Anberra Pty Ltd v Urban Stays Pty Ltd & Ors

District Court of NSW|2021-07-08|Before: Mr J

Background

This proceeding, which commenced on 2 December 2020, concerns a landlord and tenant dispute over commercial property situated in Dickson in the Australian Capital Territory. The plaintiff (the landlord) claims damages for unpaid outgoings which it quantifies in the sum of $146,534.50. It sues the first defendant (the tenant) and the second and third defendants (collectively, the 'guarantors'), both of whom were guarantors of the lease. Claims are made against them, alternatively, in contract, for equitable compensation and damages for misleading or deceptive conduct.
The plaintiff also sues the fourth defendant, Canberra Lawyers, a firm which acted for the plaintiff in the course of negotiation and preparation of the subject lease, including, its striking out (or omitting to notice the striking out) of outgoings in item 11 to a schedule to the lease. It appears that this claim is somewhat contingent: it will only arise if the plaintiff fails in its claim against the tenant and the guarantors.
By a notice of motion filed on 19 January 2021, the tenant and the guarantors applied for a stay of the proceeding under s 20 of the Service and Execution of Process Act 1992 (Cth) (the 'SEP Act'). By s 20(3), the Court may order such a stay if it is satisfied that a court of another State that has jurisdiction to determine all the matters in issue is the "appropriate court" to determine those matters. A list of mandatory, but not exhaustive, considerations for the Court to take into account in that assessment, appears in s 20(4). The stay application was listed for hearing in the Sydney registry of the Court at 9:30am for 19 February 2021. The application was dismissed with costs by her Honour Judge Gibb.
The Court's record of orders made on that day indicate that her Honour was influenced in her determination of appropriate orders by an understanding that Counsel for the applicants was in Canberra but that "no reasons were offered as to why he wished to attend by telephone". The notation in the Court's record indicates "No proponent nor any indication" was taken by the applicants. Nevertheless, a further, and more important, notation was that "Defendants 1-3 at liberty to make a fresh application of the same type as no ruling on the merits."

Evidence in support of the application

The applicants rely upon the affidavit of Joseph Edward Griffiths (one of the guarantors and director of the tenant) affirmed on 19 March 2021, and an affidavit of Kristin Anthea Chhabra, a paralegal employed by the solicitor for the tenant and the guarantors, affirmed on 18 March 2021; and an affidavit of Ms Kate Phillips affirmed on 19 March 2021.
The gist of Ms Chhabra's evidence is that since the applicants wanted Mr Opas of counsel, to appear at the hearing of the motion on 19 February 2021 by telephone, she made attempts, through communications with staff in the Court's registry in the lead up to 19 February 2021, to organise for that to occur, but those communications were ineffective. She deposes that she was led to believe that a Judge of the Court would contact Mr Opas during the hearing.
Although she does not state this, one possible implication seems to be that the applicants did not receive a fair hearing, or adequate opportunity to be heard because of the inability of their chosen Counsel to participate. However, I note that on 5 February 2021, detailed written submissions prepared by Ms Taylor, of the firm currently representing the tenant and the guarantors, were filed.
Ms Phillips annexed a Practice Direction of the ACT Magistrates' Court.
The more substantive affidavit which the applicants rely upon is that of Mr Griffiths. Mr Griffiths deposes that he and Alan Jugovic, the second defendant (and the other guarantor) wish to have the dispute heard in the ACT. The matters that arise from Mr Griffiths' affidavit which are said to support the stay are: 1. he resides in the ACT and Mr Jugovic, resides at a place much closer to Canberra than Sydney; 2. Canberra Lawyers Pty Ltd, the fourth defendant, who acted as the landlord's lawyer in negotiations about the lease with the solicitors for the tenant and the guarantors (Lexmerca, who is also based in Canberra), is registered, and has its place of business, in the ACT; 3. the lawyers acting for the tenant and the guarantors in this proceeding, Meyer Vandenberg Lawyers, are based in Canberra; 4. the leased premises which are the subject of the proceeding are in Canberra; 5. the rights and obligations of the parties under the lease are governed by the law of the Australian Capital Territory; 6. if the matter proceeds to hearing, the tenant and guarantors "may" need to call evidence from the solicitors from Lexmerca who acted for them in the negotiations for the lease; 7. Mr Griffiths and Mr Jugovic would prefer to avoid the expense of their own travel to Sydney and the expense associated with travel from the solicitors from Lexmerca travelling to Sydney; 8. They are also concerned about the uncertainty of COVID-19 restrictions that might apply to them if they, and witnesses from Lexmerca and their instructing solicitors are to travel and have accommodation in Sydney, for a hearing.
There is no dispute that the monetary jurisdiction of the ACT Magistrates Court is such that the dispute could be dealt with there; or that it was incapable of dealing with each of the plaintiff's various claims. The applicants argue that the parties proceeded on the basis that such leasing arrangements that they entered into would be governed by ACT law. In particular, reference was made to a provision in the Leases (Commercial and Retail) Act 2001 (ACT) (the "Leases Act") by which, amongst other things, parties generally are required to bear their own costs of proceedings under that Act.
The tenants and guarantors submit that the ACT Magistrates Court is a "more appropriate court" than this Court because: 1. The majority of the parties and witnesses in the proceeding are in Canberra; 2. The subject matter of the proceeding concerns property in Canberra; 3. ACT law is applicable to all the claims raised against the tenant and the guarantors - especially Part 9 of the Leases Act. Further, by its Defence, the tenant and guarantors raise defences invoking provisions of the legislation; 4. ACT law is also applicable to the plaintiff's claim against the fourth defendant, being the Civil Law (Wrongs) Act 2002 (ACT); 5. The governing legislation provides that the ACT Magistrates' Court has jurisdiction (under s 144(1) of the Leases Act) and the preponderance of authority indicates that s 144 evinces a preference that most disputes under the legislation are to be heard in that Court (Tuggerangong Town Centre Pty Ltd v Brenda Hungerford Pty Ltd (No.3) [2017] ACTSC 301 at [72] & [91]); 6. Certain procedural provisions in the Leases Act relating to the case management of disputes suggest that the dispute is more appropriately to be considered in the ACT Magistrates' Court than this Court. Indeed, a Practice Direction specifically deals with procedures for actions under the legislation. Further, there is a potential difference in the costs outcome (s 154 of the Leases Act) for a dispute of the present kind (Leda Commercial Properties Pty Ltd v Brenda Hungerford Pty Ltd (2018) 337 FLR 252 at [114], [121] & [122]).

Opposition to the application

The landlord relies upon affidavits of Jamie Cklamovski of 12 February 2021 and 3 May 2021.
The landlord, as respondent to the motion, points to the following circumstances arising from those affidavits: 1. The tenant has its registered office in NSW; 2. Although there is a choice of law clause, there is no controversy as to its content. More significantly, there is no exclusive forum clause in the lease; 3. no point is taken by the defendants about this Court's jurisdiction, including, in particular, its extra-territorial jurisdiction. None of the causes of action raise 'ACT-specific' matters and there is no juridical disadvantage to the applicants if a Court in Sydney tries a property dispute in accordance with ACT law; 4. the plaintiff's lay witnesses will be (i) the director of the plaintiff, who resides in Sydney and (ii), an agent or employee of the plaintiff, who also resides in Sydney.
The respondent estimates that its own costs for "recommencing" a proceeding in the ACT and transport and accommodation costs, will be $5,340. It has already incurred costs in just under the sum of $30,000.
The respondent notes that following dismissal of the earlier stay application, the applicants have not paid the costs order that followed the dismissal of that application. The respondent submits that the Court should not, in its discretion, allow the applicants to relitigate an interlocutory application upon which it has previously failed.
The respondent submits that the Court should not take into account the applicants' choice of lawyers, whose offices are in the ACT, or the circumstance that the property itself is located in the ACT. As to the latter, it says that where a property dispute concerns the construction of a document, as this one is, the location of the property, is not necessarily significant in determining whether one jurisdiction is more important than another. It submits that in circumstances where the relevant legislation does not clearly identify the ACT Magistrates' Court as the exclusive forum, it is entitled to choose a forum which does not have the same procedural requirements determining the dispute. As it happens, this Court is itself enjoined to decide the dispute justly, quickly, and cheaply, even if different practices are deployed to achieve that outcome.
It also submits that as to the concern about COVID-19 restrictions raised by the applicants, this issue cuts both ways. Detriment will just as likely be endured by the respondent, through its witnesses and lawyers, in having the hearing tried in the ACT. Further, it adds, even assuming that the COVID-19 restrictions will be operative at the date of a hypothetical hearing, the Court is equipped to use its facilities to have evidence given by AVL link. It also submits that it is "qualitatively" prejudiced if a stay was imposed.

Principles for this stay application

The respondent did not dispute the applicants' articulation of the relevant principles upon stay applications brought on the statutory basis here. They were referred to in a decision of his Honour Judge Dicker SC in Toyota Material Handling Pty Ltd v Cardboard Collection Service Pty Ltd [2020] NSWDC 667 at [16]-[18]. I respectfully adopt his Honour's statement of principles. Amongst other things, his Honour noted that the plaintiff's choice of forum is not itself a relevant consideration on the application. On the other hand, weight attaches to the choice of law and non-exclusive jurisdiction clauses since they embody the parties' agreement about their preferred venue. This is particularly so where the law of the chosen jurisdiction is different to the 'transferee' jurisdiction: Toyota Material at [28].

Consideration

The circumstance that the applicants are bringing the same application as that which was dismissed by Gibb DCJ prima facie would appear to engage the principle in Brimaud v Honeysett Instant Pty Ltd (1988) 217 ALR 44, where McLelland J (as his Honour then was) referred (at [46]) to the "great injustice and enormous waste of judicial time and resources which would occur if a party was not restricted in some way from re-litigating orders made in interlocutory matters". Typically, a Court will not entertain the same interlocutory applications unless new circumstances have arisen which were not apparent at the time when the first application was heard and those circumstances could not have been ascertainable at that earlier time.
However, as the notations on the Court's record of what occurred on 19 February 2021 plainly indicate, her Honour did not determine the application on its merits, but rather essentially invited the applicants to bring a fresh application. In those circumstances, Brimaud is not engaged. There is no real procedural impediment now to the Court considering the application.
I will first address the mandatory list of considerations under s 20(4). In my view, on balance, the preponderance of those factors strongly indicate that the ACT Magistrates' Court is a "more appropriate" court than this Court. First, although not necessarily large, there is a majority of witnesses in the proceeding who are either resident in, or resident nearby, the ACT; or at least closer to that jurisdiction than in NSW. This includes witnesses, potentially, for the Fourth Defendant. Further, although the dispute may turn upon the construction of a contract, and does not require any inspection of the leased premises, some weight is to be accorded to the circumstance that the property is situated in the ACT. There is not much evidence as to the financial circumstances of the tenant or the guarantors, but there is evidence of the financial circumstances of the landlord, in terms of its anticipated expenses (travel, accommodation, food etc) should the proceeding be heard in the ACT. Respect should be accorded to the parties' choice of ACT law as the applicable law governing the rights and obligations of the parties to the lease.
There is no exclusive jurisdiction clause favouring the ACT Magistrates' Court over this Court but nevertheless, there is substantial force in the applicants' submission that it was expected, if not intended, by the ACT Parliament that disputes under the subject legislation would be determined in the ACT Magistrates' Court; which Court, it appears, has developed expertise to determine those disputes. There were certain procedures in the legislation suggesting this (ss 147, 149 and 150-151) directed to the Magistrates' Court. See also, Practice Direction Civil 2 issued by the ACT Magistrates' Court which closely prescribes the conduct of proceedings brought under the subject legislation. These beneficial procedures would be lost if the proceeding continued in this Court. I do not think that it is a sufficient answer to say that the ACT Parliament could have spelt out more clearly that the ACT Magistrates' Court was the appropriate jurisdiction. That is not to say, of course, that this Court could not take cognisance of such relevant case-law authority as might bear upon substantive questions that arise in the disputes. But in the context where the Court is required to assess, in effect, the natural home of the litigation, I accept that the ACT Magistrates Court more appropriately answers that description than this Court. In determining this application, as I have noted, the Court is enjoined from taking into account the circumstance that the respondent commenced this proceeding in this court.
I am satisfied that the applicant has established a clear and compelling case for the stay.
The respondent points to certain aspects of prejudice should a stay be imposed, but, in my view, these concerns can be addressed by appropriate terms which the Court is empowered to impose as the price for a stay, under s 20(6) of the SEP Act.
The respondent argued that it will be prejudiced by the costs of "recommencing" in the ACT Magistrate Court. The respondent also pointed to the costs order in its favour on the earlier application. To the extent that there are costs of "recommencing", they include the filing fee. However, it was not suggested that costs incurred in this proceeding, in this jurisdiction, will have been wasted. All that would be incurred is a filing fee which would otherwise have been required.
Contrary to the respondent's submission, no actual prejudice has been demonstrated by delay, such as faded recollections of witnesses. Further, delay in getting money is likely to be reflected in an award of interest.
I make the following orders: 1. I grant the stay application on the terms that: 1. The costs incurred in these proceedings, including the costs of the notice of motion dated 19 March 2021, are to be 'costs in the cause' in the proceeding in the ACT Magistrates' Court, subject to term (b); 2. The term in (a) is not to derogate from the order for costs in favour of the respondent made on 19 February 2021 which is capable of enforcement after determination of the proceeding in the ACT Magistrates' Court.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 July 2021

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