Bycoon Pty Ltd (In Liquidation) v Wollongong Truck and Machinery Centre Pty Ltd

Judgment 1HER HONOUR : By notice of motion dated 4 May 2011 the plaintiff seeks summary judgment pursuant to rule 13.1 of the Uniform Civil Procedure Rules entitling it to possession of the land known as Lots 39 and 40 in DP 30082 situated at 7-9 Glastonbury Ave, Unanderra ("the property") and leave to issue a writ of possession forthwith. 2The primary proceedings were commenced by statement of claim on 28 March 2011. The second defendant filed a defence on 29 April 2011. No notice of appearance has been filed on behalf of the first defendant. 3The notice of motion was listed for hearing before me on 15 September 2011. A notice of motion filed by the second defendant was also listed for hearing that date in which a declaration was sought that a disclaimer served pursuant to s 568 of the Corporations Act 2001 (Cth) was invalid or of no legal effect. That relief is no longer pressed. 4In the course of argument on 15 September, and without the matter proceeding to conclusion on that date, leave was granted to the second defendant to file an amended defence. It was filed before the matter was listed for further hearing yesterday. 5The plaintiff is a company incorporated under the Corporations Act to which a liquidator was appointed by this Court in November 2005. The plaintiff is the registered proprietor of the property and the property its only asset. It is the intention of the liquidator to sell the property, with vacant possession, to enable him to complete the liquidation of the plaintiff corporation and to maximise the return to creditors, including a secured creditor. The sale has been delayed by unrelated proceedings involving third parties both in this Court and in the District Court. As recently as 14 December 2010, the property remained unsold after a public auction was initiated by the Wollongong City Council over unpaid rates and charges by reason of the fact that the vendor was unable to provide vacant possession because of the defendant's occupation of the premises and his refusal to vacate the premises. 6The second defendant owns and operates what he describes as a "truck centre" from premises constructed on the property. He asserts that he entered into a lease with the plaintiff in March 2000 for a term of 12 years and has been in occupation of "part of the premises from that time". The second defendant's signature appears on the lease document as lessee. The signature of the person purporting to sign on behalf of the plaintiff as lessor is not identified. There is no evidence as to the relationship between the person signing as the witness to the plaintiff/lessor's signature and the plaintiff. The circumstances in which it is contended that the lease came to be signed are not the subject of any evidence, save only for the second defendant's claim that he did not have a solicitor acting for him and that the lease was "prepared by Bycoon" and then presented to [him] for signature". 7In addition, the liquidator's investigations of the plaintiff's books and records reveal no indication that either of the defendants entered into a lease with respect to the property nor were they otherwise granted any right of possession of the property. He has received no rental payments in relation to the occupation of the property by the second defendant since the time of his appointment in November 2005. I note that in the schedule to the lease document the minimum annual rent is specified at $120,000 [clause 21.2(c)] with monthly rent specified at $10,000 [clause 21.2(a)(ii)] but that a further clause in the schedule provides that no rent is payable in the event the lessor fails to carry out specified works to be completed within 12 months of the commencement of the lease. Such rent as has been received by the liquidator is from MP Auctions and Valuation Services Pty Ltd, an entity apparently unrelated to the second defendant. The evidence reveals that company is no longer in occupation of any part of the property. The liquidator gave evidence that although there was no written lease agreement between MP Auctions and Valuation Services and the plaintiff paid rent pursuant to a verbal agreement with the plaintiff between March 2000 and May 2011. How the tenancy of the property by that entity is consistent with a lease to the second defendant is not obvious. It was not the subject of any evidence or the submissions of counsel. It is not suggested that MP Auctions and Valuation Services is an assignee of the lease to which the second defendant claims to be a party, or that the second defendant sublet or parted with possession of a part of the demised premises with the lessor's consent, as provided for in Clause 17.1 of the lease document. Were that the case, I would expect the evidence relied upon by the second defendant would have made that position clear. 8The only evidence bearing upon the question is in a letter dated 1 March 2011, from solicitors acting on behalf of the second defendant to the plaintiff's solicitors in which it is asserted that the plaintiff moved into occupation of the property in March 201 0 in reliance upon the lease he had executed 10 years earlier after a previous tenant , nominated as MP Auctions and Valuation Services Pty Ltd, vacated the premises. It is not clear to me how that state of affairs can be reconciled with the second defendant's affidavit of 27 May 2011 where he claims that since the commencement of the lease (in March 2000) he has been in occupation of the part of the premises from which he conducts his business. In that same letter it was asserted that in reliance upon the lease and upon taking occupation of the premises, the second defendant carried out considerable improvements to the property and that this was done with the full knowledge of a Mr Auyoub, who was claiming to act on behalf of the lessor, and with full knowledge of the liquidator. It was also claimed that it was agreed that the value of the improvements would be applied as rental to the property. I note that while clause 20 of the lease document provides for certain works to be carried out by the lessee these are specified expressly to have been completed within 12 months of the commencement of lease. 9A copy of the lease was annexed to the second defendant's affidavit dated 27 May 2011. Despite the liquidators repeated requests of the defendant's solicitors since December 2010 for advice as to the legal basis upon which the defendants claimed a right to lawfully occupy the property, the first time the lease document was produced was in connection with the plaintiff's notice of motion. 10It is common ground that the document said to be the lease was not registered as required under s 42 of the Real Property Act 1900 and, accordingly, no legal interest or estate in the property was created entitling the second defendant to occupy the premises. This much was asserted by the liquidator in his letter of 31 May 2011. In that same correspondence he emphasised that the plaintiff has no record of the lease; that no rent has been paid under the lease; that the second defendant admitted that MP Auctions and Valuation Services was in possession of the premises for a significant part of time before occupation was taken by him; and that the lease is not stamped and not registered. On the strength of those observations he expressed serious doubts concerning the legitimacy of the lease and, even it enforceable (which was not admitted), the second defendant was almost certainly in breach of a number of provisions. The liquidator went on to say that, to the extent that the lease constituted a binding agreement (in equity), he disclaimed the lease pursuant to s 568 of the Corporations Act and invited the second defendant to peaceably surrender possession. 11That invitation was resisted giving rise to the notice of motion upon which the plaintiff moves. By letter dated 28 September 2011 (served after the proceedings before me were adjourned part heard) the liquidator further advised that, to the extent that the Court was ultimately satisfied that a tenancy "at will" was created at common law or under s 127 of the Corporations Act , then the letter was to operate as notice of termination of that tenancy coupled with a requirement that the property be vacated no later than 5pm 29 October 2011. The second defendant remains in occupation of the premises. 12The amended defence was filed on 16 September 2001. By that defence the second defendant claims he is in lawful occupation of the property pursuant to "an agreement" between himself and the plaintiff commencing on 1 March 2000 and terminating on 28 February 2012 with an option to renewal for a further two terms each of 12 years, as provided for in the unregistered lease. The amendment to the defence was made with leave reflecting the fact that by the time of the resumed hearing the second defendant had abandoned any reliance upon "the lease" as a source of his legal right to remain on the property. This reflected recognition of the operation of s 42 of the Real Property Act . The plaintiff submitted that, in those circumstances, all that the lease does is to create an agreement to lease, enforceable in equity, and that the second defendant's entry into possession of the property creates, at its highest, a tenancy at will which is terminable on one month's notice expiring at any time (see Leitz Leeholme Stud Pty Ltd v Robinson [1977] 2 NSWLR 544 at 547). The plaintiff relies upon correspondence as recent as 28 September 2011 as notice of termination. 13The plaintiff further submitted that the agreement to lease was merely a contractual right enforceable against the plaintiff for an equitable term of the duration specified in the lease and subject to its conditions (which the liquidator asserts he has disclaimed in any event). He submitted that while the agreement for lease was capable of specific performance, it was otherwise where it has been terminated and in those circumstances equity would not allow one party to allege that any tenancy, even a tenancy at common law, existed ( Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14); 157 CLR 17). 14There was no attempt by the second defendant to rely upon any oral agreement he claims to have reached with Mr Ayoub as asserted in his solicitor's letter. His entry into possession of the property (which by reference to his solicitor's letter of 1 March 2011 was in March 2010) and his continued occupation of the property since that time to the current date was said by his counsel to be in reliance upon his contractual rights to enforce the agreement to lease, rights which are to be determined by reference to the ordinary principles of contract law. No submission was advanced to meet the plaintiff's reliance upon the notice of termination of the agreement effectively foreclosing on the second defendant's claim to equitable relief such as might entitle him to remain in occupation of the premises. His contractual rights to recover damages remain unaffected, of course, by notice terminating the tenancy. I also note that no steps were taken to enjoin the plaintiff from relying upon the notice of termination as treating the second defendant as a tenant at will. 15The plaintiff's counsel accepted that he has the burden of clearly demonstrating that there is no viable defence since the effect of the order sought by motion is to grant the plaintiff final relief. Established principle provides that if the filed defence is tenable, in that there is a real question of fact or law to be determined, the defendant will not be deprived of the right to have the case determined in the ordinary way. 16I am satisfied that the plaintiff has discharged the burden of persuading me that no tenable defence (as pleaded in the amended defence) has been demonstrated such as might be capable of resisting the plaintiff's right to possession of the property.