Victorian Civil and Administrative Tribunal|2006-02-03

Maryvell Investments PL v Sigma Constructions PL (Retail Tenancies) [2006] VCAT 74 (3 February 2006)

Victorian Civil and Administrative Tribunal Act 1998 - s.60 - joinder - whether joinder would be misconceived and doomed to failure - claims pursuant to the Fair Trading Act 1999 - defence pursuant to s.126 of the Instruments Act 1958 - whether guarantee alleged.

Leave to Applicant to join Daniel Charisiou as an added Respondent.

Applicant's Amended Points of Claim are to be filed and served on or before 17th February 2006.

Any Points of Defence, including Points of Defence by the Joined Party, Daniel Charisiou, are to be filed and served on or before 17th March 2006.

Any request for Further and Better Particulars of the Amended Points of Claim is to be filed and served on or before 17th March 2006.

Further and Better Particulars of the Amended Points of Claim are to be filed and served on or before 17th April 2006, subject to the Applicant's right to apply for an extension of time in relation to this date.

The matter is adjourned for further Directions Hearing on 8th March 2006 at 10:00am, when questions arising from service upon the Applicant of a subpoena to attend and produce documents shall be argued. The Applicant should be in a position to answer the subpoena on that day if it is so ordered.

The matter is also adjourned to a further Directions Hearing on 1st May 2006. The application pursuant to s.77 of the Victorian Civil and Administrative Tribunal Act 1998 foreshadowed by the First Respondent, Sigma Constructions Pty Ltd, shall be dealt with on that day.

The question of costs of all parties is reserved.

Michael Mackinnon, Solicitor and Independent Counsel

Mr Aizen of counsel, instructed by Paul Egan & Associates

1 This matter, with which I am well familiar, comes back before me in the context of an application by the applicant, Maryvell Investments Pty Ltd as a directions hearing ("Maryvell") against Sigma Constructions (Vic) Pty Ltd ("Sigma") in relation to the proposed joinder of further respondents. It is proposed that those further respondents be added in accordance with Amended Points of Claim. Leave is sought to file and serve the Amended Points of Claim. Some of the amendments are referrable to matters other than the joinder. Whilst some of these, namely those which are purely grammatical in nature, are not opposed, in this ruling I shall deal with nothing more than the joinder application. During the conduct of this hearing, I indicated that I would not go beyond that issue, and ultimately this was a course of action with which the parties did not disagree. It seemed to me, and ultimately to them, that it was logical to determine the parties to the action before moving on to such matters as the particulars of damages sought. Accordingly, and as indicated to the parties, it is only the joinder application with which I shall deal in this ruling. This Tribunal has the power to order joinder pursuant to s.60 of the Victorian Civil and Administrative Tribunal Act 1998.

2 I apologise to those concerned that I could not deliver this ruling prior to the Christmas vacation. I expressed my hope that I could rule prior to that break, but also stated that I was involved in a part-heard matter of some substance. As matters have evolved, unfortunately this ruling could not be delivered prior to the vacation.

3 At this directions hearing, Mr Mackinnon appeared on behalf of Maryvell. Mr Aizen of counsel appeared on behalf of Sigma, and on behalf of the proposed added respondents, Daniel Charisiou ("Charisiou"), Stellios Constantopoulos ("Mr Constantopoulos") and Margaret Constantopoulos ("Mrs Constantopoulos"). No evidence was called, but affidavit material was filed, and each legal representative made helpful submissions. There was no cross-examination of deponents of affidavits.

4 I do not propose to set out in detail the factual background of this matter. It has previously been ventilated in my earlier rulings and in the judgment of the Court of Appeal of 9 December 2004. In summary, the matter involves alleged loss and damage suffered by Maryvell as a result of it granting a licence to Sigma in relation to the occupation and use of Maryvell's land in Sydney Road, Brunswick, which land adjoins a restaurant operated by Maryvell. Maryvell issued an application out of this Tribunal concerning this dispute.

5 Maryvell now seeks to join the parties referred to above on the following basis. It alleges that Charisiou gave a written guarantee dated 16th July 2002 to Maryvell in which he guaranteed the payment by Sigma of the licence fees, and also the payment of any losses, damages, expenses and costs which Maryvell would be entitled to recover from Sigma in respect of any breach of the terms of the licence agreement. The existence of this guarantee, which is Exhibit "GV2" to the affidavit of George Velissaris ("Velissaris") sworn 23rd November 2005, is not disputed and there was little argument concerning the joinder of Charisiou. Velissaris is the sole director of Maryvell.

6 In relation to the joinder of Mr and Mrs Constantopoulos, it is alleged that they were directors of Sigma at all material times and it is further alleged that each of them entered into an oral contract with Maryvell (by means of discussions with Velissaris) pursuant to which each agreed to be personally liable to Maryvell for any loss and damage suffered by it caused by Sigma's breach of the terms and undertakings of the licence agreement. It was emphasised by Mr Mackinnon that the Amended Points of Claim place no reliance upon any alleged guarantee given by either Mr or Mrs Constantopoulos and that the proposed cause of action against each is based upon a personal contract with Maryvell. It was repeated that this is "not a guarantee claim". The wording of the proposed cause of action, which is contained in paragraphs 10 and 11 of the Amended Points of Claim, is virtually identical in relation to Mr and Mrs Constantopoulos. The relevant wording is as follows:-

"... Constantopoulos agreed with the applicant (through Mr George Velissaris, its Director), in consideration of the applicant agreeing to enter into the licence agreement (as it did), to be personally liable to the applicant for any loss and damage suffered by it caused by Sigma's breach of the terms and undertakings of the licence agreement."

Particulars are then given in relation to the discussions which took place, which particulars have no effect upon the basic allegation.

7 Whilst it would appear that Mr Constantopoulos is now the sole director of Sigma, I accept that, as at the time when the relevant discussions are alleged to have taken place (June/July 2002) both Mr and Mrs Constantopoulos were directors of Sigma. In this regard I refer to a company extract, dated 1st October 2004, which appears to have been filed in conjunction with an affidavit of Velissaris, sworn 24th October 2005, and apparently prepared by him at a time when he had no legal representation. In any event, it is part of the material placed before me during the conduct of this matter.

8 I should add that any findings of fact made by me in relation to this joinder application are so made solely for its purposes and are based upon the material currently placed before me. They are not intended to represent findings for the purposes of any hearing "on the merits" or for any dispute which may arise concerning other amendments or other interlocutory proceedings. They are made solely in relation to this joinder application.

9 I shall not set out in detail the submissions that were advanced. The scope of the dispute became very limited. As stated, the argument advanced by Mr Mackinnon on behalf of Maryvell was that joinder should be granted on the basis that Charisiou had provided a written guarantee and Mr and Mrs Constantopoulos had entered into oral contracts with Maryvell pursuant to which each personally agreed to make good any loss that might be suffered by Maryvell as a result of any breach by Sigma of the terms and undertakings of the licence agreement. The consideration for this is alleged to be Maryvell in turn entering into the licence agreement with Sigma.

10 The argument advanced by Mr Aizen on behalf of Sigma and the proposed joined respondents could be summarised as follows. Charisiou entered into a written guarantee and no argument of any substance is advanced in opposition to his proposed joinder. The claim against Mr and Mrs Constantopoulos, however worded, is essentially one based upon a guarantee. There is no written memorandum of any such guarantee, and none is alleged. The provisions of the Instruments Act 1958 require that a guarantee of this nature be in writing. If it is not, no action is maintainable in relation to it. Section 126 of that Act is quite clear in this regard. Alternatively, if the action is based upon simple contract, it has not been demonstrated that any consideration flows from Maryvell to Mr and Mrs Constantopoulos, and again any proposed action against them must fail. Therefore a joinder should not be permitted.

11 Mr Aizen also advanced a number of arguments essentially based upon difficulties which Maryvell will face in its endeavours to establish loss and damage. These relate to such matters as whether or not Maryvell's restaurant at the premises was in fact operating; if not, the reasons why this was so; the state of sanitation and cleanliness of the premises; conflicting evidence given in proceedings in which Velassaris and Maryvell appealed convictions and fines under the Food Act 1984; and similar inconsistencies and criticisms concerning the existence of any loss and damage, and the quantum of loss and damage so claimed. It may be that Maryvell will face some difficulties in this regard. That is a matter which I am not now determining. Given the matters foreshadowed by Mr Aizen, it could be expected that there will be a vigorous attack upon some of the allegations made by Maryvell. However, as stated, I am not dealing with such matters in this ruling.

12 Firstly, I am of the view that the application so far as it relates to Charisiou succeeds. There is no opposition of any substance to this application, and I determine that he should be added as a party. Section 60 of the Victorian Civil and Administrative Tribunal Act 1998 gives to the Tribunal a discretion in relation to joinder of parties if it is considered, inter alia, that such joinder is desirable. In my opinion it is both proper and desirable that Charisiou be joined as a respondent to the present application.

13 In my opinion the arguments advanced by Mr Aizen in relation to the proposed joinder of Mr and Mrs Constantopoulos are correct. The discretion in relation to joinder of parties should not be exercised in favour of the joinder if the same would enable a person to bring a claim that was clearly misconceived or doomed to failure - see, for example, Sensyn Australia Pty Ltd v United Colours on Collins Pty Ltd [2000] VCAT 2010; (2000) V Conv R 58-544. In his judgment in that matter Deputy President Macnamara stated as follows:-

"It is unnecessary for me to consider a precise formulation of the test for joinder under Section 60 of the Victorian Civil and Administrative Tribunal Act or to descend to an analysis of the terms of the Section. It cannot be right to join a party to enable the mounting of a claim which is clearly misconceived or doomed to failure."

In the circumstances, Deputy President Macnamara denied the application for a joinder. I fully agree with this approach.

14 In my opinion the proposed amendment upon which reliance is placed for the joinder of Mr and Mrs Constantopoulos falls foul of s.126 of the Instruments Act. Whatever assurance is given by Mr Mackinnon that the claim brought is one in which reliance is not placed upon a guarantee but upon simple contract, the fact is that the proposed action to be brought is one which is "... to charge a person upon a special promise to answer for the debt, default or miscarriage of another person" as described in s.126. If it is such an action, it cannot be brought unless there is a memorandum or note of the agreement in writing signed by the person to be charged or by a person lawfully authorised so to sign. Maryvell's action purports to be one pursuant to the provisions of the Fair Trading Act 1999. Apart from the original application, paragraph 8 of the Amended Points of Claim makes this clear. I can find nothing in the Fair Trading Act which, in some way, excludes the operation of s.126 of the Instruments Act. If that be so, and if I am correct in my analysis of what is in fact alleged in paragraphs 10 and 11 of the Amended Points of Claim in relation to the foundation for the proposed joinder, s.126 of the Instruments Act represents a complete defence. Any action, as presently framed, against Mr and Mrs Constantopoulos would be untenable and doomed to fail. I appreciate that, at least in the courts, reliance upon s.126 of the Instruments Act would normally be pleaded in the Defence, this being done in a manner similar to a defence pursuant to the Limitation of Actions Act 1958. However, firstly, this is not a court of pleadings. Secondly, in the circumstances of the present application, Maryvell has set out the cause of action against the proposed joined parties upon which it would rely. Mr Aizen, instructed by those proposed joined parties, has squarely raised the issue of s.126 of the Instruments Act. It would be a futile, time-consuming and unnecessarily expensive exercise for me to allow the joinder so that the foreshadowed s.126 defence could be formally pleaded. It has been specifically raised and reliance upon it has been foreshadowed. In my opinion this means that the proposed cause of action against Mr and Mrs Constantopoulos is misconceived, and, as stated, doomed to failure. Therefore, my discretion should not be exercised in favour of the proposed joinder.

15 In the circumstances, there is therefore no need for me to rule upon Mr Aizen's alternative argument that there is no consideration flowing between Maryvell and Mr and Mrs Constantopoulos so as to satisfy the requirements for the existence of an oral contract between each of them and Maryvell. However, it does seem to me that, if the terms of such alleged contract are examined, one comes back to s.126 of the Instruments Act. The consideration allegedly flowing one way is the granting of the licence by Maryvell to Sigma. The consideration flowing the other way is not between Sigma and Maryvell, but, allegedly, is the promise by Mr and Mrs Constantopoulos to answer for the debt, default or miscarriage of Sigma. No other consideration, flowing either way, is alleged. There is no written memorandum. Again the proposed joinder seems to be fatally flawed.

16 No argument was advanced as to whether the proposed claims against Charisiou and Mr and Mrs Constantopoulos are of such a nature as to attract the operation of the Fair Trading Act. I make no final ruling in that regard, save to say that it seems to me to be an arguable proposition and not clearly doomed to failure.

17 Accordingly, it is ordered that, pursuant to s.60 of the Victorian Civil and Administrative Tribunal Act 1998, Daniel Charisiou is joined as a party to the present proceedings. Insofar as the Amended Points of Claim includes an application to join Stellios and Margaret Constantopoulos to the proceedings, that application fails and leave is not given to amend the Points of Claim in that regard.

18 I shall hear the parties as to the form of any orders that are to be made.

Maryvell Investments PL v Sigma Constructions PL

At a glance

Court

Decision date

Source

Judgment (15 paragraphs)

Maryvell Investments PL v Sigma Constructions PL (Retail Tenancies) [2006] VCAT 74 (3 February 2006)

Parties