Yeeh Yong Jong v Advanced Dental Services Pty Limited

District Court of NSW|2018-07-30

Background

By Statement of Claim filed 26 June 2017, the plaintiff claims damages with interest from the defendant arising out of dealings between them concerning the lease of a property located at and known as 109 Blackwall Street, Woy Woy ("the Property").
It is said and not disputed that: 1. on or around 27 May 2009 the plaintiff entered into a lease agreement with MJ Jong Pty Limited ("Jong"); 2. the lease between the plaintiff and Jong was duly registered ("the Lease"); 3. the Lease was for a term of 5 years from 27 May 2009; 4. the Lease contained 2 options to renew. One for the period 2014 to 2019 and the second for the period 2019 to 2024; 5. the Lease provided for an annual increase of rent of 3%; 6. the Lease included terms regarding repudiation, maintenance/make good provisions and for compensation in the event of one lessee's breach; 7. on or around 23 June 2009, Jong transferred its interest in the lease to the defendant; 8. the Transfer of Lease was duly registered ("the Transfer"); 9. in July 2009, the defendant took occupation of the premises.
It is alleged but denied that on 6 January 2014 the defendant exercised the first option extending the term to 27 May 2019. The defendant says that the lease terminated on 26 May 2014 and, thereafter, it remained a tenant on a month to month basis before vacating the Property in February 2015.
The plaintiff claims that the defendant repudiated the Lease by abandoning the Property prior to the termination date.
In order to mitigate loss, the plaintiff leased the Property to a third party from 9 December 2016.
The plaintiff claims damages for repudiation as well as costs incurred in effecting repairs to the Property after the defendant's vacation.
The defendant denies that the Lease was repudiated (as it was never renewed) and any obligation to pay the damages and other amounts sought. The defendant's position is that at the time it ceased to occupy the Property, there was no lease in place as the initial lease had expired without renewal.

The Plaintiff's Application

On Friday 27 July 2018, when the matter was called on for hearing the plaintiff filed in Court with leave a Notice of Motion dated 26 July 2018. It sought leave to file an Amended Statement of Claim. The amendment was to raise additional causes of action and to be based upon the same material as pleaded in the Statement of Claim.
Instead of relying on a cause of action just for breach of the Lease, the plaintiff's amendment introduced two new causes of action based on a breach of an Equitable Lease and/or a Binding Agreement to Lease.
The material fact relied upon by the plaintiff in support of the new causes of action is a short email to the plaintiff dated 6 January 2014 (Annexure C to an affidavit of the plaintiff sworn 7 December 2017 - Exhibit B on the application to amend). Other annexures to Exhibit B make it plain that the understanding between the parties was not as straightforward as suggested by the facts pleaded in the Statement of Claim or the proposed Amended Statement of Claim.
That is to say there were additional material facts which bore upon the new causes of action which the plaintiff was seeking to introduce.

Outcome of Plaintiff's Application

The application was curious. Despite first saying that the plaintiff did not need to amend the Statement of Claim the application to do so was made. Counsel for the plaintiff accepted that the cause of action as pleaded must fail. Although, subsequently, it was submitted that the Statement of Claim should be read broadly so as to include the new causes of action.
The application to file an Amended Statement of Claim was opposed by the defendant on principally three bases: 1. that the deficiency of the current Statement of Claim had been raised in correspondence with the Solicitor for the plaintiff prior to the hearing and the plaintiff had refused to amend; 2. there was some doubt as to whether this Court has power to award damages for equitable relief, in this case breach of an equitable lease. This is linked to the first basis for opposition that the application was being made too late; and 3. the defendant would have suffered prejudice by the late amended to the Statement of Claim.
I indicated to the parties that I would not permit the amendments and that the present Statement of Claim was on its face incapable of sustaining unpleaded cause of action for breach of an Equitable Lease and/or a Binding Agreement to Lease.
Counsel for the plaintiff invited the Court to express a concluded view as to whether the original Statement of Claim would sustain the unpleaded cause of action for relief based on a breach of an Equitable Lease and/or of a Binding Agreement to Lease. I declined to do so indicating that I would simply determine the plaintiff's application to amend. The other issues would arise for consideration either at the conclusion of the hearing proper or in determining any application by the defendant to dismiss.
This led counsel for the plaintiff to state: "Regrettably, that means we do not press for the claim to run … on the current pleading."
Notwithstanding this apparent abandonment of the claim, I intend to provide short reasons for dismissing the plaintiff's Notice of Motion before then considering the defendant's dismissal application.

Reasons for Dismissing Plaintiff's Notice of Motion filed 27 July 2018

The Evidence

The application was made by the plaintiff when the matter was called on for hearing. It was opposed by the defendant.
In view of list management principles followed by this Court, the timing of the application itself would have provided a sufficient basis for its refusal.
Proceedings were first commenced by the plaintiff on 26 July 2017. A defence was filed in August 2017. Following that, the proceedings were listed before the Court on the following occasions: 1. for hearing in the sittings of the Court commencing 30 April 2018, where the matter was adjourned; and 2. for hearing in the sittings of the Court commencing 23 July 2018.
In support of the application, the plaintiff relied upon the following evidence: 1. affidavit of Laura Bazouni sworn 26 July 2018 (Exhibit A); and 2. affidavit of the plaintiff sworn 7 December 2017 (Exhibit B).
Exhibit A essentially attached correspondence by the legal representatives for the parties between 4 October 2017 (Annexure A) and 20 July 2018 (Annexure H). The most relevant of which commenced with the letter from Coleman Greig Lawyers (CGL) to PDC Lawyers (PDC) dated 15 June 2018. So far as the Court can determine this letter was the first occasion on which the plaintiff referred to the alternative case based on Equitable Lease. Still, no mention was made of the breach of a Binding Agreement to Lease as a cause of action.
By letter, dated 29 June 2018 the defendant took issue with the plaintiff raising a case in the alternative. Amongst other things the letter from PDC to CGL stated: "At no time has it been suggested (much less pleaded) that the parties entered into an equitable lease nor on what terms that lease was said to have arisen. Our client will vigorously oppose any attempt to now plead that in the alternative. We also refer you to section 134 of the District Court Act."
By letter dated 11 July 2018 CGL for the plaintiff wrote again to PDC for the defendant stating, amongst other things: Binding Agreement to Lease 12. Pursuant to rule 14.7 of the Uniform Civil Procedure Rules 2005 (NSW), my client is only required to plead material facts on which she relies. My client is not obligated to plead the cause of action upon which she relies in support of those material facts. Each of the material facts relevant to my client's cause of action - being that a binding agreement to lease, or in the alternative an equitable lease arose between the parties - are pleaded in her statement of claim.
This is the first mention made of the plaintiff's second alternative case of breach of Binding Agreement to Lease.
Under the heading "Pleadings Generally" the solicitor for the plaintiff referred to the issue of estoppel and stated "Please advise if you require us to formally plead the matter, or if you are content to deal with the matter on the basis that the correspondence between the parties has identified the issues".
That statement is at odds with the overall effect of the plaintiff's position that it was only obliged to plead material facts.
In any event, PDC replied to CGL by letter dated 18 July 2018 indicating that the defendant would "strenuously oppose any attempt by your client to now 'move the goal posts' and run a different case". It was further indicated to the plaintiff that, if the Court allowed the plaintiff to re-plead then the hearing would be vacated in order for a new defence to be prepared. Further, it was said on behalf of the defendant that any amendment to include a cause of action based on an Equitable Lease or a Binding Agreement to Lease would "fundamentally change the case". It was stated: "We note that this matter was set down for hearing earlier this year and your client was content to run the case as pleaded at that time. The prejudice to our client would be undeniable if you were now able to amend and run an entirely different case."
The plaintiff was not deterred. A further letter was issued from CGL to PDC dated 19 July 2018. Whilst the letter asserts that the plaintiff is only required to plead material facts and not the causes of action upon which she relied, it was stated that the plaintiff had "decided to formally plead" the two alternative causes of action. A copy of the proposed Amended Statement of Claim was attached.
The solicitors for the defendant received the plaintiff's letters at 5:39pm on Thursday 19 July. They responded the next day by simply stating that they would oppose the application to amend and that it would be necessary to file an amended defence if leave to the plaintiff was granted.
The affidavit of the plaintiff (Exhibit B) does not bear directly upon the merits of the application. It annexures correspondence between the parties themselves which predates commencement of litigation, together with other documents. There is, however, some material which casts doubt over the case asserted by the plaintiff that the defendant had exercised the option so as to create a new Lease, a Binding Agreement to Lease or an Equitable Lease.
In particular, I note an email from the plaintiff to the defendant dated 18 June 2014 (Annexure P) which stated, amongst other things: "It seems clear to me that you have had no intention to exercise your option to renew for 5 years. I have given you multiple chances to allow me to organise the option, always to have issues come up. I accept your last email to go on month to month. Technically, I believe you are on a month to month anyway as you have not exercised the five year option."
That would suggest that not even the plaintiff herself considered there to be a Legal Lease, Equitable Lease or Binding Agreement to Lease, raising questions as to the utility of permitting the amendment sought, in any event.

The Submissions

The plaintiff's submissions in support of the application are contradictory. They begin with the proposition that the amendments are not necessary as she pleaded the facts material to support all causes of action, pleaded or not.
It appears that the plaintiff wishes to amend in order to (unnecessarily, it was submitted) spell out the causes of action upon which the plaintiff seeks relief.
If the plaintiff's primary submission is accepted then amendment is not necessary and the granting of leave futile.
The defendant's position was that it is necessary to plead all causes of action relied upon and that the plaintiff's application was made too late. It was submitted for the defendant that it would suffer unfair prejudice by the amendment, the amendment raises new legal issues requiring investigation and consideration and that it would be necessary to amend the defence.

Disposition

The parties were informed of my ruling after submissions on the Notice of Motion.
The reasons for refusing amendment may be briefly stated as follows: 1. permitting an amendment allowing two additional and alternative causes of action on the day set for hearing would offend every principle of case management which this Court espouses; 2. to exercise its discretion to grant leave to amend in these circumstances would not facilitate the overriding purpose of the just, quick and cheap resolution of the real issues in the proceedings; 3. the Court has an unqualified obligation to give effect to the overriding purpose in the exercise of its powers, including leave to permit amendment of pleadings (s56(2) of the Civil Procedure Act); 4. to grant the relief sought would contravene the objects of case management set out in s57 of the Civil Procedure Act; 5. to permit the amendment would not following the dictates of justice as required by s58(1) of the Civil Procedure Act, having regard to the matters referred to in s58(2); 6. to exercise discretion and permit amendment to the Statement of Claim on the day of the hearing would be contrary to the principles set out in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175, which overturned the more lenient approach adopted in Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146; 7. the lawyers acting for the plaintiff had, at least as at 15 June 2018, formed the opinion that the plaintiff's case was to be advanced in the alternative and yet took no action to amend the Statement of Claim until the matter was called on for hearing on 27 July 2018; 8. I accept that the proposed amendment may require the defendant to undertake further investigations and file an amended defence resulting in the inevitable vacating of the hearing; and 9. if it is accepted that what was submitted on behalf of the plaintiff is correct, that is, that it is not necessary to plead causes of action but only material facts and that in this instance all material facts had been pleaded, then to grant leave to amend the Statement of Claim would be an exercise in futility.
For these reasons I refuse the plaintiff's application to amend the Statement of Claim. I make the following orders: 1. the plaintiff's Notice of Motion filed 27 June 2018 is dismissed; 2. the plaintiff to pay the defendant's costs of and caused by the Notice of Motion.

The Defendant's Application

In the course of argument, the following exchange occurred between the bench and counsel for the plaintiff: "HIS HONOUR: The only thing I just want you to confirm is that it's your view that the current statement of claim cannot succeed. CHATTERJEE: The claim identified in the current statement of claim cannot succeed, your Honour." (T11.42-46).
Counsel, however, did not abandon what he referred to as "the fundamental proposition" that so long as the material facts are pleaded which sustain a cause of action, there was no obligation to plead the cause of action itself.
Ultimately, counsel for the defendant made an application to dismiss parts of the Statement of Claim (from T22). A Notice of Motion was sent to my Associate by email on 31 July 2018 in order to regularise the application. The only evidence relied upon was that which had been tendered by the plaintiff on its application to amend.
Prior to the Court determining the matter the parties presented the Court with "proposed orders", as follows: 1. the defendant's application for summary disposal of the proceedings pursuant to UCPR Part 13 is granted in respect of the plaintiff's cause of action as set out in paragraphs 40 to 51 inclusive and paragraph 30(a) of the plaintiff's Statement of Claim filed 26 June 2017; 2. judgment for the defendant on the remainder of the plaintiff's claim pursuant to UCPR Part 36, by consent; 3. the plaintiff to pay the defendant's costs in the agreed sum of $27,500.00 within 28 days.
The first order was opposed by the plaintiff. Both parties consented to the second order and there was some partial agreement concerning the third order.
The difficulty with the proposed orders are many, including: 1. they were sought, absent the plaintiff's consent to at least the first matter as she wished to maintain a right to appeal the order, if made; 2. the first order sought summary disposal of the proceedings in part, on the basis that no reasonable cause of action was disclosed; 3. the second order sought by consent appeared to be premised on the basis that the first order sought would be made; and 4. the parties appeared to be acting on the basis that the Court had determined the defendant's application in its favour. That was not the case.
In those circumstances, I am not prepared to make any of the proposed orders without first determining the matter.
To be clear, the only matter the Court has ruled upon is the plaintiff's Notice of Motion for leave to amend the Statement of Claim. The orders made and the reasons for those orders are set out above.
The motion filed by the defendant sought the following orders: 1. an order that any requirement to file this motion be waived pursuant to UCPR 18.2; 2. an order that this motion now be determined in chambers by this Honourable Court without further hearing pursuant to UCPR 18.7; 3. an order that the Plaintiff's claim as set out in paragraphs 40-51 (inclusive) and paragraph 30(a) of the Statement of Claim filed on behalf of the Plaintiff on 26 June 2017 be dismissed pursuant to UCPR Part 13.4 as disclosing no reasonable cause of action; 4. that the Court make other orders as set out at paragraphs 2 and 3 in the document provided to his Honour Judge Wilson by the parties on 30 July 2018 and noting that such orders are by consent.
The application changed from one for dismissal to one for summary disposal by the filing of the motion. The general principles governing summary disposal of proceedings are well established. In General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 the High Court stated at 129: "8. The plaintiff rightly points out that the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion. I have examined the case law on the subject, to some of which I was referred in argument and to which I append a list of references. There is no need for me to discuss in any detail the various decisions, some of which were given in cases in which the inherent jurisdiction of a court was invoked and others in cases in which counterpart rules to Order 26, r. 18, were the suggested source of authority to deal summarily with the claim in question. It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow them" (the pleadings) "to stand would involve useless expense". 9. At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or "so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument"; "so to speak apparent at a glance"."
In the loose leaf service, the authors of Ritchie's Uniform Civil Procedure NSW state (at 13.1.5) that: "The criterion for satisfaction that there is no real cause of action or defence has been variously described as one where the allegedly contentious matter is: (i) "so obviously untenable that it cannot possibly succeed", "manifestly groundless", "so manifestly faulty that it does not admit of argument"; (ii) one which "the court is satisfied cannot succeed"; (iii) one where "under no possibility can there be a good cause of action"; or (iv) one which "would involve useless expense"."
Despite counsel for the plaintiff submitting that the plaintiff could not succeed on the cause of action pleaded (Breach of Lease), he forcefully maintained that the facts as pleaded permitted of other causes of action (Breach of Equitable Lease and/or Breach of a Binding Agreement to Lease), even though the Statement of Claim did not specifically refer to those causes of action.
Reliance was placed on the authorities. The first, Jiwunda and Anor v Trustees of the Travel Compensation Fund [2006] NSWSC 741, in which Palmer J considered what he referred to as "a pleading point" commencing at [81]. I have had regard to his judgment which lends support to the plaintiff's counsel's submission. A possible point of distinction is that in Jiwunda there was no prejudice suffered by the other party. In the present case, submissions were made by the defendant that it would suffer prejudice if the pleadings were given a broad interpretation. No evidence of prejudice was, however, tendered.
The plaintiff also relied upon a decision of Pembroke J in Kavia Holdings Pty Limited v Suntrack Holdings Pty Limitied [2011] NSWSC 716. His Honour considered that the question of whether an option had been exercised was "an objective one" (at [12]). In the present case, it is submitted for the plaintiff that the facts as pleaded permit an argument of breach of a Binding Agreement to Lease by reason of the defendant's email of 6 January 2014, referred to in paragraph 40 of the Statement of Claim.
Whilst I may have views about the likely outcome of the plaintiff's arguments, I am not persuaded that its case is so untenable that it ought to be summarily dismissed. The precedents suggest and submissions by counsel for the plaintiff support a conclusion that the plaintiff has an arguable case on the pleading point.
Accordingly, on the defendant's motion, I make the following orders: 1. the motion filed by email to my Associate on 31 July 2018 is dismissed; 2. the defendant is to pay the plaintiff's costs of and caused by the motion.
The proceedings will be listed in the next sittings of this Court at Parramatta commencing 15 October 2018. If the parties reach agreement about disposing of the proceedings by consent then a consent judgment ought to be filed at or before that time.

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: 25 September 2018

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