Dosto Pty Limited v Robert Allen Harrow and Others [1999] ACTSC 68 (25 June 1999)

Last Updated: 6 October 1999

Dosto Pty Limited v Robert Allen Harrow and Others

[1999] SCACT 68 (25 June 1999)

CATCHWORDS

COURTS AND TRIBUNALS - Supreme Court - power to order stay of proceedings where no abuse of process- Supreme Court Act 1933, s 20(2), s 30 - Supreme Court Rules, o 29 r 4 -Tenancy Tribunal - powers - whether concurrent jurisdiction in Supreme Court and Tenancy Tribunal - discretion in Supreme Court not to exercise jurisdiction where concurrent with another court or tribunal.

LANDLORD AND TENANT - guarantee by defendants of tenant's liability to landlord under lease - proceedings in Supreme Court to enforce guarantee - proceedings in Tenancy Tribunal - proceedings in Tenancy Tribunal discontinued - whether concurrent jurisdiction in Supreme Court and Tenancy Tribunal.

Supreme Court Act 1933, s 30

Supreme Court Rules, o 29 r 4

Australian Capital Territory (Self-Government) Act 1988 (Cth), s 48(3)

Tenancy Tribunal Act 1994, s 6(1)

Commissioner for Housing v Little (1996) 132 FLR 228, cited

Dibeek Holdings Pty Limited v Notaris (1997) 141 FLR 364, considered

Carney T and Tait D, Tribunals and Popular Justice, Sydney 1997

No. SC 216 of 1998

Court: Miles CJ

Date: 25 June 1999

Supreme Court of the ACT

IN THE SUPREME COURT OF THE
AUSTRALIAN CAPITAL TERRITORY	No 216 of 1998

BETWEEN:	Dosto Pty Limited Plaintiff
AND:	Robert Allen Harrow, Suzanne Gaele Harrow, Robert Lang Harrow, Michael Jeffrey Harrow, Michael Tong Seng Wong Defendants

ORDER

JUDGE:	Miles CJ
DATE:	25 June 1999
PLACE:	Canberra

ERRATUM

Coram: Miles CJ

Place: Canberra

Date: 6 September 1999

Amendment to Reasons for Judgement dated 25 June 1999.

The following words "guarantees an indemnity which" are deleted in paragraph 4.

Imme Hambly

Associate to the Chief Justice

6 September 1999

THE COURT ORDERS THAT:

1. The application for a stay be dismissed.

1 By notice of motion dated 7 May 1999 the second, third and fourth defendants (the defendants) moved for an order staying proceedings commenced by original application SC 216 of 1998.

2 The proceedings sought to be stayed are the subject of an amended statement of claim filed on 28 May 1999 to which an amended defence has not yet been filed. However, the parties are sufficiently at issue to enable the present application to be decided.

3 By memorandum of sublease alleged and admitted in the pleadings dated 22 August 1996 (the lease) the plaintiff sublet to Field of Dreams Family Restaurant Pty Ltd (the company) premises known as shops 1-4, Homeworld Shopping Centre, Tuggeranong, for a period of five years to commence on 1 February 1996. The lease provided for a base annual rent of $162,000 payable monthly in advance on the first day of each month, together with other payments of certain outgoings including the electricity account.

4 The memorandum is drawn up and expressed as if by the lessor in the first person. For instance, the word "I" means the lessor, the word "you" means the lessee. Article 13 guarantees an indemnity which provides as follows:

"ARTICLE 13 GUARANTEE & INDEMNITY

13.01 The Guarantor (if more than one, jointly and individually) hereby guarantees to me the payment of all money payable by you, and the performance by you of all your covenants under this lease.

13.02 The Guarantor (if more than one, jointly and individually) will keep me indemnified against all damages and all costs, losses and expenses which I may suffer or incur arising directly or indirectly out of any breach by you of any of your covenants. The Guarantor agrees that this indemnity continues despite the fact that I have exercised any of my rights including my right of re-entry. He agrees that it continues despite the fact that you (being a Company) may be wound up or (being a natural person) may be declared bankrupt and despite the fact that this guarantee may for any reason whatever be unenforceable in whole or in part.

13.03 If any payment made by you or any guarantor is avoided that payment does not discharge you or any other guarantor from liability, and all of us will be restored to our position as if payment had not been made.

13.04 Notice from me to you is deemed notice to the Guarantor."

5 The memorandum was signed and attested by each of the defendants (referred to in the memorandum as "the Guarantor") , and it is not disputed that the defendants covenanted that they would indemnify the plaintiff against default in the payment of rent and outgoings and also against all damages, costs, losses and expenses which the plaintiff might suffer or incur arising out of any breach of the lease.

6 The company, which had gone into possession sometime before September 1996, failed to pay the rent as provided for.

7 A dispute arose about the date from which rent should begin, or should have begun, to run. It is common ground that the plaintiff agreed to a six month "rent holiday" or waiver of rent, but there was disagreement about the date from when the rent waived should begin. On 19 February 1997 solicitors for the company filed a notice of dispute in the Tenancy Tribunal of the Australian Capital Territory (the Tenancy Tribunal) and made an ex parte application for certain orders. The Tenancy Tribunal made an order in terms of a document drawn up and sealed on 12 March 1997. The document is expressed to be in proceedings between "Field of Dreams Restaurant (Tenants)" and "J and E Koundouris (Landlord)". It records the making of orders to remain in force for 14 days that "the respondent, its servants and agents forthwith yield vacant possession of and permit the applicant to regain exclusive possession of the premises, ...... together with all the contents thereof belonging to the applicant" and that "the respondent, its servants and agents be restrained until further order from seeking to obtain possession of the premises or contents and from seeking to exclude the applicant therefrom".

8 It appears that the company remained in or regained possession of the premises following the orders in the Tenancy Tribunal.

9 There were then negotiations and letters, allegations and counter-allegations and the like passing between the solicitors for the parties. The plaintiff continued to complain of arrears in payments of rent and the electricity account, or both, and of other alleged breaches by the company. It appears that the proceedings in the Tenancy Tribunal remained alive and that a time-table was fixed for filing documents. Some sort of application was made, apparently ex parte, on 17 July 1997 but nothing came of it. Solicitors acting for the company dropped out and accountants took over. Negotiations continued. Agreement appeared to be reached for resolution of all outstanding disputes between various parties. On 25 July 1997 the Tenancy

Tribunal was informed by the solicitors for the plaintiff that the proceedings were discontinued.

10 However, disputes between some or other of the parties relating one way or another to the lease were by no means resolved. The evidence is very confusing, but it appears that after the company went into liquidation on 11 November 1997 the plaintiff re-entered once more and has been in possession ever since. It now wants to relet the premises.

11 The originating application was filed in this Court on 27 March 1998. It sought recovery from all defendants of the rent which the company failed to pay. As amended, the statement of claim seeks also indemnity from all defendants of any damages the company is liable to pay the plaintiff in respect of the company's breaches of the covenants in the lease. The defence makes general denials of the company's liability to pay rent and outgoings and of the company's liability to pay damages to the plaintiff. The defence alleges a collateral agreement that the company would be granted a "rent holiday" for six months from commencing to trade from the premises and a condition precedent to liability on the part of the company namely that the plaintiff would carry out certain alterations which have not been carried out. It is an untidy case on the pleadings.

12 There is still clearly a dispute between the plaintiff and the defendants over the obligations of the latter under the covenants referred to. The ambit of the dispute, however, has clearly widened since the proceedings were discontinued in the Tenancy Tribunal in July 1997. The defendants were not parties to those proceedings. Nevertheless, the defendants seek the stay of the proceedings in this Court in order to facilitate resolution of the issues in the proceedings in this Court by proceedings in the Tenancy Tribunal.

13 The source of the Court's power to grant the stay sought is not identified. Power to grant a stay is conferred by s 30 of the Supreme Court Act 1933 (Supreme Court Act) which provides as follows:

"30. Defence or stay of proceedings instead of prohibition or injunction

(1) No proceedings at any time pending in the court shall be restrained by prohibition or injunction.

(2) A defence is available in proceedings where, in pre-Judicature Act proceedings of the same type, an injunction would previously have been available.

(3) Nothing in this Act prevents the court from directing a stay in any proceedings pending before it.

(4) Upon the motion of any entitled person, the court may grant a stay in any proceedings pending before it.

(5) The court may grant a stay of proceedings under subsection (4) -

(a) generally or in relation to part only of the proceedings; and

(b) subject to such other conditions as the court thinks just.

(6) In this section -

"entitled person", in relation to proceedings referred to in sub-section (4), means a person (whether or not he or she is a party to the proceedings) who would have been entitled, in connection with pre-Judicature Act proceedings of the same type -

(a) to apply to a court to restrain the prosecution of the proceedings; or

(b) to enforce, by attachment or otherwise, any judgment, decree, rule or order in contravention of which all or a part of the proceedings have or has been taken."

14 No authority was cited as to the nature of the power under s 30 and I know of none. It may be wider than the inherent power of any Court to stay proceedings as an abuse of its own process. It may be wider than any particular power to order a stay which is conferred by the Supreme Court Rules, for example, o 29 r 4 which authorises a stay of an action when a pleading is struck out on the ground that it discloses no reasonable cause of action.

15 Despite the lack of authority, it is in accordance with general principles that when a litigant invokes the jurisdiction of the Court seeking a determination of rights and liabilities, that jurisdiction is not to be denied except for good reason. The judicial oath to do justice to all according to law is inconsistent with an arbitrary discretion whether or not to accept jurisdiction: Commissioner for Housing v Little (1996) 132 FLR 228.

16 On the other hand, s 20(2) of the Supreme Court Act provides that the Court is not bound to exercise its power where it has concurrent jurisdiction with another court or tribunal. This is a curious provision, and repeats s 48(3) of the Australian Capital Territory (Self-Government) Act 1988 (Cth). Its effect is probably that the Court will be less hesitant than it might otherwise have been about ordering a stay of proceedings where concurrent jurisdiction lies in another court or tribunal. The policy behind the section appears to be to encourage persons who would be otherwise litigants in the Court to refer their disputes to a tribunal such as the Tenancy Tribunal which is regarded as speedier, cheaper and more "user friendly" than the Court. T Carney and D Tait, Tribunals and Popular Justice, Sydney 1997, may represent a widely held belief when they write "on every measure tribunals outperform courts".

17 Some of these issues, and others, were the subject of discussion and decision by Higgins J in Dibeek Holdings Pty Limited v Notaris (1997) 141 FLR 364. His Honour concluded at 371 that the Tenancy Tribunal had power to "deal with" a dispute as to arrears of rent, if any, arising after the date of notice of forfeiture and further that in the exercise of that jurisdiction, the Tenancy Tribunal has power to grant relief by an enforceable order for possession and/or ejectment as well as "the power to determine the status of a lease and further, to re-open, re-write or, even, to set aside a lease, a power more extensive than that previously vested in either the Australian Capital Territory Magistrates Court or this Court."

18 His Honour considered the discretion of the Supreme Court to stay proceedings and observed at 373:

"If the legislature establishes a specialist tribunal to deal with matters within that specialised area, then, prima facie, it would be expected that this court would not, ordinarily, seek to assert its concurrent jurisdiction in relation to a matter then pending before such a tribunal."

19 I would not, with respect, state the principle in such broad terms and would prefer to suggest that every case depends upon its own circumstances. In any event, the general principle as formulated is irrelevant to the present application because there is nothing pending before the Tenancy Tribunal. All that has happened is that the Tenancy Tribunal made an ex parte order on or before 12 March 1996, an order which lapsed after 14 days. Although a directions hearing was fixed to take place, it did not take place at all. The proceedings in the Tenancy Tribunal may be taken to have been discontinued on 25 July 1997. Whatever jurisdiction the Tenancy Tribunal may exercise, there is no dispute before it at the present time and the concept of concurrent jurisdiction is, in my view, academic.

20 In deference to the industry of counsel, I refer to s 6(1) of the Tenancy Tribunal Act 1994 (the Tenancy Tribunal Act) which provides that the Act applies to certain disputes, none of which is relevant in the present case except "(h) any other dispute about a lease or negotiations for the entering into of a lease".

21 Although no defence has been filed to the amended statement of claim, I am told by Mr Lunney that his clients will rely, inter alia, on harsh and unconscionable conduct on the part of the plaintiff which entitles the company to a set-off against its obligation to pay the rent reserved in the lease and thus relieves the defendants of their obligation to indemnify the plaintiff against the company's failure to pay the rent. I accept that s 36 of the Tenancy Tribunal Act is cast widely enough for the Tenancy Tribunal to have regard to harsh and unconscionable conduct for the purposes of making an order in relation to any dispute referred to it, and that the issues in the proceedings in the Court may overlap with those in a dispute between the plaintiff and the defendants "about a lease" within s 6(1)(h) of the Tenancy Tribunal Act. However, overlapping of issues does not mean concurrence of jurisdiction.

22 I would also observe that the defendants cannot be parties to any hearing in the Tenancy Tribunal unless notified by the Registrar under s 35(2) of the Tenancy Tribunal Act that the Registrar is satisfied that the person to whom notice is given has a sufficient interest in the dispute. This is further ground for concluding that in relation to the issues before the Court, there is no concurrence of jurisdiction in the Tenancy Tribunal.

23 The question remains whether the Court should decline to exercise its jurisdiction in order to allow the issues in the proceedings in the Court to be formulated and decided as a dispute under the Tenancy Tribunal Act.

24 No advantage to either side is apparent to me. I will assume that proceedings in the Tenancy Tribunal are less expensive than proceedings in the Court. But that is not the end of the matter. Countervailing factors are:

(1) A litigant has a prima facie right to have rights and liabilities in law and equity and under statute determined in a court of competent jurisdiction, and that court has a corresponding duty to determine those rights and liabilities.

(2) The dispute between the parties is not a dispute between landlord and tenant but a dispute between landlord and guarantors of the liabilities of the tenant. The dispute is not concerned primarily with day to day issues such as the landlord's duty to attend to repairs, continuing misconduct of the tenant or the like. On the contrary, it is apparent that complex issues of law, equity and statute law may well arise. Such issues are best determined by the Court. Having regard to the background of the litigation, the prospect of an appeal to the Court from the Tenancy Tribunal on a question of law would appear to be a real one and should be avoided.

(3) The Tenancy Tribunal has lost any advantage it might have once had over the Court by reason of its familiarity with the dispute, that was the subject of the discontinued proceedings.

(4) Although there is provision for alternative dispute resolution mechanisms (mediation) in the Tenancy Tribunal which are not formally available in the Court, those mechanisms have been tried and have failed. There is no prospect that they will succeed if tried again. There is some cause for saying that the filtering process of the Tenancy Tribunal, whereby the Tenancy Tribunal does not attract jurisdiction at all until after the Registrar has followed the necessary statutory procedures and made the necessary statutory decisions, is as likely to protract as to expedite the resolution of the dispute. In any event, if the parties so wish, they can take advantage of the mediation mechanisms in the Tenancy Tribunal whilst the matter proceeds towards hearing in the Court. That is a matter for them.

(5) The proceedings in this Court have progressed to the stage of filing of an amended statement of claim and of a defence, and subject to the amendment of the defence to meet the amendment of the statement of claim, there is no reason why pleadings and other formalities should not be concluded quickly and an early hearing date fixed. Practitioners in this city can get cases on for hearing quickly if they want to and they know it. Experienced counsel and solicitors are already familiar with the case. Any savings in costs likely to be achieved if the dispute went to a determination in the Tenancy Tribunal may be more illusory than real.

25 For the above reasons I dismiss the application for a stay. Unless the parties wish to be heard on the question of costs, I would order that costs be reserved. I will give directions for the further progress of the case.

I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, the Chief Justice.

Associate:

Date: 25 June 1999

Counsel for the plaintiff:	Mr R Crowe
Solicitor for the plaintiff:	Deacons Graham & James
Counsel for the defendants:	Mr G Lunney
Solicitor for the defendants:	Higgins Solicitors
Date of hearing:	28 May 1999
Date of judgment:	25 June 1999