Sheehan & Kensitt v Fairway Trading Pty Ltd Acn 077 438 558 [2001] ACTSC 36 (2 May 2001)

Last Updated: 29 January 2002

BRENDAN SHEEHAN and STEPHANIE KENSITT v FAIRWAY TRADING PTY LIMITED ACN 077 438 558 [2001] ACTSC 36 (2 MAY 2001)

CATCHWORDS

APPLICATION - extension of time to appeal - parties bound by the conduct of their case -test for the grant of an extension of time.

Tenancy Tribunal Act 1994, ss 55, 58

Supreme Court Rules, O 54 r 5

Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 at 598

University of Wollongong v Metwally (No. 2) [1985] HCA 28; (1985) 59 ALJR 481 at 483

Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1

Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458

No. SCA 1 of 2001

Judge: Gray J

Supreme Court of the ACT

Date: 2 May 2001

IN THE SUPREME COURT OF THE )

) No. SCA 1 of 2001

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: BRENDAN SHEEHAN and

STEPHANIE KENSITT

Applicants

AND: FAIRWAY TRADING PTY LIMITED

ACN 077 438 558

Respondent

ORDER

Judge: Gray J

Date: 2 May 2001

Place: Canberra

THE COURT ORDERS THAT:

1. The application for an extension of time to appeal be refused.

1. This is an application made on 11 January 2001 for an extension of time to bring an appeal from a decision of the Tenancy Tribunal made on 11 February 2000.

2. Section 58(2) of the Tenancy Tribunal Act 1994 provides:

"An appeal by a person under subsection (1) shall be instituted no later than 28 days after the day on which a notice under section 55 is given to the person or within such further time as the Supreme Court (whether on, before or after that day) allows."

3. I take the date upon which the notice required to be given under s 55 to be the date of the decision on 11 February 2000.

4. The parties by consent agreed to shorten the hearing date for the extension of time application and to have the application heard on 16 February 2001.

5. On 14 February 2001 less than two clear days before the hearing, and less than the notice required by the Supreme Court Rules O 54 r 5, the respondent served a notice of motion and affidavits seeking security for costs.

6. Because the application for security for costs was not served within the time required by the rules, and because I was not willing to extend that time, this matter was put over to 22 February 2001 for hearing of this matter only.

7. It should be noted that the applicants in person were seeking to appeal, not their company with which they had been joined as parties in the matter before the Tenancy Tribunal. In light of that, I must say I was not satisfied that the application for security for costs was properly conceived, founded particularly as it was in the notions of insolvency of corporations rather than impecuniosity of the applicants in person. However, another ground for not proceeding with the application for security for costs was the consent that had been given by the respondent to the extension of time to vary the hearing date when the respondent had not taken steps to seek security for costs. It also seemed to me a necessary concomitant of any exercise in determining whether to order security for costs is the requirement to test whether there was substance in the applicants' proposed grounds of appeal. That exercise is an important aspect of the application for extension of time to appeal and could conveniently precede any application for security for costs especially as the respondent had consented to the early hearing in the course of which this matter could be tested.

8. In order to understand the reasons for this application for an extension of time it is necessary to briefly recount the history.

9. Originally the Tenancy Tribunal had before it three notices of dispute. There was a notice of dispute dated 12 March 1998 taken by Project Blue Moon Pty Ltd ("Blue Moon") as lessee against the respondent being the party to whom the original lessor had transferred the lease. The applicants were directors of Blue Moon at all relevant times and they and the company operated the business at the premises. In the notice of dispute, the party lodging the dispute was described as "Project Blue Moon Pty Ltd ACN 074 549 670 (Principals Brendan Sheehan and Stephanie Kensitt)". That notice of dispute alleged harsh, oppressive and unconscionable conduct and derogation from the grant of the lease by the respondent. The respondent filed two notices of dispute, one dated 31 March 1998 naming Blue Moon and the applicants in these proceedings. They were nominated in those proceedings as guarantors of Blue Moon. The notice of dispute of 31 March 1998 related to the rent owing. A later notice of dispute of 18 June 1998 also named Blue Moon and the applicants as parties. That notice of dispute specifically claimed at para 6.2,

"the guarantors are the guarantors and indemnifiers of the Tenant's obligations by virtue of the guarantee and indemnity which forms part of the Sublease".

That dispute claimed repudiation of the sublease by Blue Moon and claimed unconscionable and/or harsh and oppressive conduct causing loss and damage.

10. The Tenancy Tribunal decision dated 16 April 1999 found in respect of the first dispute that the respondent was in breach of contract to Blue Moon and assessed damages at $161,822.71. Blue Moon had terminated the lease and in respect of that termination and in respect of the other two disputes the Tribunal held that the respondent was entitled as against the parties to those disputes to damages in respect of the arrears of rent in the sum of $14,524.03 and to make good costs in the sum of $27,723.00. The Tribunal then proceeded to consolidate the three matters and to set off the damages to which the respondent was entitled against the damages to which Blue Moon was entitled.

11. The respondent appealed this decision to the Supreme Court. That appeal was heard and determined by Justice Crispin on 7 October 1999. He upheld the respondent's appeal against the finding that the respondent was in breach of contract and set aside the orders of the Tribunal based on that finding and dismissed those proceedings. That finding necessitated the consequence that Blue Moon was not entitled to terminate the lease and necessarily required that the award of damages in the respondent's favour be revisited.

12. The formal orders that were made on the appeal were:

"1 The appeal be upheld.

2 The judgment in favour of the first respondent [Project Blue Moon Pty Ltd] be set aside and in lieu thereof dispute number TT109/98 be dismissed.

3 The matter be remitted to the Tenancy Tribunal for assessment of damages payable to the appellant in respect of loss or damage sustained as a result of the respondent's wrongful repudiation of the sub-lease referred to in dispute number TT139/98 and TT243/98."

13. The applicants and Project Blue Moon appealed that decision to the Full Court of the Federal Court and on 18 February 2000 the Full Court of the Federal Court (Gallop, Matthews and Sunderberg JJ) dismissed that appeal.

14. In the meantime in accordance with Justice Crispin's orders the matter was heard by the Tribunal on 22 November 1999 and an order was made on 11 February 2000 assessing the damages payable in matter TT 139/98 as $30,161.28 and in matter TT 243/98 in the sum of $431,884.50.

15. It is against that decision that the applicants seek to appeal and seek the necessary extension of time.

16. The point that the applicants now wish to agitate in respect of this matter is their liability as guarantors under the sublease. The arguments for doing so require a very strained interpretation of the terms of the sublease, indeed an interpretation that I do not see is open on any reasonable reading of those provisions.

17. However, there is a fundamental difficulty that the applicants face in attempting to progress this matter. The issue that was before the Tribunal was only an issue as to the assessment of damages.

18. The Tribunal in delivering its decision said, at para 15,

"Throughout this decision I have used the word `respondent' to refer to Project Blue Moon Pty Limited only, as it was the entity which repudiated the lease. However, proceedings TT 139/1998 and TT 243/1998 named Brendan Sheehan and Stephanie Kensitt as parties on the basis that they were guarantors of Project Blue Moon Pty Limited. No submissions were made that any judgment to be entered in the matter should not be entered against them."

19. Not only did the applicants not raise the issues before the Tribunal, but these issues were not raised either in the original hearing before the Tribunal, the appeal before Justice Crispin or the appeal to the Full Court of the Federal Court. Yet they seek to raise them now.

20. The fact that these issues were not raised would normally preclude the applicants from raising them in any event.

21. In both the notices of dispute in which the applicants were named it was specifically "pleaded" against them in terms of the guarantee and indemnity that they had undertaken in respect of Blue Moon's obligations. There was no other reason why they should be party to those proceedings other than as guarantors of Blue Moon.

22. Given the limited remit to the Tribunal "for assessment of damages payable to the appellant", I do not think that the Tribunal had the power to determine the issue that is now sought to be made the subject of an appeal. Although the applicants sought some legal advice after the appeal had been determined by the Full Court of the Federal Court, the question that they sought to be further agitated was one to be determined in the proceedings that had been dealt with by the Full Court of the Federal Court. The issue of the liability of the applicants had been authoritatively determined in those proceedings.

23. Having regard to those matters, there seems to be two answers to the question of whether these matters should now be permitted to be brought forward. The first is that in the case of the proceedings that were the subject of the Full Federal Court decision, this may be regarded as an issue which this Court should not permit to being opened because it was not brought forward in the proceedings at first instance and on appeal see: Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 at 598. Or, in the case of the proceedings remitted to the Tenancy Tribunal, it may be regarded as falling within what the High Court said in: University of Wollongong v Metwally (No. 2) [1985] HCA 28; (1985) 59 ALJR 481 at 483:

"It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so."

Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 is an application of that principle to an appeal situation. No argument was put to me why those principles should not be applied in this case.

24. Even applying the usual tests for the grant of an extension of time, the applicants have not made out a case. The grant of an extension of time in circumstances like this give rise to the issue of whether such a grant is necessary to do justice between the parties. In so doing it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of litigation and the consequences for the parties of the grant or refusal of the application for extension of time. It is also necessary to consider the prospects of the applicants succeeding in the appeal and to bear in mind that upon the expiry of time for appealing a respondent has a vested right to retain the judgment unless the application is granted (see generally: Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458 at 459).

25. The fact is the applicants took advantage of their status as parties to appeal the decision of the Supreme Court. Their standing as parties depended upon them being guarantors under the sublease. One month after the Tribunal decision of 11 February 2000, and after the Full Court of the Federal Court decision of 18 February 2000, they, as individual parties, put forward a proposal to settle the damages awarded. That offer was rejected. There were then delays whilst the applicants pursued the idea that there might be some grounds to appeal. Importantly, in August 2000 when they were given some encouragement, no further steps were in fact taken. It was not until the service of a bankruptcy notice on 21 December 2000 that any further step was taken. The respondent claims that the delay has been prejudicial in organising its financial affairs on the basis of the finality of the Tenancy Tribunal judgment, in pursuing the bankruptcy proceedings and in the considerable legal costs that it has incurred. These are significant matters to take into account when determining how to do justice between the parties.

26. The other matter that I consider is whether the grounds of appeal have any real substance. In addressing the grounds of appeal, Mr Pappas for the applicants claimed that the Tribunal had reversed the onus of proof in relation to the applicants' liability as guarantors. That, to me, does not appear to be an appropriate ground of appeal. There was no question of the Tenancy Tribunal having to apply any standard of proof in relation to the respondent's liability as guarantors which, at that stage, was not in issue. Secondly, he argued that the guarantee entered into did not extend to "loss of bargain damages". That argument depended upon an interpretation of clause 34 of the sublease which I do not regard as being fairly open on the words of that provision. In particular, the tenant was in breach of an essential condition of the lease and the provisions of the sublease specifically provide for damages for the loss of the benefit of the lease. Thirdly, he argued the guarantee was a personal guarantee not touching or concerning the land and was not validly assigned. That argument was not supported by any authority that Mr Pappas was able to cite to me and is one which I do not regard as having any substance. Finally, the grounds of appeal assert that the Tribunal did not have jurisdiction to hear or determine the claims against the applicants. Support for those grounds really seems to depend upon a summary of the foregoing arguments and that it was Blue Moon's wrongful repudiation, not the applicants, which the Tribunal had to determine. However, it was the whole "of the matter" which was remitted for assessment of damages, not merely some part limited to Blue Moon. I am unable to see how these arguments or grounds of appeal can be sustained in terms of the clear provisions of the lease relating to the guarantee and the obligations of the guarantors. I would not regard any appeal on the grounds proposed as having any reasonable prospect of success.

27. Having regard to all of the foregoing matters, I refuse the application for extension of time to appeal.

I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Gray.

Associate:

Date: 2 May 2001

Counsel for the Applicants: Mr J Pappas

Solicitor for the Applicants: Messrs Vandenberg Reid

Counsel for the Respondent: Mr T Johnstone

Solicitor for the Respondent: Messrs Barker & Barker

Date of hearing: 22 February 2001

Date of judgment: 2 May 2001