Wah Lai Investment (Australia) Pty Limited v Buddies Liquor Pty Limited and Anor [1999] NSWSC 117 (25 February 1999)

Last Updated: 3 March 1999

NEW SOUTH WALES SUPREME COURT

CITATION: Wah Lai Investment (Australia) Pty Limited v Buddies Liquor Pty Limited & Anor [1999] NSWSC 117

CURRENT JURISDICTION: Civil

FILE NUMBER(S): 13712/95

HEARING DATE{S): 10-11 February 1999

JUDGMENT DATE: 25/02/1999

PARTIES:

Wah Lai Investment (Australia) Pty Limited (Pltf/Resp)

Buddies Liquor Pty Limited (1st D)

Nelson Meers (2nd D)

Craftmill Pty Limited (Applicant)

JUDGMENT OF: Newman J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

J R Mc Kenzie (Pltf/Resp)

M Christie (1st & 2nd D)

J Priestley (Applicant)

SOLICITORS:

W Chan & Co (Pltf/resp)

Meers & Meers (1st & 2nd D)

Tony Vella (Applicant)

CATCHWORDS:

Practice

Setting aside judgment for possession

Adding defendant on prospective defendant's motion

ACTS CITED:

SCR Pt 7 r 8

SCR Pt 8 r 8

SCR Pt 40 r 9(2)

DECISION:

Applications dismissed

Injunction dissolved

JUDGMENT:

THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

NEWMAN J

THURSDAY, 25 FEBRUARY 1999

13712/95 - WAH LAI INVESTMENT (AUSTRALIA) PTY LIMITED v BUDDIES LIQUOR PTY LIMITED & ANOR

JUDGMENT

1 HIS HONOUR: These are two applications brought by way of Notice of Motion by Craftmill Pty Ltd which was not a party to the original proceedings.

2 The original proceedings resulted in a consent judgment giving rise to orders for possession entered by consent in this Court on 17 April 1996.

3 The premises which were the subject of the original proceedings (and the subject of these proceedings) came back into the possession of the plaintiff (hereinafter referred to as Wah Lai) by dint of the Sheriff executing a writ of possession on 14 May 1996.

4 The Notice of Motion seeks twofold relief. First, the applicant company seeks to have the judgment of 17 April 1996 set aside. Second, if the judgment be set aside then the applicant seeks to be joined as a defendant in the reopened proceedings.

5 An identical application was brought by Paul Vella, the sole director and shareholder of the applicant company before Sully J.

6 On 29 January 1998 his Honour dismissed Mr Vella's motion. In essence his Honour held that Mr Vella's application was misconceived because at the relevant time Mr Vella was not an occupier of the subject premises and thus had no standing in the matter.

7 In these proceedings all parties accepted not only that his Honour's conclusion was correct but so also were the findings of fact made by his Honour in founding his conclusion of law. The proceedings before Sully J were, like the present proceedings, interlocutory in nature and in the normal course do not result in final findings of fact. Furthermore, both parties submitted evidence which had been before Sully J and other courts involved in this litigious exercise.

8 In making the findings which he did his Honour as far as it was relevant to the applicant then before him, recounted the history of the plethora of proceedings brought before this Court in various Divisions involving the parties to this Motion. Again, the parties in these proceedings accept his Honour's analysis as being correct.

9 Accordingly for the purposes of these reasons I incorporate Sully J's findings of fact so far as they relate to the matters raised here.

10 His Honour's findings were as follows:

11 "There are before the Court for adjudication two Notices of Motion. In order to deal with them, it is necessary to consider the relevant procedural background, which is as follows. There are pending in the Court two sets of principal proceedings, one in the Common Law Division, and the other in the Equity Division. The proceedings in the Equity Division commenced with the filing in 1996 of a Statement of Claim in which the plaintiff is Mr. Paul Vella. There are two defendants: the first being Wah Lai Investment (Australia) Pty Ltd., (Wah Lai); and the second being the Registrar General of this State. The proceedings concern premises situated at 1-3 Botany Road, Waterloo, being hotel premises known as "The Waterloo Tavern", (the subject premises). The proceedings seek various forms of relief in respect of a Transfer of Lease from Wah Lai to Mr. Vella.

12 It is not necessary for present purposes to be concerned further with the fine detail of the proceedings in the Equity Division. It is sufficient to understand that they were mentioned before Windeyer J on 13 December 1996, when his Honour, who had been asked to order an expedited hearing of the proceedings in the Equity Division, expressed the view that it was not expedient to do so until the principal proceedings in the Common Law Division had been determined; and, more particularly, until it should have been determined whether or not a judgment for possession obtained by Wah Lai in respect of the subject premises should be set aside.

13 The principal proceedings in the Common Law Division have followed, broadly speaking, the following course:

(1) On 29 September 1995 Wah Lai instituted proceedings by way of a statement of liquidated claim. There were two defendants thus sued. The first of them was a company styled Buddies Liquor Pty Limited, (Buddies Liquor); and the second of them was an individual, Mr. Nelson Meers. Wah Lai sues as registered proprietor of the subject premises; and as lessor of the subject premises to Buddies Liquor, pursuant to a lease said to have commenced on 25 March 1993 and to be due to expire on 24 March 2003.

(2) The statement of claim alleges against Buddies Liquor various breaches of the lease, both as to the payment of rent and otherwise. The statement of claim alleges against Mr. Meers that he was, pursuant to Clause 26 of the lease, the guarantor of the obligations of Buddies Liquor under the lease, and liable, therefore, to Wah Lai for payment of the obligations of Buddies Liquor pursuant to the lease.

(3) The precise claims for relief made in the Statement of Claim are as follows:

(a) Money due and owing by Buddies Liquor and by Mr. Meers to Wah Lai for rent, for increases in rent, and for other outgoings calculated to 25 September 1995 in the sum of $36,776.

(b) Loss and damages suffered by Wah Lai.

(c) Judgment for possession of the subject premises.

(d) Leave to issue a writ for possession of the subject premises by way of enforcement of such judgment for possession.

(e) An order that Wah Lai is at liberty to forfeit and to terminate the lease.

(f) Costs.

(g) Statutory interest.

(h) Such other order(s) as the Court might think fit.

(4) On 21 February 1996 Buddies Liquor and Mr. Meers filed a joint defence. Put simply, it traverses every material allegation made in the statement of claim, except for the fact of the registered proprietorship of Wah Lai of the subject premises; and except for the fact of the grant of a lease as pleaded in the statement of claim, both of which latter allegations are admitted.

14 On 17 April 1996 consent orders were filed. The orders grant Wah Lai possession of the subject premises; direct judgment for possession accordingly; grant leave to Wah Lai to issue a writ of possession in respect of the subject premises, and note the following:

"The Defendant be given the opportunity to attend and be consulted in respect of any agreement or resolution between the Plaintiff and any Third Party regarding resolution of the issues giving rise to these proceedings or the proceedings themselves."

15 The Common Law Division file contains two documents, each of which is described as a "Minute of Judgment". The two documents are identical except for certain hand-written amendments to one of them, those amendments being formal rather than substantive. According to the date stamps imprinted on the documents, one was filed on 14 February 1996 and the other on 29 February 1996. Each document purports to minute a judgment in the following terms:

"1. The defendant give the plaintiff possession of the land described in the schedule hereunder.

2. The defendant pay the plaintiff arrears of rent and outgoings being $71,913.

3. The defendant pay the plaintiff's costs and disbursements (filing fees) in the sum of $1,745.

4. The judgment takes effect on the day of 1996."

The schedule referred to describes the subject premises.

16 On 29 April 1996 the Court granted leave to Wah Lai to issue a write of possession. A writ of possession issued on that same day. The writ refers to a judgment said to have been entered on 17 April 1996; and it commands the sheriff to put Wah Lai into possession of the subject premises.

17 It appears from the Common Law Division file that on 15 February 1996 a draft writ of possession was filed. This document leaves blank the date of the judgment pursuant to which it purports to be filed; and it purports to command the Sheriff, not only to put Wah Lai into possession of the subject premises, but to levy on the property of Buddies Liquor in satisfaction of a judgment debt of $73,658 said to result from a judgment, the date of which, also, is left blank in the document.

18 On 20 May 1996 Buddies Liquor and Mr. Meers filed jointly a Notice of Motion seeking orders that they be granted leave to make a cross-claim against Mr. Vella whose address is given as 16 Terrace Road, Dulwich Hill. This Notice of Motion was made returnable, initially, for 30 May 1996. According to the Common Law Division file, it was stood over generally on that day with liberty to restore on 7 days' notice. The Notice of Motion does not seem ever to have been restored.

19 On 14 April 1996 there was a status conference held in connection with the Common Law Division proceedings. Orders for the issue of a writ of possession were confirmed by the Registrar and an order was made that the defendants in the Common Law proceedings, that is to say Buddies Liquor and Mr. Meers, give discovery as to the remaining issues to be determined in the Common Law proceedings, that is to say the issues of unpaid rent, damages and the like claims.

20 On 29 April 1996 a writ of possession issued.

21 On 6 May 1996 the Sheriff issued the customary Notice to Vacate. The notice, a copy of which is Annexure P to an affidavit sworn by Mr. Vella on 2 August 1996, is addressed to Buddies Liquor and to Mr. Meers. The notice warns "all occupants" that they "must vacate the premises without delay - in any event not later than 10.30 a.m. Tuesday 14/5/96".

22 On 14 May 1996 the Sheriff duly took possession of the subject premises.

23 It is the foregoing procedural history that gives rise to the two notices of motion now before this Court.

24 The first of those notices of motion is that of Mr. Paul Vella. The notice of motion was filed on 28 November 1996, and it seeks the following relief:

"1. Pursuant to Part 40 Rule 9(2)(C), that judgment for possession obtained on 17th April 1996, be set aside.

2. Pursuant to Part 8 Rule 8(3), that the Applicant, Paul Vella be added as a Defendant in these proceedings.

3. That this Notice of Motion be heard together with proceedings No. 2907 of 1996 in this Court, which proceedings have been expedited.

4. That evidence in proceedings no. 2907 of 1996 be evidence on this Motion.

5. That Paul Vella have leave to cross claim against the first and second defendants for such relief as he may be advised within 21 days of the hearing and determination of this Notice of Motion.

6. Costs.

7. Further or other order."

25 On 19 September 1997, and after the hearing of Mr. Vella's notice of motion had begun and had continued for some time, Wah Lai moved on notice for the following relief:

"1. That this Notice of Motion be returnable instanter.

2. That service of Notice of Occupier upon Mr. Paul Vella personally pursuant to Pt 7 r8 of the Rules be dispensed with nonc (sic) pro tunc.

3. Further or other orders.

4. Cost."

26 Fundamental to the claims for relief now made by Mr. Vella are three in particular of the Supreme Court Rules, namely Pt 7, Rule 8; Pt 8, Rule 9; and Pt 40, Rule 9(2)(c).

27 SCR Pt 7, Rule 8 is in the following terms:

"8(1) Where, on the date on which proceedings for possession of land are commenced, a person (in this Rule called the occupier) not joined as a defendant is in occupation of the whole or any part of the land, the plaintiff shall either -

(a) state in the originating process that he does not disturb the occupation of the occupier or

(b) serve the originating process on the occupier together with a notice that the occupier may apply to the Court for an order that the occupier be added as a defendant and that, if the occupier does not so apply within 10 days after service, the occupier may be evicted pursuant to a judgment entered in the occupier's absence.

(2) Documents may be served on an occupier for the purposes of sub-Rule (1) personally or by leaving the documents on the land in his occupation addressed to him by name or addressed to `the occupier'."

28 SCR Pt 8, Rule 8 is as follows:

"8(1) Where a person who is not a party -

(a) ought to have been joined as a party; or

(b) is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon,

the Court, on application by him or by any party or of its own motion, may order that he be added as a party and make orders for the further conduct of the proceedings.

(2) A person shall not be added as a plaintiff without his consent.

(3) Without limiting the generality of sub-Rule (1), where a person not a party to proceedings for possession of land is in possession (by himself or by a tenant of the whole or any part of the land, the Court, on application by him, may order that he be added as a defendant and make orders for the further conduct of the proceedings."

29 SCR Pt 40, Rule 9(2) provides, so far as is now relevant, as follows:

"9(2) The Court may set aside or vary a judgment -

...

(c) where the judgment has been entered in proceedings for possession of land after judgment has been given in the absence of a person and the Court decides to make an order that the person be added as a defendant."

30 Mr. Vella's starting point in his submissions is a simple proposition, to the truth of which he deposes in the first paragraph of an affidavit sworn by him on 2 August 1996 in the Equity Division proceedings, that between July 1994 and 14 May 1996, he carried on business at the subject premises. I would say at once that, in my opinion, the whole of the evidence now before this Court could not reasonably support a finding of fact to that effect.

31 It is much more difficult to disentangle the evidence which has been placed before this Court, and to draw out of that evidence a true picture of the course of events concerning Mr. Vella's connection with the subject premises. I am satisfied, however, of the following matters:

1. That as at 7 March 1994, Buddies Liquor was the lessee from Wah Lai as lessor of the subject premises. The lease was registered pursuant to the provisions of the Real Property Act 1900 (NSW) on 14 April 1993. The lease was for a term of 10 years commencing on 25 March 1993. The covenants in the lease required, so far as is at present material, that the subject premises not be used otherwise than as a hotel; and that the lessee should not assign or in any other way part with or share possession of the subject premises or any part of them, save with the prior written consent of the lessor, such consent not to be unreasonably withheld.

2. That Mr. Nelson Meers was, put shortly, at all material times the guarantor to Wah Lai of the due performance by Buddies Liquor of its obligations pursuant to such lease.

3. That on 7 March 1994 and by an agreement in writing bearing that date, Buddies Liquor agreed to sell to Mr. Vella the lease and business of the subject premises. The purchase price was $105,000, the whole of which was specifically attributed to the hotel lease and to the good will of the hotel business then being carried on upon the subject premises.

4. That this transaction was settled formally, as between Buddies Liquor and Mr. Meers on the one hand, and Mr. Vella on the other, on 20 July 1994.

5. That a formal Transfer of Lease was executed by Buddies Liquor and Mr. Meers on the one hand, and by Mr. Vella on the other hand; but that for some unexplained reason it was never lodged for registration until, according to Mr. Vella, he found the document among his papers on 31 July 1996, and caused it to be lodged for registration on that same day.

6. That almost immediately after such formal settlement on 20 July 1994, Mr. Vella entered into possession of, and took up the formal occupation of, the subject premises. He did so in company with his de facto wife, Miss Koleta Gleeson, who became, effectively, the day-to-day manager of the hotel business.

7. That such entry into possession and taking up of occupation of the subject premises by Mr. Vella was known to Wah Lai; and that thereafter various payments were made by Mr. Vella to Wah Lai on account of rent and other outgoings due pursuant to the covenants in the lease; and that such payments were accepted by Wah Lai. I note that Wah Lai, in its pleadings in the Equity Division proceedings, seeks to keep open its option to argue that its receipt and acceptance of such payments constituted an acceptance of payments made for and on behalf of Buddies Liquor rather than for an on behalf of Mr. Vella himself in any formal capacity as transferee of the lease to Buddies Liquor. The important point for present purposes is, however, that the payments were made by Mr. Vella and not by Buddies Liquor, and were well known to Wah Lai to have been so made.

8. That Mr. Vella, at or about the time of his entering into possession and occupation of the subject premises, obtained a provisional hotelier's licence from the relevant liquor licensing authorities.

9. That Mr. Vella's necessary application to have that provisional licence converted into a full current licence ran into serious difficulties by reason of objections raised by the licensing police and by the Chief Secretary.

10. That, since it was essential to the continuing conduct of the hotel business then being carried on at the subject premises, that there should be in force a full and current hotelier's licence, Mr. Vella arranged for a company called Craftmill Pty Ltd and Koleta Gleeson to apply for such a permanent licence.

32 Craftmill Pty Ltd had been incorporated on 2 November 1993. On 11 November 1993, Mr. Vella's son and Koleta Gleeson were appointed as directors of the company; and Mr. Vella's son was appointed as its secretary.

33 The documentation respecting Miss Gleeson's application for the permanent licence comprises Exhibit E in the instant proceedings. Of particular relevance for present purposes are the following statements made in the application documents. It is to be noted that they are all verified on oath by Miss Gleeson; and that she re-affirmed in her oral evidence in the present interlocutory applications the truth of the statements.

a. The proposed owner of the licence is Buddies Liquor Store Pty Limited.

b. $100,000 has been paid for the purchase of the business conducted pursuant to the licence.

c. Of that amount of $100,000, $5,000 has been provided by Craftmill Pty Ltd and $95,000 by Buddies Liquor as "vendor finance".

d. That she herself will hold the licence as Manager.

e. That Craftmill Pty Ltd will be the only person "directly or indirectly interested in the business or the profits of the business carried on pursuant to the licence".

f. That, as to the proprietorship of the freehold of the licensed premises: Wah Lai is the owner and the lessor; Buddies Liquor is the sub-lessor; Craftmill Pty Ltd is lessee; that there are no co-lessees; that Wah Lai will be entitled to the rents of the premises; and that Craftmill Pty Ltd will be entitled to the profits of the business."

34 Again, the three rules of court to which his Honour made reference in his reasons are again the subject of agreement by the parties to be the relevant rules involved in this application.

35 Essentially, what is put is that Craftmill was in fact, as his Honour found, the occupier at the relevant time and not Mr Vella.

36 There being no real issue that this is the fact it follows that Craftmill is entitled to make an application pursuant to SCR Pt 8 r 8 that it be joined as a party to the proceedings - provided of course that the judgment of 17 April 1996 is set aside.

37 Following the interlocutory judgment of Sully J further litigation occurred in this Court and indeed the High Court between the parties.

38 On 24 March 1998 Wah Lai made an application to Bryson J in Equity seeking that an injunction which had been granted by consent on 22 August 1996 restraining the Registrar-General from taking steps to remove the lease granted by Wah Lai to Buddies Liquor from the title be dissolved.

39 On 17 June 1998 Bryson J upheld Wah Lai's application and ordered that the injunction restraining the Registrar-General be dissolved.

40 On 24 June 1998 the liquidator of Craftmill, Mr McIntosh successfully made application for the reregistration of that company which had been dissolved and deregistered on 24 June 1997.

41 On 30 October 1998 Wah Lai pursuant to s 12A of the Real Property Act sought to have the lease registered in the name of Buddies Liquor removed from the registered title and also sought to have a caveat which had been entered in the name of Mr Vella, which had lapsed, to be removed from the title.

42 The Land Titles office following a request made on behalf of Mr Vella by his solicitor, extended time in which it would deal with Wah Lai's request until 8 December 1998.

43 On 2 February 1999 following an application made by Craftmill, Sperling J granted that company an injunction restraining the Registrar-General from cancelling, removing or deregistering the Buddies Liquor lease from the subject title until 4 February 1999.

44 Subsequently that injunction was extended by Barr J and ultimately by myself. The final order which I made extends the injunction until further order.

45 On 11 December Mr Vella had sought an injunction restraining the removing of the Buddies Liquor lease and also a mareeva injunction restraining Wah Lai from dealing with the proceedings of the sale of the subject premises. Windeyer J rejected those applications.

46 Soon thereafter Mr Vella moved the Court of Appeal for the same injunctions pending appeals from the interlocutory judgments of Windeyer and Bryson JJ. Mason P rejected that application.

47 On 19 January 1999 Craftmill took out the Notice of Motion seeking the relief I have referred to at the outset of these reasons. The injunctive relief relating to the title to which I have referred was then sought and obtained.

48 As I have said Craftmill can only make an application to be joined as a defendant if the judgment for possession is set aside. If it is not the action is complete and thus there is no room for any additional parties.

49 The power of the court to set aside a judgment is discretionary. In exercising its discretion the number of matters which the court will take into account in determining whether or not to exercise that discretion are manifold.

50 However, one matter which the court invariably takes into account is the question whether or not the party seeking to have the judgment set aside has a prospective defence on the merits. Even if that party does have such a prospective defence the matter does not end there.

51 Delay in bringing such an application is a matter which the court always considers. Significant delay would not necessarily be fatal to such an application if, for instance, a party can show good reason for that delay having occurred.

52 Another matter which the court takes into account on the exercise of its discretion arises when the party who has the benefit of the judgment has taken steps on the basis of the judgment obtained which steps will result in the party being significantly disadvantaged should the judgment be set aside.

53 In the instant case following its obtaining of possession pursuant to the judgment, Wah Lai has sought to sell the property. It first attempted to sell the property by way of auction on 1 August 1998 when the property was passed in. I should say Equity proceedings had been commenced by Mr Vella on the day before.

54 Ultimately on 11 September 1998 Wah Lai entered into a contract for the sale of land in the sum $1,600,000 to a company called Callwork Pty Limited. That contract is still on foot and there is no evidence before me to indicate that Notice to Complete has been given by Callwork albeit the completion date set by the contract, namely 42 days from 11 September 1998, has long since passed.

55 The contract, by clause 17, provides that "normally the vendor must give the purchaser vacant possession of the property on completion." Should the judgment be set aside and Craftmill be allowed in as a defendant and Wah Lai could not complete the contract if called upon to do so by the purchaser because of its inability to give vacant possession.

56 All the more so if Craftmill succeeded in defeating Wah Lai's claim for possession because Mr Vella's lease has a number of years to run and if it be that their occupation of the premises is legitimate the chance of Wah Lai selling the property for a number of years would be considerably diminished.

57 Should Wah Lai not complete when called upon so to do by the present purchaser then of course it could be the subject of an action for damages brought by the purchaser for, inter alia, loss of a bargain. Plainly enough Wah Lai would be considerably disadvantaged should this course of events occur. I shall return to this aspect of the matter later in these reasons.

58 I turn then to the question of delay. As I have already mentioned judgment was obtained by Wah Lai on 17 April 1996. Prior to the obtaining of judgment on 11 November 1995 a Notice of Claim for possession pursuant to Pt 7 r 8 which was addressed to Miss Gleeson was purportedly served by a Mr Ramshaw at the subject premises.

59 At the time Miss Gleeson was, as has been noted by Sully J, a director of Craftmill which was, of course, still in existence at that time. The mode of service purportedly effected by Mr Ramshaw was to deliver the notice to a person over the age of eighteen years within the premises. Mr Ramshaw both by affidavit and by oral testimony deposed that the person upon whom he served the document was at the time serving behind the bar of the hotel. That person, so Mr Ramshaw deposed, acknowledged that he knew Miss Gleeson.

60 A challenge was mounted to Mr Ramshaw's evidence of service on the basis that his recollection of events when he gave evidence on 10 February 1999 was necessarily dulled by both the elapse of time and the number of documents he had served in his capacity as a commercial agent between 11 November 1995 and that date.

61 Furthermore the fact that Mr Ramshaw had in fact made two affidavits of service and had deposed orally as to service was a matter so it was put, which would caste doubt upon the efficacy of his evidence.

62 While it is true that Mr Ramshaw made two affidavits in the matter they are not inconsistent with each other. The second adds information to the first. There was nothing Mr Ramshaw said in cross-examination which, in my view, was inconsistent with the contents of his affidavits. I do not have any doubt that Mr Ramshaw did in fact serve the Notice of Claim for possession on a person apparently over the age of eighteen years on the subject premises on 11 November 1995.

63 Also I have no doubt that that person was ostensibly in charge of the premises at the time. Miss Gleeson was the licensee of the hotel and was a director of Craftmill at the time and also an employee. The only inference to be drawn as to the status of the person behind the bar was that he, like Miss Gleeson, was an employee or agent of Craftmill at the time.

64 I thus find that Craftmill had constructive notice of the proceedings for possession which had been taken out by Wah Lai on 29 September 1995. However, that, as I shall now detail, is not the only notice which Craftmill, through Mr Vella, had that proceedings were either on foot or contemplated prior to the entry of judgment.

65 First, Mr Vella, in an affidavit states that in or about February 1996 he had been told by Wah Lai's estate agent that the company "wanted to throw him out." He then engaged a solicitor, a Mr Michael Kirkpatrick.

66 The undisputed evidence is that Mr Kirkpatrick was told on 8 March 1996 and on 12 April 1996 by Mr E Reuben, solicitor for Wah Lai that proceedings for possession had commenced in the court. A letter written by Mr Kirkpatrick to Mr Reuben on 8 May 1996 clearly indicates that Mr Vella was aware of the proceedings.

67 While, Mr Vella is now the sole shareholder in Craftmill there is no real dispute that at all material times prior to either the issue of the Supreme Court proceedings and the entry of judgment on 17 April 1996 Mr Vella was in control of Craftmill. I find that he was (or should have been) well aware of the proceedings prior to the entry of judgment.

68 It was submitted on behalf of the company that even if Mr Vella was so aware any dilatoriness on his behalf (and consequently Craftmill) should be excused. The basis of this submission was that his evidence before Sully J (which was an exhibit in these proceedings) should persuade me that Mr Vella was a naïve man of slender literacy skills and thus his failure to move with promptitude should be overlooked. Indeed this, it was put, was a reason for him being nominated as the applicant in the misconceived proceedings before Sully J.

69 I am far from being so persuaded. The evidence reveals that Mr Vella has been engaged as a proprietor in the catering and hotel industry since 1968. To survive in such an industry for so long is not in my view an indicia of naivety. No does this history indicate that any lack of literacy has been a great hindrance to his business activities. Furthermore in an affidavit tendered on Mr Vella's behalf in the Court of Appeal a valuer, one Timothy Simpson deposes, inter alia:

"I have known the plaintiff for more than 20 years as a real estate client who has bought and sold many properties."

These matters lead me to the conclusion that Mr Vella is anything but naïve and certainly not inexperienced in real property dealings. Accordingly, I reject the submission.

70 As I have said earlier an important question to be determined by a court in deciding whether or not a judgment should be set aside involves the matter of determining if the moving party has a meritorious defence.

71 Again, the evidence disclosed that Wah Lai was at the time when proceedings were issued (and indeed at time of judgment) owed a large sum of money representing unpaid rent on the subject premises.

72 Equally it seems clear that Mr Vella claims he had done a considerable amount of work on the premises in an attempt to comply with the fire order made by the local municipal authority. At one stage he claimed that the value of the work he had done exceeded the amount of outstanding rent.

73 I should observe in his letter of 8 May 1996 Mr Kirkpatrick indicated that if the amount of the work were set off against the claims for outstanding rent there would still be a balance owing to Wah Lai.

74 The importance of this matter is that the value of the building work raised by way of set off would seem to be the only defence which would be sought to be raised to the claim for possession.

75 If Mr Vella had been an occupier at the time when the proceedings were issued it may well be that a court might hold that his claim of set off was a sufficient indication of a defence to cause the court to set the judgment aside. However, the occupier at the relevant time was not Mr Vella but Craftmill.

76 Financial statements of Craftmill tendered in evidence demonstrate that no debt representing the work done by either Mr Vella or on his behalf on the subject premises is nominated as a debt owed by the company. Accordingly, whatever Mr Vella's position might be no defence of set off is available to Craftmill. As there is no dispute that at the relevant time a considerable amount of rent was owed, ex facie, Craftmill would have no defence to the claim for possession.

77 Accordingly, purely as a question of merit I would dismiss Craftmill's application to have the judgment set aside and it follows, its application to be joined as a defendant.

78 In any event in the light of the delay which has occurred and the fact that Wah Lai has, by entering into a contract of sale, taken a step which if the proceedings were reopened and Craftmill be allowed in as a defendant, which would result in Wah Lai being severely disadvantaged in terms of its exposure to litigation as a consequence of it being unable to complete the contract. I am of the view that I would not exercise the court's discretion to set the judgment aside.

79 There are two matters which were raised by the parties going to the question of discretion to which I should refer.

80 First, on behalf of Wah Lai evidence was put that the proceeds of the sale of the property would be utilised, inter alia, to discharge a debt owed by that company. While I allowed this evidence over objection on further reflection I am of the view that this is an irrelevant consideration. I say this because the fact that a contract for sale has been entered into is the matter of importance and how the company intends to disperse the proceeds is not a matter which should be taken into account. Accordingly, I have disregarded this piece of evidence in concluding as I have.

81 The evidence of Mr Timothy Simpson, valuer, to which I have already referred was that the subject premises were worth more than the sale price achieved. It was thus submitted that no disadvantage but rather a benefit would flow to Wah Lai if the relief sought by Craftmill were granted.

82 I make these observations relating to this submission. It does not necessarily follow that a resale of the premises would achieve the enhanced sum referred to by Mr Simpson. It is a notorious fact that real property markets can fluctuate unexpectedly and rapidly. Even if Mr Simpson's valuation could be considered as immutable it still does not remove the hazard of Wah Lai being successfully sued by its purchaser should it fail to comply. I am thus not persuaded that this submission should cause me to exercise any discretionary relief in Craftmill's favour.

83 I should add that if Mr Vella is of the view that he has a valid claim against Wah Lai for work done on the premises there is no reason why he could not commence proceedings to recoup the expenses which he alleges he has incurred.

84 In the event I dismiss both applications with costs. The injunction originally granted by Sperling J on 2 February 1999 and extended as detailed above is dissolved forthwith. I shall reserve the question of costs in relation to that injunction until after the delivery of these reasons.

LAST UPDATED: 02/03/1999