Sze Tu v Jam Studios Pty Ltd; Jam Studios Pty Ltd v Sze Tu (No 2)

1. [1]

   HIS HONOUR: By a further amended statement of claim filed on 21 December 2015, Margaret Sze Tu (“the first plaintiff”), together with Shiu How Sze Tu, Shiu Shing Sze Tu and Helen Sze Tu (collectively, “the plaintiffs”), commenced proceedings against the first defendant, CH Real Estate Pty Ltd trading as Raine & Horne Commercial Campbelltown (“CH Real Estate”) and the second defendant, Jam Studios Pty Ltd (“Jam”).

2. [2]

   The plaintiffs are the registered proprietors and owners of Lot 2367 in Deposited Plan 730219 (“the property”). Jam was in possession and occupation of part of the property otherwise known as Shop 5, 42-44 Queen Street, Campbelltown (“the premises”). The plaintiffs sought, inter alia, the following relief:

   1. (1)

      judgment for possession of the premises;

   2. (2)

      leave to issue a writ of possession forthwith;

   3. (3)

      further and/or in the alternative, an order requiring Jam to vacate the premises and do all things necessary to restore the plaintiffs to possession of the premises;

   4. (4)

      mesne profits;

   5. (5)

      damages for use and occupation;

   6. (6)

      arrears of rent; and

   7. (7)

      costs.

3. [3]

   The CH Real Estate aspect of the claim settled.

4. [4]

   By an amended statement of cross-claim filed on 25 February 2016 (“the cross-claim”), Jam sought the following relief:

   1. (1)

      a declaration that it entered into a lease with the plaintiffs on or about 11 or 12 July 2013;

   2. (2)

      an injunction restraining the plaintiffs from evicting it from the premises;

   3. (3)

      an injunction requiring the plaintiffs to install air-conditioning in the premises;

   4. (4)

      an injunction requiring the plaintiffs to consent to a Development Application (“DA”) by Jam to Campbelltown City Council (“the Council”), that includes a proposed use of the premises as a café; and

   5. (5)

      damages for alleged breaches of “the lease”.

5. [5]

   Judgment was delivered in the proceedings on 12 June 2018: Sze Tu v Jam Studios Pty Ltd; Jam Studios Pty Ltd v Sze Tu [2018] NSWSC 868 (“Jam Studios No 1”).

6. [6]

   The conclusion reached by the Court appeared at [223] and [224] of the judgment as follows:

7. [7]

   The termination of the implied tenancy at will was discussed in [167]-[169] of the judgment. It was concluded therein that the “First Notice to Vacate” was sufficient to terminate the tenancy at will and that the notice there given expired on 28 March 2014.

8. [8]

   The Court made the following directions at [225]:

9. [9]

   In accordance with those directions, the Court received written submissions from the plaintiffs and Jam.

10. [10]

    The Court also received two documents from the plaintiff with the heading “Judgment” setting out the terms of the draft orders.

11. [11]

    The first document related to “possession” and sought the following:

12. [12]

    The second document related to “money” and sought the following:

RENT

1. [13]

   As to the question of rent, the following submission was made by the plaintiffs:

   1. (1)

      The Court found that Jam’s tenancy at will was validly terminated as of 28 March 2014, that rent was payable up until that time, and that mesne profits were payable thereafter (Jam Studios No 1 at [167]-[169]).

   2. (2)

      Rent was payable monthly, at an annual rate of $45,000 (ex GST), which equated to $3,750 (ex GST) per month.

   3. (3)

      Rent had been fully paid up until 25 March 2014. However a further part payment, of $2,000, being $1,818.18 plus GST, was made on 14 April 2015 (Jam Studios No 1 at [101]).

   4. (4)

      The plaintiffs calculate the rent due for the 3 days being 26, 27 and 28 March 2014 at $362.88 (ex GST): ($3,750 / 31 = $120.96) x 3 = $362.88.

   5. (5)

      However, Jam is entitled to credit for the April 2014 payment (net of GST) of $1,818.18, which was greater than the claim for outstanding rent.

   6. (6)

      As such the amount of outstanding rent payable is nil.

   7. (7)

      Rather, Jam was (and is) entitled to credit for the balance of the April 2014 payment as against the claim for mesne profits: i.e. $1,455.30. Jam is also entitled to credit for the amount of the security deposit, i.e. $4,125, still held by the plaintiffs’ agent.

2. [14]

   Jam submitted that rent was fully paid until June 2014 and a part payment of $2,098.50 was paid. That submission was inconsistent with the Court’s findings in Jam No 1 (see at [90]-[101]).

3. [15]

   On the findings in Jam No 1, I accept the submissions of the plaintiffs.

MESNE PROFITS

1. [16]

   The relevant principles as to the calculation of mesne profits was discussed by Kunc J in Macquarie International Health Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd (No 10) [2016] NSWSC 1587 (“Macquarie International”) as follows (at [152]):

2. [17]

   The judgment of the Court of Appeal to which his Honour referred is the judgment of Allsop P (with whom Macfarlan JA agreed) in Bunnings Group Ltd v CHEP Australia Ltd (2001) 82 NSWLR 420; [2001] NSWCA 324 (“Bunnings”). His Honour referred to [177]. It is relevant to refer to [177] and [178], extracted below:

3. [18]

   I adopt, with respect, the principles as stated in Macquarie International and Bunnings in the disposition of this matter.

4. [19]

   As Bunnings makes clear, if a property right has been invaded by a wrongful user, the law should and does provide a remedy for the wrong, compensatory in character in a broad sense, focussing on the interference with the right in question. As Allsop P observed, recompense is given to the wronged property owner that requires the wrong to be seen as righted, by requiring the price or hiring charge to be paid for the wrongful use (it may be noted the case related to the wrongful detention of chattels). The use of a sum for the hire of the chattel to inform monetary compensation may be seen as referrable to the capacity of the chattel to be hired by the owner (or the actual use by the wrongdoer). The plaintiff was correct to submit that damages may be calculated on the basis of these principles having regard to the market rent for the property or what Jam would have paid had its continued occupation of the premises been lawful.

5. [20]

   It is upon this basis that the plaintiffs made the following submissions as to mesne profits:

6. [21]

   No submissions were made by Jam in that respect.

7. [22]

   This Court found at [218] of Jam Studios No 1 that the plaintiffs where entitled to mesne profits. That conclusion was made because the plaintiff is entitled to damages for the loss of a use of their rights to the possession of the premises as a result of the wrongful interference with by Jam: see Macquarie International at [152(2)]-[152(3)].

8. [23]

   On the evidence, I am satisfied that the rent agreed to by the parties in the Lease Advice Sheet is an appropriate amount to be awarded as mesne profits to the plaintiffs and that amount is the “reasonable rent” of the premises. Further, it is reasonable for Jam, as the trespasser, to pay that amount to the plaintiffs: see Macquarie International at [152(4)]. (Naturally this is exclusive of period for which rent was paid).

INTEREST

1. [24]

   As to the calculation of interest, the plaintiffs made the following submissions:

2. [25]

   I accept the plaintiffs’ submission in that respect.

MONEY JUDGMENT

1. [26]

   The plaintiffs sought a money judgment in the sum of $207,972.82.

2. [27]

   In the circumstances, I consider that an order should be made for mesne profits and interest in the sum of $207,972.82.

COSTS

1. [28]

   In its very brief submission, Jam sought that costs be assessed.

2. [29]

   On the other hand, the plaintiff’s made a submission as to costs, partly on an indemnity basis. That submission was as follows:

3. [30]

   The plaintiffs attached to its submissions a copy of a letter dated 29 August 2017 from the plaintiffs’ solicitor to Jam’s former solicitors, Robert Watson Lawyers (“Robert Watson”) which included a “Calderbank offer” (“the letter”). The offer remained open until 8 September 2017.

4. [31]

   I note that the courts are generally reluctant to order costs on an indemnity basis against self-represented litigants although the authorities suggest that from time to time the courts found it appropriate to make such orders: Spalla v St George Motor Finance Ltd (No 8) [2006] FCA 1537 (at [26]) and Bhagat v Global Custodians Ltd [2002] FCAFC 51 (at [57] and [60]).

5. [32]

   The consequences upon costs as a result of a Calderbank offer are a matter for the discretion of the Court: see Love v Victoria (No 2) [2009] VSC 531 at [22].

6. [33]

   In Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 (“Miwa”), Basten JA (with whom McColl and Campbell JJA agreed) held that the approach to considering a “without prejudice” offer of settlement in this jurisdiction was that (at [8]):

7. [34]

   His Honour went to consider the principles relating to the second limb, namely, whether it was unreasonable for the offeree not to accept the offer (at [10]-[16]):

8. [35]

   The approach in Miwa has been applied in circumstances where a Calderbank offer was made to a self-represented litigant: see Thomas v Holmes (No 3) [2017] NSWLEC 156 (“Thomas v Holmes”) per Moore J at [109]-[117].

9. [36]

   The “Calderbank offer” in this case was constituted by the letter. It was not adduced as evidence and was simply attached to an email. Questions may arise as to the availability of that course, particularly where Jam does not have legal representation. More significantly, without taking some further step in the proceedings, it is unlikely that Jam understood at the close of these proceedings the implications of the letter and the orders for indemnity costs sought by the plaintiffs in reliance upon it. This is evident from Jam’s very brief submission on costs (simply one line that costs be assessed) and its non-engagement with the issue of indemnity costs.

10. [37]

    However, given the conclusions I will reach, it is unnecessary to turn to further consider those issues. Even if the Court were to accept the letter as evidence of the fact of a Calderbank offer and that Jam was sufficiently appraised of the nature of the application, the Court will apply the approach as set out in Miwa, as applied in Thomas v Holmes, which, in my view, should result in a rejection of the plaintiffs’ application for indemnity costs based upon a Calderbank offer.

11. [38]

    At the outset, I would accept the letter represented a genuine offer of compromise. The offer represented only 20% of the outstanding rent at the time of the offer, required Jam to make good the premises and vacate within 14 days and proposed that each party bear their own costs of the proceedings “to date”.

12. [39]

    However, as to the second limb, there was no evidence adduced to suggest that it was unreasonable for Jam to not accept that offer. The letter was sent in circumstances where Robert Watson was recently instructed by Jam (a notice of appointment or change of solicitor was filed on 24 August 2017, appointing Robert Watson as the solicitor for Jam in these proceedings in place of another solicitor on record).

13. [40]

    There was no evidence of the circumstances in which the offer was made, or any other factors, other than the fact of the compromise within the letter, to suggest that Jam’s lack of acceptance of the offer was unreasonable. I note, in this respect, the lack of evidence on whether requiring Jam to vacate and make good the premises in 14 days was a reasonable term considering the premises had been fitted out and operated as a music store.

14. [41]

    In the result, the plaintiffs failed to discharge the onus upon them that it was unreasonable for Jam to not accept the offer in the circumstances at the relevant time: see Miwa at [16]. The plaintiffs shall have their costs on an ordinary basis as effectively sought by Jam.

ORDERS

1. [42]

   The Court makes the following orders:

   1. (1)

      Judgment for the plaintiffs against the second defendant for possession of the premises comprising that part of Lot 2367 in Deposited Plan 730219 known as Shop 5, 42-44 Queen Street, Campbelltown, New South Wales.

   2. (2)

      The plaintiffs have leave to issue a writ of possession forthwith.

   3. (3)

      Judgment for the plaintiffs against the second defendant in the sum of $207,972.82.

   4. (4)

      The second defendant shall pay the costs of the plaintiffs of the proceedings as agreed or, in default, as assessed.