Daraleigh Pty Ltd v Farmers Packaging Products Pty Ltd [2018] QDC 68

DISTRICT COURT OF QUEENSLAND CITATION: Daraleigh Pty Ltd v. Farmers Packaging Products Pty Ltd [2018] QDC 68 PARTIES: DARALEIGH PTY LTD ACN 010 883 093 as Trustee of CHALMYNA UNIT TRUST (applicant) v FARMERS PACKAGING PRODUCTS PTY LTD ACN 609 328 761 formerly FARMERS FRUIT BOX CO PTY LTD ACN 609 328 761 (defendant) FILE NO/S: 73/2013 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: Cairns DELIVERED ON: 12 April 2018 DELIVERED AT: Cairns HEARING DATE: 22 February and 6 April 2018. JUDGE: Morzone QC DCJ ORDER: 1. The defendant’s application for recusal is dismissed. 2. The defendant’s application to set aside default judgment is allowed. 3. The plaintiff’s application for enforcement in respect of the judgment is dismissed. 4. The defendant will file and serve a Notice of Intention to Defend and Defence by 14 May 2018. 5. Each party will bear their own costs unless either party makes an application for a different costs order within 14 days. CATCHWORDS: CIVIL PROCEDURE – APPLICATION - DEFAULT JUDGMENT –Application To Set Aside Default Judgment And Cross Application For Warrant Of Possession – -- 1 of 22 -- 2 application for recusal, service regularly obtained, proof of service – whether the plaintiff is entitled to judgment - satisfactory explanation for not filing defence, delay, prima facie defence - whether derogation of the grant, abatement of rent, counter claim or set off – whether abuse of process. Legislation Uniform Civil procedure Rules 1999 (Qld) rr 101, 107, 137, 166, 168, 183, 184, 185 284, 286, 287, 290, 915 Property Law Act 1974 (Qld) s 141 District Court Act 1967 (Qld) s 68 Corporations Act 2001 (Cth) s 109X Acts Interpretation Act 1954 (Qld) s 38 Cases White v Commissioner of Police [2014] QCA 121 Cusack v De Angelis [2008] 1 Qd R 344 Cusack v De Angelis [2008] 1 Qd R 344 Yankee Doodles Pty Ltd v Blemvale Pty Ltd, Writ No 78 of 1998, unreported decision of Atkinson J delivered 23 June 1999, BC9903401 DCT v Johnston [2006] QSC 61; (2006) 230 ALR 575 Re Rustic Homes Pty Ltd (1988) 13A CLR 105 Quicksafe Freight Lines Pty Ltd v Shell Co of Australia Ltd (1984) ACLR 161 Deputy Commissioner of Taxation v Abberwood (1990) 2 ACSR 91 Re: Gasbourne (1984) 8 ACLR 618 at 688. Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559 Golden Orchid v Comax (1995) 58 FCR 113 SV Steel Supplies Pty Ltd v Palwizat [2007] QSC 024. General Motors Acceptance Corp of Australia Ltd v Davis [1971] VR 734 Suncorp-Metway Equipment Leasing Pty Ltd v Goldkey Pty Ltd [2003] QSC 165 MY Distributors Pty Ltd v Omaq Pty Ltd (1992) 36 FCR 578 O’Keefe v Williams (1910) 11 CLR 171 Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1 Browne v. Flower [1911] 1 Ch 219 Taylor v Webb [1937] 2 KB 283 COUNSEL: J Trevino for the applicant SOLICITORS: Vandeleur & Todd Solicitors for the applicant A Jorgenson director of the defendant company [1] The defendant tenant who carries on a business of fabricating banana packing boxes, applies pursuant to r 290 of the Uniform Civil procedure Rules 1999 (Qld) (“UCPR”) -- 2 of 22 -- 3 to set aside judgment by default for a damages claim to be assessed and recovery of possession of land under rr 284, 286 and 287 of the UCPR. [2] The plaintiff relies upon the judgment to cross-apply pursuant to r 915 of the UCPR for an enforcement warrant for possession of the premises. [3] Since the hearing of these applications pending my decision, the defendant has made an application, in the form of further submissions, seeking my recusal on the grounds of bias. I deal with this first in the context of some background. Background [4] On 1 September 2016 the parties entered into a written lease of a shed owned by the plaintiff on premises at 4 Creigan Road at Fitzgerald Creek for a term of 2 years expiring on 1 August 2018. [5] The shed is 28 m wide and 94 m long with eight bays 6 m wide and ten bays 4.6 m wide. The shed is open plan merely divided by security wire mesh at 57.2 m from the front of the shed. [6] The defendant occupied the four front bays having earlier surrendered two 6m bays to carry on its business of fabricating banana packing boxes. [7] Another entity, Select Carbon, occupied another area within the same shed to carry on the business of producing carbon using a process of incineration, mulching and mixing. In the course of business overnight and into 4 February 2017, Select Carbon caused carbon dust to escape throughout the shed, including into the defendant’s tenancy and thereby contaminated its operations and products. [8] The defendant alleges that the business was rendered impotent for some months, together with loss of stock, cleaning costs, and economic loss.1 It failed or refused to pay rent. [9] On 2 August 2017 the plaintiff served a Notice to Remedy Breach for failure to pay rent in the sum of $29,969.59 between 1 January 2017 to 31 August 2017. [10] The plaintiff relied upon the failure to remedy the notified breaches and later served a Notice of Termination of Lease on 13 September 2017.2 [11] On 11 October 2017 the plaintiff commenced action for summary recovery of the possession in the Innisfail registry of the Magistrates Court by way of Complaint and Summons pursuant to s 141 of the Property Law Act 1974 (Qld).3 Those proceedings subsisted when these District Court proceedings were commenced served and resulted in default judgment. [12] The claim and statement of claim was delivered to an adult woman at the defendant’s registered office on 22 December 2018 at 3:38 pm. On 8 January 2018, the plaintiff’s solicitor wrote to Alexander Law, who had corresponded on behalf of the defendant on 17 August 2017, but there was no reply. 1 Affidavit Jorgenson 13.2.18, paras 6, 7, & 8, Exhibit ABJ-1. 2 Statement of claim, paras 11 & 13. 3 Affidavit of Todd 6.2.18, para 5; Affidavit of Todd 23.3.18, para. 2. -- 3 of 22 -- 4 [13] In default of the defendant filing any notice of intention to defend and defence, the plaintiff requested judgment by default on 24 January 2018. The request was supported by an affidavit of Mr Dillon and the solicitor’s affidavit of service of the claim and statement of claim. [14] The registrar granted judgment by default against the defendant (conditional on the value and damages being assessed) as follows:4 (a) The defendant pay to the plaintiff damages to be assessed upon the plaintiff’s statement of claim together with costs to be assessed, and that the damages be assessed by the District Court; (b) The plaintiff recover as against the defendant possession of the land described as part of Lot 4 on RP881728 County of Nares Parish of Glady and situated at 4 Creigan Road, Fitzgerald Creek; (c) The defendant pay the plaintiff the costs of the claim to be assessed. Application for recusal [15] Since adjourning the proceeding to consider my decision, the defendant has made an application, in the form of emails and further submissions,5 seeking my recusal on the grounds of apprehended bias. [16] Bias is ordinarily a question of actual or apprehended bias as a precursor to disqualification of the judicial officer. The test for determining whether a judicial officer should have disqualified himself or herself by reason of apprehended bias is “whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide”.6 [17] The defendant, through its director Mr Jorgensen, asserts to the effect that I am being “greatly influenced” and improperly directed by the Far Northern Supreme Court Judge, with whom Mr Jorgensen perceives he has been “at extreme odds with for the last 3 years”, subject of the judge’s vendetta, obstructed by alliances of friendships, frustrated by inordinate hearings. Mr Jorgensen also asserts matters of misconduct by the former Chief Justice. All allegations seem to arise out of various other and unrelated disputations in the Supreme Court. [18] In so far as Mr Jorgensen asserts that I have been influenced, the allegations are both speculative and wrong. I have not discussed this matter with the Far Northern Judge or the former Chief Justice. [19] The applications were heard over two separate days. The first hearing was adjourned to facilitate the defendant filing an affidavit as to the merits of any defence, and for the plaintiff to make further submissions in response and also explaining the prima facie abuse of process arising from parallel Magistrates Court proceedings. In this 4 Exhibit 3. 5 Exhibit 4. 6 White v Commissioner of Police [2014] QCA 121 at [4] per Morrison JA (Muir JA & Atkinson J agreed). White v Commissioner of Police [2014] QCA 121 at [8] per Morrison JA (Muir JA & Atkinson J agreed). Johnson v Johnson (2000) 201 CLR 488 at [11]. -- 4 of 22 -- 5 way, and during the course of the hearing, I have endeavoured to ensure the defendant was afforded an opportunity to be heard in the context of procedural uncertainty and emotion. [20] In my view a fair-minded lay observer would not reasonably apprehend that I might not bring an impartial and unprejudiced mind to the resolution of the case. Therefore, I refuse the defendant’s application for my recusal. Set aside default judgment [21] The power to set aside a default judgment is found in r 290 of the UCPR which provides: “290 Setting aside judgment by default and enforcement The court may set aside or amend a judgment by default under this division, and any enforcement of it, on terms, including terms about costs and the giving of security, the court considers appropriate.” [22] Where judgment has been obtained irregularly, the defendant is entitled to have it set aside as of right.7 [23] The plaintiff, who has a regular judgment, has a prima facie right to insist upon execution. However, where appropriate, the courts should not countenance conduct by litigants which amounts to an abuse of process, and should act to discourage it.8 The court has power to stay or dismiss proceedings to prevent injustice by an abuse of process. [24] Otherwise, where the judgment has been regularly obtained, three matters are usually relevant to the exercise of the court’s discretion pursuant to the rule: (a) Whether the defendant has given a satisfactory explanation for the failure to defend; (b) Whether the defendant’s delay in making the application to set aside precludes it from obtaining relief; and (c) Whether the defendant has a prima facie defence on the merits.9 Regularity [25] The defendant’s primary complaint seems to be that the judgment was obtained irregularly because, it is asserted, the plaintiff’s claim should have been commenced in the Magistrates Court having regard to the monetary jurisdiction. [26] This complaint has no substance. The plaintiff’s proceeding is not confined to a claim for rent. It includes a claim for recovery of possession, mesne profits, and an alternative claim for damages for breach of covenant. These matters are justiciable 7 Cusack v De Angelis [2008] 1 Qd R 344 at [36]. 8 Cusack v De Angelis [2008] 1 Qd R 344 at 591. 9 Yankee Doodles Pty Ltd v Blemvale Pty Ltd, Writ No 78 of 1998, unreported decision of Atkinson J delivered 23 June 1999, BC9903401 at [13]; DCT v Johnston [2006] QSC 61; (2006) 230 ALR 575 at [3] – [4]. -- 5 of 22 -- 6 in the District Court. Section 68 of the District Court Act 1967 (Qld) provides that the District Court has jurisdiction to hear and decide all of the plaintiff’s claims.10 Proof of Service [27] Proof of proper service is a necessary prerequisite to any judgment by default. [28] After commencing the proceeding, the defendant had 28 days from the date of service to file a notice of intention to defend and defence.11 Here the plaintiff asserts that it served the defendant at its registered office on 22 December 2017. This was the last working day before the Christmas public holidays. [29] By virtue of r 107 of the UCPR service on the defendant company was required in the way provided for the service of documents under the Corporations Act or another applicable law. Section 109X of the Corporations Law provides that: "For the purposes of any law, a document may be served on a company by; (a) leaving it at or posting it to the company's registered office.” [30] The plaintiff argues that service was effected at 3:38 pm on 22 December 2017 when its solicitor delivered the claim and statement of claim to a woman at the defendant’s registered office. [31] In the event that service was effective, time ran from 22 December 2017 for the defendant to defend the proceeding. The defendant complains that the service was inappropriate being the eve of the Christmas vacation and usual business closures. [32] The Acts Interpretation Act 1954 (Qld) deals with the reckoning of time.12 Subsection 38(1) of the Act provides for the calculation of a period by excluding the day of the act and including the last day the purpose is to be fulfilled. Sub-section 38(3) provides for the treatment of public holidays as follows: “If the time, or earliest day of a period, calculated backwards, that is provided or a letter by an act for doing anything falls on an excluded day, the time, or earliest day, is taken to fall on the next day earlier that is not an excluded day.” [33] Since public holidays did not fall on at the beginning13 or end of the 28 days allowed for filing the defence, the defendant’s defence was overdue by the time of default judgment on 24 January 2018. [34] Prior to seeking judgment, the solicitor undertook a second historical company search of the defendant to confirm that the registered office and principal place of business remained unchanged, being Mr Jorgensen’s residential address. In paragraph 14 of his recent affidavit, Mr Todd deposes that: “On 23 January 2018 I undertook a third search of the corporate records of the Australian Securities and Investment Commission in respect of the Defendant and noted from that search that on 1 November 2017 Elspeth 10 s 68(1)(a)(iii); (1)(b)(xi), and (2). 11 UCPR, r 137. 12 Acts Interpretation Act 1954 (Qld), s 38. 13 UCPR, r. 101 – Service not allowed on Christmas Day or Good Friday. -- 6 of 22 -- 7 Henley of Unit 18, 8 Monteath Avenue, Hawthorn East, Victoria had been appointed as a Director of the Defendant and on 16 November 2017 Allen Bradley Jorgensen had ceased to be a Director of the Defendant. …” [35] Consequently, at the time the plaintiff requested judgment, it knew or ought to have known that Mr Jorgensen was not a director of the company when the claim and statement of claim was delivered to the registered office. In contrast, in his affidavit of service before the registrar on 24 January 2018, the solicitor deposed that at 3:38 pm on 22 December 2017 he gave the process to a woman and told her that: “… this was the registered office of Farmers Packaging Product Pty Ltd and I handed to her a sealed Claim and Statement of Claim filed in these proceedings on 22 December 2017 and told her I was serving these documents on the registered office… I suggested that she hand the documents onto Alan Jorgensen, the director of the Defendant.” [36] The question arises whether misdirection to Mr Jorgensen (not a director) vitiated the service. [37] In Re Rustic Homes Pty Ltd,14 the Supreme Court of South Australia determined the adequacy of service of a winding up summons sent to a company's registered office in circumstances where the company had had no connection with this address for some time and the summons was returned unclaimed. Von Doussa J said:15 "In construing s 528 it is to be remembered that it is a fundamental principle of law that no one is to be found guilty or made liable by an order of any tribunal unless he has been given fair notice of the proceedings so as to enable him to appear and defend: Halsburys' Laws of England, 4th ed, vol 37, para 145. That principle applies equally to a company as to an individual. Notwithstanding the practical utility which may flow from a very wide construction of s 528(1) in favour of parties required to serve documents on a company, in my opinion the sub-section should not be construed so as to deem one of the modes of service permitted by it to be good service where the facts before the tribunal show that the document has probably not come to the attention of the company. It is a permissive provision, and not one which, by its terms, deems a mode of service to be sufficient service in all circumstances. The terms of s 528 are to be contrasted with the statutory provisions considered in Alexander v Stokes & Holdings (Sales) Pty Ltd [1975] VR 843 and Kirkman v Frost (1978) 20 SASR 192. It may be that some other statutory provision deems one of the specified modes of service to be sufficient service, but s 528(1), standing alone, does not do so. Where the information before the court shows that the mode of service adopted probably did not bring the document to the attention of the company, in the absence of some other statutory provision which deems the service to be sufficient, the appropriate course is for the court to insist on due service in some other way, for example, under s 528(4), or under an order for substituted service. Re Otway Coal Co Ltd, (1953) VLR at 563, is an example of such a case.” 14 Re Rustic Homes Pty Ltd (1988) 13A CLR 105. 15 Re Rustic Homes Pty Ltd (1988) 13A CLR 105 at 108-109. -- 7 of 22 -- 8 [38] A similar view was expressed by Waddell J in Deputy Commissioner of Taxation v Abberwood.16 In that case a statement of claim was served at the registered office of the company being the former office of the company's accountants who had moved two years previously. The statement of claim was returned by the new occupants of the address. [39] Waddell CJ recanted from his earlier judgment in Quicksafe Freight Lines Pty Ltd v Shell Co of Australia Ltd (1984) ACLR 161 and said:17 "I respectfully agree with what is said in both these decisions. If Re: Gasbourne had been cited to me in the Quicksafe case then I would not have stated the position as broadly as I did. In these circumstances it should be concluded that the judgment was irregularly obtained. Indeed, it could be said, although I think the court has not been pressed to say so, that it was an abuse of process for the plaintiff to sign judgment in default of an appearance when it was known in its office that the statement of claim had not and could not have come to the attention of the defendant.” [40] Further, in Re: Gasbourne,18 Nicholson J in a similar situation said: "In my opinion it is incumbent upon a person who wishes to obtain a judgment against a company in circumstances such as these to disclose the real situation concerning the company to the court and to obtain such directions as the court thinks appropriate as to the proper mode of service." [41] A different approach was taken by McLelland CJ when considering the adequacy of service when considered in the context of service of a statutory demand in Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559, which was followed by Sheppard J in Golden Orchid v Comax (1995) 58 FCR 113 at page 117, and Cullinane J in SV Steel Supplies Pty Ltd v Palwizat [2007] QSC 024. [42] In Future Life Enterprises the statutory demand was left at an accountants’ office, which was the registered office of the company. The accountants wrote to the claimant pointing out that they had had no contact with officers of the company for many years and that all mail sent to the address had subsequently been returned unclaimed. McLelland CJ said at page 564: "With great respect it is difficult to reconcile what was said in Re: Rustic Home Pty Ltd with the clear and unequivocal words of s 220(1) or with the approach adopted by the High Court to the construction of a provision as to the service of documents by post in the Acts Interpretation Act 1954 (Qld) in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, particularly at 95- 97. The questions of the construction and effect of s 220(1) together with s 109Y of the Corporations Law (which deals with service by post) was examined in considerable detail by Santow J (with whose judgment I 16 Deputy Commissioner of Taxation v Abberwood (1990) 2 ACSR 91. 17 (1990) 2 ACSR 91 at 94 and 95. 18 Re: Gasbourne (1984) 8 ACLR 618 at 688. -- 8 of 22 -- 9 respectfully agree subject to a minor qualification noted below) in F P Leonard Advertising Pty Ltd v KD Travel Service Pty Ltd (1993) 12 ACSR 136; 11 ACLC 1,203. His Honour expressed his conclusion, so far as presently relevant (at 139; 1205) as follows: "But what is the effect...of coming to know after postal delivery that the company, no longer resides at the registered office address? ...One line of authority, based on a doctrine of 'fair notice', would suggest that in cases where there is knowledge that the address is 'false' or 'non-existent' then service will not be effective: Re Gasbourne Pty Ltd (1984) 8 ACLR 618; 2 ACLC 103. This has been formulated in different ways including not being 'misled' by a register: Re Otway Coal [1953] VLR 557 at 563. And that it would be an abuse of process to allow judgment in cases, where the [plaintiff] knew that the statement of claim had not come to the attention of the defendant: Deputy Commissioner of Taxation v Abberwood Pty Ltd (1990) 2 ACSR 91; 8 ACLC 528. But Abberwood can be distinguished. There the [plaintiff] had independent contact with the directors of the company. Yet the [plaintiff] told them nothing of the process sent to the registered office and later returned by a subsequent occupant with the notification that the company was no longer at that address. This was held to be an abuse of process. That, in my judgment, should be the proper basis for such an exception to the statutory requirement. Abuse of process underlies the notion of lack of 'fair notice'. Here, contrary to the facts in Abberwood, such opportunity for indirect contact was diligently pursued by the plaintiff. There was 'fair notice' - if that be required - and clearly no abuse of process. There is therefore no basis for failing to give full force to the clear words of the two sections of the Corporations Law in deeming service to have occurred." The qualification is that an abuse of process in the circumstances postulated by His Honour is not strictly speaking an "exception" to the provisions of s 220(1) (which would suggest that there has been no effective service) but rather constitutes an over-riding ground for refusing relief notwithstanding that there has been effective service. This is really implicit in what His Honour says.” [43] In the circumstances of this case, it is clear that the claim and statement of claim was delivered to the defendant’s registered office, and principal place of business according to the company searches. Although Mr Jorgensen was not a director at the time, he was clearly connected with the company, for example, the address was his residence, and he acted as the defendant’s agent in the dispute. [44] The documents were not returned to the plaintiff, and the circumstances were not enough to give the plaintiff reason to suspect that the company probably had not received notice of documents. It seems to me that the service of the claim and statement of claim was regular. -- 9 of 22 -- 10 Entitlement to judgment [45] The plaintiff requested a judgment pursuant to r 287 of the UCPR for mixed claims for relief against the defendant in relation to the liquidated damages (r 284) and recovery of possession of land (r 286). [46] For the liquidated damages claim under r 284, an interlocutory judgment for damages to be assessed can be entered on default. By virtue of r 286(5) when considering whether to give judgment to recover possession of land, the registrar is not required to consider the merits of the plaintiff’s claim against the defendant. [47] However, proof by affidavit of the facts alleged in the claim or statement of claim remains a requirement to judgment by default.19 [48] Here the plaintiff’s claim for recovery of possession arises by the alleged breaches of the defendant failing to pay rent. Paragraph 9 of the statement of claim, consistently with the requisite Notice to Remedy Breach, particularised the failure to pay rent in the sum of $29,969.59 between 1 January 2017 to 31 August 2017. But it is difficult to reconcile that claim with the terms of the lease exhibited to Mr Dillon’s affidavit filed in support the request for judgment. [49] The lease commenced on 1 September 2016 for a term of 2 years. Clause 3 read with Item 5 prescribed the annual rent of $55,935.36 plus GST, payable monthly on the 1st day of each month from 1 September 2016 in the amount of $4,661.28 plus GST. However, by handwritten annotations, those rental amounts were “subject to First Year Concessions” of: “1st 2 months $776.88 + GST 2nd 2 months $1553.76 3rd 2 months $2,330.64 4th 2 months $3107.52 5th 2 months $3884.40” [50] It seems that the concessional rental should each be read as payable “plus GST”. On this basis, and having regard to the lease terms, the entitlement to rent under the lease seems incongruous to the invoiced rent amounts claimed in the statement of claim and Notice to Remedy breach: Period Invoice Claim Lease incl. GST (a) 1/1/17 – 31/01/17 Bal. 308 $563.70 $563.70 (b) 1/2/17 – 28/2/17 311 $2,563.70 $2,563.70 19 Cf. General Motors Acceptance Corp of Australia Ltd v Davis [1971] VR 734 per McInerney J, cited in Suncorp-Metway Equipment Leasing Pty Ltd v Goldkey Pty Ltd [2003] QSC 165 per White J. -- 10 of 22 -- 11 (c) 1/3/17 – 31/3/17 313 $4,311.27 $3,417.97 (d) 1/4/17 – 30/4/17 314 $4,311.27 $3,417.97 (e) 1/5/17 – 31/5/17 315 $5,185.84 $4,272.84 (f) 1/6/17 – 30/6/17 316 $4,311.27 $4,272.84 (g) 1/7/17 – 31/7/17 317 $4,311.27 $5,127.40 (h) 1/8/2017 – 11/8/17 318 $4,311.27 $5,127.40 Total $29,869.59 $28,763.82 [51] This is not a matter raised or relied upon by the defendant. [52] In any event, for the recovery of possession of land the registrar was not required to consider the merits of the plaintiff’s claim against the defendant.20 Further, allegations of fact made in the statement of claim are taken as admitted by the defendant in the absence of any pleading properly denying or not admitting the allegation.21 [53] On this basis, I am satisfied that the registrar properly relied upon the plaintiff’s claim for relief as giving rise to an entitlement to the default judgment. Satisfactory explanation [54] The defendant’s explanation for its failure to enter a defence is simple – the service did not come to defendant’s notice until well after the entry of default judgment. [55] Mr Jorgensen deposes that:22 “ 3. Unexpectedly, without warning, the Plaintiff’s apparently served a Statement of Claim on my home address which is the Registered Office of the Defendant. 4. Previously, the Plaintiff’s issued effectively the same proceeding in a Notice to Quit Application in the Innisfail Magistrates Court some months earlier. …. 9. Myself acting for the Defendant just flew back from Xmas holidays last Sunday to find that the Plaintiff had served its Claim on Xmas Eve Friday evening 22nd December and quickly obtained a default judgment before the Defendant had an opportunity to obtain legal advice about this second proceeding.” [56] It is true that the claim and statement of claim was served without warning. Although the service was effected at the registered office by handing the process to a woman 20 UCPR, r 286(5). 21 UCPR, rr 166 & 168. Cf. MY Distributors Pty Ltd v Omaq Pty Ltd (1992) 36 FCR 578 per Sweeney, Northrop and Gray JJ. 22 Affidavit of Jorgensen 15.2.18 paras 3, 4 & 9. -- 11 of 22 -- 12 (whom I accept was Mr Jorgensen’s elderly mother), she was told to give them to Mr Jorgensen.23 [57] There is no evidence that the plaintiff’s solicitor attempted to make personal contact with Mr Jorgensen despite dealing directly with him in the conduct of the Magistrates Court proceedings on behalf of the defendant. Nor was there any attempt to contact the new director of the defendant company. [58] Instead, on 8 January 2018, the plaintiff’s solicitor wrote to Alexander Law, who had corresponded on behalf of the defendant some months before. He wrote: “We refer to previous correspondence in relation to this matter including our email of 6 November 2017. We note that we have not heard from you since your letters dated 17 August 2017 and we did not receive a response from you to our email of 6 November 2017 and you have not appeared on behalf of the Defendant in the Magistrates Court at Innisfail in relation to the proceedings pending in that Court. Please advise whether you still hold instructions to act on behalf of the defendant in this matter. In the meantime, we enclose for your information copies of a Claim and Statement of Claim which were filed in the District Court at Innisfail on 21 December 2017 and served on the Defendant’s registered office at Kewarra Beach on 22 December 2017 at 3:38 pm. We note that your client’s Notice of Intention to Defend and Defence are due to be filed by Friday 19 January, 2018.” [59] There is no evidence that the solicitors tried to make contact with the defendant, or its director, or Mr Jorgensen between service of the claim and the default judgment. [60] In the unusual circumstances, I accept that Mr Jorgensen had no notice of the proceeding until after his return from holidays 27 January 2018, and by inference it did not come to the notice of the defendant or any director. His late notice of the proceeding well explains the absence of a timely notice of intention to defend or defence. It seems to me that he acted diligently in bringing this application. Delay [61] The plaintiff accepts that there has been no significant delay in seeking to have the default judgment set aside. [62] The defendant, through Mr Jorgensen, filed the application to set aside the default judgment, supporting affidavit and a conditional notice of intention to defend on 13 February 2018. Prima facie defence [63] The defendant asserts that it had a defence to the claim on the same grounds proposed in the cognate Magistrates Court proceedings. 23 Affidavit of service of Todd 24 January 2018, para 14. -- 12 of 22 -- 13 [64] Mr Jorgensen swore an affidavit on 13 November 2017 in defence of those Magistrates Court proceedings. He tried to tender the affidavit when the proceeding was first mentioned in the Magistrates Court on 13 November 2017, but it was declined as being premature. [65] Mr Jorgensen produced the same affidavit in this application, but I returned the material to Mr Jorgensen so he could include it in a further affidavit as to the merits. The defendant did not file any further material. [66] In his earlier affidavit filed in support of the application, Mr Jorgensen deposed to the circumstances surrounding the interruption to the defendant’s business on 4 February 2017 caused by the escape of carbon from another tenant’s business operations. These circumstances are also explained in the affidavit of the plaintiff’s officer, Mr Dillon filed on 26 March 2018. [67] Select Carbon occupied an area within two bays of about 7m to 8m wide and about 10m – 12m.24 That area did not extend the full width or depth of two bays. Select Carbon used a “MP20 Bio-Char Burner” to incinerate timber in an area outside the shed about 150m to 160m away from the defendant’s tenancy. The incineration process involved the removal of carbon in the form of charcoal from the burner into a Keenan Stock Feed Mixer, where it was watered to extinguish the embers. The charcoal was processed through a mulcher and then dropped through a hopper to fill 1 tonne bulk fertiliser bags. The carbon product was used as a soil improver in agriculture.25 [68] In early September 2016 the plaintiff allowed Select Carbon a weekly tenancy to occupy a small area in the middle section of the shed for the bagging process undercover protected from wet weather. In the course of processing inside the shed overnight and into 4 February 2017, Select Carbon caused carbon dust to escape throughout the shed, including into the defendant’s tenancy and thereby contaminated its operations and products. [69] The defendant alleges that the business was rendered impotent for some months, together with loss of stock, cleaning costs, and economic loss.26 It failed or refused to pay rent. [70] In a “Draft Statement of Claim” the defendant (as plaintiff) alleges negligence against Select Carbon (referred to as the “Carbon Parties”) but does not disclose any particular cause of action against the plaintiff (identified as first defendant). At best, it alleges actual or constructive knowledge of the plaintiff of the incompatibility of the co-tenants. In particular at paragraph 13 of the draft pleading the defendant (as plaintiff) alleges against the plaintiff (as first defendant) that: “13. At no time prior (or after) to the Plaintiff entering into the lease with the First Defendant at the Premises, did the First Defendant warn or notify the Plaintiff of the nature of the dirty carbon chemical business that was being operated by the Carbon Parties at the premises: 24 Affidavit Dillon 26.3.18, para 3. 25 Affidavit Dillon 26.3.18, para 4. 26 Affidavit Jorgenson 13.2.18, paras 6, 7, & 8, Exhibit ABJ-1. -- 13 of 22 -- 14 (a) The first defendant knew, or ought to have known, of the acute operating conflicts between the Plaintiff and the Carbon Parties, being that the respective businesses we (sic) not suitable to co- tenant a shared structure due to the nature of their respective businesses. Especially so, given that there were no dividing walls in the 90m x 28 m shed. (b) Alternatively, owing to the specific knowledge of Mr Dennis Dillon as a former banana farmer, and as the Director or officer holder of the First Defendant, knew or ought to have known of the operating conflicts between the Carbon Partys’ dirty business and the Plaintiff’s obvious need for cleanliness.” [71] The plaintiff acknowledges the defendant’s demand for $22,000.00 for cleaning costs invoiced by PPB Pty Ltd on 26 April 2017. But the plaintiff disputes the veracity of that claim having seen the defendant’s employees, and not any third party, doing the clean-up work.27 [72] This seems consistent with the “Draft Statement of Claim” which refers to “… the Plaintiff undertaking cleaning of the premises …”,28 and says in relation to the foreshadowed claim for cleaning costs of $22,000 that, “This includes the cost of the professional rubbish removal services of MAMS Plant Hire Pty Ltd”.29 [73] The parties remain in dispute about this cleaning claim, and the liability for rent while the business was closed. Derogation of the Grant [74] The obligation not to derogate from grant is automatically implied into leases. It exemplifies the general principle that a party who gives a benefit to another party, those parties should not do anything that substantially deprives that party of the benefit. [75] Clause 8.3 of the lease provided for the plaintiff’s obligations as the landlord, including that: “The Landlord shall: 8.3.1 permit the Tenant to have quiet enjoyment of the demised premises during the term of this Lease, subject to the Tenant complying with every obligation, term or condition, by this lease imposed on him/her. … 8.3.3 not be deemed to have given any warranty to the Tenant that the demised premises will be fit, suitable, or adequate for all or any of the purposes of the Tenant and all warranties (if any) as to the suitability fitness and adequateness of the demised premises implied by law are hereby expressly negatived. 27 Affidavit Dillon 26.3.18, para 9. 28 Affidavit Jorgenson 13.2.18, Exhibit ABJ-1 para. 15(b). 29 Affidavit Jorgenson 13.2.18, Exhibit ABJ-1 para. 15(a). -- 14 of 22 -- 15 … 8.3.5 The landlord shall not in any circumstances be liable to the tenant for any damage whatsoever suffered by the tenant, the tenant’s agents or invitees of property of any description on the demised premises and occasioned by any cause whatsoever except the proven negligence of the landlord or the landlord’s servant, delegates or agents. The tenant occupies and uses the demised premises at the tenant’s own risk.“ [76] In O’Keefe v Williams,30 it was established that where the lessor has contracted to give exclusive occupation of land, "there is to be an implied obligation in the nature of a promise not to disturb that occupation” … "that the lessor shall neither disturb the possession himself nor authorise its disturbance by others".31 The grant of a lease for a particular purpose obliges the lessor not to derogate from the grant to the lessee by doing anything on that other land which will render the premises granted unfit or materially less fit for the particular purpose for which they were granted.32 [77] In Aussie Traveller Pty Ltd v Marklea Pty Ltd,33 the Court of Appeal places a higher requirement of care upon lessors. However, the decision is an acknowledgement of the modern commercial leasing practices and where the element of control exists, sheeting liability to lessors for breach of the covenant for quiet enjoyment "is fair and it is reasonable”. [78] In that case the plaintiff leased premises to carry on the business of manufacturing and selling new and repaired canvas goods. Before expiry of the lease the plaintiff vacated the premises, alleging that the activities of the adjoining tenant made working conditions difficult and caused a decrease in profits. That adjoining tenant manufactured timber staircases using power saws, sanders and spindle planers which were used in its business and these activities created dust, sawdust and noise, which the plaintiff claimed interfered with its business. The tenancies were separated by partial partitions that did not reach to the common roof of the building, and the roller doors were kept open for ventilation. As a consequence, sawdust passed into the plaintiff’s premises; soiled or stained the canvas products, and decreased their value. The plaintiff also complained that staff and clients were impacted by excessive noise. The trial judge held that the defendant was liable for damages and interest for breach of covenant as lessor. [79] The court unanimously held that the defendant was liable for the sawdust and the noise created by its tenant, despite the fact that the activities had not been encouraged or authorised by the defendant. By being in the position of being able to correct or terminate such interferences by enforcing the lease covenant, the defendant, by remaining inactive, was in breach of its implied covenant not to derogate its grant. [80] McPherson JA identified the issue of whether the acts of the adjoining tenant and the consequences of those acts, were such "as to disturb the plaintiff’s occupation of the premises in a way that involved the defendant landlord in legal responsibility for the 30 O’Keefe v Williams (1910) 11 CLR 171 at 191 per Griffith CJ. 31 O’Keefe v Williams (1910) 11 CLR 171 at 191 & 192. 32 Browne v Flower [1911] 1 Ch 219 at 226; [1908-10] All ER Rep 545; Gordon v Lidcombe Developments Pty Ltd [1966] 2 NSWR 9 at 17 & Byrnes v Jokona Pty Ltd [2002] FCA 41 at [62]. 33 Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1. -- 15 of 22 -- 16 loss alleged to have ensued." This involved two inquiries: first, whether the extent of the disturbance amounted to a breach of the lessor’s implied obligation owed to the plaintiff; and secondly, whether the defendant can be liable for the actions of one of its tenants.34 [81] As to the first question, McPherson JA looked to Browne v. Flower [1911] 1 Ch 219 at 226 as the starting point:35 ‘‘…if the grant or demise be made for a particular purpose, the grantor or lessor comes under an obligation not to use the land retained by him in such a way as to render the land granted or demised unfit or materially less fit for the particular purpose for which the grant or demise was made.” [82] As to the second question, McPherson JA reviewed the cases and said:36 “The result is that although, apart from any provision in the lease, a lessor generally loses control over premises once they are let to a tenant, he may nevertheless remain legally responsible for tortious acts done on the land by a tenant at least if at the time he agreed to part with possession and control, it was reasonably foreseeable that the tenant was likely to do those acts.” [83] In the present case, it seems to me that that the current evidence tends to show that: 1. At the time of entry into defendant’s lease, the plaintiff knew or ought to have known that the defendant’s banana box fabrication business was dependent upon a clean and uncontaminated environment. 2. The plaintiff took grant rights to Select Carbon to occupy part of the shed and took positive steps to allow them to occupy the middle section of the shed for the bagging process. 3. The plaintiff, through Mr Dillon, became aware that Select Carbon modified their process to use the mixer to tumble and break the charcoal into smaller particles instead of processing through the mulcher.37 4. It was reasonably foreseeable that the modified process, in the open plan of the shed, gave rise to obvious risks of contamination of the defendant’s premises and interference with the business and use of the premises. 5. On the other hand, whilst the defendant was well aware of the use of the premises to be made by the co-tenant at the commencement of the lease, unlike the plaintiff, it had no prior knowledge of the modified process or its potential risk.38 6. The plaintiff as lessor of the un-partitioned shed was capable of exercising the requisite control over the internal occupation and process of Select Carbon but failed to act to avoid the risk of contamination. 34 Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1 at 8. 35 Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1 at 8-9. 36 Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1 at 12. 37 Affidavit Dillon 26.3.18, para 5. 38 Affidavit Jorgenson, para 6. -- 16 of 22 -- 17 7. The events of 4 February 2018 rendered the defendant’s tenanted area materially less fit for the purposes for which the lease was granted and prevents the tenant from enjoying the property. [84] It seems to me that these matters give rise to meritorious argument that the plaintiff breached the implied covenant not to derogate from the grant, and the express covenant for the defendant’s quiet enjoyment of the premises, and thereby the defendant’s occupation had been substantially interfered with by the activities of the adjoining tenant. Abatement of rent [85] Even if the defendant can show those breaches, the plaintiff argues that the obligation to pay rent continued and the plaintiff’s claim for recovery of possession stands. [86] Clause 9.1 of the lease provides for abatement of rent in the limited usual terms as follows: “If at anytime during the continuance of this Lease, the demised premises or any part thereof shall be destroyed or damaged by: 9.1.1 fire, storm, flood, enemy action; or 9.1.2 otherwise by the act of God; and 9.1.3 without any neglect or default on the part of the Tenant; so as to render the demised premises wholly or partially unfit for occupation or use by the Tenant for the purposes of the Tenant’s business; then in that event the rent reserved and payable in this lease or a fair and just proportion thereof according to the extent of the damage sustained shall thereupon be suspended and cease to be payable until the time when the demised premises shall have been reinstated by the Landlord in a good a state of tenantable repair as the same were in immediately prior such damage or destruction. In the event of any dispute arising as to the proportion or period of such suspension or abatement the matter shall be referred for determination in the manner provided in this lease. …” [87] On the facts as I apprehend them, the contamination of the defendant’s premises by the escape of carbon particles is not caught by clause 9.1 of the lease. The factual circumstances, and the state of the law on this point, are too uncertain to enable me to form a firm view about the defendant’s obligation to pay rent in this case.39 Counter Claim or set off [88] The plaintiff argues that the defendant’s material merely discloses an apparent desire to pursue a claim in negligence only against the plaintiff and third parties. There is nothing to preclude the defendant from pursuing this action. [89] Rules 183, 184 and 185 deal with counter-claims in the face of a judgment: 39 cf Taylor v Webb [1937] 2 KB 283; Aussie Traveller [1998] 1 Qd R 1 at 18 [40] per McPherson JA. -- 17 of 22 -- 18 183 Counterclaim after judgment, stay etc. of original proceeding A counterclaim may proceed after judgment is given in the original proceeding or after the original proceeding is stayed, dismissed or discontinued. 184 Judgment for balance If a defendant establishes a counterclaim against the plaintiff and there is a balance in favour of 1 of the parties, the court may give judgment for the balance. 185 Stay of claim If the defendant does not plead a defence but makes a counterclaim, the court may stay the enforcement of a judgment given against the defendant until the counterclaim is decided. [90] I do not accept that the defendant’s case is confined to the tortious cause of action of negligence. Even if that were so, I would be inclined to stay the enforcement of the defendant’s judgment for recovery of possession (by way of warrant) until after any counter-claim is decided. Abuse of Process [91] It was also contended by the defendant that the conduct of the plaintiff, through its solicitor, constituted an abuse of process such as to warrant an order that judgment should be set aside. [92] The defendant points to the circumstances of the plaintiff’s solicitor serving the unrepresented defendant on the Friday before Christmas break; parallel proceedings seeking the same relief in material respects without due notice; and that the proceeding falls within the Magistrates Court jurisdiction.40 [93] I have already found that this court is properly seized of jurisdiction, and that service of the proceeding on the defendant was regular. I now turn to consider the issue of parallel proceedings. [94] All courts have the inherent or implied powers required to control its own process in the exercise of the jurisdiction, and thereby prevent unfairness by an abuse of process. In D'Orta-Ekenaike v Victoria Legal Aid,41 Gleeson CJ, Gummow, Hayne and Heydon JJ said: “The circumstances in which proceedings might be classified as an abuse of process have been described in various ways. In Hunter v Chief Constable of the West Midlands Police, to which extensive reference was made in the speeches in Arthur J S Hall v Simons, Lord Diplock spoke of abuse of process as a misuse of a court's procedure which would "be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people". In Rogers v R, 40 Defendant’s Outline of Submission filed 6 April 2018. 41 D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at [74] (citations omitted). -- 18 of 22 -- 19 Mason CJ observed of Lord Diplock's speech that, with what had been said in this Court, it indicated that: “there are two aspects to abuse of process: first, the aspect of vexation, oppression and unfairness to the other party to the litigation and, secondly, the fact that the matter complained of will bring the administration of justice into disrepute.” [95] It seems to me that both these aspects are invoked by the plaintiff’s particular conduct of maintaining paralleled proceedings. [96] In Henry v Henry,42 the High Court considered parallel proceedings for dissolution of marriage commenced in both Monaco and Australia, in the context of applying the forum non conveniens principles.43 Dawson, Gaudron, McHugh and Gummow JJ said:44 “It is prima facie vexatious and oppressive, in the strict sense of those terms, to commence a second or subsequent action in the courts of this country if an action is already pending with respect to the matter in issue. And although there are cases in which it has been held that it is not prima facie vexatious, in in the strict sense of that word, to bring proceedings in different countries, the problems which arise if the identical issue or the same controversy is to be litigated in different countries which have jurisdiction with respect to the matter are such, in our view, that, prima facie, the continuation of one or the other should be seen as vexatious or oppressive within the Voth sense of those words. It does not follow that, because one or other of the proceedings is prima facie vexatious or oppressive within the Voth sense of those words, the local proceedings should be stayed. However, it does follow that the fact that there are or, even, that there may be simultaneous proceedings in different countries with respect to the same controversy is highly relevant to the question whether the local proceedings are oppressive in the sense of ‘seriously and unfairly burdensome, prejudicial or damaging’, or, vexatious, in the sense of ‘productive of serious and unjustified trouble and harassment’. And it also follows that courts should strive, to the extent that Voth permits, to avoid that situation.” [97] Parallel proceedings seeking the same or substantially the same relief is prima facie an abuse of process. Indeed, the plaintiff accepts that in so far as the claim in this Court seeks an order for the recovery of the leased premises, it concerns the same issue that was pending in the Magistrates Court by way of complaint and summons.45 [98] Thus, it is incumbent upon the plaintiff to demonstrate that, in the rather unique circumstances of this case, the commencement of the proceedings in this Court were not vexatious, oppressive or an abuse of process. 42 Henry v Henry (1996) 185 CLR 571. 43 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 and Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197. 44 Henry v Henry (1996) 185 CLR 571 at 591. 45 Plaintiff’s further submissions, para. 6. -- 19 of 22 -- 20 [99] The Plaintiff commenced action on 11 October 2017 for summary recovery of the possession in the Innisfail registry of the Magistrates Court by way of Complaint and Summons pursuant to s 141 of the Property Law Act 1974 (Qld).46 [100] The proceeding was first mentioned in the Magistrates Court on 13 November 2017. The plaintiff (as complainant) was represented by its solicitors, and the defendant (as respondent) was represented by Mr Jorgensen (a former director). During the hearing, Mr Jorgensen tried to tender of his affidavit sworn on 13 November 2017 as evidence of his defence in that proceeding. The magistrate declined to receive the affidavit at that mention and adjourned the proceeding for further mention on 11 December 2017 to enable the defendant to obtain legal advice. [101] Whilst it is true, as contended by the plaintiff, that the Innisfail Magistrates Court did not advance past very nascent stage, that cannot be said about the defendant. It seems to me that although the first return date did not result in any active case management, the defendant made it clear by the conduct of Mr Jorgensen that it proposed to defend the proceeding. The defendant properly reacted to proceedings, which by their form and nature were very serious. [102] However, in preparation for the next mention, the plaintiff’s solicitor formed the opinion that the Magistrates Court’s jurisdiction to issue a Warrant for Possession from a fixed term tenancy subject of those proceedings was doubtful.47 This was not communicated to the court, or the representatives of the defendant. [103] Due to a diary error, the solicitor failed to appear at the time of the further mention on 11 December 2017, and the proceeding was further adjourned to 30 January 2018 at the behest of Mr Jorgensen appearing for the defendant. The plaintiff instructed its solicitor to issue these District Court proceedings, with a view to having the Magistrates Court proceeding dismissed when next before that court on 30 January 2018. [104] Despite those developments, the plaintiff’s solicitor did not inform the court or the defendant or make any attempt to mention the Magistrates Court proceeding, or even wait for 30 January. Instead, these proceedings were commenced by claim and statement of claim on 21 December 2017. [105] After confirming by a second historical company search that Mr Jorgensen’s residential address was the defendant’s registered office, the plaintiff’s solicitor personally went to that address on 22 December 2018 at 3:38 pm. He there gave the claim and statement of claim to an adult woman, who I accept was Mr Jorgensen’s mother. [106] Instead of making further efforts to contact the defendant, its director or Mr Jorgensen, on 8 January 2018, the plaintiff’s solicitor wrote to Alexander Law, who had corresponded on behalf of the defendant on 17 August 2017. The plaintiff’s solicitor wrote: “We refer to previous correspondence in relation to this matter including our email of 6 November 2017. We note that we have not heard from you since your letters dated 17 August 2017 and we did not receive a response 46 Affidavit of Todd 6.2.18, para 5; Affidavit of Todd 23.3.18, para. 2. 47 Affidavit of Todd 23.3.18, para. 6. -- 20 of 22 -- 21 from you to our email of 6 November 2017 and you have not appeared on behalf of the Defendant in the Magistrates Court at Innisfail in relation to the proceedings pending in that Court. Please advise whether you still hold instructions to act on behalf of the defendant in this matter. In the meantime, we enclose for your information copies of a Claim and Statement of Claim which were filed in the District Court at Innisfail on 21 December 2017 and served on the Defendant’s registered office at Kewarra beach on 22 December 2017 at 3:38 pm. We note that your client’s Notice of Intention to Defend and Defence are due to be filed by Friday 19 January, 2018.” [107] It would have been opportune to alert those solicitors of the fate of the Magistrates Court proceeding, but the plaintiff remained silent about those parallel proceedings. [108] In default of the defendant filing any notice of intention to defend and defence, the plaintiff requested judgment by default on 24 January 2018. That request was supported by an affidavit of Mr Dillon and the solicitor’s affidavit of service of the claim and statement of claim. The court was not informed about the parallel proceedings, or the defendant’s demonstrated defence of the Magistrates Court proceedings, or the involvement of Mr Jorgensen. [109] I am not persuaded that the steps taken to prosecute the District Court proceeding were not an abuse of process as a misuse of a court's procedure. It seems to me that the use of this court’s procedure in this way was manifestly unfair to a defendant, and would otherwise bring the administration of justice into disrepute among right- thinking people. [110] It seems to me that to allow the matter to proceed to execution by issuing a warrant to recover possession in reliance upon the judgment obtained in the circumstances here would be to countenance an abuse of process. [111] Conclusion [112] For these reasons, I conclude that this is an appropriate case and I order that; 1. The defendant’s application for recusal is dismissed. 2. The defendant’s application to set aside default judgment is allowed. 3. The plaintiff’s application for enforcement in respect of the judgment is dismissed. 4. The defendant will file and serve a Notice of Intention to Defend and Defence by 14 May 2018. 5. Each party will bear their own costs unless either party makes an application for a different costs order within 14 days. -- 21 of 22 -- 22 Judge DP Morzone QC -- 22 of 22 --