The Sheik Holdings Pty Ltd v Bakkal
[2004] QDC 509
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- The Sheik Holdings Pty Ltd v Bakkal[2004] QDC 509
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The Sheik Holdings Pty Ltd v Bakkal[2004] QDC 509
The Sheik Holdings Pty Ltd v Bakkal[2004] QDC 509
DISTRICT COURT | No 121 of 2003 |
CIVIL JURISDICTION
CHIEF JUDGE WOLFE
THE SHEIK HOLDINGS PTY LTD (ACN 010 424 503) AS TRUSTEE FOR THE A BARAKAT NO. 2 TRUST | Plaintiff |
and
ISMAIL SAID BAKKAL, Defendants IBRAHIM SUSLU and NURTEN SUSLU | Defendents |
BRISBANE
DATE 10/11/2004
JUDGMENT
HER HONOUR: What you are relying on is this. You say there was a conversation between the co-tenants and the plaintiff's agent at which your client, Mr Bakkal, was not present. Mr Bakkal swears it was: “Sometime around the end of 2002.” Mr Bakkal also swears that his co-tenants advised him that the dispute - that is the dispute about the terms of the lease, the registered lease, reached a head at the end of 2002.
...
By the end of 2002 the following had occurred: on the 8th of July 2002 Mr Bakkal, your client, had returned the lease in triplicate resigned. He had two opportunities to consider it.
He was then advised, on the 8th of July 2002, that it would be lodged for stamping with the Office of State Revenue and that the stamp duty would be payable by him. Also, that the registration fees would be payable by him.
He was asked for the Bank Guarantee for an amount equivalent to three months rent and three months outgoing. He was advised that technically he was in breach of lease.
He was also asked to provide a Certificate of Currency for the insurance effected under the lease. He was told the landlord's rights would be reserved.
He was also properly sent back by Le Mass' Solicitors, the solicitors for the then owner or landlord, their letter which he had returned in error. Those solicitors had advised him the letter should be kept with his records.
Also, by the end of 2002, he personally was advised in a letter dated the 15th of July 2002 from the landlord's solicitors that they understood he was undertaking fit-out works to the premises. He was again asked for the guarantee and the Certificate of Currency. He was advised he would not be permitted to occupy the premises and operate the business until the Bank Guarantee and the Certificate had been forwarded.
On the 19th of July or thereabouts, he received the Assessment Notice. On the 30th of August he was advised that the lease had been stamped. One could assume the duty had been paid. He was asked for more money to pay the Department of Natural Resources so the lease could be registered.
On the 6th of September he was advised again by those solicitors that their client had advised payment of the registration fees and it had been registered and was asked to send his cheque, which was payable under the lease.
He was reminded on the 11th of September 2002 that a Bank Guarantee was still forthcoming and by the 1st of October 2002 your client had paid the registration fee's amount. That cheque had to be returned to be re-endorsed. Again the Bank Guarantee was sought.
On the 15th of November those solicitors wrote to McCarthy, Durie, Ryan and Neil, noting they were acting on behalf of the tenant, advising the lease had been registered and enclosing copies of the lease. There was discussion about whether it was one month or six months or whatever rent free. It was put to bed by that letter of the 15th of November 2002. That shows this: their facsimile transmissions to the managing agent - the solicitor's comment that the disclosure statement made reference to six months base rent free to be taken as twelve months half-rent (and that was an obvious mistake) - they referred to the agreement to enter into the lease acknowledged and signed by your client, one month's rent free. That was supported by the lease documents which had been sent to your client for signing and which your client signed twice, on two occasions, and it was then noted that your client was then in arrears.
So much for that. Your argument seems to be based on what Mr Bakkal alleges was told to him by the Suslus. They have not deposed to that. There is no evidence of them deposing to that. The closest that supports that is the Suslus' - the co-tenants' - solicitor's letter of the 3rd of January which is addressed not to the solicitors for the plaintiff, but for the solicitors who had acted for the earlier owner. It alleges:
“Your client has delivered an ultimatum to ours, namely that they either vacate the premises, or alternatively, sign a three year lease. The latter presents a number of problems given that our clients differ as to what had been originally agreed between the parties and its subsequent documentation.”
Then it goes on to say:
“From our client's point of view, given that your client differs as to what has been agreed in the first place, and the deterioration of relations between the parties as a result, our client will accept your client's first demand.”
Not offer, demand:
“Namely that they vacate the premises.”
And then it goes to say:
“They will remove their fittings and equipment by the end of the week,”
and goes on to say:
“And propose to vacate by then on the basis that this discharges all obligations and potential causes of action between the parties now or in the future arising from this particular matter. Please advise if this is acceptable to your client.”
That letter does not confirm that there was any binding agreement between the co-tenants, or between the co-tenants and your client on the one hand, and the plaintiff on the other. It is noteworthy that it was sent after the Notice to Remedy Breach of Covenant was served.
Further, it does not accord with that which Mr Bakkal alleges he was told, in that he deposes that they chose to leave and instructed their solicitors to write to the landlord's solicitors that they would do so on the basis that this discharged all obligations and causes of actions between the parties.
Clearly that is not what their solicitor wrote to the plaintiff. It was an offer at best which was not accepted by the plaintiff as can be seen by the letters served advising that the repudiation had been accepted on the 14th of January. The locks were changed and on the 16th of January a claim for rent and outgoings et cetera was filed in this Court.
There was further correspondence and that was to move the fittings or - and on the 24th January would be liable under that provision of the lease.
On the 24th of January your client was served. Nothing was done. Plenty of time elapsed because it was not until the 18th of July 2003 that default judgment on the liquidated amount was regularly obtained. It was not until the 14th of November last year that the hearing of the assessment of damages took place before his Honour, Judge Boulton; his Honour giving judgment in that matter.
It seems that it was not until the 10th of November that the plaintiff's solicitors notified the defendants by mail of the three judgments. That may have been just to the solicitor's for the co-tenants. Certainly on the 12th of November a copy of the default judgment and a Notice of the Assessment to be held on the 14th of November was sent by post in Sydney to your client, the applicant.
You have indicated today that you are not taking the point about that, if there is one, except to say that such notice was given at best only a day or so before the hearing. Nonetheless, on that date when your client received that notice your client knew default judgment had been entered.
Turning to the draft defence, which is exhibited to the affidavit of Mr Bakkal - and before I turn to that I should say that I do note that Mr Bakkal has difficulties with the English language; it is not his first language. He, like the other co-tenants, are apparently of Turkish origin and that is their first language.
Secondly, it can be inferred that Mr Bakkal knew that the Suslus had retained solicitors and who they were, for he retained them to act in the bankruptcy proceedings when an application for a sequestration order was made and a notice served on the applicant here, Mr Bakkal. That occurred on or about the 23rd of March, it was served on the 1st of April this year.
Mr Bakkal did not apply to set aside the notice, nor did he then apply to set aside the judgment. The creditor's petition and supporting documentation was filed on the 17th of May and served on the 27th of May, being returnable before the Federal Magistrate on the 11th of June this year. He did not then attempt to set aside the default judgment.
The bankruptcy petition has been adjourned on three occasions. On the first occasion, the 11th of June, Mr Bakkal's solicitors requested an adjournment of the hearing of the petition. That was adjourned until the 18th of June. On the 18th of June Mr Bakkal's solicitors again requested an adjournment. That was denied. After oral argument Registrar Baldwin reserved her decision and ordered the parties file and serve their submissions by the 25th of June and any in reply by the 3rd of July.
Those submissions were, on the part of the plaintiff, directed towards indefeasibility of title and the time and system of registration and the relevant provisions of the Land Title Act.
On the 2nd of July the plaintiff objected to the respondent's written submissions on the point that the written submissions were to deal with an issue of law only, that of indefeasibility of title, and that the Registrar had emphasised that they were not to deal with facts or background.
It would seem from the submissions in response to Mr Bakkal's submissions that Mr Bakkal had been concerned with the matters raised by the plaintiff. For example, Mr Bakkal had contended that a lease of three years duration was not registrable and also non est factum, unilateral mistake as to terms, and unconscionable conduct was raised, as well as promissory estoppel.
There is further evidence before me that Mr Bakkal was the registered earner of certain real property in New South Wales and that on the 17th of June, the day prior to the second hearing of the petition, Mr Bakkal transferred his full interest in the property to another person.
On the 24th of August there was a third appearance before Registrar Baldwin, who delivered her decision. She ordered that the hearing of the petition be adjourned until 15th of October this year. In her decision she held that the “formal” requirements of section 52 of the Bankruptcy Act 1966 had been established and that it was open to her to make a sequestration order.
What was not apparently before the learned Registrar or perhaps not taken into account was the notice to remedy a breach of covenant which was served on Mr Bakkal and the other tenants on the 24th of December. Certainly the notice served on the 14th of January was taken into account by her plus the other notices.
...
She also notes that the respondent's version of events that was before her again did not reflect accurately what is in the solicitor's letter of the 3rd of January.
She also refers to his affidavit in that case stating he is the father of three children. I am told today he has six children. One of his children suffers severely from a serious disease and he told the Magistrate that he had returned in August 2003 and remained there until November 2003 seeking treatment, and that was why he did not seek legal or other advice.
However, those notices were served in December 2002 and January 2003. The plaint was filed in January 2003 and the claim was served on him on the 24th of January, that is, six months before he left for Turkey.
It is clear from the notices on the claim that he should have been on notice of what could occur if he did not defend the claim and that judgment would be entered into against him.
Before her he had referred to his allegation that the original lease was invalid because of the way in which it was entered into, and secondly that the plaintiff's agent had entered into an agreement with the Suslus and Mr Bakkal that they could vacate the premises and that would be the end of the matter.
Pausing there, the only evidence of that before me is in Mr Bakkal's affidavit - that allegation relying on what the Suslus told him. There is nothing to indicate when he was told of that or whether he was consulted in the Suslus leaving the premises.
Accordingly Registrar Baldwin decided to refuse to make the sequestration order and permit the hearing of the petition to be adjourned until the 15th of October to allow the respondent to bring this application.
I note the Registrar also observed that she was giving liberty to apply earlier, should the respondent not take expeditious steps in the District Court of Queensland.
This application was filed on the 13th of October, once again the applicant to set aside judgment not showing any great urgency, and it was set down for hearing today. I am not sure why it was not set down for hearing earlier. I can only assume that was the date chosen by Mr Bakkal's solicitors.
None the less that does not figure in my assessment of the material before me. So far as the decision I have to make is concerned the fact of the bankruptcy proceedings is only relevant in that the applicant, Mr Bakkal, has had a solicitor since they began, has known that the judgment - attempts were being made to execute the judgment from the moment the bankruptcy notice was served on him and that it was not until the 13th of October that he attempted to do anything about this matter.
I also note that counsel for Mr Bakkal wished to amend his application to insert the words “and the judgment of 14 November 2003” in paragraph 1 of the application, but later in the hearing he withdrew that application.
Finally, I consider the defence - or the draft defence of the first defendant. Curiously, although Mr Alldridge acts only for Mr Bakkal, the heading includes the Suslus who have gone to Turkey and have not been heard of since. But this is said to be the defence of the first defendant being Mr Bakkal.
Much is pleaded about the execution of the lease and alleged that it is void ab initio. However, it then goes on - and for the purposes of this application that is the relevant one - to allege that the plaintiff acted unconscionably “in taking advantage of the defendant's poor language skills, particularly reading skills and their lack of knowledge, particularly the first defendant who acted without the benefit of legal advice.”
That is a serious allegation to make, so far as it concerns any actions of the plaintiff or the plaintiff's agent, in November, December or January 2003. It does not appear in the material before me that the plaintiff's agent or any officer of the plaintiff had any conversation with Mr Bakkal.
Accordingly, that allegation of breach under section 51AC of the Trade Practices Act 1974, that is, that the plaintiff's conduct was misleading and deceptive in a material way such that had the true facts had been known to the defendants they would not have executed the document in question, is an extremely serious allegation to make knowing the plaintiff had not, in effect, been around when the lease was executed.
If it refers to the letters and the notices served in respect of breach, in November and December 2002, and January 2003, then what is alleged is that the plaintiff's conduct in making demand under a registered lease in the form prescribed by the Property Law Act is misleading and deceptive in a material way. No other particulars are given and accordingly, if this was an application to strike out, I would strike that paragraph out.
Secondly, it is alleged that there was what counsel for Mr Bakkal describes as a collateral agreement. It is alleged in the pleading that the solicitors for the second and third defendants - that is the co-tenants - accepted the landlord's offer to vacate on condition that this ended all claims between the parties. How that could be pleaded in view of the letter I do not know.
This Court has, on many occasions, considered the judgment of Justice Williams in Cook v D A Manufacturing Co Pty Ltd [2004] QCA 52, as it has, of course, the judgment of McPherson J, as he then was, in National Mutual Life Association of Australasia v Oasis Developments Pty Ltd [1983] 2 QdR 441 at 449-50, and the matters referred to therein.
The most important question is whether the defendant has a prima facie defence on the merits. In my view, the defendant or the applicant here, Mr Bakkal, does not have an apparently good ground of defence. Had he, I would not refuse him the opportunity of defending.
Subject to this, one is also conscious of the damage done by delay. The conversations upon which Mr Bakkal relies so far as they concern the present owner's agent, the plaintiff's agent - which I must say have been strenuously denied - it is not suggested that he was not on holidays and away from Brisbane when this crucial conversation is said to have taken place, probably after Christmas 2002 and before the letter of the 3rd of July. It is the Christmas/New Year period or certainly around that time. And that's in 2002.
Certainly that is barely two years ago, but these conversations had not been alleged - apart from another version in the letter of the 3rd of July 2003 - until the proceedings before the Federal Magistrate was called in the middle of the year.
But, even giving slight weight to that, in my view, the defendant applicant has not shown a prima facie defence on the merits of the claim on which the judgment is founded.
Accordingly, I dismiss the application. Have you anything to say about costs?
MR PEDEN: I've asked for them, your Honour.
HER HONOUR: And I order the applicant defendant, Mr Bakkal, to pay the respondent plaintiff's costs of and incidental to the application to be assessed if not agreed.