A client of mine received summary judgment for possession in an interesting case today.
The judgment suggests that it is harder for a rogue tenant to resist summary judgment for possession since the introduction of the Civil Procedure Act 2010 (Vic).
In today's case:
- the defendant had entered into a vendor's terms contract;
- both the vendor and the purchaser purported to terminate the contract and the associated possessory rights;
- however, the purchaser remained in possession, so the vendor sued for possession;
- the vendor and purchaser entered into subsequent negotiations for the sale of the property;
- the purchaser in his defence and counterclaim relied on the subsequent negotiations as giving rise to either a further agreement for the sale of the property on vendor's terms or a Walton Stores-style estoppel; and
- the vendor sought summary judgment for possession and summary dismissal of that part of the counterclaim relating to specific performance of the alleged agreement.
His Honour Justice Habersberger held that the purchaser did not have a sufficiently strong case to warrant the grant of leave to defend.
When considering the new test for summary judgment and summary dismissal of a claim under the Civil Procedure Act 2010 (Vic), his Honour held that (see [43] and [44]):
There is no doubt, in my opinion, that the test (for determining summary judgment) under the CPA (“no real prospect of success”) is less stringent than the test under the Rules or the inherent jurisdiction (a question that “ought to be tried” or an arguable defence on the merits). This means that an application which does not succeed under the CPA must also fail under the Rules test.
I often see cases where a rogue tenant is able to use a weak, but arguable counterclaim for damages to great advantage.
Provided there is no prohibition on claiming a set off, the tenant can often use the damages counterclaim to obtain an injunction to restrain termination of the lease for non-payment of rent.
This then locks the landlord into a protracted (and expensive) court timetable. This, in turn, strengthens the tenant's bargaining power and often results in the landlord writing off a significant amount of rental arrears to avoid protracted litigation against a potentially insolvent tenant. It also often leaves the landlord feeling frustrated with the legal system.
By making it more difficult for a tenant to resist summary judgment for possession on the back of a weak damages claim, the CPA makes it more difficult for rogue tenants to take advantage of a very weak damages counterclaim.
It also means that practitioners acting for tenants with a legitimate damages counterclaim that they wish to set off against rental arrears need to be vigilant to rally the tenant's evidence for their counterclaim at the earliest stage.
A copy of the judgment is available here.
Thanks to my colleague John Simpson for helping me prepare this post.
