Border Hotels No 2 Pty Ltd v Mehmet Cihan as Trustee for the Cihan Family Trust; Mehmet Cihan as Trustee for the Cihan Family Trust v Border Hotels No 2 Pty Ltd

[2015] NSWSC 273

Supreme Court

New South Wales

Medium Neutral Citation:	Border Hotels No 2 Pty Ltd v Mehmet Cihan as Trustee for the Cihan Family Trust;; Mehmet Cihan as Trustee for the Cihan Family Trust v Border Hotels No 2 Pty Ltd [2015] NSWSC 273
Hearing dates:	19 March 2015
Date of orders:	19 March 2015
Decision date:	19 March 2015
Jurisdiction:	Equity Division - Duty List
Before:	White J
Decision:	1. Order that the plaintiff’s claim for interlocutory relief in the summons be dismissed. 2. Order that the plaintiff, that is Border Hotels No. 2 Pty Limited, pay the defendant’s (Mr Cihan’s) costs of this application for interlocutory relief. 3. On the plaintiff by its counsel giving the usual undertaking as to damages order that up to and including 24 March 2015 the defendant by itself, its servants and agents be restrained from interfering with the plaintiff’s occupation and quiet enjoyment of the leased premises at 77 Liverpool Street, Sydney NSW 2000 or from otherwise interfering with the plaintiff’s conduct of the business known as Casa Asturina.
Catchwords:	PRACTICE AND PROCEDURE – interlocutory orders – present plaintiff previously obtained interlocutory injunction on condition – present defendant successfully obtained an order discharging that injunction due to plaintiff’s non-compliance with condition – plaintiff brings an application for a second injunction on the same terms one day after the earlier injunction was discharged – no new evidence adduced and no new circumstances arose between the discharge of the first injunction and the application for the second injunction – evidence which the plaintiff relied on in support of the application had also been relied on by it in opposing the defendant’s application to discharge the first injunction – held, dismissing the application, that the Court should not permit the re-ventilation of an interlocutory judgment where no new evidence or circumstances have arisen PRACTICE AND PROCEDURE – interlocutory injunctions – absence of evidence that undertaking as to damages could be satisfied if called on
Cases Cited:	Brimaud v Honeysett Instant Print Pty Limited (1988) 217 ALR 44
Category:	Procedural and other rulings
Parties:	Border Hotels No 2 Pty Ltd (Plaintiff 2015/38019) Mehmet Cihan as Trustee for the Cihan Family Trust (Defendant 2015/38019)
Representation:	Counsel: A Ahmad (Plaintiff) J Jobson (Defendant Solicitors: Dib Lawyers (Plaintiff) Andresakis & Associates (Defendant)
File Number(s):	2015/38019; 2015/29699

Judgment

1. HIS HONOUR:   This is an application for an interlocutory injunction. The plaintiff (Border Hotels No. 2 Pty Ltd) is in occupation of restaurant premises in Liverpool Street, Sydney. According to the plaintiff its manager, a Mr John Palasty, negotiated terms upon which the plaintiff would purchase a restaurant business at the premises that had been carried on by the defendant owner and on which it would take a retail lease. It appears that terms were negotiated for the purchase of the business for a sum of $550,000 to be paid as to $130,000 by way of deposit on entering into the agreement for purchase, as to a further $210,000 by 30 January 2015 with the balance of the $550,000 to be paid by 30 April 2015. A copy of the agreement for purchase of the business was signed for the purchaser and sent to the vendor’s solicitors, but it was common ground that the vendor did not return a signed copy of the agreement.

2. It is the purchaser’s case that notwithstanding a term of the agreement that it acknowledged that it not been induced to enter into the agreement by any representation, except as was expressly contained in the agreement, it did in fact negotiate the agreement on the basis of a representation made by the vendor that the restaurant business had an annual turnover of $1.5 million.

3. The purchaser went into possession of the restaurant business on or about 20 November 2014 with the vendor’s agreement. It provided two post-dated cheques totalling $150,000. Those cheques were not met on presentation. The plaintiff’s case is the reason for that is that by 28 November it had ascertained from examination of the vendor’s books that the business was not making the turnover which had been represented and in substance it sought to renegotiate the terms of the agreement.

4. It is the plaintiff’s case that on 30 November 2014 an agreement was made orally between it and the vendor that it would pay $10,000 per week. Of that sum $6,500 per week would represent rent and $3,500 would be applied towards the purchase price. The plaintiff’s evidence is to the effect that it was agreed that the purchase price would be paid in that way by payments of $10,000 per week for the first year with the balance of the purchase price to be paid thereafter.

5. The defendant’s (Mr Cihan’s) evidence is to the effect that he agreed to accept payments of $10,000 per week until 29 December 2014 at which time the deposit of $130,000 would have to be paid together with a bond of $90,000.

6. On 29 December 2014 the defendant attended the premises and, according to the plaintiff, demanded cheques for $220,000 and on non-compliance with that demand, attempted to take possession of the premises.

7. On 31 December 2014 the plaintiff commenced proceedings in the Civil and Administrative Tribunal seeking both final orders under the Retail Leases Act1994 (NSW) and interlocutory relief. The interlocutory relief sought was that the defendant be restrained from taking possession of the premises.

8. On 31 December 2014, the same date on which the application was filed, the Civil and Administrative Tribunal made what it described as a “procedural direction”, namely:

“The respondent [the defendant Mr Cihan] is restrained from locking the applicant out of the premises and is to permit the applicant to operate the business until further order of the Tribunal, subject to the applicant paying the respondent the sum of $10,000 per week.”

9. The proceedings were transferred to this Court. On 30 January 2015. Mr Cihan, whom I have called the defendant, filed a summons seeking, among other things, an order for possession (proceeding 2015/29699). On 2 March 2015 he filed a notice of motion seeking an order that the injunction granted by the Tribunal on 31 December 2014 be discharged.

10. It appears that the basis for the application to discharge the injunction was that the plaintiff had not complied with the condition of the order of the Tribunal that it pay Mr Cihan $10,000 per week. That application was heard and determined by McDougall J yesterday.

11. His Honour, as I understand it, gave oral ex tempore reasons for allowing Mr Cihan’s application and discharging the injunction. The parties have been provided with a draft of his Honour’s reasons.

12. In substance, his Honour concluded that the interlocutory injunction should be discharged for non-compliance with the condition that Border Hotels pay $10,000 from 31 December 2014.

13. His Honour said that it appeared to be common ground, and in any event he found, that since 31 December 2014 Border Hotels should have paid a total of $110,000 and in fact had paid only $75,000.

14. Today, Border Hotels makes a fresh application for another interlocutory injunction. It seeks an order that on proffering the usual undertaking as to damages, the defendant be restrained until further order from interfering with its quiet enjoyment of the leased premises or interfering with the plaintiff’s occupation of the restaurant business.

15. In support of that application, counsel for the plaintiff relies upon evidence given by the plaintiff to the effect that prior to 31 December 2014 it had paid more than the $10,000 per week that was the subject of the alleged agreement with the defendant, from the time on which it had taken possession of the business, or at least from 30 November 2014.

16. The plaintiff says that there is a serious question to be tried that it is entitled to occupation of the premises for a five-year term pursuant to an oral agreement for a retail lease and is entitled to an order for specific performance of the oral agreement of the purchase of the business on the terms to which Mr Palasty deposes. The plaintiff submits that the balance of convenience favours the grant of interlocutory relief and that damages would not be an adequate remedy. It proffers the usual undertaking as to damages.

17. The plaintiff’s case faces two hurdles. The first is that it has already sought and obtained interlocutory relief by order of the Tribunal of 31 December 2014 on a condition. Because it did not comply with the condition of that relief, that interlocutory injunction has been discharged. It now makes another application for relief to the same effect, but on different terms; although the plaintiff would say that in substance the terms are similar in that it says that it has paid or substantially paid $10,000 a week for its occupation and offers to submit to a condition that it continue to pay that amount.

18. The difficulty is that this argument, it seems to me, if made good, would have been a proper basis for the plaintiff to have resisted the defendant’s application to discharge the interlocutory injunction, notwithstanding its non-compliance with the condition on which the Tribunal made its order.

19. Indeed, it appears from the transcript, particularly at p 18, and from the draft reasons of McDougall J, that such a ground was argued before his Honour.

20. At paras [39] and following of McDougall J’s draft reasons, his Honour refers to evidence given by Mr Palasty for the plaintiff that from 1 December 2014 to 13 January 2015 the plaintiff paid a total of $73,000 compared to the sum of $60,000 that presumably would then have been owing on its case. His Honour said that the evidence for the plaintiff left the situation, or the factual picture, unclear. His Honour also said (at [42] and [43] of the draft reasons):

“[42]    Even if it were appropriate to take into account alleged overpayments made before NCAT made its orders, they do not seem to me to be of such magnitude as to offset the now, as I have said, agreed and proven shortfall.

[43]   Thus, I do not regard the asserted overpayments as offering any discretionary reason to withhold the relief that Mr Cihan seeks.”

21. I do not think it open to the plaintiff to seek to re-ventilate the same ground that was raised as a ground of opposition to the discharge of the injunction as a ground for this Court now to make, in substance, the same orders that were discharged yesterday.

22. Counsel for the plaintiff submits that today’s hearing addresses a different issue. Counsel submits that yesterday the argument based on over-payment before the date of the Tribunal’s orders addressed a discretionary element that McDougall J was entitled to take into account as to why he should not discharge the orders, notwithstanding non-compliance with the condition ordered by the Tribunal. Today, counsel submits, the plaintiff is making a completely different application, namely, an application for an interlocutory injunction based upon there being a serious question to be tried that the plaintiff is entitled to possession of the premises and the balance of convenience favours upholding the status quo.

23. Although the applications are different, the issue that has arisen on today’s application is an issue that could have arisen, and it seems to me did arise, on the hearing before McDougall J.

24. In Brimaud vHoneysett Instant Print Pty Limited (1988) 217 ALR 44 McLlelland J said (at 46) that although interlocutory orders by their very nature create no res judicata or estoppel, and although the Court retains the jurisdiction to set aside, vary or discharge an interlocutory order up to the time of the final disposition of the proceedings, it would be conducive to great injustice and an enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order re-litigated at will. The governing principle is that the Court should do whatever the interests of justice require in the circumstances of the case, but in giving effect to that general principle the Court recognises the public and private interests in finality of litigation such that rules of practice have developed that generally, after there has been a contested hearing on an application for interlocutory relief, it requires a material change of circumstances, or the discovery of new material which could not reasonably have been brought forward at the time of the hearing of the original application, before the previous interlocutory order of a substantive nature will be discharged.

25. In that case, a provisional liquidator had been appointed to the defendant after a contested hearing. The defendant applied to discharge the order. McLelland J held that the defendant had to show a material change of circumstances since the original application was heard.

26. The present case appears to me to be the converse of that, or perhaps an extrapolation of it. In this case the plaintiff obtained an interlocutory order from the Tribunal. The defendant successfully obtained an order for discharge of that injunction after a contested hearing. It is only after the plaintiff failed successfully to resist the application for discharge that it now brings a fresh application for a new interlocutory injunction. That application is brought on the basis of the same facts as were available on the hearing before McDougall J.

27. It appears to me that the limited circumstances in which the Court will allow the re-ventilation of an interlocutory judgment that has already been the subject of a contested hearing, do not exist in the present case.

28. In any event, the plaintiff faces a second hurdle. Whilst it seems to me that there may well be arguable grounds for saying that there is a serious question to be tried and that the balance of convenience would favour the grant of an interlocutory injunction, if there were an adequate undertaking as to damages (and I express no concluded view about that because I have not felt it necessary to call on counsel for the defendant), nonetheless I am of the view that in the circumstances of this case no such interlocutory injunction should be granted.

29. The Tribunal, for reasons that do not appear, granted interlocutory relief without requiring an undertaking as to damages. Nonetheless, it is clear that an undertaking should be required. It is common ground that two cheques that the plaintiff proffered were not met on presentation. Although the plaintiff has advanced reasons for that, (reasons which are contested), it is a matter which calls not only for the provision of an undertaking, but for there being satisfactory evidence that the undertaking as to damages could be relied upon, that is to say, that it would be met if called on.

30. No evidence as to the plaintiff’s ability to give a worthwhile undertaking as to damages has been proffered. At the heel of the application, counsel for the plaintiff submitted that he understood that such evidence could be obtained.

31. If such evidence were to be led, it would not be appropriate for it to be led orally. The defendant would be entitled to adequate notice of the evidence so that it could consider whether there was material on which it might wish to rely to rebut any evidence that the undertaking as to damages would be satisfied if called on.

32. For both of these reasons I order that the plaintiff’s claim for interlocutory relief in the summons be dismissed.

33. I order that the plaintiff, that is Border Hotels No. 2 Pty Limited, pay the defendant’s (Mr Cihan’s) costs of this application for interlocutory relief.

[Counsel addressed]

34. The plaintiff seeks an interlocutory injunction in order to preserve the position whilst it considers whether it should seek leave to appeal from the orders I have made or the orders that McDougall J made yesterday.

35. Counsel for the defendant does not point to any particular prejudice that the defendant would suffer if such an injunction is granted to preserve the position until any application is made to the Court of Appeal.

36. I will accede to that application. The plaintiff, by its counsel, gives the usual undertaking as to damages.

37. In proceedings 2015/38019, in which the plaintiff is Border Hotels No 2 Pty Limited and Mr Cihan is the defendant, I order that upon the plaintiff, by its counsel, giving the usual undertaking as to damages, that up to and including 24 March 2015 the defendant, by itself, its servants and agents, be restrained from interfering with the plaintiff’s occupation and quiet enjoyment of the premises known as 77 Liverpool Street, Sydney, New South Wales 2000 or from otherwise interfering with the plaintiff’s conduct of the business known as Casa Asturina.

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Decision last updated: 20 March 2015