Cervo, R.A. v Vrakas, J
[1994] FCA 96
•10 Mar 1994
JUDGMENT No. .ZA - f
| IN THE FEDERAL COURT OF | AUSTRALIA ) |
)
| AUSTRALIAN CAPITAL TERRITORY | ) | |
| ||
| DISTRICT REGISTRY | ) | |
| ) | ||
| GENERAL DIVISION | ) |
BETWEEN: RENATO ANTONIO CERVO
Applicant
AND: JULIETTE VRAKAS
Respondent
MINUTE OF ORDER
| ''P/X A ^, | received̂ |
| JUDGE MAKING ORDER : | Neaves J. | »®m/ii?)994 h) |
| DATE OF ORDER | : | 10 March 1994 | 'FEDERAL COURT OF | - | ' |
| \a\ | AUSTRALIA ^ | ||
| VO\ |
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| WHERE MADE | ; | Canberra |
y>T
THE COURT ORDERS TtiAT:
1. The application for leave to appeal from the interlocutory judgment of the Supreme Court of the Australian Capital Territory given on 23 November 1993 is dismissed.
2. The applicant pay the respondent's costs of the application.
Note; Settlement and entry of orders is dealt with in Order
36 of the Federal Court Rules.
| IN THE FEDERAL COURT OF | AUSTRALIA ) |
)
| AUSTRALIAN CAPITAL TERRITORY | )) | No. ACT G 119 of 1993 |
| DISTRICT REGISTRY | ) | |
| ) | ||
| GENERAL DIVISION | ) |
BETWEEN: RENATO ANTONIO CERVO
Applicant
AND: JULIETTE VRAKAS
Respondent
CORAMr Neaves J.
DATE: 10 March 1994
REASONS FOR JUDGMENT
This is an application for leave to appeal from an interlocutory judgment of the Supreme Court of the Australian Capital Territory {Higgins J.) given on 22 November 1993. The application is made by Renato Antonio Cervo who is the defendant in an action (No. SC 755 of 1993) instituted in the Supreme Court by writ of summons by Juliette Vrakas as plaintiff on 18 November 1993.
The action in the Supreme Court concerns premises known as Suite 9, Green Square Centre situate at Kingston in the Australian Capital Territory of which, at the time of the events complained of, Mr Cervo was the sub-lessor and Ms
Vrakas was the sub-lessee. At the relevant time, the business of a restaurant and bar was being conducted on the premises by the sub-lessee. Ms Vrakas complained that Mr Cervo had on 18 November 1993 unlawfully re-entered the premises and purported to terminate the sub-lease on the ground that she, as the sub lessee, was in breach of an essential term of the sub-lease, namely clause 6.2. That clause relevantly provides:
"6.2 The Lessee must not carry on or permit to be carried on upon the said premises or any part thereof any noxious, noisy, dangerous or offensive business or premises or any part thereof which may be or become process or do or permit anything in or upon the said
a nuisance, annoyance or damage to the tenants or occupiers of other premises in the neighbourhood
The breach relied upon was that the sub-lessee had carried on or permitted to be carried on upon the premises an offensive business and had done or permitted something in or upon the premises which was or might be or become a nuisance, annoyance or damage to the tenants or occupiers of other premises in the neighbourhood. Particulars of the breach were given as follows:
"On 5th November, 1993 between 8.00p.m. and 9.00p.m. you premises and you have caused advertisements to be permitted a strip-tease show to be conducted at the
distributed . . . evincing your intention to continue to
permit such shows to be conducted at the premises."
By the endorsement on the writ of summons, the claim
was for declarations that the plaintiff in conducting, or
permitting the conduct of, strip-tease shows on the premises
had not coininitted a breach of clause 6.2 of the sub-lease and that the re-entry of the premises by the defendant was a breach of the sub-lease. The plaintiff sought orders that the defendant be restrained from interfering with the plaintiff's quiet enjoyment of the premises, that the defendant pay damages for loss of goodwill, trading and consequential costs of closure and that the defendant pay the costs of the proceedings.
An urgent application for interim relief was made to the Supreme Court (Gallop J.) on behalf of Ms Vrakas on 18 November 1993. His Honour made the following orders -
"1. Until further order of this Honourable Court, the defendant by himself, his servants or agents forthwith cause Juliette Vrakas her servants and agents to have possession of premises, being Unit 9 in Sub Leasing plan number 3266 at Block 27 Section 21 Kingston, leased pursuant to sublease RN 824107 in accordance with the sublease.
2. Until further order of this Honourable Court, Renato Antonio Cervo by himself, his servants and agents shall not interfere with the quiet enjoyment of the premises being Unit 9 in Sub Leasing Plan number 3266 at Block 27 Section 21 Kingston, leased pursuant to sublease RN 824107 by Juliette Vrakas, her servants and agents.
| ||
| day of November, 1993." |
On 19 November 1993, the matter again came before Gallop J. who adjourned the matter until 10 a.m. on 22 November 1993 and continued, until that time, the orders he had made on the previous day. His Honour also gave directions as to the filing of affidavits on behalf of the defendant.
The matter came before Higgins J. on 22 November 1993 upon a motion by the defendant, Mr Cervo, that the orders made on 18 November 1993 be discharged. His Honour had before him the affidavit of Philip Bashi filed on behalf of Ms Vrakas, the transcript of the cross-examination of Mr Bashi on 18 November 1993 and several affidavits filed on behalf of Mr Cervo. Most of the latter affidavits were sworn by tenants or occupiers of premises in the Kingston shopping area in proximity to the premises of which Ms Vrakas was the sub lessee .
The affidavits filed on behalf of Mr Cervo having been read, certain objections taken on behalf of Ms Vrakas having been upheld, counsel for Ms Vrakas informed his Honour that he wished to cross-examine the deponents. His Honour raised the question whether any of the affidavit evidence filed on behalf of Mr Cervo was relevant. Submissions were then made by counsel on behalf of Mr Cervo to support the contention that the material contained in those affidavits, if accepted, justified the action taken by Mr Cervo in re entering the premises and terminating the sub-lease. After hearing those submissions and without calling upon counsel for Ms Vrakas, his Honour gave judgment refusing the application to discharge the orders made on 18 November 1993 and ordering the defendant to pay the plaintiff's costs of and incidental to the application. The transcript of the proceedings records his Honour as saying -
"Essentially the case against Mr Cervo is that he took action under the lease which was justified if and only if there was a prima facie breach of the lease. The plaintiff's case is that there is no evidence of any breach of the lease which warrants any such action even if the facts as deposed to by Mr Cervo were as he said they were. Now, in this application it is not necessary to determine the issues of fact that have been raised in the affidavit evidence as between Mr Bashi on the one hand and Mr Cervo and other persons on the other hand.
The undisputed facts are that the premises covered by the relevant sub-lease, which are known as Lou Lou's Restaurant and Bar which are licensed premises licensed by the ACT Liquor Licensing Board to serve alcohol and food, are so conducted as to include at various times what is called a striptease show and that description does not create any mystery. It is a situation where, according to one of the affidavits at least where one of these shows was witnessed, a person strips off her clothes and carries out certain gyrations, I suppose they could be described as. It is said by the persons that they find the knowledge of such activities on these premises being conducted to be offensive or an annoyance.
That is a subjective description of course and the question is whether annoyance in that sense is what is referred to under clause 6.2 and while one can understand that there may well be objections by neighbours to activities being conducted in or upon premises there must be some objective justification for that view beyond the moral objection to the activity in question. It is not suggested here that the activity in question is in any way unlawful or in breach of the terms of either the Crown lease or the sub-lease by itself and there is no evidence of any way in which the activity is so conducted objection to it.as to be obvious to or to confront persons who have an
It is not conducted so as to be seen from outside the premises. It is not of itself advertised in an offensive manner. The advertisements do no more than warn customers or seek to entice them on the basis that this activity will be going on so that they have the choice
whether they enter or not with the full knowledge that that is likely to occur. It simply seems to me that the proposition that the carrying out of this activity on these premises is in some way a breach of 6.2 is totally misconceived. it is incapable of being such a breach any more than if the premises were being used to discuss political points of view with which the various tenants fundcimentally disagreed and found offensive.
It, of course, does not mean to say that what is carried on on the premises cannot be conducted in such a way as
to cause annoyance as if, for instance, as I used an example in argument with Mr Johnstone, where speakers outside engaged in offensive badinage with passers-by, that would certainly be capable of being an annoyance. Where, for instance, the advertisements which are distributed were themselves offensive or were pressed onto persons who did not wish to view them, that could be an annoyance, but in the absence of any evidence of matters of that kind then I cannot really see any logical connection between what is happening and the terms of clause 6.2."
It is from this judgment that Mr Cervo seeks leave to appeal.
It is convenient at this point to refer to certain
events which have occurred since 22 November 1993.
On 21 December 1993, notice was given on behalf of Mr Cervo of a motion to be made to the Supreme Court for a declaration that Ms Vrakas was in breach of the covenants set out in clauses 8.2 and 8.3 of the sub-lease and for an order that Ms Vrakas give Mr Cervo possession of the subject premises forthwith. Clauses 8.2 and 8.3 of the sub-lease
| provide - | ' |
"8.2 The Lessee must insure forthwith and keep insured during the said tenancy all plate glass windows of the said premises against loss or damage by accident or otherwise to the full value thereof in the name of the Lessee in some insurance office to be
approved by the Lessor (and such approval will not be unreasonably withheld) and from time to time at the request of the Lessor or his agent will produce to the Lessor evidence of such insurance and in case the said plate glass windows or any of them are destroyed or damaged by accident or otherwise will ensure they are replaced forthwith with glass of the same relative quality and thickness PROVIDED HOWEVER that if the Lessee fails to make and maintain any such insurance the Lessor may from time to time at his discretion effect or keep on foot such insurance
and the Lessee will on demand repay to the Lessor
all sums of money expended by him for that purpose.
8.3 At all times during the term hereof the Lessee must at his own expense keep current a public risk policy in the joint names of the Lessee and the Lessor satisfactory to the Lessor and issued by a company approved by the Lessor (and such approval will not be unreasonably withheld) in respect of the premises in an amount not less than that set out in item 6 of the Reference Schedule and will immediately when renewals thereof to the Lessor and must also required by the Lessor produce such policy and all
indemnify and keep indemnified the Lessor from and against all claims, demands, actions, suits and proceedings to the same extent as the Lessee also becomes liable or but for the application of some limitation period or similar procedural law would become liable in respect of those claims, demands, actions, suits or proceedings. The Lessee will not be required to indemnify the Lessor in respect of any accident, injury or damage caused by or arriving [sic] out of the act or default of the Lessor."
The amount specified in item 6 of the Reference Schedule is
$5,000,000.00.
The notice of motion was subsequently amended, by leave of the Supreme Court given on 22 December 1993, to peinnit Mr Cervo to seek an order in the following terms:
"That the plaintiff by her servants or agents be restrained from permitting or suffering any member of the public to enter or remain upon the premises described in the Statement of Claim or any part thereof until;
(a) the hearing of this action;
| (b) | the production to the Defendant of a public risk policy in accordance with the Sub-lease and certified by the insurer as valid and current; or |
{c) further order
whichever event shall first happen."
The notice of motion as amended came before the Supreme Court (Miles C.J.) for hearing on 4 January 1994. On 6 January 1994, his Honour delivered judgment on the motion, finding that the evidence did not establish a breach of clause 8.2 of the sub-lease but that a breach or breaches of clause 8.3 thereof had occurred. His Honour made orders in the following terms:
"1. Whilst the plaintiff continues to fail to produce to the defendant or his solicitors a public risk policy in the joint names of the plaintiff and the defendant in accordance with sub-cl.8{3) of the Sub lease RN 824107 together with a statement from the insurer that the policy is valid and current and [sic] as from 4 p.m. Tuesday, 1 February 1994 and until further order, the plaintiff is restrained from permitting or suffering any member of the public from entering or remaining upon the premises the subject of the sub-lease.
2. Adjourned to Tuesday, 1 February 1994 at 9.30 a.m. for mention.
3. The plaintiff to pay the defendant's costs of motion.
Liberty to apply on 2 days notice."
When the motion was mentioned on 1 February 1994, Miles C.J. declined to accede to a request by counsel for Ms Vrakas that she have further time within which to remedy the breach or breaches of clause 8.3 of the sub-lease. In consequence, Ms Vrakas has, since 4 p.m. on 1 February 1994, been restrained from permitting or suffering any member of the public to enter or remain upon the subject premises. No further order was sought on behalf of Mr Cervo.
On 4 February 1994, a defence and counter-claim was filed on behalf of Mr Cervo in the action numbered SC 755 of 1993 alleging that Ms Vrakas has committed various breaches of the sub-lease. The action has not yet come on for hearing.
Counsel for Mr Cervo submitted that Higgins J. had effectively determined, as a matter of substantive right, that no breach of clause 6.2 of the sub-lease had occurred, that that decision was attended with sufficient doubt to justify the granting of leave to appeal and that substantial injustice would be done by leaving the decision unreversed. He referred to Niemann v Electronic Industries Ltd [1978] VR 431, Superstar Australia Pty Ltd v Coonan & Denlay Pty Ltd (1981) 40 ALR 183 and Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. It was submitted that Higgins J. erred in law in his interpretation of clause 6.2 of the sub-lease, in selecting the test to be applied in determining whether such a breach had occurred and in his approach to the affidavit evidence tendered on behalf of Mr Cervo. In concluding that that material, even if accepted, was incapable of establishing a breach of clause 6.2, his Honour was said to have applied the wrong test. A further submission was that his Honour erred in treating the affidavits sworn by tenants or occupiers of premises in the Kingston shopping area as saying no more than that their objection to the activities being conducted on the premises was based solely on their knowledge that striptease shows were being performed there. It was submitted that his Honour gave no weight to the evidence that the
activities in question and the advertisements relating thereto resulted in a lowering of the reputation of the area, in a
| diminution of the value | of businesses in the immediate |
proximity and in embarrassment to the deponents of the
affidavits, their staff and their customers.
Substantive injustice was said to flow from allowing the order made by Higgins J. to remain in force as it precluded Mr Cervo from exercising his rights under the sub lease not only in respect of the alleged breach of clause 6.2 but also in respect of the breach of clause 8.3 to which reference has been made and any future breach. It was submitted that an early resolution by this Court of the question whether a breach of clause 6.2 of the sub-lease had occurred would bring the litigation between the parties to an end.
It is unnecessary to express an opinion upon the question whether the judgment of Higgins J. is attended with sufficient doubt to warrant a review by this Court for, even if that question be answered in the affirmative, I am satisfied that leave to appeal should not be granted. The application is, in my view, misconceived. It fails to give due weight to the nature of the proceeding that was before Higgins J. The issue before his Honour was not the final determination of the question whether a breach of clause 6.2 of the sub-lease had occurred. What was before him was an application to discharge an interlocutory injunction granted
by Gallop J. designed to preserve, until the final determination of that issue, the situation as it existed prior to the actions of Mr Cervo in re-entering the premises and purporting to terminate the sub-lease, the actions which precipitated the action commenced by Ms Vrakas.
If leave to appeal were to be granted, the only issue for this Court would be whether the injunction granted by Gallop J. should continue until the hearing of the action or whether it should be discharged. It would not be open to this Court to resolve finally the question which Mr Cervo seeks to have resolved in his favour, namely that the activities conducted on the premises constituted a breach of clause 6.2 of the lease. The resolution of that question must await a final determination of the factual issues which the parties wish to raise in the action pending in the Supreme Court. It follows that to allow the decision of Higgins J. to remain unreversed will work no substantial injustice to Mr Cervo. It is open to him to seek to bring the action on for trial as a matter of urgency. A further factor militating against the granting of leave to appeal is the fact that, by operation of the orders made by Miles C.J. on 4 January 1994 and 1 February 1994, the activities complained of are no longer continuing.
The application is dismissed. The applicant must
pay the respondent's costs of the application.
preceding 11 pages are a I certify that this and the
true copy of the Reasons for Judgment herein of the Honourable Mr Justice Neaves
Associate
Dated; 10 March 1994
| Counsel for the applicant | Mr P. Shiels QC and Mr T.M. Johnstone |
| Solicitors for the applicant | Gillespie-Jones & Co |
| Counsel for the respondent | ; Mr R. Arthur |
Solicitors for the respondent : Bernard Collaery & Associates
| Date of hearing | 11 February 1994 |
| Date of judgment | 10 March 1994 |
| 5 V I |
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