Compadres Aust v Waterfront Place No2

[1995] QSC 200

IN THE SUPREME COURT
OF QUEENSLAND

Brisbane  WRT. No. 599 of 1995

Before the Hon. Justice Mackenzie

[Compadres Aust v. Waterfront Place No.2 & Ors]

BETWEEN:
  COMPADRES AUSTRALIA PTY LTD
  Plaintiff
AND:

WATERFRONT PLACE NO. 2 PTY LTD
  ACN 010 728 042
  First Defendant
AND:
  WATERFRONT PLACE NO.3 PTY LTD
  ACN 010 790 931
  Second Defendant
AND:
  HANNASLEA NOMINEES PTY LTD
  Third Defendant

JUDGMENT - MACKENZIE J.

Judgment delivered  15/08/1995

CATCHWORDS:           COSTS - Action discontinued - O.91 r.16 - motion for injunction to restrain 3rd defendant from restricting access to plaintiff's premises based on terms of lease between plaintiff and 1st and 2nd defendants - injunction refused but compromise made between parties - after proceeding plaintiff became aware of liquor licence to 3rd defendant preventing service of liquor in the relevant area - whether proceedings have therefore become unnecessary - whether costs order should reflect that.

Counsel:J. Batch for applicant

P. Freeburn for first and second respondent

D. Savage for third respondent

Solicitors:Biggs & Biggs for applicant

Corrs Chambers Westgarth for first and second respondents

Phillips Fox for third respondent

Hearing date:          7 August 1995.

IN THE SUPREME COURT
OF QUEENSLAND

Brisbane  WRT. No. 599 of 1995

Before the Hon. Justice Mackenzie

[Compadres Aust v. Waterfront Place No.2 & Ors]

BETWEEN:
  COMPADRES AUSTRALIA PTY LTD
  Plaintiff
AND:

WATERFRONT PLACE NO. 2 PTY LTD
  ACN 010 728 042
  First Defendant
AND:
  WATERFRONT PLACE NO.3 PTY LTD
  ACN 010 790 931
  Second Defendant
AND:
  HANNASLEA NOMINEES PTY LTD
  Third Defendant

JUDGMENT - MACKENZIE J.

Judgment Delivered 25 August 1995

The summons in this matter seeks the following orders:-

1. That the action be dismissed;

2. That the plaintiff be released from its undertaking given on 11 April 1995;

3. That monies held in the trust account of the solicitors for the plaintiff pursuant to that undertaking be paid out to the plaintiff;

4. That the third defendant be released from its undertaking given on 21 April 1995;  and

5. That the question by whom the costs of the action should be paid be determined pursuant to O.91 r.16.

   The first four orders are not in dispute.  Mr Savage on behalf of the third defendant objects that O.91 r.16 has no application to the case.  The writ and notice of motion seeking injunctive relief were both filed on 10 April 1995.  On 11 April 1995, Byrne J. granted an interim injunction on condition that a sum of money representing estimated daily damages to the third defendant be paid into court by the first defendant.  The proceedings are concerned with premises in Eagle Street.  The plaintiff conducts a restaurant called Compadres Bar and Grill on the first floor of the Pier complex.  The third defendant conducts a restaurant and nightclub called Grand Orbit in adjacent premises. 
             The immediate cause of the proceedings is that the first and second defendants, the landlords of the complex, permitted the third defendant to place tables chairs and pot plants along the entire length of part of a walkway used as one of the means of access to the plaintiff's restaurant.  The walkway, prior to that permission, was about 3.9m wide.  After the furniture and pot plants were put in position it was reduced to 1.2m and the plaintiff complained that that was a cause of a fall in sales and patronage.  Upon the hearing of the motion for interlocutory relief before Byrne J. attention appears to have focussed on whether the licence to the third defendant by the first and second defendants constituted a breach of the plaintiff's lease with the first and second defendants, in particular, of a clause obliging the landlord to endeavour to ensure that the means of ingress to and egress from the plaintiff's premises would be no less adequate than those provided at the commencement date of the lease.  Byrne J. held that it was "fairly arguable" that there had been a constraint upon ingress to and egress from the premises in a way which made the existing access "less adequate than the access prevailing at the commencement date."  He also expressed the view that it seemed arguable that there had been an unreasonable interference with the conduct of the plaintiff's business which was referred to in other clauses of the lease.
             Byrne J. then expressed the view that damages would not be an adequate remedy because they would prove too difficult of assessment.  On the issue of balance of convenience he considered that an injunction would cause some appreciable economic loss to the third defendant if access to part of the balcony for the placing of tables and chairs was not permitted.  Against that, he weighed the prospective loss which refusal of the injunction might cause to the plaintiff against a proposal that would result in 1.9m of the walkway being available for access. Byrne J. took the view that that and certain structural work should substantially diminish adverse impact upon the plaintiff's trading which might otherwise have been attributable to the visible presence of tables, chairs and pot plants extending over all but 1.2m of the walkway.  He concluded that in the light of that proposal, though the plaintiff may sustain some loss if the injunction was refused, the plaintiff's loss would be less than the third defendant's and that the proposal was a reasonable way of balancing interests until the action could be tried.
             The relief sought in the writ was -

   (a)a permanent injunction restraining the defendants from causing or permitting tables, chairs or pot plants on the balcony; and

   (b)damages.

   It was submitted that the plaintiff had obtained neither of those forms of relief.  It was also submitted that the plaintiff's application for an interlocutory injunction had been refused.  However, the refusal was contributed to by the first and second defendants' proposal, which was accepted by Byrne J. as reasonable, to partially remedy what was complained of.  In that sense it is not a case where the application can be said to have failed on the merits.
             Costs of the application for an interim injunction were reserved on 11 April 1995.  When the application for the interlocutory injunction was before Byrne J. he indicated that he would not interfere with that order.  So far as the costs of the proceedings on 21 April 1995 are concerned he awarded costs to the first and second defendants with respect to the period after the making of the offer to enlarge the walkway but ordered that the costs of the applications so far as they related to the first and second defendants otherwise should be the first and second defendants' costs in the cause.  So far as the third defendant was concerned Byrne J. did not interfere with the order that costs be reserved made on 11 April 1995.  However, so far as the costs of the application for the interlocutory injunction were concerned, he ordered that they be the third defendant's cost in the cause.
             It was submitted by Mr Batch that the jurisdiction under O.91 r.16 had been enlivened because the terms of the liquor license granted in respect of the third defendant's premises did not permit the serving of liquor on the balcony.  It was submitted that as this had come to the knowledge of the plaintiff only after the interlocutory proceedings had been heard and the fact had not been brought to the attention of the court by the third defendant the proceedings had become unnecessary.  Ordinarily, discontinuance of an action would be subject to O.30 r.2.  It was submitted on behalf of the first and second defendants that discontinuance should be allowed on the basis that the plaintiff pay the costs of the defendants.  Alternatively it was submitted that each party should bear its own costs.  The third defendant submitted that there was no reason to reverse the normal rule that costs follow the event of the dismissal of the application.
             I was referred to a number of authorities.  The first two differ from the present case in that in each case, the cause of complaint leading to the application was desisted from unequivocally.  In the present case, the cause of complaint is said to have ceased by reason of a separate circumstance, leaving the initial basis upon which relief was sought unresolved.  In Gold Coast City Council ex parte Raysun Pty Ltd (1971) QWN 13 the applicant sought to force the Council to consider a plan of subdivision by mandamus. After service of, but without concession that it was because of, the initiating process the Council considered the plan. An order for costs was made under O.91 r.16 on the basis that the prosecutor had reasonable grounds for complaint about the attitude taken by the respondent in failing to consider the application and to argue a case to support mandamus up to the time when the respondent considered the plan. I was also referred to R. v. Wilkey ex parte Cooke (1991) 2 Qd.R 447 where an applicant to set a witness summons aside was granted costs of the application and of the application for costs after the summons was not proceeded with.
             In Austcorp Finance and Leasing Pty Ltd v. Thomas (unreported, Supreme Court of Queensland 23.8.91, Master White) injunctive relief was given on short notice and without affording the defendant an opportunity to return confidential documents allegedly wrongly taken or to give undertakings.  Undertakings were eventually given but against the background of a denial that the respondent had done or intended to do any of the things against which relief was sought.  Master White took the view that it could not be said that the plaintiff was driven to litigate by the attitude of the defendant who had neither been given an opportunity to return the documents nor to give undertakings.  Leave was given to discontinue on the basis that there was no order as to costs of the action including certain reserved costs and that the plaintiff pay the respondent's cost of and incidental to the application for costs.
             In the course of that decision reference was made to J.T. Stratford & Son Ltd v. Lindley (No.2) (1969) 1 WLR 1547. The principle is stated in that case and in Auscorp Finance that it is not appropriate on an application of this kind for the court to attempt to determine for itself the likely outcome of the case on its merits had it gone to trial.  Stratford was also referred to in Australian Securities Commission v. Aust - Home Investments Ltd (1993) 11 ACSR 136 where Hill J. recited a number of propositions which appeared to have support from the cases. The proposition about not determining the matter on the merits was repeated. Other propositions were that -

   (a)where neither party desires to proceed with litigation the court should be ready to facilitate the conclusion of the proceedings by making a costs order;

   (b)it is appropriate to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them;

   (c)that in some cases it may be appropriate to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation;  and

   (d)that while the fact that interlocutory relief may have been granted may be taken into account that fact carries no implication as to the ultimate merits of the case but does ordinarily suggest that there was an arguable issue to be tried between the parties and that the balance of convenience favoured the grant of that relief.

   The third defendant submitted that the application under O.91 r.16 was misconceived.  It was submitted that the proceedings had not become unnecessary because the action was, by consent to be dismissed.  The application for an interlocutory injunction in terms of the notice of motion was refused.  A compromise suggested by the first and second defendants, which resulted in the third defendant being permitted to keep tables chairs and pot plants on the balcony subject to leaving a specified walkway, was accepted by Byrne J. as a satisfactory  basis for balancing the rights of the parties at the trial.  The basis upon which the interlocutory proceedings were brought was that the first and second defendants had acted in contravention of the plaintiff's rights under a lease by granting a licence to the third defendant to place the items on the balcony.  There remains no concession that the granting of the licence was in breach of the plaintiff's lease.       However, it is submitted by the plaintiff that the proceedings have become unnecessary because of matters pertaining to the liquor licence.  The argument is, in effect, that because since the proceedings began, the licensing authorities have asserted that the terms of the liquor licence to the third defendant do not extend to the balcony at all, the plaintiff would not have had to bring the proceedings if it had known of the terms of the licence.  The first and second defendants say that even if that is so, it does not resolve the issue as between them and the plaintiff as to the right to allow the third defendant to place tables and other furniture on the balcony.  The extent of the liquor licence is irrelevant to that issue.  It is, in any event, not finally resolved what its final terms will be.  The third defendant says that, in any event, the plaintiff could not cogently submit that it had no knowledge of the condition in the licence relating to access along the balcony prior to the commencement of proceedings.
             The licence in existence at 15 March 1995 had a condition to the following effect:-

   "4.The licensee must ensure that free and unrestricted access along the balcony perimeter of the premises is maintained at all times."

By letter of 19 December 1994 Ms Greer, a Director of the plaintiff was advised by the Executive Director (Liquor Licensing) that it had been determined to approve the application for the third defendant's premises subject to, among other things, a condition being endorsed  on the document ensuring free and unrestricted access along the balcony perimeter of the premises.  It will be noted that is in the same terms as the licence itself.  Until after the proceedings were commenced, the terms of the licence, insofar as they related to the actual area in which liquor might be served, were apparently not raised as an issue in connection with this matter.  The terms of condition 4 do not address the issue, being concerned with access.  No inquiry for the purpose of these proceedings was made prior to their commencement.  It was only belatedly that the authorities expressed the view it did not extend to the balcony.
          The plaintiff's proposition is that, given the effective coincidence between the injunction sought by the plaintiff and the terms of the liquor licence issued, the determination of the action has become academic.  The plaintiff submitted it had reasonable grounds for complaint of the attitude taken by the defendants and an arguable case to support the course it took up to the point when the terms of the liquor licence became known.  It was submitted that because the third defendant had had dealings with the liquor licensing division and had represented that it would ensure unrestricted access along the balcony perimeter its opposition to the applications for injunctions was unreasonable.  It was submitted that the plaintiff should have the costs of the action against the third defendant including all reserved costs.  The plaintiff submitted that while the first and second defendants took a less vigorous role they opposed the application.  The matter which precipitated the proceedings was the permission given to the third defendant to use the balcony by them and the first and second defendants were necessary parties.  It was submitted that the plaintiff should have its costs of the action including reserved costs against the first and second defendants although it would be an appropriate order if the first and second defendants had the benefit of a Bullock order for its benefit as against the third defendant.  No submissions were addressed to Byrne J. in relation to the liquor licence.  Nor was the relief sought based on alleged breach of it.  A Director of the plaintiff had notice of the fact that a condition, albeit ambiguous, relating to the balcony was to be included in the licence.  While the inability to serve liquor on the balcony may be a disincentive to place furniture on it, the legal issue whether the plaintiff's rights have been infringed by the permission given by the first and second defendants to do so is not resolved by the terms of the liquor licence.  That issue remains in dispute and unresolved, although there is no reason to doubt that there are serious questions to be tried, as Byrne J. decided. Whether or not O.91 r.16 strictly extends to this kind of case, it is not in the circumstances convincing to say that because the significance of the existence of and the terms of the liquor licence have only become apparent to the plaintiff since the proceedings were commenced the proceedings have therefore become unnecessary in circumstances necessarily entitling the plaintiff to an exercise of the discretion as to costs in its favour.  Applying the principles in Stratford I consider that the matter should be resolved in the following way. 
          I make orders in terms of paragraphs 1 to 4 of the summons.
          As between the plaintiff and the first and second defendants, except in the respect to be mentioned, each party should bear its own costs of the motion for an injunction.  This includes costs reserved by Byrne J. on 11 April 1995 and costs made their costs in the cause on 21 April 1995.  The costs order of 21 April 1995 in favour of the first and second defendants with respect to the period after the making of the offer adopted by Byrne J. as a basis for resolving the application for an interlocutory injunction is confirmed.
          As between the plaintiff and the third defendant, each party should bear its own costs.  This includes costs reserved by Byrne J. on 11 April 1995 and costs made the third defendant's costs in the cause on 21 April 1995.
          As to costs of the present summons, an offer was made on behalf of the first and second defendants on 4 August 1995 to settle the whole question of costs on the basis of no order as to costs and not to brief counsel on the summons.  As the outcome proposed was no less favourable than that achieved upon hearing the summons, I order that the plaintiff pay the first and second defendants' costs of the summons to be taxed.  As between the plaintiff and the third defendant, the outcome was not what was sought by either party.  I order that there be no order as to costs as between them.