Lauriano Querobino Mendonca and SUZZANE Mason
[2013] HCATrans 235
[2013] HCATrans 235
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Melbourne No M130 of 2013
B e t w e e n -
LAURIANO QUEROBINO MENDONCA
Applicant
and
SUZZANE MASON
Respondent
Application for an injunction
HAYNE J
TRANSCRIPT OF PROCEEDINGS
AT MELBOURNE ON FRIDAY, 4 OCTOBER 2013, AT 2.30 PM
Copyright in the High Court of Australia
MR J.M. SELIMI: May it please the Court, I appear for the applicant in this matter. (instructed by the applicant)
MR W.G. STARK: If your Honour pleases, I appear for the respondent. (instructed by Moores Legal)
HIS HONOUR: Yes, Mr Selimi, it is your application, I think, on the summons issued today, supported by the affidavit of Mr Mendonca sworn today. Is that right?
MR SELIMI: That is so, your Honour. Firstly, may ‑ ‑ ‑
HIS HONOUR: Just a moment, Mr Selimi. Is there any objection to my receiving the affidavit, Mr Stark?
MR STARK: No, your Honour.
HIS HONOUR: Yes, very well. I have read the affidavit. I have read the reasons of the Court of Appeal. I have read the reasons of the primary judge. Mr Selimi.
MR SELIMI: Thank you, your Honour. Your Honour, in my submission, it is imperative to preserve the subject matter of the proposed - of the actual application for special leave to appeal which has been filed this afternoon. The application for special leave to appeal, in my respectful submission, raises an important question or questions of law of general public importance which, indeed, extend well beyond the particular interests of the parties before this Court.
If I can go to the crux of the matter, your Honour, it is my submission that the approach adopted by the Court of Appeal below sets a dangerous precedent which has the effect of undermining and violating an ancient principle in relation to the protection of proprietary interests. If I may take your Honour directly to the part of the judgment which we seek to attack in due course, at page 8 of the decision of the Court of Appeal, paragraph 27, their Honours state:
With respect to grounds 5 to 7, counsel submitted that, in the circumstances of the case, the judge should have found that damages were not an adequate remedy. The appellant, it was submitted, had an ‘emotional attachment’ to the premises, he having lived there for 20 years. He submitted that principle established that a threatened interference with the appellant’s proprietary right ought prima facie entitle him to injunctive relief.
HIS HONOUR: Yes, I have read that and I read it as recording what counsel submitted.
MR SELIMI: Yes, and the relevant cases which were relied upon below are cited at footnote 4 of his Honour’s judgment.
HIS HONOUR: Yes.
MR SELIMI: Now, I would contrast, with great respect, that correct summary of the position with what has been stated at page 13, paragraph 42, dealing with the same point, the point being the adequacy of damages. At paragraph 42, the learned Justice Priest said:
The primary judge also found that damages would be an adequate remedy. In my opinion it has not been demonstrated that he fell into error in so finding. Very little was put to the judge – or this Court – beyond reliance upon a supposed sentimental attachment to the premises.
If I can pause there, your Honour. With great respect to his Honour, that is not a correct summary of what transpired before the learned judge at first instance, or in the Court of Appeal. At first instance before Justice Macaulay, reference was made to the approach adopted by Senior Member Vassie of VCAT who initially granted the interlocutory injection, pending the determination of the proceeding.
That practice was referred to in my submissions to the learned judge at first instance and, indeed, the ancient rule or practice was also referred to with authority being cited in my submissions to the Court of Appeal. If I may hand up for your Honour’s benefit the appellant’s submissions that were put before the Court of Appeal in relation to this particular issue.
HIS HONOUR: By all means, but what point is thus demonstrated? The point was well before the Court of Appeal. Do you not have to come to grips with, one, this is, according to the Court of Appeal, an interlocutory decision on a matter of practice and procedure?
MR SELIMI: That is correct.
HIS HONOUR: Two, in relation to a lease, never produced in evidence, the rent due under which, so far as at least my hasty examination of the papers has gone, is never stated or revealed and in which, I think, there was at least evidence permitting the formation of a point of view, rent due had never been paid to the mortgagee in possession but had been paid to a second mortgagee. Now, what is one to make of those facts?
MR SELIMI: Well, if I may address each of those matters. Firstly, it is correct to observe that the applicant did not produce the original lease at the hearing before the learned judge at first instance. He did, however, produce a copy of the lease which was then in existence. In relation to the question of payment of rental to a person other than the mortgagee in possession, the appellant gave evidence, sworn evidence, that he had paid the sister who held the second mortgage with the knowledge, agreement and acquiescence of the respondent, being the ultimate purchaser of the mortgage. But both of those matters, with respect, do not touch on the special leave point which I seek to agitate.
HIS HONOUR: You will never get to the special leave point if this case goes off on those facts. If this case were to be determined on the footing, as I think at least a possible point of view is the trial judge and the Court of Appeal did, on the footing that there is a claim made in the capacity of tenant where that capacity is not sufficiently demonstrated, the tenancy having been terminated.
MR SELIMI: Well, with respect, that begs the question. The learned judge – we have not had a trial yet, your Honour – the learned judge in the practice court found, as your Honour has read, that there were serious questions to be tried. His Honour, however, then went on to express the opinion that the probability of success was low. Now, my submission in that regard, your Honour, is that if one applied O’Neill, as soon as a serious question of fact was found to be triable, then his Honour ought not to have gone further and delved into the intrinsic merits of the claim for relief.
That raises the second, or rather one of the questions which is sought to be agitated, and that is whether the learned judge and indeed the Court of Appeal has effectively superimposed a requirement of proof of the probability of ultimate success upon the element of the need to show a serious question to be tried. In my submission, given that this was at an interlocutory stage, once the applicant/appellant exhibited before the court the relevant lease, the relevant exercise of option to renew the lease ‑ ‑ ‑
HIS HONOUR: As to which there was a question.
MR SELIMI: Yes, as to which questions were raised, and once he swore that rent had been paid either directly or to the respondent at her request on account of rent, albeit as part ‑ ‑ ‑
HIS HONOUR: I thought you said payment was made to the second mortgagee with the knowledge and approval, not at the request of ‑ ‑ ‑
MR SELIMI: Yes, that is so, but subsequently after May 2013 payments have been made directly to the respondent mortgagee in possession, your Honour.
HIS HONOUR: In accordance with the undertaking is the price of the injunction, was it not?
MR SELIMI: No, in accordance with a prior agreement between the parties and then subsequently overtaken by the injunction undertakings. My submission, your Honour, is quite simple. The learned judge correctly found that there were serious questions to be tried. His Honour then went on to conclude that “damages would be an adequate remedy” in the event that the plaintiff ultimately succeeded, and therefore militated against the grant of interlocutory injunctive relief, and thirdly, his Honour concluded that the balance of convenience weighed in favour of the rejection of the application for interlocutory injunctive relief. But that in part was swayed, no doubt, by his Honour’s conclusion that damages would be an adequate remedy.
In my submission, going back to the nub of the complaint, paragraph 42 of the Court of Appeal’s decision, with great respect to the Court of Appeal, does not correctly state the position in terms of what was put to the learned judge at first instance and what was put to the Court of Appeal in relation to damages not being an adequate remedy. Indeed, on the face of the judgment itself, what their Honours said at paragraph 42 is directly inconsistent and contradicted by what their Honours said at paragraph 27 at page 8.
Paragraph 27, page 8, correctly recites the ancient principles that the plaintiff sought to invoke, both at first instance and on appeal, but then paragraph 42 simply makes this suggestion, which quite frankly with the greatest of respect to the Court of Appeal, was totally wrong. It was not simply a matter of “sentimental attachment to the premises” that the plaintiff/appellant/applicant was seeking to invoke or rely upon. It was ancient principle accepted by the High Court, accepted by the Full Court of the Supreme Court in the decision of Justice Cussen, and accepted in various other jurisdictions throughout the world that there is a special approach adopted with respect to the protection of proprietary rights.
Therefore, to the extent to which the adequacy of damages was a relevant consideration in relation to whether an injunction ought go, an incorrect approach by ignoring ancient principle in my submission vitiated the exercise of discretion in relation to the interests of justice and, if indeed such a violation of principle occurred, then it reopens the exercise of discretion.
So if indeed his Honour – and I respectfully submit not only did his Honour at first instance fall into error, but likewise the Court of Appeal by failing to even deal with the ancient principles, in my submission, fell into error. If there was an error, then the exercise in relation to the discretion to grant an injunction was reopened and could have been re‑exercised by the Court of Appeal and, in my submission, it is important, given the judgment that has now been published that this judgment of the Court of Appeal of Victoria should not stand because it sets a dangerous precedent in relation – a dangerous precedent which effectively treads on the rights of leasehold interest‑holders, lessees.
In my submission, putting aside the particular intrinsic merits or otherwise of this case, so far as the question of general principle is concerned, I recall a case where your Honour presided in the case of Aussie Vic v Esanda where, notwithstanding your Honour’s view in relation to the intrinsic merits of the case, your Honour nevertheless held that the case raised an important question of principle. In my submission, this application – albeit it somewhat unique in the sense that we have a plaintiff in respect of whom adverse findings have been made, albeit at an interim stage, but we nevertheless, in my submission, have a case which is a suitable vehicle to reaffirm the ancient principles in relation to the protection of proprietary rights. Otherwise lessees throughout the country, tenants throughout the country could have their proprietary rights to possession interfered with without any trial on the merits. They are my submissions, your Honour.
HIS HONOUR: Yes, thank you, Mr Selimi. Yes, Mr Stark.
MR STARK: Your Honour, our opposition to this application is relatively simple. We say that no important question is raised on this application. We say that the barrier that my learned friend has to overcome is very high. He has to establish to this Court that there is a likelihood of special leave being granted before an injunction would go. He has to show an error of principle by the Court of Appeal which, in my submission, he cannot show because the judgment is correct in law, and this is an application in relation to an original application before the Supreme Court of Victoria on a matter of practice and procedure, so again, the barrier is even higher. We say that they do not get anywhere near – the applicant does not get anywhere near where he needs to get in order to establish an error in the exercise of a discretion by the trial judge and again by the Court of Appeal.
The cases – my learned friend refers to ancient principle but your Honour will notice that in paragraph 42, which my learned friend attempts to impugn, the judges go on to say not only sentimental attachment but:
sentimental attachment has been held in other circumstances to be of limited relevance in determining whether a stay of a judgment for possession should be ordered –
Three cases there referred to are Johnson v Cressy, Palmer v Permanent Custodians Ltd and Ozden v Commonwealth Bank of Australia. Each of those were applications dealing with – by mortgagees for possession or similar circumstances. In each of those cases, the court held that damages is an adequate remedy in the circumstances that presented in that case, and we say in this case similarly. If it is established that there was a lease, if it is established that the option to renew the lease was exercised and if it is established all the other disputed facts, your Honour, we say that they still do not get to the point they needed to get to because even if they establish all those things by the time we have sold the property as mortgagee in possession, they still have a right to be compensated by damages for our alleged interference with the lease, and in those circumstances, your Honour, we say it is most inappropriate that we are here. No question of principle arises that is of general importance and it is really just a waste of everyone’s time that we are here.
HIS HONOUR: Thank you, Mr Stark. Yes, Mr Selimi.
MR SELIMI: Just briefly, your Honour. My learned friend refers to this issue of “sentimental attachment”. Now, this is the entire gravamen of our complaint. It is not a matter of mere sentimental attachment to premises of which we complain. It is the abrogation by permitting the landlord to take immediate possession without a trial. It is the abrogation, the denigration of our proprietary leasehold interests of which we complain, not simply a loss of sentimental attachment. That is the critical distinction, your Honour.
HIS HONOUR: Yes, thank you.
The applicant lives, and for some years has lived, at premises in Queen Street in the city. He says that he first lived there pursuant to an oral agreement made with his mother who was then the director of the company, Candolim Pty Limited, which was registered proprietor of the land. The applicant alleges that, subsequently, in September 1998, Candolim Pty Limited granted him a lease of the premises for a term of 10 years with an option to renew that term for at least a further period of 10 years. He says, though this is disputed, that within the time prescribed by the lease he exercised the option to renew the term for a further 10 years commencing on 8 June 2008.
Candolim Pty Limited gave two mortgages over the land. The first registered mortgage was granted to Bendigo Bank which, in July 2009, assigned that mortgage to the respondent, Ms Mason. A second registered mortgage, granted by Candolim to the applicant’s sister and her husband, was also assigned to Ms Mason. Candolim went into liquidation on 2 April 2009 and has since been deregistered. At the time of the assignment of the first registered mortgage to Bendigo Bank, Bendigo Bank had taken possession of the premises and, accordingly, as assignee of the mortgage, Ms Mason succeeded as mortgagee in possession.
After taking the assignment in July 2009, Ms Mason sought to find out from Candolim and its liquidator and from the applicant as tenant what were the details of the lease pursuant to which the applicant claimed to occupy the premises. The applicant says that he never received notice of these inquiries. During this period, and for some time afterwards, Ms Mason would say that no rent was paid to her as mortgagee in possession, whether in the amount required or at all.
It is said that early in 2013 Ms Mason sought again to find out by what right the applicant occupied the premises and served on him a notice claiming that no rental payments had been made to her. Again, Ms Mason would have it that details of the kind sought were not provided.
In June 2013, Ms Mason sent to the applicant a notice alleging that if there were any lease of the premises the applicant had repudiated it and Ms Mason accepted that repudiation. The notice demanded that the applicant vacate the premises.
There then ensued litigation, initially in the Victorian Civil and Administrative Tribunal but subsequently in the Supreme Court of Victoria instituted by the applicant seeking, in effect, to restrain interference with what he claimed to be his right to occupy the premises as tenant.
After an interim order was made in September 2013, the matter came back before Justice Macaulay of the Supreme Court of Victoria for the applicant to seek an interlocutory injunction restraining Ms Mason from interfering with his possession of the property. Justice Macaulay refused the application for injunction: see Mendonca v Mason [2013] VSC 516.
The primary judge, Justice Macaulay, stayed the operation of an order dissolving the interim injunction that had been granted until, in effect, further order of the Court of Appeal of the Supreme Court of Victoria. On appeal to the Court of Appeal that court, Justices Priest and Santamaria, dismissed the applicant’s appeal: see Mendonca v Mason [2013] VSCA 280.
As a consequence of the dismissal of the applicant’s appeal, the orders restraining Ms Mason from interfering with the applicant’s possession of the property will terminate at 4 pm today. Immediately upon the Court of Appeal dismissing the appeal, the applicant sought from that court a stay of proceedings, perhaps more accurately an extension of the injunction which had been granted, pending the hearing and determination by this Court of what was then an intended application for special leave to appeal.
The applicant forthwith filed his application for special leave and now seeks an order restraining Ms Mason from interfering with his right of occupation and quiet enjoyment of the premises until the determination of his application for special leave to appeal.
There is no doubt that this Court has power to grant an injunction pending the hearing and determination of an application for special leave, at least in cases where the grant of such relief is necessary to preserve the subject matter of the application for special leave: see, for example, Wilson v Church (No 2) (1879) 12 Ch D 454. It is convenient to assume, without deciding, that the injunction which the applicant seeks is an injunction which is sought for the purpose of preserving the subject matter of the application for special leave to appeal, but the question then becomes whether, in all of the circumstances, it is right to grant an injunction of the kind which is sought.
The Court of Appeal treated the appeal to that court as raising a question of practice and procedure in relation to an order made in the exercise of discretion, which was an order which did not have the effect of finally determining the rights of the parties: see Mendonca v Mason [2013] VSCA 280 at [31]; see also Adam P. Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170.
It was not suggested in the course of argument of the present application that the Court of Appeal was wrong so to characterise the appeal which was then before it and, at least for the purposes of considering the grant of an injunction by this Court, I have little doubt that the description I have identified is properly applied to this matter.
Counsel for the applicant asserted that it is evident that the Court of Appeal determined the appeal to that court by applying the wrong principles. In particular, he submitted that the effect of the Court of Appeal’s decision was to abrogate the proprietary leasehold interest of a tenant by refusing an interlocutory order to prevent interference with that right. In that connection, counsel had referred in the Court of Appeal and again referred in this Court, to the well‑known propositions in Mayfair Trading Company Pty Ltd v Dreyer (1958) 101 CLR 428 at 451 that the case might be considered within:
“the rule that where the plaintiff has established the invasion of a common law right, and there is ground for believing that without an injunction there is likely to be a repetition of the wrong, he is, in the absence of special circumstances, entitled to an injunction against such repetition” - see Beswicke v Alner (1926) VLR 72 at 76, per Justice Cussen.
It is to be noticed, however, that what was said in Mayfair Trading and what might be regarded as being what counsel referred to as long and well‑established principle is one which depends upon the establishment of the invasion of a common law right.
In the present case the primary judge, Justice Macaulay, noted a number of issues which he considered arose out of the applicant’s application for interlocutory relief. As counsel for the applicant rightly pointed out, it is at least possible, perhaps even preferable to read what the primary judge wrote as saying that in respect of each of those matters there was a serious question to be tried. Yet, when read as a whole, it is evident, most especially from the primary judge’s reference to the overall weakness of the applicant’s case, that Justice Macaulay concluded that this was not a case in which what had been proved demonstrated that injunction should go.
In that regard it is particularly important to recognise that the primary judge said – see Mendonca v Mason [2013] VSC 516 at 23 - that he considered “the strength of Mendonca’s prospects of ultimate success is relatively low”. It is then important to recognise the basis upon which the primary judge formed this view. It was a basis turning critically upon his Honour’s assessment of a number of purely factual considerations unique to this case. His Honour recorded a number of features relating to each of the issues which he considered could be seen as arising out of the application for interlocutory injunction which supported the conclusion that the prospects of ultimate success were relatively low.
At the risk of undue abbreviation with consequent inaccuracy, it is enough for present purposes to say that the material advanced at first instance was such as to permit the primary judge to form the view that there was no satisfactory explanation provided by the applicant in answer to what, on the face of things, appeared to be a clear case where, if he had ever been tenant of the premises, that tenancy had been terminated in consequence of his repudiatory conduct.
Having regard to the considerations which I have mentioned, I am not persuaded that this is a case in which injunction should go, even if that injunction were necessary to preserve the subject matter of the application for special leave now pending in this Court. I am not persuaded that it is demonstrated that the Court of Appeal or the primary judge were wrong to conclude as they did that damages in this case would be a suitable alternative remedy if, contrary to Ms Mason’s case, it were demonstrated that she had acted in contravention of the applicant’s rights.
I am not persuaded that the points which the applicant seeks to agitate in this Court are points of a kind which raise questions of general public importance as distinct from questions of fact unique to the particular case. Most particularly I am not persuaded that the applicant is right to submit, as he did in this Court, that the Court of Appeal likely erred in its application of proper principle in concluding that this was not a case in which it should interfere with the discretionary judgment of the primary judge. The application will be dismissed.
MR SELIMI: May it please the Court.
MR STARK: Your Honour, I seek the costs of the application.
HIS HONOUR: Can you resist costs, Mr Selimi?
MR SELIMI: No, your Honour.
HIS HONOUR: With costs. Adjourn the Court.
AT 3.16 PM THE MATTER WAS CONCLUDED
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