Shi v Agostino Nominees Pty Ltd - [2023] WASC 27

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   SHI -v- AGOSTINO NOMINEES PTY LTD [2023] WASC 27
CORAM:   STRK J
HEARD:   3 FEBRUARY 2023
DELIVERED          :   3 FEBRUARY 2023
PUBLISHED           :   9 FEBRUARY 2023
FILE NO/S:   CIV 1098 of 2023
BETWEEN:   WEIDONG SHI
Plaintiff
AND
AGOSTINO NOMINEES PTY LTD
Defendant

Catchwords:

Equity - Injunction - Whether the plaintiff has established a serious question to be tried - Whether the balance of convenience favours injunctive relief - Turns on own facts

Legislation:

Criminal Code Compilation Act 1913 (WA)
Property Law Act 1969 (WA)
Prostitution Act 2000 (WA)

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff	:	M De Kerloy
Defendant	:	I Freeman

Solicitors:

Plaintiff	:	Mony De Kerloy
Defendant	:	Lavan

Case(s) referred to in decision(s):

Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76; (2017) 55 WAR 36
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
Wellard Land Holdings (WA) Pty Ltd v Barker Mortgages Pty Ltd [2018] WASC 27

STRK J:

(This judgment was delivered extemporaneously and has been edited from the transcript.)

On 2 February 2023, the plaintiff, Weidong Shi, applied to this court for urgent injunctive relief. Among other things, Mr Shi sought until further order of the court that an injunction be granted requiring the defendant, Agostino Nominees Pty Ltd, to provide Mr Shi with possession of the premises at Unit 11, 1904 Beach Road, Malaga, in the state of Western Australia being part of the land in certificate of title volume 1922 folio 853 (Premises) to conduct his massage and beauty salon; and restraining Agostino Nominees from taking possession of the Premises and from interfering with Mr Shi's quiet enjoyment of the Premises.
The urgent application was made by chamber summons filed in a proceeding commenced by Mr Shi by writ of summons on 2 February 2023. As recorded in the indorsement of claim to the writ, Mr Shi by the proceeding seeks declaratory relief in the following circumstances:
1.Pursuant to a written lease agreement dated 24 September 2019 Agostino Nominees leased the premises at Shop 11, 1904 Beach Road, Malaga, WA (Premises) to Mr Shi for the purpose of conducting a massage and beauty salon (Lease).
2.Mr Shi claims against Agostino Nominees that on 1 February 2023 Agostino Nominees, in breach of the terms of the Lease:
(a)purported to terminate the Lease on the allegation that Mr Shi was in breach of the Lease; and
(b)re-took possession of the Premises from Mr Shi;
thus causing interruption to the operation of Mr Shi's business together with loss and damage to Mr Shi.
3.At all material times Mr Shi complied with his obligations under the Lease and was not in breach of the Lease.
The relief Mr Shi seeks by the substantive proceeding is a declaration that the Lease (as defined in the indorsement of claim), remains on foot, together with damages, interest and costs.
The application by chamber summons was listed on an urgent basis on 3 February 2023. Agostino Nominees was served with the papers and an appearance was entered on its behalf on 2 February 2023. Counsel for Agostino Nominees appeared at the hearing on 3 February 2023.

Factual background

As noted above Mr Shi is the tenant and Agostino Nominees is the landlord of the Premises pursuant to the terms of the Lease, which is an agreement dated 24 September 2019 for an initial term of five years commencing on 1 November 2019, with options to extend.[1] Agostino Nominees as landlord alleges that Mr Shi as tenant has breached the Lease on several occasions. It is alleged that Mr Shi has breached the Lease by having allowed prostitution to occur on the Premises.[2]
[1] Affidavit of W Shi par 4.
[2] Affidavit of W Shi par 7.
On 13 January 2023 Mr Shi was issued with a notice of default dated 11 January 2023.[3] In that notice, the alleged breach of Lease was described as follows: [4]
3Mr Shi is in breach of his obligations under the Lease because:
3.1Mr Shi runs a business from the Premises which includes, allows or facilitates activities that constitute prostitution within the meaning of section 4 of the Prostitution Act 2000 (WA) and has therefore used, or permitted the Premises to be used, for trade or business which is not permitted by the Lease (clause 8.1 and Item 10 of the Schedule to the Lease); and
3.2in doing so, Mr Shi has caused or permitted activities on the Premises which constitute a nuisance, annoyance or inconvenience to Agostino Nominees or occupiers of any adjoining or neighbouring premises (clauses 7.5(d) and 8.1 of the Lease),
(Breach).
[3] Affidavit of W Shi par 18.
[4] Affidavit of W Shi, WDS-15.
On 1 February 2023 Mr Shi was issued with a notice of termination.[5] Agostino Nominees contends that Mr Shi failed to remedy the breach described in the notice of default, and he was locked out of the Premises.[6]
[5] Affidavit of W Shi par 22.
[6] Affidavit of W Shi, WDS-19.
On 2 February 2023 Mr Shi applied to the court by chamber summons for an urgent interlocutory injunction compelling Agostino Nominees, as landlord, to provide him with possession of the Premises, and restraining Agostino Nominees from taking possession of the Premises and from interfering with his quiet enjoyment of the Premises.

The evidence

On 2 February 2023, Mr Shi filed a signed but unsworn affidavit in support of the application, to which he attached documents marked WDS-1 to WDS-19. Mr Shi provided an undertaking to the court to file a sworn version of the affidavit as soon as reasonably possible. In that undertaking, Mr Shi explained that he is currently traveling in Japan and anticipates he will not return to Australia for a number of weeks.[7]
[7] Undertaking to the court to file sworn affidavit filed 2 February 2023.
At the hearing, counsel for Mr Shi provided the court with an update as to Mr Shi's attempts to have the affidavit duly sworn, and the court was informed that Mr Shi had an appointment with the Australian Embassy in Japan to attend to the same.[8] On the basis of Mr Shi's undertaking and without objection by Agostino Nominees, the affidavit was read.
[8] ts 2 (3 February 2023).
By his affidavit, among other things, Mr Shi deposed to the nature of the business conducted at the Premises; the nature of the Lease; communications between Mr Shi (directly and through Mr Shi's legal representatives), and Anthony Vulinovich and Paolo Testi (on behalf of Agostino Nominees); communications between Mr Shi's legal representatives and Agostino Nominees' legal representatives concerning Mr Vulinovich's authority to act on behalf of Agostino Nominees; the lodgement by Mr Shi of a caveat over the Premises; Mr Shi's efforts to ensure that there was no sexual activity taking place on the Premises, including the affixing of signs directed to both staff and clients; his receipt of the notice of default under the Lease issued by Agostino Nominees; correspondence as between the parties' legal representatives; his efforts to meet with Agostino Nominees; his receipt of the notice of termination of the Lease issued by Agostino Nominees; the impact caused by the lockout on Mr Shi's business and Mr Shi's solicitors' repeated requests for the asserted breaches to be particularised.
Mr Shi attached to his affidavit a copy of the Lease; a copy of an external photograph of the Premises; copies of the various communications described above; a copy of the caveat over the Premises dated 15 December 2022; copies of photographs taken of signs displayed at the Premises; a copy of the notice of default dated 11 January 2023; and a copy of the notice of termination dated 1 February 2023.
With the application, a memorandum of conferral pursuant to the Rules of the Supreme Court 1971 (WA) O 59 r 9(1) was filed, which indicated that the parties had engaged in correspondence prior to the issue of the notice of termination, and the communications had continued up to 1 February 2023.
The application for urgent injunctive relief is supported by an undertaking as to damages proffered by Mr Shi in the usual form.
At the hearing, counsel for Mr Shi relied upon a written outline of submissions filed on 2 February 2023 and a minute of proposed orders filed on 2 February 2023. Counsel also produced to the court an email communication from Agostino Nominees' previous legal representative which was inadvertently omitted from Mr Shi's affidavit.[9]
[9] ts 2 - 3 (3 February 2023).
On 2 February 2023, Robert David Critchley, a private investigator engaged by Agostino Nominees, affirmed an affidavit in opposition to Mr Shi's application, to which he attached documents marked RDC-1 to RDC-5.
By his affidavit, Mr Critchley deposed to his engagement as a private investigator by the owners of the Premises to undertake surveillance activity to determine whether the Premises were being used for the purposes of prostitution; his attendance at the Premises on four occasions being 20 November 2022, 28 November 2022, 19 January 2023 and 25 January 2023; the preparation of investigative field notes for each attendance at the Premises; and his payment for services received at the Premises.
Mr Critchley attached to his affidavit the four field reports in which he described interactions that appear to fall within the meaning of prostitution as defined in s 4 of the Prostitution Act 2000 (WA), and which he deposed took place on the Premises.[10]
[10] ts 10 - 11 (3 February 2023).
At the hearing, counsel for Agostino Nominees also relied upon a written outline of submissions filed on 3 February 2023.

Disposition

The principles governing the grant of interlocutory injunctive relief are well established, and were summarised by Beech J in Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] - [13], Newnes JA (with whom McLure P and Corboy J agreed) in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87], and the Court of Appeal in Sino Iron Pty Ltd v Mineralogy Pty Ltd[No 2] [2017] WASCA 76; (2017) 55 WAR 36 [130] - [131]. There was no dispute as between the parties as to the principles to be applied.
In short, it is necessary for the applicant for relief to show that there exists a serious question to be tried, or a prima facie case, and that the balance of convenience favours the grant of an injunction.
Where a party is seeking a mandatory injunction, as Mr Shi is by the first injunctive order sought, no more stringent or different legal test is to be applied than that which is applicable in seeking a prohibitory injunction.[11] Ultimately, the question is as to the balance of the risk of injustice and in considering that balance the court must take into account the nature and consequences of the particular injunction sought.[12]

Serious question to be tried

[11] Mineralogy Pty Ltd v Sino Iron Pty Ltd [76] - [86].

[12] Twinside Pty Ltd v Venetian Nominees Pty Ltd [12]; Wellard Land Holdings (WA) Pty Ltd v Barker Mortgages Pty Ltd [2018] WASC 27 [9].

I now turn to the consideration of whether or not there is a serious question to be tried in relation to Mr Shi's claim.
Where an applicant seeks an interlocutory injunction, the applicant must identify the legal or equitable rights which are said to be determined at the trial and in respect of which the final relief is sought. An interlocutory injunction in the auxiliary jurisdiction can only lie in order to protect an equitable or legal right, which the plaintiff might enforce by final judgment.
Mr Shi seeks to enforce his rights as tenant under the Lease. He says that there is a serious question to be tried as to whether:[13]
(a)the conduct Agostino Nominees relies on in claiming a breach under the Lease actually occurred;
(b)the alleged conduct amounts to a breach of the Lease;
(c)Mr Shi has taken reasonable steps to resolve any alleged breach or potential for any breach prior to the issue of the notice of termination;
(d)there has been or is unconscionable conduct on the part of Agostino Nominees; and
(e)the substance of the dispute should be resolved in the State Administrative Tribunal for which the Lease makes provision.
[13] Plaintiff's submissions par 11(a) - (e); ts 24, 25 (3 February 2023).
Mr Shi complained that requests made to Agostino Nominees to provide particulars and/or specific evidence of the breach or breaches alleged so that he could actually address the same were not answered until the affidavit of Mr Critchley was filed in this proceeding. Mr Shi complains that Agostino Nominees was prepared to provide its evidence to authorities, but not to him.[14]
[14] Plaintiff's submissions par 17(c); ts 6, 24 (3 February 2023).
As noted by counsel for Agostino Nominees, to establish a serious question to be tried, Mr Shi does not need to prove that it is more probable than not that he will succeed at the final hearing. It is enough that he shows a sufficient likelihood of success to justify in the circumstances the preservation of property. That is, show that there is a sufficient likelihood that he is not in breach of the Lease by reason of his alleged use of the Premises.[15]
[15] Defendant's submissions par 4; ts 24 - 25 (3 February 2023).
Agostino Nominees concedes that there is a serious question to be tried with respect to the alleged breach of the Lease by Mr Shi,[16] and on the evidence filed, this concession is properly made. I accept Mr Shi has made out a prima facie case.
[16] Defendant's submissions par 5; ts 10, 25 (3 February 2023).
However, Agostino Nominees says that if the evidence remains as it is, the court will ultimately find that Mr Shi has committed a serious breach of the Lease and is likely to continue to do so if he is let back into possession.[17]

Balance of convenience

[17] Defendant's submissions par 5; ts 12, 25 (3 February 2023).

I accept the defendant's submission that the requisite strength of the prima facie case and the balance of convenience are not independent considerations. The more the balance of convenience supports the respondent, and the more serious the consequences for a respondent, the stronger will be the prima facie case the applicant may need to establish to support an interlocutory injunction. Conversely, in a case where the balance of convenience strongly favours the applicant, then the strength of the prima facie case required to support the interlocutory injunction diminishes.[18]
[18] Defendant's submissions par 6; ts 25 (3 February 2023).
Although the court will often examine the strength of a case for an interlocutory injunction, the court will not normally undertake a preliminary trial and will rarely attempt to resolve disputes of fact.[19] The extent to which the court will consider the merits of disputes as to legal issues will depend on the circumstances of the case. There is no inflexible rule in this regard.
[19] Beecham Group Ltd v Bristol Laboratories Pty Ltd 622 (Kitto, Taylor, Menzies and Owen JJ).
The grant of an injunction involves balancing the injustice which might be suffered by Agostino Nominees if the injunction is granted and Mr Shi retakes possession of the premises but later fails at trial, against the injustice which might be suffered by Mr Shi if the injunction is not granted and Mr Shi later succeeds at trial.[20]
[20] Defendant's submissions par 8.
If the requested injunction is granted, Mr Shi will retake possession of the Premises and continue to trade from the same. The continued loss of possession would be a serious interference with Mr Shi's rights as lessee if his contention that there has been no breach of the Lease is ultimately upheld.[21]
[21] ts 25 (3 February 2023).
On behalf of Agostino Nominees, the following is noted in regard to the balance of convenience.
First, the Lease does not permit the use of the Premises for prostitution.[22]
[22] Defendant's submissions par 9; ts 26 (3 February 2023).
Secondly, the evidence relied on by Agostino Nominees is prima facie evidence that prostitution has occurred at the Premises, in breach of the Lease.
Thirdly, a breach of this nature is one that could carry serious consequences for Agostino Nominees.[23]
[23] Defendant's submissions par 10; ts 26 (3 February 2023).
In this regard, counsel for Agostino Nominees notes that prostitution is defined in s 4 of the Prostitution Act, and an offence is not committed under s 14 unless, relevantly, the person who acts as a prostitute is a minor, has been declared to be a drug trafficker, or has been found guilty of certain other offences. Counsel further noted that Agostino Nominees has no information at present as to whether any of these criteria are met and accordingly does not suggest that s 14 has been breached.[24]
[24] Defendant's submissions par 11; ts 26 (3 February 2023).
Counsel for Agostino Nominees submitted that it appeared to follow that no offences was committed under s 14 of the Prostitution Act on the evidence now filed. However, counsel notes that an offence may be committed by a person who maintains a property for the purposes of prostitution, or by a landlord who knowingly permits prostitution to occur at premises the landlord rents out, by operation of s 190 of the Criminal Code (WA).[25]
[25] Defendant's submissions par 12; ts 26 (3 February 2023).
Counsel submits that Agostino Nominees now has knowledge of prostitution taking place at the Premises and continuing to take place at the Premises, which led to the notice of default being issued and served. Counsel submitted that accordingly, Agostino Nominees should prudently take steps to end the conduct at the Premises, which may require Agostino Nominees as landlord to evict Mr Shi as tenant. Further, a failure to do so may expose Agostino Nominees to prosecution, and so Agostino Nominees took steps to terminate the Lease to prevent the continuation of the conduct.[26]
[26] Defendant's submissions par 13; ts 26 (3 February 2023).
As to the balance of convenience, Agostino Nominees maintains that the breach of the terms of the Lease, coupled with the risk to Agostino Nominees under s 190 of the Criminal Code, makes it appropriate that the status quo be maintained, namely that Mr Shi is excluded from trading at the Premises.[27] I gave due consideration to this submission.
[27] Defendant's submissions par 14; ts 27 (3 February 2023).
In support of Mr Shi's application, Mr Shi proffered an undertaking as to damages in the usual form. At the court's suggestion and after conferral between counsel, Mr Shi agreed to proffer a further undertaking in the following terms:
I, WEIDONG SHI, undertake to the Court that:
(a)there will be no conduct within the meaning of s 4 of the Prostitution Act 2000 (WA) proffered or conducted on the Premises (being Unit 11, 1904 Beach Road, Malaga in the state of Western Australia, and being part of the land in Certificate of Title Volume 1922 Folio 853);
(b)I will instruct the managers of the business conducted at the Premises that there must be no conduct within the meaning of s 4 of the Prostitution Act 2000 (WA) proffered or conducted on the Premises;
(c)I will instruct the employees of the business conducted at the Premises that there must be no conduct within the meaning of s 4 of the Prostitution Act 2000 (WA) proffered or conducted on the Premises; and
(d)I will instruct the managers of the business conducted at the Premises that they must supervise the employees of the business conducted at the Premises to ensure that the undertaking described in paragraph (a) above is complied with by all employees.
In circumstances where Mr Shi's re-entry and ongoing possession of the Premises would be pursuant to an order of this court subject to the provision by Mr Shi of an undertaking in the terms reproduced above, which would afford Agostino Nominees protection against the alleged conduct taking place, on balance, on the evidence before me, I conclude that there appears to be a greater risk of injustice being done if I refuse to grant the injunction in favour of Mr Shi and Mr Shi later succeeds, than if I refuse and Agostino Nominees later successfully defends the proceeding. The balance of convenience favours the grant of injunctive relief.

Conclusion and orders

For these reasons, subject to Mr Shi's undertaking as to damages and upon his provision of an undertaking to the court in the form described at [42] above, I will grant an injunction in favour of Mr Shi in the following terms:
(a)Agostino Nominees be required to provide Mr Shi with possession of the premises at Unit 11, 1904 Beach Road, Malaga, in the State of Western Australia, and being part of the land in Certificate of Title Volume 1922 Folio 853 (Premises) to conduct his massage and beauty salon; and
(b)Agostino Nominees be restrained from taking possession of the Premises and from interfering with Mr Shi's quiet enjoyment of the Premises.
The injunction will continue until further order.
Among other things, I will also make an order admitting the proceeding into the Commercial and Managed Cases List, and granting the parties liberty to apply.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RW
Associate to the Judge
9 FEBRUARY 2023