Tannous v Cipolla (No 2)

[2001] NSWSC 296

CITATION:	Tannous v Cipolla (No 2) [2001] NSWSC 296
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 1398/01
HEARING DATE(S):	18/04/01
JUDGMENT DATE:	20 April 2001
PARTIES :	Bernard Tannous - Plaintiff Cipolla Bros Holdings Pty Limited - Defendant
JUDGMENT OF:	Barrett J

COUNSEL :	Mr C. Tannous (Solicitor) - Plaintiff Mr N. Potts - Defendant
SOLICITORS:	Jones King Lawyers - Plaintiff Star Carver & Co - Defendant
CATCHWORDS:	Costs
CASES CITED:	Cicinave Pty Ltd v Jasco Pty Ltd (1989) 5 BPR 11,139
DECISION:	Plaintiff to pay defendant's costs

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

FRIDAY, 20 APRIL 2001

1398/2001 - TANNOUS v CIPOLLA BROS HOLDINGS PTY LIMITED (NO 2)

JUDGMENT

HIS HONOUR:

1    Upon this matter being listed for mention on 18 April 2001, Mr C. Tannous, the solicitor for the plaintiff, and Mr N. Potts of Counsel for the defendant made submissions in relation to the orders I should make (including orders as to costs) in consequence of judgment given on 6 April 2001.

2    As to costs, I indicated in that judgment that, because of the conclusions as to termination of the lease of shop 2 and relief against forfeiture, the plaintiff should pay all costs of the proceedings relevant to those issues. I also expressed a preliminary view that, as there had been findings adverse to the plaintiff regarding refusal of consent to assignment of the lease of shop 2, that the plaintiff should also pay the balance of the defendant’s costs.

3    Mr C. Tannous, for the plaintiff, submitted that, in the exercise of the Court’s discretion, costs related to the issues of termination of the lease of the shop and relief against forfeiture should not be awarded against his client. But such an approach would be at entirely odds with the principles concerning relief against forfeiture in matters of this kind which were referred to in my earlier judgment. In particular, I said at paragraph 24, after referring to the fact that rent had been paid in full:

“It follows that if the plaintiff also pays the costs and expenses to which the defendant has been put by the present proceedings insofar as they concern termination of the lease and relief against forfeiture, the plaintiff is entitled to succeed upon his application for relief against forfeiture, assuming the absence of any other factor which would cause a court of equity to exercise its discretion against the grant of such relief.”

In the result, the assumption at the end of that statement was borne out, in that I concluded that there was no basis on which relief against forfeiture should be refused. But payment of the defendant’s assessed costs must be the price the plaintiff pays for such relief.

4    As to other matters, Mr C. Tannous referred to two aspects which, in his submission, should cause me to reconsider my initial predisposition towards ordering that his client pay all remaining costs. The first was the fate of the matters relevant to claims in the defendant’s Cross-Summons and the second, the Notice of Motion which, by leave, the defendant filed in Court and argued at the commencement of the hearing.

5    As to the Cross-Summons, the defendant indicated when the hearing began on 29 March 2001 that it would not press the claim for declaration in the terms of paragraph 3 but otherwise maintained its claims. But those remaining claims were, to a large extent, the obverse of the claims of the plaintiff, in the sense that a decision on a matter in the Summons would also dispose of a matter in the Cross-Summons. The exception is paragraph 1A of the Cross-Summons which sought an order restricting the defendant from using water by hosing down the floor in the reception lounge.

6    On that, my finding was that use of the hose did not amount to a breach of a provision of the lease, although I went on to say:

“That is not to say that the plaintiff may not have become liable on some independent basis for any damage occasioned by his acts of hosing. But that is not a matter which arises from the Amended Summons or the Cross-Summons; nor was it addressed in submissions. I therefore say no more about it.”

7    Ventilation of the issue of hosing was, in any event, principally relevant to the exercise of the Court’s discretion on the question of relief against forfeiture and I regard the outcome of the hosing issue as covered by the principles with respect to costs on a successful claim for relief against forfeiture.

8    In relation to the Notice of Motion dealt with at the beginning of the hearing, Mr Potts submitted that the need for the application he made would not have arisen had the plaintiff complied with pre-trial directions regarding delivery of affidavits. That is quite correct. The affidavit in question was delivered effectively on the morning of 27 March 2001 when the matter was listed for hearing on 29 March 2001. The relevant direction required delivery not later than 15 March 2001. In these circumstances, the defendant’s action in testing by the motion the question whether the trial should be allowed to proceed on 29 March 2001 on a basis which might entail the reading of the affidavit in question was fair and reasonable. The motion would not have arisen had the plaintiff abided by the terms of the pre-trial directions. That, to my mind, is sufficient to justify a conclusion that the defendant, although not successful upon the motion, should not bear the burden of costs associated with it.

9    Bearing in mind the principles I have just mentioned and the expectation that payment of costs and expenses to which the lessor has been put should be the “price” a tenant pays for relief against forfeiture in a case such as this, Mr Potts has referred me to the decision of Powell J (as he then was) in Cicinave Pty Ltd v Jasco Pty Ltd (1989) 5 BPR 11,139 where interim arrangements for the payment of that “price” were incorporated into the orders granting relief against forfeiture pending taxation of costs. Mr Potts indicated that his client’s costs were of the order of $23,000.

10    Against that general background and, in particular, the approach taken by Powell J, I make the following orders and declarations:

1. Order that on or before 18 May 2001, the plaintiff pay into a joint interest bearing account to be opened in the names of the solicitor for the plaintiff and the solicitor for the defendant with a bank (being an “ADI” as defined by the Banking Act 1959) selected by the solicitor for the defendant the sum of $23,000, and that that sum, and any interest accruing thereon, shall, subject to order 7(c), abide the result of the assessment of the defendant’s costs of these proceedings and then be dealt with in the manner provided in orders 7(a) and (b).
2. Declare that the lease dated 19 May 2000 No 7358783M between the defendant as lessor and the plaintiff as lessee in respect of premises known as shop 2, 83-95 Gibson Avenue, Padstow was validly terminated by the defendant in consequence of Notice of Termination dated 7 February 2001 on the grounds of non-payment of rent.
3. Order that, upon and subject to the making by the plaintiff of the payment provided for in order 1, the plaintiff be granted relief against forfeiture in respect of the said lease.
4. Declare that there is no subsisting or continuing breach of any covenant on the part of the plaintiff as tenant under the said lease and that the lease is a valid and subsisting lease.
5. Declare that the lease dated 19 May 2000 No 7361369E between the defendant as lessor and the plaintiff as less of premises being part of the top floor, 83-95 Gibson Avenue, Padstow used as a reception lounge is a valid and subsisting lease.
6. Order that the plaintiff pay the whole of the defendant’s costs of these proceedings.
7. Order that:
(a) if the defendant’s costs referred to in order 6 be assessed in the sum of $23,000 or more, the whole of the sum then standing to the credit of the joint account referred to in order 1 thereupon be paid out of the said account to the defendant or its solicitor (this being without prejudice to, but towards satisfaction of, the liability of the defendant for such costs);
(b) if the defendant’s costs referred to in order 6 be assessed in a sum less than $23,000, the sum then standing to the credit of the said joint account shall be dealt with as follows:
(i) a sum representing the total of the amount of such costs, together with that proportion of the interest which the amount of such costs bears to the sum of $23,000 shall be paid out of the said account to the defendant or its solicitor pro tanto in satisfaction of the liability of the defendant for such costs; and
(ii) the balance then standing to the credit of the said account shall be paid to the plaintiff or his solicitor; and
(c) if the defendant’s costs referred to in order 6 be agreed by the plaintiff and the defendant without assessment, each party shall have liberty to apply on two days’ notice for orders releasing the sum standing to the credit of the said joint account in conformity with the agreement of the parties with respect to costs.
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Last Modified: 04/23/2001