Water Wine and Juice v Konstantopoulos

[2009] NSWSC 1475

CITATION:	Water Wine & Juice v Konstantopoulos [2009] NSWSC 1475
HEARING DATE(S):	16 December 2009
JURISDICTION:	Equity Division
JUDGMENT OF:	McDougall J at 1
EX TEMPORE JUDGMENT DATE:	16 December 2009
DECISION:	See paragraph [16] of the judgment.
CATCHWORDS:	EQUITY - lessee's interlocutory application for injunctive relief - lessor exercising right of re-entry following lessee's failure to comply with notice of breach of covenant issued pursuant to Conveyancing Act 1919 s 129 - whether serious question to be tried as to whether there was a breach of lease - no discretionary considerations relied upon that relief should be withheld - injunctive relief granted. - LANLORD AND TENANT - Conveyancing Act 1919 s 129 - lessee's failure to comply with notice of breach of covenant.
LEGISLATION CITED:	Conveyancing Act 1919
CATEGORY:	Procedural and other rulings
PARTIES:	Water Wine & Juice Pty Limited (Plaintiff) Steve Konstantopoulos (First Defendant) Rosa Konstantopoulos (Second Defendant)
FILE NUMBER(S):	SC 2009/291740
COUNSEL:	A Martin (Plaintiff) D M Flaherty (Defendant)
SOLICITORS:	Champion Legal (Plaintiff) DC Chambers & Associates (First and Second Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

McDOUGALL J

16 December 2009 (ex tempore – revised 16 December 2009)

5692/09 WATER WINE & JUICE PTY LTD v STEVE KONSTANTOPOULOS AND ANOR

JUDGMENT

1 HIS HONOUR: The defendants are the lessors to the plaintiff of premises at Fairfield. The premises are used by the plaintiff for the purposes of a business. There is evidence, unchallenged for today's purposes, that if the plaintiffs are deprived of the use of the premises it will cause very significant disruption and loss, including what might be called collateral damage to employees of the plaintiff.

2 The plaintiff's case is that it holds the premises on a four-year lease from the defendants, and that it has exercised the first of three three-year options for renewal contained in that lease. As the application has been run today, I proceed (as Mr Flaherty of counsel for the defendants said I could) on the basis that there is a serious question to be tried, at the very least, that the option has been validly exercised.

3 There is an unfortunate history of dispute between the plaintiff and the defendants. It is clear on the plaintiff's evidence that it has not always been an ideal tenant. In particular, its attitude towards rental appears to have been that it would pay it on time if it could, but not otherwise. Those matters are not perhaps relevant to the question with which I am concerned today, but I suspect that they help to explain the attitude taken by the defendants.

4 The defendants’ case today is that, assuming (as they agree I should do) that the plaintiff has made out a serious question to be tried as to the valid exercise of the option for renewal, nonetheless the plaintiff cannot succeed because, after the option was exercised, the defendants gave the plaintiff notices under section 129 of the Conveyancing Act 1919, two of which notices have not been complied with.

5 One of those notices relates to the sum of $1,001 said to be due to the defendants for costs in respect of an earlier breach. Mr Martin of counsel says that the sum has been paid today. There is no evidence of that. However, he accepted, the matter could be dealt with by the imposition of a condition on the grant of relief if otherwise his client were entitled to relief.

6 The real question relates to the other notice of breach of covenant which has not been complied with. It appears that the defendants complain that the plaintiff is storing containers not within the demised premises but on the common property of the strata title development of which the demised premises fall part. The evidence as to this is less than persuasive. The description of the demised premises in the lease refers to "part lot B" in a certain deposited plan and then describes the property as "unit 2, building B" at a certain street address. A sketch plan of the premises shows that there is indeed a lot B and that it appears to be occupied, at least in part, by something called warehouse 5. The sketch does not identify anything that could be called either unit 2 or building B unless lot B and building B are to be taken as synonymous.

7 The evidence is capable of showing, I think, that the containers in question are stored along what appears to be the eastern boundary of lot B. I say "appears to be" because the north bearing on the plan is almost indistinguishable. There is no basis, in such evidence as there is, to conclude that the containers are stored on common property rather than within the boundaries of lot B. However, it appears to have been accepted, at least passively, that the containers may not be stored wholly within the boundaries of lot B. If it be assumed, for the moment, that they are not so stored, then the question arises as to whether this constitutes a breach of the lease.

8 The plaintiff wishes to argue that the containers had been stored as they were with the consent of the defendants. The defendants deny that they gave any such consent. The denial comes rather late in the day after a series of unanswered assertions, putting the plaintiff's case, in correspondence over many months. But the question is irrelevant in any event, because if the containers are stored on common property it is for the owners corporation and not the defendants to give consent to that being done.

9 The notice of breach refers to six clauses of the lease. The first is clause 3.1. That simply says that the property leased is described on page 1 of the lease; the description to which I have referred. The next clause referred to is clause 6.1.4. That clause says that the plaintiff must comply with all laws relating to strata schemes and all other laws regulating how the property is used, obtain necessary consents or licences, comply with any conditions of consent and keep current any licences or registration that are necessary for its business or the use of the property. There is no evidence to suggest that whatever the plaintiff is doing with its containers is in breach of clause 6.1.4.

10 The next clause relied upon is clause 6.3.1. By that clause, the plaintiff must not do anything that might invalidate any relevant insurance policy or increase the premium unless the defendants consent. If they do consent, the plaintiff must pay any increased premium. It is not immediately clear to me how storage of containers on common property (assuming this is what is happening) could invalidate the defendant's insurance. There is no evidence that the insurer has taken that position. Although a demand for increased premium was made in the sum of $58,000-odd, no justification for that apparently exorbitant sum was given.

11 The final clause relied upon is clause 6.3.2. By that clause, the plaintiff must not use the property as a residence or for any activity that is dangerous, offensive, noxious, illegal or immoral. It is not suggested that the plaintiff's use contravenes any of those prohibitions. The clause goes on to prohibit use that is or may become a nuisance or annoyance to the landlord or owner or occupier of any neighbouring property. No doubt the plaintiff's presence on the demised property is a nuisance in the popular sense of the word, or annoyance, because the defendants want the plaintiff out. It has not been suggested that this amounts to a nuisance at law; nor is there any evidence to suggest that such use as the plaintiff may be making of the demised premises has caused any nuisance or annoyance to the owner or occupier of any neighbouring property.

12 The final point to make about clause 6.3.2 is that on its face it prohibits use of the demised property in certain ways. It is at least arguable that it does not extend to use of adjacent common property.

13 For those reasons I think there is a serious question to be tried as to whether there is a breach of clause 6.3 of the lease, in the manner alleged by the notice of breach; and likewise, that there is a serious question to be tried as to breach of clause 6.1 in the manner alleged.

14 Mr Flaherty submitted that many of the matters upon which the plaintiff relied in submissions had not been "pleaded" (as he put it) by the summons. That is so, partly, because summonses are not pleadings; and partly because the issues arose only in the course of his introductory submissions. However, the points are open under the relief claimed and on the evidence.

15 It was common ground that if there were (as I have concluded there is) a serious question to be tried as to breach, then the balance of convenience favoured the grant of injunctive relief. There were no discretionary considerations relied on to found a submission that relief, if otherwise a case for its grant had been made out, should be withheld.

16 For those reasons, in my view the plaintiff has made out its claim for interlocutory relief. As I have said above, the relief granted should be on terms that if the sum of $1,001 has not been paid then it is to be paid within a very short period of time.

17 In light of the time of year at which these proceedings are being heard and in light of the state of the list, what I propose to do is stand the matter down to 2 o'clock to enable the parties to bring in short minutes of order to give effect to my reasons. Those reasons should cover, among other things, a program for the case to proceed on pleadings and to be got ready for hearing as soon as possible with a view to one of the parties moving for an expedited hearing.

**********