Charing Nominees Pty Ltd v Utopia Sales Pty Ltd [2000] VSC 519

Supreme Court of Victoria|2000-12-05|Before: BEACH, J.

The plaintiff, Charing Nominees Pty Ltd, is the owner of a property at 18 Cardigan Street, Carlton. By a lease dated 5 August 1995 it leased the premises to the first-named defendant, Utopia Sales Pty Ltd, for a period of three years as from 1 December 1994. From that time to the present day the defendant has been conducting a brothel at the premises. The lease gave the first defendant an option for a further three years. On 28 May 1987 the first defendant exercised that option.

For some unexplained reason it was not until 4 June 1998 that the plaintiff's solicitors sent a new lease to the first defendant's solicitors for execution by it. That lease was for a further term of three years from 1 December 1997 to 30 November 2000. For some unexplained reason the lease, which on the face of it appears to be a perfectly satisfactory one, was never executed by the first defendant.

At all events, on 27 October 1998, the plaintiff sold the property to the Royal Melbourne Institute of Technology for the sum of $600,000. Settlement of that sale was due on 1 December 2000. On 2 February 2000 the plaintiff sent to the first defendant and to its solicitors a notice of landlord's intentions pursuant to the provisions of s.16 of the Retail Tenancies Reform Act 1998. The relevant sub-sections of that section read:

"(1) Unless the tenant under a retail premises lease has an option under the lease of a further term, the landlord must, by written notice to the tenant at least 6 months and not more than 12 months before the end of the term of the lease - ... (b) inform the tenant that the landlord does not propose to offer the tenant a renewal of the lease."

"(4) If a landlord fails to notify a tenant as required by sub-section (1), the lease continues, subject to sub-section (6), until a day specified in a notice (containing the same information as is required by sub-section (1)) given to the tenant by the landlord that is more than 3 months after the giving of the notice."

The notice sent to the first defendant and its solicitors on 2 February reads:

"TAKE NOTICE that the Lease submitted to you for execution on the 4 June 1998 made provision for the Lease term to expire on the 30 November 2000 and you are hereby informed that the Lessor does not propose to offer the Lessee Utopia Sales Pty. Ltd. a renewal of the Lease. The Lessor requires the Lessee to give up possession of the premises on the 30 November 2000."

There was no immediate response by the first defendant or its solicitors to that notice. However, by letter of 22 November 2000 written by the solicitors for the first defendant to the solicitors for the plaintiff, the solicitors for the first defendant referred to an agreement which the first defendant and its directors allege was reached with the plaintiff in 1987 concerning the property. The relevant paragraphs of the letter read:

"We also confirm that the representative of your client rang our client last Thursday or Friday asking whether our client would be vacating the premises at the end of this month. We are instructed that our client informed your client that they would not. We are instructed that in 1987 our client through Dimitra Ioannou reached agreement with Mr Bade Senior representing your client as follows:- (a) Our client was required, at its expense to conduct the defence of Supreme Court proceeding issued against your client and our client. (b) If our client was successful in maintaining a permit to conduct a brothel at the premises by way of the Supreme Court litigation, then in progress; (c) Our client would thereafter be entitled to be and remain a tenant of your client at 18 Cardigan Street Carlton for as many years as our client wished. (d) Your client would continually renew the lease to ensure that our client was entitled to conduct its business from those premises for as long as our client wished. In fact, since that date there has never been a problem with our client continually being provided with a lease of the premises under and in accordance with the agreement. Your client has now made it clear that they do not intend to honour the agreement and do not intend to renew the lease to which our client is entitled."

On 1 December last the plaintiff filed a writ in the court in which it seeks (inter alia) an order for possession of the premises. At the same time it filed a summons, which is the summons now before me, whereby it seeks the following orders:

1. The first defendant forthwith vacate, quit and give up possession of the premises situate at and known as 18 Cardigan Street, Carlton in the State of Victoria and more particularly described as the whole of the land in Certificate of Title Volume 3178 Folio 420.

2. The first defendant lodge a withdrawal of caveat with the Registrar of Titles within such time as the court directs.

Yesterday a director of the first defendant, Dimitra Ioannou, swore an affidavit in opposition to the plaintiff's application. In that affidavit Ioannou makes reference to the proceeding which was before this court in 1987. The relevant sentence in paragraph 5 of the affidavit reads:

"By Originating Motions filed 15 April 1987 and a summons of that date a proceeding was issued out of this Honourable Court seeking an order and declaration that the subject premises were used as a prescribed brothel."

The proceeding was taken against the present plaintiff and Ioannou by one Noel Alfred Anderson. The relief Mr Anderson sought in the originating motion was a declaration pursuant to the provisions of s.49F of the Town and Country Planning Act 1961 that the house or place known as Utopia and situate at 18 Cardigan Street, Carlton in the State of Victoria is a prescribed brothel. The hearing took place before Hampel, J. and on 24 August 1987 his Honour dismissed the originating motion.

Paragraphs 10, 11 and 12 of Ioannou's affidavit then read:

"10. Prior to the hearing of the said proceeding before Hampel J., I together with my partner Efthinmios Giannakopoulos (Jim) went and saw Geoff Bade (Mr Bade) a director of the Plaintiff at his factory. He stated to me that his company would not incur any legal expenses in defending the proceeding because he considered that it was unlikely that a defence of this proceeding would succeed. He told me that if I chose to defend the proceeding I should do so at my own expense and that he was not going to contribute to any costs incurred by me. Nevertheless, he said:- '... You run it, and win and you can stay there forever I want you as a tenant.' 11. During the period between the hearing of the said proceeding and judgement, Geoff Bade and I kept in regular contact both by telephone and in person. He was very keen to know whether judgement had been delivered. During these conversations he repeated his promise that if I was successful, I could stay there forever. I understood this to mean that the company would be given a lease of the premises as long as it wished to conduct its business there. 12. After Hampel J had delivered his judgement, I spoke to Mr Bade and informed him about the result. He said to me words to the effect:-

The principles which one must bear in mind in considering an application for a mandatory injunction are well known. The exercise of the discretion to grant a mandatory injunction in interlocutory proceedings should be approached with caution and only granted in a clear case where the court feels a high degree of assurance that at the trial it would appear that the injunction was rightly granted.

In considering the material placed before the court, both in support of and in opposition to the present application, I have borne that principle in mind. However, in my opinion, this is an appropriate case in which to grant the injunctive relief now sought by the plaintiff.

It would seem to me that the first defendant's account of this matter is highly improbable. If that was the true situation, then one asks: Why was no reference made to that agreement when the notice of landlord's intentions was served on the first defendant on 2 February 2000? Why was there no reference to it until 22 November 2000, which, of course, was a matter of days only before the notice of landlord's intentions expired.

A director of the first defendant has sworn that the first defendant contacted its solicitors in July in relation to the matter. If those were the instructions given to the first defendant's solicitors at that time, why was the matter not raised then with the solicitors for the plaintiff? The fact is it was not, and it is for that reason that I regard the account now given by the directors of the defendant some 13 years later as somewhat improbable.

But, let us assume that I am wrong in thinking that. It would seem to me that even if the first defendant establishes that that was said in 1987, it is highly arguable that what was said did not amount to any estoppel of the nature contended for by counsel for the first defendant.

If the plaintiff is not able to now provide vacant possession of the property to RMIT and finalise its contract with RMIT, there is evidence to suggest that it would suffer significant loss. I refer in that connection to the letter dated 30 November 2000 written by RMIT's solicitors to the plaintiff's solicitors, the relevant paragraphs of which read:

"My client reserves its rights to claim damages arising from your client's default. These damages will be particularly significant if settlement does not occur in this calendar year. RMIT plans to construct a new building on an area incorporating this site as part of its new arts precinct development. Delay costs on this project will be significant. Apart from increases in construction costs and consultant's fees, there will be a loss of fees from students who would otherwise have taken new courses planned to be conducted in the new arts precinct. RMIT's business operations planned for this site will be delayed with consequential financial loss to RMIT."

On the other hand, if the views I have formed on this matter are later held to be erroneous, then in my opinion the first defendant would be adequately compensated for any loss it has suffered or will suffer as a consequence of the orders I propose to make today by an appropriate award of damages.

Counsel for the plaintiff having given the usual undertaking as to damages on behalf of the plaintiff, the order of the court is as follows:

1. The plaintiff recover possession of the land described in the statement of claim endorsed on the writ at 18 Cardigan Street, Carlton.

2. The first defendant vacate, quit and give up possession of the premises situate and known as 18 Cardigan Street, Carlton in the State of Victoria and more particularly described as the whole of the land in certificate of title Volume 3178 Folio 420 by 5 p.m. on Friday 8 December 2000.

3. The first defendant by 5 p.m. on Friday 8 December 2000 lodge at the Office of Titles withdrawals of caveats in registrable form of all the caveats that it has lodged for registration on certificate of title Volume 3178 Folio 420.

5. I direct that this order be drawn up by the solicitor for the plaintiff and brought to me for authentication.

As that has already been done, I shall sign the order, Mr Connor.

MR MOSHINSKY: I am instructed to ask for leave to appeal and to ask Your Honour to grant a stay of Your Honour's orders pending the application for leave to appeal.

HIS HONOUR: I will not grant you leave to appeal but I will grant a stay of the orders until 5 p.m. on Friday of this week.

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