Supreme Court of WA|2011-12-07|Before: Edelman J

1 The simple question in this application is whether an interim injunction, granted in the absence of the defendants on 30 October 2011, should be extended, as an interlocutory injunction, until trial.

2 In very broad terms, the interim injunction was granted to restrain the defendants from terminating the plaintiff's rights to a Swan Taxi licence plate, or interfering with the plaintiff's rights to the use of that plate.

3 The interlocutory injunction should be granted, with liberty to the defendants to apply to discharge or vary it. The plaintiff has a prima facie case that, subject to conditions of payment, he has an enforceable right granted by the defendants to continue to use the licence plate. Further, the inconvenience which the plaintiff would be likely to suffer if an injunction were refused outweighs that of the defendants if the injunction were granted.

4 On 26 October 2011, the plaintiff brought an action against the defendants. A statement of claim has been filed but no defence has yet been filed. In brief summary, the plaintiff's case, as pleaded and based on the evidence before me, is as follows.

5 The plaintiff is the lessee of WA Taxi Plate No 503 (the Plate). The plaintiff is also the director of Embleton Motors Pty Ltd (Embleton). For convenience, in setting out the plaintiff's case, I have followed the plaintiff's use of the word 'lease' to describe the parties' contractual arrangements in relation to the use of the Plate. No submissions were made by the defendants that anything turned upon the characterisation of the nature of the plaintiff's alleged right.

6 Embleton is the owner of the vehicle on which the Plate is fixed. Embleton owns four taxi plates, leases 35 taxi plates and manages eight taxi plates for other people.

7 Until February 2008, the plaintiff leased the Plate from Mr Bott.

8 In early February 2008, the plaintiff's agent, Mr Osman, says that the following occurred:

(a) Swan Taxis telephoned Mr Osman, and told him that the Plate had been sold to new owners. The new owners are the defendants, Mr and Mrs Cetin.

(b) At the plaintiff's request, Mr Osman telephoned Mr Cetin and said that unless the defendants would lease the Plate to the plaintiff for five years the plaintiff was not interested in leasing the Plate.

(c) Mr Cetin replied that the plaintiff could lease the Plate for life, provided that the plaintiff paid all lease payments prior to the 17th day of each month and provided that the plaintiff enter into a one year trial lease period so that Mr Cetin could assess whether the plaintiff would meet all his payment obligations under the lease.

(d) Mr Osman replied that the plaintiff agreed to those terms. Mr Osman informed the plaintiff of the terms and the plaintiff confirmed his agreement.

9 Around July 2009, Mr Osman says that Mr Cetin telephoned him and said that as long as the plaintiff continued to pay all money owing under the lease, the term would be extended indefinitely and would not be terminated. He says that he informed the plaintiff of this.

10 The plaintiff says, and Mr Osman agrees, that Mr Osman acted as his agent in relation to these transactions. The plaintiff's affidavit also confirms these conversations that he had with Mr Osman.

11 The representation to which I have referred above at [8](c) is pleaded as the 'Life Term Representation'.

12 The plaintiff's evidence, and pleading, is that on 16 February 2008 he executed a written lease with the defendants in reliance upon the Life Term Representation.

13 The plaintiff annexes to his affidavit the written 'lease' agreement. It is dated 16 February 2008. The terms which are relevant to this application are as follows:

The Owner of the Car is M[r] KIM JOHNSON ...
The Owner of the Car is leasing the plate for a period of 12 months as from [BLANK] with the provision to release after this time. (If in the event of a decrease or increase of lease from the DPI then [the] lease will be reviewed)
Mr JOHNSON is to pay the owner $1690 (inc. GST) monthly, which comes to $390 per week. Payments must be made monthly.
Mr JOHNSON is to pay the sum of $110.00 per week being for rank fees to Swan Taxi each Monday.
Failing to pay lease to the owner & Rank fees to Swan Taxi on the given days, the owner has full authority to put car off the air until outstanding monies are paid. Failing to pay outstanding monies after two weeks will result in the contract being terminated and all equipment and plates returned to the owner.
Should Mr KIM JOHNSON leave the State or Country he must notify the Records Department immediately! Under no circumstances is he to Sublet the plates.
Either party may cancel the agreement provided they give 1 month prior notice.

14 In a letter dated 24 December 2009, legal representatives of the defendants sent a letter to the plaintiff enclosing a 'Notice of Termination of Contract'. The plaintiff says that the letter was received on 4 January 2010.

15 The notice of termination to the plaintiff is dated 9 December 2009 and is signed by the defendants. It says the following:

The Lessor (T503) Necati and Fikriye Cetin of 92 Outlook drive, Glenroy 3046, Victoria as of the 09/12/2009 shall CANCEL and TERMINATE the contract between the Lesser [sic], Kim Johnson, 24 Embleton Ave, Bayswater, Perth. (Either party may cancel the agreement provided they give 60 days notice) without further notice.
On the Date of termination is [sic] 09/12/2009, all equipment to be returned to Swan Taxi on the 09/02/2010.

16 The plaintiff says that he was not in breach of any terms of the lease and claims relief including:

16.1 a declaration the Plate is leased to the plaintiff for a life term by the defendants, as owner, pursuant to the Lease and only terminable by the defendants, upon the plaintiff first being in unrectified breach of the Lease and being first given 1 month's prior notice thereof;

16.2 a declaration no, or no valid, notice of termination for the Lease of the Plate was served on the plaintiff and the Lease of the Plate has not been terminated;

16.3 a declaration it is an implied term of the Agreement that the defendants, as owners of the Plate, will do all required of them to maintain access by the plaintiff to the Swan Taxi dispatch service, or any similar service, and will not act otherwise so that the plaintiff may enjoy the full and uninterrupted benefit of the Lease of the Plate and/or have access to Swan Taxi dispatch service, or any similar service;

The 26 October 2011 interim injunction application

17 On 26 October 2011, in addition to the writ of summons and statement of claim, the plaintiff also filed a chamber summons for an interlocutory injunction essentially to restrain the defendants from terminating the 'lease' of the Plate or interfering with the plaintiff's possession and use of the Plate and access to the dispatch service. That chamber summons was supported by an affidavit sworn by the plaintiff, and an undertaking as to damages.

18 Submissions in support of the application for an urgent interim injunction were filed the next day.

19 The interim injunction application was listed to be heard before Justice Beech on 3 November 2011.

20 On Sunday, 30 October 2011 the solicitor for the plaintiff informed the court that the plaintiff's 'Swan Taxi dispatch service will be turned off at 12 midnight tonight unless the injunction is granted'. He sought a determination on the papers. That afternoon, his Honour Justice Murray made the orders sought on the papers. The matter was listed to be heard, with notice to the defendants, by the Supreme Court on 10 November 2011.

21 The terms of the interim injunction granted by his Honour Justice Murray were as follows:

The defendants be restrained until close of business on 10 November 2011 and an injunction is granted restraining them by themselves, their servants, agents or otherwise from:

1.1 terminating the leases by the Plaintiff of, and with respect to Swan Taxi Plate number 503 ('the Plate'); and

1.2 interfering with the Plaintiff's possession and use of the Plate inclusive of instructing, or maintaining any previous instructions, to Swan Taxi dispatch service located at 7 Harvey Street, Victoria Park, Perth in the state of Western Australia, or any similar service, that it cease taxi rank dispatch customer services with respect to the Plate, without an order of the court.

There be liberty to apply to discharge or vary the injunction in paragraph 1 above, upon 48 hours written notice.
The Plaintiff is to serve upon the Defendants by close of business on 4 November 2011, a copy of this order.
The Plaintiff's application, dated 26 October 2011, is listed for further hearing at 9.15am on 10 November 2011.

The hearing of the application on 10 November 2011

22 In early November 2011 the defendants filed submissions and affidavits in opposition to the plaintiff's application for the interlocutory injunction.

23 On 10 November 2011 when the matter came before Kenneth Martin J, the interlocutory injunction was extended until further order. This was done by consent of the parties to allow the defendants time to address objections which the plaintiff had made the previous day to the defendants' affidavits. The matter was adjourned for two weeks.

24 On 6 December 2011, the defendants relied upon fresh affidavits which met some of the objections raised by the plaintiff. The defendants filed affidavits from:

Mr Sidar Cetin sworn on 22 November 2011;
Mr Necati Cetin sworn on 22 November 2011; and
Mr Seyit Erciyas declared on 25 November 2011.

Various objections to these affidavits were ruled on at the commencement of the hearing.

25 The essence of the responsive affidavit evidence relevant to the defendants' opposition to the grant of the interlocutory injunction is that Mr Necati Cetin forcefully denies having made the alleged Life Term Representation or having repeated it in July 2009 as Mr Osman claims. His denials are supported by his son.

26 Mr Necati Cetin says that he telephoned Mr Osman prior to the expiration of the lease agreement. He says that he told Mr Osman that 'the lease is expiring soon and I am prepared to allow you to continue to lease the taxi plate on a month to month basis until I provide written notice that the lease is at an end'. He says that Mr Osman told him that Mr Osman was content with this and that the plaintiff would simply continue to pay the agreed fees on a month to month basis until such time that the plaintiff received written notice of termination.

27 Mr Sidar Cetin, the son of Mr Necati Cetin, says that he has been privy to most of his father's business transactions which took place on loudspeaker due to his father's limited English skills. He says that he was present during the telephone conversations between Mr Osman and Mr Cetin. He says that his father's evidence is accurate.

28 The final affidavit filed on behalf of the defendants is by Mr Erciyas. His evidence is concerned with par 15 of the evidence of the plaintiff. In par 15 the plaintiff gives evidence of a conversation that he had with his solicitor. The plaintiff says that in the conversation with his solicitor, he was told of matters of which the solicitor had been told by Mr Osman which the solicitor said that Mr Osman had been told by Ms Huang from Swan Taxis. Although no objection was brought to this evidence of the plaintiff, it is hearsay, upon hearsay, upon hearsay.

29 The evidence of Mr Erciyas was that in February 2010 he had told Swan Taxis that the Plate was not to be taken off the air. This evidence may have been relevant to the question of the urgency of the 30 October 2011 application. But it is not needed to rebut the hearsay, upon hearsay, upon hearsay. It may also have some relevance, as the defendants submitted, in relation to potential inconsistencies in the plaintiff's case but what Mr Erciyas said to Swan Taxis in February 2010 is, at best, peripheral to the question of whether representations were made by the Mr Cetin to Mr Osman in 2008 and 2009.

Whether an interlocutory injunction should be granted until trial

30 In Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618, 622 623 the High Court (Kitto, Taylor, Menzies & Owen JJ) said that a claim for an interlocutory injunction requires two inquiries:

The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief ... .

... The second inquiry is ... whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.

This was quoted with approval in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, 82 [65] (Gummow & Hayne JJ).

31 As to the issue of whether a prima facie case of an underlying cause of action exists, the plaintiff submitted that if the court considered that there were a prima facie case that the Life Term Representation had been made, then there were three ways in which the plaintiff had an enforceable right that the lease be continued:

(1) On the basis that the Life Term Representation was an oral contract that the plaintiff performed, in part, by entering into the one year lease agreement on 16 February 2008. After the expiry of that one year trial lease, the oral contract required the defendants to lease the Plate to the plaintiff for life unless terminated by agreement, subject to the plaintiff paying all lease payments prior to the 17th day of each month. This submission was not pleaded, but counsel indicated an intention to amend the statement of claim.

(2) On the basis of the Life Term Representation, and the reliance upon it by the plaintiff, the plaintiff pleaded an estoppel preventing the defendants from departing from the Life Term Representation (Statement of Claim at par 12).

(3) On the basis that there were implied terms in the lease, it was also pleaded in the Statement of Claim at par 6 that:

[B]y reason of the Life Term Representation, the defendants would take all steps to ensure the plaintiff enjoyed the benefit of the Lease and had [amongst other things] continued and uninterrupted access to a taxi dispatch service with respect to the Plate; and in the event the Lease was not terminated by other party within the first 12 month term: (a) the plaintiff was granted a life term of the Lease; and (b) the defendants could not terminate the Lease unless the plaintiff remained in unrectified breach of the Lease after first being given 1 month's notice thereof by the defendants.

32 Alternatively, the plaintiff submitted that no valid notice of termination had been given. The alternative submission was that the termination notice dated 9 December 2009 was an immediate termination on 9 December 2009, which was received on 4 January 2010 and which did not comply with a requirement of a month's notice. The plaintiff properly conceded that this alternative submission would not justify an injunction which prevented the defendants from issuing a new notice of termination.

33 I am satisfied that the plaintiff has made out a prima facie case of an underlying cause of action, namely that the alleged Life Term Representation gave the plaintiff an enforceable right to indefinite continuation of the plaintiff's right to use the Plate, subject only to payment of the monthly rental prior to the 17th day of each month. The reasons why I consider that there is a prima facie case are threefold.

34 First, as Gummow and Hayne JJ explained in Australian Broadcasting Corporation (82) [65], (84) [71], the requisite strength of the probability of ultimate success which is required for the assessment of a prima facie case in relation to the first inquiry 'depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought'.

35 The nature of a right to a taxi licence which is asserted by the plaintiff, has been described in a joint judgment of Gaudron, McHugh, Gummow and Hayne JJ as 'a valuable item of property': Commissioner of Taxation of the Commonwealth of Australia v Murry [1998] HCA 42; (1998) 193 CLR 605, 629 [67]. The word 'property' is used by lawyers in a myriad of senses, usually to signify particular characteristics of a right which mark it as an important right. The relevant characteristic of the plaintiff's right in this case is that it concerns part of his business and livelihood.

36 The possible practical consequences which could flow from a refusal of the interlocutory injunction are, in the words of the plaintiff's affidavit:

[M]y company will not be sent any customer jobs from Swan Taxis and I will not be able to earn any income [from] the Plate. In effect my lease of the Plate will be rendered worthless as I have been informed by Swan Taxis and verily believe they will only accept instructions to take a Plate off or on air and otherwise to provide rank services, from the owner of the Plate and not myself as lessee.

37 The assessment of the strength of the plaintiff's case in determining whether a prima facie case of whether an underlying cause of action exists must be conducted against these significant matters of practical consequences as well as the nature of the plaintiff's right: Beecham (622) (the Court), and [34] above.

38 Secondly, the essence of the defendants' objection to the injunction was their submission, supported by the affidavit evidence filed on their behalf, that the Life Term Representation (and its alleged repetition in July 2009) was inherently unlikely. The evidence of the plaintiff and Mr Osman was met by the denials of Mr Cetin and his son. The defendants also pointed to the inherent improbability that a term as important as the Life Term Representation would be omitted from the 16 February 2008 agreement. It may be that these matters will become important at trial in establishing which account of the Life Term Representation is to be accepted. But, in light of the evidence of the plaintiff and Mr Osman, I am satisfied that there is sufficient strength for a prima facie case that the Life Term Representation was made. I put the matter no higher than this.

39 In reaching this conclusion it must be emphasised that although the court must assess the strength of the plaintiff's case, the High Court has said that 'where the defendant goes into evidence on the interlocutory application the Court does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case': Beecham (622) (the Court).

40 One of the primary reasons why the court should not go beyond a necessarily limited assessment of the strength of the plaintiff's case, to conduct a preliminary trial at an interlocutory stage, is the need for efficiency. In emphasising that the court does not undertake a preliminary trial in interlocutory cases, the Court in Beecham (623) quoted the former Vice Chancellor, James LJ, in Plimpton v Spiller (1876) 4 Ch D 286. James LJ was a paragon of efficiency who urged the total abolition of pleadings. James LJ said that the consideration is whether the issue is 'a fairly open question to be determined at the hearing' (289).

41 In this application, the plaintiff has adduced sufficient evidence that the issue is a fairly open question to be determined at the hearing or, to apply the more established verbal phrase, there is a prima facie case that the Life Term Representation was made.

42 Thirdly, counsel for the defendants did not suggest that, if a finding were made at trial that the Life Term Representation had been made then the plaintiff would, nevertheless, not be entitled to a declaration that the right was a continuing, indefinite right subject only to the condition of payment. Nor was it suggested that the alleged right would not be enforced by final injunction if necessary. Such submissions in opposition to the legal basis of this pleading were not raised at this interlocutory stage. Counsel for the defendants did point to difficulties in reconciling the terms of the written agreement with (1) the alleged (and unpleaded) written agreement which was purportedly performing the oral agreement, and (2) the pleaded implied terms. But it was not submitted, for example, that the plaintiff's plea of estoppel was deficient or that the oral contract, or implied terms were incapable in law of supporting the relief sought by the plaintiff. Nor was it suggested that any necessary final injunctive relief would not be available due to the nature of the right. In these circumstances, I am satisfied that there is a prima facie case for the enforcement of the plaintiff's asserted right to the continuation of the use of the Plate based on the alleged Life Term Representation. I have also reached my conclusion in light of the nature of the plaintiff's right and the practical consequences which follow from the grant of the injunction.

43 Turning to the second element of the inquiry, sometimes (awkwardly) described as the 'balance of convenience', there can be little doubt that, on the evidence before me, the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs the injury which the defendants would suffer if an injunction were granted.

44 I have set out above at [36], the plaintiff's evidence concerning the possible effect on him of the denial of this interlocutory injunction.

45 The plaintiff's right to use the Plate is part of, although only part of, his business and livelihood. As I have mentioned, it is a right which has been described as proprietary, emphasising the importance of its characteristics. The plaintiff's uncontradicted evidence was that denial of the injunction could render the plaintiff's right to the use of the Plate worthless if the defendants then instructed Swan Taxis to cease the rank and dispatch services to the plaintiff.

46 In contrast, there is no evidence that the defendants would suffer any prejudice from the grant of the interlocutory injunction. Counsel for the defendants referred to the defendants' inability to sell the Plate to a third party. That may be so but there is no evidence that the defendants have any desire to sell the Plate to a third party or even to move to Western Australia from Victoria to use the Plate; nor is there any evidence that they have any prospective lessee; nor is there evidence that a prospective lessee might pay more rent (subject to any statutory constraint) than the plaintiff. Further, the plaintiff has provided an undertaking as to damages.

47 There may be some controversy concerning whether a plaintiff must also establish a third factor in order to succeed in an application for an interlocutory injunction. A possible third factor is whether damages will not be an adequate remedy. In Australian Broadcasting Corporation, Gleeson CJ and Crennan J agreed with the discussion of the organising principles in the judgment of Gummow and Hayne JJ to which I have referred above. However, their Honours said:

[I]n all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff's entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction (68) [19] (emphasis added).

48 The decision of the High Court in Beecham did not suggest that there was a separate requirement for the plaintiff to prove that damages are an inadequate remedy. It may be that the approach of Gleeson CJ and Crennan J can be reconciled with the twofold Beecham test by treating the requirement that damages be an inadequate remedy as part of the test for the 'balance of convenience' rather than as an independent requirement. Alternatively, it may be that if it is determined that the plaintiff has a prima facie case and the 'balance of convenience' supports an interlocutory injunction, then it will always be inadequate to conclude that the plaintiff should be left to damages at trial.

49 It is not necessary in this case to resolve this issue. As I have explained, the nature of the plaintiff's alleged right is closely connected with part of his business and livelihood. Damages in such cases are rarely an adequate substitute if the right is established. Further, as the plaintiff submitted, the assessment of any damages if the plaintiff's claim turned out to be successful would be difficult.

50 For these reasons the interim injunction should be continued until trial, with liberty for the defendants to apply.

51 Counsel for the plaintiff submitted that the costs of this injunction application should be the plaintiff's costs because the costs of an interlocutory injunction application should, as a matter of course, follow the result. This is not correct.

52 A 'very common order on the grant or dismissal of an interlocutory injunction is that the costs of the application be in the cause': Topseal Concrete Services Pty Ltd v Sika Australia Pty Ltd [2008] WASC 57 (S) [5] (Beech J). One obvious reason for this usual approach is that a plaintiff's alleged rights upon which the interlocutory injunction is based might not be established at trial.

53 The appropriate order in the circumstances of this case is that costs of this application should be in the cause.

The interim injunction granted by the Hon Justice Murray on 30 October 2011 be extended until the date of trial of this matter.
The defendants have liberty to apply to discharge or vary the injunction upon 48 hours written notice.
The costs of this application be in the cause.

JOHNSON -v- CETIN [2011] WASC 344 (7 December 2011)

At a glance

Court

Decision date

Before

Source

Judgment (77 paragraphs)

The 26 October 2011 interim injunction application

The hearing of the application on 10 November 2011

Whether an interlocutory injunction should be granted until trial

Cases Cited (3)