Court grants interim injunction for property owners claiming near-certain success on tenancy vs option contract issue.

[*496] 1982 June

(ARTEMIS, S.D.J.)

IN THE DISTRICT COURT OF LIMASSOL

G.P. Sykopetritis & Sons Ltd.,

Plaintiffs,

v.

Lima sun Flat Management Co. and Others,

Defendants.

(Action No. 1495/82).

Interlocutory injunction - Section 4 of the Civil Procedure Law, Cap.6 and section 32 of the Courts of Justice Law, 1960 (Law 14./60) - Principles applicable - Claim under contract whereby option was given by plaintiffs, as owners of block of flats, to defendants to utilise and exploit the premises by letting them to tourists - Application for inter­locutory orders connected with the subject-matter of the. action. - Serious question to be tried at the hearing - Success of plaintiffs in their action on the question of whether there was a tenancy or not almost certain - Application granted - Whether an injunction will be granted when it gives the applicants their whole remedy before the action is tried.

T. Timotheou, for Plaintiffs-Appiicants.

S. Sofroniou, for Defendants-Respondents·

INTERIM DECISION

The following interim decision was delivered by:-

ARTEMIS. S.D.J.: By their present [*497] action the Plaintiffs/Applicants claim:

(a) A declaration that the Plaintiffs are the owners entitled to exclusive possession of a block of flats in Limassol,

(B) An Order of the Court preventing the Defendants and/or their servants and/or agents from interfering in any way with the said property,

(C) An Order against the Defendants for the delivery of vacant possession of shop (T) of the said property,

(D) An Order of the Court against the Defendants for the delivery of the keys, furniture, etc. of the said property,

(E) An Order preventing the Defendants from using their name in connection with the said property, and,

(F) Damages for breach of contract.

May it be noted

that there is a cross action by Defendants 1 by which they claim damages for forceful entry of the Plaintiffs to the said property,

for a declaration that they are entitled to possession of the property and for orders giving them possession of the property and preventing the Defendants from interfering with it.

In both actions the Plaintiffs have filed Applications seeking Interim Injunctions connected with the subjectmatter of the action.

Due to the close connection between the two cases, the Applications were tried on the same day and today they are [*498] both fixed for Judgment.

The substantive provisions of the Law on which the Application for interim injunctions is based are Section 1+ of the Civil Procedure Law, Cap. 6 and Section 32 of the Courts of Justice Law 14/60 which read as follows:-

S.4 of Cap. 6: "The Court may at any time during the penddncy of any action therein make in the action an order for the sequestration, preservation, custody, sale, detention, or inspection of any property, being the subject of the action, or an order for preventing any loss, damage, or prejudice which but for the making of the order might be occasioned to any person or property, pending a final judgment, on some question affecting such person or property or pending the execution of the judgment.”

S.32 of Law 14/60 reads: "Subject to any Rules of Court every Court, in the exercise of its civil jurisdiction, may, by order, grant an injunction (interlocutory, perpetual or mandatory) or appoint a receiver in all cases in which it appears to the Court just or convenient so to do notwith­standing that no compensation or other relief is claimed or granted together therewith:

Provided that an interlocutory injunction shall not be granted unless the Court is satisfied that there is a serious question to be tried at the hearing, that there is a probability that the Plaintiff is entitled to relief and that unless an interlocutory injunction is granted it shall he difficult or impossible to do complete justice at [*499] a later stage.

......................................................."

The doubts existing for a long time in England as to how far the Plaintiff should go in order to satisfy the Court that there is a serious question to be tried and a probability that he is entitled to relief (see the cases of Preston v. Luck

(1884) 27 Ch. D. U.497 Smith v. Grigg Ltd. (1924) 1 K.B. 659; Jones v. Pacaya Rubber & Produce Co. Ltd. (1911) 1 K.B.1445; see also Donmar Productions Ltd. v. Bart (1967) 2 All E.R.338; Harman Pictures N.V. v. Osborne (1967) 2 All E.R.324) were finallyresolved in the important

decision of the House of Lords in American Cyanamid Co, v. Ethicon Ltd.

(1975) 1 All E.R. 504, the effect of which was very clearly summarized in Fellowes and Another v. Fisher (1975) 2 All E.R.829 in which it was laid down that, at that preliminary stage the Court should not investigate the merits of the action but the strength of the Plaintiff's case should be judged on its face value and unless the action is frivolous or vexatious, there is a serious case to be tried and no attempt should be made to foretell the outcome of the action.

In Cyprus, however, the principles expressed in the above cases should always be viewed in the light of the requirements set out in the proviso to Section 32 of Law 14/60 which must be satisfied before an order is granted. As it was said in the case of Acropol Shipping Co. Ltd. and Others v. Petros Rossis (1976) 1 C.L.R. 38 at p.56: [*500]

"......in Cyprus in granting an interim injunction, the Courts followed closely the principles formulated in Preston v. Luck (supra)......”

And, further down at p. 57 the following was stated:

"Having given this matter our best consideration, we are of the opinion that this is one of those individual cases in which the Courts should go by the clear and unambiguous language of our Statute section 32, of the Courts of Justice Law, I960, ......... rather than the principles stated by the House of Lords in the American Cyanamid case."

The relevant extract from the decision of Preston v· Luck (supra) which has application in Cyprus appears at P.505 of the report and reads as follows:

"Of course in order to entitle the plaintiffs to an interlocutory injunction though the Court is not called upon to decide finally on the right of the parties, it is necessary that the Court should be satisfied that there is a serious question to be tried at the hearing, and that on the facts before it there is a probability that the plaintiffs are entitled to relief."

By their present Application the Plaintiffs apply for Interim Orders as per paragraphs (B, (c) , (D) and (E) of their claim.

In the present case by a contract between the Plaintiffs and Defendant 1, which is Exh.l, the Plaintiffs, the [*501] owners of a block of flats, gave the option to the Defendants to utilize and exploit the premises by letting them to tourists. As the Plaintiffs submit, the said agreement did not create a tenancy but a licence, something which the Defendants strongly oppose, suggesting that this is a. tenancy agreement. As the Court, in order to decide the Application, will have to examine whether there is a serious question to be tried at the hearing of the action and whether the Plaintiffs have any likelihood of success, inevitably I will have to deal with this point as, according to the agreement, the period of the option ended on 30/4/82 after which the Defendants remained in occupation and were forcibly ejected by the Plaintiffs. Counsel for the Defendants further argued that, being tenants, after the expiration of such tenancy they became controlled tenants. This submission, however, was not substantiated as it has not been shown before the Court that this is a case where controlled tenancy would have any application.

There is a number of English authorities which have been cited in Cyprus District Court cases which deal with instances where a licence was distinguished from a tenancy and the net result of which is that, irrespective of the terminology used in the contract, the Court will have to decide upon the true nature of the agreement, (See Errington v, Errington & Woods (1952) 1 All E.R.149; Cobb v, Lane (1952) 1 All E.R.1199 C.A. ; Faccini v. Bryson

(1952) 1 T.L.R.1386; Shell-Mex and B.P. Ltd. v. Manchester Garages

(1971) 1 All E.R.841; Heslop v. Burns (1974) 3 All E.R. 406 and Somma v. Hazlehurst & [*502] Another (1978) 2 All E.R.1011.)

It has also been held that, in the case of written agreements, where there is sufficient evidence to justify this, the Court must construe the agreement in the light of the surrounding circumstances and give effect to that constructions. (See the case of Buchmann v. May (1978) 2 All E.R.993 at p.998; Addiscombe Gardens Estates v. Crabbe (1957) 3 All E.R.563, etc.)

Bearing in mind the above authorities and having examined the written agreement before me, it is plain that there is really a serious question to be tried at the hearing but furthermore it is clear from that agreement that the success of the Plaintiffs in their action on the question of whether this is a tenancy or not, is almost certain. The Purpose for which the option was given in my mind clearly shows that this was not a tenancy agreement. Something which very strongly points to that is the fact that the payments to be made to the Plaintiffs would depend on the question of whether the flats in question would be let out to tourists at a certain given period and no amount was to be payable when the flats were not so let out. The fact that for the shop used as an office a fixed amount was to be payable per month does not change the situation as the use of the said shop was to be inci­dental, to the general option and its use, being continuous, it is only logical that a fixed amount should be paid over the whole period. [*503]

It has been argued by Counsel for the Defendants that the Court should not accede to the application as what the Plaintiffs are asking is something which they also claim by their action itself.

In the case of Manchester Corporation v. Connolly and Others (1970) 1 All E.R.961, it was held that, although an injunction gives the applicants their whole remedy before the action is tried, it should be granted where it is plain that there is no defence to the action and the only object in raising a defence was delay.

As regards the third prerequisite of Section 32, it can be said that unless the Application is granted it will be difficult to do justice at a later stage, as the assessment of damages may be very difficult. As I am of the view that in both cases the situation as to compensation and damages stands on an equal footing for both parties, the Order sought for should be exercised in favour of the Plaintiffs in this action, in the light of my findings as to their likelihood of success.

In the result I make Orders in favour of the Plaintiffs and against Defendants 1 as per the Application. The costs of the Application awarded against the Respondents, Costs to be assessed by the Registrar.

Order for plaintiffs against

defendants as per application

with costs against respondents.