Court grants absolute interim injunction to tenant against landlord selling shop pending specific performance trial.

[*43] 1984 May 29

(ARTEMIS, S.D.J.)

IN THE DISTRICT COURT OF LIMASSOL

Alpan Limited and Another,

Plaintiffs,

v.

Thelraa Tryfonidou,

Defendant.

(Action No. 1064).

Injunctions

- Interlocutory injunctions - The Courts of Justice Law 14./60,, section 32 - The three prerequisites that must be satisfied before the Court can grant an interim injunction - Analysis of each one of such prerequisites - Lease agreement - Probability that plaintiffs (tenants) claim for specific performance will succeed - Interlocutory injunction restraining defendant (landlord) from selling, disposing or otherwise alienating or parting with possession of the premises in question - If defendant parts with possession of the premises, any judgment for specific performance will be rendered ineffectual - Interlocutory injunction made absolute.

Landlord and tenant - Lease agreement in respect of a shop for a term of five years as from 1.7.81 , providing that if the existing tenants delay to give up vacant possession of the shop andsuch delay does not exceed two months, the tenants (plaintiffs) will not have a claim for damages and the term of the lease will begin on 1.9.81. - In fact, existing tenants delayed to give up vacant possession to the landlord until January, 1984 - Landlord refused to implement said lease agreement on the ground that it came to an end by reason of such delay - Action by tenants for specific performance of aforesaid lease agreement - Upon application by the tenants (plaintiffs) for an interlocutory injunction restraining landlord (defendant) from selling, disposing or otherwise alienating or parting with possession of said shop, the following questions arose for determination: (a) Whether time was of the essence of the lease agreement, 9(b) Whether the commencement of the lease became by reason of the aforesaid delay so [*44] uncertain, that no Court will specifically enforce the agreement of lease - Both questions were answered in the negative.

An Lemis for K.Michaelides for Applicants-Plaintiffs. P.Mouaimis for G. Cacoyiannis, for Respondent-Defendant. Parties absent.

RULING

The following ruling was delivered by:

ARTEMIS, S.D.J. : The Respondent/Defendant is the owner of a shop at 116 Makarios III Avenue. On 21.4.81 the Respondent/Defendant and the Applicants/Plaintiffs entered into a contract of lease by which the Respondent let to the Applicants the abovementioned premises for a period of five years as from 1.7.81, giving the Respondent the option to renew the said lease for another five years. As it was within the Knowledge of the parties that at the time of the signingof the agreement there were other tenants in the shop and there was the possibility of their delaying to deliver vacant possession thereof, by term (z) of the said contract (see Exh. “A”) it was provided that, if those tenants delayed in giving vacant possession and such delay did not exceed two months , then the Applicants would have no claim for damages and the lease would have started as from 1.9.81. It appears that the previous tenants, who were waiting to move into new premises, delayed much longer and finally delivered [*45] possession to the owner in January, 1984 The Applicants, who had been repeatedly pressing for delivery of the premises to them pursuant to the lease, again intimated to the Respondent their wish to enter into possession in January,1984, but the Respondent alleged that the contract had come to an end because of the delay that was caused by the previous tenants and refused to implement the contract of lease.

The Applicants filed the present action by chich they claim:

(a) A declaration of the Court that the said lease is valid and still in force,

(b) an order for specific performance , and,

(c) damages for breach of contract.

They also filed an application for an interm injunction restraining the Respondent from selling, alienating or otherwise disposing’ of the premises and parting with the possession of the said shop in favour of any third person. The injunction was granted ex parte and, after the objection taken by the Respondent, argument was heard on

21.5.84. Before proceeding, any further, I would wish to point out at this stage that the Respondent abandoned, at least for the purposes of this application, the argument that the contract has been frustrated. Learned Counsel for the Respondent also stated that the did not object to the injunction being made absolute in so far as it restrained the Respondent from selling or otherwise disposing of the ownership of the shop.[*46]

The application is mainly based on S.32 of the Courts of Justice Law 14/60, the provisions of which are well known. The said section sets down three prerequisites that must be satisfied before the Court can grant in interim injunction, these being (a) the existence of a serious question to be tried at the hearing, (b) the probability that the Plaintiff is entitled to relief, and (c) the fact that, unless the interlocutory injunction is granted, it shall be difficult or impossible to do complete justice at a later stage.

In the case of Acropol Shipping Co. Ltd. and Others v. Petros Rossis (1976) 1 C.L.R. 38, it was held that the principles applicable in

Cyprus are those formulated in the case of Preston v. Luck (1884) 27 Ch D. 497, and that the

principles enunciated in more recent cases and, in particular, in the case of American Cyanamid Co. v. Ethicon Ltd. (1975) 1 All E.R. 504, do not apply in full in Cyprus.

As regards the requirement that there should be a serious question to be tried at the hearing, it was held in the case of Odysseos v. Pieris Estates and Others (1982)

1 C.L.R. 557, that this requirement is satisfied when there is a disclosure of an arguable case on the strength of

the pleadings. As regards the second requirement of s.32, in the case of Odysseos v. Pieris Estates and Others (supra) the following is said:

“On the other hand, it is fair to assume that the second requirement laid down by the legislature as a precondition for the grant of an interlocutory injunction [*47] “ ‘ a probability that the plaintiff is entitled to ‘relief’ - relates to something other than the Complexion of the pleaded case of the applicant, and that ‘could not be in the context of this statutory provision, ‘anything other than the evidential strength of the case ‘of the plaintiff. In so holding, we are fortified by a series of decisions of the Supreme Court to the effect ‘that the principles adopted in Ethicon do not apply in ‘their entirety or in all their breadth in Cyprus. The ‘Court must purport to make some evaluation, what this should be we shall explain below, of the evidential ‘strength of the case for the party applying for an ‘injunction.”

It is obvious, therefore, from the above statement of the law that there must be enough evidence before the Court so as to enable it to exercise its discretion and decide whether there is a likelihood of success in the action on behalf of the Plaintiffs. As regards the standard of proof required, the following was said further down in the same judgment:

“The standard required for the plaintiff to overcome the evidential hurdle is not very high; he is only required to establish ‘a probability’ of success. The concept of ‘a probability’ imports something, more than a mere possibility but something much less than the “ ‘balance of probabilities’, the standard required for proof of a civil action. A legal probability is something different from a mathematical probability as the Court explained in Re J.S. (a minor) (1980) 1 All E.R 1061 (C.A.) [*48]

“ ‘A probability’ , in the context of the proviso to s.32(1), requires the applicant to demonstrate that that he has a visible chance of success”.

The main argument put forward by learned Counsel for the Respondent is based on the principle which was set out in the case of Lumley v. Ravenscroft (1895) 1 Q.B. 683 where it was held that an injunction ought to be granted only where a case was made out for specific performance. In that ease the defendants agreed to grant the plaintiff a lease of premises in which they were jointly interested. The plaintiff brought an action for specific performance of the agreement and applied for an injunction to restrain the defendants till after the trial of the action from leasing the premises to any other person. It was held that, as one of the defendants was an infant, the plaintiff was not entitled to specific performance against both of them and, therefore, he was neither entitled to the injunction sought as an interlocutory injunction is ancillary only to the relief which the Court may grant at the trial. Learned Counsel for the Respondent argued that, in view of the delay of the previous tenants to give vacant possession and of the contents of paragraph (z) of the lease, the beginning of the term became so uncertain that no Court would specifically enforce such an agreement. As to the impossibility of specifically enforcing agreements with term uncertainties, learned Counsel cited a number of authorities.

The Court, learned Counsel submitted, would in addition, have the problem of deciding, in case of specific

performance, the date from which the lease should commence. [*49] would that date be that provided in the contract or the date on

which the tenancy and possession would actually start? In addition, he argued that time was of the essence of the contract and, as there was no compliance with that, the contract came to an end. He also submitted that the conduct of the Applicants was such as to show that they had abandoned any rights they had under the contract, an allegation which is mentioned in the Respondent’s affidavit as well. Indeed, I fail to see how the Respondent can argue that time was of the essence of the contract, especially in view of the fact that it was in the contemplation of the parties that there might be a delay because of the already existing tenants. In addition, the prospective tenants, that is, the parties who were interested to get the lease, did, in fact, insist on enforcing the agreement even though the date envisaged in the contract for the commencement of the lease had passed. How can the lessor, who was, by inability to deliver possession, possibly in breach, take benefit of this fact? I therefore find no merit in this argument as I find no merit in the allegation that the Applicants abandoned their rights to the contract, for it is quite plain from the affidavits and the letters attached thereto that they always intimated their wish to enter into possession and pressed for delivery of the premises as late as January, 1984. The fact that they had in the meantime rented another shop can in no way affect the validity of the present contract.

I have carefully considered the argument as to the alleged uncertainty of the commencement of the lease and I have reached the conclusion that there is no uncertainty at [*50] all. The commencement.of the lease is clearly provided for in the contract as being the

1.7.81 or the 1.9.81 if delivery of possession would be delayed, as provided in paragraph (z) of the contract. There being such a delay at present, the commencement of the lease can be definitely fixed as being from 1.9.81. Therefore, any specific performance of the contract that might be ordered will be enforcing the lease for the remaining term of the five years, such five years being calculated as from 1.9.81. It has been suggested by learned Counsel for the Respondent that the effect of .paragraph (z) might be that the lease would become ineffective if there was delay beyond 1.9.81. I would be inclined to dismiss this submission as to my mind the real effect of paragraph (z) might be that, in case there would be a delay and such delay would be limited to two months, then those two months should not be deducted from the term of the contract and, in addition, the Applicants should have no right to claim damages for the delay. Otherwise, the validity of the lease would not be affected.

It should be pointed out that at this stage the Court is not making final findings on these points as this is a matter to be decided at the trial. However, a degree of examination of the evidence is necessary in so far as it is required of the Court to examine to a certain extent the evidence in the case to enable itself to state whether there is a probability of success of the claim for specific performance.

In view of what has been set out hereinabove and in the light of the relevant legal principles, I find that it [*51] has been sufficiently shown that there is indeed a probability of success in the Plaintiffs’ claim for specific performance.

As regards the first requirement, that there should be a serious question to be tried at the hearing, even though there are no pleadings in the present case besides the prayer, which would have been enough if they disclosed a “serious question”, the affidavit evidence does indeed disclose the existence of such a “serious question”.

It is manifest that, if the interim injunction is not granted and the Respondent parts with the possession of the shop in the meantime, any Judgment for specific performance will, in substance, be rendered ineffectual. Therefore, it is my view that the injunction should be made absolute. It is obvious, on the other hand, that, if in the end the Plaintiffs fail in their action, real and considerable damage may have been caused to the Respondent by the granting of the injunction. Therefore, the security that must be given must be of such an extent and of such a nature as to secure in the best possible way the interests of the Respondent.

In the result, the interim injunction is hereby made absolute pending the final determination of the action on condition that the applicants will furnish the Respondent within four days from today with security in the form of a bank guarantee in the amount of £15,000. -

Interim injunction made absolute.