Pricebusters Pty Limited v Renato Antonio Cervo; Tenant [1988] ACTSC 27 (18 May 1988)

SUPREME COURT OF THE ACT

PRICEBUSTERS PTY. LIMITED v RENATO ANTONIO CERVO
S.C. No. 304 of 1988
Landford & Tenant

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1)

CATCHWORDS

Landlord & Tenant - application for interim order restraining tenant from occupation until premises insured - amount of weight given to submission that landlord was source of information leading to purported cancellation of insurance - whether question to be tried as to whether tenant has kept premises insured.

HEARING

CANBERRA
18:5:1988

ORDER

Upon the usual undertaking as to damages on behalf of the applicant defendant and until further order, as from 4 p.m., 25 May 1988 the respondent plaintiff be restrained from occupying the premises described as Area No. 4, Plan 2146, Block 7, Section 185, Division Belconnen, Volume 1036, Folio 74, and the applicant defendant be at liberty to occupy the said premises.

The question of costs be reserved.

There be liberty to apply.

DECISION

This is an application arising out of a contest
between the respondent plaintiff (tenant) and the applicant defendant (landlord) for possession of premises at Area No. 4, Plan No. 2146, Block 7, Section 185, Belconnen. The landlord wants an interim order restraining the tenant from continuing in occupation until the premises are insured against public liability and damage to plate glass.

2. The premises are the subject of a sub-lease between the parties executed on 24 November 1987 providing for a term of three years commencing on 1 November 1987.

3. On 18 December 1987 Gallop J., at the instance of the tenant, made an interim ex parte order restraining the landlord from interfering with the tenant's quiet enjoyment of property. That was in proceedings commenced by writ on the same day, No. SC 1581 of 1987. The relief claimed in the statement of claim endorsed on the writ was for a permanent injunction in similar terms.

4. In February and March 1988 the landlord purported to serve notices of breach on the tenant and on 11 March 1988 the landlord purported to issue a notice of termination of the sub-lease. On 15 March 1988 Gallop J. in these proceedings, No. SC 304 of 1988, made further ex parte orders, again restraining the landlord from interfering with the tenant's quiet enjoyment of the property. In the statement of claim annexed to the writ the tenant sought a permanent injunction on similar lines and further a declaration that the notice of determination of 11 March 1988 was ineffective. On 18 March 1988 the landlord filed a defence and counter-claim seeking in effect a declaration of entitlement to possession. The ex parte orders were continued by Gallop J. on 25 March 1988 after a contested hearing. His Honour held that there was a serious question to be tried, namely whether the sub-lease had been validly terminated or not. His Honour further held that the balance of convenience lay in preserving the status quo, that is, by allowing the tenant to remain in possession and the landlord to recover the rent which he had contracted to accept for the term of three years.

5. The ground for disturbing this status quo, as it is put in the application before me, is that the tenant has failed to keep the premises insured against public liability risk and against damage to plate glass windows, as required by clause 8.02 and 8.03 of the sub-lease. Mr. Higgins Q.C. has put before me a number of submissions why the relief should not be granted. The chief one is that an insurance policy issued by the Government Insurance Office of New South Wales (GIO) on 4 March 1988 covering both public liability and glass remains in force despite a notification by the GIO by letter dated 6 April 1988 to the defendant that it had cancelled the policy "from inception". The argument put on behalf of the tenant may turn out to be correct when all the relevant facts and circumstances are known. At this stage it is necessary for me to decide only whether there is a serious question to be tried on this new issue raised on behalf of the landlord, namely, whether the tenant has kept the premises insured pursuant to clauses 8.02 and 8.03. That was an issue which was not argued before Gallop J. I am of the view that there is such a question to be tried in the proper way. It should not be disposed of in an interlocutory application such as this. It is, in my view, no answer to say that because the landlord can take out the insurance himself that the remedy then lies in the hands of the landlord. Of course it may well be that if the landlord was able to effect insurance, he could claim the cost of the premium from the tenant. In that situation it may well be that damages being an adequate remedy, the landlord would not be entitled to interlocutory relief by way of injunction. However, that is not the situation. The evidence is that the landlord has made some effort to obtain insurance but the insurers approached have declined cover, or where a cover note has been issued, have declined to issue a policy.

6. Does the balance of convenience then still lie as Gallop J. held it did by the tenant remaining in possession? The nature of the business of the tenant conducted at the premises has been referred to in the evidence with some coyness. It has been described as a sex shop. That I take to be a somewhat loose description. A sports store does not sell sport but gear and equipment connected with sporting activity. However, in the absence of any evidence to the contrary, I would expect that the business of a sex shop is such that members of the public visit the premises as customers or as potential customers of the business. Keeping the premises insured against public liability is, in my view, an important matter both from the point of view of the landlord and indeed of the public. Claims for personal injury by customers in shops are by no means infrequent in the Territory, and the potential financial liability of a defendant to an injured plaintiff may be very substantial. The chances of success of such an action against the landlord of such premises who is not in occupation may not be as high as in an action against the tenant in occupation, but they are not necessarily remote. In any event, a plaintiff may be more attracted to sueing or joining the landlord where the premises, or the tenant, are uninsured. I note that the policy issued by the GIO covered liability to a maximum of two million dollars.

7. As to the discretionary aspects of granting the relief sought, it was submitted on behalf of the tenant that the landlord was the source of the information which led to the purported cancellation of the policy by the GIO and to the apparent refusal of other insurers to issue a public liability policy. The information given was first that there was material non-disclosure by the tenant in the application for insurance in that the tenant had failed to disclose the true nature of the business and, secondly, that the landlord was taking proceedings for possession based upon an alleged breach of the purposes clause of the sub-lease.

8. Whether the true nature of the business was as disclosed is a serious matter for consideration. The question of whether the tenant was in breach of the purposes clause of the lease lies at the heart of the dispute between the parties and remains to be tried in the proper way. I do not think that the fact that the landlord conveyed information to the insurers which was followed by the insurers refusing insurance, is such that in itself it should be regarded as sufficient to refuse the relief sought.

9. I think that the balance of convenience lies in allowing the landlord to regain occupation of the premises until such time as the premises are the subject of a plate glass policy and a public risk policy as required by the sub-lease. Such policy or policies should be certified by the insurer as valid and current. The tenant should be given a week to vacate.

10. Upon the usual undertaking as to damages on behalf of the applicant defendant and until further order, I order that as from 4 p.m., 25 May 1988 the respondent plaintiff be restrained from occupying the premises described as Area No. 4, Plan 2146, Block 7, Section 185, Division Belconnen, Volume 1036, Folio 74 and that the applicant defendant be at liberty to occupy the said premises. I reserve the question of costs and grant liberty to apply.