Ernster v Slobodetsky [2011] FJHC 308; HBC45.2011 (30 May 2011)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 045 of 2011L

BETWEEN:

RICHARD ERNSTER
of 5 Coleman Street, Mascot, NSW,
Australia 2020, Company Director.
First Plaintiff

AND :

OLIVER SLOBODETSKY
of 5 Coleman Street, Mascot, NSW, Australia 2020, Company Director.
Second Plaintiff

AND:

DENARAU CORPORATION LIMITED
a limited liability company having its registered address at Lot 8 Industrial Area, Denarau Island, and having a postal address of PO Box PD 86, Port Denarau Marina, Denarau Island.
Defendant

INTERLOCUTORY JUDGMENT

Judgment of : Ms. Dias Wickramasinghe J.

Counsel : Ms. M Muir for the Plaintiffs
Mr Faiz Khan for the Defendant

Solicitors : M.K. Sahu Khan & Company for the Plaintiffs
Lateef & Lateef for the Defendant

Date of Judgment : 30 May 2011

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Keywords: Interim injunction, lessees /occupant rights,

INTRODUCTION

[1] The plaintiffs seek an interim injunction restraining the defendant from denying them access to their premises at Lot 8, The Cove, Denarau Island. The defendant admits denying access, and states that it was necessary as the plaintiffs' guests were making excessive noise and other nuisances in breach of The Cove Neighbourhood By-laws (By-laws) that applied to the residents on the island.

THE NOTICE OF MOTION AND AFFIDAVITS

[2] The application for injunction is by Notice of Motion filed on 6 April 2011, pursuant to O 29 r 1(2) and r 2 of the High Court Rules, 1988. It is supported by the affidavit of the second plaintiff, Oliver Slobodetsky, dated of the same date. The defendant filed an Affidavit in Opposition by Rupeni Fonmanu dated 19 April 2011. An Affidavit in Response by Fazlin Kausar dated 26 April 2011 was filed on behalf of the plaintiffs.

[3] When the Notice of Motion was first called on 11 April 2011, the defendant's solicitors gave their temporary undertaking to maintain the status quo of Lot 8, (premises) until the delivery of this interlocutory judgment, i.e. the plaintiffs' invitees would be allowed into The Cove without any further interference by the defendant. Both counsel also agreed that I make my order on the written submissions filed by them.

BACKGROUND FACTS

[4] The plaintiffs are directors of The Helping Hand Group, a major charitable fundraising organisation in Australia. They leased the premises from Namaka Land Development Company Limited under the Lease Agreement dated 1 December 2011, for a period of two years, commencing 24 January 2011. (OS1– lease agreement). The Group donates holiday packages in different destinations in Asia and Pacific, including the Denarau premises, to various charities in fundraising events where the invitees stay for free.

[5] The defendant company is a body corporate that acts on behalf of Denarau Residential Estates Limited, a company consisting of shareholders that are owners of residential lots at The Cove, Denarau Island. The Cove is an exclusive high-end, pre-retirement residence. It is a gated residential community and one Matrix Security Guards, employed by the defendant, operates the security gate. The defendant manages the common services and areas for The Cove. All residents, tenants and their invitees are governed by the By-laws in addition to their other proprietary interests.

THE INJUNCTION APPLICATION

[6] The defendant admits denying access to the plaintiffs' invitees on two or more occasions, by directing the security guards not to open the entry gate; admits requesting the plaintiffs' guests to vacate the premises; and admits denying access to one group on 4 April 2011. The defendant states that it was required to make a judgment call for the sake of security of the other residents.

[7] The defendant alleges that there were several complaints from the neighbours of Lot 8 that the occupiers were making noise at 1am and 2am on two occasions; that despite security calls the guests continued with the noise disturbing the neighbours; that golf carts were driven on The Cove roads; and touching of a balabala statue in Lot 20 driveway by kids who were in the golf cart. It appears that approximately four groups had visited the premises since the plaintiffs moved in.

[8] In addition, the defendant states that complaints were received relating to security and increased risk and exposure to the defendant as a result of the short-term accommodation by the invitees on holiday. The defendant also deposes that, when the invitees are present in the absence of the owners, those invitees poses a security threat and exposes the defendant to liability, in the event of theft, fire or damage to the premises at Lot 8 or any other lots in The Cove. The defendant states that such eventualities would be costly in terms of insurance claims. As such, the defendant is required to impose stringent security procedures by taking a proactive approach, as the defendant's role demands the exercise of caution and restraint at all costs to protect the properties and investments of all residents on Denarau Island.

[9] The defendant submits that permitting of invitees on short-term letting and the behavior of the invitees were in breach of Clauses 2.1, 3.1(b), 8.1 of the By-Laws.

[10] The defendant says that Clause 3.1 (a) of the by-laws specifically states that the owner or occupier of a lot must not use or permit the lot to be used other than as his residence or for residential accommodation of their tenants. The defendant claims that the invitees of the plaintiffs do not fit into either category as they are neither owners, occupiers or tenants of the owners.

[11] The defendant also relied on Clause 49.1(a) and (b) of the Articles of Association which is akin to Clauses 22.1 (a) and (b) of the By-Laws which permit imposing sanctions on violators of the By-Laws.

[12] In support of its contention, the defendant annexed "RF1" to "RF6" which includes several e–mail correspondence, security log entries and a police complaint. The two complaints received on 5 March 2011 and 21 March 2011 from Edward Pieszko, a resident of Lot 7, to Bob Lyon who is the Chairperson of Denarau Residential Estates Limited and one of the Directors of the defendant company, were among the defendant's exhibits.

[13] The plaintiffs contend that the defendant's allegations are baseless as the first group of invitees were permitted by the defendant without the presence of the plaintiffs; that there are several listings on the Internet, offering short term letting of other lots in The Cove (OS6 and OS7); that despite requests none of the complaints were provided to the plaintiffs or an investigation was carried out by the defendants before denying access to or requesting the invitees to leave the premises. The plaintiffs submit that the defendant is engaging in discriminatory behaviour and selective enforcement of the By-Laws against the plaintiffs and their invitees.

LEGAL MATRIX

[14] The law relating to interim injunction is well settled. Interim injunction is a quia timet action, a discretionary remedy in equity, a process of preventive or remedial justice. A plaintiff, who has locus standi to maintain the substantive action, is entitled to obtain an interim injunction, to preserve in status quo the subject matter, to ensure that the final judgment is not ineffectual at the conclusion of the hearing of the substantive matter. The court to exercise this discretionary remedy it must be satisfied of the following established legal principles:

1. that there is a serious question to be tried at the hearing of the substantive action;
2. that there is a prima facie case of infringement or imminent infringement of a legal right;
3. that damages are not an adequate remedy;
4. that the balance of convenience lies in favour of the applicant; and,
5. that equitable considerations favour the grant of an injunction.
   

See Preston v Luck [1984] 27 Ch. D 497.506(CA); American Cyanamid v Ehtricon [1975] UKHL 1; [1975] AC 396; Chambers –v- Wakaya Limited [2011] FJCA 25 (15 March 2011); and Pacific Timber Developments Ltd v Consolidated Agriculture Fiji Ltd [1994] FJHC 40 HCA 118 of 1994S (22 April 1994).

[15] Let me now turn to consider whether the plaintiffs have established the grounds stated above.

[16] The locus standii of the plaintiffs are not an issue in this case. Nonetheless, the plaintiffs claim their status persona as the lessee/tenant under the lease agreement based on lessees/occupiers rights.

[17] The defendant's Affidavit in Opposition did not disclose the process followed by the defendant before the invitees were asked to vacate the premises or denied access. Neither did it disclose the level of noise made by the guests for this court to assess its reasonableness. The By-Laws do not stipulate the noise level that should be maintained by the occupants especially in the evenings. The defendant failed to give a legally acceptable explanation regarding the other residents letting their residences for short-term periods albeit the listings for short-term renting are freely available on the Internet. Indeed, the only explanation given by the defendant is 'two wrongs don't make a right'.

[18] I am not inclined to scan intently and critically the documents and the By-Laws produced before Court at this juncture of the case, but only to opine that ex facie there appears to be arbitrary, discriminatory behavior and selective enforcement by the defendant of the plaintiffs' invitees. These acts of the defendants in fact establish a prima facie infringement of the leasehold rights and occupant rights of the plaintiffs. This, I especially observe, of the denial of entry of the invitees on 4 April 2011 upon their arrival of a family of 2 adults and 3 children on foreign soil, who cannot be accused of any of the allegations of the acts alleged to have been committed by the other guests. I am inclined to agree with the plaintiffs' counsel that the defendant was required to carry out an investigation following a due process, adhering to the rules of natural justice.

[19] I am mindful that the defendant would have been required to make a judgment call if persistent noise continued to the wee hours of the nights despite repeated caution by the security. However, the Court record does not disclose such evidence. Indeed, the first complaint was received on 21 March 2011, which is 2 weeks after the first group had alleged to have made noise, and on the following day after the other group said to have made noise (RF 2). The documents reveal that the defendant had in fact kept a tab on movements of the premises, even before receiving any complaints (RF1).

[20] Needless to state that occupiers of any premises, whether it be the owners, tenants or invitees, or whether they lived in an exclusive residential premises or otherwise, must ensure duty of care to the neighbours. That duty of care includes keeping the noise at a level, which is not a nuisance or hindrance to the neighbours at all hours, more particularly in the evenings after 6pm. The plaintiffs therefore should have ensured that their invitees were advised of the exclusivity of the premises and not to be a nuisance to the neighbours, especially when there had been alleged complaints against some of their invitees.

[21] I must also place on record that sanctions under the By-Laws could be imposed only after the breach of the By-Laws are properly investigated. The defendant also admits that the parties are in dispute as to: (a) the legal nature of the plaintiffs invitees; (b) the facts surrounding their refusal of entry into The Cove; and (3) interpretation of relevant clauses in the By-Laws. In the circumstances, I am convinced that there is a serious question between the parties to be tried before this court.

[22] Let me now examine whether there is a prima facie case of infringement or imminent infringement of the legal rights of the plaintiffs. The defendant had given an undertaking to permit access to the plaintiffs' guests until my Order. Thereafter the defendant could restrict or deny access of the plaintiffs' invitees to the premises. The plaintiffs are on a 24 month lease agreement. I have already stated the conduct of the defendant, which demonstrates to be ex facie unlawful. I am therefore of the view that there is a prima facie case of infringement or imminent infringement of a legal rights of the plaintiffs.

[23] The defendant states that their guests/invitees are non-paying guests. In my mind what is relevant and the core issue is dependent on plaintiffs proprietary rights as lessees or occupiers. Clearly, damages are not an adequate remedy if the defendant continues to prevent the plaintiffs' guests accessing Lot 8.

[24] The plaintiffs' counsel submits that the defendant has no legal or beneficial interest in Lot 8; the defendant merely supervises and directs the security guards at the gate and maintains the common areas of The Cove. I disagree. It is evident that some of the reasons for the incorporation of the defendant's company by the owners of The Cove properties are, to ensure the protection of the exclusivity of The Cove and to provide security and maintenance. Therefore, they do have beneficial interests in the residential precincts. However, in the present issue, I am inclined to agree with the plaintiffs' counsel's submission that the balance of convenience falls heavily in favour of the plaintiffs as it is the plaintiffs' legal rights as lessees/occupiers of Lot 8 that are being breached and their quiet enjoyment of the said premises allegedly infringed by the conduct of the defendant.

[25] I am also inclined to agree with the plaintiffs' counsel that the defendant had not provided any evidence that it will incur any additional expense or suffer any loss on account of the plaintiffs' invitees accessing the said premises or will not be prejudiced and will not suffer any loss or damage from the injunctive order prayed for. I am also mindful that the plaintiffs have given their undertaking to this Court and fortified the same in their Affidavit in Support.

[26] Having considered all the evidence surrounding the issues, I am convinced that the equitable considerations reasoned above by me, favour the grant of an injunction.

COSTS

[27] Neither party had provided their respective costs. I therefore summarily assess costs at $1600 as being reasonable costs, upon considering the 3 days of appearances and the documents filed before me.

ORDERS

[28] I therefore Order as follows:

• (a) I grant an interim injunction as prayed for in the Notice of Motion filed on 6 April 2011;
• (b) The defendant to file within 30 days a report setting out the acceptable noise levels that should be maintained after a due process considering bench marks available either locally or internationally; and
• (c) The defendants to pay the Costs of $1600 of this injunction application to the plaintiffs within 21 days hereof.
  

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Ms. D. Dias Wickramasinghe
Judge