THE DUNES CAFE AND BAR LIMITED V 623 ROCKS ROAD LIMITED AND ANOR HC NEL CIV-2006-442-481

THE DUNES CAFE AND BAR LIMITED V 623 ROCKS ROAD LIMITED AND ANOR HC NEL CIV-2006- 442-481 6 November 2006IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY CIV-2006-442-481BETWEEN THE DUNES CAFE AND BAR LIMITED Plaintiff AND 623 ROCKS ROAD LIMITED Defendant AND NELSON GOURMET LIMITED Second Defendant Hearing: 6 November 2006 Appearances: G J Praat for Plaintiff S E England for First Defendant J M Fitchett for Second Defendant Judgment: 6 November 2006ORAL JUDGMENT OF GENDALL J[1] This is an application for an interlocutory injunction brought by the plaintiff, Dunes Café and Bar Limited against a development company, 623 Rocks Road Limited. There has been joined a second defendant, Nelson Gourmet Limited, it being a party interested in the proceedings. It sought to be joined as a second defendant, and was so joined by MacKenzie J on 16 October 2006. At this stage, however, no cause of action is pleaded in the amended statement of claim filed in respect of relief sought from that second defendant. [2] In the course of this oral judgment I will refer to the parties as "Dunes Café", "623 Rocks Road", and "Nelson Gourmet". Because of the urgency I am having to give an oral decision, having heard extensive argument this morning but I reserve theright to make editorial or grammatical amendments to the completed judgment but of course not to its substance. [3] As is usually the case where the Court considers applications for interim injunctions, matters have to be dealt with at short notice and this is no different. The Court cannot determine or even try to make a determination on the ultimate merits or outcome of the proceedings and I resist any temptation to do so. [4] Apart from the statement of claim in the application for interim injunction and also the amended notice of interlocutory application, I have considered very comprehensive affidavit evidence and submissions of counsel, including the third affidavit of Mr Hampson, a director of Dunes Café, which was sworn and filed at a late stage on 2 November 2006. As MacKenzie J observed in his Minute of 16 October 2006 any further delay is to be avoided for the reasons that he gives. It is apparent the parties have not been able to come to any interim arrangement or resolution and as a result the amended interlocutory application has been heard on a defended basis. Some, but not all, but some of the essential background facts are as follows.Essential facts[5] Dunes Café operated a restaurant and bar from premises in the Tahunanui area near Nelson for about 10 years. A property development company, 623 Rocks Road Ltd purchased the property in about October 2004, intending to re-develop the site. Dunes Café had a lease of the property, which had rights of renewal until 2010. It agreed to close its business and surrender the lease to enable 623 Rocks Road to re-develop the site, so as to build a multi-storey building and to eventually provide a new lease of ground floor premises to Dunes Café. It provided considerable incentives to Dunes Café, particularly financial, to secure its aims. A document entitled "Heads of Agreement" was prepared to incorporate the agreements or understandings of Dunes Café and the developer so as to provide for their respective rights, entitlements and obligations of both parties during the period the premises were vacated and re-developed. It is a document partially typed with a number of handwritten alterations signed by the parties on 17 June 2004. Some of the mattersregarding the re-development were uncertain at that time and in some respects further agreement between the parties in some areas was envisaged. [6] Essentially, the agreement provided that Dunes Café was not to be required to vacate before 30 March 2005, six months notice to vacate would be given, the premises would be demolished, new premises constructed and Dunes Café and 623 Rocks Road would enter into a lease of new premises on terms set out in the Heads of Agreement. The construction of the premises would be to a base level and thereafter the fit-out of the restaurant/bar was to be completed by Dunes Café. [7] As I have said, it was significant that 623 Rocks Road agreed to pay compensation to Dunes Café and its directors and family of living costs and business costs over a period. It was anticipated that that would be approximately six months, and the envisaged cost over that six-month period would have been $96,700. But the agreement did provide that should the completion of the development take longer than six months, monthly payments of compensation would continue. [8] Although the Heads of Agreement itself did not specifically record this it is quite clear as was envisaged from a facsimile from the developer to the directors of Dunes Café on 6 January 2005, prior to vacation of the premises, that the tenants were to be responsible for the subsequent fit-out of the tenanted area. But delays occurred because of difficulties in obtaining resource consent and other matters so the developed premises did not become available to the plaintiff, at least according to 623 Rocks Road, for fitting-out until early June 2006. There is a dispute about that, however. Instead of there being the anticipated six months vacating period, the actual period increased to 14 months. During that period payments to Dunes Café by 623 Rocks Road in the form of "compensation" and envisaged by the Heads of Agreement were made in excess of $242,122. So, Dunes Café was able to obtain significant income without, it seems, operating the business, but such payments included business costs and a personal allowance of $80,000 per annum. [9] 623 Rocks Road contended that the premises became ready for fitting-out but a dispute arose as to that process. Dunes Café contended the premises were not so ready for that task and it did not commence to fit-out. In May 2006 a meeting tookplace between the parties where construction, floor plan and other building issues were discussed. Affidavit evidence on behalf of 623 Rocks Road is that any outstanding issue had been resolved. A share of the costs that 623 Rocks Road would pay in respect of fit-out, it is said, was agreed at $22,532.16 and that is confirmed in a facsimile headed "Fitout Costs" sent on behalf of 623 Rocks Road to Dunes Café directors. [10] The developer contends that thereafter Dunes Café should have proceeded with the fit-out and the premises, the developer says, were made available in early June 2006 for that process to be commenced. 623 Rocks Road claims that no fit-out steps of any consequence were thereafter taken. Unquestionably those will be matters for further evidence at trial. From the point of view of 623 Rocks Road its director contends that no completed fit-out work at all had been performed by the end of July and photographs annexed to an affidavit, if accurate, support that view. But the issue is whether Dunes Café should have been required to have started to perform the fit-out work at that time. [11] For its part, Dunes Café contends that the premises had not been completed to the level required by the Heads of Agreement and that position did not change over the next month. So, on 1 August 2006 the directors of Dunes Café were advised by 623 Rocks Road that the developer expected the tenancy to be commenced and that the premises be open by 1 September, and said if no action was forthcoming, and the premises remained without having been fitted out, then steps would be taken by it. From the point of view of 623 Rocks Road it was, and remains, essential that the premises open for business and completed lease arrangements between the parties resolved as soon as possible, because firstly, rental was sought and required of the premises; and secondly, until the fit-out stage arose, 623 Rocks Road was responsible for the continuing monthly compensation payments. [12] 623 Rocks Road saw its solicitor who wrote to Dunes Café on 10 August 2006 and that letter dealt with certain provisions and amendments to the proposed Agreement to Lease. The letter expressed concern about the fit-out and the letter said in part but the critical parts of the letter are:"Fitout Issues.we are instructed to seek your client's execution of the Agreement to Lease with the modifications contained within this letter and to proceed immediately to commence its fitout. Your clients are either in or out. Time is now of the essence. If your client fails to complete the Agreement to Lease by 18 August 2006 then our client will treat that behaviour as repudiation of the Terms of Lease, exercise its right to cancel and will mitigate its loss by reletting the premises. The Dunes is a cornerstone tenancy in this development. Prevarication and delay by your clients is starting to cause loss to 623 Rocks Road."That Agreement for Lease provided a commencement date of 1 September 2006. [13] On 11 August 2006 the solicitors for Dunes Café wrote to the solicitors for 623 Rocks Road, although that letter had been prepared before receiving the earlier letter of 10 August 2006. In it were a large number of building and other matters which Dunes Café said required clarification and negotiation. The answering response on 15 August 2006 from the solicitors for 623 Rocks Road contained the assertion that Dunes Café's attempt to negotiate was a "clear sign that your client is unprepared to follow its obligations under the Heads of Agreement". There was a response to a number of matters raised but in the end the position of 623 Rocks Road was that "it is not prepared to haggle or negotiate further with your client". It sought to make it clear that Dunes Café had to accept certain provisions in the lease, agree to sign it immediately and commence to pay rent from 1 August (by which it said there was the time the fit-out should have been completed). It referred to the likelihood of cancellation. [14] There is the contention by 623 Rocks Road that Dunes Café was not especially concerned about completing a lease because (it is said) that when pressed to progress the Agreement to Lease on 17 July 2006, the solicitors for Dunes Café said that a director had "asked us not to spend any time on the lease at the moment", the contention being that it was considering selling or disposing of the business at some stage. It is apparent that some negotiations, it seems, had been entered into with Nelson Gourmet, which did not come to anything. Those are matters, no doubt, which are in dispute and would be the subject of evidence at trial. I return to that aspect a little later because it may be a matter which is to be weighed in the balancewhen considering where the balance of convenience lies and I will come back to that. [15] Notwithstanding the solicitor's letter of 21 August 2006, 623 Rocks Road agreed that the lease commencement date could be moved to commence 1 September 2006 so as to enable fit-out to be completed. So, it was on 24 August 2006 that the solicitors for Dunes Café advised the developer's solicitors that the lease had been signed but it was "without prejudice to any claim our client may have against your client including the correctness of the 1 st September commencement date" and on 25 August 2006 the lease with an accompanying letter was returned but with qualifications that it was without prejudice to three matters which I will quote in the judgment:"1. Our client's contention that your client has not yet completed its required fitout work and hence the commencement date of 1 stSeptember may not be correct; and 2. Our client's claim against your client for the 'stand-down' costs and compensation for loss of income from the gaming machines that are unpaid; and 3. Any further claim our client might have relating to or arising from the disputed fitout work."[16] From the point of view of 623 Rocks Road it regarded the letter as a clear indication that Dunes Café continued to further dispute the fit-out costs, and obligations, and thus further delay the commencement of such fit-out. 623 Rocks Road contends that that letter was in fact a counter offer. It brought forth the response from its solicitors on 28 August 2006 that fit-out matters did not remain open for negotiation, that attempts to continue discussions and negotiations on which matters it said had been resolved was untenable, and the letter was a notification of cancellation of the existing contractual relationship. [17] Of course there is a lot more evidence and facts than that which I have recorded but I think that sufficiently highlights the factual dispute and the chronology not largely in contest.[18] The essence of the defence of 623 Rocks Road is that despite receiving more than $242,000, Dunes Café had taken no steps to perform its side of the bargain by fitting-out their premises at the time the agreement was cancelled and they had had repeated warnings that such was likely to occur. For its part Dunes Café's position is that it did not breach the agreement, that the cancellation was invalid, and that 623 Rocks Road was not entitled to terminate the agreement. Dunes Café says that it is the latter, that is 623 Rocks Road, that was responsible for any delays, through deficient construction, and it was responsible for work on the developed premises. It says that it was, and remains, obliged and able to perform the terms of the Heads of Agreement and that 623 Rocks Road was also obliged, and required to grant to Dunes Cafe a new lease. [19] However, there were events, which occurred after the purported cancellation. 623 Rocks Road entered into an agreement to lease the premises to Nelson Gourmet to be operated as a restaurant/bar. As I have said, it seems that that company had made an offer to purchase the business from Dunes Café at an earlier stage, which was not accepted. Negotiations as between the developers and Nelson Gourmet appear to have taken place throughout September, draft leases were exchanged, clauses debated, and an Agreement to Lease was signed by or on behalf of Nelson Gourmet on 6 October 2006. It so happened that Dunes Café had filed its statement of claim and notice of proceeding on 5 October 2006. That had not been served but solicitors for 623 Rocks Road and Nelson Gourmet were aware of the issue of the statement of claim. The evidence is that the latter, that is Nelson Gourmet, had specifically enquired as to whether an injunction had been sought and it believed, correctly, that that was not the case nor had such been foreshadowed. The statement of claim (as it is then, and remains in its present form) provides or seeks relief first, by way of an order for declaration that the Heads of Agreement remains in full force; and further, orders that 623 Rocks Road complete the landlord's fit-out, pay Dunes Café storage costs until the date of completion and pay a monthly compensation payment of $14,950 until fit-out is completed; and pay Dunes Café compensation for casino income [20] It was not until 11 October 2006 that the interlocutory application seeking this interim injunction was filed. In the meantime, Nelson Gourmet has proceeded toacquire some items to meet its fit-out obligations under its lease and incur costs, it is said, of up to $70,000 at the moment to acquire or ordering fit-out items so as to meet the 31 January 2007 deadline. Such deadline being necessary in relation to the casino licence and also obviously for trade during the busy holiday season. Nelson Gourmet's position as contained in its notice of opposition is that apart from claiming there is no serious question to be tried, alleges the equities favour it because of delay on behalf of Dunes Café; that it has worked to plan for and arrange completion of the fit-out. It is contended by both Nelson Gourmet and 623 Rocks Road that Dunes Café is not of sufficient financial standing not only to fund any fit- out itself by 31 January but also to meet any damages that might eventually be held to be payable by it to each of them if its substantive proceedings fail.Discussion[21] Interlocutory injunctions applications brought at short notice have to be determined as best the Court can, usually in haste and never the subject of measured and reasoned judgments, and the Court does not determine the ultimate merits. Before an interlocutory injunction can be granted the plaintiff's action has to be capable of supporting a perpetual injunction. That is not a remedy that is sought by Dunes Café in its statement of claim. As I have said, it seeks a declaration as to the status of the agreement and further alternative orders as to certain payments. It does, however, seek an order in the form of a mandatory injunction requiring 623 Rocks Road to complete "obligations" said to be required of it pursuant to that agreement.The interlocutory application[22] The application for the interim injunction as now amended (and the amendment really is designed it seems to encompass or include Nelson Gourmet), seeks orders to restrain 623 Rocks Road from entering into any further lease, sale or disposition of such premises; secondly, to restrain 623 Rocks Road from taking any further steps to give effect to its purported cancellation of the Heads of Agreement; and thirdly, seeking to restrain Nelson Gourmet "from taking any steps in fulfilment of it pursuant to the Deed of Lease dated 6 October 2006". Those are all restraining applications. As I signalled to counsel, if the first two were granted against623 Rocks Road they would be moot and futile, given that it has already entered into a lease with Nelson Gourmet. What is really sought is a mandatory interlocutory injunction seeking specific performance (for want of better words) requiring 623 Rocks Road to enter into a lease with Dunes Café on terms contained in the Heads of Agreement. The application and amended application falls far short of seeking that. But for the purpose of this judgment I am prepared to treat the application in substance as seeking that remedy because the remedies as presently sought against 623 Rocks Road as I have said, even if granted, it would be moot. [23] The remedy sought against Nelson Gourmet is an order restraining it from taking further steps. That is something that would inevitably arise or be consequential upon any order that the Court makes, subject, however, to what I am going to say later about the ability of this Court to make orders against a party or person or company, against which no cause of action is pleaded, or I apprehend contemplated. But I think that if Dunes Café succeeded in the substantive proceedings in obtaining the declaration, from the relief that it seeks, then it would be within the Court's power to grant it a perpetual injunction. So, to that extent, I am satisfied that there is jurisdictional power at the moment to make an interim mandatory injunction if all other criteria or factors suggest that it should.Legal principles[24] As to the law, it is well known that the granting of interlocutory injunctions is a discretionary matter, the object of it being to protect the plaintiff against harm for which it could not adequately be compensated by damages if it were to later succeed in its substantive proceeding. There are two well understood steps in the procedure. The House of Lords enunciated the two-stage approach in American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL) namely: "(1) Is there a serious question to be tried between the parties?; and (2) Where does the balance of convenience lie?"[25] As Cooke J (as he then was) said in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 at 142:"In any event the two heads are not exhaustive. Marshalling considerations under them is an aid to determining, as regards the grant or refusal of an interim injunction, where overall justice lies. In every case the Judge has finally to stand back and ask himself that question."[26] A plaintiff's need for protection against violation of its rights has to be weighed against the corresponding need of a defendant to be protected against injury resulting from it having been prevented from the exercise of its own legal rights and for which damages would not be an adequate compensation. As was recognised inKlissers Farmhouse Bakeries Ltd (supra) when the Court seeks an answer to an interlocutory application it is important that it not impose a rigid application of a formula. Cooke J observed that a danger against which it is necessary to guard is the situation where a plaintiff who obtains an injunction which, although nominally interim, has the effect of putting an end to the litigation. So, is there a serious question to be tried?Serious question to be tried[27] The Court has to be satisfied that a plaintiff's claim is not frivolous, that is to say, whether there are prospects of success, which in substance and in reality exist. Whilst the test is not that of a strong prima facie case, nevertheless, the plaintiff must be able to point to a tenable cause of action from a legal point of view which is contested because of the conflict existing on the evidence or the facts or on legal principles. The claim must be more than illusory. [28] Although it is argued that there is not a substantial question to be tried I do not think that that can be seriously disputed. It is a major contest between the plaintiff and the first defendant. The question to be tried on the case of Dunes Café is whether the agreement, to which they were a party, was validly cancelled by 623 Rocks Road because of Dunes Café's repudiation. If it had not been validly cancelled then it may continue in force and Dunes Café may, if the Court granted a discretionary remedy, seek specific performance or alternatively, damages for wrongful cancellation. The competing requirements and evidential matters will haveto be considered and examined in detail because ascertainment of the facts in this case are likely to be vital. [29] Although a statement of defence is said to be filed by 623 Rocks Road the notice of opposition (apart from dealing with questions such as where the balance of convenience might lie), contends no serious question exists to be tried because of the acts or omissions of Dunes Café, it having repudiated the Heads of Agreement. That simply illustrates the contest which will evolve around the evidence and the facts either supporting the position of the plaintiff or of 623 Rocks Road. [30] So, I have to turn to the elusive concept of the "balance of convenience".Balance of convenience[31] This might appropriately, if less elegantly, be described as "the balance of the risk of doing an injustice" to one or the other parties; see Cayne v Global Natural Resources [1984] 1 All ER 225, 237. What has to be considered is whether the granting of an interim injunction, or its refusal, is the course which, after the action itself has been tried and the issues between the parties determined, would best allow for the adjustment of the rights of the parties in a way that accords with fairness or justice. If it be that damages would be an adequate remedy available to a plaintiff if it succeeded at trial, and be able to be paid by a defendant, it may well be that an interim injunction should be refused. Likewise, if damages payable upon a plaintiff's undertaking to a defendant, for loss arising to it out of an interim injunction would be adequate compensation to an eventually successful defendant, then an injunction might more readily be granted. [32] If refusal of an interim injunction in a situation where a plaintiff has a reasonably arguable case, might lead to any ultimate remedy being rendered nugatory should the plaintiff succeed, then the balance of justice may well justify an interim injunction. It is implicit that the Court considers what is adequate compensation in this part of the enquiry on the basis of what is fair and just in all the circumstances of the case. This means necessarily looking at what intangible harm may occur and that possibility should be taken into account. So, too, the difficulty ofassessing damages may also be a factor. It is well understood that if innocent third parties might be detrimentally affected by the granting of an interim injunction then this may be a factor to which significant weight is given against the granting of interim relief. [33] Generally, the relative strength of the parties' cases is of lesser importance but where the balance of convenience or interests of justice are evenly weighed as between competing parties then weight can be given to the relevant strength of each parties' cases as revealed by the affidavit evidence. It is clear that arguments in respect of both Dunes Café and 623 Rocks Road exist in favour of each and proceed in different ways but as I have said are very much dependent upon the ultimate facts as determined by the Court after hearing all the evidence. Within the threshold test I am not able to place any great weight upon either Dunes Café or 623 Rocks Road having a greater "strength" to this case than the other. So, in the end I have returned to the ultimate question "Where does the overall justice and balance of convenience lie?" asking myself the question balancing the risk of doing injustice to one or other of the parties viewed broadly. I must add in as a factor in that decision-making process the interests and rights (if any) that Nelson Gourmet contend they have pursuant to its Agreement to Lease dated 6 October 2006. [34] It is not always an easy task when the Courts have to assess where the balance of convenience lies. It is not something that can be subject of formal mathematical or mechanical analysis because it involves a matter of judgement and impression as to whether the flexible, discretionary remedy of interim relief should be afforded a claimant. Precise formal steps are not apt in the decision-making process such as this where either ultimate decision is essentially discretionary. "Discretionary" involves the imprecise and often difficult or not impossible task of predicting future outcomes. [35] So, I ask, "Where does the lesser risk of causing an injustice to one or other of the parties lie?" It is argued that if an interim injunction was granted in the present case that would effectively determine the issue in favour of Dunes Café to the detriment of 623 Rocks Road. It would have to grant the lease to Dunes Café. Consequential detriment or loss it is said would flow to Nelson Gourmet, includingthe loss of a chance or bargain to maintain the lease of which it contends it has the benefit. On the other hand, it is contended on behalf of Dunes Café that if it did not obtain the benefit of an interim injunction now, and later succeeded at trial, damages would not be an adequate remedy to compensate it for any loss. [36] My assessment of the balance of convenience is as follows. Without 623 Rocks Road having a lease with consequent rental payments it will be suffering a loss. At the moment it has the benefit of a lease with Nelson Gourmet. If that was somehow to be thwarted by an interim injunction – and in the terms that it is sought – then 623 Rocks Road would not able to mitigate the loss. So any interim injunction as I have said, would have to be of a permanent nature in the sense of specific performance requiring the completion of the lease between Dunes Café and 623 Rocks Road. If there were to be a lease now to Dunes Café then it would have to at the very least pay rental since 1 September and thereafter and probably for a period of six months so up to March it would be in the order of $20,000. If an interim injunction is not granted and Dunes Café eventually fails in its action then the balance of convenience is obvious. But if an interim injunction is granted and Dunes Café fails in its proceedings, then the questions of damages not only at the suit of 623 Rocks Road but also on behalf of Nelson Gourmet looms large. Nelson Gourmet says it has expended over $70,000 in cash and it would have done so for no return and been unlikely to recover that elsewhere. As well it would have lost the benefit of the bargain or chance that it had under its lease which realistically speaking will have evaporated. If the interim injunction was not to be granted (and Dunes Café eventually succeeds in establishing that the cancellation of the agreement was wrongful), obviously it could claim damages which would include, no doubt, loss of revenue and goodwill, and loss of a chance to pursue or continue the café business at the reconstituted premises. There is no real doubt that 623 Rocks Road could meet any award for damages that might be made against it. [37] It was the contentions of both defendants that Dunes Café did not, or does not, have sufficient financial standing to be able to meet any undertaking to pay damages if it failed in its substantive proceedings. That is, if it be granted interim remedy now and ultimately failed, it would have achieved the benefit of specific performance of an Agreement to Lease later to be reviewed but not be able toameliorate any loss either defendant might sustain. Dunes Café did not provide details of its financial position when asked. In the late affidavit sworn on 2 November 2006 it answered in annexures financial statements for the year ending 31 March 2004. No statements have been provided for the years 2005 and 2006 although it is certain it was not operating as a café from March 2005 although it received $240,000 over a period up to mid-2006. Those accounts should at least have been available. [38] The accounts presently given to the Court show that there is an equity deficit of a small amount of $40,000 represented as a loan to one of its directors in that amount. I sought advice from counsel as to what amount Dunes Café might be able to provide as a security for future rental, say $20,000 over six months and possible damages claims should its fail in its proceedings and it gave a figure of $50,000. I take that into account in the balancing exercise. I note that Nelson Gourmet's loss or contended loss would be, it says, $70,000 plus the loss of a chance to retain its lease and the loss that 623 Rocks Road might sustain would be at least $30,000 being loss of rental for the first year period because under its lease with Nelson Gourmet the rental appears to be $400 per square foot whereas for the first two periods of six months in the Heads of Agreement the payment to be required by Dunes Café is less. So, at the very least, there would be a $30,000 claim apart from general damages on behalf of 623 Rocks Road. [39] I note that it was contended by the two defendants that Dunes Café did not intend to remain as a party to any lease granted to it indefinitely because it had thoughts of disposing of the café business. That is disputed. No doubt it will be a matter for evidence at a later date. But I have been referred to a letter written on 7 July 2006 to a real estate agent when approach was made (not by Dunes Café), by others seeking to see whether the business was for sale. In it the directors refer to increased amount of interest from potential purchasers "whom we have forestalled due to the awkwardness of selling whilst in the midst of setting up and had been looking at the financial scenario putting the business on the open market after a short trading history due to the amount of interest shown". Well, that is an opinion or a view expressed in July but at the present time it is the position of directors ofDunes Café that if they succeed in the proceedings they say they are in the premises for the long-term. [40] In the end the issue turns on two things really: (1) Whether the damages would be an adequate remedy to the plaintiff if it succeeded; and (2) Whether the Court should give interim relief to Dunes Café which would in a practical way interfere with rights of Nelson Gourmet that it has under its lease. [41] A feature which looms large in this case is one of time limitations and urgency. It is critical that the reconstituted premises be the subject of fit-out and operating in a commercial way so that income is achieved by the proprietor to pay rental to 623 Rocks Road and that the complex itself presents as an attractive facility to the public. Nelson Gourmet is able to meet targets and is expending substantial cash to do so. The dispute, however, is not between it and Dunes Café as, to put it bluntly, who should have the lease. The issue is whether the cancellation was valid and that can only be determined at trial. [42] Nelson Gourmet entered into its lease at a time when although proceedings had been issued there was no bar against it entering into that lease. No injunction proceedings had been taken, nor signalled. Likewise, there was no bar to 623 Rocks Road entering into its lease, it having a duty, it said, to mitigate its loss. Of course, it did so at the risk that it might eventually be found to have wrongly repudiated. [43] The position would be very different if the application for an interim injunction had been filed but not heard when the lease was entered into. Delays are a telling factor often in the exercise or not of the Court's discretion to grant or refuse interim injunctions. To turn back the clock and reverse the position now by making what would be in truth an interim order for specific performance would in my view risk a substantial injustice being caused to Nelson Gourmet.[44] The delay in this case was significant, despite there being some attempted negotiations. Dunes Café was told that 623 Rocks Road intended to mitigate its loss. It had a period of at least six weeks in which to file an application for an interim injunction, and that would been dealt with swiftly. If granted, it would have maintained the position and status quo without there being any involvement of a third party obtaining the benefit of a lease. The delay in seeking interim relief is about seven weeks (six weeks in filing the proceedings and another week before applying for interim relief). During that delay 623 Rocks Road was facing the prospect of further loss, if its position is correct, through not having a lease or the certainty that lease payments would be made which were granted to it. The delay in making this application for interim relief had a direct bearing upon the entering into the lease with Nelson Gourmet. [45] Weighing all those considerations up I am satisfied by a wide margin that the balance of convenience must fall in favour of 623 Rocks Road and the allied party Nelson Gourmet. If at trial Dunes Café succeeds against 623 Rocks Road then it would be entitled to damages, both special and general. They can be assessed in the usual way. If it was so entitled the loss that arises to it to the use of the reconstituted premises may not easily be assessed in the form of damages, but that is not unusual in many cases where claims involve damages for loss of a chance. The Court frequently has to deal with them and despite difficulties damages can be assessed as general damages. [46] To grant an interim injunction at this stage, given the rights that Nelson Gourmet have obtained, and without there being any cause of action pleaded against Nelson Gourmet, would involve creating a greater risk of injustice to that third party. I am not at all sure that the Court could make orders in any event which affect the rights of a third party obtained under an Agreement to Lease which party could enforce it as against another, although I imagine in the Court's equitable jurisdiction the granting of one order for specific performance in respect of one agreement effectively disposes of the other. But this is not a case where I think that the Court should exercise its discretion to grant the relief especially because of the question of delay. That is pivotal in my discretion to refuse the interim remedy.[47] As I have said I am satisfied by a wide margin that the interim relief should be refused and the application must be declined. Proceedings can be timetabled for hearing on the questions of damages. The first and second defendants are entitled to costs on the interim application fixed on the Category 2B basis.. J W Gendall JSolicitors: Knapps, Richmond, Nelson for Plaintiff Hunter Ralfe, Nelson for First Defendant Rout Milner Fitchett, Nelson for Second Defendant