Can the first instance Court , by a subsequent order, fix a different (reduced) rent for a period which had already been conclusively regulated by the consent judgment?
B. & P. Michael Estates Limited v. KK Etreme Entertainment Limited, Civil Appeal No. 176/2016 (18/12/2024)
Supreme Court of Cyprus — Appellate Jurisdiction [Stamatiou, Malachtos, Demetriadou-Andreou, JJ.]
Our firm successfully represented the Appellant.
Background
The case concerned a shop (a beer house) situated in the central tourist area of Ayia Napa. In the context of Eviction Application No. E14/2010, the Rent Control Court issued, on 30/06/2011, a consent judgment ordering the eviction of the tenant, with a stay of execution until 30/11/2011 on terms regulating the payment of the arrears of rent for the period 01/05/2010 – 30/06/2011 (€3,588 per month), plus interest, together with monthly mesne profits of €3,588 from 01/07/2011 until delivery of possession. Upon full settlement, the eviction order would be automatically cancelled as of 01/12/2011.
In parallel, however, an application by the tenant for the determination of a fair rent was pending (Application No. K5/2011, filed on 07/04/2011). On that application, the first-instance Court issued, on 28/01/2016, an order fixing the fair rent at €1,425 per month, a reduction of approximately 60%, with retrospective effect from the date of filing of the application, i.e. from 07/04/2011, pursuant to section 8(3) of the Rent Control Law (Law 23/83). The owner company appealed the judgment on eight grounds of appeal.
The decisive legal issue
The Supreme Court dealt only with the 1st Ground of Appeal, the success of which sealed the outcome and rendered the examination of the remaining grounds unnecessary. The question raised was whether the first instance Court could, by a subsequent order, fix a different (reduced) rent for a period which had already been conclusively regulated by the consent judgment of 30/06/2011 between the same parties and in respect of the same premises.
The Appellant argued that the rent determination order, by fixing a rent of €1,425 as from 07/04/2011, effectively varied the consent judgment for the period 07/04/2011 – 01/12/2011, and that the application ought to have been dismissed on the grounds of abuse of process and res judicata. The Respondent countered that the subject matter was not the same, since E14/2010 was an eviction procedure and not a rent-determination procedure.
The Supreme Court's ruling
The Supreme Court accepted that, for the period from 07/04/2011 until 01/12/2011, the amount of the monthly rent payable had been regulated through the consent judgment, which confirmed the rent then in force. Consequently, it was not possible for another judgment to be issued subsequently which conflicted with it in any way.
The Court reaffirmed the well-established principle of case law that conflict or contradiction between judgments or orders of courts of equal standing constitutes a form of excess of power which neutralises the effectiveness of justice, referring, among others, to Russell Ritchie and Others (2008) 1 C.L.R. 639, Georghios Hadjialexandrou (No. 2) (2000) 1 C.L.R. 1366, RCK Sports Ltd (No. 1) (1993) 1 C.L.R. 571, Re Miltiades Neophytou Civil Engineering Contractors & Developers Ltd, Civil Appeal No. 129/2015, dated 13/10/2015, and Re the Application of Marios Kosmas, Civil Application No. 51/2014, dated 26/03/2014. The setting aside of an existing order by a court of equal rank amounts to an act in excess of jurisdiction and, moreover, places the parties before the dilemma of which of the two contradictory orders to obey.
Of particular significance is the Court's finding that, since the tenant had accepted, through the consent judgment, both the amount of the monthly rent and of the mesne profits up to 01/12/2011, Application No. K5/2011, which at the time of its filing did have a subject matter, had in the meantime become devoid of object (moot). Prior to 01/12/2011there was no longer any live dispute between the parties, since their relations, including the rent payable, had been fully regulated. The Court further noted that the owner, who appeared to have had good cause to obtain the tenant's eviction on account of the arrears of rent, consented to the settlement precisely on the footing that the rent would remain unchanged at least until 01/12/2011.
The examination of the application and the issuing of a rent-determination order for a period covered by the consent judgment inevitably had the effect of undoing part of that judgment, thereby creating a case of conflicting provisions between orders of courts of equal standing.
Outcome
The Appeal succeeded. The first-instance judgment fixing a reduced monthly rent was set aside and replaced with a judgment dismissing the application, with first-instance costs in favour of the Appellant, together with appeal costs of €2,500 plus VAT.
Practical significance of the judgment
The judgment confirms and applies in the field of rent control three important principles. First, a consent judgment in eviction proceedings which regulates the rent payable for a specific period binds the parties and cannot be indirectly overturned through a parallel application for the determination of a fair rent, even if the latter was filed earlier. Second, the retrospective effect of section 8(3) of the Rent Control Law (whereby the rent determined applies from the date of filing of the application) cannot operate to the detriment of a period already regulated by a court judgment. Third, a pending application may become devoid of object as a result of a subsequent contractual or judicial regulation of the parties' relations, in which case its proper disposal is dismissal rather than examination on the merits.
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