Lease agreement subject to the sale of the property

Lease agreement subject to the sale of the property

by George Coucounis

“A condition in a lease agreement that in the event the property is sold, the lease will be terminated, is applicable”

THE pursuit of a similar remedy in an application for an interim order with that sought in the action constitutes an exception and it is unlikely that a Court will grant it, unless the facts are such that the balance of convenience justifies it. The issuance of such a prohibitive order must not destroy the subject matter of the action and the Court must safeguard the disputed matters to be heard and decided in its final judgment, giving priority to the trial of the action. Where an action is instituted for illegal trespass in a property after the termination of the lease agreement, an interim order may be sought prohibiting the ex-tenant from entering or possessing the property so that the landlord will obtain its exclusive possession and use. The Court must weigh all the factors, the terms of the lease agreement, the reason for the termination and the facts of the urgent remedy requested.

It is a basic principle of law that what is agreed upon must be fulfilled and for this reason the wording and conditions included in a lease agreement are very important. The Supreme Court in a unanimous judgement issued in a Civil Appeal dated 31.5.2022 set aside the judgment of the Court of first instance. The plaintiff’s action was based on illegal trespass by the defendant ex-tenant in the property and he claimed its exclusive possession and use because he sold it, that the defendant had no right over it, that the lease was terminated, plus damages. The plaintiff also filed an application for an interim order prohibiting the defendant from entering or possessing the property, which was commercial. The lease agreement included a term that the landlord was entitled to sell the property and terminate the lease and in such a case the tenant was obliged to deliver its possession. The landlord sought the interim order after having served the application to the defendant making it by summons, so that the parties would be heard, claiming that he had legally terminated the tenancy and sold the property.

The Court of first instance dismissed the landlord’s application, who appealed, claiming that the judgment was wrong. The Supreme Court held that the ground of the action was illegal trespass and breach of contract and that in the statement of claim there was specific reference that the property and the premises did not fall under the Rent Control Law and that the tenant was not statutory, since in 1999 and 2000 the premises were used by the landlord. Therefore, the finding of the Court of first instance that the procedure before it was not suitable for resolving the issue of jurisdiction was not correct, especially given the principle that the jurisdiction is defined in the pleadings which determine the disputed facts.

In addition, the Supreme Court held that the Court of first instance did not proceed to assess that it had jurisdiction based on the evidence before it and not the Rent Control Court. Moreover, it did not consider that immediately before the commencement of the hearing of the application, the lawyers of the litigants declared and it was approved as an admitted fact that sale contracts were signed for the sale of the property, which were duly stamped and one of them was deposited at the Land Registry. It was pointed out that this fact had potential value and the Court of first instance failed to assess and take it into account.

The Supreme Court concluded that the Court of first instance did not exercise its discretion in accordance with the case-law. The fact that the issuance of the orders was similar with the same claims in the action should not, in the circumstances of the case, mean anything more than that the orders would be issued for the plaintiff as an urgent remedy. The orders, as an interim remedy, could accordingly be finally decided in the final judgment of the Court, whether they would become permanent and perpetual. Therefore, the Supreme Court ruled that the necessary conditions for the issuance of the prohibiting order are met, the balance of convenience was in favour of the plaintiff and issued the order to safeguard the rights of the landlord until the trial of the action.