Relief from forfeiture III – Lontav Pty Ltd v Pineross Custodial Services Pty Ltd [2011] VSC 278 (Hargreaves J)

This is the next post in my series on relief from forfeiture. There are two recent cases of relief from forfeiture between the parties to the above decision, both relating to the same lease. This post considers the first of those cases.

There were issues in the case over whether the tenant was in breach of the lease by:

1. parting with possession by appointing an agent to conduct the business on its behalf (the proprietor being seriously ill);
2. failing to increase the security deposit;
3. failing to pay rent; and
4. failing to pay interest.

The landlord alleged that the tenant breached its lease in various ways.

The Court granted relief on the grounds that:

1. with two exceptions, financial defaults were remedied by the date of the application, albeit after expiry of the notice to terminate;
2. the lessee’s position with respect to those defaults was arguable (albeit that the argument was ultimately rejected);
3. although there had been a history of late payment of rent and promises to increase the bank guarantee, the Court was not satisfied that the rent will not be paid in the future;
4. relief was granted on various conditions, including the remedy of the other financial defaults, compliance with other obligations under the lease relating to the conduct of the business and, importantly, that its liquor licence was regularised by, among other things, transferring the licence from the agent operating the business to the tenant;
5. there was no demonstrated loss to the landlord (subject to compliance with the conditions); and
6. the termination of the lease would cause significant loss to the tenant, particularly the value of its goodwill.

The first decision was handed down on 23 June 2011 by Hargreaves J. A copy of the judgment can be found here. The second decision will be considered in a later post on this site.