Relief against forfeiture – V & O Princi Pty Ltd v Prestige Holdings Group Pty Ltd & Anor [2010] VSC 627

The next few posts on this site will consider some recent cases on relief from forfeiture.

The decision of Mukhtar AsJ can be found here.

The material facts are:

1. the tenant had acquired a car wash business at the leased premises and was in breach of numerous covenants under the lease, including being in arrears of rent, operating without appropriate planning permission, altering the premises without the landlord’s consent and using the premises beyond the permitted use;
2. the landlord re-entered the premises and terminated the lease.  The termination relied on rental arrears at the date of termination;
3. the tenant broke back into the premises the following day;
4. the landlord brought an application for summary possession of land in the Supreme Court and the tenant foreshadowed an application for relief from forfeiture;
5. the landlord and tenant entered relatively complicated terms of settlement, including payment of various sums of money (including arrears of rent) and completion of various outstanding tasks in accordance with a timetable.  The tenant consented to an order of possession if the agreement was not complied with and the landlord consented to the grant of relief from forfeiture if the tenant met its obligations;  and
6. when the tenant did not comply with its obligations under the settlement agreement, the landlord pressed its application for possession and the tenant renewed its application for relief from forfeiture.

The Court found that:

1. the tenant had paid the rental arrears;
2. the tenant spent money setting up the business and finding a buyer;
3. the business was a going concern;
4. there was no evidence of insolvency;
5. while the landlord had good reason to be wary or apprehensive about the future based on the tenant’s “unbusinesslike behaviour”, and there had been some “cavalier and undeserving conduct”, the landlord could take action to terminate the lease in future;  and
6. as a result, relief from forfeiture should be granted.