VCAT’s equitable jurisdiction to amend relief from forfeiture

In the recent decision of Paramount Investments Group Pty Ltd v Club Fogolar Furlan Melbourne [2025] VSC 90, Croft J in the Supreme Court considered VCAT’s power to vary conditions on an order for relief against forfeiture after the order was made and after the tenant had failed to comply with the conditions.  His Honour reviewed the various powers in the VCAT Act and found that the Tribunal generally could not vary a final order, but held that relief from forfeiture was different and that the Tribunal did have the power to vary conditions placed on the grant of relief from forfeiture in the right circumstances.

His Honour also made reference to some other authorities that might become relevant to VCAT granting relief from forfeiture of commercial leases that are not regulated by the Retail Leases Act 2003 (Vic) (RLA 2003) that will be of interest to the lease nerds!

Background

The background to this case can be summarised as follows.

In December 2023, the tenant sought an interlocutory injunction to restrain re-entry by the landlord.  The Tribunal dismissed that application but ordered that the tenant should be granted relief from forfeiture on the condition that it pay certain arrears of rent by a specified date.   A copy of the Tribunal’s original decision is available here: Paramount Investments Pty Ltd v Club Fogolar Furlan Melbourne (Building and Property) [2024] VCAT 169.

The tenant missed those dates and then applied to the Tribunal for an extension of the time for compliance.

In July 2024, the Tribunal granted that extension of time.  Its reasons for that extension are reported here: Paramount Investments Group Pty Ltd v Club Fogolar Furlan Melbourne (No 3) (Building and Property) [2024] VCAT 666.

The landlord sought to appeal the July orders, arguing that:

• the Tribunal did not have the power under ss 126(2)(a) or 98(3) of the VCAT Act to amend its original orders and was functus officio; and
• even if the Tribunal did have the power to vary the original conditions, the Tribunal’s discretion to grant the extension was exercised wrongly.

In response, the tenant argued that:

• the Tribunal has both the power to issue self-executing orders and set aside or vary them;
• ss 130 and 131 of the VCAT Act grant the Tribunal a broad discretion to make orders or determinations with any conditions or further orders it deems appropriate; and
• in any event, the Court should not interfere with the exercise of the Tribunal’s discretion.

Decision

The Court ultimately accepted that the Tribunal generally cannot vary final orders under the terms of the VCAT Act.  However, it held that the Tribunal’s jurisdiction to grant relief against forfeiture of a retail premises lease carries with it the power to amend (in the right circumstances) conditions that are attached to the grant of that relief.

His Honour Justice Croft cited the following passage from Lord Greene (with whom Lord Clauson agreed), in Chandless‑Chandless v Nicholson [1942] 2 KB 321, 323–325:

The court, in exercising its jurisdiction to grant relief in cases of non‑payment of rent is, of course, proceeding on the old principles of the court of equity which always regarded the condition of re‑entry as being merely security for payment of the rent and gave relief if the landlord could get his rent.  If an order of this kind, in which relief is granted on terms to be observed within a limited time, is to be treated as one which the court has no jurisdiction to modify in point of time even though circumstances justify modification, then the order becomes as vicious as the original forfeiture clause itself.  I hold the view without hesitation that … an order of this kind, which gives relief on terms to be performed within a specified time, is one in respect of which the court retains jurisdiction to extend that time if circumstances are brought to its notice which would make it just and equitable that extension should be granted.  …

…. It is not, of course, to be understood from anything I say that lessees who obtain orders for relief are entitled to treat the conditions laid down in them lightly.  Any lessee who has obtained relief on conditions cannot expect to get further indulgence from the court in the matter of time unless good grounds are shown.  Lessees must not think for one moment that they are entitled to be slack or casual about the performance of terms.  If they are so and then endeavour to get further indulgence from the court, the court will know how to deal with them, but in a case where on all equitable grounds a period of limitation ought in fairness to be extended and its extension will do no more than apply the principle that the condition of re‑entry is nothing more than security for the rent, there is no reason why equity should not lend its aid notwithstanding the original order.  …

Implications for practitioners

This case highlights that VCAT’s power to grant relief from forfeiture is both broad and flexible and allows the Tribunal to fashion a remedy to avoid injustice in the circumstances.

This may be a source of frustration for landlords who see a tenant who has both breached the terms of the lease in the first place and then has failed to comply with the conditions that the Tribunal placed on the grant of relief from forfeiture.  Consequently, practitioners acting for landlords (particularly landlords who have not terminated a lease before) should advise their clients at the beginning of the process that VCAT has the power to grant relief from forfeiture subject to certain conditions and also has the power to vary or extend those conditions, and will exercise those powers in the right circumstances.  It often helps to explain to a landlord that their right to re-enter is not there to punish the tenant for breaches of the lease, but to secure compliance with its terms.

That being said, as is highlighted by the second paragraph from the extract above, defaulting tenants (and practitioners acting for them) should not treat the conditions attached to the grant of relief from forfeiture as optional.  A tenant that does not comply with those conditions does so at its peril and will need to provide to the Tribunal a good explanation for failing to meet the Tribunal’s conditions.

And one for the lease nerds…

There is an additional nugget for the lease nerds in his Honour’s reasons.

VCAT has a general jurisdiction to hear and determine disputes arising under commercial leases under the consumer and trader provisions of the Australian Consumer Law and Fair Trading Act 2012 (Vic) (ACL&FTA) (see Zeus and Ra Pty Ltd v Nicolaou (2003) 6 VR 606).

However, whether VCAT has power under the ACL&FTA to grant relief from forfeiture of commercial leases that are not regulated by the RLA 2003 has been an ongoing issue in recent years.

Readers may recall the paper ‘VCAT’s jurisdiction: An endangered species?’ by Robert Hay KC and Brett Harding, a copy of which was posted on this blog here.  Paragraphs 45 to 57 of that paper raised the question of whether VCAT has the power to grant relief from forfeiture of a non-retail commercial lease under the ACL&FTA.  The authors raised arguments that suggested that VCAT does not have that power, but ultimately left the question open.

In the Paramount case, His Honour made the following remarks:

[106]   It is clear from the Tribunal Reasons and the orders that the Tribunal was exercising jurisdiction specifically conferred upon it to grant relief against forfeiture conferred by s 89 of the RLA.   …

[107]   It is also clear from earlier authorities with respect to the retail leases jurisdiction that such equitable jurisdiction and powers required an express legislative grant.  So much is clear from the decisions of Ormiston J in Jam Factory Pty Ltd v Sunny Paradise Pty Ltd[1] and Klewet Pty Ltd v Lansdown.[2]  True it is that these decisions were in the context of an arbitral dispute resolution scheme under the Retail Tenancies Act 1986 but, having regard to the jurisdiction to grant relief against forfeiture being a central and ancient part of the equitable jurisdiction, a matter clearly in the mind of Ormiston J, there is no doubt that a tribunal such as VCAT could not exercise any such jurisdiction without the enactment of provisions such as contained in s 89 of the RLA.

Section 89 of the RLA 2003 gives VCAT an express power to grant relief from forfeiture of a lease under the RLA 2003.  There is no express reference to relief from forfeiture in the consumer and trader provisions of the ACL&FTA.

While his Honour was not expressly considering the Tribunal’s powers under the ACL&FTA and did not determine the issue, the passages extracted above support the argument that the Tribunal does not have the power to grant relief from forfeiture under the consumer and trader provisions of the ACL&FTA.

Sam Hopper SC[3] and Dylan Matthews

Dylan Matthews is a final-year Bachelor of Property and Real Estate / Bachelor of Laws student from Deakin University.

[1] (1989) VR 584.

[2] (1989) VR 969.

[3] Liability limited by a scheme approved under Professional Standards Legislation.