Darzi Group Pty Ltd v Nolde Pty Ltd

Darzi Group Pty Ltd, the lessee, sought specific performance of an option to renew a retail lease from Nolde Pty Ltd, the lessor. The matter was heard in the Supreme Court of New South Wales. The Court of Appeal had previously found that the parties had entered into a retail lease. The dispute now centered on the lessor's refusal to renew the lease after the lessee exercised an option to do so. The lessor argued that specific performance should be denied due to the breakdown in personal relations between the principals of the parties, the inability of the parties to cooperate, and the availability of damages as an adequate remedy.

The court held that a breakdown in personal relations between the principals of the parties to a lease is not a valid reason for denying the lessee its proprietary right to a lease renewal. The court also found that damages were not an adequate remedy in this context, as the specific performance of the renewal agreement was necessary to protect the lessee's proprietary rights. The court granted specific performance of the lessor's agreement to grant a renewed lease to the lessee. Additionally, the court found that the lessor was not entitled to take action against the lessee for short payments in rent due to the lessor's failure to renegotiate in good faith under the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW). The court also held that the lessee did not breach the lease by failing to pay a share of product and public liability insurance premiums claimed by the lessor, as the lessee held its own insurance in that regard.

The court made an order that would facilitate making an order in relation to the cleaning, repair, and maintenance of the premises, as it was unclear on the evidence whether the rectification of the alleged breaches were the responsibility of the lessor or lessee under the lease. The court refused to make the orders sought by the lessor regarding the lessee's failure to provide access to the premises for inspection, as there was no evidence that the lessor sought to access the premises for that purpose. Finally, the court found that the lessor could not claim damages for trespass on parts of the property outside the leased premises, as the lessor had not proved that it suffered any loss or established that it had title to bring a claim in trespass against the lessee.