Gouger Street Pty Ltd v Diakou Nominees Pty Ltd

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
GOUGER STREET PTY LTD v DIAKOU NOMINEES PTY LTD
[2023] SASC 112
Judgment of the Honourable Justice Bleby
PROCEDURE - STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY - DECLARATIONS - APPROPRIATE FORM OF RELIEF - DISCRETION OF COURT
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - JURISDICTION AND AVAILABILITY
LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS
By an originating application dated 6 June 2023, Gouger Street Pty Ltd (‘Gouger Street’) has sought declaratory and injunctive relief against the respondent, Diakou Nominees Pty Ltd (‘Diakou’) in the following form:
1.A declaration that the respondent was not entitled to issue and serve on the applicant a Notice to Quit, dated 19 May 2023, purporting to terminate the applicant’s possession of the Talbot Hotel upon the grounds therein relied on.
2.An order in the nature of a permanent injunction requiring the respondent not to take any steps, in reliance upon the said Notice to Quit, to interfere with the applicant’s possession of the Talbot Hotel.

This originating application is the third proceeding commenced in a course of a long running and complex dispute between Gouger Street and Diakou about the terms, the enforceability and more recently the very existence of a lease between them with respect to the Talbot Hotel in Gouger Street, Adelaide.
The main proceedings are progressing in stages, by the determination of selected issues. On 5 May 2023, the Court delivered judgment on a preliminary trial of Issues 1, 2, 3, 4, 8 and 9. The effect of the decision on Issues 1 and 2 was that there was no grant of a further five-year lease on 1 September 2011. However, that conclusion was subject, at least, to the determination of Issues 5 and 6, which concern whether Diakou is estopped from denying the existence of a lease and whether there was nonetheless an implied lease. Gouger Street has appealed against the decision on Issues 1, 2 and 3. The parties anticipate that this appeal will be heard and determined prior to the trial of the next tranche of issues to be determined.
On 19 May 2023, prior to the Court making orders, Diakou served on Gouger Street a Notice to Quit the premises on the basis that the effect of the judgment was that Gouger Street was left with a tenancy at will. It required Gouger Street vacate to the Talbot Hotel within 30 days.
Gouger Street contends that by giving the Notice to Quit, Diakou announced a stratagem by which if Gouger Street wishes to remain in possession whilst the main proceedings continue to their determination, it will have to apply for an interlocutory injunction to restrain action on the Notice to Quit pending final judgment. In that case, Diakou would be in a position to insist upon Gouger Street giving an undertaking as to damages, supported by third party security.
Held, per Bleby J, granting the application:
1.Diakou’s actions in taking and maintaining the main proceedings preclude it from relying on the Notice to Quit. Diakou cannot now manufacture an obligation on the part of Gouger Street to give a secured undertaking in order to set aside a notice that Diakou had no right to give. This is a case where the Court should act to protect the integrity of the curial process to which Diakou committed the resolution of the disputes between the parties.

Corporations Act 2001 (Cth) part 5.3A; Corporations Law s 447A; Retail and Commercial Leases Act 1995 (SA) ss 4(2)(a), 22, referred to.
21st Century Promotions Australia Pty v Telstra Corporation Ltd [2005] SASC 115; Aloridge Pty Ltd (prov liq appt) v Christianos (1994) 13 ACSR 99; Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWLR 377; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; Cinc v Bucan Holdings Pty Ltd [2004] NSWSC 847; Diakou Nominees Pty Ltd v Gouger Street Pty Ltd & Anor; Gouger Street Pty Ltd v Diakou Nominees Pty Ltd [2023] SASC 66; Eagle Star Trustees Ltd v Tai Ping Trading Pty Ltd (No 2) Supreme Court of NSW, 30 October 1990, unreported; Jackson v Sterling Industries Ltd (1987) 162 CLR 612; Jago v The District Court of New South Wales (1989) 168 CLR 23; McGregor v Henry [2006] NSWSC 368; Myrning v Beal (1899) 15 WN (NSW) 243; Pioneer Mortgage Services Pty Ltd v Columbus Capital Pty Ltd [2015] FCA 1067; Remm Construction (SA) Pty Ltd v Allco Newsteel Pty Ltd (1991) 56 SASR 515; Re New Bounty Pty Ltd; Winpar Holdings Ltd v Baron Corporation Ltd (2015) 107 ACSR 504; Spacorp Australia Pty Ltd (Administrator Appointed) v Fitzgerald [2001] VSC 61; The Chinese Cultural Club Ltd v Auswealth Pty Ltd (No 2) Unreported Judgments NSW, 11 December 1992, BC9201423; Walton v Gardiner (1993) 177 CLR 378, considered.

GOUGER STREET PTY LTD v DIAKOU NOMINEES PTY LTD
[2023] SASC 112
Civil: Application

BLEBY J:   By an originating application dated 6 June 2023, Gouger Street Pty Ltd (‘Gouger Street’) has sought declaratory and injunctive relief against the respondent, Diakou Nominees Pty Ltd (‘Diakou’) in the following form:
1.   A Declaration that the Respondent was not entitled to issue and serve on the Applicant a Notice to Quit, dated 19 May 2023, purporting to terminate the Applicant’s possession of the Talbot Hotel upon the grounds therein relied on.
2.   An order in the nature of a permanent injunction requiring the Respondent not to take any steps, in reliance upon the said Notice to Quit, to interfere with the applicant’s possession of the Talbot Hotel.
The application was supported by an affidavit of Terrence Michael Board, a director of Gouger Street, dated 6 June 2023 and an affidavit of Alejandro Luciano Perez-Gonzalez, the manager of the Talbot Hotel on behalf of Gouger Street, also dated 6 June 2023.
On 8 June 2023, Gouger Street filed an interlocutory application seeking summary judgment on the originating application. Gouger Street requested that application to be made specially returnable. The interlocutory application was supported by an affidavit of Thomas Alexander Walker, solicitor for Gouger Street, dated 6 June 2023. As determination of that interlocutory application would necessarily have the effect of determining the originating application, the matter proceeded expeditiously to a hearing of the substantive matter. This is the determination of the originating application.
This originating application is the third proceeding commenced in a course of a long running and complex dispute between Gouger Street and Diakou about the terms, the enforceability and more recently the very existence of a lease between them with respect to the Talbot Hotel in Gouger Street, Adelaide. In 2015, Diakou commenced Action SCCIV-15-420 seeking various forms of relief, including a declaration that the RCLA did not apply to the Lease. Subsequently, Gouger Street commenced Action SCCIV‑15-802 seeking repayment of monies it claimed it had overpaid and declarations as to its future obligations under the Lease. Those two matters are being heard together (‘the main proceedings’).
The essential history of Diakou’s entry into a Lease of the Talbot Hotel with the Talbot Hotel Group in 2006, the assignment of the Lease to Schillvest Pty Ltd (‘Schillvest’) in 2007, Schillvest’s purported renewal as at 1 September 2011 and then purported assignment of the renewed Lease to Gouger Street in 2013 is set out in my previous judgment on the preliminary trial of certain selected issues arising in the main proceedings.[1] I do not propose to rehearse that history here, but it is necessary to supplement it in certain matters of detail.
[1] Diakou Nominees Pty Ltd v Gouger Street Pty Ltd & Anor; Gouger Street Pty Ltd v Diakou Nominees Pty Ltd [2023] SASC 66 at [2]-[18].
The dispute was precipitated by the commencement of operation of the Retail and Commercial Leases Variation Regulations 2010 (SA) on 4 April 2011. These Regulations prescribed the amount of $400,000 for the purposes of s 4(2)(a) of the Retail and Commercial Leases Act 1995 (SA) (‘RCLA’) such that from that date, the RCLA did not apply to a retail shop lease if the rent payable under the lease exceeded $400,000 per annum. Prior to this, the relevant threshold was $250,000. The annual rent prescribed by the 2006 Lease, as purportedly renewed, has always exceeded $250,000 but has never exceeded $400,000. Consequently, the effect of the commencement of these Regulations was, ostensibly, that the Act commenced to apply to the Lease.
On 26 May 2017, Stanley J gave judgment on a preliminary issue arising in both matters, being whether the RCLA applied to the Lease. His Honour held that the Lease was subject to the operation of the RCLA on and from 4 April 2011 and as renewed from 1 September 2011. He concluded that s 22 of the RCLA operated on the September 2011 rent review, which is the subject of clause 4.10(a) of the Lease, and that s 30 operated to preclude Diakou from recovering payment for or reimbursement of land tax levied on and from 4 April 2011.
When Diakou commenced proceedings in 2015, its case was that the Lease as renewed was in existence and binding. It sought a declaration that the RCLA did not apply to the Lease. Following the judgment of Stanley J, its pleaded position remained premised on the validity of the Lease. One aspect of the relief it continued to seek was a declaration that the Lease was exempt from the provisions of the RCLA.
In 2020, Diakou made significant amendments to its Statement of Claim. Specifically, it pleaded that by reason of the application of the RCLA to the 2006 lease from 4 April 2011, there was no agreement for a renewal of the Lease on 1 September 2011. It pleaded that in consequence, the then Lessee, Schillvest, remained in possession under a tenancy at will from month to month, terminable on one month’s notice.
Diakou then pleaded that in consequence, the assignment of the renewed, 2011 Lease was only a ‘purported’ assignment from Schillvest to Gouger Street and that Gouger Street acquired no right, title or interest in respect of the purported extension or renewal of the 2006 Lease. Similarly, it described the further extension of the Lease by Gouger Street in 2016 as a ‘purported’ extension. It then sought declarations that Schillvest acquired no rights, title or interest in any renewal of the 2006 Lease and a declaration that Gouger Street acquired no rights, title or interest in any renewal of the 2006 Lease.
Gouger Street joined issue with these pleadings by a Defence, Second Revision filed 2 September 2020. It disputed Diakou’s claim that there was no grant of a further five-year lease on 1 September 2011. It also pleaded that Diakou was estopped from asserting that there was no agreement, because Diakou, Schillvest and Gouger Street all proceeded on the conventional basis that the Lease was renewed. It further pleaded that for such time as the RCLA applies to the Lease, the rent review clause (cl 4.10(a)) requires rent to be reviewed to current market rent. It also pleaded that the Lease that arose in 2011 was partly in writing and partly implied.
The question whether Gouger Street is a monthly tenant, a tenant at will or in possession under a five-year lease with rights of renewal therefore lies at the heart of the dispute in the main proceedings. However, a brief description of the more recent history of these proceedings illustrates that the dispute is considerably more complex.
The recent procedural history
On 23 March 2022, the Chief Justice made directions for the preparation of an agreed list of issues and contentions. This ultimately resulted in a document entitled Agreed List of Issues and Contentions Revision 1, filed on 30 May 2022. This document lists 25 issues, each expressed as a question. Underneath each listed issue is a short summary of the contentions of each party.
On 31 May 2022, the Chief Justice gave directions for a tender book index to be prepared on all issues. He also directed the parties to prepare an agreed statement of discrete issues that were to be heard and determined in a preliminary trial in the first two weeks of August 2022.
On 23 June 2022, the Chief Justice gave directions for the trial to proceed, with Issues 1, 2, 3, 4, 8 and 9 to be heard and determined first. This preliminary trial was eventually set down for November 2022. The Chief Justice also directed that the balance of the issues would be determined afterwards, with judgment on the actions to be entered to reflect determination of all the issues. At that stage, the Chief Justice intimated that the balance of the issues would be heard in the last two weeks of November 2022.
The matter was allocated to me. On 10 October 2022, I made directions with respect to the preparation of the trial on the first set of issues. I vacated the hearing directed to the trial of the balance of the issues.
On 5 May 2023, I delivered judgment on the preliminary trial of Issues 1, 2, 3, 4, 8 and 9. I concluded as follows:[2]
[2] [2023] SASC 66 at [270].
On the preliminary issue, I find that Diakou is not prevented by issue estoppel from contending that the 2011 Lease was not validly entered into.
Issue 1:The effect of the application of the RCLA to the 2006 Lease is that cl 4.10 is wholly void and of no effect.
Issue 2:The effect of cl 4.10 being wholly void is that there was no agreement between the Lessor and Lessee as to a mechanism for fixing rent payable under the 2011 Lease. It would follow from this that there was no grant of a further five-year lease on 1 September 2011. However, that conclusion is subject, at least, to the determination of Issues 5 and 6.
Issue 3: Issue 3 does not arise.
Issue 4:The effect of cl 4.10 being void did not have the effect that the 2006 Lease was frustrated and discharged. Neither did it have the effect that any contract to renew the 2006 Lease was frustrated.
Issue 8:Schillvest did not assign to Gouger Street its rights (if any) to recover overpayments of rent (if any) by the operation of the Deed of Assignment of Lease dated July 2013 between Schillvest, Gouger Street and Diakou.
Issue 9:Schillvest did assign to Gouger Street its rights (if any) to recover overpayments of rent (if any) and land tax by the operation of the Deed of Assignment dated 18 December 2014 between Schillvest and Gouger Street.
I indicated that I would hear the parties as to the orders to be made in consequence of those conclusions.
I have since made orders giving effect to those conclusions. Gouger Street has appealed against my decision on Issues 1, 2 and 3. The parties anticipate that this appeal will be heard and determined prior to the trial of the next tranche of issues to be determined.
The Notice to Quit
Meanwhile, on 19 May 2023, prior to my making orders, the solicitors for Gouger Street received an email from the solicitors for Diakou attaching a letter, the express purpose of which was to give notice terminating what the solicitors for Diakou described as a tenancy at will and to require that Gouger Street vacate the Talbot Hotel within 30 days (‘the Notice to Quit’).
The Notice to Quit relied expressly on my determination of Issues 1 and 2 as expressed above. However, it can be seen from my determination of Issue 2 that the conclusion expressed therein was subject to the determination of Issues 5 and 6. Issues 5 and 6 concern whether Diakou is nonetheless estopped from denying the existence of a lease and whether there is, in any event, a lease that is partly in writing and partly implied. As to these, the solicitors for Diakou wrote:
15.Issues 5 and 6 relate to arguments that GSPL [Gouger Street] had raised in an apparent attempt to salvage its position in the event that the Court found, as it now has, that pending only the determination of those issues ‘there was no grant of a further five year lease on 1 September 2011’. While yet to be determined, those arguments, on any reasonable view, will not succeed.
16.In circumstances where, as has now been confirmed by Bleby J, ‘there was no agreement between the Lessor and Lessee as to a mechanism for fixing rent payable under the [purported] 2011 Lease’, it is clear that GSPL has been occupying the Talbot Hotel at all times since approximately 2 July 2013 as a tenant at will.
This position relied on cl 4.8 of the 2006 Lease, which addresses the situation of Gouger Street holding over after the expiration or sooner determination of the Lease.
Diakou also served a letter in the same terms on Mr Perez-Gonzalez, the manager of the Talbot Hotel, at about 3:00pm on the same day.
The present application
Gouger Street’s case on its present application for a declaration and injunction can be expressed simply. Effectively, it is that by this letter, Diakou announced a stratagem by which if Gouger Street wishes to remain in possession whilst the proceedings continue to their determination, it will have to apply for an interlocutory injunction to restrain action on the Notice to Quit pending final judgment. In that case, Diakou would be in a position to insist upon Gouger Street giving an undertaking as to damages, supported by third party security.
The evidence of Mr Board asserts that Gouger Street is not in default as to rent or compliance with the other terms of the Lease. Gouger Street contends that the conduct of Diakou is an attempt to interfere with the administration of justice. That is, Diakou’s election to institute and maintain curial proceedings against Gouger Street is mutually exclusive of physical action to obtain possession. The purported right to re-enter, which Diakou now asserts, depends for its existence on an answer to whether Gouger Street’s right to possession is nothing more than a tenancy at will or monthly tenancy under the holding over clause of the Lease, cl 4.8. That remains to be determined in the proceedings. The next tranche of issues to be determined will include Issues 5 and 6.
This is just a summary of Gouger Street’s position. It will be necessary to examine it in more detail.
The affidavit evidence of Gouger Street
Gouger Street relied on the affidavit of Mr Walker of 6 June 2023. It also relied on a further affidavit of Mr Walker dated 11 July 2023 in response to an affidavit of Mr Hagi-Diakou dated 29 June 2023. It tendered that affidavit on an effectively contingent basis, in that Gouger Street disputed the admissibility of much of Mr Hagi-Diakou’s affidavit, but in the event that Mr Hagi-Diakou’s affidavit was admitted, it sought to supplement the history provided therein. I explain my approach to Mr Hagi-Diakou’s affidavit below. Each of these affidavits incorporate and refer to a number of documents filed or tendered in evidence in the other proceedings.
The affidavit evidence of Diakou
Diakou relied on the affidavit of Stephen Hagi-Diakou dated 29 June 2023. As identified above, Gouger Street objected to the admissibility of much of this affidavit, primarily on grounds of relevance. It submitted that insofar as some parts of the affidavit might be admissible, this could only be for certain, confined purposes. For example, Mr Hagi-Diakou expressed a number of concerns about the financial position of Gouger Steet. Gouger Street submitted that these concerns could only be admitted as evidence of the existence of those concerns, if relevant, and not the underlying propositions the subject of the concerns. Mr Hagi-Diakou also gives evidence of the history of what Diakou claims has been underpayment by Gouger Street.
In the course of argument it became apparent that the dispute over admissibility, and in particular the relevance of much of Mr Hagi-Diakou’s evidence, depended on the breadth of the principle that Gouger Street was invoking in support of its application. Put simply, Diakou maintained that the principles applicable to the granting of an interlocutory injunction necessarily governed or informed the application. It contended, for example, that Gouger Street’s asset position and consequent ability to satisfy any judgment were consequently relevant to whether the Court should order the provision of security on an undertaking as to damages.

Gouger Street eschewed any reliance on the principles governing the granting of an interlocutory injunction. It emphasised that it was seeking final relief in the form of a declaration and a permanent injunction. It characterised the applicable principles, which I consider below, as being of a quite different character. In any event, it expressly disavowed having established the matters that would be necessary for it to satisfy the Court that an interlocutory injunction should be granted. For the purposes of the present observations, this included not challenging the proposition that it was a trustee company with no assets of its own, and that the only assets to which it could have recourse were the assets of the business of the Talbot Hotel. It offered no undertaking as to damages.
In the absence of a pleaded case and with a dispute about the applicable principles, I admitted the affidavit of Mr Hagi-Diakou and some other evidence relevant to the asset position of the Talbot Hotel business and Gouger Street as a trustee. I am satisfied that, if nothing else, this evidence provides a helpful background narrative of Diakou’s asserted reasons for serving the Notice to Quit and the concerns of Mr Hagi-Diakou. Whether these matters prove to be directly relevant to my determination requires consideration of the applicable principles, which I undertake below.
The evidence of Mr Hagi-Diakou
Mr Hagi-Diakou effectively disputes Mr Board’s evidence that Gouger Street is not in arrears of rent or outgoings, or in breach of any term of condition of the Lease.
Mr Hagi-Diakou’s evidence is that prior to the judgment of Stanley J on 26 May 2017, the parties entered into an arrangement by which Gouger Street would pay the full amount of the monthly rental invoices issued by Diakou. However, a portion of that payment would be paid into the trust account of Diakou’s solicitors, Griffins Lawyers, such that Diakou would not be able to access the full amount. The trust account statement presently records a balance of $390,118.44.
Since the judgement of Stanley J, Diakou has continued to issue monthly rental invoices to Gouger Street, but Gouger Street has only paid a portion of the amount invoiced on each occasion. Mr Hagi-Diakou’s affidavit gives an example of the 12-month period from April 2022 to March 2023. In each month during this period, Diakou issued an invoice dated the first of the month for rent in the amount of $38,561.03 (GST inclusive). On each occasion, Gouger Street has only paid $26.684.34 (GST inclusive). Mr Hagi-Diakou’s evidence is that he does not know how or on what basis Gouger Street has calculated the amounts paid. It is his opinion that those amounts have not been calculated by reference to the express terms of the Lease.
I make two preliminary observations here. First, Mr Hagi-Diakou does not identify which express terms of the Lease he is referring to in disputing the accuracy of the amounts paid. Secondly, as Mr Hagi-Diakou expressly says in his affidavit, there has been a shortfall of this nature between the rent invoiced and the rent paid ‘for many years’.
Mr Hagi-Diakou’s evidence is also that following Stanley J’s decision, Gouger Street stopped paying the invoices for land tax. At some point, Mr Hagi‑Diakou stopped forwarding those invoices to Gouger Street. The amount of land tax payable for the 2022/2023 financial year is $50,550.
Mr Hagi-Diakou has calculated the total difference between rent invoiced and rent paid to be $905,784.12, and the land tax difference to be $303,300.
Diakou’s concerns
Diakou relies on evidence that the Talbot Hotel business is the only business of Gouger Street. Gouger Street is a trustee company without assets of its own. In the ordinary course, it would have a right of indemnity against the trust’s assets. Mr Hagi-Diakou’s expressed concerns are that:
·if Gouger Street’s contentions in the other two proceedings are determined not to be correct, then the only business of Gouger Street will have no value;
·in that circumstance, Gouger Street will not be able to satisfy any judgment against it in the other proceedings in respect of unpaid rent, land tax, interest and costs;
·Diakou is continuing to incur losses of the order described above; and
·the longer Gouger Street remains in occupation of the Talbot Hotel premises, the greater the risk Diakou will suffer losses that are unrecoverable and the higher those losses will be.
Diakou also points to the fact that the litigation commenced eight years ago. Mr Hagi-Diakou’s evidence extended to the effect of the long dispute on his personal life, his desire to sell his hotel business, including the Talbot Hotel, and his inability to proceed with his personal plans in the absence of being able to do so. Mr Hagi-Diakou also expressed concern about rising interest rates, the uncertainty of the economic outlook and the risk that the price Diakou could obtain for the sale could be reduced significantly, even if Diakou’s ambitions to sell the property were delayed ‘by even a short period of a mere few months’.
Gouger Street’s response on factual matters
As identified above, Gouger Street relied on affidavits of Mr Walker dated 6 June 2023 and 11 July 2023. The affidavit of 11 July 2023 supplemented the history provided by Mr Hagi-Diakou in some detail, by referring to the history of the pleadings in the other matters, the documents incorporated in Mr Walker’s affidavit of 6 June 2023 and a number of further documents exhibited to that affidavit. As identified above, Gouger Street tendered it with the reservation that the matters the subject of Mr Hagi-Diakou’s affidavit to which it has responded are, in the main, irrelevant.
Gouger Street does not dispute that it has not been paying the rent amounts invoiced by Diakou and has not been paying land tax. In those circumstances, I find that Gouger Street has not been paying the amounts identified by Mr Hagi‑Diakou. However, the cornerstone of Gouger Street’s application is that these are the very matters that are the subject of the proceedings brought by Diakou in Action SCCIV-15-420, by which Diakou has sought to enforce its position.
The following matters relied on by Gouger Street are evidenced by the correspondence and pleadings referred to or exhibited to the Walker affidavits. Unless indicated otherwise, I accept the matters of fact set out below of which those documents are evidence.
Diakou commenced Action SCCIV-15-420 on 10 April 2015. The original Statement of Claim sought determination, relevantly, of:
·whether the RCLA applied to the 2011 Lease as renewed and assigned to Gouger Street;
·whether Schillvest had waived its right to a market rent review as at 1 September 2011;
·whether the Court should order that the Lease be exempted from the application of the RCLA; and
·whether the rent determination by an independent expert, Mr Pledge, as at 1 September 2011 was not binding on the basis that it had not been carried out in accordance with the terms of the Lease.
Diakou and Gouger Street executed an Extension of Lease for a further 5‑year term commencing on 1 September 2016. The Extension of Lease records, as consideration, ‘Pursuant to a certain option in the above Memorandum of Lease’. Mr Walker’s evidence is that Diakou required these words. Diakou did not challenge this assertion.
Meanwhile, in 2014, Mr Pledge had been retained by the parties jointly to determine current market rent as at 1 September 2011, pursuant to cl 4.10(a) of the Lease. The parties agreed that if Mr Pledge determined current market rent to be less than the rent that was in fact being paid, then Diakou would, on an interim basis, pay into its solicitor’s (Griffins Lawyers) trust account, each month, the difference between the amount paid by Gouger Street and the amount Mr Pledge determined. That difference would be held in trust pending the determination of the dispute about whether the RCLA applied and whether Schillvest had waived its right to rent review, as pleaded by Diakou. Gouger Street describes this agreement as the ‘Rent Difference Agreement’. This agreement did not address land tax.
On 24 August 2017, Griffins Lawyers advised Mr Walker that Diakou had not paid any amount into its trust account on account of the Rent Difference Agreement since 29 July 2016. A considerable amount of correspondence ensued, regarding Gouger Street’s claimed shortfall between the balance held on trust and that which should have been held on account of that agreement, and what should be done about the claimed shortfall. Relevantly:
·on 1 September 2017, Diakou proposed that the parties obtain a rental determination of current market rent as at 1 September 2016, as that would crystallise the amount of the shortfall from the period commencing 1 September 2016;
·on 5 September 2016, Gouger Street advised of its intention to seek the appointment of a valuer to make a determination of current market rent as at 1 September 2016 pursuant to cl 4.10(a)(ii) of the 2016 Lease;
·on 5 September 2017, Diakou agreed to that proposal;
·the parties then jointly applied to the Australian Property Institute for the nomination of a valuer. Mr Nobes was appointed to determine current market rent as at 1 September 2016 under the 2016 Lease.
Gouger Street submitted that at this point, the parties were proceeding on the basis that, subject to Diakou appealing from Stanley J’s decision or obtaining an exemption, the RCLA applied to the Lease and the rent was current market rent as determined by a valuer appointed by the parties. It is not necessary to make any finding about that contention, which is partly the subject of Issues 5 and 6 in the other proceedings. The state of the correspondence was as described above. For present purposes, I find that the parties sought the determination. Diakou had not and did not, at this stage, pleaded that the Lease was invalid, and did not do so until 2020.
On 20 April 2018, Mr Nobes issued his rental determination. On the same date, the parties agreed on the terms on which Diakou would discontinue its appeal against the decision of Stanley J.
On 9 May 2018, Gouger Street advised Diakou that in light of the discontinuance of the appeal, Gouger Street would commence to pay rent by reference to the determination of Mr Nobes and would cease to pay land tax. Gouger Street also sought repayment of the rent difference (by reference to the Nobes valuation) since the commencement of the 2016 Lease and the repayment of land tax.
This then is Gouger Street’s explanation in the present proceedings for Mr Hagi-Diakou’s complaint that Gouger Street has only paid a portion of the amount invoiced since Stanley J’s decision.
On 29 May 2018, Diakou responded to the effect that the Rent Difference Agreement should continue until Diakou’s application for an exemption from the application of the RCLA had been determined. That correspondence also expressed ‘serious concerns’ with respect to the determination by Mr Nobes. Diakou further said that it should not have to repay the land tax until its application for an exemption had been determined.
Gouger Street emphasised in its submissions that the parties were proceeding on the basis that the RCLA applied to the 2016 Lease. The correspondence was certainly framed by reference to the application of the RCLA, subject to Diakou’s ability to obtain an exemption from its application.
On 13 June 2018, Gouger Street confirmed in correspondence its position that it was only required to pay rent in accordance with the Nobes rent review and was not required to pay land tax. It expressed the view that the Rent Difference Agreement only related to the rent difference arising out of the determination of current market rent by Mr Pledge.
On 6 July 2018, Diakou advised that it was continuing to pay land tax ‘on the basis that it reserves its right to reimbursement’ from Gouger Street.
On 10 July 2018, Diakou filed a Second Statement of Claim. By this claim, Diakou pleaded a claim for further relief on the ground that the determination of current market rent by Mr Nobes was not binding. This claim also sought damages for unpaid land tax and underpayment of rent. Gouger Street’s submission is that these claims were ‘clearly consequent on Diakou’s claim for an exemption’. The Second Statement of Claim does not disclose any other basis for those claims.
On 1 June 2020, Diakou filed a further application to amend its claim in Action SCCIV-15-420. The proposed Statement of Claim, Second Revision claimed that the 2011 Lease and the 2016 Lease were void. On 3 July 2020, Nicholson J granted the application for leave to amend and vacated the trial date, which had been listed for both actions to commence on 27 July 2020. Diakou filed the Statement of Claim, Second Revision On 24 July 2020.
On 2 September 2020, Gouger Street filed its Defence to Statement of Claim (Second Revision), asserting the defences of issue estoppel and an implied lease, these being the subjects of Issues 5 and 6.
On 2 August 2021, Diakou further amended its claim in Action SCCIV‑15-420 (Statement of Claim: Third Revision), to seek a declaration that Gouger Street had not effectively exercised its right of renewal, such that the Lease had expired on 31 August 2021 and that Gouger Street had no rights after that date.
Gouger Street’s answer to the complaint of delay
In light of the above, Gouger Street submitted that the delay of which Mr Hagi-Diakou complains and expresses concerns, summarised above, must be seen in light of the fact that the matter was listed for trial in July 2020. It was Diakou’s application immediately prior to trial, to amend its Statement of Claim to plead that the 2011 and 2016 Leases were invalid, that caused the trial to be vacated and the matter to be ‘delayed substantially’.
The power of the Court to protect the integrity of its processes
Gouger Street’s case that Diakou is precluded from seeking to recover possession of the premises by giving the Notice to Quit relies on a proposition of principle extracted from a series of authorities. It is necessary to examine some of these authorities, the effect of which Diakou contested. The essential proposition for which Gouger Street contends starts with the contention that by commencing Action SCCIV-15-420, Diakou elected to prosecute an action to establish its right to possession. It is thereby precluded from exercising a right to re-enter, the existence of which depends on the determination of those proceedings. That preclusion arises from the Court’s power to protect the integrity of the proceedings set in motion.
In Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd,[3] a head tenant served on a subtenant a notice to quit purporting to terminate a lease and then, in December 1975, issued a summons for ejectment, returnable in January 1976. The hearing commenced in that January. On 5 February 1976, the head tenant then served a second notice to quit, requiring possession by 6 March 1976. The subtenant applied for an injunction to restrain the head tenant from interfering with its possession of the premises.
[3] [1976] 1 NSWLR 377.
Needham J referred to a number of authorities, finding no support for the proposition that:[4]
… where a landlord has taken proceedings to establish his right to possession, he is entitled, before the right has been upheld in the proceedings, to exercise a right to re-enter at common law, which depends for its existence upon an affirmative answer to the question whether the former tenant’s right to possession has been determined.
[4] Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWLR 377 at 386.
His Honour concluded that the subtenants had established the existence of a tenancy. However, relevantly to the present matter, he concluded:[5]
I would, therefore, be of the opinion that, even if a positive right in the plaintiffs here had not been established the decisions to which I have referred would not require me to hold that the re-entry by the defendant was justified. In such a case I would be of the opinion that the defendant had elected to try his right to possession in the Court of Petty Sessions and not by re-entry at common law.
[5] Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWLR 377 at 386.
This decision articulated the concept of election to pursue a right to possession by curial means, with the effect of the plaintiff thereby being prevented from exercising self-help to the same ends. Argyle does not develop the principle beyond that of ‘election’. It should also be noted, at this stage, that it was concerned with an attempt to re-enter in circumstances where the head tenant had commenced proceedings for ejectment.
Needham J in Argyle did not develop the doctrinal principle behind his conclusion that an election of this nature had such a prohibiting effect. The language of principle in the cases that have followed seems to have varied. In Eagle Star Trustees Ltd v Tai Ping Trading Pty Ltd (No 2),[6] Young J described the prohibition arising on account of it being a contempt of court:[7]
There is good authority for the proposition that if a party seeks to obtain a right by Court proceedings, then it is a contempt of Court to seek to obtain that which is apparently not being gained in the Court proceedings by some other route whilst those proceedings are still on foot.
[6] Supreme Court of NSW, 30 October 1990, unreported.
[7] Eagle Star Trustees Ltd v Tai Ping Trading Pty Ltd (No 2) Supreme Court of NSW, 30 October 1990, unreported at 8, quoted in Cinc v Bucan Holdings Pty Ltd [2004] NSWSC 847 at [33] (Campbell J).
In Spacorp Australia Pty Ltd (Administrator Appointed) v Fitzgerald,[8] Spacorp was conducting a beauty products and services marketing business. Myer provided funding for Spacorp to establish its business in Myer stores. The business failed and a dispute arose about the obligation of Spacorp to repay the funding. Myer served a statutory demand pursuant to s 459E of the (then) Corporations Law. Spacorp applied to the court to set the statutory demand aside, on account of there being a genuine dispute about the existence of the debt.
[8] [2001] VSC 61.
A Master set aside the statutory demand. Myer appealed successfully. Spacorp then appealed to the Court of appeal. Meanwhile, the single judge who had upheld the appeal extended the time for compliance with the statutory demand. The Court of Appeal then stayed the time for compliance until 21 days after the hearing and determination of Spacorp’s appeal or further order. Myer did not oppose that order.
Myer then made a demand on Spacorp for the payment of the disputed sum and appointed administrators to Spacorp. Spacorp applied for an order declaring the appointment of the administrators invalid, or an order staying the administration until 21 days after the hearing and determination of the appeal.
Beach J ordered that the administration of Spacorp end forthwith. He did so pursuant to the power in s 447A of the Corporations Law, which extended the power of the Court to end an administration if the provisions of the Part were being abused. Beach J held:[9]
In my opinion, the action of Myer in appointing administrators of Spacorp at the time it did can properly be categorized as an abuse of process.
Having chosen to serve a statutory notice on Spacorp with a view to having it wound up and been thwarted in the way it has, I think that it was totally inappropriate for Myer to seek then to attain its objective by appointing administrators. All the more so when it was well aware of the fact that the appeal was on foot and that the Court of Appeal had stayed the time for compliance with the statutory notice until after the hearing and determination of the appeal.
[9] Spacorp Australia Pty Ltd (Administrator Appointed) v Fitzgerald [2001] VSC 61 at [27]-[28].

The language of abuse of process was thus deployed here in a context where that question was raised specifically by the legislation. There have been a number of instances where the appointment of an administrator has been seen as capable of amounting to an abuse of Part 5.3A of the Corporations Act 2001 (Cth). In Re New Bounty Pty Ltd; Winpar Holdings Ltd v Baron Corporation Ltd, Sackville AJA remarked:[10]
It is not uncommon for proceedings to be brought challenging the appointment of an administrator or the execution of a deed of company arrangement on the ground that the appointment of an administrator or the execution of the deed was an abuse of Pt 5.3A, although ordinarily such cases seem to be brought while the administration is continuing. In dealing with challenges of this kind, courts have tended to apply principles derived from other areas of the law. For example, orders have been made under s 447A(1) terminating an administration where the party appointing an administrator seeks to thwart pending proceedings disputing the existence of the debt which provided the foundation for the appointment of the administrator. These decisions have reasoned by analogy from authorities holding that a party who elects to pursue a remedy curially ought not be permitted to attempt to enforce it by more direct means.
(Footnotes omitted; emphasis added)
[10] Re New Bounty Pty Ltd; Winpar Holdings Ltd v Baron Corporation Ltd (2015) 107 ACSR 504 at [189].
In this regard, his Honour referred to Argyle as supplying the analogy, together with Aloridge Pty Ltd (prov liq appt) v Christianos,[11] which had adopted the statement of principle in Argyle. The drawing of this analogy appears to have assisted in framing the possession cases such as Argyle as concerned with abuse of curial processes. However, the analogy is not exact, as the Corporations Act cases are specifically concerned with abuses of provisions of the Act that have been invoked in curial proceedings.
[11] (1994) 13 ACSR 99 at 101 (Burchett J).
The significance of the analogy lies in the more abstract recognition that the concept of an election, as articulated in Argyle, is concerned with protecting the integrity of curial proceedings already embarked upon. That imperative of protection does not necessarily require statutory recognition of the capacity for an abuse before it will be invoked.
Cinc v Bucan Holdings Pty Ltd[12] concerned a dispute between brothers, the plaintiff Lucien and second defendant Vic. Bucan Holdings was a company by which the brothers conducted business. Lucien had been employed by Bucan and continued to be a director. The defendants decided that Lucien should no longer be involved in Bucan’s business. Lucien sought the winding up of Bucan on just and equitable grounds. The defendants gave undertakings in terms providing Lucien with access to the business premises, and to the books and records of Bucan.
[12] [2004] NSWSC 847.
In the course of Lucien availing himself of this access, there was a violent altercation. Vic then went to the Burwood police station about laying assault charges against Lucien. The police just gave Vic some advice at that stage.
The matter appeared in the Corporations List less than a week later, where Campbell J declined to make any variation to the access orders. On the same day, Vic returned to the police station and expressed concern that Lucien intended to attend at the office the next day. He was advised as to the availability of an apprehended violence order (AVO) and proceeded to obtain one from a magistrate, in terms that effectively prevented Lucien from attending at the office.
Campbell J recognised that on the state of the evidence, it was impossible to say whether the AVO had been sought on a proper basis. He observed:[13]
On the material before me, if Mr Vic Cinc's side of the evidence were to be accepted at a final hearing, then the process of the Criminal Court would have been set in motion for a purpose which, at the least, included a legitimate purpose. The fact that, if his evidence were accepted, he had that legitimate purpose, of seeking to protect himself from violence or the threat of violence, would not be the end of the question, because there would then be a question of whether that was his predominant purpose. However, the material before me at least raises as a possibility which might come to pass, when the evidence is explored, that the criminal proceedings have been set in train predominantly for a proper purpose, and that there is no abuse of process, of the kind involved in Williams v Spautz (1992) 174 CLR 509. On the other hand, if after examination of the facts the inferences for which Mr Ashhurst contends were drawn, the criminal proceedings would have been set in train predominantly for an improper purpose.
[13] Cinc v Bucan Holdings Pty Ltd [2004] NSWSC 847 at [27].
His Honour was therefore faced with the possibility of an abuse of process of the criminal courts, which the Supreme Court could prevent in the exercise of its supervisory jurisdiction.[14] However, he could not say, at this stage, whether the AVO amounted to such an abuse. This did not, however, prevent the possibility of the Court acting:[15]
There is another line of authority which has been discussed in argument, which is relevant to abuse of process. This is the line of principle which is drawn upon in the granting of anti-suit injunctions, and also had a role to play, in earlier periods of legal history, in the granting of common injunctions. It is referred to in the joint judgment of the High Court in CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345 at 391-2:
“The counterpart of a court’s power to prevent its processes being abused is its power to protect the integrity of those processes once set in motion. And in some cases, it is that counterpart power of protection that authorises the grant of anti-suit injunctions. Thus, for example, if “an estate is being administered … or a petition in bankruptcy has been presented … or winding up proceedings have been commenced … an injunction [may be] granted to restrain a person from seeking, by foreign proceedings, to obtain the sole benefit of certain foreign assets”. Similarly, as Gummow J pointed out in National Mutual Holdings Pty Ltd v Sentry Corporation, a court may grant an injunction to restrain a person from commencing or continuing foreign proceedings if they, the foreign proceedings, interfere with or have a tendency to interfere with proceedings pending in that court.
The inherent power to grant anti-suit injunctions is not confined to the examples just given. As with other aspects of that power, it is not to be restricted to defined and closed categories. Rather, it is to be exercised when the administration of justice so demands or, in the context of anti-suit injunctions, when necessary for the protection of the court’s own proceedings or processes.”
In this other line of authority, the superior court acts to prevent an abuse of its own process, not an abuse of the process of an inferior court or tribunal. The power of a superior court to prevent the abuse of its own process is wide. Many examples are given in Mason, ‘The Inherent Jurisdiction of the Court’ (1983) 57 ALJ 449 at 453-456. That power authorises the superior court to make Mareva orders preventing a litigant from disposing of assets pending a hearing, as a means of protecting its own process from abuse in relation to the enforcement of its orders: Jackson v Sterling Industries Limited (1987) 162 CLR 612 at 619, 621, 623, 634, 638-9; Cardile v LED Builders Pty Limited (1999) 198 CLR 380 at 393. It enables the superior court to punish a litigant in that court who, by action out of court, seeks to get an advantage concerning the litigation which the processes of the court do not permit him to have, or engages in conduct which interferes with the administration of justice by the court in which the litigation is occurring: Brambles Holdings Ltd v Trade Practices Commission (No 2) (1980) 44 FLR 182 at 192-4; Pioneer Concrete (Vic) Proprietary Limited v Trade Practices Commission (1983) 152 CLR 460 at 467-8, 473. It enables the court to make orders to undo what has been achieved by a person who is litigating in the superior court and who engages in a
“… devious stratagem designed to achieve the result which it had sought to achieve in the proceedings, but which, at the time of its adopting that stratagem, it had not achieved by Order of the Court.” (Howse Fink and Johnson Computing Services Pty Ltd v Beard (Supreme Court of NSW, 26 October 1989 unreported), per Powell J.
[14] Jago v The District Court of New South Wales (1989) 168 CLR 23; Walton v Gardiner (1993) 177 CLR 378.
[15] Cinc v Bucan Holdings Pty Ltd [2004] NSWSC 847 at [31]-[32].
Campbell J then related this concept of the Court acting to protect its own processes, rather than simply responding to a proved abuse, to the concept of election articulated in Argyle:[16]
Another means by which a superior court protects the integrity of its own processes, without directly invoking the notion of abuse of process, is by regarding a litigant who has committed a particular topic to the Court for decision as having elected not to use extra‑curial means to achieve the same objective as the application to the court was seeking to achieve: Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWR 377 at 386.
[16] Cinc v Bucan Holdings Pty Ltd [2004] NSWSC 847 at [34].
An interpretation of Argyle that grounds the concept of election, as expressed in that case, within the framework of the court’s capacity to protect the integrity of its own processes does two things. First, it expresses a principled reason for effectively requiring there to have been an ‘election’ to commence proceedings. Secondly, it directs attention to the nature of the proceedings, the causes of action and the remedies sought. It looks to what is incorporated within the litigation commenced by the party who then has also taken extra-curial steps. Whether the party has ‘elected’ not to take such steps requires, however, an assessment of what they have ‘elected’ to pursue within the proceedings. This understanding does not appear to require an assessment of prospects of the curial relief sought by the ‘electing’ party.
In the New South Wales case of McGregor v Henry,[17] the defendants had given an undertaking and consented to orders that had the effect of restraining them from interfering with the plaintiffs’ possession of premises that the defendants owned and from which the plaintiffs conducted a restaurant business. The defendants then sought to evict the plaintiffs for non-payment of rent. Following some procedural steps, they filed a cross claim by which they contended that there had been a material change of circumstances, by reason of the non-payment and by reason of the plaintiffs having vacated the premises. They sought to be released from their undertaking and discharge of the consent orders, so as to be in a position to retake possession. The plaintiffs admitted vacating but contended that they had only done so on a temporary basis, being in fear of physical violence.
[17] [2006] NSWSC 368.
One question that arose was whether, by reason of filing the cross claim seeking orders for possession, the defendants were precluded from making physical re-entry prior to the determination of that cross claim.
In considering that issue, White J recognised that if the concept of election as deployed in Argyle was nothing more than that, it would be subservient to the possibility that new grounds for termination might arise. However, he approached Argyle with the benefit of the analysis in Cinc v Bucan Holdings, to the following effect:[18]
Considered as a case of election, it may be possible to say that by not taking up the opportunity in June and July 2005 to discharge the undertaking and consent orders, and by filing a cross claim for possession, the defendants elected not to enforce such right they may then have had to terminate the plaintiffs’ lease by re-entry. However, I cannot see how the taking of those steps could be an election not to terminate the lease by re-entry if grounds arose subsequently for it to do so. In my view Argyle Art Centre Pty Ltd v Argyle Bond and Free Stores Pty Ltd is better understood, not as a case of election, but as an instance of the court’s denying the efficacy of steps taken out of court which could adversely affect the integrity of the curial process; see Cinc v Bucan Holdings Pty Ltd [2004] NSWSC 847 at [34]. As the authorities referred to in that case demonstrate, it may be an abuse of process, and in some cases it may be a contempt, for a party who seeks to obtain relief by court proceedings, to attempt to gain in some other way the same relief whilst the proceedings remain on foot. It may be that in the circumstances of the Argyle Art Centre case, the taking of possession of the premises by extra-curial means was an abuse of process of the Court of Petty Sessions which the Supreme Court would prevent by denying the efficacy of the steps taken.
(Emphasis added)
[18] McGregor v Henry [2006] NSWSC 368 at [73].
In that case, White J considered that it would not be an abuse of the court’s processes if the defendants terminated by re-entry. That would be exercising a right on a basis that did not exist when they filed the cross claim.[19]
[19] McGregor v Henry [2006] NSWSC 368 at [74].
Gouger Street described this understanding of Argyle as an instance of what the High Court has described as ‘the armoury of a court of law or equity to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction’.[20] In Cardile v LED Builders Pty Ltd,[21] the High Court described the Mareva order as an addition to that armoury.
[20] Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [26] (Gaudron, McHugh, Gummow and Callinan JJ), citing Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623 (Deane J).
[21] (1999) 198 CLR 380 at [40].
In summary, then, Gouger street submitted that the effect of Argyle, when understood from a principled perspective, is that where a claimant has elected for a curial remedy, invoking the jurisdiction of the court, for that claimant to then resort to a non-curial remedy is incompatible with the resolution of the dispute by judicial determination. Such recourse is calculated to interfere with and disturb the curial process to which the claimant has already submitted the dispute. The Court has power to prevent such a course, whether or not it is shown to be an abuse of process, in order to protect the integrity of its proceedings. That is what Gouger Street seeks by this application.
The same remedy, objective or relief
Diakou submitted that the present case should be distinguished from the scope of any principle established by Argyle. Specifically, it observed that the curial steps taken in Argyle were described as, and were, proceedings ‘for the purpose of obtaining possession’.[22] That is, the proceedings were commenced to try the very right of the defendant to possession, which was inconsistent with re‑entry at common law. The principle of ‘election’ identified in Argyle turned on a narrow compass, being between two different ways of achieving, in Diakou’s submission, ‘the very same objective or remedy’.
[22] Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWLR 377 at 383.
In support of this understanding of Argyle, Diakou relied on the following observations in various cases. In Aloridge Pty Ltd (prov liq appt) v Christianos, Burchett J said of Argyle:[23]
[Argyle] states the rule that a party who elects to pursue a remedy curially ought not to be permitted to seek to enforce it by other and more direct means.
[23] Aloridge Pty Ltd (prov liq appt) v Christianos (1994) 13 ACSR 99 at 101 (Burchett J).
As identified above, in Cinc v Bucan Holdings Pty Ltd,[24] Campbell J cited Argyle in describing the means of protection of a court’s processes:[25]
… by regarding a litigant who has committed a particular topic to the Court for decision as having elected not to use extra-curial means to achieve the same objective as the application to the court was seeking to achieve.
[24] [2004] NSWSC 847.
[25] Cinc v Bucan Holdings Pty Ltd [2004] NSWSC 847 at [34].
Then, also as identified above, in Re New Bounty Pty Ltd; Winpar Holdings Ltd v Baron Corporation Ltd, Sackville AJA, in citing Argyle, remarked:[26]
These decisions have reasoned by analogy from authorities holding that a party who elects to pursue a remedy curially ought not be permitted to attempt to enforce it by more direct means.
(Footnote omitted)
[26] Re New Bounty Pty Ltd; Winpar Holdings Ltd v Baron Corporation Ltd (2015) 107 ACSR 504 at [189].
Finally, Diakou referred to McGregor v Henry, where White J observed:[27]
The decision in Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Pty Ltd has been treated as authority for the proposition that an election to pursue a court remedy by way of an action for possession excludes the right to take physical possession (Aloridge Pty Ltd v Christianos (1994) 13 ACSR 99 at 101; National Australia Bank Ltd v Zollo (1995) 64 SASR 63 at (68-69).
[27] [2006] NSWSC 368 at [72].
Three of these cases describe Argyle as establishing that a person cannot pursue, extra-curially, a remedy that they have elected to seek through proceedings. The description in Cinc is broader: in the context of his elucidation of principle underlying Argyle’s ‘election’ conclusion, Campbell J described using extra-curial means to obtain the same objective.
None of these cases expressly limits the principle to requiring an identity of remedies. I do not think it would be right to do so. It may be accepted that where the impugned extra-curial remedy is, to all intents and purposes, the same as that being sought in proceedings, that would move the court to act to protect the integrity of its processes. If the remedies can properly be described differently, however, the question is whether the impugned action nonetheless carries a threat of the same nature to the integrity of the court’s processes. A mere stipulation that the principle requires an identity of remedies does not engage with the underlying principle.
In focusing on the need for an identity of remedies, Diakou relied on the decision of Jagot J in Pioneer Mortgage Services Pty Ltd v Columbus Capital Pty Ltd.[28] In that case, Pioneer was a ‘mortgage originator’ and Columbus was a provider of financial services. Columbus acquired the loan book associated with mortgages originated by Pioneer. A number of things happened. First, an employee of Pioneer had fraudulently obtained funds from Pioneer, disguised as redraws from loan accounts. Columbus was unable to recover most of those funds. Second, Columbus decided to impose an annual facility fee on Pioneer borrowers.
[28] [2015] FCA 1067.
Pioneer commenced proceedings, seeking injunctions against Columbus in respect of the annual facility fee. The core of its claim was misleading and deceptive conduct. Columbus cross claimed for damages on account of the employee’s fraud.
Columbus then ceased to pay Pioneer management fees on the basis that it was not liable to do so, by reason of the contractual breaches by Pioneer. Pioneer then filed another application, seeking declarations and orders that were largely responsive to Columbus’s cross claim. These were, in the main, that Pioneer was not in breach of contract, that the notices of default were invalid, that Pioneer was not bound to acquire the loans the subject of the fraud and that it was entitled to be paid the management fees. Pioneer was, therefore, the applicant in both actions.
Relevantly for present purposes, Pioneer submitted:[29]
By pleading an entitlement to terminate but without seeking to have an adjudication of that right by specifying a remedy, and instead engaging in conduct refusing to pay management fees, the conduct of Columbus does infringe the principles enunciated in Cinc v Bucan Holdings [Pty Ltd [2004] NSWSC 847]. This is another basis upon which its entitlement to refuse to pay the management fees should be rejected.
[29] Pioneer Mortgage Services Pty Ltd v Columbus Capital Pty Ltd [2015] FCA 1067 at [153].

Essentially, Pioneer’s case was that it was an abuse of process for Columbus to have stopped paying the management fees when this was an issue to be determined in the second proceedings. Jagot J did not accept that submission. Critically, the Schedule to the relevant deed provided that Pioneer was not entitled to be paid management fees if there was an Event of Default. A separate clause in the deed provided that this was a matter for Columbus to determine. Columbus did so determine and was thereby within its rights to cease paying the fees from the applicable date. Her Honour held:[30]
The fact that the issue was in dispute did not mean Columbus had to keep paying fees while the issue was being resolved in proceeding NSD 526 of 2015. If Columbus was right, its decision would be vindicated. If Pioneer was right, Columbus would be in breach. There was no abuse of this Court’s process in those circumstances.
[30] Pioneer Mortgage Services Pty Ltd v Columbus Capital Pty Ltd [2015] FCA 1067 at [156].
Further, and critically for resent purposes, Jagot J observed that Columbus had not sought any relief in respect of Pioneer’s lack of entitlement to be paid management fees:[31]
Columbus thus did not elect to have this issue resolved by the Court. Pioneer put the issue before the Court because Columbus has decided to and had in fact stopped paying management fees. Pioneer’s case thus involves the proposition that to avoid an abuse of process Columbus needed to start paying management fees again once Pioneer commenced [the second action]. I do not accept this proposition.
[31] Pioneer Mortgage Services Pty Ltd v Columbus Capital Pty Ltd [2015] FCA 1067 at [157].
As indicated above, Diakou relied on this case as authority in support of its proposition that where it has not brought an action for possession in the main proceedings, there is no inconsistency in it now serving on Gouger Street a Notice to Quit. It seeks only declarations and damages in the main proceedings. That is, it does not seek the same remedy, objective or relief.
Pioneer does not provide the assistance Diakou seeks. Jagot J drew directly on Campbell J’s elucidation of principle in Cinc. Columbus had not sought curial relief or endorsement in respect of its non-payment of management fees. It was purporting to exercise a contractual right not to pay them. Pioneer sought curial relief in respect of that non-payment, in proceedings it had commenced. The conditions by which the Court would act to protect the integrity of its processes were simply not enlivened: Columbus had not acted inconsistently in any way at all.
The question arising in the present case is whether the Court will act to protect the integrity of its processes by reason of Diakou serving the Notice to Quit, in circumstances where it has also committed itself to a resolution of its dispute with Gouger Street in curial proceedings. The relief that Diakou has sought is relevant to that. However, I do not accept that in the absence of an absolute identity of relief, the conditions for a Court to act to protect the integrity of its processes cannot exist.
In Cinc, in what is, with respect, a careful elucidation of principle that I adopt, Campbell J referred to the notional election as being not to use extra‑curial means to achieve the same objective as the application. There can never be a complete identity of remedies. A notice to quit is not, as a matter of law, an identical remedy to a court order for possession. For example, its enforceability is contingent on different considerations. It may be met by an application for an injunction, which is not available against a court order. Both remedies serve the same objective, however, which concerns possession.
Nevertheless, because an order for possession and a notice to quit are directed towards a common objective, it is descriptively convenient to refer to them as seeking common remedies. This helps frame the real issue here. Since 2020, Diakou has, in Action SCCIV-15-420, sought a declaration that Gouger Street ‘has acquired no rights, title or interest in any renewal of the New Lease’. Should Diakou be successful in this claim, what can be said to be the objective being served?
Diakou submitted that the Court cannot speculate as to what would happen following the making of a declaration that Gouger Street had no valid lease. So, for example, looking at the matter without the benefit of any further information, Diakou might simply look to renegotiate a new lease with Gouger Street.
The practical difficulty with this submission is that the affidavit of Mr Hagi‑Diakou commits Diakou to its ambitions to sell the hotel business, building and land once it has taken possession. It is not unfounded speculation, at least, to say that this would likely also be the result of Diakou succeeding on its application for a declaration.
However, that observation misses the point of principle, even if it does illustrate it. In seeking a declaration to the effect that Gouger Street has no leasehold interest, Diakou is seeking an order that removes the present barrier to it resuming the right to possession. The effect of its pleading is that Gouger Street would remain, pursuant to cl 4.8 of the Lease, on a periodic tenancy, terminable on one month’s notice. What Diakou then chooses to do with that capacity to resume the right to possession is a matter for it. It might never re-enter and might simply renegotiate new terms with Gouger Street. More likely, it will give one month’s notice, re-enter and prepare the hotel business, land and building for sale. However, it cannot do either without the legal facility to resume the right to possession.
Diakou therefore has a common objective in pursuing Action SCCIV-15-420 and in serving the Notice to Quit. This is to obtain the facility to resume the right to possession (on no more than one month’s notice). There is nothing speculative about that conclusion. Subject to the further objections of Diakou, which I consider below, there is a sufficient commonality of objectives in Action SCCIV-15-420 and the Notice to Quit that the Court would act to protect the integrity of the curial proceedings brought by Diakou by denying the efficacy of the Notice to Quit.
This conclusion is sufficient to determine the third of four reasons proffered by Diakou as to why Gouger Street’s application should be dismissed. I have addressed it first, as it engages directly with the principle on which Gouger Street relies. It is convenient to address the remaining first, second and fourth contentions in the order in which they are made.
Whether the Court has already effectively determined the relevant question
Diakou’s first contention was that by my judgment dated 5 May 2023,[32] I had determined ‘the most significant contentions in the proceedings in Diakou’s favour’. These were, in Diakou’s words:
… that the effect of the application of the RCLA to the 2006 Lease was that the clause setting the rent (clause 4.10) was wholly void and of no effect so there was no agreement between the Lessor and Lessee as to a mechanism for fixing rent payable under the 2011 Lease. Therefore, subject to the determination of Issues 5 and 6 concerning the 2011 Lease, there was no grant of a further five-year lease on 1 September 2011.
[32] [2023] SASC 66.
Issue 5 and 6, to which I made these determinations expressly subject, are expressed in the Agreed List of Issues and Contentions Revision 1 as follows:
5. If Diakou would otherwise succeed on issues 2, 3 or 4, is Diakou estopped from denying that there was a grant of a further 5 year lease, being the 2011 Lease?
…
6. If Diakou would otherwise succeed on issues 2, 3, 4 or 5, did the 2011 Lease arise as a lease that was in part in writing and in part implied?
Diakou submitted that these issues did not affect the question of the present right to possession, only being relevant to the five-year period from 2011-2016 and the respective claims and counterclaims for payments and repayments referable to past occupation.
This is not an accurate characterisation of the pleadings that underlie the issues as articulated. The essential plea of Gouger Street in Action SCCIV‑15‑420 with respect to estoppel is in paragraph 56A of the Defence to Statement of Claim (Third Revision):
56A.If, which is denied, the effect of s 22 of the Act upon clause 4.10(a) of the New Lease is as alleged by Diakou … [i.e., no extension of the New Lease], then … Diakou is bound by an estoppel by convention not to depart from the assumption that:
56A.1the New Lease was renewed and binding as and from 1 September 2011 and then further renewed and binding as and from 1 September 2016; and that
56A.2for such time as the Act applies to the New Lease as renewed from time to time, clause 4.10(a) of the New Lease requires rent to be reviewed to current market rent.
(Emphasis added)
Gouger Street also points to its pleading of direct estoppel in its favour in respect of the 2016 Lease, in response to Diakou’s claim that the 2016 Lease could not have arisen because the 2011 Lease was void. This pleading ultimately picks up and applies the estoppel plea I have already referred to (in paragraphs 30D to 30H and 56A to 56G). Similarly, the plea of a partially written and partially implied lease (paragraph 30I) manifestly extends to a plea that includes the existence of the rights of renewal contained in the 2006 Lease (paragraph 30I(1)).
These pleas encompassing Issues 5 and 6 are therefore not limited to the period 2011-2016. Diakou’s contention fails.
Diakou also made extensive submissions on the strength and prospects of success of the estoppel plea. That submission is properly considered as part of Diakou’s fourth contention, below. For present purposes, Diakou’s contention, that by its determination of Issues 1 and 2 in its favour the Court has effectively determined that Diakou has a present right to possession, is untenable.
Dux litis on Issues 5 and 6
Diakou’s second submission was that Issues 5 and 6 were agitated by Gouger Street. Gouger Street was therefore dux litis on these issues. Having regard to the principle in Argyle, Diakou could not be said to have elected to proceed on these issues.
I reject this submission. There is no question that Gouger Street has the onus of proof on these issues. That is because Gouger Street has raised them as a defence to Diakou’s claim, an objective of which is to obtain the legal facility to resume the right to possession. For Gouger Street to raise a defence to that claim does not absolve Diakou of the consequence of its election. The question of dux litis on Issues 5 and 6 is irrelevant. The separation of these issues from Issues 1 and 2 only occurred by reason of the case management choices made by the parties that have resulted in the proceedings progressing in stages.
The ‘fruits of the judgment’
Diakou’s fourth contention requires revisiting an aspect of the principle in Argyle. Diakou submitted that in serving the Notice to Quit, it was doing nothing more than taking advantage of ‘the fruits of the judgment’ awarded by the Court on 5 May 2023. This submission requires a degree of explanation. The starting point is that on the current state of the proceedings, Issues 1 and 2 have been determined in Diakou’s favour (although that part of the judgment is presently the subject of an appeal).
Diakou’s next step was to mount a case that Gouger Street’s prospects of success on Issues 5 and 6 are poor. It is not presently necessary to address those prospects, on which Diakou made extensive oral submissions. Those submissions extended to the submission addressed above, to the effect that Issues 5 and 6 do not affect Gouger Street’s present right to possession, which I have rejected on the pleadings. The submissions on prospects were not, however, confined to that question.
Next, Diakou invoked the evidence that I admitted over the objection of Gouger Street. This included evidence that Gouger Street is a trustee company with no assets of its own, and only the assets of the business available to call on in the exercise of its right of indemnity. Against that, Diakou submitted that it found itself in a position where it is ‘seriously exposed’ to the risk of substantial losses in the form of large amounts of unpaid rent and land tax, interest, unrecoverable costs and unrecoverable losses from its inability to sell the property at the present ‘opportune’ time. This last consideration invokes some of the ‘concerns’ expressed by Mr Hagi-Diakou in his affidavit, which I have identified above. As Gouger Street submitted, there was no admissible evidence before me as to the actual state of the market or its prospects. Nevertheless, the evidence was that Mr Hagi-Diakou holds these concerns, rightly or wrongly.
Diakou then submitted that with this evidential foundation, it was necessary to consider Gouger Street’s application within the framework of the principles applicable to interlocutory injunctive relief. Not to do so would allow Gouger Street to obtain the benefits that would ordinarily only be obtainable by an application for interlocutory injunctive relief against the Notice to Quit, without having to satisfy the prerequisites to a grant of that relief.
As I have already noted, Gouger Street has not presented a case that seeks to satisfy the prerequisites to an interlocutory injunction. It has offered no undertaking as to damages, let alone one with security attached. It has largely not contested the central elements of Diakou’s case about its asset position. It did point to evidence that directors of Gouger Street had executed guarantees, which it submitted undermined Diakou’s assertion that Gouger Street would not be able to satisfy a judgment. However, Gouger Street’s submission was that these matters were simply not relevant to its application, which does not seek an interlocutory injunction. Its case, as already discussed above, is that the Court will act against the Notice to Quit, by the making of final orders, in order to protect its own processes.
It is therefore necessary to revisit the reach of the principle invoked by Gouger Street, and to consider whether the prerequisites attaching to an application for an interlocutory injunction are applicable at all. If they are not, it will not be necessary to consider the evidence on which Diakou here relies.
Diakou’s central contention was that in circumstances where it is facing substantial and ongoing losses which it will never be able to recover, it cannot be an abuse of process of the Court to try to avoid being ‘shackled’ to Gouger Street while the dispute enters its 13^th year. I infer that this refers to the dispute as originally articulated with Schillvest in 2011. The litigation has been on foot for eight years. It would have gone to trial in 2020, but for Diakou’s amendments to its pleadings as I have described them above.
In any event, Diakou’s position is that it has issued the Notice to Quit in circumstances where it has presented evidence that it is at risk of non-recovery, should it succeed in the main proceedings. It has succeeded at trial on Issues 1 and 2. It contends that Issues 5 and 6 are not reasonably arguable. If it is to be prevented from acting on the Notice to Quit, it should have the protections attendant on an interlocutory injunction. In this regard, it identified a number of authorities exhorting the importance of this principle. For example, it referred to a statement of Mullighan J in Remm Construction (SA) Pty Ltd v Allco Newsteel Pty Ltd,[33] quoted by Bleby J in 21^st Century Promotions Australia Pty v Telstra Corporation Ltd:[34]
It is necessary to consider principles which relate to injunctive relief of the nature here granted at the interlocutory stage, upon the basis of an undertaking in damages. As was observed by Kaye J in Bond Brewing Holdings Ltd v National Australia Bank Ltd (No.2) (1990) 8 ACLC 403 at 406:
‘… the requirement of an undertaking as to damages from a plaintiff seeking interlocutory intervention is for the purpose of safeguarding the defendant from being without remedy for damage suffered as a result of an interlocutory order which subsequently might be held ought not to have been made.’
(Diakou’s emphasis)
[33] (1991) 56 SASR 515 at 519-520.
[34] [2005] SASC 115 at [20].
In the same vein, the undertaking must not be illusory. In this regard, Diakou referred to Myrning v Beal, where Simpson CJ in Equity said:[35]
This Court should not be satisfied with an undertaking which may possibly prove illusory. The Court of Equity imposes this undertaking on [a party] as a condition of his injunction, and it ought to see that the condition is not a mere form, as it would be in cases where the [party] is out of the jurisdiction, especially where there is no evidence that the [party has] any property in the jurisdiction.
[35] Myrning v Beal (1899) 15 WN (NSW) 243 at 244.
Diakou also submitted that it was necessary to consider whether damages would be an adequate remedy for Gouger Street, and that they would be.
In support of its contention that the Court should at least have regard to the prerequisites for an interlocutory injunction, Diakou referred to The Chinese Cultural Club Ltd v Auswealth Pty Ltd (No 2).[36] However, that case actually concerned an application for an interlocutory injunction. A plaintiff tenant sought an interlocutory injunction to protect its possession of premises in Sydney. A notice to quit had been given in circumstances where the plaintiff was in occupation preparatory to a long lease. The parties had given little consideration to their interim rights.
[36] Unreported Judgments NSW, 11 December 1992, BC9201423.
Young J considered that the evidence would support a finding at trial that the relationship between the parties was a tenancy at will, terminable on reasonable notice. The notice to quit had given one month to vacate. Young J considered that if the tenancy was terminable on reasonable notice, the notice to quit operated to determine the tenancy and the plaintiff merely had an equitable right to be protected on the basis that the tenancy would be determined on reasonable notice. The difference between the one month and what would amount to reasonable notice in that case was potentially only two months. In this regard, Young J said, referring to Argyle:[37]
I think the real answer is that equity will only in fact give effect to these if they are for a long period of time because equity does not, as a general rule at least, interfere with a situation where the plaintiff can only claim some precarious right to possession; Argyle Art Centre Pty Ltd v Argyle Bond and Free Stores Co Pty Ltd [1976] 1 NSWLR 377, 387.
[37] The Chinese Cultural Club Ltd v Auswealth Pty Ltd (No 2) Unreported Judgments NSW, 11 December 1992, BC9201423 at 7.
Young J was of the view that equity would generally not interfere to protect relatively short possession:[38]
That wisdom seems to be accurately represented in what Needham J said in the Argyle case, that equity does not interfere and protect relatively short possession, usually on the ground that damages are an adequate remedy, or that equity does not put parties through a farce of having to issue another notice and commence new proceedings when the outcome is obvious.
[38] The Chinese Cultural Club Ltd v Auswealth Pty Ltd (No 2) Unreported Judgments NSW, 11 December 1992, BC9201423 at 9.
This is a reference to Needham J’s ultimate conclusion in Argyle which, it is to be recalled, was a judgment on an application for an injunction by a subtenant to restrain the head tenant from interfering with its possession of the premises. Needham J said:[39]
In this context the date 30th June, 1976, seems to have significance. As I have said, the lease of the defendant is to be surrendered on 30th June, 1976. The first plaintiff has said that it is hopeful that it can obtain a lease directly from the Sydney Cove Redevelopment Authority on that date, and that it would assist it to do so if it were in possession at that time. The defendant submits that this is not a case where the Court is asked to protect, by injunction, an existing and established business with a secure right to possession for a long period. The future of the plaintiffs in these proceedings, assuming possession were restored to them, is precarious at the best. The defendant, in my opinion, could effectively and lawfully remove them well before 30th June, 1976. In these circumstances I think the defendant’s submission that the injury to the plaintiffs can be adequately recompense by damages is correct.
[39] Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWLR 377 at 387.

Diakou sought to draw a comparison here with the present case, in that on its contention, the effect of the Lease being invalid would be that under clause 4.9 of the Lease, Gouger Street would be left with a monthly tenancy. It would follow that equity would likely not intervene. Damages would be an adequate remedy.
There are therefore several strands to Diakou’s submissions on the fourth contention.
The starting point is that Gouger Street does not seek an interlocutory injunction. It seeks final relief in the form of a declaration and a permanent injunction. The premise for seeking this relief is that the Notice to Quit constitutes a risk to the integrity of the curial proceedings by which Diakou has sought to enforce its rights. Diakou elected to take proceedings; it cannot then act to undermine the very proceedings it has invoked.
I am not persuaded that a grant of relief on application of the principle articulated in Argyle and explicated in Cinc is dependent on an assessment of the matters relevant to the granting of an interlocutory injunction. The authorities exhorting the importance of the protections for a respondent on an application for an interlocutory injunction do not engage with that principle. Neither do I think that those considerations can logically be accommodated. The question is whether the impugned action in any case threatens the integrity of the processes of the Court. That requires an assessment of whether the extra-curial action of a party is directed to the same objective as that which that party has committed to curial resolution. It is a structural question.
Thus, in McGregor v Henry,[40] the principle was not engaged, as the asserted right of physical re-entry arose independently of the matters with which the cross claim was concerned and after the cross claim was made. The cross claimant had not elected to engage the court’s processes in respect of that issue.
[40] [2006] NSWSC 368.
In Argyle itself, Needham J considered damages to be an adequate remedy given the remaining length of the tenancy. However, that did not involve undertaking the balancing exercise of all factors relevant to whether to grant an interlocutory injunction. The interest sought to be protected was a tenancy of no more than two and half months. Having found that the head tenant had elected to pursue curial proceedings, and was not entitled to re-enter, Needham J considered it to be relevant to the remedy to be granted that the Court was not being asked ‘to protect, by injunction, an existing and established business with a secure right to possession for a long period’.[41] He still granted relief, referring the matter for an assessment of damages.
[41] Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWLR 377 at 387.
Unlike in the present matter, The Chinese Cultural Club concerned an application for an interlocutory injunction. Equity did not intervene on that interlocutory application because only a short tenancy of one month remained at best. The conclusion that damages were an adequate remedy was reached in the deployment of orthodox principles on such an application.
Diakou’s contention that Gouger Street only has a monthly tenancy under cl 4.8 is not at all comparable. That contention is entirely contingent on Diakou’s submission that the pleadings of estoppel and implied lease (Issues 5 and 6) have extremely poor prospects of success. Moreover, these issues are directed to Gouger Street’s defensive case that it has a long-term tenancy with rights of renewal. Gouger Street is not looking to protect an interest that will on any view expire presently.
Whether Issues 5 and 6 are reasonably arguable would be highly relevant to an application for an interlocutory injunction. Diakou expressly anticipated such an application when giving the Notice to Quit. However, the parties had long since committed those issues to trial on Diakou’s action. Gouger Street’s application seeks to preserve that commitment. The fact that Issues 5 and 6 were not determined by the judgment of 5 May 2023 and remain outstanding is nothing more than the product of an agreed approach to case management.
If there was no remaining contest that Diakou could give one month’s notice to quit, then Argyle suggests that this might be relevant to whether damages would be awarded in lieu of a permanent injunction on Gouger Street’s application, rather than to refuse the application altogether. Even that possibility would need to be given careful thought in light of the more contemporary jurisprudence explicating the underlying principle. The question would arise whether the Court would nonetheless grant injunctive relief to protect its processes, in the absence of Diakou discontinuing its action. However, as things stand, Issues 5 and 6 (at least) remain live in the main proceedings. Moreover, they are directed to whether Gouger Street has a long-term proprietary interest in the premises.
I do not need to assess the strength of Diakou’s present attacks on the merits of Issues 5 and 6. The fact that these attacks were made in defence of Diakou’s Notice to Quit illustrates that the Notice to Quit threatens the integrity of the proceedings to which Diakou has necessarily acquiesced in committing those issues. Defensive as Issues 5 and 6 are, they are an incident of the curial proceedings Diakou elected to bring. It is unsurprising that Diakou has not discontinued those proceedings: it has no ‘fruits of the judgment’. I reject Diakou’s fourth contention.
Conclusion
I consider that Diakou’s actions in taking and maintaining the proceedings preclude it from relying on the Notice to Quit. Diakou cannot now manufacture an obligation on the part of Gouger Street to give a secured undertaking in order to set aside a notice that Diakou had no right to give. I am satisfied that this is a case where the Court should act to protect the integrity of the curial process to which Diakou committed the resolution of the disputes between the parties. I make the following orders:
1.a declaration that the respondent Diakou was not entitled to issue and serve on the applicant Gouger Street a Notice to Quit, dated 19 May 2023, purporting to terminate the applicant’s possession of the Talbot Hotel upon the grounds therein relied upon; and
2.an order in the nature of a permanent injunction requiring the respondent Diakou not to take any steps, in reliance upon the said Notice to Quit, to interfere with the applicant’s possession of the Talbot Hotel.
I will hear the parties as to costs.

[2023] SASC 112

1 August 2023