Gupta v Fordham Laboratories Pty Ltd

[2018] NSWSC 551

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:	Gupta v Fordham Laboratories Pty Ltd [2018] NSWSC 551
Hearing dates:	31 October; 2 November 2017
Date of orders:	01 May 2018
Decision date:	01 May 2018
Jurisdiction:	Equity
Before:	Ward CJ in Eq
Decision:	(1) Declare that the binding agreement for lease that came into existence on 30 June 2015 following the valid exercise by the plaintiff on 12 March 2015 of the option contained in registered lease No AF722335 (“the Lease”) of premises known as Shop 4, 54-60 Flinders Avenue, South Camden (“the Premises”), has not been abandoned or relinquished by the plaintiff. (2) Order that the defendant specifically perform the said agreement for lease in relation to the Premises, by providing to the plaintiff within 28 days a lease, for execution by the plaintiff, on the terms provided for under the option clause in the Lease (cl 4.6) with a commencement date of 30 June 2015 and at a commencing rental of $47,644.13 per annum. (3) Order (2) is subject to the provision by the plaintiff to the defendant, within 21 days of a written undertaking by the plaintiff to rectify the breaches of lease referred to in these reasons and the subject of order (4) below; and to indemnify the defendant for any claim by any other tenant in the shopping centre of which the Premises form part in relation to condensate discharge from the lines on the external walls of the building. (4) On the cross-claim, order as follows: (i) Order the plaintiff to rectify any damage to the roof sheeting caused by the installation of air conditioning units and/or an aerial on the roof of the Premises or (at the election of the defendant) to pay the defendant the sum of $10,000 for removal of those items, the relocation and re-gassing of the air conditioning units, and the removal and replacement of the roof sheeting. (ii) Order the plaintiff to indemnify the defendant against any claim by any other tenant in the shopping centre of which the Premises form part in relation to condensate discharge from the external air conditioning compressor lines. (iii) Order the plaintiff to take all necessary steps to install and maintain compliant fire extinguishers on the Premises as required by the Lease. (iv) Order the plaintiff to comply with the requirements under the Lease for provision and maintenance of line-markings for disabled car spaces or (at the election of the defendant) to pay to the defendant the sum of $2,000 in relation thereto. (v) Order the plaintiff to redecorate the Premises in accordance with cl 7.3.3 of the Lease or (at the election of the defendant) to pay to the defendant the sum of $4,300 in relation thereto. (vi) Order the plaintiff to provide the defendant within 21 days (if he has not already done so) with a signage plan for the premises. (vii) Order the plaintiff to produce to the defendant within 21 days (if he has not already done so) evidence of his insurance coverage as required under the Lease. (viii) Order the plaintiff (if any part of the Premises is presently occupied by any unapproved sub-tenant) to submit to the defendant a copy of the sub-lease for the approval of the defendant. (ix) Otherwise, dismiss the cross-claim. (5) Reserve the question of costs to be dealt with on the papers.
Catchwords:	LEASES AND TENANCIES – Exercise of option – Whether agreement for lease arising out of exercise of option had been abandoned – Held no abandonment – Discretionary considerations relevant to a specific performance order – Held specific performance of the agreement for lease should be ordered – Cross-claim for alleged breaches of option lease
Legislation Cited:	Conveyancing Act 1919 (NSW), ss 127, 129, 133E Retail Leases Act 1994 (NSW), ss 16C, 16G, 16H, 72(1)(b)
Cases Cited:	Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 Ashton v Pratt (2015) 88 NSWLR 281; [2015] NSWCA 12 Baby Zone (Aust) Pty Ltd (Administrators Appointed) v Keira Street Ventures Pty Ltd [2016] NSWSC 528 Batiste v Lenin [2002] NSWCA 316 Bettervale v Warehouse Solutions International (No 3) [2015] NSWSC 1356 Byron Bay Retirement Villages Pty Ltd v Zandata Pty Ltd [2008] NSWSC 1123 Cedar Meats Pty Ltd v Five Star Lamb Pty Ltd [2013] VSC 164 Central London Property Trust Ltd v High Trees House Ltd [1947] 1 KB 130 Chan v Cresdon Pty Ltd (1989) 168 CLR 242; [1989] HCA 63 CIC Insurance Limited v Bankstown Football Club Limited (1995) 8 ANZ Ins Cas 61-232 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Limited (1980) 160 CLR 226; [1986] HCA 14 DHJPM Pty Limited v Blackthorn Resources Limited (2011) 83 NSWLR 728; [2011] NSWCA 348 Dimond v Moore (1931) 45 CLR 159; [1931] HCA 12 Dockrill v Cavanagh (1944) 45 SR (NSW) 78 Doueihi v Construction Technologies Australia Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 DTR Nominees Pty Limited v Mona Homes Pty Limited (1978) 138 CLR 423; [1978] HCA 12 Elite Promotion and Management Pty Ltd v 5A Investments Pty Limited [2009] NSWSC 556 Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53 Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 Fullers’ Theatres Ltd v Musgrove (1923) 31 CLR 524 at 546; [1923] HCA 12 Gerraty v McGavin (1914) 18 CLR 152; [1914] HCA 23 Hammond v JP Morgan Trust Australia Ltd [2012] NSWCA 295 Heggies Bulkhaul Ltd v Global Minerals Australia Pty Ltd (2003) 59 NSWLR 312; [2003] NSWSC 851 Hemer Pty Ltd v Benni [2011] SASCFC 35 Hexter v Pearce [1900] 1 Ch 341 Jiwunda v Trustees of the Travel Compensation Fund [2006] NSWSC 741 Lamshed v Lamshed (1963) 109 CLR 440; [1963] HCA 60 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; [1989] HCA 23 Lolly Pops (Harbourside) Pty Ltd v Werncog Pty Ltd (1998) 9 BPR 16,361 Marminta Pty Limited v French [2003] QCA 541 Martin v Kelly [2009] NSWCA 105 McDrury v Luporini [2000] 1 NZLR 652 Mehmet v Benson (1965) 113 CLR 295; [1965] HCA 18 Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106 Mineaplenty Pty Ltd v Trek 31 Pty Ltd [2006] NSWSC 1203 Moratic Pty Ltd v Gordon [2007] NSWSC 5 New Dragon Investments Pty Ltd v Morgan & Banks Development Pty Ltd [2006] NSWSC 113 New South Wales Land and Housing Corporation v Diab [2015] NSWCA 133 Owendale Pty Ltd v Anthony [1967] HCA 20; (1967) 117 CLR 539 Palermo Seafoods Pty Ltd v Lunapas Pty Ltd [2014] NSWSC 792 Pioneer Quarries (Sydney) Pty Ltd v Permanent Trustee Co of NSW Ltd (1970) 2 BPR 97,145 Pozetu Pty Ltd v Alexander James Pty Ltd [2016] NSWCA 208 Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17; [1985] HCA 14 Quadling v Robinson (1976) 137 CLR 192; [1978] HCA 31 Re Eastdoro Pty Ltd [1989] 2 Qd R 182 Ryder v Frohlich [2004] NSWCA 472 Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 Saleh v Romanous (2010) 79 NSWLR 453; [2010] NSWCA 274 Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634 Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505 Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 29 TMA Australia Pty Ltd v Indect Electronics & Distribution GmbH [2015] NSWCA 343 Van Dyke v Sidhu [2013] NSWCA 198; 301 ALR 769 Vanworld Pty Ltd v Perpetual Trustees Australia Ltd [2002] QSC 249 Wallera Pty Limited v CGM Investments Pty Limited [2003] FCAFC 279 Walsh v Lonsdale (1882) 21 Ch D 9 Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 Wilkinson v S & S Gikas Pty Ltd [2006] NSWSC 1314 Williams v Frayne (1937) 58 CLR 710; [1937] HCA 16
Texts Cited:	ICF Spry, The Principles of Equitable Remedies (9th ed, Lawbook Co, 2014) JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies (5th ed, LexisNexis, 2015) JW Carter, Carter on Contract (LexisNexis, 2017)
Category:	Principal judgment
Parties:	Ranjan Gupta (Plaintiff) Fordham Laboratories Pty Ltd (Defendant)
Representation:	Counsel: L W Chan (Plaintiff) PJ McEwen SC with D Birch (Defendant)   Solicitors: McCray Legal (Plaintiff) McDermott & Associates (Defendant)
File Number(s):	2016/00371617
Publication restriction:	Nil

Judgment

1. HER HONOUR: This matter involves a dispute as to commercial premises in a neighbourhood shopping centre in South Camden (the premises) from which the plaintiff (Ranjan Gupta) has operated a pharmacy for a number of years (and from part of which, for at least part of that time, he was also involved in the running of a medical practice). The defendant (Fordham Laboratories Pty Ltd, to which I will refer as Fordham) is the owner of the premises.

2. In essence, the dispute concerns whether (as Fordham contends) Fordham has validly terminated Mr Gupta’s tenancy of the premises and is now entitled to vacant possession of the premises or whether (as Mr Gupta contends) Mr Gupta is entitled to specific performance of an equitable lease that came into existence following the exercise by him in March 2015 of an option to renew the registered lease that he then held (and that expired in accordance with its terms on 29 June 2015). Fordham has also cross-claimed for damages in respect of alleged breaches by Mr Gupta of his obligations as tenant in relation to the premises.

3. It is now not disputed by Fordham that Mr Gupta validly exercised the option to renew his lease in March 2015; nor that, following the exercise of that option, there came into existence a binding agreement for lease on the terms provided for in the initial lease (including that the commencement rent was to be the current market rent as agreed or determined in accordance with the procedure there set out or, if not so determined, the rent as at the expiry of the initial lease).

Summary

4. For the reasons that follow, I am of the view that the subsequent course of negotiation between the parties in relation to the terms of the “new lease”, which departed in a number of not insignificant respects from the terms provided for under the equitable lease (to which I will refer, to avoid confusion arising from the varied terminology used in the correspondence and submissions, as the “option lease”) that came into existence following the exercise of the option, did not (lengthy as those negotiations were) amount to an abandonment by Mr Gupta of his rights to or under the option lease. Nor am I persuaded that Mr Gupta is now estopped from exercising those rights notwithstanding that he did not demur (until very late in the negotiations) from Fordham’s assertion in the course of the negotiations that he had forfeited the option (or had resiled from his rights under the option) and was occupying the premises as, or only as, a monthly tenant holding over after the expiry of the fixed term.

5. As to the claim for specific performance, while I accept that there was a basis for complaint by Fordham as to Mr Gupta’s compliance from time to time with his obligations in respect of the tenancy, it appears to me that at least part of the problem was that there was an ongoing difficulty in the reconciliation of amounts due in respect of the tenancy. That difficulty started with a dispute over the characterisation of a payment made by Mr Gupta before entry into the original lease compounded by the practice from time to time of Mr Gupta to make payments by direct deposit in lump sums without any reference or description; and was then exacerbated by the fact that, although Fordham applied to the Department of Fair Trading for a security bond to be paid out to it in 2011, the moneys so drawn down were not then treated by Fordham as discharging the rent arrears. There is also now a dispute as to whether (as Fordham seems at the time to have accepted but now disputes was the case) Mr Gupta had satisfied the conditions of an offer by Fordham for there to be a waiver of the percentage increase in rental otherwise applicable in respect of the 2013/2014 lease year and a dispute as to the consequential effect of any such rent waiver for the rent then payable for the 2014/2015 year.

6. Once there has been an up to date reconciliation of the position in relation to payments due in respect of the tenancy (and having regard to the unlikelihood that a tenant in Mr Gupta’s position would wish to expose himself to further litigation costs and risk of termination of his tenancy), I have no reason to think that Mr Gupta will not henceforth be astute to ensure that he honours his rental obligations under the option lease (and he would certainly be well advised to do so in a timely fashion). I have concluded that Mr Gupta is ready, willing and able to perform his obligations under the option lease and that, given the significance attached to rights in relation to real property and the value such a lease may be assumed to have for the conduct of Mr Gupta’s practice as a pharmacist in the area, the proper exercise of discretion (notwithstanding the obvious breakdown in the landlord/tenant relationship) is to order the specific performance of the option lease (but to impose conditions requiring Mr Gupta to make good extant breaches in relation to the tenancy, as determined in these reasons by way of orders in relation to the cross-claim).

7. As to the cross-claim by Fordham for various breaches of the Lease and liquidated damages for rental arrears, to the extent that those breaches have been made out (and have not yet been remedied) orders will be made in relation thereto. As indicated above, the order for specific performance of the option lease will be made subject to the giving of an undertaking by Mr Gupta to rectify all extant breaches in relation to the tenancy as determined by these reasons and to indemnify Fordham in relation to any claims that may be made against it by other tenants in the shopping centre in relation to condensate discharge from certain air conditioning lines placed on the exterior of the building.

Background

Events prior to entry into initial lease in August 2010

8. Mr Gupta first had contact with one of the directors of Fordham (Mr Peter Lubrano) in relation to entry into a proposed lease of the premises in or about November 2008, at which time Fordham was proposing to carry out building works or a building extension in relation to the shopping centre in question (see T 19.50; T 20.23-26).

9. By December 2009, it appears that there had been discussions as to a “rental package” for both the premises the subject of this dispute (shop 4) and another shop in the centre (shop 3) – see letter dated 23 December 2009 from Fordham to Mr Gupta (Exhibit D). In that letter, Mr Lubrano refers to there having been “many meetings and a great deal of detail supplied in response to your [Mr Gupta’s] requests”. Mr Lubrano urged Mr Gupta “to be realistic and get on with the job of providing the information required in applying for a lease, instead of dancing around the edges”. (Complaint as to Mr Gupta’s dilatory behaviour in the negotiation of arrangements in relation to the premises has been a constant refrain over the period both before and during his occupancy of the premises.) That letter appears to have been in response to a 22 December 2009 letter from Mr Gupta (a copy of which was not in evidence).

10. Relevantly, when it comes to considering how the subsequent payment of $6,167 was to be characterised (see [11] below) in response to whatever was contained in paragraph 4 of that 22 December 2009 letter, Mr Lubrano wrote:

•   In our experience, a letting agent usually “qualifies” a prospective lessee and then takes a deposit of say $1,000 (per shop) preparatory to the lessor’s solicitor issuing a disclosure statement to the lessee’s solicitors as a security for costs. [my emphasis]

•   Despite requests, we don’t know anything meaningful about who you are (CV) or what you propose to do (layouts) nor do we have any holding deposit or agreement made during what has been a lengthy period of talking.

11. On 4 March 2010, Mr Gupta paid the sum of $6,167 to the real estate agents acting for Fordham (Ex A p 3-1A). There is a dispute between the parties as to the proper characterisation of that payment. Mr Gupta’s position is that it was a deposit on account of rent or other moneys due under the lease he later entered into in August 2010 (such that it should have been credited against moneys payable by him in relation to the tenancy). Fordham’s position (consistent with the explanation proffered in the 23 December 2009 letter) is that it was an “earnest” or payment to “qualify” Mr Gupta as a tenant – in other words that the payment was made so that Fordham would not lease the premises to any other potential lessee; and that it was not a payment of rent in advance nor is it to be credited as such. I consider this issue in due course.

12. By 25 May 2010, negotiations were taking place through the respective parties’ solicitors as to the terms of a lease for the premises (shop 4 only) – see letter dated 25 May 2010 from Fordham’s former solicitors (Back Schwartz Vaughan) to Mr Gupta’s solicitors (Exhibit C). In that letter, apparently in response to a request from Mr Gupta in relation to payment of moneys due to a third party which had presumably been involved in some way in the discussions (it having earlier received a copy of the letter which is Exhibit D), Fordham’s solicitors stated “[w]e are instructed that your client [Mr Gupta] is required to pay the monies due to NU-ERA Homes Pty Limited separately and may not be deducted from any monies previously paid towards the rent and security deposit”. (The only evidence of any amount having been paid by Mr Gupta to Fordham at that stage seems to be the sum of $6,167 paid to the real estate agents.)

13. As at 26 May 2010, Mr Lubrano was expressing the view that the dealings in relation to the proposed lease had been “excessively protracted” – see his letter of that date to Mr Gupta (Ex A p 4). In that letter, Mr Lubrano recorded that Mr Gupta had proposed a lease term making the lease conditional on both Pharmacy Board of NSW approval and Council consent to the proposed use of the premises as a pharmacy; and permitting either party to terminate the lease by written notice if for any reason any of the conditions had not been satisfied by a specified date. The proposed additional lease terms contemplated the payment of rent and outgoings for the period 1 May to 31 August 2010 if any of the conditions was not satisfied by 16 July 2010 and that, if all lease conditions (excluding a special condition relating to “PBS” approval) were satisfied, then the lessor would allow one month’s “credit rent”. There was no reference to any deposit. Mr Gupta initialled a copy of that letter on 28 May 2010 to confirm that it covered “all of the terms that [he] had agreed” at a meeting on 25 May 2010.

14. On 16 July 2010, approval was given by Camden Council to a development application by Mr Gupta for the use of the premises as a pharmacy and medical practice (Ex A p8-1ff). Presumably approval was also received from the Pharmacy Board at some stage (since there is no suggestion that the operation of the pharmacy business was not compliant with any applicable Pharmacy Board requirements). As adverted to earlier, Mr Gupta’s evidence is that for part of the time during the course of his tenancy he was also running a medical practice “under [his] own ownership” from the premises but that he then sold his interest in the medical practice (see his evidence at T 8.35ff) (in this regard, I note there is evidence as to the purchase of the medical practice by an entity known as Cristorae Pty Limited (Cristorae) some time in 2015 – to which I refer in due course below – see [92] below).

Lease dated 18 August 2010

15. The initial lease in respect of the premises (the Lease) was executed by the parties in August 2010 (it was dated 18 August 2010 but the statutory declaration in relation to it was completed on 27 August 2010) (Ex A pp9-10). It appears that it was in the Law Society’s standard form as at November 2007.

15. The Lease was for a term of 5 years commencing on 30 June 2010 and ending on 29 June 2015. Clause 4 of the Lease, headed “Lease Period”, included provision for the lessee (Mr Gupta) to have the option to renew the Lease if a further period, commencing when the Lease ended, was stated in item 12A in the schedule (Annexure A to the Lease) and for renewal more than once if so stated in item 12B in the schedule, but that the period of tenancy under the Lease and under any renewal(s) was, in total, not to be longer than the maximum period stated in item 12C in the schedule. Item 12A specified a further period of five years from 30 June 2015 to 29 June 2020. No further period was specified in item 12B and the maximum period of the tenancy under the Lease and permitted renewals, as stated in item 12C, was ten years. Therefore, as executed in August 2010, under the Lease there was only one option to renew, that being for a further 5 years.

16. The initial rent specified under the Lease (as set out in item 13 of Annexure A to the Lease) for the period from the commencement date to the first rent review date (30 June 2011- see item 16) was $40,726.40 (inclusive of GST) a year payable by monthly instalments of $3,393.87 (inclusive of GST). Thereafter, from the first rent review date, rent was payable at the new yearly rent in monthly instalments of one twelfth of the new yearly rent beginning on each rent review date.

17. Item 16 of Annexure A listed the rent review dates (for the initial term of the Lease as well as any further period of lease following exercise of the option to renew), the method of rent review, and (if Method 1 applied) the applicable increase, as set out below. For ease of reference, I have added to the far right column in square brackets the rental amounts for the relevant years of the first lease period (assuming no waiver of the percentage increase was applicable for the 2013/2014 lease year).

Rent review date   Method of rent review   If Method 1 applies, increase by

(the increase should show percentage or amount)

30 June 2011   Method 1   4%   [$3,529.62]

30 June 2012   Method 1   4%   [$3,670.81]

30 June 2013   Method 1   4%   [$3,817.64]

30 June 2014   Method 1   4%   [$3,970.35]

30 June 2015   Method 3   

30 June 2016   Method 1   4%

30 June 2017   Method 1   4%

30 June 2018   Method 1   4%

Method 1 is a fixed amount or percentage.

Method 2 is Consumer Price Index.

Method 3 is current market rent. [Method 3 is explained further below – see [21] below]

Method 2 applies unless another method is stated.

19. As to the exercise of the option, cl 4.4 of the Lease provided that:

4.4   The lessee can exercise the option only if –

4.4.1   the lessee serves on the lessor a notice of exercise of option not earlier than the first day stated in item 12D in the schedule [29 December 2014] and not later than the last day stated in item 12E in the schedule [29 March 2015];

4.4.2   there is at the time of service no rent or outgoing that is overdue for payment; and

4.4.3   at the time of service all the other obligations of the lessee have been complied with or fully remedied in accordance with the terms of any notice to remedy given by the lessor.

If this lease is extended by legislation, items 12D and 12E in the schedule are adjusted accordingly.

20. The terms of the “new” lease (if the option were to be exercised) were set out in cl 4.6 of the Lease, which provided that:

4.6   A new lease will be the same as this lease except for -

4.6.1   the new rent;

4.6.2   the commencement date and the termination date;

4.6.3   the omission of clauses 4.2, 4.3, 4.5 and 4.6 and items 12A and 12B in the schedule in the last lease allowed in item 12 in the schedule;

4.6.4   item 12B becoming item 12A;

4.6.5   adjustment of item 12C in the schedule; and

4.6.6   adjustment of items 12D and 12E in the schedule. The number of days between the dates stated in items 12D and 12E in the schedule of the new lease and the termination date of the new lease and the number of days between each date stated in items 12D and 12E in the schedule of this lease and the termination date of this lease are to correspond.

If the new rent is to be current market rent it will be decided in the same way that current market rent is to be decided under Method 3 stated in clause 5 assuming that this lease and the new lease were one continuous lease and the commencement date of the new lease was a rent review date.

21. The methodology for calculating the new rent under Method 3 was set out in cl 5, commencing from cl 5.12:

Method 3. By reference to current market rent.

5.12    In this case the rent is to be the current market rent. This can be higher or lower than the rent payable at the rent review date and is the rent that would reasonably be expected to be paid for the property, determined on an effective rent basis, having regard to the following matters –

5.12.1   the provisions of this lease;

5.12.2   the rent that would reasonably be expected to be paid for the property if it were unoccupied and offered for renting for the same or a substantially similar use to which the property may be put under this lease;

5.12.3   the gross rent, less the lessor’s outgoings payable by the lessee;

5.12.4   where the property is a retail shop, rent concessions and other benefits that are frequently or generally offered to prospective lessees of unoccupied retail shops; and

5.12.5   the value of goodwill created by the lessee’s occupation and the value of lessee’s fixtures and fittings are to be ignored.

5.13    The lessor or the lessee can inform the other in writing at least 60 days before the rent review date of the rent that the lessor or lessee thinks will be the current market rent at the review date.

5.14   If the lessor and the lessee agree on a new rent then that rent will be the new rent beginning on the rent review date and the lessor and the lessee must sign a statement saying so.

5.15   If the lessor and the lessee do not agree on the amount of the new rent 30 days before the rent review date, the current market rent will be decided by a valuer appointed under clause 5.16.

5.16   

5.16.1   Unless 5.16.2 applies the lessor and the lessee can either agree upon a valuer or can ask the President of the Law Society of New South Wales to nominate a person who is a licensed valuer to decide the current market rent.

5.16.2   Where the property is a retail shop, the valuer appointed must be a specialist retail valuer appointed by agreement of the parties or, failing agreement, by the Administrative Decisions Tribunal.

5.17   The valuer will act as an expert not an arbitrator. The lessor and the lessee can each make submissions in writing to the valuer within 14 days after they receive notice of the valuer’s appointment but not later unless the valuer agrees.

5.18   The valuer’s decision is final and binding. The valuer must state how the decision was reached.

5.19   If the valuer

5.19.1   does not accept the nomination to act; or

5.19.2   does not decide the current market rent within 1 month after accepting the nomination; or

5.19.3   becomes incapacitated or dies; or

5.19.4   resigns;

then another valuer is to be appointed in the same way.

5.20   The lessor and lessee must each pay half the valuer’s costs.

5.21   If the lessor and lessee do not agree upon a valuer and neither asks for a valuer to be nominated before –

5.21.1   the next rent review date passes; or

5.21.2   this lease ends without the lessee renewing it; or

5.21.3   this lease is transferred after the rent review date with the lessor’s consent; or

5.21.4   the property is transferred after the rent review date

then the rent will not change on that rent review date.

22. As to outgoings, the Lease provided that the lessee was to pay 34.3% of all Outgoings (as defined in item 14B of Annexure A to the Lease), such payment to be made on the next rent day after a request for payment is made by the lessor (see cll 5.1.2 and 5.3, read with item 14A of Annexure A to the Lease).

23. The permitted use of the premises was specified in item 17 of Annexure A to the Lease as “Pharmacy and Medical Practice”.

24. Clause 17 of the Lease, headed “Security Deposit”, read with item 20 of Annexure A to the Lease, made provision for delivery of a security deposit by the lessee to the lessor on or before the commencement date of the Lease. The amount required was four and a half months’ rent and the lessee’s proportion of outgoings increased by the rate of GST (expressed as a percentage) applicable from time to time. Clause 17.3 entitled the lessor to deduct from the security deposit “an amount equal to any monies due but unpaid by the lessee to the lessor under this lease”. Pursuant to cl 17.6, the lessee agreed to vary the amount of the security deposit “immediately upon each rent review” so that it “represents the equivalent of the number of months referred to in the schedule”. Other than insofar as cl 17.6 may have this effect, there was no express provision in the Lease requiring the lessee to “top up” or reinstate the security deposit if the deposit was called upon by the lessor during the course of the Lease.

25. Clause 12.3.1 of the Lease (as amended by cl 28.1.5) provided that when the Lease ends “unless the lease becomes a lessee of the property under a new lease” the lessee was obliged, among other things, to return the property to the lessor “reinstated to its original open plan layout and condition”. If the lessor allowed the lessee to continue to occupy the property after the end of the lease period (“other than under a new lease” – my emphasis) then, pursuant to cl 12.4 as amended by cl 28.1.7, the lessee “becomes a monthly lessee and must pay at a monthly rent equal to one months [sic] proportion of the yearly rent multiplied by 105% of all other amounts payable by the Lessee to the Lessor hereby reserved and adjusted”. (I interpose to note that cl 12.4 will not apply if, as I have found, Mr Gupta was occupying the premises from 30 June 2015 under the option lease.)

26. Pursuant to cl 5.1.5 of the Lease (and item 15 of Annexure A), interest was payable at the maximum overdraft rate applied by the Commonwealth Bank of Australia plus 2% p.a. calculated on a daily basis on any unpaid amounts (being rent, outgoings or the cost of remedying defaults) that were more than 14 days overdue.

Payment of rent during the term of the Lease

27. An issue that arose early during the term of the Lease was as to Mr Gupta’s failure to pay rent in a timely fashion (see Mr Lubrano’s affidavit sworn 7 April 2017 at [8]). Further, for at least some period Mr Gupta made direct deposits to Fordham’s bank account in round sums “without explanation or identification”. It appears that, among other things, this has contributed to the difficulty in reconciliation of amounts paid/outstanding by way of rent or other obligations to pay moneys under the Lease.

28. Letters requesting payment of amounts claimed as outstanding rent were sent by Mr Lubrano on 7 October 2010, 26 October 2010, 26 November 2010, 6 December 2010, 10 February 2011 and 21 March 2011 (see Mr Lubrano’s affidavit at [8] and copies of letters exhibited thereto).

29. Relevantly, in his letter of demand dated 26 November 2010 (Exhibit 1, PML-1 27), Mr Lubrano made reference to a telephone conversation earlier that day with Mr Gupta, saying:

…you said you were writing to us because we had totally ignored the $6167 for 2 months that you paid to Elders. That deal did not proceed and the money was forfeited. A written Chronology of events relevant to that $6167 was given to you at Artarmon on 25th August 2010. No objection to it has been received.

30. In that letter (and I note that the respective letters of demand appeared to follow a standard formula), it was noted that the rent payable for 30 June 2010 to 30 December 2010 was $3,393.87 (including GST) per month. Mr Lubrano asserted that, even (which he did not there agree to do) crediting towards the rental account the disputed $6,167, Mr Gupta was in arrears as at 26 November 2010 by $6,466.92 (including GST). (It may be noted here that the sum of $6,167 in fact represents less than 2 months’ rent at the rent specified for the first year of the Lease.)

31. By email dated 6 December 2010, Mr Gupta acknowledged receipt of the 26 November letter (and an earlier letter of 12 November 2010). He asked for correspondence to be addressed to a particular address in Camden (that request was not always complied with – in particular, later correspondence was often addressed either to the premises or sent by email). Mr Gupta stated in this email that:

Please note that i am NOT saying there is any dispute re the $6167 i deposited in Elders R/E Camden Trust a/c (so that they could ‘qualify’ me as a serious prospective tenant) during our lease negotiations. Notwithstanding the rather regrettable fact that the money from the letting agent’s trust a/c ended up with you without any prior notice/warning to me, and despite your claiming it to be yours months later (without a reasonable explanation), I AM CLEAR that those funds were to be adjusted against rent as per normal business practice. For your information I have already consulted my solicitor on this matter. Please feel free to consult yours too. With due respect to you, I rather not spend any more time discussing this. Thank you. [my emphasis in italics]

32. Mr Lubrano did not accept the position asserted by Mr Gupta in relation to the $6,167 but advised by letter dated 6 December 2010 that, even setting that aside, there were arrears of $4,758.37 (including GST). A similar letter of demand was sent on 10 February 2011.

Application for mediation by Fordham; Claim in relation to bond money

33. An application for mediation under the Retail Leases Act 1994 (NSW) was then lodged by Fordham. By reference to a letter dated 21 March 2011 from Fordham it appears that Mr Gupta failed to attend a mediation on that date (Exhibit 1, PML-1 34); and Fordham then applied for a Certificate of Failed Mediation to be issued and notified Mr Gupta of its intention to apply to the Administrative Decisions Tribunal of New South Wales.

34. On 21 March 2011, Fordham lodged a claim with NSW Fair Trading for a refund of Mr Gupta’s security bond of $16,847.25 (that being the total of the security deposit that had been paid by Mr Gupta in two tranches (Exhibit 1, PML-1 33)) (Exhibit 1, PML-1 35). As at 21 March 2011 (see Fordham’s letter of demand of that date at Exhibit 1, PML-1 33), Fordham calculated the total of all amounts outstanding under the Lease (including rent, the lessee’s proportion of outgoings, legal and mediation fees, and interest under cl 5.1.5) to be $20,146.12 (or, if the $6,167 “deposit” were not “taken into account” – i.e., as I understand it, that amount were to be treated as a credit towards rent – still to be more than $13,000). Fordham’s claim for a release of the security bond was in due course successful, leading to the receipt by Fordham of the amount of $16,847.25 on 7 April 2011 (Mr Lubrano’s affidavit sworn 7 April 2017 at [9]). (As already adverted to, Fordham’s treatment of the security deposit was the subject of contention during the course of the hearing – since that amount was released to Fordham but, it appears, never credited to the rental arrears. Mr Lubrano’s evidence is to the effect that this amount has been “held” by Fordham and that he considers that Fordham would be obliged to reinstate the bond with the rental bond board when Mr Gupta “paid up” the amount owing – see T 49.15-42. I will revert to this issue in due course.)

Proceedings in the Administrative Decisions Tribunal

35. Meanwhile, on 23 March 2011 (being a time when the security deposit had not yet been released to it), Fordham issued a Notice to Quit to Mr Gupta (Mr Lubrano’s affidavit at [10]; Exhibit 1, PML-1 36), notifying Mr Gupta that Fordham wished to bring the Lease to an end on 2 May 2011 and requiring vacant possession on that date. Fordham then commenced proceedings on about 31 March 2011 in the Administrative Decisions Tribunal seeking, in essence, orders for vacant possession of the premises (see Exhibit 1, PML-1 37).

36. The first rent review date was 30 June 2011. In accordance with the terms of the Lease to which I have referred above, from that date the rent increased by 4% (to $3,529.62 per calendar month). By letter dated 1 July 2011, Mr Lubrano advised that Mr Gupta was in credit for $2,595.42 and that it held the $16,847.25 “as monies returned at our request”. The letter also noted an application by Mr Gupta application for mediation on 5 July 2011. A certificate of failed mediation dated 6 July 2011 was issued in relation to that mediation.

37. The matter was listed for a hearing in the Administrative Decisions Tribunal on 25 July 2011. Two days prior to that hearing, Fordham forwarded an offer (Exhibit 1, PML-1 42) to Mr Gupta. The terms included that Mr Gupta was to carry out a fit out to the premises (acceptable to Council and to Fordham using insured, licensed tradesmen) and commence trading on or before 31 October 2011; and that Mr Gupta pay rent and outgoings for that period. (From this, it appears that Mr Gupta had not yet commenced trading from the premises.) Provided Mr Gupta complied with the foregoing, Fordham offered a “rent waiver from that 31 October 2011 date of compliance until 31st January 2012”. The offer also included the term that if, in the future Mr Gupta exercised the existing option, entered into a new lease, complied with all its terms and conditions and paid $11,500 plus interest at the default interest rate in the Lease, Fordham would grant a second 5 year option at Mr Gupta’s request. The stated logic for this was that Fordham would have foregone $11,500 rent and outgoings income but that that amount, plus interest, would be repayable if Mr Gupta took the additional 5 year option.

38. The Tribunal made orders on 25 July 2011 (Exhibit 1, PML-1 44) noting that the parties had reached agreement to vary the Lease on the terms of the offer described at [37] above and noting that, if the Lease was not varied in accordance with that offer by 18 August 2011, Mr Gupta was to vacate the premises immediately.

Variation of Lease

39. On 30 September 2011, in accordance with the agreement noted by the Tribunal though not within the time frame there specified, a variation of lease was executed between the parties to include an additional option to renew for a further period of 5 years from 30 June 2020 to 29 June 2025. The variation of lease also provided that, subject to a new cl 29, the permitted use included a convenience store and sub-newsagency. A new cl 31 provided for repayment of deferred rent (a reference it seems to the $11,500 amount the subject of the offer accepted by Mr Gupta), in the event that the second option was exercised.

Medical practice

40. An interim occupation certificate was issued for the premises on 11 October 2011 (Annexure F to Mr Gupta’s affidavit affirmed 7 June 2017); the then remaining work being described as “complete fitout of pharmacy” and “complete all painting”. From about late 2011, according to Mr Lubrano (see his affidavit sworn 7 April 2017 at [17]), Mr Gupta commenced to operate a medical practice as well as his pharmacy from the premises. At around that time, Mr Lubrano says he was pressing for a final occupation certificate from Mr Gupta (see his affidavit sworn 7 April 2017 at [15]). A final occupation certificate was issued on 4 November 2011 (Annexure R to Mr Gupta’s affidavit affirmed 17 March 2017).

Air conditioning

41. On 3, and then 5, October 2011, respectively, Mr Gupta forwarded to Fordham first a quote and then a revised quote for air-conditioning units in respect of the premises and seeking approval for the nature and scope of works in relation thereto (see his email 3 October 2011 (Exhibit 1, PML-1 66, PML-1 68)). Also in evidence (Annexure E to Mr Gupta’s affidavit affirmed 7 June 2017) is an email from Mr Gupta to Mr Lubrano dated 3 October 2011 with a quote from an electrician with reference to an item “Install digital antenna includes this quote” ($450) (although the quote which is in the annexure is dated 6 June 2017; this was not explained). Mr Lubrano (who is a chartered builder with university degrees in the fields of building and architecture – see his affidavit sworn 7 April 2017 at [3]), complains that the air conditioning compressor units that were installed in 2011 were not installed “properly or at all” (see his affidavit sworn 7 April 2017 at [21]). He also made complaint later, when the compressors were relocated externally, that this was done without consultation with him (see [34] of his affidavit sworn 7 April 2017). There was some confusion during the course of the evidence at the hearing as to the issue of the air conditioning. As I understand the position, Fordham’s complaint is that three air-conditioning compressor units (and an aerial) were installed on the roof of the premises without Council approval and in so doing the roof deck or sheeting had been penetrated; and also that three plastic condensate drainage lines had been mounted on the external brick wall and, it is said, were discharging onto the right of way which gives access to the rear of the premises (see Mr Lubrano’s affidavit sworn 7 April 2017 at [54]; [55]).

Further issues in relation to rent

42. The second rent review date was 30 June 2012. In accordance with the Lease terms, the rent was to increase by another 4%. By letter dated 21 June 2012, Mr Lubrano notified Mr Gupta that, following the second anniversary of the Lease, rent was $3,670.81 (per calendar month).

43. During the course of 2012, there was further correspondence in relation to outstanding rent from time to time (see Mr Lubrano’s affidavit sworn 7 April 2017 at [23]-[26]). Mr Lubrano subsequently provided Mr Gupta with a schedule calculating the outstanding rent as at 16 August 2012 at $16,680.70 (see Mr Lubrano’s affidavit sworn 7 April 2017 at [25]; Exhibit 1, PML-1 73). (Pausing here, it can be seen that, on Mr Lubrano’s calculations, if the security deposit that had been withdrawn by Fordham in 2011 were to have been applied to the then rental arrears there would have been no remaining arrears as at 16 August 2012, though then an issue as to whether there was an obligation to top-up or replace the security bond may have arisen. In these proceedings, Fordham concedes, however, that it did not then call for the $16,847.25 to be replaced by Mr Gupta – see T 51.42.)

Offer “not to apply” 4% rental increase for 2013/2014 year

44. On 4 July 2013, Mr Lubrano sent a handwritten facsimile transmission to Mr Gupta, advising that the outstanding rent was $10,660.68 and requesting payment (Mr Lubrano’s affidavit sworn 7 April 2017 at [27]; Exhibit 1, PML-1 75). In that communication, Mr Lubrano confirmed an offer “not to apply the 4% rental increase for the 13-14 year” (my emphasis) “provided you are fully paid up not later than the end of August 2013 and provided you make all payments due under the lease for the whole year” (Exhibit 1, PML-1 75).

45. The effect of that offer was in dispute in these proceedings (as was the question whether Mr Gupta had in fact satisfied both conditions of that offer). Relevantly, for present purposes, but for that offer, and in the absence of compliance with that offer, the rent payable under the Lease would have increased on 30 June 2013 to $3,817.64 per month. Hence, if both conditions attached to the offer were not satisfied, the rent would have been that amount.

46. Mr Gupta maintains that he complied with the above conditions for the “waiver” of the 4% rental increase: by paying (by 22 July 2013) all amounts due under the Lease for the period ending 31 August 2013; and by paying (by 29 June 2014) all amounts due for the period 30 June 2013 to 29 June 2014 (referring to the schedule at Exhibit 1, PML-1 206). Fordham did not at the time dispute this but now does.

47. Mr Lubrano emphasised in the witness box that this was a “conditional offer” (which Mr Gupta does not deny) and that the condition placed on the offer was not limited to the payment of all “rent” due, but applied to “all payments due”, which he says included the security bond (see T 47-50). While Mr Gupta did not, as I understand it, dispute that the conditions to which this offer was subject encompassed more than the payment of rent, his position is that he had made all payments due under the Lease for the 2013/2014 year and thus had satisfied the conditions for the “rent waiver”.

48. Whatever the position as at 31 August 2013, Fordham contends that, in the period between then and 29 June 2014, Mr Gupta again fell into arrears. By letter dated 5 April 2014, Mr Lubrano advised Mr Gupta that he was in arrears of $3,337.08 and that “[t]his means that you have risked your $1,832.47 concession”. Again on 10 June 2014, demand was made by Fordham for outstanding rent ($2,472.36) with a similar statement that Mr Gupta had “risked” his $1,832.47 concession. The monthly rent figure there referred to, for the period 1 October 2013 to 30 June 2014, was $3,817.64. From this it can be discerned that Fordham was proceeding (at least for the purpose of the arrears calculations) on the basis that the 4% “rent waiver” did not apply for the 2013/2014 lease year (whereas if the concession or rent waiver did apply then there would presumably need to be a revised calculation). Of course one difficulty with the conditions attached to the rent waiver is that one would not know until the end of the 2013/2014 lease year whether or not the waiver was in fact to apply. Hence, logically, Mr Gupta might have ended that lease year in arrears even though during the course of the year Fordham may have had no difficulty with payment of the lesser amount for rent – pending the anticipated satisfaction of the conditions. It is not clear how Mr Lubrano envisaged the retrospective rent waiver would operate in practice.

Sub-lease to Sonic Healthcare Ltd

49. On about 2 June 2014, Fordham signed (by way of consent to the sub-lease) a sub-lease dated 30 May 2014 between Mr Gupta and Sonic Healthcare Ltd (Sonic), which operated a pathology collection room within the premises alongside the pharmacy business at the rear of the medical practice (see Mr Lubrano’s affidavit sworn 7 April 2017 at [30]; sub-lease at Exhibit 1, PML-1 81).

Fourth rent review date

50. The fourth rent review date was 30 June 2014.

51. At this point the effect of the “non-application” of the 4% increase for the previous year becomes relevant – in other words, was the rent payable from 30 June 2014 for the 2014/2015 (final) year of the Lease $3,817.64 per calendar month (assuming both that the conditions of what Mr Gupta called the “rent waiver” were satisfied and that the 4% increase due on the 2014/2015 rent review date was to apply to the 2012/2013 rental amount) – i.e., $3,670.81 per calendar month plus 4%; or was the 4% increase to be applied to the $3,817.64 figure (which, but for the agreement not to apply the increase for the 2013/2014 year, would have been the monthly rent payable for that year and was the rent strictly payable under the Lease for 2013/2014), thus producing a rent for 2014/2015 of $3,970.35 per calendar month.

52. Various of the calculations prepared for Mr Gupta in these proceedings were based on the lesser sum ($3,817.64 per calendar month) being payable for the 2014/2015 year; whereas Mr Lubrano maintains that the rent payable for 2014/2015 was the higher amount ($3,970.35 per calendar month). (That issue arises, of course, only if the conditions precedent to the non-applicant of the percentage rent increase – the so-called “rent waiver” – were in fact satisfied.) The issue is of relevance not only in determining what were the actual arrears of rent (if any) from that point onwards but also when one comes to consider the commencement rent payable on the option lease commencing on 30 June 2015 (assuming exercise of the option was valid and Mr Gupta’s rights in relation thereto were not abandoned), for reasons which I will explain in due course.

53. By letter dated 13 August 2014, Fordham notified Mr Gupta that $6,640.11 (including GST) was payable for outgoings for the period 1 July 2012 to 30 June 2014. In accordance with the terms of the Lease referred to earlier, that outgoings amount was payable on the next rent day after the notice was given. It appears that this amount was duly paid.

Exercise of option

54. On 29 January 2015, Mr Lubrano sent a handwritten facsimile transmission to Mr Gupta, saying:

Although I have not recently made a reconciliation of rent and outgoings situations, Annette [Fordham] tells me she thinks you are up to date and so, I confirm agreement to your request to defer your next payment that would otherwise be due at the end of this month for a month.

There is no complaint now made about the deferral of that month’s rent, but Mr Lubrano has subsequently calculated the Lease payments and says that he was incorrect at the time and that Mr Gupta was in fact in arrears at that point. Nevertheless, at the time, Mr Lubrano accepted that Mr Gupta was not in arrears and Mr Lubrano deposes to having advised Mr Gupta during February/March 2015 that the time for him to exercise the option was approaching (see his affidavit sworn 7 April 2017 at [35]).

55. Pursuant to the terms of the Lease, the first option to renew was required to be exercised between 29 December 2014 and 29 March 2015. Within that time period, on 12 March 2015, Mr Gupta exercised the first option to renew the Lease, by forwarding an email to the email address of the second director of Fordham, Ms Annette Fordham, stating: “[t]his is to confirm my verbal request to you that I’d like to exercise my option to renew the lease at [the premises]…” (Exhibit 1 PML-1 92). Mr Gupta also expressed a wish to sub-lease the space currently occupied by the surgery and pathology to some other business – “preferably a dentist”. He said that the surgery and pathology were expected “to move across the street in the next few months”. Mr Gupta maintains that at that time (12 March 2015) he was not in arrears of rent and points out that Fordham had not served any notice to remedy any alleged breach of the Lease at that stage.

56. On 16 March 2015, Sonic forwarded to Mr Lubrano copies of notices of exercise of option under its sub-lease (see Mr Lubrano’s affidavit at [38]; Exhibit 1, PML-1 93).

57. By letter dated 23 March 2015, Fordham wrote to Mr Gupta acknowledging receipt of the notice of exercise of the option dated 12 March 2015 (Exhibit 1, PML-1 96). In that letter, which was signed by Mr Lubrano, there appeared the following:

Under the existing lease, which commenced 29 June 2010, the current rent is $47644.12 pa incl GST or $3970.35 pcm incl GST plus 34.3% of outgoings (approx. $3,500) making a total of $51144.00pa; and the security bond should be $18525.00 but we only have the original $16847.25 amount. [my emphasis]

Although the monthly rent for 2014-2015 is $3970.35 as above you have still been paying at the 2012-2013 rate of $3670.81. We calculate that for the rental up to and including 29 March 2015 you are in credit $83.55.

Therefore, your rental payments up to the end of your lease period will be 3 months @ $3970.35 = $11911.05 less $83.55 credit being $11827.50. In addition, your share of outgoings estimated to be approximately $3500 will be payable for the 2014-2015 year.

Having considered our improving relationship and your advice regarding the doctors and pathology service moving, we offer you a new 5 year lease starting at the same rate of $51144 pa including GST and there will be no contributions levied for outgoings. You must be responsible for your own waste removal, insurance, services and the proper care and maintenance of the garden square in front of shop 4. Annual increases will be at the rate of 4% and the Security Deposit will be increased to $19179.00 (an additional $2691.75).

We suggest that in the event that Sonic stay on, or you find a dentist as you propose or, another tenant suitable to both of us as a sub-lease, the rent will increase by 15% from the date of their occupation. This would mean that if Sonic exercise their option and pay you $39600 pa, we would benefit by $5940 pa while your net gain would be $33660.00. Alternatively, say you sub-leased the medical area to dentists for $18000 pa we would receive $3000 and you would retain $15000.

We hope that this offer is suitable to you. Upon receipt of your written acceptance we will instruct our solicitor to prepare a disclosure statement as required by the Retail Leases Act.

58. As adverted to above, in his affidavit Mr Lubrano has deposed that he has since recalculated the amounts and that his statement that Mr Gupta was in credit at the time of exercise of the option was incorrect ([39]). Those subsequent calculations (to which I will refer in due course) “incorporate the forfeiture of the $16,847.25 bond” and include a further $6,640.11 “as a result of the separate treatment of outgoings payments in [Fordham’s] accounting”; also, Mr Lubrano says that interest payments due on unpaid amounts due under the Lease were not included in his earlier calculations.

59. By reference to item 16 of Annexure A to the Lease, the new rent for the option lease (assuming a valid exercise of the option to renew for the further five year period) commencing on termination of the initial term of the Lease was to be determined using Method 3, i.e., current market rent.

60. It should be noted in this regard that Fordham’s 23 March 2015 letter was sent more than 60 days before the next rent review date of 30 June 2015 – the significance of this being that the rent was to be reviewed on that date using “Method 3” (the current market rent methodology). Under that method, either party could notify the other more than 60 days before the rent review date of what that party thought to be the current market rent – see cl 5.13. That could either be accepted by the other party or, failing agreement, there was a process for its determination by an expert valuer; but if the parties could not agree, or if neither party asked for a valuer to be appointed, before (relevantly) the passing of the next rent review date, the rent was to remain unchanged.

61. Although in Fordham’s letter of 23 March 2015, it was proposed that the new 5 year lease would be at the same “starting rate” of $51,144 p.a. including GST”, that figure was arrived at by treating the rent and outgoings as in effect a lump sum (i.e, rent of $47,644.13 p.a., plus outgoings of approximately $3,500). In fact the current rent as at 23 March 2015 was $47,644.13 p.a. Therefore, the figure proposed in the 23 March 2015 letter was not the rental figure that would strictly apply under the terms of the Lease if no new current market rent was agreed and no valuation had occurred by the next rent review date. (Of course, the terms there proposed also included that there be no contribution to outgoings and contemplated that additional rent would be payable if Sonic continued to occupy the premises or another sub-tenant was procured in relation to the premises, which, if applicable, would have increased the total rent payable. This seems to have been the nub of Fordham’s later complaint when it appeared that no sub-lease would be executed.) It also appears from this letter that Fordham was asserting that the rent payable for the final year of the Lease to be $3,970.35 per calendar month (which is consistent with there having been no rental waiver in the 2013-2014 year).

62. There was apparently no reply for some months to the letter of 23 March 2015, which led to a series of communications from Mr Lubrano, copies of which were in evidence but the receipt of which was denied by Mr Gupta (it being in effect suggested that those letters had been concocted after the event – something denied by Mr Lubrano).

63. By letter dated 27 May 2015 (Exhibit 1, PML-1 98), Mr Lubrano wrote to Mr Gupta (at the premises address) reminding him that the current lease would expire on 29 June 2015. On the copy of this letter there is a handwritten note at the foot of the letter, in what appears to be Mr Lubrano’s handwriting, stating “3/6/15 faxed … [with Mr Gupta’s fax number]”. Mr Gupta said in the witness box that he did not receive this letter (or indeed a number of the letters) at the time (T 31.21).

64. Whether or not Mr Gupta in fact received the 27 May 2015 letter, the relevance of there being no agreement between the parties 30 days before the next rent review date (30 June 2015) as to the amount of the new rent was that, in the absence of either party taking steps to appoint a valuer to determine the current market rent, cl 5.21 would apply such that the rent payable under the option lease (i.e., the new lease commencing on 30 June 2015) (assuming Mr Gupta had validly exercised the option and did not later abandon his rights in relation thereto) for the first year of that lease (i.e., the 2015/2016 year) would remain unchanged from the rent payable for the 2014/2015 year ($3,970.35 per calendar month or $47,644.13 per annum).

65. By letter dated 27 June 2015 (Exhibit 1, PML-1 99) addressed again to the premises and with a similar handwritten note at the foot (“29/6/15 & mailed”) (which Mr Gupta also denies receiving – T 31.47), Mr Lubrano noted that no reply had been received and stated:

It is our reading of the current lease document, that if there is no new lease when the current lease expires on 29th June 2015 and you wish to remain in occupation, as we expect you to do, then subject to our consent to that continuation, that the lease continues as a monthly tenancy, with either party having the right to give 1 months written notice, as per lease clause 12.4 attached.

Also, as provided in the rent schedule and clause 28.1 of Annexure B (attached) to the lease, we calculate the rent as at 30 June 2015 to be $50,026.33 pa payable at the rate of $4168.86 pcm in advance.

The letter went on to state “[w]e accept that you gave us Notice of Exercise of Option. We responded to that Notice but have received no reply”.

66. According to Mr Lubrano, between about 12 March 2015 and 30 June 2015 he had several conversations with Mr Gupta in which he told Mr Gupta, in effect, that if he wanted “to give effect to your exercise of your option, we will need to commit to a new lease by 29 June 2015” and Mr Gupta said he would talk to his solicitor (see Mr Lubrano’s affidavit sworn 7 April 2017 at [40]).

67. I interpose to note that the assertion by Mr Lubrano in the 27 June 2015 letter (which Mr Gupta denies receiving) to the effect that “if there is no new lease” when the current lease expires then (subject to Fordham’s consent) the Lease continues as a monthly tenancy, appears to assume that it was necessary for there to have been an executed lease in place by 29 June 2015. That involves a misapprehension on Mr Lubrano’s part as to the legal effect of a valid exercise of the option to renew the Lease (in that it does not take into account that the valid exercise of the option would give rise to a binding agreement for a new lease and, since all essential terms were agreed as at 30 June 2015 such that the lease would have been able at that stage to be the subject of an order for specific performance, an equitable lease i.e., the option lease would have come into existence at that stage). I address that issue in due course.

68. By letter dated 20 July 2015 (which, again, Mr Gupta says he did not receive and the copy of which, unlike most of the other correspondence, is not on Fordham letterhead – and which bears a handwritten note that Mr Lubrano says related to paragraph 1 of the letter and was to his solicitor saying “is this correct? OK 22/7”), Mr Lubrano stated: “[a]s you know, the current status of your tenure is only a continuation of occupancy under an expired lease because, while you gave Notice of Exercise of Option, you haven’t taken up the offer”. Fordham now accepts that, at least at that stage, the proposition that there was only a monthly tenancy in existence was incorrect.

69. I interpose here to note, in terms of the chronology, that there is reference in the evidence to the completion of the sale of the medical practice as of 21 August 2015 – see [92] below – though it is not clear that Fordham was aware of this at the time. Nor is it clear at what point the purchaser of the medical practice (Cristorae or a Mr Mike Broesel) commenced in occupation of part of the premises. This is, however, as I understand it, the alleged unauthorised sub-tenant of which Fordham has made complaint.

Negotiations in relation to the “new” lease

70. On 15 September 2015, Mr Gupta’s solicitors wrote to Fordham’s solicitors (Exhibit 1, PML-1 103), referring to a telephone discussion on 3 September 2015 and advising as to the former’s instructions. The letter set out six items, the first four of which were:

1.   There is to be a new 5 year Lease with commencing rental at the rate of $51,144.00 pa including gst with 4% annual increases.

2.   There will be no contributions levied for outgoings.

3.   The Lessee shall be responsible for own waste removal, insurance services and the proper care and maintenance of the garden square in front of the shop.

4.   Security Deposit will be increased to $19,179.00

71. The last two items in the letter (not extracted above) related to the position with the sublease (or proposed sublease).

72. Compared with the 23 March 2015 letter (see [57] above), it is apparent that at this stage the instructions that had been conveyed by Mr Gupta’s solicitors (as set out in items 1 to 4 above) amounted to an acceptance of what had been offered by Fordham in those respects in relation to the new lease. What was not, however, agreed were the proposed provisions in relation to the sub-lease (i.e., the proposal that the rent increase depend on the sub-lease situation).

73. The response from Fordham’s solicitors, dated 17 September 2015, was to note (as I have above) that the first four items were agreed. As to Item 1, it was also said:

1.   Agreed. Technically your client exercised an Option not consistent with this arrangement. The fact that has been relinquished [sic] will need to be recorded. [my emphasis]

Rent will need, we understand that it is currently in arrears, to be brought up to date.

Herewith a copy of a Schedule provided to us as at the 1st of September 2015 at which time we understand the amount outstanding was $4,773.94. No doubt the position will need to be reviewed.

74. The letter went on to seek details of the intended additional sublease and to state the lessor’s requirement that if there was more than one health care professional involved in the sublease as at 30 June 2016 or subsequently, the lease payments under the head lease were to increase by 10%. The letter also noted other requirements as to direct payment by the sub-lessee if the head rental was in arrears.

75. The Schedule of Lease payments said to be due as at 1 September 2015 (a copy of which was provided with the 17 September 2015 letter) showed amounts totalling $13,198.74, including amounts of $4,773.94 (referred to as “Total amount due – Old lease”) and $8,424.80 (“Total amount due – New lease”). The Schedule noted a $51,114 p.a. rental commencing 30 June 2015, being $4,259.50 per calendar month (Exhibit 1, PML-1 106). This is inconsistent with the 15 September 2015 letter, which referred to a rent commencing on 30 June 2015 of $51,144 p.a. ($4,262 per month). That was also the figure proposed in Fordham’s 23 March 2015 letter. The figure of $51,114 p.a. (which is $4,259.50 per month) seems likely therefore to be no more than a typographical error. As at 3 November 2015, Fordham advised that the rent for the current period was $4.259.50 (see below at [78]). Yet it appears that as at 11 July 2016, when Mr Gupta had been paying a monthly rent for 2015-2016 of $4,259.50, Fordham corrected him, saying that it was $4,262.00 (Exhibit 1, PML-1 159).

76. In any event, the significance of the 17 September 2015 date is that, at least by reference to Mr Gupta’s summons, Mr Gupta’s contention when these proceedings were commenced was that a binding agreement had been reached as at that date on the terms of the option lease. Initially, in these proceedings, he sought specific performance of that agreement. That is no longer his position – he now accepts that no binding agreement was reached in relation to the different lease terms that had been proposed (see below).

77. By letter dated 23 September 2015, Fordham’s solicitors wrote to Mr Gupta’s solicitors stating that their client (i.e., Fordham) had asked them to clarify one point relating to the increase by 10% – saying that this increase was to apply only to the portion of the premises occupied by the sub-tenant and that “It would appear that the parties will need to agree on the pro-rata relationship of the sub-tenancy to the whole” (Exhibit 1, PML-1 117). By this stage, it is not clear that any agreement (even in principle) had been reached between the parties as to the proposal that additional rent be payable by Mr Gupta by reference to any part of the premises sub-leased to another tenant.

78. By letter dated 3 November 2015 (Exhibit 1, PML-1 118) Fordham sent Mr Gupta (again addressed to the premises) a rent reconciliation – noting the amount owing to 29 June 2015 including outgoings of $4,733.94 plus rent due for 5 months from 30 June 2015 to 29 November 2015 at $4,259.50 per month, being $21,297.50, less payments made, leaving the sum of $7,851.68 said to be outstanding. The letter stated that more than a month had passed since any contact from Mr Gupta’s solicitors regarding the new lease and sub-lease; and that Fordham had instructed its solicitors “not to do anything further on the Leases until the overdue amount is paid”. Fordham required the lease payments to be brought up to date on or before 29 November 2015. (It appears that the amount claimed in this letter was paid by Mr Gupta on 5 November 2015 – see [80] below.)

79. By email dated 5 November 2015, Mr Gupta sent to Mr Lubrano (care of Ms Fordham’s email address) a request to allow inclusion of “pharmacist’s residence subject to Council approval” as a permitted use; and requesting, in relation to Fordham increasing rent “in case of number of Doctors increases”, that Mr Lubrano consider 31 December 2016 as the “trigger date for increase of rent to give the doctors [presumably a reference to the surgery and pathology that had been expected to leave the premises and move across the street – see [55] above] a reasonable time to build across the street and relocate” (Exhibit 1, PML-1 119). (This seems to signal an acceptance, at least in principle, at that stage of Fordham’s proposal that there be an increase in rent referable to a new sub-tenancy.)

80. By letter dated 9 November 2015, Fordham’s solicitors advised Mr Gupta’s solicitors that they had been advised that the positon as regards to rental had been brought up to date and that they were now in a position further to consider any request that they might receive from Mr Gupta’s solicitors “reflecting Mr Gupta’s instructions herein” (subject to the bringing up to date of the firm’s costs). The letter (Exhibit 1, PML-1 120) further stated that:

Our file was opened well over two months ago after your client purported to exercise an Option, possibly not validly as we understand there were probably arrears at the time, which has since been forfeited. [my emphasis]

There has been considerable correspondence with our client and with your firm subsequently, although no realistic progress has been made.

81. By facsimile transmission dated 23 December 2015, Mr Gupta’s solicitors responded to the 17 and 23 September 2015 letters, referring to further discussions between the respective clients and advising their instructions in relation to three items: first, that the permitted use was to be “Pharmacy and Medical Practice” but noting the lessor’s indication that, provided Mr Gupta obtained prior approval from the local Council, part of the premises may be used for the pharmacist’s residence; second, stating that Mr Gupta requested 2 x 5 year options following termination of the initial term; and, third, requesting “the date of effect of 10% extra rent from the Medical Practice” be changed to 31 December 2016 from 30 June 2016 (Exhibit 1, PML-1 126). There was no response to the suggestion by Fordham’s solicitors in the 17 September letter that the fact that the option had been “relinquished” needed to be recorded, nor to the assertion in the 23 September letter that the option had been forfeited.

82. The response to this (Exhibit 1, PML-1 127) from Fordham’s solicitors was that they would refer this to their client when, in effect, the tax invoice for their costs (submitted in early November 2015) was paid. Following this, by letter dated 7 January 2016, Mr Gupta’s solicitors advised that the tax invoice had been paid and stated that they looked forward to a response to their 23 December 2015 letter (Exhibit 1, PML-1 128).

83. Fordham’s solicitors’ response (by letter dated 12 January 2016) to the three items raised in the 23 December 2015 correspondence was to raise matters in relation to the first two (as to the first, pointing out an inconsistency between the proposed permitted use and the proposed application for a residence; as to the second, stating that the lessor was prepared to consider the requested options “upon the basis of your client’s advice that his bank is prepared to advance him a loan for the purpose of the dwelling provided these options are in place”). They advised that the third matter (the change to the date for the increased rent referable to the sub-lease) was not agreed (Exhibit 1, PML-1 129).

84. By letter dated 18 January 2016 (Exhibit 1, PML-1 130) Fordham’s solicitors again wrote to Mr Gupta’s solicitors, this time referring to an application they understood Mr Gupta was making with respect to the installation of air-conditioning plant on the roof of the premises. They said that “[i]f this matter proceeds, we are awaiting your response to our prior correspondence, then the new documentation will require your client to accept responsibility for all roof penetrations and for ensuring that they do not create maintenance of water leakage difficulties”. The letter referred to what was to happen to the air-conditioners at the end of the occupancy (either that they were to be removed with proper reinstatement – “with particular reference to roof penetrations” – or, if they were to remain with the consent of the lessor, that the lessor must be satisfied that there had been no further deterioration which might create maintenance problems). The letter further stated:

As you are aware the negotiations between the parties herein have been in progress for an unsatisfactorily long period.

On our instructions our client has indulged yours as regards various requests, varying from time to time over a lengthy period. It is now time to bring matters to a head.

85. The response to this, and to the earlier 12 January 2016 letter, by letter dated 4 February 2016 (Exhibit 1, PML-1 135) from Mr Gupta’s solicitors was that: Mr Gupta did not intend to pursue use of the premises for the pharmacist’s residence; Fordham was asked that it “please confirm 2 x 5 options”; and the lessor’s response in relation to item 3 (the date for the increase of rent referable to the sub-lease) was noted.

86. Fordham’s solicitors then responded (Exhibit 1, PML-1 136) by letter dated 10 February 2016, simply noting the first item, and stating in relation to the second and third items:

2.   You are doubtless aware that some time ago your client purported to exercise the Option under the existing Lease [registered dealing number].

The initial term terminated on the 29th of June 2015 and that Option, later forfeit, was for a further period of five years until the 29th of June 2020 with the last day for renewal being the 29th of March 2015. [my emphasis]

We are unsure as to whether you hold your own copy of this Lease but herewith copies of the first three pages for ease of reference.

Our instructions are to submit a new Lease on this basis, absent your raising anything with us in the interim.

As you will appreciate our comments in our letter of the 12th of January 2016 apply.

3.   The additional rent is to apply from the 31st of December 2016, as per previous correspondence, we are checking with our client to ensure that rental and any other outstanding matters are paid up to date, this being a pre-condition of the above.

87. By letter dated 22 February 2016 (Exhibit 1, PML-1 142), Fordham’s solicitors (finally, though I say this without criticism of either set of solicitors) forwarded “the new Lease” to Mr Gupta’s solicitors. In that letter they stated that: “[a]s you will recall your client initially purported to exercise the Option contained in the original Lease but subsequently resiled from having done so”. The letter referred to various changes, in that the lease “in fact provides for a longer term, because it itself contains an Option, subject to what follows”. It was noted that the lease generally followed the previous document although the form of expression as regards item 14 had been changed in some instances; the amount for insurance required had been increased “in line with contemporaneous Leases”; the amount of the security deposit had increased; and cl 27 had been altered. (In terms, therefore, this was not the option lease as provided for under cl 4.6 of the Lease.) There was reference to the separate correspondence in relation to a sub-lease. Reference was also made to the permission that Mr Gupta had sought to install air conditioning, which the solicitors said would be available, subject to the fulfilment of certain preconditions. Fordham’s solicitors stated:

Our client’s ongoing preparedness to enter into both this Lease and the proposed Sublease is dependent upon the overall position being satisfactorily clarified and finalised within 28 days of the date hereof.

88. The letter then set out various matters in relation to the lease terms. That letter was apparently forwarded (in error) in draft because on 24 February 2016 a “correct version” of the letter (still dated 22 February) was sent to Mr Gupta’s solicitors.

89. The response by Mr Gupta’s solicitors to those letters (by letter dated 15 March 2016: Exhibit 1, PML-1 145) expressed agreement to the form of proposed lease; indicated some amendments, including that Mr Gupta would not be liable for outgoings (consistent with the initial 23 March 2015 offer- see [57] above); and proposed a clause in relation to air-conditioning – providing for its removal at the end of the lease by the lessee and the repair of any damage caused by the removal. The letter also addressed various matters in relation to the sub-lease (including seeming instructions as to the surrender of the Sonic sub-lease with a single sublease with regard to the two areas in question and anticipating the need for a licence agreement between the medical practice and Sonic).

90. The proposed clause in relation to the air conditioning was rejected by Fordham’s solicitors. By letter dated 21 March 2016 they clarified (Exhibit 1, PML-1 148) that the air conditioning installed “some time ago” was not permitted to be removed and that there was a different issue as to the penetration of the roof. A different clause was proposed in relation to that issue. In that letter, Fordham’s solicitors requested that Mr Gupta’s solicitors submit the proposed sub-lease for Fordham’s approval.

91. By letter dated 31 March 2016, Fordham’s solicitors informed Mr Gupta’s solicitors that “the 28 days is up” (Exhibit 1, PML-1 150) (in its terms obviously a reference to the letter of 22 February 2016 with which the new lease had been forwarded to Mr Gupta’s solicitors – see [87] above). On the same day, there was a facsimile transmission from Mr Lubrano on Fordham letterhead to Mr Gupta stating that: “[t]he matter of whether there is or is not to be a new lease for Gupta has been going on for 11 months and is a fiasco”. (Mr Gupta did not, in the witness box, dispute that characterisation, accepting that it was a fiasco – T 30.50.)

Sale of the medical practice

92. In April 2016, Fordham received a communication forwarded from Mr Gupta in which reference was made to the completion, as of 21 August 2015, of a sale of the medical practice at the premises to Cristorae (with a reference to Mr Mike Broesel) “with lease documents to be finalised in due course thereafter” (Exhibit A, RG 80).

93. Fordham appears to have been on notice (if not from the April communication then at least as at May 2016) of Mr Broesel’s (or Cristorae’s) occupation of at least part of the premises – see Fordham’s letter dated 17 May 2016 (Exhibit 1, PML-1 155) addressed to Mr Broesel in which Mr Lubrano referred to “the long ongoing discussions” about the “unauthorised installation” of three air conditioning units, and to a suggestion having been made that Mr Gupta obtain retrospective development consent for those units (which, according to Mr Lubrano, Mr Gupta had not taken up). In that letter, Mr Lubrano proposed three options to address the air conditioning issue: that works be undertaken to the units and Fordham be indemnified against claims by another owner (apparently to address the a concern as to condensate discharges from the units); that Mr Gupta lodge a development application for the installation; and that the air conditioning units be removed and the building reinstated. (It appears that in due course the second option was taken, as Fordham later confirmed to the Council that it had consented to such an application (see Exhibit 1, PML-1 157A) and development consent was obtained on 23 August 2016 for the continued use of 3 air conditioning units located on the roof of the premises – see Notice of Determination subject to the condition there stated (Annexure P to Mr Gupta’s affidavit affirmed 17 March 2017) – but it is not clear if this approval encompassed the condensate lines on the extreme of the building.)

Matters come to a head

94. By letter dated 1 July 2016 (Exhibit 1, PML-1 158), Fordham’s solicitors advised Mr Gupta’s solicitors that:

…our client is now reaching the end of its tether.

If the outstanding matters are not attended to within 28 days then we intend to seek our client’s instructions to obtain vacant possession. As you would be aware your client is currently on a monthly tenancy. [my emphasis]

This seems to be the first communication directed to Mr Gupta’s solicitors in which the assertion that Mr Gupta was currently under a monthly tenancy was made, though as noted earlier, the assertion had been made in February 2016 – see [86] above – that the option was “forfeit”.

95. By letter of 11 July 2016 (Exhibit 1, PML-1 159) Mr Lubrano advised Mr Gupta as to the rent payments from 30 June 2016, namely that the 4% annual increase was from $4,262.00 to $4,432.48 per month and that: “[a]s you know, if the area you sublet is occupied by more than one individual practising as a health care professional after 30.6.16 then the rental for that area under the Head Lease is to increase by 10% which will become the base figure for future increases”. Certification from Mr Gupta’s lawyer (or a satisfactory statutory declaration) was sought that the sublet area was not occupied by more than one health care professional or, if the clause was triggered, the lessor sought prompt payment of the extra rent due. (I interpose to note that this letter is clearly written on the assumption that there had been agreement reached that the terms of the new lease would include an additional 10% increase in the rent if the medical practice “clause” was triggered – something that featured in oral submissions at the hearing, though if there was no binding agreement on the proposed new lease terms then this clause cannot have applied.) The letter concluded with a complaint as to the lack of response to the head lease communications, Mr Lubrano then stating “[t]he future of your occupancy is in your own hands”.

96. It appears that this correspondence may have precipitated some action on Mr Gupta’s part to finalise the lease arrangements, since, by letter dated 26 July 2016 (Exhibit 1, PML-1 160), Mr Gupta’s solicitors confirmed their client’s “request to proceed with execution of the lease notwithstanding the sublease arrangement has not been finalised”.

97. Fordham’s solicitors’ response of 4 August 2016 (Exhibit 1, PML-1 162) was that “[n]otwithstanding your client’s dilatoriness and failure to meet undertakings our client has persevered” and that “[w]e are now advised that Mr Gupta does not intend to proceed with the Sub-Lease originally proposed and which was intended to provide additional income to our client”. (It is not clear if this was something that had been communicated to Mr Lubrano directly or if this was the interpretation placed by Fordham’s solicitors’ on the request that execution of the lease be finalised notwithstanding the sublease arrangement had not been finalised – see [96] above). The letter also noted Fordham’s solicitors’ instructions that Mr Gupta was in arrears of rent and that the arrears should be brought up to date within 14 days, stating that “[o]ur client will then further consider its position”.

Whether Mr Gupta is ready and willing to perform

223. A plaintiff for specific performance must show “that he has performed or been ready and willing to perform the terms of the contract on his part” (Mehmet v Benson (1965) 113 CLR 295 at 314-315; [1965] HCA 18 (Windeyer J)). This threshold question arises because Mr Gupta has committed a number of breaches of his obligations as a lessee in the past. It is important to observe that specific performance has been granted in cases where inessential breaches have already taken place on the part of the plaintiff (see ICF Spry, The Principles of Equitable Remedies (9th ed, Lawbook Co, 2014) 225). For this reason, Spry suggests that past breaches are “merely relevant considerations in the exercise by the court of its discretion, especially where questions of hardship arise”. Although his past breaches of obligations in relation to the tenancy have not been inessential breaches, I do not consider it can be said that Mr Gupta is not ready and willing to perform his obligations in future.

224. Applying what I consider to be the correct accounting between the parties (that is, not crediting the $6,167 deposited in March 2010 as against rent but applying the $16,847.25 towards rent owing as at March 2011), Mr Gupta has in fact been in credit of rent for most of his tenancy. The exception is the period from the commencement of the Lease on 29 June 2010 until 21 March 2011, when very irregular payments of rent were made. The arrears amounted, at the end of that period, to as much as $12,479.60. As I have outlined above, this precipitated the lessor’s application to the Administrative Decisions Tribunal and application for the security bond. I consider below the allegations in relation to the other particular breaches of the Lessee’s obligations in relation to the tenancy. Taking the circumstances as a whole, while I accept that there have been issues in the landlord/tenant relationship between these parties and that Mr Gupta was, in 2011, in significant arrears of rent, I would not infer from this that Mr Gupta is not now ready willing and able to honour his obligations under the option lease going forward. As to the other claimed breaches, I am not persuaded that even those that are made out should disentitle Mr Gupta to relief by way of specific performance.

Discretionary considerations

225. First, I should note that I am not satisfied that there has been such delay in the enforcement of the option lease as to amount to laches. Mr Gupta was not denying that there was an agreement for lease (or option lease); he was, albeit with notable delay from time to time, responding to and proposing additional terms of the new lease under which he was to occupy the premises from 30 June 2015.

226. I have considered the issue of abandonment already. As for the remaining points of distinction sought to be drawn by Fordham, this is a case where, although for a time Mr Gupta was asserting that agreement had been reached as to the terms of the “new” lease, by the time of the hearing it was accepted that there was no binding agreement reached as to the additional/different terms. I accept that Mr Gupta did not expressly reserve his right to enforce the option lease as such. Nevertheless, I consider that the proper characterisation to be placed on the negotiations is that the parties were seeking to agree additional terms of their lease going forward. The negotiations were premised on there having been a valid exercise of the option. In those circumstances I do not consider that the second of the factual distinctions drawn by Fordham to be of significance.

227. True it is that it would have been a simple matter (and far more prudent) for Mr Gupta to have made clear that what he was seeking to negotiate were additional or different terms of the option lease but that, absent agreement as to those terms, he would rely on the option lease as provided for under the Lease. By the same token, it would have been a simple matter for Fordham (and likewise more prudent) to make clear what Mr Gupta’s position was in the event that agreement could not be reached on the last iteration of the proposed terms before terminating the tenancy (and risking being said to have repudiated the option lease). Neither, however, took such a course.

228. Insofar as Mr Gupta has alleged that Fordham “has waived any entitlement to rely upon any of the other alleged breaches of the Renewed Lease set out in the amended cross-claim which are denied, by its continued acceptance of rent and outgoings that Mr Gupta has proffered pursuant to the Renewed Lease and Equitable Lease” (see his submissions at [34]), I accept Fordham’s submissions that there has been no such waiver for the following reasons.

229. First, that any election would disentitle Fordham only from exercising a right to terminate, not to rely on breaches as giving rise to damages or relevant to equitable relief. Fordham submits, and I accept, that the doctrine of election precludes the alternative course of action when some conclusive step securing one outcome is taken in a way that is incompatible with attainment of the alternative outcome (Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 29 at [361]). In the Tim Barr case it was not the breach that was held to be waived; it was the lessor’s right to forfeit and re-enter (Tim Barr at [373]). Fordham also points to cl 19 of the Lease in this regard.

230. Second, as Fordham submits, acknowledgment of a monthly lease does not constitute an election to waive any rights to terminate. Fordham refers to Baby Zone (Aust) Pty Ltd (Administrators Appointed) v Keira Street Ventures Pty Ltd [2016] NSWSC 528 at [75]-[77], where Robb J held that a lessor which agreed to allow its tenant to continue in occupation of the property on a monthly tenancy had not waived any rights to terminate.

231. Third, as Fordham submits, (on the assumption that Mr Gupta in fact holds an equitable lease, which I have in fact found to be the case), any acceptance of rent before Fordham issued its s 129 notice cannot effect a waiver because before that point Fordham did not have an unconditional right to forfeit and re-enter; and that no waiver can occur after Fordham issued its s 129 notice, because by that point it was already prosecuting its claim to be entitled to terminate in these proceedings. (Fordham refers in this regard to McDrury v Luporini [2000] 1 NZLR 652, and to what was said by Barrett J (as his Honour then was) in Tim Barr at [374]-[379]; and in South Australia in Hemer Pty Ltd v Benni [2011] SASCFC 35 by Doyle CJ (Sulan J agreeing) at [58]-[60]).

232. Fordham also argues that such a result also follows by reference to cl 12.2 of the Lease (which gives a right of termination for failure to comply with a s 129 notice (cl 12.2.3) as an alternative to the right to termination for repudiation or failure to pay rent (cl 12.2.1 or 12.2.2)). In that context, Fordham refers to Byron Bay Retirement Villages Pty Ltd v Zandata Pty Ltd at [32] where it was recognised that the lease itself can provide that acceptance of rent after knowledge of a breach does not constitute an election (though Palmer J did not consider that to be the case on the facts before him). It is not necessary here to determine that issue – suffice to note that Palmer J’s obiter dicta referred to an “express contract between the parties”, and cl 12.2 does not in terms make provision of that kind as referred to in the Byron Bay case.

233. A relevant discretionary consideration would be the question of any hardship to the lessor (Spry, The Principles of Equitable Remedies, 227):

The degree of hardship that leads to a refusal of relief depends on the extent to which the recovery of damages for breach of the non-essential term in question provides an adequate recompense and on other discretionary considerations. So it may be, for example, that the defendant will be adequately protected if a condition of the grant of relief is the payment of interest by the plaintiff.

234. This question must be approached on the basis that, if damages are inadequate, an applicant is prima facie entitled to specific performance of a valid and enforceable contract (The Principles of Equitable Remedies, 204; Fullers’ Theatres Ltd v Musgrove at 548-549). Fullers’ Theatres was a case where “both parties [had] adopted inconsistent attitudes” (550). A question of hardship arose because the plaintiff lessor (who sought specific performance) had acted with particular inconsistency, pursuing a damages action, then an ejectment action, and then a specific performance suit. The High Court held that specific performance ought to be refused. Isaacs and Rich JJ observed that, both parties being at fault, they should be left “to whatever remedy they have at law” (see at 551). The present is not such a case. Although both the lessor and the lessee have been to blame, in my opinion, at various times for the difficulties between them, there is no particular reason why responsibility should be attributed primarily to Mr Gupta; and I am of the view that the impact of a refusal of specific performance upon him would be far more severe than the corresponding impact of imposing an order for specific performance upon Fordham.

235. As to Fordham’s other arguments in relation to discretionary considerations, I do not accept that Mr Gupta should here be precluded from the relief he seeks by having followed the exercise of the option with negotiations for a new lease, which presupposed a lease on different terms, and which negotiations were conducted with delay. I consider later in these reasons the conditions that should be attached to the order for specific performance.

(iv)   Relief against forfeiture

236. This issue does not arise in view of the conclusions reached above. I have concluded that after 30 June 2015 Mr Gupta continued to occupy the premises under the terms of the option lease, by reason of the exercise of the option. That option lease could have been terminated by the service of a demand for possession under cl 12.2 of the Lease. A notice under s 129 of the Conveyancing Act, dated 2 May 2017, was served on Mr Gupta, outlining, in essence, the breaches which are the subject of the cross-claim in these proceedings, and requiring him to remedy those breaches. However, as at the date of hearing the matter, no notice demanding possession under cl 12.2 of the Lease had been served. Therefore, it is not necessary for me now to address Mr Gupta’s claim for relief against forfeiture. In any event, it will be apparent from my conclusions on the cross-claim (to which I shall turn shortly) that all Mr Gupta’s breaches can be addressed by the payment of damages and the other orders which I propose to make. Fordham’s submission was that if it succeeded in its contention that Mr Gupta was occupying the premises only pursuant to a monthly tenancy, then concepts of relief against forfeiture would have little, if any, relevance (referring to New Dragon Investments Pty Ltd v Morgan & Banks Development Pty Ltd [2006] NSWSC 1139 at [5]; Bettervale v Warehouse Solutions International (No 3) [2015] NSWSC 1356 at [324]-[330]). I agree, but I have concluded that Mr Gupta did not abandon his rights under the agreement for lease that came into existence on exercise of the option and hence he is occupying under the option lease.

Fordham’s submissions

237. On the assumption (as I have found) that Mr Gupta is occupying the premises pursuant to the option lease, the terms of which mirror the terms of the original Lease, the question is whether Fordham ought to be restrained from terminating the option lease. Fordham argues that Mr Gupta’s breach of the terms of the option lease is again relevant. Fordham accepts that where there has been a breach or breaches by a lessee that have been or can be cured, and if the lessee can make up arrears (if any) and continues paying rent, then a court of equity has a discretion to grant relief against forfeiture; and that, in this context, “forfeiture” includes a lessor’s entitlement to terminate, as well as an actual attempt to do so (referring to Mineaplenty Pty Ltd v Trek 31 Pty Ltd [2006] NSWSC 1203 at [66]). Fordham also accepts that, in resisting a claim for relief against forfeiture, the lessor is not entitled to rely on any ground that could have been the subject of a s 129 notice but in respect of which no such notice was given (Mineaplenty Pty Ltd v Trek 31 Pty Ltd at [68]) other than where the breach is non-payment of the rent. In that context it notes that it has issued a s 129 notice in respect of the alleged breaches.

238. Fordham notes that factors relevant to the exercise of the discretion include: whether the breaches have been wilful and repeated (Pioneer Quarries (Sydney) Pty Ltd v Permanent Trustee Co of NSW Ltd (1970) 2 BPR 97,145); whether the relationship between the landlord and lessee has been combative (Batiste v Lenin [2002] NSWCA 316 at [63]); whether the tenant admits the alleged breaches (see Mineaplenty Pty Ltd v Trek 31 Pty Ltd at [69]); and notes that, where the lessee’s breach is other than failure to pay rent, then final relief will generally only be granted if that failure is made good (Wilkinson v S & S Gikas Pty Ltd [2006] NSWSC 1314 at [30] per Campbell J).

239. Fordham points to the fact that Mr Gupta has not sought to offer any positive defence or explanations to the various allegations put by Fordham; and has not undertaken to remedy his default if established (see Mineaplenty Pty Ltd v Trek 31 Pty Ltd at [69]); but has simply denied the various breaches.

240. Insofar as Mr Gupta has alleged that Fordham, in continuing to accept rent, has irrevocably elected to affirm the lease (in his defence to cross-claim at [22(a)], [24(a)], [31(a)], [40(a)], [43(a)], [45(a)], [47(a)], [49(a)], [56(a)]), Fordham submits that there is an incongruity in Mr Gupta arguing that the Court should exercise its discretion to relieve against forfeiture on the basis that Fordham’s resort to its strict legal right of re-entry would be unconscionable; and at the same time arguing that Fordham, in not taking steps earlier to terminate Mr Gupta’s lease, has now irrevocably elected to affirm the lease.

241. Fordham submits that it has at various points throughout the dispute complained of Mr Gupta’s conduct as lessee and, since September 2016, has taken steps to terminate Mr Gupta’s occupancy of the premises. In those circumstances it submits that its past forbearance in not taking steps to remove Mr Gupta earlier is a matter that should count against the exercise of a discretion to relieve against forfeiture in Mr Gupta’s favour.

Mr Gupta’s submissions

242. Mr Gupta submits that the option lease arising from the specifically enforceable exercise of the option continues even if the monthly tenancy has been determined (referring to Lolly Pops (Harbourside) Pty Ltd v Werncog Pty Ltd at 16,383). Mr Gupta argues that the notices of termination were not effective to terminate the equitable lease and hence there is no forfeiture against which a claim for relief would arise.

Determination as to issue (iv)

243. Had the issue of relief against forfeiture been necessary to determine in the context of a monthly tenancy only, I would have considered it futile to grant relief against forfeiture in circumstances where the tenancy could be determined (without any question of breach) on a month’s notice. As to whether relief against forfeiture ought be granted against termination of the option lease, if it were necessary to decide I would grant relief against Fordham. The background against which the rent reconciliation was disputed between the parties is a relevant factor to take into account as is the fact that any relief would be conditioned on the making good of any default. The arguments raised in this regard do not, however, need to be determined in light of the conclusions reached earlier to the effect that Mr Gupta is no longer in arrears in relation to his tenancy of the premises (and any other existing breaches will be required to be made good).

(v)   Damages claim

244. Fordham has alleged that Mr Gupta is in breach of a number of obligations under the Lease and option lease. It relies upon all of them to establish a pattern of Mr Gupta breaching his obligations under the Lease and option lease.

Rental, outgoings and security deposit

245. First, Fordham alleges that Mr Gupta is in breach of his obligations to pay rent and outgoings, and to reinstate the security deposit. It relies in this regard on the table that was prepared by a chartered accountant (Ms Montgomery), on the instructions of Mr Lubrano (which is attached as a schedule to the amended cross-claim). The methodology of preparation of the table was explained in affidavits of both Ms Montgomery and Mr Lubrano (see his September affidavit). Mr Gupta denies that he is in breach. I have addressed above the assumptions on which any rent reconciliation should be carried out. The effect of my findings in relation to the $6,167 and the $16,847.25 amounts is that Mr Gupta was in credit on his rental account from March 2011 onwards up to the time of the hearing.

246. As to the complaint made in the course of proceedings about the failure of Mr Gupta to pay the 10% uplift in relation to the medical practice, there is no basis for this in circumstances where final agreement was not reached on that term of the proposed new lease.

247. In light of the conclusions I have reached, it is not necessary for me to consider the plaintiff’s obligation to pay interest on outstanding amounts; nor the estoppel or waiver arguments raised by Mr Gupta in this regard.

248. Had that issue been necessary to determine, I would have concluded that this is not a case where Fordham waived its right to charge interest. In March 2011, shortly before lodging its application to the Administrative Decisions Tribunal, Fordham claimed interest (see letter dated 21 March 2011 at Exhibit 1, PML-1 33). It is true that, since that time, though there has been regular correspondence relating to rent arrears, Fordham has not claimed interest from Mr Gupta. For example, there was correspondence on 5 April 2014 at Exhibit 1, PML-1 77 (stating the arrears to be $3,337.08); on 10 June 2014 at Exhibit 1, PM,L-1 87 (stating the arrears to be $2,472.36); on 17 September 2015 at Exhibit 1 PML-1 104 (stating the arrears to be $4,773.94) and on 3 November 2015 at PML-1 118 (stating the arrears to be $7,851.58). None of those communications referred to interest.

249. Further, even if, as a matter of principle, the right to pursue arrears without interest is capable of being characterised as inconsistent with the right to pursue arrears with interest, I do not consider that there is "clear evidence" (see JW Carter, Carter on Contract (LexisNexis, 2017), [7.190]) that Fordham elected, purely by its conduct, the right not to charge interest in favour of the right to pursue Mr Gupta for arrears with interest.

Unauthorised sublease

250. Fordham argues that there does not appear to be any real dispute that Mr Gupta subleased part of the premises to Cristorae without the necessary approval from Fordham. Fordham points to evidence that it repeatedly sought that the sub-lease be submitted for its approval, in accordance with Mr Gupta’s obligations under the head lease (Exhibit 1, PML-1 149; PML-1 153).

251. Fordham points to Mr Gupta’s response (in his defence) that Fordham was aware that he had entered into the sub-lease (defence to cross-claim at [24](a), (b); affidavit of Mr Gupta affirmed 7 June 2017 at [2]). In oral submissions (T 54.35), it was said:

Can I say this about the 10% for the sub tenancies, it was plain from the first offer on 23 March and the correspondence thereafter, that a term for any new lease had to include the 10% uplift for the area occupied by a subtenant or if there was more than one medical professional. We know for example, that Douglass Hanly Moir were in occupation for some 7 months and [Cristorae] have been in occupation until last week, and there’s been no accounting. My learned friend would say there’s no demand made, Mr Lubrano knew about it, didn’t do anything about it. At the same time, Mr Gupta says, “Yes I want a new lease and my solicitor has agreed to a 10% uplift”. That’s a long time before now when he agreed to that, and the obligation remains outstanding.

252. Since it is accepted by Fordham that there was no binding agreement as to the different terms proposed for the new lease (i.e., no binding agreement for a variation of the terms of the option lease), there was no obligation on the part of Mr Gupta to pay the 10% uplift. As such, the only relevance of the occupation of part of the premises by the sub-lessee is the breach of an obligation for approval to be obtained for any sub-lessee. That point is now moot if, as Counsel for Fordham appeared to accept, Cristorae has already vacated the premises. If there is any doubt about that, or if the premises are presently occupied by any (unapproved) sub-tenant, then Mr Gupta should seek Fordham’s approval and submit any intended sub-lease for approval without delay.

Air-conditioning defects and aerial

253. As noted earlier, there are three complaints made in relation to this topic. First, Fordham alleges that in around February 2015, Mr Gupta relocated air-conditioning compressor units onto an external wall without Fordham’s consent or relevant development approval (see Mr Lubrano’s affidavit sworn 7 April 2017 at [19]-[22], [34]; contemporaneous photographs at Exhibit 1, PML-1 123 – PML-1 125). Second, that in around November 2015, Mr Gupta (or Cristorae) installed three air conditioning compressor units on the roof of the premises, the installation of which is said to have penetrated the roof sheeting of the premises. Those units are said to be causing discharge of condensate onto a neighbour’s premises by reason of the condensate lines having been placed on the exterior walls of the premises (see Mr Lubrano’s April affidavit at [54]-[55], [59], [65]; Exhibit 1, PML-1 123 – PML-1 125; and evidence of complaints at Exhibit 1, PML-1 130, PML-1 132; PML-1 148; PML-1 155). Third, there is complaint that Mr Gupta installed an aerial on the roof of the premises, the installation of which also penetrated the roof sheeting of the premises. Fordham notes that Mr Gupta’s response to this is that he sent Mr Lubrano a copy of a quote for the installation (see Annexure E to Mr Gupta’s affidavit sworn 7 June 2017 and see [41] above).

254. Insofar as the complaint is that development approval was not obtained, and it has now been obtained, the issue has been resolved. As to any penetration to the roof sheeting, Mr Gupta should be required to pay for its rectification. If Fordham maintains its opposition to the installation of the roof aerial then that should be removed by Mr Gupta and the roof rectified. It is not clear whether Fordham maintains its complaint as to the existence of the three air-conditioning units on the roof (for which Council approval seems not to have bene obtained). The estimated cost of those items (according to the cross-claim) seems to total $10,000 – see prayers 2(d)-(f). (A separate claim for the rectification of condensate lines, at a cost $1,000, had been removed from the amended statement of cross-claim.) Mr Gupta should be required to rectify those matters (or, at Fordham’s election, to pay the sum of $10,000 in damages to permit Fordham to rectify the problems) and should indemnify Fordham for any claims by neighbours in relation to the condensation discharge.

Fire extinguishers

255. Fordham alleges that Mr Gupta has failed to maintain a compliant fire extinguisher on the premises (see Mr Lubrano’s affidavit sworn 7 April 2017 at [89]-[96]). Fordham says that, insofar as Mr Gupta’s response is that he does not recall that being an issue for Fordham over the years (see Mr Gupta’s affidavit affirmed 17 March 2017 at [21]), this misses the point: it is Mr Gupta’s responsibility to maintain the fire extinguishers on the premises and he failed to do so. Mr Gupta should be directed to rectify this breach.

Disabled car space

256. Fordham alleges that Mr Gupta has failed to provide for a disabled car space within the parking area, and maintain the line-markings for the parking area so as clearly to delineate the car space (see Mr Lubrano’s affidavit sworn 2 May 2017 at [11]-[14]). Fordham estimates that the cost of rectification of the disabled car park space and line markings in the car park area is $2,000. Again, if this breach has not been remedied then Mr Gupta should now be required to rectify it or, at Fordham’s election, pay the sum of $2,000 in damages for the breach.

Redecoration and reinstatement

257. The complaint in this regard is that Mr Gupta has not redecorated or reinstated the premises to its original open-plan layout since (respectively) March 2015 and June 2015 (see the amended statement of cross-claim at [50], [57]). Fordham accepts that whether the obligation to reinstate has been triggered is largely dependent on whether Mr Gupta is currently entitled to an equitable lease, by virtue of his exercise of option (referring to cl 28.1.5 of Annexure A of the Lease) but says that Mr Gupta’s obligation to redecorate is in a different category to the reinstatement obligation, as it does not have a proviso for occupation under a new lease, and is expressed to arise at the end of “the lease period (however it ends)” (see cl 7.3.3 of the Lease).

258. Fordham notes that the lease period of the Lease has ended (cl 12.1) and that, even on Mr Gupta’s case, he is occupying the premises pursuant to a new lease arising as a result of the exercise of the option, not an extension of the original lease.

259. The cost of redecoration is estimated to be $4,300. Mr Gupta should either comply with the obligation to redecorate or, at Fordham’s election, pay the amount claimed by way of damages for the breach of that obligation. However, I conclude that the obligation to reinstate the premises to open plan layout has not yet arisen given the conclusions I have reached in relation to the option lease.

Signage

260. Fordham alleges that Mr Gupta placed signage on the premises without Fordham’s consent and without providing Fordham with a signage plan as required under the Lease. Mr Gupta’s response is that Fordham did not raise the need for a signage plan (see Mr Gupta’s affidavit affirmed 17 March 2017 at [10]). If this remains in issue, Mr Gupta should provide Fordham with the necessary signage plan for its approval.

Occupancy and occupancy certificate

261. Fordham notes that it was a requirement under the Lease that Mr Gupta provide Fordham with an occupation certificate from Camden Council and that Fordham requested that Mr Gupta do so (see Mr Lubrano’s affidavit affirmed 7 April 2017 affidavit at [15], Exhibit 1, PML-1 59). This breach appears to have been remedied.

Insurance coverage

262. Finally, complaint is made that Mr Gupta has provided no evidence of insurance coverage. Fordham points to the requirement under the Lease for Mr Gupta to maintain required insurance coverage and to provide Fordham with the certificates of currency and, on request, the policies of insurance. Mr Lubrano’s evidence is that he has made requests for such documents (see his affidavit sworn 2 May 2017 at [9]-[10]; Exhibit 1, PML-1 90A). Mr Gupta should be ordered to produce such documents.

Conclusions

263. For the reasons set out above, I am of the opinion that Mr Gupta, by engaging in negotiations as to varied terms for the lease to be entered into following exercise of the option did not abandon his entitlement to take a lease on the terms of the option lease and that, as at the time of issue of the notices of termination, he occupied the premises on the terms of an equitable lease (the “option lease”) arising as a consequence of the exercise of the option.

264. Notwithstanding the various disputes between the parties as to the outstanding rental and the other breaches of lease of which Fordham has complained, I accept that Mr Gupta is now ready, willing and able to perform the option lease (i.e., a lease on the terms provided for under the option clause in the expired Lease, cl 4.6; not a lease on the terms that were the subject of negotiation between the parties during the course of 2015 and 2016). The commencement rent for that lease was, in light of the failure of the parties to seek a market review at the relevant time, the rent payable at the expiry of the Lease (i.e., $3,970.35 per calendar month). However, given the lapse of time there will have been a 4% increase of rent applicable on the subsequent rent review dates.

265. Fordham will be required to execute the option lease within 28 days.

266. As to the damages claim, I find that the payment prior to the entry into of the Lease was an earnest for performance and not a payment on account of rent and thus should not be taken into account when determining any arrears of rent. As to the security bond, it must be treated as a credit towards rent in March 2011. Fordham could not both call upon the rental bond by reference to the rental arrears and then treat those arrears as not having been discharged by the security bond. Its position has been both to call upon the bond and maintain its claim to the rental arrears (at the same time arguing that there is a requirement to top up the security bond). It cannot maintain that there is an obligation to top up the security bond in the absence of a clause in the Lease requiring that to be done and when the bond is still being treated as being held as security. Conversely, it cannot have the benefit of calling upon the bond and treat the arrears as not having been discharged. Therefore, as noted earlier, I have concluded that accounting between the parties should be adjusted by crediting towards rent as at March 2011 the amount of $16,847.25.

267. As to the effect of the waiver of rent, I have found that the conditions for that waiver of rent to operate were satisfied, meaning that the rent percentage increase otherwise applicable from 30 June 2013 to 29 June 2014 did not apply and rent for that year should be calculated at $44,049.67 p.a. However, from 30 June 2014, the rent payable was that which was provided for under the Lease, without reference to the rental waiver, i.e., $3,970.35 per calendar month or $47,644.13 p.a.

268. As to the other claims made in the cross-claim, on my rough calculations there is an amount of about $10,000 payable in relation to the air-conditioning issue (depending on whether Fordham now requires the removal of any of the air-conditioning units or aerial); $2,000 for disable car park space signage, and $5,000 for redecoration costs. This amount should be finally quantified and (at Fordham’s election) either those defaults should be remedied or the amounts claimed in relation thereto should be paid. So far as possible the parties should move forward with a clean state and a clear understanding of their respective rights and obligations under the option lease now to be specifically performed.

269. As to costs, I am inclined to the view that Fordham should pay Mr Gupta’s costs of the proceedings, given that Mr Gupta has had a large measure of success on this claim, without which he would not have been able to retain his occupancy of the premises. However, if the parties wish to make brief written submissions on that issue I will fix a timetable for that to occur when these reasons are published, with a view to determining the issue on the papers.

Orders

270. For the above reasons I make the following orders:

1. Declare that the binding agreement for lease that came into existence on 30 June 2015 following the valid exercise by the plaintiff on 12 March 2015 of the option contained in registered lease No AF722335 (“the Lease”) of premises known as Shop 4, 54-60 Flinders Avenue, South Camden (“the Premises”), has not been abandoned or relinquished by the plaintiff.

2. Order that the defendant specifically perform the said agreement for lease in relation to the Premises, by providing to the plaintiff within 28 days a lease, for execution by the plaintiff, on the terms provided for under the option clause in the Lease (cl 4.6) with a commencement date of 30 June 2015 and at a commencing rental of $47,644.13 per annum.

3. Order (2) is subject to the provision by the plaintiff to the defendant, within 21 days of a written undertaking by the plaintiff to rectify the breaches of lease referred to in these reasons and the subject of order (4) below; and to indemnify the defendant for any claim by any other tenant in the shopping centre of which the Premises form part in relation to condensate discharge from the lines on the external walls of the building.

4. On the cross-claim, order as follows:

1. Order the plaintiff to rectify any damage to the roof sheeting caused by the installation of air conditioning units and/or an aerial on the roof of the Premises or (at the election of the defendant) to pay the defendant the sum of $10,000 for removal of those items, the relocation and re-gassing of the air conditioning units, and the removal and replacement of the roof sheeting.

2. Order the plaintiff to indemnify the defendant against any claim by any other tenant in the shopping centre of which the Premises form part in relation to condensate discharge from the external air conditioning compressor lines.

3. Order the plaintiff to take all necessary steps to install and maintain compliant fire extinguishers on the Premises as required by the Lease.

4. Order the plaintiff to comply with the requirements under the Lease for provision and maintenance of line-markings for disabled car spaces or (at the election of the defendant) to pay to the defendant the sum of $2,000 in relation thereto.

5. Order the plaintiff to redecorate the Premises in accordance with cl 7.3.3 of the Lease or (at the election of the defendant) to pay to the defendant the sum of $4,300 in relation thereto.

6. Order the plaintiff to provide the defendant within 21 days (if he has not already done so) with a signage plan for the premises.

7. Order the plaintiff to produce to the defendant within 21 days (if he has not already done so) evidence of his insurance coverage as required under the Lease.

8. Order the plaintiff (if any part of the Premises is presently occupied by any unapproved sub-tenant) to submit to the defendant a copy of the sub-lease for the approval of the defendant.

9. Otherwise, dismiss the cross-claim.

5. Reserve the question of costs to be dealt with on the papers.

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Amendments

02 May 2018 - [162] - typographical

[166] - 1978 to 1976

[188] - 1980 to 1986

[195] - Walton Stores to Waltons v Maher

[233] - typographical

Decision last updated: 02 May 2018