Merhi v New Quay Stage 2 Pty Ltd

[2003] VSC 190

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 5899 of 2003

CLAUDIA MERHI AND JOUMANI ALI	Plaintiffs
v
NEW QUAY STAGE 2 PTY LTD (ACN 086 482 644)	Defendant

---

JUDGE:	COLDREY J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	23 MAY 2003
DATE OF JUDGMENT:	23 MAY 2003
CASE MAY BE CITED AS:	MERHI & ANOR v NEW QUAY STAGE 2 PTY LTD
MEDIUM NEUTRAL CITATION:	[2003] VSC 190

---

Relief from forfeiture of a lease – Rent tendered – No exceptional circumstances requiring forfeiture – Relief granted.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr Gillies
For the Defendant	Mr Burns

HIS HONOUR:

1. This is an application brought by Claudia Merhi and Joumani Ali seeking, inter alia, relief from forfeiture of a lease entered into with New Quay Stage 2 Pty Ltd, the defendants to the summons.  The affidavit material and the attached exhibits set out the lease and its terms and I do not need to refer to them. 

1. It appears that the lease entered into by the plaintiffs had provision for a rent-free period commencing on 22 November 2002.  It is now said that such a rent-free period was dependent upon the payment of a security deposit, which was not paid.  I do not intend to go into the various matters raised by Mr Gillies in relation to possible flaws in the lease document itself, because, as he made clear, whatever the exact situation might have been in relation to any rent-free period and security deposit, the plaintiffs are prepared, without cavilling, to make the payments of arrears particularised in the notice provided to the Court by the defendant.  The total of arrears on the account as at 22 May 2003 is shown as $37,003.

1. The defendant, whilst prepared to offer the plaintiffs what is termed a 364-day licence to occupy the subject premises, opposes any relief of forfeiture.  It is said on behalf of the plaintiffs that such an offer subverts the operation of the Retail Tenancy Reform Act 1998, and in any event is contemptuous, given the amount of money spent by the plaintiffs in fitting out what was initially the empty shell of a building.  The point was made on behalf of the defendant that had the plaintiffs commenced to trade at a time they were being urged to by the representatives of the defendant, there would have been arguably no cash flow problem and the present situation would not have arisen.  It was suggested that in effect they, by their conduct to this point, have demonstrated that they are unlikely to be successful as businesswomen.

1. Be that as it may, as is made clear in the leading case in this area, Jam Factory Pty Ltd v. Sunny Paradise Pty Ltd and Ors,[1] a decision of Ormiston, J., the refusal to grant relief against forfeiture would only occur in exceptional circumstances where a tenant undertakes to pay the demanded arrears in rent.  Despite the matters referred to by Mr Burns in his submissions on behalf of the defendant, I am not convinced on the affidavit material and the material placed before the Court that those exceptional circumstances exist in the present case.  Accordingly, the arrears of rent being offered, I propose to grant relief from the forfeiture of the lease, and it seems appropriate that the order handed to me by Mr Gillies, which I am told is a reflection of similar orders made by Ormiston, J. in the past, is the appropriate form of order.

   [1](1989) V.R. 584.

(Discussion ensued.)

HIS HONOUR:  I will sign the order.

---