NightOwl Properties Pty Ltd v Replay Australia Pty Ltd

NightOwl Properties Pty Ltd v Replay Australia Pty Ltd is a case about the costs order to be made after a trial and judgment. The plaintiff, NightOwl Properties, sought to exercise an option to lease the ground floor premises in Albert Street, Brisbane for another five years, but the defendant, Replay Australia, refused to grant the further lease. NightOwl Properties sought equitable relief against the forfeiture of the property interest associated with the contractual right, and the court found that it was appropriate to grant such relief. The court rejected the defendant’s submissions that the plaintiff could not ask the court to order the defendant to grant a further lease for the first option period, and that a tenant, like the plaintiff, who gave a notice of exercise of an option, and then failed to comply with a post-notice condition, could not seek equitable relief against forfeiture. The court also found that the payment of rent reduced “in line with the reduction of turnover”, during the peak of the pandemic restrictions, was not a wilful forfeiture, a wilful or grave breach, or improper in a legal sense.

The legal issues in this case were whether the plaintiff should pay the defendant’s costs of the proceeding on the indemnity basis to do equity, and whether the defendant should pay the defendant’s costs from its failure to accept the plaintiff’s offer. The plaintiff conceded that usually a tenant seeking relief would be required to pay the landlord’s costs, but argued that the defendant should pay the costs from its failure to accept the plaintiff’s offer. The defendant submitted that the plaintiff should pay the defendant’s costs on the indemnity basis to do equity. The court considered the authorities on offers of compromise, including informal offers and Calderbank letters, and found that the defendant’s failure to accept the plaintiff’s offer was unreasonable. The court also considered the exchange of offers of settlement between the parties, and found that none of the offers was accepted.

The court held that the plaintiff should pay the defendant’s costs of the proceeding to and including 30 November 2021, to be assessed on the indemnity basis. The court held that the defendant should pay the plaintiff’s costs of the proceeding from and including 2 June 2022, to be assessed on the standard basis. The court found that the defendant’s failure to accept the plaintiff’s offer was unreasonable, and that the plaintiff was entitled to costs from that date. The court also found that the plaintiff should pay the defendant’s costs of the proceeding to and including 30 November 2021, to be assessed on the indemnity basis, as the plaintiff was the successful party in the proceeding, and the defendant’s failure to accept the plaintiff’s offer was unreasonable. The orders of the court reflect these findings.