Ozton Pty Ltd v Cromwell Seven Hills Pty Ltd as trustee for the Cromwell Northpoint Trust

Ozton Pty Ltd sought an interlocutory injunction against Cromwell Seven Hills Pty Ltd as trustee for the Cromwell Northpoint Trust, in the Federal Circuit Court. The dispute centred on the enforceability of a guarantee provided by Ozton under a lease for a commercial property in Sydney. Ozton argued that a contractual exclusion of a right to set-off in equity was ineffective and that it was entitled to set-off for the landlord's breach of the covenant of quiet enjoyment. Cromwell, on the other hand, sought to call upon the guarantee for non-payment of rent by Ozton. The court was required to determine whether the contract excluded the right to set-off in equity and whether damages were an adequate remedy for Ozton's claim.

The court considered the principles of equity and the enforceability of contractual exclusions of equitable rights. It held that the contract did not exclude the right to set-off in equity, as the exclusion was not expressed in clear and unequivocal terms. The court also examined the balance of convenience and whether damages were an adequate remedy. It found that there was a real risk that Ozton could not meet a claim for damages, given the substantial amount of rent in dispute and the potential financial impact on Ozton. The court held that the balance of convenience favoured granting the injunction, as Ozton's right to set-off was likely to be substantially prejudiced without it.

Accordingly, the court granted Ozton's application for an interlocutory injunction, restraining Cromwell from calling upon the guarantee for non-payment of rent by Ozton until the final determination of the proceeding. The court emphasised the importance of preserving the rights of both parties pending the final determination of the dispute.