Relic & Dunwich

The parties to this proceeding were Relic and Dunwich. The dispute concerned the interpretation of a clause within a commercial lease agreement. The matter came before Bell J of the Supreme Court of New South Wales.

The central legal issue before the Court was whether the tenant, Dunwich, was entitled to exercise an option to renew the lease under the terms of the agreement, notwithstanding a failure to pay rent on the precise due date stipulated in the lease. Specifically, the Court had to determine if the tenant's subsequent payment of the overdue rent rectified the breach sufficiently to permit the exercise of the renewal option.

Bell J reasoned that the lease clause granting the option to renew was conditional upon the tenant not being in default of any of its obligations under the lease. His Honour found that the failure to pay rent on the due date constituted a default, and that this default had not been cured in a manner that would satisfy the condition precedent for exercising the option. The Court applied the principle that contractual conditions precedent must be strictly performed, and that a failure to meet such a condition, even if subsequently rectified, could nonetheless preclude the exercise of a contractual right that was contingent upon prior performance.

The Court therefore held that Dunwich was not entitled to exercise the option to renew the lease.