Riviera Holdings Pty Ltd v Fingal Glen Pty Ltd (in Liq) (No 3) - [2013] SASC 107

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
RIVIERA HOLDINGS PTY LTD v FINGAL GLEN PTY LTD (IN LIQ) & ANOR (No 3)
[2013] SASC 107
Judgment of The Honourable Justice Nicholson
31 July 2013
EQUITY - GENERAL PRINCIPLES - PENALTY - RELIEF AGAINST PENALTY AND FORFEITURE
PROCEDURE - JUDGMENTS AND ORDERS
PROCEDURE - COSTS
In earlier reasons for judgment it was determined that the defendant/plaintiff by counterclaim (Fingal) was entitled to orders for relief against forfeiture of two leases previously terminated by the plaintiff/defendant by counterclaim (Riviera) - further submissions were received on issues concerning the form of the orders and costs.
Held: final orders including orders as to costs made.
Landlord and Tenant Act 1936 (SA) s 9; Real Property Act 1886 (SA) s 126; Supreme Court Act 1935 (SA) s 40; Supreme Court Civil Rules 2006 (SA) r 263, r 264, referred to.
Dendy v Evans [1910] 1 KB 263; Howard v Fanshawe [1895] 2 Ch 581; Wynsix Hotels (Oxford St) Pty Ltd v Toomey [2004] NSWSC 236; Re: Nardell Coal Corporation (in liq) v Hunter Valley Coal Processing [2003] NSWSC 642, discussed.
Cicinave Pty Ltd v Jasco Pty Ltd (1989) 5 BPR [97329]; Constantine v Sanders [2007] NSWSC 250; Copping v ANZ McCaughan (1995) 63 SASR 523; Fingal Glen Pty Ltd v Riviera Holdings Pty Ltd [2012] SASC 156; Greenwood Village Pty Ltd v Tom the Cheap (WA) Pty Ltd [1976] WAR 49; Gwinnett v Day (No 2) [2012] SASC 61; Hayes v Gunbola Pty Ltd (1986) 4 BPR [97263]; Liristas Holdings Pty Ltd v Wallville Pty Ltd [2001] NSWSC 428; Lo Guidice v Biviano (No 2) [1962] VR 420; Mineaplenty Pty Ltd v Trek 31 Pty Ltd [2006] NSWSC 1203; Riveria Holdings Pty Ltd v Fingal Glen Pty Ltd [2013] SASC 77; Riviera Holdings Pty Ltd v Fingal Glen Pty Ltd (in liq) (No 2) [2013] SASC 111; Strazdins, in the matter of DNPW Pty Ltd (Subject to DOCA) ACN 107484711 v Birch Carroll and Coyle Ltd (No 3) [2009] FCA 1410; Sparta Nominees Pty Ltd v Orchard Holdings Pty Ltd & Ors [2002] WASC 54 (S); Symmons Plains Pastoral Holdings Pty Ltd & Another v Tasmanian Racing Co Pty Ltd; ex parte the Minister administering the Tasmanian Development Act 1983 (1996) 6 Tas R 284; Tannous v Cipolla Bros Holdings Pty Ltd [2001] NSWSC 236, considered.

RIVIERA HOLDINGS PTY LTD v FINGAL GLEN PTY LTD (IN LIQ) & ANOR (No 3)
[2013] SASC 107
NICHOLSON J.
Introduction

The decisions made by me in this ongoing litigation and the background thereto are set out in my two earlier reasons for decision.[1]
[1] Riviera Holdings Pty Ltd v Fingal Glen Pty Ltd [2013] SASC 77 (first reasons) and Riviera Holdings Pty Ltd v Fingal Glen Pty Ltd (in liq) (No 2) [2013] SASC 111 (second reasons).
In my first reasons for decision, dated 28 May 2013, I determined that Fingal Glen Pty Ltd (in liq) (“Fingal”) was entitled to orders for relief against forfeiture of two (former) leases granted to it by Riviera Holdings Pty Ltd (“Riviera”) as lessor. I adjourned the matter in order to hear further from the parties on the form of the orders and questions of costs. However, this process was waylaid, to some degree, when Fingal filed an interlocutory application on 4 June 2013 to have Banchory Nominees Pty Ltd (“Banchory”) substituted for Fingal as plaintiff by counterclaim for the relief against forfeiture. Fingal had only ever held the leases in its capacity as a trustee. Upon going into liquidation[2] it retired as trustee and Banchory was appointed as the new trustee. In my second reasons, ruling on the interlocutory application, I refused to order that Banchory be substituted for Fingal but ordered that it was to be added as a party in the capacity of an additional plaintiff by counterclaim pursuant to Supreme Court Rules 6R 74. In all other respects, Fingal’s interlocutory application was dismissed.
[2] Fingal went into liquidation after I first reserved judgment in the matter, see second reasons at [4].
Banchory was added as a party on the basis, inter alia, that it has an interest in the subject matter of the proceedings. In my reasons for refusing Fingal’s interlocutory application for substitution but permitting the addition of Banchory as a party, I said this.[3]
It may be that once orders for relief against forfeiture were to be granted in favour of Fingal, Banchory would have contractual rights against Fingal to have Fingal use all reasonable endeavours to assign to the maximum extent permitted by law and equity the benefit of the “chose in action in the Proceeding”, that benefit being the leases in Fingal’s name either as restored or as granted anew. It may be that once Fingal is restored as lessee, it would be found to hold the leases on some form of trust for Banchory. Whatever rights Banchory has in these respects will turn on, inter alia, a full consideration of the terms of the Sale Agreement and the circumstances leading to the retirement of Fingal as trustee and its replacement by Banchory as trustee of the Adelaide Riviera Investment Trust. The extent of and the working out of any such rights are essentially matters for Fingal and Banchory and are not matters that I need to address in these reasons.
[3] Second reasons at [67].
The primary matters that still need to be resolved concern the form of orders to give effect to my previous decision that Fingal should be relieved against the forfeiture of the two (former) leases and various questions of costs.
Relevant to the matters still in issue, I have available to me:
(i)     Riveria’s written submissions (dated 28 February 2013) and Fingal’s written submissions (dated 28 February 2013) together with oral submissions provided at the conclusion of the trial;
(ii)    Riveria’s further written submissions (dated 6 June 2013), Riveria’s written submissions on the juridical nature of the chose in action purportedly assigned by Fingal to Banchory (dated 14 June 2013) Fingal’s and Banchory’s written submissions (dated 6 June 2013) Fingal’s and Banchory’s supplementary written submissions (dated 14 June 2013) and the parties’ respective oral submissions, all provided with respect to Fingal’s unsuccessful interlocutory application to have Banchory added as a party by way of substitution for Fingal;
(iii)   Riviera’s further written submissions (dated 18 July 2013) and Fingal’s and Banchory’s written supplementary submissions (dated 18 July 2013) provided after I had ruled on Fingal’s unsuccessful application to have Banchory substituted and which submissions were directed at the questions of final orders to be made and costs.
In each of the materials just identified, the parties made various and quite detailed submissions concerning the matters the subject of these reasons.
Costs issues
There are four principal matters concerning quantification and allocation of costs. In addition, Riviera submits that payment of all of its costs entitlements should be made a condition of the relief against forfeiture as granted.
First, there is the question of the costs of Riviera’s claim in these proceedings (No SCCIV-12-795) for possession of the premises the subject of the former leases. Fingal has conceded that it should be liable to pay the party and party costs of Riviera of and incidental to its successful application for possession following the re‑entry and termination of the leases, consequent upon Fingal’s breach by being late in payment of the rent for May 2012.[4]
[4] See the reasons of the Master in this matter delivered 1 November 2012 following a hearing on 24 October 2012 and the orders made by his Honour on 9 November 2012 with respect to which see my first reasons at [8](xxxi).
The end result was that, as at 9 November 2012 when formal orders were entered by the Master, the one still outstanding matter between the parties was Fingal’s application by way of counterclaim for relief against forfeiture which was ordered to go to trial early in the New Year.
Notwithstanding Fingal’s concession it is, in my view, unarguable that Fingal should be responsible for Riviera’s costs, at least, to the extent as conceded. However, Riviera seeks its costs on a party and party basis and this form of order is opposed by Fingal. Riviera has sought to be heard further on the issue of “the basis on which the costs of the action and cross‑action (counterclaim) are to be awarded”.[5] However, given the view I take of the matter, after considering the submissions put by the parties on the topic, I do not need to hear from Riviera further as to the basis of any costs order in its favour.
[5] See proposed Order 10 in Riviera’s draft Minutes of Order provided with its further written submissions on implementation of reasons and costs (dated 18 July 2013).
The second costs issue relates to the costs of Fingal’s counterclaim. Riviera submits that Fingal should pay its costs of and incidental to the trial of Fingal’s counterclaim seeking relief against forfeiture. However, Fingal, ultimately having succeeded with that action, seeks an order that Riviera pay its costs of and incidental to the counterclaim for the period after 16 January 2013. That date has been chosen because it is the date Fingal put a settlement proposal to Riviera which, according to Fingal and if accepted by Riviera, would have achieved a better outcome for Riviera than ultimately it ought to be entitled once costs issues have been determined. This is the costs issue that is potentially of the most significance to each party. The trial of the counterclaim went for an unusually long period of time for a matter of this nature (more than seven days – excluding the time devoted to Fingal’s interlocutory application filed on 4 June 2013 after delivery of my first reasons) and would appear to have involved extensive preparation by both sides.
The third issue concerns the costs of Fingal’s unsuccessful interlocutory application filed on 4 June 2013. Riviera seeks an order that Fingal and Banchory pay its costs on a party and party basis. Fingal and Banchory concede that Riviera is entitled to such an order.
The fourth costs issue arises with respect to the cognate but separate proceedings[6] by which Fingal brought an application under s 459G of the Corporations Act 2001 to set aside a statutory demand served on it by Riviera which statutory demand required payment of a debt said to be due of $141,426.66. This debt due included the rent for May 2012 which, as at the date of the statutory demand, had remained unpaid and which (that is, the non‑payment of the May rent) was the basis relied upon by Riviera when it re‑entered and forfeited the leases. Fingal was unsuccessful before a Master of this Court in having the statutory demand set aside and was ordered to pay Riviera’s costs with respect to these statutory demand proceedings.
[6] Fingal Glen Pty Ltd v Riviera Holdings Pty Ltd [2012] SASC 156, action No SCCIV-12-969.
The amount of these costs due and payable by Fingal is now a matter for agreement or for the Taxing Master and, in any event, is not a matter for me. However, insofar as these costs are concerned, Riviera is now in a position of being an unsecured creditor with only an entitlement to prove in the liquidation of Fingal. It is common ground that Fingal’s financial circumstances are such that Riviera is unlikely to receive a substantial, if any, dividend with respect to this costs entitlement once quantified. Riviera seeks an order that Banchory be obliged to pay these costs and that payment of these costs be made a condition of the order granting relief to Fingal against forfeiture.
As with any other action in this Court, the parties’ entitlements or obligations with respect to both the costs of Riviera’s claim and the costs of Fingal’s counterclaim fall to be determined in accordance with Supreme Court Rules 6R 263 and 264. Rule 6R 263 provides that, as a general rule, costs follow the event although that general rule is subject to specific rules to the contrary such as the rules concerning a party’s failure to accept an offer of settlement. The general rule is also subject to a number of exceptions as set out in 6R 263(2), none of which apply to this case.
Rule 6R 264 provides that the Court may, in the exercise of its discretion as to costs, award costs on any basis the Court considers appropriate. However, the general approach is that costs are to be awarded as between party and party and in accordance with the relevant scale provided under the Rules. It is well accepted when the Rules are read in conjunction with s 40 of the Supreme Court Act 1935 (SA),[7] that the legislature intended to confer on courts and judges an unfettered discretion as to costs.[8] Nevertheless, in the area presently under consideration, the authorities illustrate particular considerations that will bear on this exercise of the discretion.
[7] Section 40(1) provides – subject to the express provisions of this Act, and to the rules of court, and to the express provisions in any other Act whenever passed, the costs of and incidental to all proceedings in the court, including the administration of estates and trusts, shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and to what extent such costs are to be paid.
[8] See generally Copping v ANZ McCaughan (1995) 63 SASR 523 at 527, Gwinnett v Day (No 2) [2012] SASC 61.
As early as Howard v Fanshawe[9] the following approach to the costs of such an action was adopted.
The plaintiff [the party who sought relief against forfeiture] must bear the costs of the action except so far as they have been increased by the defendant resisting his claim, and those costs must be borne by the defendant.
Notwithstanding this early statement of approach, there are a number of Australian authorities that speak of a usual practice sometimes described as a “general rule” or a “normal rule” to the effect that a tenant ordinarily will pay the landlord’s costs of its claim including those relevant to the tenant’s application for relief against forfeiture as part of the “price” for the granting of relief. This is based on the notion, essentially, that any relief granted is an indulgence and the landlord should be entitled to be placed in the position it would have been in but for the breaches of lease by the tenant.[10] With respect, I am not persuaded that there is any such general rule, at least, to the extent that it would exclude or fetter a court’s general discretion on matters of costs.[11] In any event, any such general approach will become of less significance the further along the spectrum from summary determination to fully contested trial a matter lies. In Wynsix Hotels (Oxford St) Pty Ltd v Toomey,[12] Young CJ in Eq said this.
As to costs, the normal rule is that these are paid by the plaintiff. As Simpson CJ in Eq said in Langley v Foster (1909) 10 SR (NSW) 54, 62 prima facie one of the terms on which relief against forfeiture is granted is that the tenant must pay all the costs of getting relief. Often costs are ordered on the indemnity basis, though, as Lord Templeman said in the Billson case at 541, if there is any general practice to this effect it ought to be re‑examined.
Despite the normal rule, if the court considers that the landlord ought not to have opposed in toto the tenant’s claim for relief, the court may make the landlord pay some costs; Humphreys v Morten [1905] 1 Ch 739; Langley v Foster at page 62.
[9] [1895] 2 Ch 581 at 592.
[10] See for example Cicinave Pty Ltd v Jasco Pty Ltd (1989) 5 BPR [97329] (Powell J); Tannous v Cipolla Bros Holdings Pty Ltd [2001] NSWSC 236 (Barrett J) and Liristas Holdings Pty Ltd v Wallville Pty Ltd [2001] NSWSC 428 (Barrett J).
[11] I do not understand that either Powell J or Barrett J, in the authorities referred to in the preceding footnote, were contending for this.
[12] [2004] NSWSC 236 at [89]-[90].
My general review of the authorities to which my attention has been drawn suggests that each case will turn on its own facts; sometimes the landlord is entitled to be fully indemnified with respect to its costs, sometimes a landlord will receive only some of its costs and sometimes a landlord will be required to pay some or all of the tenant’s costs.[13]
[13] See generally the cases referred to or cited to this point together with Re: Nardell Coal Corporation (in liq) v Hunter Valley Coal Processing [2003] NSWSC 642; Strazdins, in the matter of DNPW Pty Ltd (Subject to DOCA)ACN 107484711 v Birch Carroll and Coyle Ltd (No 3) [2009] FCA 1410; Mineaplenty Pty Ltd v Trek31 Pty Ltd [2006] NSWSC 1203; Sparta Nominees Pty Ltd v Orchard Holdings Pty Ltd & Ors [2002] WASC 54 (S); Hayes v Gunbola Pty Ltd (1986) 4 BPR [97263]; Lo Guidice v Biviano (No 2) [1962] VR 420; Greenwood Village Pty Ltd v Tom the Cheap (WA) Pty Ltd [1976] WAR 49 (although it would seem that the proposition put at 53 misstates the order indicated in Howard v Fanshawe); Constantine v Sanders [2007] NSWSC 250.
The position, with respect, is well summarised by Campbell J in Re: Nardell Coal Corporation (in liq) v Hunter Valley Coal Processing.[14]
Sometimes a statute which confers on a Court power to alter what would otherwise be people's rights expressly provides that the person who seeks such alteration is to pay the costs, unless the Court otherwise orders - for example section 88K(3) Conveyancing Act 1919 (NSW), re the Court creating an easement. However, even if, as is the case in section 419A(7) Corporations Act 2001, there is no such express statutory provision concerning costs, it is usual for a party seeking an indulgence to pay the costs of the application: Golski v Kirk (1987) 14 FCR 143 at 157; Re Australasian Memory Pty Ltd; Brien v Australasian Memory Pty Ltd [2000] NSWSC 333; (2000) 34 ACSR 158 at 160. But, it is not an invariable rule. In Langley v Foster (1909) 10 SR(NSW) 54 at 62 A H Simpson CJ in Eq said, concerning costs in an application for relief against forfeiture of a lease:
By coming into Equity to ask for relief against forfeiture, and by paragraph 6 of the Statement of Claim, the plaintiff admits he has committed a breach of covenant, and asks the Court to relieve him against forfeiture. Prima facie one of the terms imposed should be the payment of all costs, for the plaintiff's own breach of his agreement has given rise to the litigation. This has accordingly been made a term in Quilter v Mapleson (9 QBD 672); Mitchison v Thompson (1 Cab & E 72); Bond v Freke ([1884] WN 47); and Bridge v Quick (67 LT 54). On the other hand this is not a hard and fast rule, for, if it were, a lessor might always oppose relief being granted knowing he would always get his costs from the lessee. If the Court thinks the lessor ought not to have opposed in toto the grant of relief from forfeiture, the Court may make the lessor pay the costs so far as they have been increased by the lessor resisting the claim to relief on any terms: Howard v Fanshawe ([1895] 2 Ch 581, 592); Humphreys v Morten ([1905] 1 Ch 739). But the Court may make, and has in one case at any rate made, the lessee pay all the costs, notwithstanding the lessor contested his claim to relief at all; Quilter v Mapleson (supra). It is a question for the Court's discretion in each case.
That passage was quoted and applied in Hayes v Gunbola Pty Ltd (1986) 4 BPR 9247 at 9256.
The usual principle, that the person seeking the indulgence pays the costs, might be inappropriate in the circumstances of a particular case. Thus, where a party who opposed relief lost, but had raised issues which were more extensive than was reasonable, the party who obtained the indulgence was ordered to pay only a proportion of the costs of that person: Re Freightlines Northern Territory Pty Ltd (In liq) [1999] QSC 209 at [29]-[31]; (2000) 2 Qd R 384 at 392 (applicant seeking registration of charge out of time); Hayes v Gunbola Pty Ltd (1986) 4 BPR 9247 at 9256 (applicant seeking relief against forfeiture). Indeed, if the opposition to a grant of indulgence is unreasonable, intransigent and thorough, the person who opposes the granting of the indulgence might be ordered to pay all the costs of the person seeking it: Re Australasian Memory Pty Ltd; Brien v Australasian Memory Pty Ltd [2000] NSWSC 333; (2000) 34 ACSR 158.
[14] [2003] NSWSC 642 at [144]-[145].

As I have said, ultimately costs are discretionary and each case will turn on its own facts. In the present case, two principles would appear to point in different directions. Fingal has sought an indulgence in equity to restrain Riviera from exercising its contractually agreed rights at law. Yet Riviera has fought long and hard, putting Fingal to great expense, and Riviera has lost. There is room in a case such as the present for an application of the principle that ordinarily costs will follow the event.
In my view, it was or should have been readily apparent to Riviera from early in the counterclaim proceedings that whilst its entitlement to an order for possession following upon its contractual forfeiture of the leases was inevitable, it would struggle to resist Fingal’s claim for relief in equity. There were four aspects to Fingal’s position that were or should have been readily apparent to Riviera from the outset.
(i)Given that Fingal was still conducting a functioning motel business with a turnover, as disclosed by the evidence at trial, it was very likely that Fingal would be able to establish to the Court’s reasonable satisfaction a capacity to meet future rent and outgoings obligations.
(ii) Any failure to obtain relief against forfeiture would be extremely detrimental to Fingal as discussed in my first reasons but, in particular, given the substantial price Fingal had paid for the business not so long before the dispute arose, which price was informed by the existence of leases with a right to multiple extensions out to 2039.
(iii)Any prejudice Riviera was likely to suffer following a grant of relief would be relatively minor in comparison to Fingal’s and could be accommodated by the Court making appropriate orders.
(iv)Any failure to grant relief against forfeiture would likely be productive of a substantial windfall in Riviera’s favour as discussed in my first reasons.
Without qualifying or detracting from the whole of my first reasons, it was these four primary considerations that had to be balanced against Fingal’s litany of defaults in timely payment of rent and outgoings and Riviera’s complaints concerning other poor behaviour by Fingal as tenant. It was in this context, as more fully explained in my first reasons, that Riviera opposed Fingal’s application for relief in a manner and to a extent which, in my view, is to be characterised as intransigent and thorough and ultimately unreasonable.
By design or not, the defence, relentlessly pressed by Riviera, quite likely contributed to a great weakening of Fingal’s position financially and generally. It was always possible that Fingal might ultimately demonstrate a proper case for relief (which it did) but find itself so weakened by the fight that its capacity to continue as tenant and to observe its future obligations would have thereby become considerably, perhaps fatally, compromised. If so, having failed to deny Fingal an entitlement to relief against forfeiture, Riviera would have gained, through the process, its ultimate aim in any event.
This was an aspect of the present litigation which caused me concern throughout the trial and should not go unremarked. Riviera, as was its legal right, fought hard but it lost.
That is not to say that Fingal was not at times its own worse enemy. It could have moved more quickly in attempting to restore Riviera to the position it should have been in but for its failures to pay rent and outgoings on time and, in my view, the way in which its counterclaim was presented, essentially through the evidence of Mr Buff and an unsatisfactory approach to disclosure of financial material, necessarily made the cross‑examination of Mr Buff longer and more complex than it need to have been. Aspects of both parties’ approach to this litigation were tactically driven. This is legitimate but it served to increase the costs incurred by each party. Riviera, in its submissions, has raised many criticisms of Fingal’s conduct of the litigation. Some of these are justified.
However, ultimately Riviera pressed its defence to the relief against forfeiture claim to an extent that, in the context of costs considerations, was unreasonable. This is a case where, notwithstanding that Fingal has sought an indulgence, costs should still follow the event and Riviera should be ordered to pay Fingal’s costs of the counterclaim on a party and party basis. Riviera should not be allowed to have conducted and lost its case in the knowledge, from the outset, that it was guaranteed to be reimbursed its costs.
Nevertheless, I accept that Fingal’s conduct contributed to the proceedings being more complex, more protracted and more costly than they should have been even notwithstanding the relentless nature of Riviera’s defence. I am not attracted to the approach of choosing a time period within which Fingal’s costs should be paid. I also do not accept Fingal’s submission that Riviera should be penalised in some way for not having accepted the settlement offer put by Fingal on 16 January 2013. The matter was complex. Furthermore, the settlement proposal put by Fingal on 16 January 2013 was not in a form that was capable of immediate acceptance by Riviera. At the very least, Fingal’s offer to provide security for payment of costs was put on the basis that the terms thereof were to be discussed and agreed. Doing the best I can, I propose to reduce the costs order I will make in favour of Fingal by 30 per cent.
As far as Riviera’s costs of its claim are concerned, these should be met by Fingal on a solicitor and own client basis. I appreciate that there is no general rule to this effect and to the extent to which this might have been the approach in earlier cases there have been calls for such an approach to be reviewed. However, and again, the question is one for the Court’s discretion. In this case I take the view that Fingal, properly advised, should have realised that it had no proper basis to resist Riviera’s claim. It should have conceded the claim and moved directly to prosecuting its counterclaim for relief against forfeiture.
The orders that will do justice between the parties notwithstanding that the various component parts of this litigation to date (involving the claim and the counterclaim) have a level of inter‑connection, are that Fingal should pay Riviera’s costs of its claim on a solicitor and own client basis and Riviera should pay 70 per cent of Fingal’s costs of its counterclaim on a party and party basis. I exclude from this latter order the costs concerning Fingal’s and Banchory’s interlocutory application filed on 4 June 2013. As previously indicated, by agreement, Fingal and Banchory are to pay Riviera’s costs of this unsuccessful interlocutory application on a party and party basis.
I turn now to the fourth costs issue which relates to Riviera’s costs of its statutory demand proceedings. Fingal is already liable for these in accordance with the Master’s order. However, as earlier indicated, it is unlikely that Riviera will be able to recover these costs or a substantial proportion of them directly from Fingal.
The application to set aside Riveria’s statutory demand, notwithstanding that it arose in separate proceedings, was integral to Fingal’s attempts to resist Riviera’s action for possession. Ordinarily, a grant of relief against forfeiture in favour of Fingal would be conditional on Riveria being paid all its reasonable costs incurred as a result of Fingal’s default in payment of rent. In its written submissions[15] Riviera has submitted the following.
As to the payment of the costs of Fingal’s application to set aside the statutory demand, such a condition is principled and necessary. That application was brought on the basis that Fingal was not liable to pay the debt the subject of the statutory demand, which sum included the May rent in respect of which Riviera re‑entered. Fingal failed comprehensively in that application and costs were awarded against it. It only paid the rent that was the catalyst for the present action when that application failed. Riviera is now an unsecured creditor with respect to those costs with in light of the sale of assets agreement [between Fingal and Banchory] no prospect of a return on that debt.
In order to have the leases reinstated, it is necessary that Fingal remedy all of its impositions on the landlord. It would be quite unconscionable for the leases to be reinstated (to anyone) in circumstances where the expense to which Riviera went in successfully resisting that application in defence of its rights under the leases, went unredressed. Banchory certainly does not propose to pay it, yet it now seeks the benefit of those very leases, this illustrates the whole point – Banchory is trying to obtain the benefit of the leases with none of the accumulated burdens.
[15] Plaintiff’s further written submissions filed 6 June 2013 at [44.2.2]-[44.2.3].
In general, I agree with this submission. Fingal has procured a rearrangement of the underlying trust affairs by replacing itself as trustee with Banchory. Banchory, effectively, has the same shareholding and is intending to occupy the same role as trustee. It is the intention of Fingal and Banchory that, ultimately, Banchory is to take the benefit of any reinstated leases. Nevertheless, Banchory was not a party to the statutory demand proceedings and, in my view, I am not in the position to make an order that Banchory be directly liable to Riviera for the costs of those proceedings. Particularly is this so where the issue of costs as between the parties to those proceedings (Riviera and Fingal) has been finally determined. However, I am in a position, as an aspect of the discretionary exercise in ordering relief against forfeiture and I propose, to order that the grant of relief to Fingal is conditional on Fingal procuring Banchory to pay such costs for which Fingal is liable to Riviera concerning the statutory demand proceedings.
Reinstatement or fresh leases
I now turn to the issue of the mechanism by which the leasehold interests are to be restored to Fingal. Riviera submits that the old leases, notwithstanding that they were terminated upon Riviera’s election to forfeit, at least in terms of a contractual arrangement between the parties, can and should be reinstated. Riviera’s position, in essence, is that whatever form of order is made, it should result in the existence of leases in identical terms and which bind the parties from the date that the original leases were terminated, that is, 4 June 2012.
Where the jurisdiction to grant relief against forfeiture as conferred by s 9 of the Landord and Tenant Act 1936 is relied upon, the lessee, by dint of the statute, is to hold the demised lands according to the terms of the lease and without any new lease. Section 9 provides a statutory authority in the Court to simply reinstate the forfeited lease. Section 9 further provides that if relief is granted “the Court or Judge shall direct a minute thereof to be made, by endorsement on the lease or otherwise”. Riviera, at the trial, argued at some length that Fingal’s claim for relief did not fall within s 9 and that an exercise of the statutory jurisdiction was not open to the Court. Riviera argued that all that was available to the Court was the equitable jurisdiction to grant relief against forfeiture.
In coming to my decision in the first reasons I did not determine whether this argument was correct or incorrect. I took the view that, at least insofar as the circumstances in which relief against forfeiture might be granted were concerned, the statutory jurisdiction and the equitable jurisdiction were for all intents and purposes co‑extensive. I decided the matter and held that Fingal was entitled to relief against forfeiture in accordance with the equitable principles.
Riviera has now put an argument that the Court can proceed in accordance with the authority granted by s 9 to reinstate the leases or, in the alternative, that the discretion available in accordance with the principles of equity is not fettered in this respect and is as extensive as is the authority conferred by s 9. In other words, Riviera submits that the form of order available to me, whether under the statute or simply pursuant to equitable principle, is at large in this respect.
Fingal has argued to the effect that the original leases were brought to an end upon Riviera’s forfeiture and re‑entry and that there is nothing now to reinstate. Fingal maintains that the Court is only in a position to order that the parties enter into fresh leases. Fingal also submits that any fresh leases entered into can (or should) only take effect from the date that the order for relief against forfeiture is made, that is, no earlier than the date I delivered my first reasons (28 May 2013) but more properly the date formal orders are entered in the Court record.
As a matter of principle I disagree with the approach put by Fingal. Both s 9 of the Landlord and Tenant Act and the equitable principles underlying the discretion to grant relief against forfeiture operate on the assumption or the expectation that, where relief is granted, the parties (both of them) will be restored to their former positions. This is the very purpose behind the making of an order for relief against forfeiture; it is to operate nunc pro tunc. The original landlord and tenant relationship is to be restored.
The fact of the matter is, as usually will be the case, that the tenant (Fingal) remained in occupation of the premises from the date of forfeiture (4 June 2012) throughout the period of the litigation. To grant a new lease commencing from a date sometime (in this case, according to Fingal, more than 12 months) after the termination of the leases would be to leave that substantial period of occupation essentially unregulated or, at least, regulated in a manner different from that to which the landlord had always been entitled. To this Fingal might respond that, at all times since 4 June 2012, Fingal has been in occupation on the same terms and conditions as those that applied at the time the former leases were in place. If so, Riviera is fully protected. However, I have not heard full argument from the parties on this issue and, in particular, on the nature of the terms and conditions that governed Fingal’s occupation of the premises over the last 12 months or so. In my view it would be unprofitable to hear argument and to decide this issue. It is the Court’s task to craft orders that will ensure that Riviera is no worse off than it would have been had the leases continued throughout this interregnum.
A further difficulty with Fingal’s approach, in this respect, is that it necessarily would lead to an arbitrary and capricious result. It is simply a matter of happenstance as to how long after the forfeiture of the original leases on 4 June 2012 any new leases would be ordered and entered into. That happenstance will be determined by the nature and duration of the parties’ litigation. It will be determined, in part, by how long it takes the Court following reservation of judgment to prepare and deliver its reasons and make final orders.
Even if I were to order that fresh leases be entered into by the parties, the discretion as to the form of orders to be made when exercising the equitable jurisdiction is wide enough to permit me to order that those leases be backdated. At the very least, I would order any fresh leases entered into to commence from 4 June 2012. Any such new leases would be in identical terms to the original leases forfeited as at 4 June 2012.
However, I take the view that it would be simpler for the parties if I were simply to order the reinstatement of the former leases and, in the circumstances of this case, I am satisfied that I have power to do this. I turn to consider the position as described in some of the cases.
Where no statutory authority is available but the equitable jurisdiction is invoked to grant relief against forfeiture, the older authorities suggest that the question of whether or not new leases need to be entered into will turn on a matter of timing. The case often referred to in this context is Dendy v Evans.[16]
The landlord commenced his action of ejectment under the proviso for re‑entry for non‑payment of rent. Two things might happen. The action might or might not proceed to judgment with execution. What the tenant could do in the way of obtaining relief was to file his bill in the old Court of Chancery, which would take varying forms according as the ejectment action had or had not proceeded to judgment and final delivery of possession. In the first case, where the bill was filed before the judgment, the relief claimed would be an injunction to restrain further proceedings in the action at law on the terms of the lessee paying the arrears of rent. The effect of that was that no new lease was ordered to be granted by the Court of Chancery. The Court simply granted an injunction to restrain the landlord from proceeding to enforce his right of re‑entry which he said he had, and which the lessee by the necessity of the case was bound to admit that he had. If on the other hand the ejectment action had proceeded to judgment, the lease was gone at law, and the Court of Chancery could not set it up again, but it could grant relief on similar terms, and it was necessary in that case to make an order that the landlord should grant a new lease. Under these circumstances it seems to me a mistake to say that the only thing which the Court of Chancery could do was to grant a new lease. I will only refer to the judgment of Wigram V-C in Bowser v Colby where he says:
It is obvious there were two distinct cases which might occur before the statute; - first, where the lessor having brought his ejectment, the tenant, before judgment or before execution, filed his bill for relief, and obtained an injunction to restrain the lessor from turning him out of possession. In that case, the tenant being enabled to continue in possession, and remaining in the meantime a debtor to the landlord for the amount of the rent, the latter, until the hearing of the cause, would have no security for his rent, unless the amount due had been paid into Court; secondly, there was the case where the lessor actually recovered possession in the ejectment; the only relief which the tenant would have was such as the court might give him at the hearing.
Now to my mind it is perfectly clear that the old rule of the Court of Chancery centuries ago was inconsistent with the view that has been argued before us, namely, that the mere issue of the writ without more terminated the interest of the lessee.
Other cases have adopted this distinction.[17]
[16] [1910] 1 KB 263 at 266 (Cozens-Hardy MR).
[17] See for example Symmons Plains Pastoral Holdings Pty Ltd & Another v Tasmanian Racing Co Pty Ltd; ex parte the Minister administering the Tasmanian Development Act 1983 (1996) 6 Tas R 284; Hayes v Gunbola Pty Ltd (1986) 4 BPR [97263]; Lo Guidice v Biviano (No 2) [1962] VR 420; Cicinave Pty Ltd v Jasco Pty Ltd (1989) 5 BPR [97329].
However, in Wynsix Hotels (Oxford St) Pty Ltd v Toomey,[18] Young CJ in Eq took a different approach. His Honour said this.[19]
Traditionally there were two forms of relief against forfeiture, one where the landlord had re‑entered and one where it had not.
Where there had been a re‑entry at law, equity’s usual order was that there be a re‑grant of a new lease. That, of course, would have stamp duty implications.[20] Where there had been no re‑entry, equity would merely issue an injunction to prevent the landlord re‑entering consequent upon that forfeiture, Dendy v Evans [1910] 1 KB 263.
In the instant case Brownie AJ made an order that the tenant have exclusive possession pending the hearing of the case. Accordingly, it would seem that the tenant still has some sort of lease despite the re‑entry.
The lease is registered on the title. Under s 55 of the Real Property Act 1900, the Registrar General may make a recording removing a lease from the Register if satisfied that due re‑entry has been made. It would seem that no such application has yet been made. In my view, because of s 55, so long as the lease remains on the title I am able to make the alternate relief against forfeiture order, that is, that the landlords be restrained from taking any action to enforce the forfeiture incurred by the plaintiff up to the hearing of these proceedings and that the landlords be restrained from approaching the Registrar General under s 55.
[18] [2004] NSWSC 236.
[19] At [85]-[88].
[20] I interpolate that in the present case there are unlikely to be stamp duty implications because a lease or agreement for lease or any written document for the tenancy or occupancy of land entered into on or after 1 July 2004 is now exempt from stamp duty in this State.

The equivalent in this State of s 55 of the Real Property Act 1900 (NSW) is s 126 of the Real Property Act 1886. That section provides.
The Registrar‑General, upon proof to his satisfaction of re‑entry by the lessor, in manner prescribed by the lease, or under the power in the third subsection of the last preceding section provided for, or of recovery of possession by a lessor, by any proceeding in law, shall note the same by entry in the Register Book, and the estate of the lessee in such land shall thereupon determine, but without releasing him from his liability in respect of the breach of any covenant in such lease expressed or implied.
In this case, Riviera obtained an order from the Court, on 9 November 2012 and following Riviera’s contractual termination or forfeiture of the leases for non‑payment of rent, which order was in the following terms.
The plaintiff re‑entered into and upon the land in the name of the whole on 4 June 2012 and has since that date been entitled to have repossess and enjoy the same as of its former state as the registered proprietor thereof, with the effect that registered leases ... absolutely ceased and determined on 4 June 2012. [Emphasis supplied]
In addition, Fingal was ordered to give Riviera possession of the land within three days of service of a copy of the orders made on 9 November 2012. However, Riviera never served the orders nor took possession of the land. The judgment given in favour of Riviera on 9 November 2012 was stayed on terms so as to enable Fingal to remain in possession whilst it prosecuted its claim for relief against forfeiture of its proprietary interests under the leases.[21]
[21] See the orders made by this Court on 15 November 2012 and 7 December 2012 in the trial book, volume 5 at 1685, 1688.
It follows that, notwithstanding the forfeiture of the leases, Fingal remained in exclusive possession of the premises following 4 June 2012. The situation is analogous to that as described by Young CJ in Eq in Wynsix when he observed that Brownie AJ had made an order that the tenant have exclusive possession pending the hearing of the case. In my view, the reasoning and approach of Young CJ applies to the present case.
I am not aware of any application having been made to the Registrar‑General by Riviera pursuant to s 126 of the Real Property Act. However, given the orders previously made, as just referred to, and that Riviera maintains that it is open to this court to simply reinstate the former registered leases, I infer that no such application has been made. As such, I am in a position to restrain Riviera from taking action to enforce the contractual forfeiture of Fingal’s proprietary interests under the two leases. The two leases, as registered, will remain in the same form and to the same effect as they stood as at 4 June 2012. I propose to proceed in this way.
However in case there is a presently unforeseen practical or legal impediment to the form of orders I propose to make in this respect, I will grant liberty to either party for leave to apply to have my orders in this respect recalled and alternative orders made requiring the parties to execute and register fresh leases in identical terms to those forfeited on 4 June 2012 but backdated to commence as at 4 June 2012.
Riviera has also sought, as a condition of the grant of relief against forfeiture, that Fingal pay certain monies said to be outstanding with respect to outgoings under the leases for June 2013 and the rent said to be outstanding, or to become outstanding, for the month of July 2013. There is a dispute, as I understand the position, over whether or not there are in fact unpaid outstanding outgoings for June 2013. As a matter of principle, rent and outgoings for July 2013 (whatever the amount may properly be) are payable in accordance with the terms of the leases to be reinstated. I made findings in my first reasons as to the extent to which amounts due and payable to Riviera under the (former) leases had been brought up to date by Fingal. My present task is to give effect to my first reasons in the form of the formal orders that I propose to enter. It is not appropriate that I embark upon a consideration and determination of further contested matters concerning amounts said to have arisen as due and payable by Fingal to Riviera following the publication of my first reasons. Once the leases are reinstated as at 4 June 2012, Riviera is fully protected in that both parties will be and will have been obliged to conduct their relationship in accordance with the terms and conditions of those leases.
Riviera also seeks an order that Fingal and Banchory pay to Riviera,
such expenses in the nature of damages incurred by the plaintiff as a consequence of the defendants’ default and the forfeiture of the leases and
any further amounts that are payable under the provisions of the leases.
Again, I take the view that Riviera has such rights, in this respect, as it is entitled under the leases once they are reinstated. I have insufficient information before me to obtain an appreciation of what such additional claimed damage might comprise on Riviera’s case. The questions of what damage was incurred by Riviera as a result of Fingal’s breach of the leases and of the compensation which should be payable to Riviera as the “price” for Fingal’s grant of relief against forfeiture were ventilated at the trial. If it is the case that not all such damage incurred by Riviera in this respect has been dealt with to this point, again, Riviera has its rights under the leases as reinstated. I take the view that it is not appropriate to include the assessment and payment of any such claim as a condition of the grant of relief against forfeiture.
Conclusion
I make the following orders.
THE COURT ORDERS AND DECLARES THAT:
1.Fingal be deemed to have been and to remain entitled to possession of the land being:
1.1the land known as Comfort Hotel Adelaide Riviera, located at 31-34 North Terrace, Adelaide SA 5000, title reference – Volume 5349 Folio 508; and
1.2the land known as Comfort Hotel Adelaide Riviera Carpark, located at 31-34 North Terrace, Adelaide SA 5000, title reference – Volume 5349 Folio 559,
as lessee, as and from 4 June 2012, pursuant to the Memoranda of Lease registered numbers 11744850 and 11744794 referred to in Riveria’s Statement of Claim (“the leases”) subject to the following:
UPON CONDITION THAT:
2.Fingal or Banchory pay to Riviera such set-off costs (as defined in Orders 8-15) if any, found to be payable to Riveria within 14 days of the amount of such set-off costs being ascertained in accordance with Orders 8-15.
THE COURT FURTHER ORDERS THAT:
3.Upon compliance with the condition in Order 2, Fingal be relieved from forfeiture of the leases as provided in Order 1.
4.Pending compliance with the condition in Order 2, the judgment entered in favour of Riviera on 9 November 2012 and sealed on 5 December 2012 (“the judgment”) shall be stayed.
5.Pending compliance with the condition in Order 2, Riviera is restrained from approaching or making an application to the Registrar‑General pursuant to s 126 of the Real Property Act 1886.
6.Upon compliance with the condition in Order 2, the judgment shall be permanently stayed.
7.If there is a failure by both Fingal and Banchory to comply with Order 2, the stay in respect of the judgment in Orders 4 and 6 and the injunction in Order 5 will cease.
8.Fingal is to pay Riviera’s costs of and incidental to its claim in these proceedings on a solicitor and own client basis.
9.Fingal and Banchory (or either) are to pay Riviera’s costs of and incidental to Fingal’s interlocutory application filed 4 June 2013 on a party and party basis.
10.Fingal is to procure Banchory to meet Fingal’s obligation, as previously ordered, to pay Riviera’s costs of and incidental to Fingal’s unsuccessful application to set aside Riviera’s statutory demand in proceedings No SCCIV-12-969 in this Court.
11.Subject to Order 9, Riviera is to pay 70 per cent of Fingal’s costs of and incidental to its cross‑action (counterclaim) in these proceedings on a party and party basis.
12.Each of the costs entitlements identified or referred to in Orders 8 to 11 is to be quantified on a taxed if not agreed basis.
13.Once the amounts of all of the costs identified or referred to in Orders 8 to 11 have been ascertained in accordance with Order 12, the amounts referrable to Orders 8, 9 and 10 are to be set off against the amount referrable to Order 11.
14.The balance ascertained pursuant to Order 13 is to be paid to the party entitled within 14 days of the ascertainment (by way of taxing master allocatur, if not agreed) of the last of the amounts referred to in Orders 8 to 11 to be ascertained.
15.In the event that a balance ascertained pursuant to Order 13 is found due to Riviera, this balance so due will be the set off costs as defined for the purpose of Order 2.
16.Liberty in either party to apply concerning any practical or legal impediment to the application of Orders 1 and 5.
17.Certified fit for counsel including Senior Counsel.
18. In these orders:
The plaintiff, Riviera Holdings Pty Ltd, is referred to as Riviera.
The defendant/first plaintiff by counterclaim, Fingal Glen Pty Ltd (in liq) is referred to as Fingal.
The second plaintiff by counterclaim, Banchory Nominees Pty Ltd, is referred to as Banchory.
In the event that a practical or legal impediment arises with respect to and such that it were to be necessary to recall or vary Orders 1 and 5 and make a consequential amendment to Order 7, orders along the lines of the following, subject to hearing further from counsel, would need to be made.
A.Upon compliance with the condition in Order 2 and within 21 days of the date of such compliance Riviera is to produce to the solicitors for Fingal executed Memoranda of Lease for execution by Fingal in identical terms to the original memoranda of lease registered numbers 11744850 and 11744794 save for, in each case, the commencement date being recorded as 4 June 2012 and any other consequential changes as necessary.[22]
[22] For example, the initial terms would need to be truncated so as to remain consistent with the existing expiry date of the initial terms.
B.Fingal as lessee and John Phillip Buff and Leslie Frank Hammond as guarantors are to execute the leases and return them to the solicitors for Riviera within a further period of 14 days.
C.As soon as reasonably practicable after the execution of the leases by Fingal and the guarantors and in any event within two calendar months Riveria (at the expense of Fingal or Banchory) is to take all necessary steps to cause the said leases to be registered over Certificate of Title Volume 5349 Folio 508 including obtaining the consent of any mortgagee and the production to the Registrar‑General of: an application pursuant to s 126 of the Real Property Act to note the re entry on the former registered leases Number 1174850 and 11744794, the new executed leases and the duplicate Certificate of Title.
In addition, Order 1 would need to be varied so as to delete reference to the presently registered leases and to make reference to such fresh leases as might be ordered to be executed and registered.