Simjanovski v Maribyrnong Views Pty Ltd

[2000] VSC 4

SUPREME COURT OF VICTORIA
PRACTICE COURT	Do not Send for Reporting
Not Restricted

No. 4043 of 2000

SIME SIMJANOVSKI	Plaintiff
v.
MARIBYRNONG VIEWS PTY. LTD.	Defendant

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JUDGE:	BEACH, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	14 JANUARY 2000
DATE OF JUDGMENT:	14 JANUARY 2000
CASE MAY BE CITED AS:	SIMJANOVSKI v. MARIBYRNONG VIEWS
MEDIA NEUTRAL CITATION:	[2000] VSC 4

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CATCHWORDS:      Landlord and Tenant – Lease – Non-payment of rent – Relief from forfeiture.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr. D. Aghion	Griffin Law Firm
For the Defendant	Mr. N. Pane	Law Partners

HIS HONOUR:

1           I have before me an application on behalf of the plaintiffs for relief against forfeiture.  The plaintiffs are the lessees of premises on the first floor of block two at the corner of Moreland and Parker Streets, Footscray.  They conduct the City Link Restaurant and receptions at the premises.

2           The plaintiffs entered into a lease of the premises in 1987 with the defendants predecessor in title a company called Varda Koren Nominees Pty Ltd.  The lease was for a period of 10 years.  However, in 1991 the lease was extended to 15 years and is to expire on 31 May 2,003.  There is an option in the lease to extend the term for a further period of 10 years after that date.  The rent payable under the lease is payable on the first of each month.

3           On Friday, 31 December 1999, the plaintiffs delivered to the defendant's real estate agent, a cheque in respect of rent for the month of January 2,000.  At the time that cheque was given to the defendant's agent, it was believed by the plaintiffs that there were sufficient funds in the plaintiffs' bank account with the ANZ Bank in Footscray to cover the cheque.  That was based on, amongst other things, the fact that a cheque for $2,500, which the plaintiffs had themselves received, was paid into the account that day together with a further sum of $2,550 in cash which were the receipts the plaintiffs had received from a recent reception held at the premises.  At all events the plaintiffs' cheque bounced and on 11 January the defendant caused the plaintiffs to be locked out of the premises.  It was not until that day that the plaintiffs ascertained that the cheque had not been met.  The plaintiffs' cheque bounced because the cheque for $2,500 which the plaintiffs had paid into their account on 31 December was itself not met.  The plaintiffs immediately set about obtaining a bank cheque from the ANZ Bank in respect of the January rent and paid it again that same day to the defendant's solicitors.  However, although the defendant's solicitors accepted the rent cheque on behalf of the plaintiffs, the plaintiffs have continued to be locked out of the premises, hence the application to this court.

4           The application is opposed by the defendant on the basis that this is just one occasion on which the plaintiffs have not paid the rent when due over the last two years.

5           In the affidavit filed on behalf of the defendant and sworn by their solicitor, Brendan Geary on 14 January, are set out the dates upon which the plaintiffs have been late with the rent payments since November 1998.  The material contained in the affidavit is to the effect that the payment of rent on some six occasions over that period of time has been late.  The longest delay in paying it being 14 days, that having occurred in January of 1999.  The defendant also points to some four previous occasions upon which it has exercised its right to re-enter the premises because the rent was not paid on time.

6           It is said on behalf of the defendant, that having regard to that history of the matter, there is a reasonable likelihood if relief against forfeiture is granted to the plaintiffs on this occasion, the rent will not be paid in future.

7           The principles applicable to applications of this nature were considered by Ormiston, J., as he then was, in Jam Factory Pty Ltd v. Sunny Paradise Pty Ltd and others [1988] V.R. 584. At page 590 His Honour said:-

"In my opinion none of these facts, or any of the others which have been canvassed at the hearing, would justify a refusal to grant relief against forfeiture.  The tenant offered to pay the rent in arrears, and in those circumstances relief against forfeiture for non-payment of rent should be granted usually as of course, save in exceptional circumstances." 

His Honour continued at page 591:-

"As to failure to pay rent, this is clearly not an exceptional case.  Some idea of what that exception requires may be gained from a comment which appears in two of the authorities.  Rigby L.J. Said in Newbolt v. Bingham (1895) 72 L.T. 852, at p.854 that he knew of no case where a court of equity had refused relief because actions had to be brought on previous occasions to recover the rent: Cf. Gill v. Lewis, at p.11."

Later His Honour continued on the same page:-

"The power to refuse relief is clearly reserved for cases of consistently lengthy defaults which may fairly lead to an inference that, even if relief be given, there is a reasonable likelihood that the rent will not be paid in future, at least for some considerable time after the due date for payment.

The only way in which the landlord could deny the applicant relief in this case was by showing that it was or would soon become insolvent because its business was badly run."

8           It is argued on behalf of the defendant that because of the late payment of rent on the various occasions in question, including on this last occasion, one can infer that the business being conducted by the plaintiffs on the premises is not particularly profitable and that there is for that reason ground for believing that if relief is granted there is a reasonable likelihood that the rent will not be paid in future.  In that regard the defendant points out that the plaintiffs have not produced any material before the court to demonstrate the solvency of their restaurant and reception business.

9           Whilst that is so, the material which the plaintiffs have produced to the court demonstrates, on its face, that the plaintiffs have spent more than $500,000 of their own money over the 12 years they have been in occupation of the premises, improving and renovating the reception centre and that as recently as October of 1999, there were negotiations to sell the business for a sum of $400,000.  It is said that one can infer therefore that the business being conducted at the premises is a valuable and profitable one.

10         Sime Simjanovski, who is the first plaintiff in the proceeding, has sworn in his affidavit of 13 January that he was not happy with the ANZ Bank for dishonouring the rent cheque without first speaking to him or one of the other plaintiffs and that he has now made arrangements to move the business account of the plaintiffs to the Commonwealth Bank.  He then swears and I quote,

"As part of those arrangements I have asked the Commonwealth Bank to set up overdraft and automatic debit facilities.  If the plaintiffs are allowed to re-enter the premises I will arrange for the rent to be paid by automatic debit to an account nominated by the landlord."

11         If that proposal is carried out and it is very much in the interests of the plaintiffs to ensure that it is, it should mean that hereafter rent will be paid by the plaintiffs as and when it falls due.

12         Whilst mindful of the strength of the argument advanced on behalf of the defendant, having regard to the circumstances in which the cheque for the January rent was not met, and the significant financial loss that the plaintiffs would suffer if they were refused the relief they seek, I think it is appropriate to accede to their application.

13         I should say however, that if the plaintiffs fail to pay the rent as and when due hereafter and the defendant again re-enters the premises, the plaintiffs may face great difficulty in persuading this court to grant them further relief in the matter.

14         In the circumstances I make the following order in the proceeding:  

Upon condition that the plaintiffs pay to or reimburse the defendant its costs and disbursements on a solicitor and client basis, and all other expenses, including administrative costs reasonably incurred by the lessor in connection with the forfeiture and this proceeding, within 14 days of the allocation of the taxing master or agreement between the parties, the plaintiffs be relieved of forfeiture of the lease referred to in the endorsement on the originating motion.

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