Tebb v Filsee Pty Ltd; Tebb v KKV Pty Ltd

In the case of Tebb v Filsee Pty Ltd; Tebb v KKV Pty Ltd, the dispute arose between the landlords, Tebb, and their respective tenants, Filsee Pty Ltd and KKV Pty Ltd. The landlords had provided bank guarantees to secure the tenants' obligations under their leases. Following the tenants' default in payment of rent and land tax, the landlords repudiated the leases and re-entered the premises. An arrangement was subsequently made to permit the tenants' access to the premises in return for immediate payment of a portion of the arrears and land tax, with the balance of the indebtedness to be resolved by the payment of fees and reinstatement of the bank guarantees. The tenants, however, failed to comply with all further conditions of the arrangement. The central issue before the court was whether the guarantees continued to apply or were discharged or extinguished upon the termination of the leases and the grant of the licence, and whether the landlords had fully mitigated their loss such that their damages were nil by entering into the licence arrangement.

The court examined the legal principles surrounding the guarantees and the circumstances of the tenants' default and the landlords' actions. It distinguished the case from Progressive Mailing House v Tabali, where the court held that a landlord was not required to mitigate losses by taking reasonable steps to re-let the premises. The court considered the cases of Koch Marine Inc v D’Amica Di Navigazione ARL and Luxer Holdings Pty Ltd v Glentham Pty Ltd, which dealt with the effect of a licence agreement on the underlying lease and security interests. The court held that the guarantees remained in effect as they were not expressly discharged by the licence and the tenants' failure to comply with the terms of the licence did not affect the enforceability of the guarantees. The landlords' damages were not nil as they had not fully mitigated their loss by entering into the licence arrangement.

The appeal was dismissed, and the landlords were entitled to claim the amounts due under the guarantees. The court held that the landlords were not required to mitigate their losses by entering into the licence arrangement, as the arrangement was not a reasonable step to mitigate the loss. The guarantees remained valid and enforceable, and the landlords were entitled to claim the amounts due under the guarantees from the tenants. The court further held that the landlords had not fully mitigated their loss by entering into the licence arrangement, as the arrangement was not a reasonable step to mitigate the loss.