Tok Holdings Pty Ltd v Marchionna (No 2)
[2025] VCC 1606
•6 November 2025
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-22-05123
| Tok Holdings Pty Ltd (ACN 006 559 066) | Plaintiff |
| v | |
| Richard Marchionna | Defendant |
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JUDGE: | HIS HONOUR JUDGE WISE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 28 October 2025 | |
DATE OF JUDGMENT: | 6 November 2025 | |
CASE MAY BE CITED AS: | Tok Holdings Pty Ltd v Marchionna (No 2) | |
MEDIUM NEUTRAL CITATION: | [2025] VCC 1606 | |
REASONS FOR JUDGMENT
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Subject:Review of a Decision of the Court Constituted by a Judicial Registrar
Catchwords: Retail Lease - Exercise of Option - Whether Notice Absolute and Unqualified - Overholding - Statutory Continuation - Guarantor Liability – Retail Leases Act 2003 (Vic) Arrears And Interest – Mitigation.
Legislation Cited: Retail Leases Act 2003 (Vic)
Cases Cited:Tok Holdings Pty Ltd v Marchionna [2025] VCC 539, MPA Construction Pty Ltd v Profine Construction Pty Ltd (No 2) [2020] VCC 1254, Lolly Pops (Harbourside) Pty Ltd v Wencog Pty Ltd (1998) 9 BPR 16,361; [1998] NSWSC 304, Vered Nominees Pty Ltd v Scalex Pty Ltd [2002] VCAT 392, Kavia Holdings Pty Ltd v Suntrack Holdings Pty Ltd [2011] NSWSC 716, Quadling v Robinson (1976) 137 CLR 192, Astor Theatre WA Pty Ltd v Zimmermann Investments Pty Ltd [2014] WASC 329, P G Kazis Nominees Pty Ltd v Bakers II Pty Ltd [2018] SADC 48, AZW International Pty Ltd v N J Agius Pty Ltd [2018] VCAT 1281, Sea One North Pty Ltd v Ignazia Pty Ltd [2024] NSWSC 343, APlus Capital Pty Ltd v Kontomichalos [2024] VSC 546; Verraty Pty Ltd v Richmond Football Club Ltd [2020] VSCA 267; Bob Jane Corporation Pty Ltd v Commercial Road Developments Pty Ltd and Anor (Retail Tenancies) [2007] VCAT 2120; Crown Melbourne v Cosmopolitan Hotel (2016) CLR 1; Legfin Pty Ltd v Anthony (Building and Property) [2015] VCAT 986; Pagica Pty Ltd atf the Oscinah Trust v Inlet Property Pty Ltd (Building and Property) [2024] VCAT 830.
Judgment: For the plaintiff.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms S Weinberg | Tisher Liner FC Law |
| For the Defendant | Mr Richard Marchionna | Self-Represented |
HIS HONOUR:
Contents
Introduction
The conduct of this review
Review
The Issues
Issue 1. Was the Option Exercised? Letter of 26 September 2019.
Legal Principles
Analysis
Issue 2 – if the option was not validly exercised, did the tenant overhold pursuant to clause 10.1 of the Lease
Issue 3 – Liability of Mr Marchionna as guarantor for the obligations of the tenant
Issue 4 - Quantum
Conclusion and Orders
Introduction
1This proceeding is a review of a trial judgment of Judicial Registrar Bennett made on 6 May 2025 in Tok Holdings Pty Ltd v Marchionna [2025] VCC 539 (JR Reasons) which will be referred to throughout this judgment.
2This judicial review is by way of a rehearing de novo, and as a consequence, I am not bound by the Judicial Registrar’s reasons, nor do I need to search for error, as one would on an appeal by way of rehearing. The submissions made by the defendant, both in writing and orally before me today, address the defendant’s reasons why it is he says that the judgment ought to be set aside.
3This proceeding concerns shop 10-16 on the ground floor of the Trak Centre at 443-449 Toorak Road, Toorak (the Premises) and an associated parking space (the Carpark). The plaintiff is the landlord. The tenant, Jorimar Solutions Pty Ltd (Jorimar), has operated a restaurant called Funkies from the Premises. The defendant, Mr Richard Marchionna, is Jorimar’s sole director, runs the restaurant and guaranteed Jorimar’s obligations under the lease and carpark licence.
4The plaintiff sues for unpaid rent for the Premises and unpaid licence fees for the Carpark, together with legal costs. The central issue is the legal basis on which Jorimar has occupied the Premises since 1 April 2020.
5On 31 March 2011, Jorimar leased the Premises from the then-owner, Paisley Ridge Pty Ltd, for five years to 31 March 2016, with an associated Carpark licence. Mr Marchionna signed as director and guarantor. A Deed of Variation executed on 4 September 2015 extended the lease from 1 April 2016 to 31 March 2020 and granted an option for a further three years to 31 March 2023 (the Option), with overholding provisions if the tenant remained in possession without objection.
6The plaintiff became registered proprietor on 17 December 2018 and is entitled to enforce the Varied Lease. It is accepted that the Retail Leases Act2003 (Vic) (RLA) applies, but this dispute is within the landlord-guarantor exception in section 89(4)(c) and is therefore not within VCAT’s exclusive jurisdiction.
7The plaintiff pleads that Jorimar exercised the option by a letter dated 26 September 2019 (the September 2019 Letter), and that an equitable lease arose for the option term. It says that, from April 2023, Jorimar continued as a monthly tenant under the overholding provisions. Alternatively, if the option was not exercised, Jorimar has been a month-to-month tenant since 1 April 2020 under clause 10.1. The plaintiff says rent and licence fees remain unpaid and the defendant is liable under his guarantee. The claim is quantified by reference to a ledger maintained by its managing agent.
8The defendant, who is self-represented, contends that the September 2019 letter was conditional on a rent reduction and further lease and was therefore ineffective. He further argues that the plaintiff cannot rely on equity because it did not act with clean hands, including by failing to conduct the required market rent review and by issuing misleading rent review letters in 2022. He says that failure to comply with clause 11 renders the guarantee unenforceable and the claim should be dismissed. He also disputes the quantum, saying the plaintiff belatedly credited interim COVID-era rent payments of $500 per week and improperly increased rent from May 2022 based on an invalid appraisal. He says Jorimar remained in occupation from April 2020 at the plaintiff’s request pending rent negotiations and that the plaintiff’s silence after March 2023 reasonably led him to believe the lease had ended. He maintains the Varied Lease expired on 31 March 2020 and that no guarantee applied beyond that date.
9Mr Marchionna did not press all of these matters before me and it will be apparent from my reasons below what matters were pressed.
10It is common ground that Jorimar already owed $42,948.86 in arrears as at 31 March 2020, which the defendant concedes. The plaintiff does not pursue Carpark licence fees after 1 April 2020, and from that date claims only unpaid rent. The claim for legal costs was abandoned.
11By orders dated 27 May 2025 Judicial Registrar Bennett ordered that:
(a)The defendant pay to the plaintiff the sum of $727,859.65.
(b)The defendant pay to the plaintiff interest on the principal sum owing as at 1 December 2022 ($345,629.15) at the penalty interest rate of 10% per annum from 1 December 2022 to the date of judgment, being the sum of $85,981.17.
(c)The defendant pay the plaintiff’s costs of the proceeding, including reserved costs but excluding the costs incurred by the plaintiff on 31 July 2024, on the standard basis to be taxed in default of agreement.
The conduct of this review
12The parties were agreed that no witnesses would be called on this review, they agreed that the transcript of the examination and cross-examination of witnesses should form part of the record that I might have to resort to in deciding the review.
Review
13Adopting the approach of his Honour Judge Woodward (as he then was) in MPA Construction Pty Ltd v Profine Construction Pty Ltd (No 2) [2020] VCC 1254, in my view, it is proper in this case to give considerable weight to the JR Reasons for the following reasons:
(a)The summary of the facts and argument is comprehensive;
(b)Save for any differences noted below, I consider that the JR Reasons accurately and correctly set out the legal principles to be applied; and
(c)Save for the fact that I reach a different conclusion on the issue of whether the Option was effectively exercised, the conclusions reached are unimpeachable.
14Further, given these matters and the summary nature of these proceedings, it is neither necessary nor appropriate for me to add substantively to the JR Reasons just for the sake of doing so. I therefore adopt without repeating the summary of facts and argument, the analysis of the law and, save as set out below, the conclusion reached in the JR Reasons.
The Issues
15There are really only four issues that arise for consideration in this review.
16First, was the Option effectively exercised by the Tenant by the letter of 26 September 2019?
(a)For the reasons set out below, I find that the Option was effectively exercised.
17Secondly, if the Option was not so exercised, did the tenant remain in occupation of the premises pursuant to the overholding provisions of the Varied Lease from 1 April 2020 until 31 May 2025?
(a)For the reasons given in paragraphs 137 – 168 of the JR Reasons, which I consider to be correct and adopt, the Tenant was in occupation pursuant to the overholding provisions of the Varied Lease.
(b)Further, given my answer to Issue 1, I also find that the tenant was in occupation from 1 April 2023 until 30 June 2025, pursuant to the overholding provisions of the Varied Lease.
18Thirdly, is Mr Marchionna liable as guarantor for the obligations of the tenant?
(a)For the reasons set out below, I find that he is.
19Fourthly, what is the quantum for which Mr Marchionna is liable?
(a)The quantum was not seriously in dispute. The amount for which Mr Marchionna is liable is as ordered by Judicial Registrar Bennett, whose orders will be confirmed.
Issue 1. Was the Option Exercised? Letter of 26 September 2019.
20The sole point upon which I depart from the JR Reasons concerns the proper construction of the letter dated 26 September 2019. Judicial Registrar Bennett concluded that the letter did not constitute an absolute and unqualified exercise of the option, and therefore the option was not validly exercised. With respect, I do not agree.
21For convenience, the text of the letter is reproduced below.
“Dear Donna
Re: Notification of exercise of option for Shops 10-16 Ground Floor Level, Trak Centre
I am writing to advise that I am exercising the option that I am entitled to for the further period of three years.
I am also advising that I would be receptive to a new lease for a minimum of 5 years.
Business conditions have turned sharply down over the last 12 months and the level of rent that the business can sustain needs to be reviewed sharply down. Sales are currently running at a level that to make the rent it takes 2 days sales which is not sustainable. The cause of the reduction in sales, according to my observations and discussions with other traders in the village, is not due to competitive activity. In fact another establishment has recently shut down because of a lack of general activity in the area.
I therefore request that for the new period the rent be $1500/week incl GST and outgoings.
I have, as you know, been here in the village at Funkies for over 17 years and have never before experienced worse trading conditions or seen as many empty shops.”
Legal Principles
22In paragraphs 106 to 122 of the JR Decision, Judicial Registrar Bennett rightly identified and analysed a number of authorities relevant to the determination of this issue.
23These paragraphs are replicated below.
[106] In Lolly Pops (Harbourside) Pty Ltd v Wencog Pty Ltd,[1] the plaintiff tenant contended that it had validly exercised an option for a further lease term by delivering to the landlord a covering letter from its controlling director and an enclosed notice.[2] The covering letter made various complaints in the first two paragraphs, before going on to state:
[1](1998) 9 BPR 16,361; [1998] NSWSC 304.
[2]See (1998) 9 BPR 16,361 at 16,365.
“The enclosed lease renewal notice is therefore subject to me knowing precisely what is likely to happen over the short to medium term, what is the plans in terms of merchandising mix and how is [the tenant] to be affected any more than it is already.
…
What really irks me is that I am still being asked to pay for rental on a property that is obviously in trouble and as far as I am concerned I am renewing my lease oblivious to the future. Please contact me at the earliest possible time.”
[107] The enclosed notice was headed “Notice of Lease Renewal” and commenced by stating: “Pursuant to the terms of the lease be advised that [the tenant] hereby elects forthwith to continue with the second further term and exercises the option to renew the lease of shop 283 Festival Market Place at Darling Harbour.”
[108] Amongst other things, Young J was required to consider whether the documents constituted an exercise of the option or were merely a conditional acceptance. In concluding that the tenant had exercised the option, his Honour stated:[3]
[3](1998) 9 BPR 16,361 at 16,373.
“It is not every acceptance which appears to have a condition attached to it that should be classed as a qualified acceptance. There may be an acceptance which asks for matters to be reviewed so long as it is clear from the whole of the context that if the request is refused, the acceptor is prepared to carry out the original contract. Furthermore, there may be an acceptance coupled with an offer to enter into a further collateral contract.
It seems to me that the ‘subject to’ matters referred to in the [covering letter] are in the category of a general request for consideration in view of all the problems that the lessee has been experiencing through the renovation works of the lessor and should not be taken to be a condition qualifying the acceptance.” (emphasis added)
[109] In Vered Nominees Pty Ltd v Scalex Pty Ltd,[4] the tenant asserted that it had not exercised an option to renew a lease, whereas the landlord asserted that the tenant had done so. The purported notice was contained in a letter from the tenant’s solicitors headed “Option for Renewal of lease – 14-18 Cremorne Street” and stated:
[4][2002] VCAT 392.
“We refer to the above matter and advise that we act on behalf of Scalex Pty Ltd the Lessee of the above premises. Our client has forwarded to us a copy of your letter dated 8 November 1999 and we advise that our client wishes to exercise the Option contained in the Lease.
As per the terms of the lease, the rent for the first year will be the same as the current rent, our client would prefer this rent to remain the same for the second year, but will be prepared to negotiate a reasonable variation.”
[110] The tenant relied upon the “cardinal rule” that a notice of exercise of an option must be clear and unequivocal and that the exercise of the option must be absolute and unqualified. It contended that, having regard to the second paragraph quoted above, the letter was simply an invitation to continue negotiation as to what was the proper rental for year 2 of the option period, rather than an acceptance of the irrevocable offer constituted by the option to renew.[5] Deputy President Macnamara, in concluding that the option had been exercised, rejected this submission. Critical in his reasoning was the fact that the lease provided that the rental in the first year of the option period would be the same as the rental under the expiring lease, and in the second and third years was to be agreed by the parties. Accordingly, the second paragraph of the letter was entirely consistent with the rental review machinery provided for by the lease and therefore “asserts nothing which is inconsistent with the terms of the lease and the terms of the option to renew.”[6] Thus, the Deputy President rejected the tenant’s submission that the second paragraph of the letter was somehow repudiatory of the terms of the option.[7] Rather, he held that, “insofar as this letter of 1st December 1999 suggests a continuation of negotiation, it is not at all inconsistent with the letter in itself constituted [sic] a clear and equivocal [scil: unequivocal] exercise of the option.”[8]
[5][2002] VCAT 392 at [20]-[23].
[6] [2002] VCAT 392 at [29].
[7][2002] VCAT 392 at [29].
[8][2002] VCAT 392 at [31].
[111] In Kavia Holdings Pty Ltd v Suntrack Holdings Pty Ltd,[9] the purported notice of exercise of the option was contained in the second sentence of the following paragraph of a six-paragraph email from the tenant’s representative:
[9][2011] NSWSC 716.
“I am just considering and it is probably worth the lessors while as well, that we tie all the leases up for the full term that we can expect. I would like to have at least another 20 years with Jordons lease and tie that in with Cohibar and Watershed so that they are a composite asset in the books of Kavia. There are benefits both ways by doing such an agreement.”
[112] Justice Pembroke observed[10] that, whilst the primary issue was the understanding of a reasonable person in the lessor’s position in the relevant context, “the lessee cannot hedge its bets, impose its own qualifications, or point to the need for further negotiations. This is the sense in which it is sometimes said that the notice must be ‘absolute and unqualified’: Quadling v Robinson (1976) 137 CLR 192 at 200-201 (Gibbs J)”.
[10][2011] NSWSC 716 at [22].
[113] His Honour went on to hold on a number of bases that the notice in question did not constitute a valid exercise of the option, because it would not have been understood by a reasonable person in the lessor’s position as being “an unqualified statement of a desire to take a further lease of the premises for the further term of years set out in the reference schedule”.[11] One such basis was that the paragraph set out above suggested that the author contemplated further negotiation.[12] Another was that the second sentence proposed two qualifications in relation to the lease: the first being that the author stated he would like to have “at least another 20 years” (in circumstances where the option provided for only 20 years), and the second being that he wished to tie the Jordons lease (which was the subject of the option) with the other two leases (Cohibar and Watershed).[13] Justice Pembroke observed that this would “involve alteration to some or all of the leases to ensure, among other things, that their expiry dates became coincident”.[14] There were also other bases of invalidity which are not relevant for present purposes.
[11][2011] NSWSC 716 at [29].
[12][2011] NSWSC 716 at [8].
[13] [2011] NSWSC 716 at [9].
[14][2011] NSWSC 716 at [8]-[9].
[114] In Astor Theatre WA Pty Ltd v Zimmermann Investments Pty Ltd, the relevant notice from the tenant stated:[15]
[15][2014] WASC 329 at [7].
“Take notice that pursuant to clause 5(15)(a) of the Lease, and subject to and conditional upon acceptance by the Lessor that Mr Robert Denman shall not be continuing as a Guarantor for the obligations of the Lessee for the First Extended term, or any subsequent extension of the Lease, the Lessee hereby exercises its option to renew the Lease and requests an extension of the Term of the Lease for the First Extended Term, being a further period of five (5) years commencing on 2 September 2014.”
[115] Justice Chaney held[16] that the option had not been exercised, because the phrase “subject to and conditional upon … continuing as a Guarantor” meant that the “lessee was requesting a lease, or an extension of the term of the lease, subject to different conditions and, indeed, different parties, or at least not all of the same parties, given that Mr Denman would have been effectively released as a party to the lease.”
[16][2014] WASC 329 at [19].
[116] In P G Kazis Nominees Pty Ltd v Bakers II Pty Ltd,[17] the landlord contended that the relevant lease had been renewed for a second time by reason of the tenant’s exercise of an option, while the tenant contended that the option had not been exercised. The notice in question was a letter from the tenant’s director stating, relevantly:
[17][2018] SADC 48.
“I am writing to inform you of our intentions to extend our lease on the property … for a further 5 years starting March 2013. We would also like to add another 5 by 5 year lease to the existing lease. We see this extension very important [sic] to us securing our long-term goal in North Adelaide.
We would also like the same conditions as in the previous lease with the only change being the carport in front of the bakery being the bakeries premises. We also require the lease to be registered this term. As your lawyer was inadequate in providing the required documents for the past 9 years, can we get another person to draw the new lease up? … ”
[117] After discussing other reasons why the letter did not constitute a valid exercise of the option, Judge Chivell went on to say:[18]
[18][2018] SADC 48 at [26].
“Even if the letter purported to exercise the option, it was not absolute and unqualified. In his letter, Mr Greven indicated a desire to change the existing lease by:
adding another 5-plus-5-year lease to the existing lease;
making the carport in front of the bakery ‘being’ the bakery’s premises (which I take to mean that he wanted the area of the carport to be included in the demised premises);
having a new lease drawn up by someone other than the person who drew up the last one;
having the lease registered on the title to the property.
These requested alterations were too substantial to be described as constituting an absolute and unqualified request to renew the then current lease on the same terms. The right to renew in clause 4.8.1 of the lease was limited to a renewal ‘on the same terms and conditions as are herein contained’.”
[118] In AZW International Pty Ltd v N J Agius Pty Ltd,[19] the landlord contended that the tenant had exercised an option to renew a lease, while the tenant denied that it had done so. The purported notice had been preceded by several emails from the tenant to the landlord expressing concern about trading conditions at the relevant food court where the premises were located and requesting that the rent not be increased. Three days before the notice was sent, the daughter of the tenant’s director, who acted as the agent of the tenant, had telephoned the landlord and said that the tenant would definitely exercise the option. The landlord responded by asking for this to be confirmed in an email. The tenant then sent an email to the landlord which opened by stating “Im [sic] writing this letter regarding out [sic] rental issue.” The email went on to refer at some length and in general terms to the downturn in customers at the food court and the increasing difficulty in running the business. The final paragraph stated:
[19][2018] VCAT 1281.
“Ultimately, we are extremely grateful that you have always been helping us. We would like our landlord to kindly consider our situation and help us to go through the current economic hardship. Your help will be very appreciated and give us confidence to continue operating the business. We are willing to exercise option of further term and hoping you can still help and support us with the rental issue.”
[119] The landlord contended that, by this email, and in particular the final sentence thereof, the tenant had exercised the option. The tenant contended that the option was not exercised and would only be exercised if the rent was reduced. Senior Member Forde held[20] that the words of the final sentence of the email “were sufficiently clear to be an operative act as opposed to a mere statement of future intention” and that they “constitute a clear and unequivocal act to exercise the option.” She further held[21] that the phrase “and hoping you can still help and support us with the rental issue” was “not a qualification or reservation on the exercise of the option”, but rather, “a repeat of previous requests by [the tenant] of the Landlord for rental relief” and that the email “does not make the exercise of the option conditional upon rental relief”. Accordingly, the Tribunal concluded,[22] having regard to all the circumstances of its receipt – including the parties’ previous correspondence and the telephone call to which I have referred – that the email constituted an exercise of the option by the tenant.
[20][2018] VCAT 1281 at [29].
[21][2018] VCAT 1281 at [30].
[22][2018] VCAT 1281 at [32].
[120] In Sea One North Pty Ltd v Ignazia Pty Ltd,[23] the plaintiff tenant denied that it had exercised a renewal option conferred by clause 22.1 of the relevant lease, while the defendant contended that the plaintiff had done so. The purported notice was contained in an email from the tenant’s sole director to the landlord’s agent, which occurred in the course of various communications regarding the issue of whether the tenant intended to exercise its option. The email stated:
[23][2024] NSWSC 343.
“Just a further update re: the lease @ [the subject property].
I’ve now had the scope of the refurb works finalised with the franchisor … all of the works can be categorised as internal refurb (eg flooring, joinery, internal painting, internal signage, furniture and the like) … at least nothing that requires external approval … just a hefty amount of $$!
So I am fine to now formally exercise the lease renewal option.
And in terms of getting to an agreed set of renewal terms, I have asked Dennis Kalofonos to assist with the process …”
[121] Justice Peden began by considering the relevant authorities, noting by reference to Quadling v Robinson[24] that “It is well established that the valid exercise of an option must be absolute and unqualified. The purported exercise of an option will not be absolute and unqualified if it would involve a variation of the terms of the option”.[25] Her Honour went on to conclude for a number of reasons that the option had not been exercised. One such reason was that the language of the penultimate paragraph communicated that a path had been cleared for the future exercise of the option and not that the option was thereby being exercised. More relevantly for present purposes, another such reason was that in the final paragraph:[26]
[24](1976) 137 CLR 192 at 201.
[25][2024] NSWSC 343 at [13].
[26] [2024] NSWSC 343 at [20]-[21].
“… [the author] does not speak with finality one would expect in relation to an unequivocal exercise of an option to renew, but instead envisages a process by which the parties will be, ‘getting to an agreed set of terms’. The process is to be achieved with the assistance of Mr Kalofonos. I consider there would be no need for the assistance of Mr Kalofonos, a real estate agent, if what Mr Barbour was agreeing to was a simple exercise of the option on known terms.
In relation to the lease, there was no need for any further negotiation of any terms. Instead, all terms had been determined …”
[122] In concluding that the option had not been exercised, her Honour also opined[27] that the use of the word “And” at the beginning of the final paragraph meant that that paragraph naturally flowed from the language of the penultimate paragraph. Thus, the penultimate paragraph could not be read as unqualified by the final paragraph. The letter was therefore “not an unqualified exercise of the option, but instead sets out the writer’s proposed process for moving forward.” Relatedly, Peden J concluded[28] that “[the tenant’s] desire to negotiate terms is inconsistent with, or would require the variation of, the actual terms of cl 22.1, and is not an absolute and unequivocal exercise of that right.”
Analysis
[27][2024] NSWSC 383 at [22].
[28][2024] NSWSC 383 at [24].
24As was noted in the JR Reasons:
[101] There was no substantial dispute between the parties as to the applicable legal principles concerning the exercise of an option. The plaintiff submitted, by reference to a number of authorities, that the “cardinal rule” is that a notice purportedly exercising an option must be clear and unequivocal, and that the exercise of the option must be absolute and unqualified.[29] This proposition is uncontroversial and the defendant took no issue with it. Relatedly, both parties agreed that an option cannot be exercised conditionally or, put another way, a purported conditional exercise of an option is not a valid exercise of an option.
[102] The plaintiff further submitted that that a notice purporting to to exercise an option is to be construed objectively in the way it would be understood by a reasonable recipient, and that evidence of the parties' subjective understanding of the effect of the notice is inadmissible.[30] These propositions are well-settled and they were not challenged by the defendant.
[29]The plaintiff cited Croft, Hay and Virgona, Commercial Tenancy Law (5th ed, 2024) at 450 [14.8] and the authorities cited therein.
[30]The plaintiff cited Croft, Hay and Virgona, Commercial Tenancy Law (5th ed, ed, 2024) at 450 [14.8] and the authorities cited therein.
25In my view, giving the September 2019 Letter an objective reading, as would be done by a reasonable person receiving it, it is properly to be understood as serving three distinct purposes.
26First, and most significantly, it contained an unequivocal and operative communication of the present exercise of the option conferred by clause 12 of the Varied lease. The sentence “I am writing to advise that I am exercising the option that I am entitled to for the further period of three years” is expressed as a present act of election, unqualified by any other matter. The sentence stands alone and its meaning is beyond doubt. This is reinforced when regard is had to the subject line of the letter which indicates what must be the primary purpose of the letter as “Re: Notification of exercise of option for Shops 10-16 Ground Floor Level, Trak Centre”.
27The letter then continued to canvass two further matters. There are no words in those subsidiary matters that indicate that they are conditions placed upon the otherwise unconditional exercise of the option in the first paragraph. A reasonable recipient of the letter would not have understood them to be conditions placed upon that exercise of the option.
28Secondly, the letter conveyed the tenant’s willingness to enter into discussions for a lease term beyond the option period by stating that “I am also advising that I would be receptive to a new lease for a minimum of 5 years”. I note the use of the word “also” which reinforces that the subject matter of the first paragraph was standalone and this was a further and different matter. In submissions before me, Mr Marchionna disavowed any reliance on this paragraph as placing a condition on the exercise of the option in the first paragraph.
29Nevertheless, it does provide context to understand what the tenant was doing in the second and third to fourth paragraphs of the letter. Objectively and reasonably read, the second paragraph makes clear that notwithstanding that the tenant had effectively exercised the option – that is, that it had secured to itself a term of three further years to which it was legally entitled and upon the terms of the Varied Lease – it wanted to engage the landlord in discussions to obtain an extended term of 5 years and (by the third subject matter in the letter to which I will refer shortly) renegotiate the rent down, if these were possible. However, what is tolerably clear is that the exercise of the option was the primary issue that the letter was directed to and the tenant was clear that it was exercising that option then and there.
30Thirdly, it advanced a proposal for the renegotiation of rent, referring to deteriorating trading conditions and expressly requesting that “for the new period the rent be $1500/week incl GST and outgoings”. As I stated in the last paragraph, I consider this to be an expression of a desire to renegotiate the rent that would apply to the term that had been renewed by the exercise of the option. It was not expressed to be a condition upon that exercise. Reading the letter as a whole, the tenant was careful to protect its right to obtain a further three year term and thereafter to negotiate a lower rent, if it could. But these matters were not interdependent.
31The second and third matters are properly characterised as proposals for future negotiation rather than conditions upon the act of renewal. That distinction has been repeatedly recognised in the authorities summarised above. In Lolly Pops, Young J upheld the validity of a renewal notwithstanding the accompanying language in the covering letter which referred to the renewal notice being “subject to me knowing precisely what is likely to happen” and “as far as I am concerned I am renewing my lease oblivious to the future”. Young J held that such statements amounted only to requests for consideration and not to conditions that qualified the effectiveness of the exercise. Similarly, in Vered Nominees, the tenant’s solicitors stated that the client “wishes to exercise” the option and then immediately expressed a preference that the rent remain the same into the second year, while being prepared to negotiate a variation. That was still held to be a clear and unequivocal exercise because the lease itself contemplated agreement on rent for subsequent years and the tenant did not state that the renewal depended upon the rent position being accepted.
32When contrasted with those cases where the exercise was held to be invalid, the different character of the present letter becomes plain. In Kavia Holdings, the tenant did not confine itself to exercising the option conferred by the existing lease but instead spoke of wanting “at least another 20 years” and tying together three separate leases. Justice Pembroke expressly found that this amounted to a contemplated alteration of the existing contractual framework, not an acceptance of it. In Astor Theatre, the tenant’s purported exercise was expressly “subject to and conditional upon” the landlord accepting the removal of a guarantor, which the Court held would amount to different parties being bound and hence a renewal only on new terms. In Sea One North, the tenant stated “I am fine to now formally exercise the lease renewal option” but immediately followed with reference to “getting to an agreed set of renewal terms” with assistance, which Justice Peden interpreted as indicating that exercise would occur only once further terms were agreed. In each of those cases, the renewal was expressed as dependent on alteration to the existing contractual terms.
33When reading the September letter as a whole it bears the character that I have described above. First, it was an unequivocal and unconditional notice of exercise then and there of the option that the tenant was legally entitled to. It then sought to introduce the notion of a longer term and a rent reduction as secondary matters to be negotiated.
34Accordingly, I conclude that the option was validly exercised on 26 September 2019 and the lease renewed for the period 1 April 2020 to 31 March 2023.
35Mr Marchionna made an argument that the plaintiff acted harshly, unconscionably and without clean hands. This argument was articulated in paragraphs 21 to 23 of his written submissions dated 22 October 2025.
36As best I can understand them they allege that the plaintiff engaged in the following misconduct:
(a)The plaintiff pursued the guarantor alone without pursuing the tenant as well.
(i)I reject that this constitutes any form of misconduct. The plaintiff is entitled to pursue whichever defendant it considers it has a legally enforceable claim against to the exclusion of any other.
(b)The assertions in paragraph 22 of those written submissions do not make any sense and I do not pause to comment on them further.
(c)The plaintiff pursued Mr Marchionna for the rent that prevailed pre-COVID in the knowledge that this rental was uncommercial.
(i)I reject this submission. The tenant was liable to pay the rent contracted for subject to such relief as it was entitled to under the COVID rental relief regulations. Mr Marchionna was liable as guarantor. There is nothing unfair or inequitable in the plaintiff pursuing its strict contractual rights.
(d)I also pause to consider all of these matters together, and for the same reasons do not consider them to ground any form of relief for Mr Marchionna.
Issue 2 – if the option was not validly exercised, did the tenant overhold pursuant to clause 10.1 of the Lease
37If that conclusion were wrong, I would nevertheless adopt the Judicial Registrar’s reasoning in paragraphs 137 to 168 of the JR Reasons in finding that the tenant remained in occupation of the premises with the landlord’s permission such that the overholding provisions in clause 10.1 of the Varied Lease were engaged.
38Given my conclusion in paragraph 34 above, I would similarly hold that for the period following the expiry of the further term on 31 March 2023, the tenant remained in occupation of the premises with the permission of the landlord from 1 April 2023 until it vacated on 30 June 2025 under the overholding provisions in clause 10.1 of the Varied Lease.
39I wish to deal with one further argument advanced by Mr Marchionna before me. He made a submission by reference to s 28 of the RLA as in force from 24 August 2011 (Version No.15).
40That provision has the effect that if a tenant remains in possession of premises with the landlord’s consent after a lease has expired, “the lease continues on the same terms and conditions until the date specified in the landlord’s notice [given under the RLA] or until a new lease is entered into.”
41Ms Weinberg submitted that this was the wrong version of the RLA to which regard should be had and directed my attention to sections 10 and 12 of the RLA as in force from 1 July 2017 (Version No.24).
42Section 10 provided that “If, in accordance with a retail premises lease, the tenant continues to be in possession of the retail premises for a period after the lease has expired, the lease is taken to continue for the purposes of this Act while the tenant is in possession of the premises.”
43Ms Weinberg submitted that the purpose of this provision and the inclusion of the words “for the purpose of this Act” were tied to s 12, the effect of which was to make leases for a term of less than 12 months (which would be outside the remit of the RLA) subject to the Act if the tenant remained in possession with the consent of the landlord for an aggregate period of 12 months or more taking into account among other things the “the lease being continued”.
44Mr Marchionna’s submission was that the effect of these provisions was that any overholding by the tenant after the expiry of the term on 31 March 2020 came to be perforce of the statutory continuation of the lease rather than perforce of the lease itself. This, he said, led to the conclusion that the guarantee within the lease did not extend to any liability of the tenant pursuant to such a “statutory overholding”.
45He was asked to provide any authority that stood for such a proposition. He said that he had such authorities but that they must have fallen out of his bag and therefore did not have them with him at the time he made his submissions. I allowed him the opportunity to provide any such authorities to my Chambers by the end of the day.
46Mr Marchionna forwarded to my Chambers six authorities.[31] I have reviewed all of them. None of those authorities addressed the issue of whether the statutory continuation of a lease under the RLA works a discharge of a guarantee of the primary lease obligations. Some of them did not address the question of a guarantee of a lease at all.
[31]APlus Capital Pty Ltd v Kontomichalos [2024] VSC 546; Verraty Pty Ltd v Richmond Football Club Ltd [2020] VSCA 267; Bob Jane Corporation Pty Ltd v Commercial Road Developments Pty Ltd and Anor (Retail Tenancies) [2007] VCAT 2120; Crown Melbourne v Cosmopolitan Hotel (2016) CLR 1; Legfin Pty Ltd v Anthony (Building and Property) [2015] VCAT 986; Pagica Pty Ltd atf the Oscinah Trust v Inlet Property Pty Ltd (Building and Property) [2024] VCAT 830.
47Bob Jane bore on the question of whether an overholding pursuant to a lease, set up a new lease, to the extent that it required the tenant to decide to remain in occupation after the expiry of the lease term and the landlord to agree. Thus it was said to require a new consensus between the parties. While this may be so, it did not grapple with the question of whether a guarantee of the original lease extended to the new lease constituted by the parties agreeing to the tenant overholding. It also said nothing about the effect of s 10 and 12 of the RLA on such circumstances. As I will find below, the terms of the guarantee in this case clearly extend to any overholding by the tenant.
48It is unnecessary for me to delve into the transitional provisions of the RLA to work out which of those provisions might apply. This is because it is plain that, regardless of which provision applies, the argument put by Mr Marchionna must fail.
49It fails for the simple reason that the effect of those provisions is not to create any new or varied lease obligations upon the tenant beyond those already present in the Varied Lease. In both instances the provisions merely provide that the expired lease “continues” until some other event occurs. The terms of the continued lease continue to apply with full force and effect from the date of expiry.
50To the extent that the varied lease makes provision in clause 10.1 for the tenant to become a monthly tenant at 1/12 of the prevailing annual rental, by force of the statutory provisions those terms continue to apply.
51To the extent that the guarantee in the Varied Lease (see clause 7 of the Deed of Variation and clause 15.1 of the Lease) includes a guarantee of the tenant’s obligation during “any period of overholding after the end of the term” (see clause 15.1.1 and 15.1.2), those terms continue to apply.
52I can see no basis upon which it might be said that the guarantee is discharged merely because the statute might provide for the “continuation” of the lease, particularly when the plain words of the guarantee contemplate its application during such a period.
53I therefore conclude that the tenant remained in possession of the premises under the overholding provisions of the Varied Lease and was therefore liable to pay rent as provided for in those provisions.
Issue 3 – Liability of Mr Marchionna as guarantor for the obligations of the tenant
54Judicial Registrar Bennett dealt with this matter at paragraphs [203] – [213]. I agree with his reasoning and adopt them and his conclusions.
55I do also note that to the extent that I have found that the Option was validly exercised, the guarantee in clause 15.1.1 and 15.1.2 of the Varied Lease also provide that the guarantee subsists in respect of the tenant’s liability “for the term and any renewed term or terms and during any period of overholding …”
56Thus, I find that the guarantee liability includes that incurred during the renewed terms as well as the period of overholding.
57The consequence is that Mr Marchionna as guarantor is liable to pay to the landlord such amounts as the tenant was liable to pay.
Issue 4 - Quantum
58Following the delivery of the JR Reasons, the plaintiff provided to the Court a document entitled “Sum Owed by Guarantor”. This contained a calculation carried out in accordance with the findings made in the JR Reasons. Ms Weinberg for the plaintiff submitted that this was the basis upon which the plaintiff pressed its claim before me.
59Mr Marchionna accepted that the sums set out in that document accurately recorded all of the debits and credits applicable to the account.
60He did continue to agitate some form of argument that the credits ought to have been applied to the debit balance earlier than they were and this would have extinguished any amounts for which he accepted that he was liable. This argument really goes nowhere. All credits and debits have been accounted for. No contractual interest has been applied by the plaintiff. Interest is only sought according to statute on the net sum that was owing at the commencement of the proceeding, after the application of such credits and debits as would fully extinguish the amount that was admitted to be owing. Under those circumstances, the argument fails.
61Finally, Mr Marchionna made a vague argument that the plaintiff failed to mitigate its damage by not moving to evict the tenant at an earlier date.
62I note that Mr Marchionna has not pleaded that the plaintiff failed to mitigate its damage nor particularised what steps it ought to have taken in mitigation. He did not make submissions before the Judicial Registrar on the point. Evidence may well have been led or examined which went to this question. He may have been cross-examined on the tenant’s attitude had the landlord attempted to evict it. Under those circumstances it is my view that he cannot make such an argument in closing submissions.
Conclusion and Orders
63The orders made by Judicial Registrar Bennett on 27 May 2025 should therefore be confirmed.
64I will make the following orders.
(a)The Notice seeking review of a decision constituted by a Judicial Registrar filed on 16 June 2025 is dismissed; and
(b)The orders of Judicial Registrar Bennett dated 27 May 2025 are confirmed.
65Subject to any matters that the parties bring to my attention on the question of costs, I propose to order that the defendant pay the plaintiff’s costs of the proceeding (including reserved costs) on the standard basis, in default of agreement.
66The parties should submit draft orders to my chambers to reflect these reasons within 7 days of today’s date.
67Should there be any matters that require the Court’s further attention (including in respect of costs) they should correspond with my chambers within 7 days.
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Certificate
I certify that these 22 pages are a true copy of the judgment of His Honour Judge Wise delivered on 6 November 2025.
Dated: 6 November 2025
Liam Crough
Associate to His Honour Judge Wise.
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