Stylo Medical Services Ltd v Hum Hospitality Ltd

[2013] NZHC 2114

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-005824 [2013] NZHC 2114

BETWEEN  STYLO MEDICAL SERVICES LIMITED Applicant

ANDHUM HOSPITALITY LIMITED Respondent

Hearing:                   6 May 2013

Appearances:           R O Parmenter for Applicant

S M Henderson for Respondent

Judgment:                20 August 2013

JUDGMENT OF ELLIS J

This judgment was delivered by Justice Ellis on 20 August 2013 at 12.00 noon

pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

Date…………………………..

STYLO MEDICAL SERVICES LTD v HUM HOSPITALITY LTD [2013] NZHC 2114 [20 August 2013]

[1]      Stylo Medical Services Ltd (Stylo) is the registered proprietor of a heritage (Category B) property located at 123 Grafton Road.  In 2011 it leased the property to Hum Hospitality Ltd (Hum).   Stylo now seeks to cancel the lease, due to alleged defaults by Hum.   Hum says that Stylo is not entitled to cancel the lease.   In the alternative, Hum seeks relief pursuant to s 253 of the Property Law Act 2007 (the PLA).

Backgound

[2]      Stylo’s sole director and majority shareholder is Dr Shen Tat Ooi, who is a medical practitioner.  Dr Ooi purchased 123 Grafton Road in 2008 from the Housing Corporation.  He immediately spent some $22,000 re-piling the house, which was in a state of considerable disrepair.  He also applied for a resource consent, which was granted in April 2010.

[3]      Dr Ooi  had  no  further money to  renovate the  property and,  indeed,  has deposed that he has some $3.6m worth of bank debt due to his wider property investment activities.  Dr Ooi appointed James Lee from Ray White Commercial to look for a tenant for the property.  Mr Lee introduced Dr Ooi to Rosie Armitage, who is the sole director and shareholder of the respondent, Hum Hospitality Ltd (Hum).

[4]      In late 2010 there were negotiations between Dr Ooi, Ms Armitage and two others (Mr Mather and Ms Christiansen), as a result of which an agreement to lease between Stylo and Hum was signed on 1 November 2010.[1]    A Deed of Lease in relation to 123 Grafton Rd was subsequently executed on 22 January 2011.   As I understand it, both parties had access to legal advice.

[1] Although Mr Mather and Ms Christiansen were initially involved in the project (as guarantors and otherwise) my understanding is that that is no longer so.

[5]      The two  agreements entered into between  Stylo and Hum  are somewhat unusual, and it is necessary to set them out in some detail.

The agreement to lease

[6]      The agreement to lease (the agreement) stipulated that the annual rent would be $87,000 plus GST and that three months rent was payable in advance.  As well as the standard Law Society clauses, the agreement contained a number of further terms including that there would be a rent holiday for a period of 28 months during which the tenant was to be responsible for the payment of all outgoings.  The agreement was said to be conditional upon both the landlord and the tenants’ solicitors’ approval being obtained within five working days.   The agreement also provided that the annual rent was to increase to $100,000 on 1 December 2015 and then to $120,000 on 1 December 2016.  Clause 11 of the agreement was as follows:

11.0     Tenants due diligence

11.1      This agreement is conditional upon the tenant being entirely satisfied in all respects (in the tenant’s sole judgment) the property is suitable for the tenant’s intended use following the tenant undertaking a due and diligent investigation of the property including (but not limited to) an investigation of the building structure, resource and building consents requirement from the local authority, feasibility study of the building layout.

11.2     This condition is for the sole benefit of the tenant and may, at any time prior to this agreement being cancelled, be waived by the tenant giving written notice of the waiver to the landlord.

11.3     The satisfaction of this condition shall be at the sole and absolute discretion of the tenant and if the condition is not satisfied the tenant shall not be obliged to give reasons for the tenant’s lack of satisfaction.

11.4      This condition is to be satisfied within 15 working days from the date of this agreement.

[7]      The agreement went on to provide that the landlord agreed to give the tenant full access to the premises upon the agreement being declared unconditional.  Clause

12.2  set  out  (in  general  terms  at  least)  certain  renovation  work  that  Hum  was required to do, at its own cost prior to commencing its business on the premises. This list of work is replicated in the Deed of Lease itself and I set it out in that context later in the judgment.

[8]      The agreement required that the work to be done by the tenant was to comply with  the  Building  Code  and  that  any  necessary  consents  and  code  compliance

certificates be obtained.   It provided that the tenant was required to  obtain the landlord’s approval to any application for a resource or building consent at least 10 working days prior to the submission of such an application to the consent authority. Then, at cl 12.5, the agreement stated:

The tenant must commence the renovation of the building by 1 March 2011. The work listed in above 12.2.1 to 12.2.4 must be completed by 1 July 2011. The work listed in above clause 12.2.5 to 12.2.6 must be completed by 1

August 2011.  If any of the work is not completed by the time period stated above the landlord may give the tenant 10 working days notice to complete

the work.  If the tenant fails to complete the work within the notice period the landlord may terminate this agreement or the deed of lease immediately.

If this agreement or the deed of lease is so terminated all the work done by the  tenant,  except  kitchen  equipment  will  belong  to  the  landlord.    The

landlord has no obligation to pay any compensation.

[9]      At cl 12.2.7 the lease agreement stated:

For  the  sake  of  clarity  the  tenant  acknowledges  that  the  premises  are currently in a very poor condition.  The landlord leases the premises to the tenant as is.  The landlord gives no guarantee as to whether the premises are fit for the business use of the tenant.   The landlord does not warrant the soundness of the structure, the fit out of the services of the premises either. The tenant will do all the work necessary to make the premises fit for the tenant’s business use and to comply with the requirements of law and local authority.   The tenant will not require the landlord to do any work or contribute to any work that is required for the premises to be used for the tenant’s business use or to comply with the requirements of law or the local authority.

[10]     Finally, the agreement provided that the tenant would have a right of first refusal in the event that the landlord wished to sell the property, provided that the tenant had complied with the lease.

The Deed of Lease

[11]     Following execution of the agreement to lease there was a meeting between Dr Ooi, Ms Armitage and others.  This led to email negotiations between Dr Ooi and Ms Armitage in December 2010 which led to some of the timeframes contained in the agreement to be extended in the deed of lease that was to follow.

[12]     As I have said, that deed of lease (the lease) was entered into by the parties on 22 January 2011.  The Law Society standard terms were again used but (again) further clauses were added of a nature very similar to the additional clauses in the

earlier agreement.  In particular, the lease provided for a three-year rent holiday and contained (in cl 48.2.1-48.2.4) a list of work to be done by the tenants that was identical to that contained in cl 12.2 of the agreement.  Clause 48.2 provides:

48.2Before the commencement of the tenant’s business the tenant shall, at the tenant’s cost, complete the following work:

48.2.1  Repaint and repair (if necessary) the exterior of the building;

48.2.2  Repair the roof brackets (if necessary);

48.2.3  Fence around the balcony;

48.2.4  Landscaping;

48.2.5  Fit out all floors by painting, flooring, installation of toilet and kitchen;

48.2.6  Any other work that in the tenant’s opinion is necessary for the tenant’s business use of the premises.

Details of the works are listed in the attached schedule.

[13]     But the “attached schedule” is not, in fact, particularly detailed and nor is the precise relationship between some of the items appearing on it and the cl 48.2 requirements entirely clear.  It provides:

The tenants agree to take responsibility for the following work in regards to the property at 123 Grafton Road;

Checklist for fit out on Grafton Road.

Roofer  Chimneys to standard and roof check off and repair.

Electrician  Rewiring   of   house   and   replacement   of fixtures to bring it to standard.

Plumbing  Waste  water  and  gas  reticulation  fixtures gassed house.

Builder  All fireproofing requirements, floor repairs, all removal and pre-paint repair, kitchen to health and safety requirements, decking and entire site repair to Heritage Council sign off standards.

Gardener/landscaper                All   external   landscape   work   including gardens,  tree  replacement,  drainage, retaining  walls,  fencing,  hedging  as  per

Council  requirement  for  resource  consent

(including car parking as required).

Architect  Amendment     to     plans     for     restaurant suitability on site, architect overseeing of all work as required by Ian Grant at Council for final sign-off.

Painter  Repainting   of   external   and   internal   to Council standard; required use of Heritage coloured paints and high standard of work.

Designers  Air circulation for main restaurant areas. Fire report  Full report as required by Council. Structural engineer report  Full report as required by Council.

Resource consent

(new resource consent for late licence/Tavern).

Building consent.

[14]     Clause 48.3 requires work to be done in compliance with the Building Code and says that it is the tenant’s obligation to obtain any necessary resource or building consents and to obtain any required code compliance certificate.

[15]     As far as the timeframes were concerned, cl 48.5 of the lease stipulated that while renovation of the building was to commence by 1 March 2011 the work listed in 48.2.1 to 48.2.4 did not need to be completed until some time later:

In relationship [sic] to everything downstairs, landscaping out the front, all external work on the house, front fencing, etc must be completed by 31

December 2011.  All other work in relation to the gardens out the back and inside upstairs must be completed by 31 December 2012.  If any of the work is not completed by the time periods stated above the landlord may give the

tenant 20 working days notice to complete the work.  If the tenant fails to complete the work within the notice period the landlord may terminate this

agreement or the deed of lease immediately.  If this agreement or the deed of lease  is  so  terminated  all  the  work  done  by  the  tenant,  except  kitchen

equipments will belong to the landlord.  The landlord has no obligation to pay any compensation.

[16]     The deed also repeated the earlier clause acknowledging that the premises were in a state of disrepair and that the landlord was not warranting either that they were fit for the business use of the tenant or as to the soundness of the structure.

[17]     Clause 50.1 of the deed stated:

During the period from the commencement date to 1 February 2017 the tenant will be responsible for repair and maintenance of both the interior and exterior of the premises, including the structure and services of the premises. The tenant will not require landlord to do any repair or maintenance work in relation to the premises. The provision in clauses 8.4 and 11.1 to 11.3 of this lease shall be suspended during this period.   Before 1 February 2017 the landlord will have builder’s report done by a registered builder.  The tenant will, at the tenant’s cost, have all the defects revealed by the report remedied by professionals within workmanlike manner within one month from the date  of  receiving  the  report.     Thereafter  the  landlord  shall  take  the obligations of maintenance and repairs as provided in clauses 8.4 and 11.1 to

11.3 to this deed of lease.

The dispute

[18]     Ms Armitage’s evidence was that it was always her intention to renovate 123

Grafton Rd as a community project, principally with the use of volunteer labour and contributions from local businesses and individuals.  Hum would then operate a cafe, restaurant and bar from the premises.

[19]     There is something of a dispute on the affidavit evidence about whether Dr Ooi knew about this at the time of entry into the lease.  Dr Ooi says that he was told by Ms Armitage and the guarantors that if push came to shove Ms Armitage had access to plenty of money and that there was  no difficulty with her eventually meeting the rental payments.   By contrast, Ms Armitage, and now the real estate agent who was present at a critical meeting in October 2010, have said that Dr Ooi was well aware that it was always intended by her to be a project that was of a

different nature.[2]

[2] I have not found it necessary to resolve this dispute in the present context.   However my provisional view is that Dr Ooi would have been well aware in a general sense of what Ms Armitage had in mind; my sense is that she is a person who wears her utopian aspirations on her sleeve.  But whether or not Dr Ooi was lulled into a false sense of security by representations made by or on behalf of Ms Armitage about her future access to money, if required, is not something I can fairly resolve in the absence of cross-examination.

[20]     Shortly after the lease was signed, on 9 February 2011, Dr Ooi emailed Ms Armitage on, asking how she was getting on with the consent process.  He noted the December 2011 completion date for phase one and expressed concern that nothing

appeared to have been done.  Ms Armitage’s reply the same day acknowledged the

tight timeframes under which Hum was operating and reassured Dr Ooi that everything was under control.

[21]     A further inquiry as to progress was made by Dr Ooi in August 2011 and, in November, he asked Ms Armitage to give him a timeline for completion of the project. This does not appear to have been forthcoming.

[22]     In  early  December  2011  there  were  discussions  between  Hum  and  the Council over a number of matters, including the placement of a lift, the placement of bathrooms and an issue about signage on the site which (as I understand it) had been erected as the quid pro quo for sponsorship it had received to fund the project.  The Council required the signage to be removed.  At that point, Dr Ooi was sympathetic to Hum’s plight and, on 13 December 2011 (two weeks before the scheduled completion date for Phase one) he wrote Ms Armitage an email in which he said (inter alia):

As in whether you will take the risk or not to start with the stripping work and doing the gutters and the verandah, that will be up to you.  Of course it is in my interest to see you start the work.   However, you will have some hesitation as the council might not give you what you want (fully, like the upper deck but they have to give you the lift as per requirement) and ask you to  operate  a  restaurant  with  current  structure  (unlikely  as  the  current structure is a residential house which required alteration to meet the commercial needs) I will wait for Barry Kaye’s input.  I think at the end of the day you will get there but just the matter of “TIME”.   I can give you that

As your landlord, it is my interest to support you and hope that both of us can get the return one day.  I think telling you and the council that I will let the house rot and it is their heritage and not mine is just an unreasonable and inappropriate response but I was just as angry and despair as you.

I hope you will keep going. [emphases in original]

[23]     On 15 March 2012 Dr Ooi again sought a timeline for compliance with the resource consent and he expressed his displeasure with progress during a site visit in early June.  On 5 July 2012 he wrote Ms Armitage a long and rather despairing email setting out his concerns about progress and saying that he would consider taking legal action unless she:

(a)       paid the rates;

(b)      got new business partners; and

(c)       put in place a realistic progress plan and stuck with it.

[24]     Dr Ooi’s concerns first formally manifested themselves on 20 August 2012 when he issued Hum with a Property Law Act (PLA) notice.   However due to acknowledged deficiencies in that notice he did not pursue it at that time.

[25]     At the present time, the extent of the work already done by Hum (and its value) is not agreed.  Similarly the extent of Hum’s defaults, the reasons for those defaults and the length of time required to remedy them are also far from agreed. This is partly a result of conflicting evidence on these issues but is also because of the absence of specificity in the lease itself.   The necessarily ad hoc method by which Hum has been undertaking the work (and in particular by virtue of the fact that it is largely or wholly dependent on the use of volunteers) also make predictions as to any future timeframes almost impossible.   As well, it seems that Hum has applied for a resource consent for work that goes beyond its obligations under the lease and compliance with it will place more of a burden on Hum than does the lease itself.

[26]     Hum’s rent holiday ceases on 14 February 2014 and Dr Ooi quite fairly has

an ancillary concern about Hum’s ability to meet the rental payments at that time.

Stylo’s application and Hum’s opposition

[27]     Following the withdrawal of the original PLA notice, Stylo issued a further

PLA notice on 27 November 2012, requiring Hum to:

Complete the work required by clauses 48.2.1 to 48.2.4 of the Lease which was to be completed by 31st December 2011

Apply for building consent required for the work contained in clauses 48.2.1 to 48.2.4 as required by clause 48.3 of the Lease.

[28]     The costs sought under the notice were $363 (including GST).

[29]     The terms of the notice required Hum to comply within 20 working days from the date of service.  Mr Ooi says Hum has not complied and therefore seeks cancellation of the lease.

[30]     Hum’s opposition to cancellation is based on:

(a)       Alleged deficiencies in the PLA notice itself, namely that:

(i)the  notice  is  invalid  because  it  does  not  inform  Hum adequately of the effect of s 247(1) and (2) of the PLA;

(ii)      the notice seeks costs that are excessive;

(iii)the notice is not specific enough about what work that has not been done and what is required to remedy the default; and

(iv)the 20 working days specified in the notice for Hum to remedy the defaults is unreasonable in all the circumstances.

(b)      Defences based on the lease itself, or matters going to the exercise of

the Court’s discretion under PLA s 253, namely that:

(i)Stylo may not rely on the timeframes stipulated in the lease because they were unachievable “from the outset” and were only ever “aspirational”;

(ii)work previously done by Stylo on the premises has proved to be faulty and the need to remedy it has put Hum behind schedule;

(iii)the fact that the building was in such poor condition, together with a lack of specificity in the lease means that timeframes and deadlines in the lease are uncertain and/or were not intended to be strictly enforced;

(iv)Stylo is estopped from relying on the deadlines in the lease because of representations it has made that strict compliance was not required;

(v)      cancellation of the lease would unjustly enrich Stylo; and

(vi)     Stylo is preventing Hum from remedying the defaults.

Discussion

[31] I address the matters listed at [30] above in turn.

Validity of PLA Notice

[32]     Section 246(1) of the PLA states that:

(1) A lessor may exercise a right to cancel a lease because of a breach of a covenant or condition of the lease (except the covenant to pay rent) only if—

(a)      the lessor has served on the lessee a notice of intention to cancel the lease; and

(b)      at   the   expiry   of   a   period   that   is   reasonable   in   the circumstances, the breach has not been remedied.

[33]     And  s  246(2)  requires  that  a  notice  of  intention  to  cancel  a  lease  must adequately inform the recipient of the following matters:

(a)       the nature and extent of the breach complained about:

(b)       if the lessor considers that the breach is capable of being remedied by the lessee doing or stopping from doing a particular thing, or by the lessee paying reasonable compensation, or both,—

(i)       the thing that the lessee must do or stop doing; or

(ii)      the  amount  of  compensation  that  the  lessor  considers reasonable; and

(c)       the consequence that, if the breach is not remedied at the expiry of a period that is reasonable in the circumstances, the lessor may seek to cancel the lease in accordance with section 244:

(d)      the effect of section 247(1) and (2):

(e)       the right, under section 253, to apply to a court for relief against cancellation of the lease, and the advisability of seeking legal advice on the exercise of that right.

[34]     As far as the complaint that the notice issued to Hum did not comply with s 246(2)(d) (did not inform Hum of the effect of s 247(1) and (2)) is concerned, the notice here simply said:

4.Pursuant to Section 247 of the Property Law Act 2007 this Notice is not invalid merely because the Lessor:

(a)       may not have specified that the breach is capable of being remedied by the payment of reasonable compensation; or

(b)      may have specified an amount of compensation that is unreasonable; or

(c)       may have  specified  that  the  breach  would  be  capable  of being remedied by the payment of reasonable compensation, but without specifying the amount that the lessor considers reasonable.

None of the matters set out in paragraph 4(a) to (c) prevents the Lessee from offering an amount that the  Lessee considers to be reasonable compensation for the breach.

[35]     It will be observed that this advice essentially replicates the terms of s 247(1)

and (2) verbatim.

[36]     Given that the two subsections (and therefore the advice) are clear enough on their face I do not consider that it can fairly be said that the notice did not convey their “effect”.  The first validity issue in relation to the PLA notice cannot therefore be sustained.

[37]     So, too, is the second issue concerning the notice doomed to failure.   The costs sought were $363. They are plainly not excessive.

[38] As far as the third issue is concerned, I have set out at [27] above what the PLA notice said in terms of what was required to remedy the default, namely compliance with certain provisions in the lease. While on its face that seems straightforward enough, the requirement to remedy the defaults is necessarily only as specific as the contract itself. The clauses with which the notice demands

compliance simply stipulate that Hum must, before commencement of Hum’s business and at Hum’s cost complete the following work:

Repaint and repair (if necessary) the exterior of the building; Repair the roof brackets (if necessary);

Fence around the balcony; Landscaping.

[39]     The PLA notice does not expressly refer to cl 48.5, which makes it clear that the work required by cls 48.2.1 – 48.2.4 comprises the first phase of the project, imposes the timeframes for completion, and which authorises the landlord, in the event of default, to require completion on 20 days notice.  It is, however arguably implicit in the notice and I do not propose to make too much of its omission.

[40]     More difficult, however, is the absence of clarity around precisely what is to be done to comply with cls 48.2.1 – 48.2.4.  Even incorporation of cl 48.5 does not assist; that clause simply stipulates (for example) that the landscaping required is “out the front” and the reference in the notice to cl 48.5 does little to enhance the precision of what is needed to complete phase one.   And although at the end of cl 48.2 there is reference to the “details” of the required work being listed in the schedule to the lease:

(a)      the “details” contained in the schedule are, as I have noted, hardly more particularised; and

(b)the relationship between those “details” and either the specific cl 48.2 matters referred to in the notice or the division of work into two phases is far from clear.

[41]     As will be discussed further in the next section of this judgment, I consider that Mr Parmenter is right that Hum cannot properly ask the Court to rewrite or amend the lease itself to remedy any vagueness or lack of reality about some of the

obligations contained in it.[3]    But it seems to me that the imprecision of some of its

terms create an equal and opposite difficulty for Stylo in attempting to articulate what  compliance  with  the lease  actually entails  and,  for that  reason,  drafting a satisfactory notice.

[3] This submission was made in response to the grounds of opposition I have summarised at [30](b) above.

[42]     It would, perhaps, be a different matter if there were some objective standard against which compliance (with both the lease and therefore the PLA notice) was to be judged.   It may be that such a standard does exist, because compliance will ultimately be judged against any building and resource consents obtained (at the code compliance  certificate stage),  but  the PLA notice  does  not  require a code compliance certificate to be obtained; the work is not yet at that stage.

[43]     Accordingly, although Hum necessarily accepts that it is in default, the extent of the default (and what is required to remedy it) is, as I have said, in dispute.  So given that the code compliance certificate stage has not been reached, and given that the vague and uncertain contractual clauses relied upon were drafted by Dr Ooi’s lawyers,  it  would  I  think  be  wrong  in  principle  for  Dr  Ooi  to  be  permitted subjectively to determine what is required to comply with those provisions.

[44]     The last PLA validity issue is whether 20 working days was “a period that is reasonable in the circumstances” within which Hum was required to remedy the breaches.  Clause 48.5 of the lease itself, of course, refers to that time period and I tend to agree with Mr Parmenter that that must be indicative of what the parties considered to be reasonable when entering the lease.  If that were not the case the issue of reasonableness would certainly be more problematic.   First, it would be difficult to assess reasonableness when it there is a lack of specificity about what is required to be done.   Secondly, and if the defaults and delays are as extensive as Stylo says they are, then 20 days might well be unreasonable, at least to the extent that  that  term  might  be  synonymous  with  “unrealistic”.    But  conversely  if  the defaults are major and longstanding then what is or is not “reasonable” may need to

be judged against a different standard.

Lease issues

[45]     As far as the issues relating to the lease itself are concerned, I have already indicated my acceptance of Mr Parmenter’s submission that it is not open to this Court to rewrite the deed of lease.[4]    The contract is clear at least to the extent that Hum’s obligations (whatever precisely they may be) and the stipulated timeframes are not contingent, or aspirational.  Moreover the lease is also clear that Hum took on the project (and the house) on an “as is, where is” basis.  And while I am willing, on the evidence, to accept that Dr Ooi was prepared to cut Hum some slack in terms of meticulous  compliance  with  the  contractual  time  frames  I  do  not  consider,  for

example, that he ever represented that they did not matter at all.  I do not consider that the formal requirements of an estoppel could be made out.

Discretion

[4] Ponsonby Mall Trust Ltd v New Zealand Food Industries Ltd (2005) 7 NZCPR 48 (HC) at [77].

[46]     Section 253 of the PLA gives the Court a discretion to grant relief against can cellation or proposed cancellation of a least.  The matters that might be relevant to the exercise of the Court’s discretion were summarised by Hammond J in Studio X Ltd v Mobil Oil New Zealand Ltd as including:[5]

[5] Studio X Ltd v Mobil Oil New Zealand Ltd [1996] 2 NZLR 697 (HC) at 701.

(a)       whether the breach was advertent or deliberately committed;

(b)conversely, whether the breach was inadvertent or was beyond the tenant's control;

(c)       whether the breach involves an immoral/illegal use of the property by the lessee;

(d)whether  a  tenant  has  made  or  will  make  good  the  breach  of  the covenant and is able and willing to fulfil his obligations in the future;

(e)       the conduct of the landlord;

(f)       the personal qualifications of the tenant;

(g)      the financial position of the tenant;

(h)      relevant interests of any affected third parties; (i)        the gravity of the breach;

(j)       whether a breach has occasioned lasting damage to a landlord; and

(k)whether the damage sustained by the landlord can truly be said to be proportionate to the advantages the landlord will obtain if relief is not granted.

[47]     As will be evident from the discussion above, the present case is an unusual one.   Although the lease has undoubtedly been breached, Stylo has suffered no immediate harm.  Rather, Mr Ooi’s real concern is principally a future one – that the rent holiday will end and Hum will be unable to meet the rent, the renovations will not be complete and the property will not be ready for use.  While it might be argued that Hum has had the benefit of the rent holiday in the meantime it does not seem to me that that has been a significant advantage to Hum, or a significant detriment to Stylo.  There is no suggestion that Hum’s operation of a small coffee shop from a hut on the front lawn has yielded a profit. And the acknowledged reality for Stylo is that it could not afford to pay for any renovations itself and the property is unrentable unless and until it has been restored.

[48]     That said, in seeking relief from cancellation Hum takes the risk that it will expend more time and money on restoration and never see the benefit (if the rent cannot be paid).

[49]      In my view the discretionary factors under s 253 presently favour Hum.

Conclusions

[50]     For the reasons already given I consider it is strongly arguable that the PLA notice did not adequately inform Hum of what it was required to do to remedy the breach of the lease and is therefore invalid.  Given that Hum plainly is in breach of

the lease, however, I prefer, not to deal with the matter on that basis.  Such a finding would simply result in Stylo issuing another notice, for example, on the basis that the breaches were incapable of remedy within a reasonable period.

[51]     Equally, I have indicated my view that the lease itself is immune from the kinds of attacks made by Hum in these proceedings and that there are no positive defences available to it.  Once that point is reached, it is not in dispute Hum is in breach.

[52]     But lastly, and as I have said, the factors going to the exercise of the Court’s

discretion to order relief against cancellation favour Hum, at least for the moment.

[53]     What is required, if at all possible, is for the parties to work together with a view to obtaining a mutually beneficial resolution of the difficulties that have arisen. I accept that there is little or no prospect that Hum will be able to remedy its defaults and meet the final deadline under the lease.  It is not clear to me, however, whether the rental payments might be able to be made by Ms Armitage in any event, once the rent holiday ends.   Clearly, if she were, then that might alleviate all of Dr Ooi’s concerns.

[54]     For the time being, however, I propose to exercise my discretion under PLA s 253, and order relief against cancellation.   Leave will be reserved to the parties to bring the matter back before me if a way forward cannot be negotiated.

[55]     Hum has only been successful in terms of my discretion to grant it relief.  In my view it is not appropriate for costs to follow that event and it is my intention to direct that costs should lie where they fall. To the extent either party has a strong

contrary view memoranda are to be filed within 10 working days.

Rebecca Ellis J