Bondi Beachside Pty Ltd v AB Bondi Pty Ltd

Representation: Counsel:
T Bateman (First, Second and Third Plaintiffs)
Solicitors:
Baron & Associates (First, Second and Third Plaintiffs)
No appearance (First, Second and Third Defendants)

File Number(s): 2024/00467532

JUDGMENT – ex tempore

1. Before the Court is an assessment hearing relating to a breach of a lease concerning retail premises at Bondi Beach in Sydney.

2. Proceedings were commenced by way of Statement of Claim on 16 December 2024 by the plaintiffs seeking an amount said to be owed under a lease against the first defendant, which is now in liquidation, together with damages against the second and third defendants, who were guarantors pursuant to the lease.

3. Defences have not been filed by any of the defendants. An application was made by the plaintiffs for a default judgment. On 15 May 2025, default judgment was entered in favour of the plaintiffs against each of the defendants for damages and costs, with damages to be assessed. However, the first defendant is in liquidation, and, accordingly, the proceedings against it were stayed under the Corporations Act 2001 (Cth). On 4 November 2025, when the matter was first listed for an assessment hearing, the Judicial Registrar set aside the judgment entered against the first defendant, as it was in liquidation (and proceedings against it were stayed), but did not set the judgment aside in relation to the second and third defendants. The matter was listed for a further assessment hearing today, 27 November 2025.

The Evidence

4. There was no appearance for the defendants. Mr Bateman of counsel appears for the plaintiffs. He read the following affidavits: affidavit of Alka Parti dated 3 November 2025; and affidavit of Neil Gregory Palmer of 26 November 2025.

5. The exhibits to those two affidavits were made Exhibit A and Exhibit B in the assessment hearing, respectively. The exhibits contain documents relied on by the plaintiffs in establishing their claim for damages. In addition, an outline of submissions from Mr Bateman was handed up, dated 27 November 2025, which has been of assistance to the Court. In paragraphs 5 and 6 of those submissions, Mr Bateman sets out information explaining the orders made on 4 November 2025, and the appointment of liquidators to the first defendant.

6. I am satisfied, in the light of the contents of the two affidavits referred to above, and the material in Exhibits A and B, that the guarantors, who are the second and third defendants, were properly served with the Statement of Claim, were aware of the hearing on 4 November 2025, and were aware of the assessment hearing today. As indicated, Defences have not been filed by them and there was no appearance on 4 November 2025, or today, 27 November 2025, by or on behalf of either defendants.

Background

7. The background, in summary, is as follows:

(a) The plaintiffs are the owners as tenants in common of the property known as XX Campbell Parade, Bondi Beach (“the Property”): see Exhibit A, p 25; (b) On 15 October 2018, the plaintiffs entered into a commercial lease in respect of the retail premises at the Property (“the Premises”) with the first defendant, AB Bondi Pty Ltd. The lease commenced on 15 September 2018 and terminated on 4 May 2026. It was for a term of seven years, seven months, two weeks and six days: Exhibit A, p 35 and following. The Premises were used as a retail shop. The lease is detailed: see Exhibit A, pp 35 to 120. It contains the usual terms in relation to payment of rent and outgoings (clauses 4.1-4.2), and has a minimum rent increase provision. The reference schedule for the lease is at Exhibit A, p 115; (c) Under the lease, the second and third defendants guaranteed, unconditionally and irrevocably, payment to the lessor of what was defined as the “Guaranteed Money”, being the amount owed by the first defendant/lessee company to the lessors: see Exhibit A, p 91, and the definition of “Guaranteed Money” at Exhibit A, p 97. I am satisfied that the second and third defendants have signed the lease as guarantors: exhibit A, p 120; (d) On the same day, 15 October 2018, an Incentive Deed was entered into by the first defendant and the second and third defendants with the plaintiffs providing for certain incentives, including rent incentives, to be taken into account in relation to moneys owing by the defendants under the lease: Exhibit A, p 121. The incentives under the Incentive Deed appear to apply only if the lessee fully complies with its obligations under the Incentive Deed and under the lease: see cl 2.1 and 4.1 of the Incentive Deed: Exhibit A, pp 125 to 126; (e) Soon thereafter, a bank guarantee was provided for the benefit of the lessors in the sum of $54,000 at the request of the guarantor, Ms Dynan: Exhibit A, p 135; (f) In the course of the operation of the lease, the first defendant apparently on a number of occasions fell behind on its obligations in relation to payments under the lease. Exhibit A contains numerous letters requesting payment pursuant to the lease: Exhibit A, p 136 and following; (g) It appears that the breaches relating to allegedly outstanding moneys continued, and solicitors acting for the plaintiffs issued a notice of demand on 13 February 2024, and indicated that there was an intention by the plaintiffs to re‑enter: Exhibit A, pp 152 to 153; (h) There was continuing correspondence relating to the obligations of the defendants under the lease, and a letter of demand was issued to St George Bank in relation to the bank guarantee on 23 April 2024: Exhibit A, p 155; (i) Various statements were issued in relation to moneys said to be owing by the defendants under the lease: Exhibit A, pp 157 to 166; (j) As part of the materials in Exhibit A is a statement setting out the history of the amounts owing under the lease and the reduction in those amounts following payments and the utilisation of the bank guarantee: Exhibit A, pp 167 to 169; (k) As part of its desire to re‑lease the Premises upon re‑entry, and pursuant to its obligation to mitigate its loss, the plaintiffs entered into a lease with another corporate entity, Embrace The Chi Pty Ltd: Exhibit A, p 171. The term of that lease was for seven years from 1 May 2024 to 30 April 2031. The reference schedule for that lease is at Exhibit A, p 261. Also, as in the lease the subject of the proceedings, an Incentive Deed was entered into involving certain reductions of rent that are fully explained in Ms Parti’s affidavit. The Incentive Deed for the new lease is at Exhibit A, p 269; (l) As part of its expenses incurred in re‑leasing the Premises, the plaintiffs incurred obligations to a real estate agent, Ray White Commercial Eastern Suburbs for leasing fees, and solicitors’ fees in preparing relevant legal documents. A claim is made for those expenses: Exhibit A, pp 282 to 294; (m) Interest is claimed by the plaintiffs pursuant to the lease. That is calculated by reference to the Commonwealth Bank of Australia overdraft interest rate: Exhibit A, clause 4.3. The relevant rates initially for the period are at Exhibit A, p 295. Part 17 of the lease deals with default: Exhibit A, p 77; (n) As I indicated, notice has been given to the second and third defendants in relation to the claim and this hearing; (o) The affidavit of Mr Palmer updates the position relating to the defendants.

8. I am satisfied, having looked at the material and having taken into account the affidavits, that the liability of the second and third defendants has been properly established. As I indicated, I am also satisfied that the second and third defendants were aware of the hearings, both on 4 November 2025, which was adjourned to today, and of today.

9. In paragraphs 20 to 23 of Mr Palmer’s affidavit, he sets out the claim of the plaintiffs for interest and outstanding amounts under the lease, including rent and outgoings, rent for the balance of the term and re‑leasing costs, less the amount which would be obtained from the new lease, and the amount obtained under the bank guarantee. Having reviewed the matters, it seems to me that the amount claimed is justified under the lease.

10. I am satisfied that it is appropriate for the plaintiffs to claim goods and services tax (“GST”) for the rent outstanding, with that amount, in due course, to be remitted, where appropriate, to the Australian Taxation Office. In relation to losses concerning the rent in the future, as that amount has not been received yet, there is no GST to take into account, and it should be GST exclusive. I accept that that is the proper approach to take.

Principles to be Applied

11. In Interslice Pty Ltd v CCA Investments ‑ Bass Hill Pty Ltd (No 2) [2024] NSWSC 481, Richmond J states at paragraph 130 that where a landlord terminates a lease as a consequence of repudiation, and claims damages for loss of its bargain, the measure of damages is assessed by reference to the difference between future rental payments and the benefits that a landlord will receive from re‑letting the premises. The burden to show that loss is on the landlord. Richmond J refers in detail to the authorities standing for those propositions.

12. Where a landlord fails to prove any loss, it is only entitled to nominal damages. As Richmond J outlines in paragraph 131 of Interslice, a landlord has to prove that there is some detriment as a result of being put in the position where the tenancy ended early. Mere assertion of that fact is not sufficient. In the present case, there is direct evidence of the existing lease and the incentives, and the new lease.

13. Mr Bateman in his written submissions relies on the statement of principle by the High Court in Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237 at [55]. The plurality stated as follows:

“The Lessor was only entitled to obtain, as damages, the present value of any difference between the rent not paid by the Lessee and the rent received or to be received on re‑letting. That is all that the trial judge allowed.”

14. In Interslice, Richmond J followed and made reference to Gumland: at paragraph 131.

15. In the submissions for the plaintiff that are relied upon, there is a reference to the principles to be taken into account in relation to mitigation of loss. In paragraph 23 of those submissions, Mr Bateman relies on the principles stated by Giles JA in Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 at [187], which, in essence, are that the plaintiff does not have to show that he has fulfilled his so‑called duty to mitigate, and the onus is on the defendant to show that he has not, and the extent to which he has not, as the defendant is the wrongdoer. Giles JA said that a high standard of conduct will not be required in taking steps to mitigate loss, and the plaintiff will not be held to have acted unreasonably simply because the defendant can suggest other and more beneficial conduct if it was reasonable for the plaintiff to do what he did.

16. In Ceerose Pty Ltd v The Owners ‑ Strata Plan No 89074 [2025] NSWCA 235, that approach was followed by the Court of Appeal: see paragraphs [28] ‑ [31]. As their Honours stated in paragraph 28, it has “long been established that even though a plaintiff bears the duty of establishing loss, the onus is on the defendant to prove facts going to a claim that the plaintiff failed to mitigate the loss.” Karacominakis was expressly approved at paragraph 31. Any suggestion that the onus was different was expressly rejected in paragraph 37 by Kirk JA (with whom Leeming and Ball JJA agreed).

17. Here, in my view, the plaintiffs are entitled to their loss through the failure to receive rent and moneys owing for outgoings, less the bank guarantee, and taken to the end of the term of the lease, less the amount they receive under their new lease and are also entitled to consequential losses, such as the cost of the real estate agent to re‑lease and the solicitor’s fees.

18. There has been no evidence put forward before me that there is any failure to mitigate by the plaintiffs. Differently to the Interslice case, there is direct evidence in relation to the new lease and the difference in the amounts owing.

19. In my view, the above authorities establish the general principles applicable on which the plaintiffs have calculated their losses. I am satisfied, therefore, that the amount claimed is an amount properly owed by the second and third defendants, the guarantors in the present case.

20. The first order I make is judgment for the plaintiff against the second and third defendants in the sum of $360,800.12.

[His Honour then heard submissions on costs.]

21. The Court has a wide discretion as to costs under s 98 of the Civil Procedure Act 2005 (NSW). The second and third defendants have not participated in the proceedings or in the assessment hearing. The plaintiffs have gone to the trouble of commencing the proceedings and preparing the extensive affidavit evidence to justify the amount claimed for rent, outgoings and consequential losses. In my view, there is no reason why the second and third defendants should not pay the costs of the proceedings.

22. The second order I make is the second and third defendants are to pay the plaintiffs’ costs of the proceedings, as agreed or assessed.

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Amendments

16 December 2025

Note added between paragraphs 20 and 21.