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Carlingford Montessori Academy Pty Ltd v Thallon HLD Pty Ltd [2025] NSWSC 630 | Case summary | Zoe

NSWNSWSC

Carlingford Montessori Academy Pty Ltd v Thallon HLD Pty Ltd

[2025] NSWSC 630

Supreme Court of NSW|2025-06-20|Before: Pike J

View on NSW CaselawOr email me a plain-English summary of this case

General information, not legal advice.

At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2025-06-20

Before

Pike J

Catchwords

LEASES AND TENANCIES – Default and termination – Relief against
forfeiture – where the change of ownership of the
shares of the tenant
company constitute an assignment of the lease – where consent was not

Source

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Catchwords

LEASES AND TENANCIES – Default and termination – Relief againstforfeiture – where the change of ownership of theshares of the tenantcompany constitute an assignment of the lease – where consent was notsought for the assignment of thelease – whether to grant relief againstforfeiture – no question of principle EVIDENCE –Standard of proof – Civil cases – where defendant alleges thatplaintiff made up evidence of seriouswrongful conduct of defendant –application of Briginshaw – application of s 140(2) of Evidence Act 1995(NSW) – no question of principle ESTOPPEL – Cause ofaction estoppel – Anshun estoppel – no question of principle

Judgment

Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.

Medium Neutral Citation: Carlingford Montessori Academy Pty Ltd v Thallon HLD Pty Ltd [2025] NSWSC 630

Two witnesses gave evidence before me. Mr Charles Assaf for CMA (Mr Assaf) and Mr Remon Fayad for Thallon (Mr Fayad). Mr Assaf is the Chief Executive Officer of Montessori Academy. Mr Remon Fayad is a director of Thallon. The other two directors of Thallon are Mr Fayad’s brother, Fayad-Lee Fayad, and Zhou Cao.
It appears that Mr Assaf and Mr Fayad were once close – at least from Mr Fayad’s perspective they are no more.
An essential aspect of Thallon’s opposition to relief against forfeiture is that Thallon (and in particular Mr Fayad) has lost trust and confidence in Mr Assaf and thus CMA because Mr Assaf has made false allegations against Mr Fayad apparently so as to threaten Thallon to back down on its contentions that the Lease had been breached. The allegedly false allegations apparently include that Mr Fayad rang Mr Assaf and asked him to agree to an arrangement the effect of which was that the rental under the Lease would be artificially inflated so as to enable Thallon to sell the Premises for a higher price. Affidavit evidence to this effect was filed and responded to in the earlier proceedings before Williams J, but ultimately not read in those proceedings.
Each of Mr Assaf and Mr Fayad was cross examined including on this serious allegation.
I deal in detail with this conversation in the factual chronology below. I prefer the evidence of Mr Assaf over the evidence of Mr Fayad. Mr Assaf’s evidence is supported by a contemporaneous file note that he made in his notebook and is also more consistent with the inherent probabilities having regard to what was going on at the time.
I also accept Mr Assaf’s evidence more generally. He appeared to me to be an honest witness seeking to do his best.
I do not accept much of Mr Fayad’s evidence. In particular, I do not accept his evidence that Thallon is in fact genuinely concerned with the breach alleged in the Breach Notice, as opposed to wanting to terminate the Lease because it views the rental payable under it as well below market so as to enable a new tenant to be installed at a much higher rent. I reach this conclusion having carefully observed Mr Fayad giving evidence and more importantly, having considered his evidence against the objective materials and inherent probabilities.

From 15 November 2016 to 28 May 2023, the sole director and shareholder of CAVS16 was Mr Fayad. CAVS16 was deregistered on 28 May 2023.
On 16 September 2022, MAG entered into an agreement with CAVS16 for MAG to purchase all of the shares CAVS16 owned in CIG (2022 share sale agreement). On 16 September 2022, MAG paid $645,175 to Mr Fayad on behalf of CAVS16 for those shares.
Mr Assaf negotiated the transaction directly with Mr Fayad.
No issue was raised at the time to the effect that formal consent of Thallon to a change in control was required under cl 8.3 of the Lease.
Mr Assaf gave evidence, which I accept, that he considered that Mr Fayad was aware of the transaction as it was his shares that were sold and that Mr Fayad had authority to act on behalf of Thallon generally in relation to matters concerning the Lease. Further, at no time until mid-2024 did Mr Fayad ever complain or allege that the Lease had been breached by the 2022 share sale agreement.
Mr Assaf was extensively cross examined as to his state of mind at the time of the 2022 share sale agreement in relation to whether he thought consent was necessary for the transaction and whether he thought that he had that consent through Mr Fayad. Mr Assaf’s state of mind at this time fed into an attack, which I deal with below, as to whether Mr Assaf was reckless at the time in not seeking consent, and, further, whether he was genuinely causing CMA to pursue the legal proceedings which were commenced by CMA when the issue was raised by Thallon in the Breach Notice.
Whilst I accept that not all of the many answers which Mr Assaf was asked to give on this topic in cross examination were completely consistent, I take from Mr Assaf’s cross examination as a whole on this topic, that he did not really turn his mind to the issue of formal consent under the Lease at the time of the 2022 share sale agreement.
I reject the criticism levelled at Mr Assaf by Thallon that he somehow should have appreciated in September 2022 that Mr Fayad was only acting in his capacity as a director and shareholder of CAVS16 and the consent of Thallon through its other two directors, should have been sought. I deal with the legal contention below. Whatever may be said of the formal legal position, at a factual level Mr Assaf could not be criticised in not appreciating that Mr Fayad could not speak for Thallon, if that was the case legally. Mr Assaf gave uncontradicted evidence that the only director of Thallon that he dealt with in relation to the Lease and the Premises more generally was Mr Fayad.

To the left of the last entry commencing with “Me” is a vertical line with the word “Con!” written next to it.
Mr Fayad strongly denies that any such conversation occurred.
Mr Assaf’s notebook was sought under notice to produce and produced. It was then tendered in the re-examination of Mr Assaf. I have examined the pages extracted above and several pages after it. Writing is only on the right hand page of the book. The file note occupies two handwritten pages. On the next right hand page in the notebook after the alleged conversation is another handwritten note with a date “8/4/24” written in the top right hand corner.
Mr Fayad produced his mobile phone records to seek to demonstrate that there was no call from him to Mr Assaf on or around 2 April 2024.
The lack of any evidence in Mr Fayad’s phone records of a call to Mr Assaf formed a central aspect of the attack on Mr Assaf in relation to this call. Mr Assaf said that the call may have been from a different number. Reliance was also placed on Mr Assaf’s admission in cross examination that as at 2 April 2024 all that was being discussed between him and Mr Fayad was Montessori Academy purchasing the Premises – there was no discussion between them of Thallon selling to a third party. Mr Assaf said that it may have been on a slightly different date.
In attacking Mr Fayad’s denial of the conversation, reliance was placed on Mr Fayad’s admission in cross examination that he was of the view that the rental under the Lease was below market and, more importantly, that increasing the rental under the Lease would likely result in a higher sale price for the Premises. Mr Fayad also admitted that on 3 April 2024 he was aware that Montessori Academy was not interested in buying the Premises and thereafter he was wanting to sell on market. He was willing to sell to Mr Assaf for $3.5 million, $1.5 million less than what he was wanting for the Premises in September 2022. Mr Fayad said that it was a business decision to sell “because there was other things happening” and that he was concerned at this time that he would not be able to sell for the price he wanted to sell the Premises for.
Mr Fayad also admitted that as at April 2024, there was no dispute as to whether the Lease had been breached – this was not raised by Thallon until several months later . Mr Fayad agreed that Thallon’s contention was thus that Mr Assaf foresaw as at early April 2024 a future dispute in relation to a breach of the Lease and deliberately fabricated a file note to later use to threaten Thallon to back down in the not yet made breach allegation.
Mr Fernon SC did not shy away from the fact that it was his client that raised this allegation – that Mr Assaf made up evidence of serious wrongful conduct by Mr Fayad – and that it was an extremely serious one attracting the well-known principles in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 (Briginshaw) at 361-2 per Dixon J, as now reflected in s 140(2) of the Evidence Act 1995 (NSW) (Evidence Act).
Section 140 of the Evidence Act provides:

As Gleeson JA observed in Musa at [42], the requirement of clear and cogent proof of serious allegations, does not change the standard of proof, but merely reflects the perception that members of the community do not ordinarily engage in serious misconduct.
I am far from comfortably satisfied that Mr Assaf made up the conversation that he says he had with Mr Fayad on or about 2 April 2024. Considering all of the relevant evidence, I find that it is more likely that the conversation occurred.
The conversation is supported by a file note. Two theories were advanced by Thallon in relation to the file note. First, that it was made on or about 2 April 2024, or between 2 April 2024 and 8 April 2024. So the theory goes, Mr Assaf foresaw the potential dispute that emerged several months later when Thallon served the Breach Notice and fabricated the conversation and file note to deploy later on when the dispute emerged. Such a theory, in my view, is absurd, bordering on fanciful. As at April 2024 there was nothing whatsoever to suggest that a dispute was brewing.
The second theory is that the file note is not contemporaneous – between 2 and 8 April 2024 – but rather was written in the note book at a later time after the Breach Notice had been served. I do not accept this theory. It is at odds with the flow of the note book.
Mr Assaf’s account is far more consistent with the inherent probabilities having regard to what was occurring at the time. As at 2 April 2024, Mr Fayad and Mr Assaf were again discussing whether Montessori Academy would buy the Premises. Mr Fayad had substantially dropped his asking price to $3.5 million from the $5 million floor he had previously set. This perhaps suggests Mr Fayad was quite anxious to sell. By 3 April 2024, Mr Assaf had clearly told Mr Fayad he was not buying. The text exchanges on 2 April 2024 include a reference to Thallon going to market if Montessori Academy was not buying. Mr Fayad admitted the obvious proposition that increasing the rental under the Lease would likely increase the selling price. This is what, on Mr Assaf’s account, Mr Fayad was suggesting.

A follow up email was sent on 20 June 2024. Mr Ganesh responded on 20 June 2024 to the effect that Montessori Academy did not have “this document saved on file for Carlingford”.
Mr Fayad was cross examined about this request, given that it appears to predate the commencement of the Lease. His answers were somewhat confusing. He was not aware of when the change in control referred to in fact occurred. When it was suggested to him that 2019 predated the commencement of the Lease and as such there was no requirement to obtain consent, Mr Fayad said “there was other leases in the past” and “there were amendments to the lease”, referring to the Lease, which it was not in dispute was entered into in 2020. This evidence is troubling and casts doubt on Mr Fayad’s, and thus Thallon’s, genuineness.
Mr Fayad denied that there never was any financier request and that he was simply looking for an excuse to terminate the Lease. I do not accept this last denial.
I find that Thallon, through Mr Fayad, was not genuinely concerned about an apparent breach several years earlier brought about by the sale of his own shares, but rather was looking to get out of the Lease so as to re-lease the Premises at a higher rent and thus likely sell the Premises at market at a higher price than would have been achieved if the Lease remained in place. I reach this conclusion having regard to several matters including the delay in raising the issue, the reference to the obviously erroneous date of 2018, the fact that if it was simply at the request of a financier why Thallon quickly doubled down and purported to terminate the Lease in circumstances where no plausible reason was in fact given by Thallon as to why the change in control was in fact a concern. In addition, the matter was only raised after negotiations for Montessori Academy to buy the Premises broke down such that Thallon would need to seek to sell the Premises on the open market. This is all against Mr Fayad’s admission that rent payable under the Lease was below market and a higher rent would likely yield a higher sale price.
On 24 June 2024, and without prior warning, Thallon issued a notice, via its lawyers, Aquinas More, purporting to terminate the Lease. The notice was addressed to Montessori Academy and copied to CMA. The notice was not in evidence.
On 26 June 2024, CMA’s solicitors responded to Aquinas More in the following terms:

The principal case advanced by CMA was for relief against forfeiture, reliant on either the equitable jurisdiction to relieve or pursuant to s 129(2) of the Conveyancing Act 1919 (NSW) (CA). CMA contended that the breach relied on by Thallon was an innocent breach, in circumstances where Thallon was motivated by an ulterior motive in terminating the Lease – namely a windfall gain in entering into a new lease with a new tenant at a much higher rental. Reliance in this regard was placed on Byron Bay Retirement Villages Pty Ltd v Zandata Pty Ltd [2008] NSWSC 1123 (Zandata) and Steel Supplies Bega v Shoveller [2014] NSWSC 1612 (Steel Supplies).
Thallon disputed that CMA’s breach was innocent and further contended that there had been a breakdown in trust and confidence in the relationship between CMA and Thallon by reason of the false allegations made by Mr Assaf. Given the breakdown and thus apparent inability to work together, no relief against forfeiture should be granted. Reliance was placed on Pembroke J’s decision in Casquash Pty Ltd v NSW Squash Limited (No 2) [2012] NSWSC 522 at [59] (Casquash) as considered by Robb J in Darzi Group Pty Ltd v Nolde Pty Ltd [2021] NSWSC 774 at [275] and Hookey v Whitelaw [2020] QSC 63 (Hookey) at [154] per Flanagan J.
Alternatively to seeking relief against forfeiture, CMA contended that the conduct of Thallon after the 2022 share sale agreement was entered into constituted either a waiver of the right to rely on the breach, or an election to affirm the Lease. Thallon had a number of responses to these contentions, including that any knowledge of Mr Fayad to the 2022 transaction should not be attributed to Thallon because Mr Fayad was acting in his capacity as director of CAVS16 at the time and is only one of three directors of Thallon. Further, it was not open to CMA to raise these matters because they should have been raised in the earlier proceedings before Williams J. Principles of res judicata or alternatively an Anshun estoppel prohibit the matters being raised now.

What damage or other adverse consequences did the lessor suffer by reason of the lessee’s breach?
What is the magnitude of the lessee's loss and the lessor’s gain if the forfeiture is to stand?
For the reasons set out below, I am of the view that relief against forfeiture should be granted in the present case.
Dealing first with the nature of the breach, I am satisfied that the breach was at the trivial end and was inadvertent. Accepting that a change in control is an important matter in the context of the Lease – evidenced by the fact that the parties made it an essential term (see cl 14.7(1)(b)) - the 2022 change in control involved a 25% shareholder (Mr Fayad) selling his interest to the 50% shareholder in circumstances where there was to be no day to day change in control in the operations of the childcare centre. No new party was coming into the relationship. One minority owner was selling out to the majority owner.
Whilst Mr Fayad was, on one view, strictly acting in his capacity as the director and shareholder of CAVS16 in entering into the 2022 share sale agreement, he was, on the evidence, the person with whom Montessori Academy had been dealing in relation to the Premises, including the Lease and the Agreement for Lease. Whilst the two other directors of Thallon had executed documents, there was nothing to indicate that they had any role to play in relation to Thallon and the Premises. A few days after the 2022 share sale agreement, Montessori Academy dealt with Mr Fayad in relation to the Side Deed. Mr Fayad executed the document on behalf of Thallon.
On the evidence, there was nothing to put Mr Assaf on notice that in relation to the 2022 share sale agreement, CMA needed to separately seek out the other two directors of Thallon and formally seek Thallon’s consent to a change in control under cl 8 of the Lease.
Thallon contended that the personal knowledge of Mr Fayad does not constitute knowledge of another company of which he is a director – in this case Thallon. Reliance was placed on Sanpoint Pty Ltd v V8 Supercars Holdings Pty Ltd [2019] NSWCA 5 (Sanpoint) from [58], Maurtray Pty Ltd v Pillemer Pty Ltd [2022] NSWSC 1181 (Maurtray) at [495]-[496] per Williams J and R P Austin and I M Ramsay, Ford, Austin and Ramsay’s Principles of Corporations Law (17th ed, 2018, LexisNexis Butterworths) at [16.220]. This contention was relevant primarily to the election/waiver argument raised by CMA but also had relevance, as I understood the submissions, to the question of the nature of the breach.
It is not necessary for me to determine this legal question. I observe, however, that the facts of the present case are quite different to both Sanpoint and Maurtray. Whether or not, as a matter of law, any acquiescence by Mr Fayad could be attributed to Thallon, I find as a matter of fact, Mr Assaf was entitled, in my view, to proceed on the basis that Thallon had no issue with the transaction in terms of the change in control provisions of the Lease. The only person who he had dealt with on behalf of Thallon was Mr Fayad. Further, what Mr Fayad said in relation to the Premises, including the Agreement for Lease and the Lease, was honoured by Thallon. As a matter of fact, there was no reason for Mr Assaf to think, an every reason for him not to think, that consent of the two directors of Thallon should be sought to the 2022 share sale agreement.
Having regard to this factual position, and regardless of the legal position, the breach by CMA could only be described as inadvertent and innocent.
Further, having regard to the nature of the change in control, it is difficult to see how Thallon could have refused to provide consent had it been asked. In these circumstances, the breach is trivial.
The lack of any concern on the part of Thallon with the change in control is evidenced by the Side Deed entered into several days later, and no complaint being raised for nearly two years. These objective matters speak more loudly, in my view, than any contrary contention now made in the evidence given on behalf of Thallon.
Whilst perhaps not strictly relevant, no evidence was adduced on behalf of the other two directors of Thallon to the effect that they were not aware of the 2022 share sale agreement or that the change in control that it brought about was of some concern to them.
It is of some significance, in my view, that the change in control breach issue was not raised until after the discussions between Montessori Academy and Thallon for Montessori Academy to purchase the Premises had been exhausted. The reduction in Thallon’s asking price to $3.5 million from the previous $5 million, coupled with the text messages between Mr Assaf and Mr Fayad in early April 2024 in which Mr Fayad asks Mr Assaf if there is a price that works for Mr Assaf, perhaps suggests that Thallon was, at least, an extremely willing seller. Nothing was also raised by Thallon as to why the change in control brought about by the 2022 share sale agreement was one which Thallon could reasonably withhold its consent to. One minority shareholder was simply selling to the majority shareholder. The initial stated reason from Thallon in enquiring about consent – namely a request from a financier – seemed to quickly fade into oblivion, telling strongly against its genuineness.
A further background fact is Mr Fayad’s view, throughout the relevant period, that the rental under the Lease was under market and the interrelationship between the rental payable for the Premises and the price which Thallon would receive for a sale of the Premises on the open market. Mr Fayad admitted that he was looking to sell the Premises on the open market and was concerned that he would not be able to sell the Premises for the price he wanted to sell it for.
In light of these matters, the inevitable conclusion, in my view, is that Thallon’s raising of the issue in June 2024 was principally driven by a desire to terminate the Lease so as to install a new tenant at a higher rent, and thus hopefully achieve a higher price for the Premises in a sale on the open market.
I have not included in the circumstances immediately above to the alleged conversation between Mr Assaf and Mr Fayad during which Mr Fayad asked Mr Assaf to increase the rent on the Premises by $50,000 with Mr Fayad giving that money back to Mr Assaf, so as to increase the price likely to be achieved on an open market sale. As set out above, having regard to the strict sense in which the issue was raised, I have found that I am not comfortably satisfied that Mr Assaf made the conversation up, and on balance I am satisfied that it occurred. Including the conversation, and Mr Assaf’s rejection of Mr Fayad’s proposal into the mix, only reinforces the conclusion I am otherwise satisfied should be made.
Associated with this last point, I reject the attack levelled at Mr Assaf and thus CMA that CMA, through Mr Assaf, sought to raise in response to the alleged breach in June 2024, side issues which Mr Assaf knew to be irrelevant and false so as to, in effect, threaten Thallon to back down from its allegations of breach of the Lease.
The focus in this regard was on the letter sent by CMA’s solicitors to Aquinas More dated 1 July 2024 which I have set out above. That letter raised two, or perhaps three issues.
First, it was contended that Thallon, as lessor, has been charging (and collecting) GST on the rent, since the commencement of the Lease, in circumstances where it is not registered for GST. The letter requested evidence within seven days that the lessor was registered for GST and stated that CMA would separately report the matter to the ATO. The response from Aquinas More of 3 July 2024 (wrongly dated 27 June 2024) asserted that Thallon was compliant with its GST obligations and invited CMA to report the matter to the ATO if CMA maintained Thallon was non-compliant. No evidence was provided in support of Thallon’s position in this response.
As it emerged at the hearing, it appears that “Thallon HLD Pty Ltd” was not registered for GST whereas “Thallon HLD Pty Ltd atf Thallon HLD Unit Trust” was registered. The Lease did not indicate that Thallon entered into the Lease in its capacity as Trustee of the HLD Unit Trust but rental invoices were issued to CMA by “Thallon HLD PL atf Thallon HLD Unit Trust”.
In these circumstances, it is perhaps understandable how the issue came about. I reject any suggestion that CMA was making a contention it knew to be false.
Whilst it seems to me to be clear that the letter of 1 July 2024 was sent with a view to persuading Thallon to back down from its contentions of breach, and the GST issue was extraneous to the alleged breach, I do not regard this as overly significant in the overall circumstances.
The second matter raised in the letter dated 1 July 2024 was the April 2024 conversation where the $50,000 artificial rent increase was discussed. I have dealt with this above. I am far from comfortably satisfied that this conversation was made up. In these circumstances I reject the attack levelled at Mr Assaf and CMA in raising a false issue. Again, whilst the issue was extraneous to the issue of breach and was no doubt raised by CMA to seek to persuade Thallon not to continue with its proposed course, I do not regard this as overly significant in the overall circumstances.
The third matter raised in the letter was the contention that the notice of termination issued by Thallon was “flawed”. Quite a bit of time was taken up in cross examination of Mr Assaf to suggest to him that he must have known that consent was required to the 2022 share sale agreement and, as such, that the claims made by CMA’s lawyers in this correspondence and in the subsequent proceedings were doomed to fail, or at least were quite likely to. Thallon contended in closing submissions that the legal advice received by Montessori Academy was self-evidently inadequate.
I reject the attack on Mr Assaf in this regard. It was clear that CMA sought legal advice when Thallon raised the issue of breach in June 2024. CMA’s lawyers then set out in inter partes correspondence, CMA’s contentions in relation to the construction of the relevant parts of cl 8 of the Lease. Proceedings were then commenced propounding that view. Those proceedings failed and CMA now accepts that its view was wrong.
Thallon’s contention in this regard appeared to be that CMA put forward its contentions and then subsequently commenced proceedings and prosecuted those proceedings so as to, again, put pressure on Thallon to back down. The suggestion appeared to be that the proceedings were not pursued in the hope or expectation that they may succeed, but rather to put pressure on Thallon to back down.
I am far from satisfied that this contention has been made good. The fact that the proceedings failed is one thing. Concluding that the proceedings were knowingly pursued, in effect, for an ulterior purpose by Mr Assaf, is entirely another. The evidence does not establish that they were.
I therefore reject the contentions made by Thallon arising out of the 1 July 2024 letter and CMA’s subsequent conduct.
Insofar as Thallon pleaded reliance on the November 2024 transaction and the failure to obtain consent the position is, in my view, relevantly the same as the 2022 share sale agreement. I do not regard the correspondence sent by CMA through its solicitors contending that consent was not required but nonetheless seeking it, as being overly significant. The proceedings were on foot at this stage and CMA was maintaining its now accepted to be wrong construction of cl 8 of the Lease. There is nothing to characterise the nature of this breach any differently to the 2022 share sale agreement.
Further, nothing of substance has been put forward to suggest that Thallon had a reasonable basis to withhold consent.
Turning now to Thallon’s primary factual contention, I do not accept that there has been any breakdown in the relationship of trust and confidence between CMA and Thallon such that the Court should not grant relief against forfeiture. Perhaps somewhat curiously in light of Thallon’s position that Mr Fayad’s knowledge of the 2022 share sale agreement could not be attributed to Thallon, the only evidence of the alleged breakdown was given by Mr Fayad. No evidence was adduced from Thallon’s other two directors to suggest that they had any difficulty in dealing with CMA.
Mr Assaf gave evidence that he had no difficulty in working with Thallon and Mr Fayad going forward.
I do not accept that the circumstances of the present case are anything like those considered by Pembroke J in Casquash. His Honour described the position in that case as unusual. What was required was an unusual degree of ongoing cooperation between lessor and lessee: see [58]-[59] of the judgment.
The present case is, in my view, closer to that considered by Flanagan J in Hookey. Like the situation considered by Flanagan J whilst, in the present case, taken at its highest, there is some personal animosity between Mr Assaf and Mr Fayad (more so it would seem from Mr Fayad’s part) this is not a sufficient basis to suggest that CMA as lessee will conduct itself other than in accordance with the Lease.
The reality appears to be that CMA has never really had a problem with Thallon as its landlord, or Thallon having a problem with CMA as its tenant. The concerns expressed by Thallon are really no more than an attempt by it to seek to get rid of CMA so as to re-lease the Premises at a higher rent and then hopefully sell the Premises on the open market for a higher price than would be achieved if CMA remained as its tenant under the Lease, for the remainder of the initial 10 year term and potentially the next 20 years if the two options were exercised.
In Zandata, Palmer J observed at [50] in relation to circumstances similar to the present that this “is precisely the sort of unmerited windfall to which the Courts have regard in forfeiture cases – referred to in Legione v Hateley – in granting relief against forfeiture”. A similar statement was made by McDougall J in Steel Supplies at [141].
Finally, it was accepted that by Thallon that no loss was suffered by it as a result of the September 2022 breach or the November 2024 breach. It was also accepted that a consequence of the termination of the Lease would be that the LVR lease would come into effect at a much higher rent and to that extent Thallon would be in a better financial position than if the Lease remained in force. This financial gain is likely to be significant given that the below market Lease, including its options, could run until 2050.
As set out above, Thallon contended that its motive in seeking to terminate the Lease was not financial gain, but I have rejected this contention.
Against the financial gain to Thallon if the Lease was terminated, it really was not in dispute that CMA and third parties would be adversely impacted by a termination of the Lease. CMA would lose the not insubstantial profits it was making from the operation of the centre at the Premises. A number of employees will lose their jobs – Mr Assaf estimated 15. Families whose children attend the centre will need to find another centre for their children to attend or alternatively, at a minimum will be without child care for the 90 or so days that it would appear it will take for LVR to be approved to operate from the Premises. The likelihood of LVR being approved was not really explored in the evidence.
Having regard to all of these matters, I am comfortably satisfied that relief against forfeiture should be granted.
In these circumstances it was also not in dispute that an order should be made for the Lease to be registered.