AND UPON the applicant by its Counsel undertaking to pay the following amounts by bank cheque namely

(a) the sum of $5,526.94 by close of business this day; and

(b) the sum of $5,780.54 by close of business 13 June 2001.

The respondents are restrained until hearing and determination of this proceeding or further order whether by themselves, their servants and agents or otherwise howsoever from entering into possession of the premises at ground floor and part basement 228 Swanston Street, Melbourne.

1. This is an application by Ganka Holdings Pty Ltd for interlocutory relief against Athina Nominees Pty Ltd and Leo Dimos Nominees Pty Ltd. These respondents are landlords of premises situated at 228 Swanston Street, Melbourne.

2. The applicant tenant Ganka Holdings Pty Ltd has received two notices under Section 146 of the Property Law Act 1958 which expire today. The purport of those notices as is contemplated by the Section is that if the defaults referred to therein are not remedied within the stipulated period of 14 days the lease will be forfeited. The lease in question was granted in 1999 and apparently runs until the year 2005.

3. At the outset Mr Rallis, Solicitor of the landlord raised the objection that the lease had not been stamped. Even although copies of the lease are exhibited to affidavits sworn both by Mr Malos on behalf of the applicant tenant and Mr Leonidas on behalf of the respondent landlords, I felt constrained by the terms of Section 30 of the Stamps Act 1958 to exclude the lease from evidence and even although affidavits exhibiting it have been filed, it is not to be regarded as being in evidence. I did not have the advantage of any submissions upon the effect of the Stamps Act in those circumstances as to the receipt of evidence otherwise calculated to establish the existence of the lease. I was prepared to treat the two notices under Section 146 of the Property Law Act which were put into evidence as evidence of the existence of a lease for a term of years now current, as indeed was asserted by the notices themselves.

4. Mr Chizik, Counsel for the tenant attacks the validity of the notices and submits in the circumstances that his client should be given interlocutory relief until the hearing and determination of the entire proceeding, protecting him from any form of lock-out or threat to his position by the landlord acting upon the operation of the notices under Section 146. Mr Chizik conceded that the test for the grant of such interlocutory relief in the Tribunal was the same as the test in Court, namely one had to consider first, whether the tenant had demonstrated a serious issue or question to be tried with respect to the relief sought and secondly, consider whether in the circumstances the balance of convenience favoured the grant of relief.

5. I turn therefore to the first question, namely whether it has been demonstrated that there is a serious question to be tried. This of course brings me immediately to the validity of the two notices under Section 146 both of which bear date the 23rd of May this year and both of which I infer were served on that date. The first of the notices demands payment of rental in arrears in the sum of $2,892.35 and it is common ground that those rental arrears have now been paid and therefore in so far as breach of covenant existed, that breach of covenant can no longer be relied upon. The second sum demanded is interest accrued on the rental arrears for the period 1st December 1999 to 23rd May 2001, being a total of $5,780.54. The third item is fire insurance in the sum of $8,473.45. Those amounts of premium cover periods going back to the year 1998/1999, they yield a total of $16,946.90 for the entire building and it is asserted in the notice that the lease requires that 50 percent of those premiums be paid by the tenant. The fourth item is land tax for 2001 in the sum of $14,828.95.

6. The second notice claims payment of estimated stamp duty on lease; payment of legal costs on the disclosure statement; payment of $1,045 legal costs including as the evidence disclosed, goods and services tax with respect to a sub-lease; costs of $950 for

"The lessor's legal costs and disbursements arising from the lessee's breach of the lease as per Section 146 of the Property Law Act 1988 Notice dated 16 March 2001

(e) the lessor's further legal costs and disbursements arising from the lessee's breach of the lease being the amount $950."

7. Mr Chizik took me to these items in turn. As to the first item on the first notice, the arrears of rent, he asserted and it was not denied, that the arrears of rent had been paid. He further stated that rental for the entire period of the month of June had been tendered by his client and accepted.

8. Secondly, he said as to the amount of interest on rental arrears, whilst his client did not deny that there had been rental arrears and Mr Leonidas' affidavit disclosed very substantial arrears in the relevant period, Mr Chizik said that it was incumbent on the landlord in these circumstances to provide a precise calculation and since the landlord provided no such calculation, it was competent for his client simply to ignore the interest obligation unless and until such a quantification was provided.

9. As to the amounts of fire insurance, Mr Chizik observed that a number of the periods covered by the fire insurance were periods before the commencement of the current lease and therefore they could not be property made the subject of a notice under this lease. He also observed that the assessment for 2001 land tax was forwarded as it seemed for the first time, with no indication of any earlier dispatch to his client under separate cover of a letter dated the 23rd of May, the same day as the notices themselves.

10. Passing to the second of the notices, Mr Chizik made no submission as to the amount of stamp duty payable on the lease, in particular he made no submission that his client was not liable to this amount. He submitted so far as the costs of the disclosure statement were concerned, that his client was protected from liability for those costs by Section 19 of the Retail Tenancies Reform Act 1998 and in any event those costs were, he submitted, excessive. Mr Malos' affidavit made reference to this and attributed a view to that effect to a legal costs consultant Mr Wood.

11. Likewise, as to the sub-lease legal costs, Mr Chizik submitted that whilst these amounts had been demanded, no element of particularity had been given which would enable his client to form a view as to whether the costs were reasonable. He did not submit that something in the nature of a taxable bill would require it where legal costs were demanded in these circumstances, what was required however was sufficient detail to enable the recipient of the demand to make a judgment of some sort as to the reasonableness or otherwise of the costs. He made the same submission with respect to the two sums of $950 relative to the first alleged breach leading to the service of the notice under Section 146 of the Act on the 16th of March 2001 and the $950 claimed as at present.

12. In those circumstances in Mr Chizik's submission it was demonstrated that there was a serious issue to be tried as to the validity of both notices, the balance of convenience he submitted favoured his client. He referred to Mr Malos' affidavit explaining the disruptive effect that a termination of the tenancy would have upon his business; he observed it was not demonstrated that any commensurate loss would be suffered by the landlord if the landlord were restrained from enforcing the affect which they claimed the Section 146 notices had and said he is instructed to give the usual undertaking as to damages.

13. Mr Rallis, Solicitor for the landlords, conceded that the rental arrears referred to in the first paragraph of the first notice had been cleared and further that rental had been paid until the end of this month. He submitted that no credible attack had been made upon the claim for interest and further, so far as the fire insurance and the land tax were concerned, he said the applicant's points of claim demonstrated the applicant accepted liability for some amounts and the only dispute here was quantum.

14. As to the second notice Mr Rallis observed that no attack had been made at all on the liability of the tenant for the stamp duty on the lease. He submitted that Section 19 of the Retail Tenancies Reform Act prohibited a landlord from recovering its legal costs of the preparation of a lease but did not prohibit landlords from recovering their legal costs of related matters such as disclosure statements. He denied that the amount claimed was excessive. As to the legal costs for the sub-lease he took me to correspondence which gave notice of this claim, namely $950; costs was $95.50 Goods and Services Tax before the service of the notice. He invited me to infer that a landlord could reasonably incur those costs by having his legal adviser peruse a proposed sub-lease. He noted that Section 11(2) of the Retail Tenancies Reform Act specifically excluded the recovery of costs of this sort from the general prohibition on the recovery by landlords of so called key money. Likewise, he submitted that the $960 costs for each of two processes of default were reasonable. In so far as the view attributed to Mr Wood, the costs consultant in the applicant's material proceeded upon the footing that the costs related solely to the preparation and service of the notices. Mr Rallis said that this misunderstood the situation. He took me to a number of items of correspondence relative to defaults and alleged defaults prepared by the landlord's solicitors and submitted that the legal costs covered not only the preparation of the notices but the taking of instructions, the dispatch of this correspondence, the perusal of documents to draw these matters together. So viewed, he submitted there was no excessive element in these costs.

15. Finally, he referred me to an unreported decision of His Honour O'Bryan J sitting in the Supreme Court of Victoria in a matter of Grantville Grove Pty Ltd v Mylonopolous a judgment given on the 7th of December 1994, the reference provided is in the Butterworths unreported judgement series BC 9406136. There His Honour had to consider the lawfulness or otherwise of a re-entry affected, purportedly in pursuance of a Section 146 notice. His Honour observed:

"A notice under Section 146 to be effective must specify accurately that which is alleged to be the breach of covenant relied upon and that tell the lessee what he or she is entitled to do to remedy each breach. Gerraty v McGavin [1914] HCA 23; (1914) 18 CLR 152. As will shortly be seen, the notice did not specify accurately or at all in Paragraphs (a), (c) and (e) breaches of covenant and conditions in the lease. In my opinion the lessor is only entitled to rely upon Paragraph (b) therefore in support of its claim for possession.

16. The effect therefore was that in considering the notice before him, His Honour concluded that it was good as to one item but bad as to all the others. What then was the effectiveness of the notice as a whole? His Honour continued some pages later in his judgement:

"I raised the question with Counsel for the lessor whether a notice to the lessee pursuant to Section 146 Property Law Act in which multiple breaches of covenant in the lease are alleged is valid and effective if only one alleged breach is proved as is the case here. Mr Stafford of Counsel for the applicant referred the Court to a number of authorities which established the principle of law that a notice is not invalidated in toto because it turns out that all though some of the alleged breaches have occurred others have never taken place or that the lessor is not entitled to rely upon them."

17. His Honour then referred to a number of authorities and continued:

"I find therefore that the lessor was entitled to re-enter the premises on 15 December 1993 pursuant to the lease and eject the lessee. The lessor is entitled to possession of the premises pursuant to Clause 15.1 of the lease."

18. Accordingly therefore, in Mr Rallis' submission to render it inappropriate for injunctive relief to be granted today it is sufficient if even one of the alleged breaches of covenant to be found asserted in the two notices withstands attack. As noted there was no attack at all on the demand for the payment of stamp duty and as to the claim for interest on arrears of rental, all that was said was that there was no obligation to pay without the landlord's providing a detailed calculation justifying the amount alleged to be owing.

19. I will return therefore to what may be said as to the validity of the various claims made in the two notices. The first paragraph (a) of the first notice is remedied because rent has now been paid. Paragraph (c) - the interest accrued on rental arrears is not attacked in any positive way by the tenant. Mr Chizik's submission is that the landlord can only assert an entitlement to that interest upon provision of detailed calculation. I reject that submission. The fundamental principle of law right across the law of contract and in the law of landlord and tenant is that the debtor is obliged to seek out his creditor. This obviously has a spatial effect in that it is the obligation of the tenant to make his way to the landlord to pay rent or to dispatch the rent to the landlord not the landlord's obligation to attend upon the tenant to collect. Another element of it is that since the tenant has his own records and can resort to the terms of the lease, the tenant is in as good a position as the landlord to calculate his obligations as to matters such as interest and should meet those obligations in any event. It is for this reason that a generalised notice under a mortgage to pay the moneys secured or to pay the principal sum and interest is held to be a good notice to pay pursuant to the terms of the Transfer of Land Act even without the assertion by the mortgagee of a particular amount owing, let alone the provision of detailed calculations to support that, that proposition is established by the decision of the Full Court of the Supreme Court of Victoria in Indrisie v General Credits Limited [1985] VicRp 20; [1985] VR 251.

20. As to the matters of fire insurance and land tax, it seems to me that there is a serious issue to be tried as to whether in truth those amounts are payable. First, Mr Leonidas' affidavit concedes that the amounts claimed for land tax were incorrect. The amount claimed as noted was over $14,000. Mr Leonidas says that the amount claimed should be approximately $10,000. In my view attempts to recover items such as fire insurance and land tax are subject to the operation of Section 21 of the Retail Tenancies Reform Act 1998. It is a complex section and I will not trouble to read it. Its application is quite difficult. Sub-section (2) clearly deals only with a retail premises which are located in a retail shopping centre. There are words to be found in sub-section (1) which might appear to have that effect likewise, however upon proper analysis the section is found, for instance sub-section (1) to apply to retail premises whether in a retail shopping centre or not. This matter is analysed in some length in my own decision of Laundry Coin Wash Leasing Nominees Pty Ltd v Karen Lee Nominees Pty Ltd (2000) VConvR 58-545 at paragraphs 20 to 25. In particular I refer to the analysis adopted to that effect by Dr Clyde Croft in his work on Retail Premises Second Edition 1994. The learned author appears to maintain the same view in the third edition of his work where he quotes my analysis in the Laundry Coin Wash Leasing Nominees case at pages 324-325 with apparent approval.

21. The effect of Section 21 amongst other things is that the landlords in this case are required to give annual estimates of the various items of operating expenses and annual statements of expenditure incurred. Nothing of the sort has been given in relation to the fire insurance and the land tax appears to have been demanded in the manner which I have already described. More pertinently with respect to land tax, Regulation 7 of the Retail Tenancies Reform Regulations 1998 provides that land tax is to be recovered from tenants of retail premises only on a single holding basis, that is, upon the basis that the relevant tenancy is the sole tenancy owned by the landlord. Here, as I understand it, the tenancy was part of one building. The liability as disclosed in the land tax assessment for the whole of the building was some $620.80. It may be therefore that the proper analysis is that this particular tenancy would as a single holding attract no liability to land tax at all. Whatever is the case the amounts demanded in the notice and the amounts asserted in the respondents' affidavit have been right off the planet, wholly inaccurate and wholly wrong. Just what the effect of Section 21 is upon the obligation to pay such operating expenses, it is unnecessary for me now to express a view on. I think it is clear that there is a serious question to be tried as to whether this difficult provision and Regulation 7 of the Retail Tenancies Reform Regulations 1998 relieve the tenant entirely of the obligation to pay these operating expenses or outgoings unless they are demanded in the form required by the section in the Regulations. An alternate view of course is that the liability remains but only for the reduced amount. In the circumstances however I accept that there is a serious issue to be tried as to the validity of the items claimed for fire insurance and land tax.

22. Turning then to the second notice. There is no serious issue to be tried as to the liability for stamp duty on the lease. No objection has been raised to that. As to the various classes of legal costs, with some hesitation I am prepared to conclude that there is a serious issue to be tried as to whether those costs are reasonable in the circumstances and such as are recoverable under the lease. Whether the lease provides any additional criterion beyond one of reasonableness, I am unable to say having regard to the fact that by the force of Section 30 of the Stamps Act the lease instrument itself is not available to me as part of the evidence.

23. The situation then appears to be the same as the one which confronted His Honour O'Bryan J in Grantville Grove v Mylonopoulous and that is that the notices are partly good and partly bad. The principle which His Honour enunciated was that as long as some part of the notice was good, it was open to the landlord to rely upon it. That appears to me to be the situation here, subject to one proviso. If matters stopped there the proper course would be for me simply to deny any interlocutory relief based upon the authority of the Grantville Grove case, however matters do not stop there. As previously noted it is said that rental has been paid since the issue of these notices, both covering the arrears and covering the period to the end of June

24. Mr Rallis says that there is no element of waiver in this because in his submission it would be proper to regard the payment of rent for the period after the expiry of the notices as payment of rent for a tenancy from month to month. The issue of waiver of forfeiture is dealt with by Professor Bradbrook and Dr Croft in their work Commercial Tenancy Law in Australia Second Edition at paragraph [17.18]. At about point 5 of page 414 the learned authors state:

"Acceptance of rent which accrues due after the forfeiture operates as a waiver of the forfeiture: [they then refer to a number of authorities]. The lessor cannot avoid this result by accepting the rent without prejudice to his or her right to forfeit the lease: [another series of authorities is referred to]. Similarly a demand for rent "without prejudice" will operate as a waiver: [more authorities are referred to]. So will acceptance of rent (prior to forfeiture) as `mesne profits': Lidsdale Nominees Pty Ltd v Elkharadly [1979] VicRp 10; [1979] VR 84.

25. Once a lease is terminated the tenant becomes a trespasser and not a tenant from month to month. Any amounts which would be paid for the tenant's occupation after termination would properly be characterised as mesne profits. That very point appears to have been raised in the Lidsdale Nominees case and was considered and rejected by Sir George Lush. It follows therefore that there is a serious question to be tried as to whether either of these notices can be acted upon in light of the apparent waiver of both of them by the acceptance of rent for a period accruing after their expiry. I did not understand there to be any particular argument with Mr Chizik's analysis of the balance of convenience. All of this would point in favour of the grant of the interlocutory relief which is sought today; but we must remind ourselves that injunctive relief, whether interlocutory or final is discretionary and is subject to the principles and maxims of equity. One of those maxims is that he who seeks equity must do equity. That maxim is dealt with by the learned authors Maher, Gummo and Lehayne JJ in the third edition of their book Equity: Doctrines and Remedies at paragraph [311] page 76. They describe the operation of the maxim as is follows:

"This is one of the most important of the maxims of equity. It prescribes that any plaintiff who wishes to avail himself of an equitable remedy can only do so on terms that he fulfils his own legal and equitable obligations arising out of the subject matter of the dispute. It draws attention to the origins of equity in a "court of conscience"; and it serves to point to a very important distinction between equity and law, viz the ability of equity to give conditional relief. At law (apart from the prerogative writs) all remedies were non-discretionary, and all remedies consisted of either an unconditional verdict for the plaintiff in a specified sum of money or an unconditional verdict for the defendant. Equity, on the other hand, was flexible, equitable remedies were discretionary; and equity could mould its orders and decrees to suit ever-varying circumstances."

26. It would in my view be contrary to conscience to provide equitable relief by way of an interlocutory injunction to an applicant who is admittedly in flagrant breach of its obligations with respect to the very subject matter which it is trying to protect by the interlocutory relief sought, namely the lease. Payment by the tenant of the stamp duty is a fundamental obligation and I see no reason why the tenant should not pay the interest on the rental arrears, obviously this may be a matter of a dispute and debate between the parties. The calculation of daily rates of interest on arrears is now a much easier process with the assistance of electronic calculators than it once was. Accordingly, for the reasons given, I would, subject to the usual undertaking be prepared to grant interlocutory relief to the applicant tenant but subject to his paying before the grant of the relief the amount of stamp duty claimed in the Section 146 notice and the interest on rental arrears either as claimed in the notice or as demonstrated by him and his Counsel by calculation to be the correct figure.

[Luncheon adjournment. The hearing resumed and discussion ensued.]

27. Just before lunch I gave reasons for declining to grant the interlocutory relief sought by the applicant tenant in this proceeding except upon terms that the tenant pay the proper amount of interest on arrears of rental and the amount of stamp duty payable on the relevant lease. I stood the matter down over the luncheon period to enable the applicant and his Counsel to consider the situation. Upon the resumption Mr Chizik submitted that the conclusions that I have reached indicated that an injunction should be granted without any conditions, save and except for the usual undertaking as to damages which he had previously indicated a willingness to give. He said that the finding that I had made to the effect that the landlord had accepted rent for a period after the expiry of the Section 146 notice, before that notice had expired meant that the effect of those notices had been waived. Any action which the landlord might take or threaten to take by way of re-entry would therefore be unlawful and an injunction should go as a matter of right, without any condition other than the usual undertaking.

28. Mr Rallis on behalf of the landlord submits that I should not depart from the position that I enunciated before lunch, should not consider granting unconditional injunctive relief. He says that the proceeding this morning was heard without recourse to the terms of the lease instrument. This was because he had objected to its being received and reliance upon Section 30 of the Stamps Act 1958. Mr Rallis now says that were it possible to refer to the written instrument, his client would have a conclusive answer based upon the text of the lease to the waiver argument which I determined against it.

29. The application for injunctive relief in my view has now been heard and determined. I did not stand the matter down to enable the applicant as it were to have a second go and try and get a better result. The reasons that I gave before lunch seemed to me to be correct then and they seem to me to be correct now. Accordingly, I believe that it would not be right and I decline to give unconditional injunctive relief as sought. If the landlord proceeds to re-enter then if the view that I expressed this morning without recourse to the lease instrument were correct, the landlords would be exposing themselves to a liability in damages. On the other hand if Mr Rallis is right and there is something in the lease that would outflank the waiver issue, the landlord will be able to take that action without liability in damages. I have indicated already the basis upon which I am prepared to grant interlocutory relief. If that relief is not taken up because the conditions are unacceptable, the tenant is left to its remedies at law.