//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2026] ACTSC 250
Supreme Court of the ACT
2026-07-22
Muller J
Original judgment source is linked above.
Source: the ACT Courts (www.courts.act.gov.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: HC Quality Cars Pty Ltd v Diamond Window Tints Pty Ltd Citation: [2026] ACTSC 250 Hearing Date: 3 July 2026 Decision Date: 22 July 2026 Before: Muller J Decision: See [42] Catchwords: REAL PROPERTY – LANDLORD AND TENANT – Retail and commercial tenancies legislation – subleasing of commercial premises – whether sublease assigned – whether a periodic tenancy existed – whether tenancy appropriately determined under common law principles – whether right of re-entry should be permitted – whether orders for possession should be made PRACTICE AND PROCEDURE – DEFAULT JUDGMENT – Defendants failed to appear on numerous occasions at court – requirements for an applicant to succeed for default judgment – default judgment awarded – whether damages should be awarded – requirements for unliquidated sum of damages met – damages to be assessed Legislation Cited: Civil Law (Property) Act 2006 (ACT), ss 201, 426, 436, Ch 4, Pts 4.5, 4.7 Corporations Act 2001 (Cth), s 127 Court Procedures Rules 2006 (ACT), rr 102, 1115, 1119, 1120, 1122, 1126 Leases (Commercial and Retail) Act 2001 (ACT), ss 17, 95, 122, 144, Pt 11 Leases (Commercial and Retail) Regulations 2002 (ACT) Cases Cited: Amad v Grant [1947] HCA 9; 74 CLR 327 Anderson v Bowles [1951] HCA 61; 84 CLR 310 Arnold v Mann [1957] HCA 64; 99 CLR 464 Chronopoulos v Caltex Oil (Australia) Pty Ltd [1982] FCA 298; 70 FLR 8 Queen’s Club Gardens Estates Ltd v Bignell [1923] 1 KB 117 Samios v Petersilka (1993) 113 FLR 63 Parties: HC Quality Cars Pty Ltd (Plaintiff) Diamond Detail Group Pty Ltd (Second Defendant) Anthony Michael Taylor (Third Defendant) Representation: Counsel S Zhao (Plaintiff) Solicitors BQ Law (Plaintiff) File Number: SC 418 of 2025 MULLER J:
HC Quality Cars Pty Ltd (HC) is a lessee of commercial premises at Fyshwick, ACT. Diamond Detail Group Canberra Pty Ltd (Diamond Detail) subleases part of those premises. The portion subleased is itself in two parts. The first part is occupied by Diamond Detail under an arrangement HC describes as a periodic lease (tenancy). The second part is occupied by Diamond Detail under a continuing lease. Diamond Detail continues to occupy both parts of the premises but stopped paying rent for them in May 2025. Anthony Michael Taylor, or Michael Anthony Taylor as he is sometimes described, is the sole director and shareholder of Diamond Detail. HC brings proceedings seeking various orders in relation to both parts of the premises presently occupied by Diamond Detail as a consequence of their continuing non-payment of rent as follows: (a) termination of the lease; (b) surrender of possession; (c) permission to remove property belonging to Diamond Detail and to change the locks; and, (d) damages for non-payment of rent.
Mr Taylor is sued as well as Diamond Detail because of his failure to honour a deed of acknowledgement of debt he entered into personally with HC, and because he personally guaranteed the performance of Diamond Detail under the continuing lease. When the matter was listed for hearing before me, there was no appearance on behalf of either Diamond Detail or Mr Taylor.
By its application in proceedings, HC seeks default judgment, or alternatively summary judgment, against Diamond Detail and Mr Taylor. In support of its application, it reads affidavits of Xiang He affirmed on 12 June 2026 and 2 July 2026, and affidavits of Shuonan Zhao, solicitor, affirmed on 2 May 2026 and 3 July 2026.
A short chronology of relevant events
HC is the lessee for the whole of the basement level of 115-117 Wollongong Street, Fyshwick. HC is owned and controlled by Mr He.
In September 2018, HC subleased part of the basement area (the First Part) to a company called Forced Clothing Co Pty Ltd (Forced). The directors of Forced were Mr Taylor and Alanah Rose Mayberry. The sublease was for a term of four years.
Prior to the expiry of the sublease, in about April 2022, Mr Taylor and Mr He agreed the lease arrangement would continue through a new entity to be incorporated by Mr Taylor, which became Diamond Detail. The change was prompted by Mr Taylor going through a separation and divorce (presumably from his co-director in Forced, Ms Mayberry). Diamond Detail thereafter commenced making rental payments consistent with the terms of the sublease to Forced.
In April 2025, HC and Diamond Detail agreed to enter into a new lease for an additional area within the same premises (the Second Part). The lease for the Second Part was reduced to writing.
Thereafter, Diamond Detail ceased making rental payments for either the First Part or the Second Part. They continue to occupy both parts of the premises and to conduct their business from those parts.
Under the terms of the lease for the Second Part, Mr Taylor guarantees the performance of Diamond Detail. In addition, pursuant to a deed of acknowledgement of debt signed by Mr Taylor on behalf of Diamond Detail and in his personal capacity as guarantor, a debt of $4,600 is acknowledged in relation to a “storage fee”. Diamond Detail agreed under the terms of the deed to pay the debt in 10 equal instalments of $460 commencing on 1 April 2025. No payments have been made pursuant to the deed.
On 2 July 2025, written notice (notice to remedy) was provided to Diamond Detail of the default in payment of rent, the need to remedy the default and the risk of termination of the lease where the default was not remedied. No response was received.
On 18 August 2025, solicitors for HC served a notice of termination of the lease on Diamond Detail, requiring them to vacate the premises and to remove all belongings by 19 August 2025. No response was received and Diamond Detail have continued in their occupation of the premises up until the present time and have continued to conduct their business from the premises.
Diamond Detail and Mr Taylor have failed to appear when this matter has been listed before the Court on at least 10 occasions. Neither have filed any documentation in response to HC’s claim.
The evidence before me establishes service of relevant documentation on Diamond Detail and Mr Taylor as follows: (a) On 25 November 2025, Mr Zhao posted the documents to Diamond Detail. (b) Between 27 November 2025 and 4 February 2026, HC’s solicitors engaged process serves to serve the documents on Mr Taylor to no avail. (c) On 5 February 2026, Mr Zhao attempted to personally serve the documents on an individual who was purportedly Mr Taylor before leaving it on a chair beside him. (d) On 19 June 2026, Mr Zhao posted a copy of the present application in proceedings to Diamond Detail and Mr Taylor. (e) On 2 July 2026, Mr Zhao travelled to the property and left the application with a person he says was Mr Taylor.
Are the defendants in default?
In proceedings commenced by originating claim, where the defendant has failed to file a notice of intention to respond or defence within the time required by r 102 of the Court Procedures Rules 2006 (ACT), that question is readily answered. The defendants are clearly in default. As a consequence, HC is entitled to apply for judgment to be entered in its favour, subject to satisfaction of the following requirements: (a) There must be evidence of service of the originating claim and any application: r 1119(1)(a) of the Rules. (b) An affidavit in support of the application from the plaintiff or a qualified person is required (r 1119(1)(b) of the Rules) and it must be sworn not earlier than 14 days before the date it is filed. A qualified person is defined by r 1115 of the Rules as including, among other persons, the plaintiff’s solicitor. (c) Where judgment for a liquidated sum is sought, the affidavit must: (i) state the amount owing to the claimant at the time the originating claim is filed: r 1120(3)(a) of the Rules; and, (ii) give particulars of any reduction in the amount owing since the originating claim was filed: r 1120(3)(b) of the Rules. (d) Where the damages sought are unliquidated, the affidavit in support must state the proceedings have not settled and include any amount paid in relation to damages: r 1122(3) of the Rules. (e) Where a claimant is not entitled to apply for judgment under any of the specified rules, the court may enter judgment it considers justified on the plaintiff’s claim for relief even if the judgment was not specifically claimed: r 1126 of the Rules.
I am satisfied those requirements are met here in terms of judgment for an unliquidated sum, but not for a liquidated sum. What consequences flow from the default in this case?
HC has not complied strictly with the requirements for default judgment in a liquidated claim. The damages sum specified in the originating claim was described as an accruing sum as the non-payment of rent was continuing. The affidavit evidence confirms no payments have been made by way of reduction of the claimed debt in the period between the filing of the originating claim and the hearing of the application for default judgment. However, it does not state the amount owing to HC, in relation to the claim for relief, at the time the originating claim was filed as required by r 1120(3) of the Rules.
Although the notice to remedy and the notice of termination each referred to a liquidated sum due to HC in respect of unpaid rent, the application before me seeks payment of damages in “an amount to be quantified”. At hearing, the total rent owing for the leases of both parts was asserted to be $132,000. The amount owing under the deed of acknowledgement was asserted to be $4,600. As against Mr Taylor personally there was an asserted debt of $30,400 comprising the amount owing under the deed of acknowledgement together with the amount owing pursuant to the guarantee under the lease for the Second Part.
In relation to the First Part, HC contends there is a periodic tenancy enforceable against Diamond Detail. In relation to the Second Part, HC relies on a written lease agreement for a fixed term. To determine the consequences flowing from the defendants’ default in the proceedings, it is necessary to first work out for each part of the premises the nature of the legal relationship between the parties established by the evidence.
What is a periodic tenancy?
A sublease for the First Part of the premises entered into between HC and Forced is in evidence before me. The lease expired in August 2022. However, from as early as March 2022, rental payments under that lease were purportedly made by or on behalf of Diamond Detail and that entity continued to make rental payments to HC for the First Part of the premises until April 2025. HC says the effect of the arrangement was to create a periodic tenancy between HC and Diamond Detail governing Diamond Detail’s occupation of the First Part of the premises. It says the existence of a periodic tenancy is evidenced by the conduct of the parties between March 2022 and April 2025 whereby Diamond Detail continued to occupy the premises and operate the business previously conducted by Forced. Diamond Detail continued to pay rent to HC on the same basis as Forced had previously paid rent for its occupation of the premises.
A periodic tenancy describes a tenancy for a prescribed term that continues unless and until terminated. It may continue from week to week, from month to month or for such other period as is agreed between the parties. The essence of the agreement is its continuation for successive periods until terminated by agreement of the parties or by legal implication. The common law position is if a notice to terminate is to have validity it must expire at the end of a recognised lease period: Amad v Grant [1947] HCA 9; 74 CLR 327 at 340-1 (Rich J); Samios v Petersilka (1993) 113 FLR 63 at 64 (Higgins J). A periodic tenancy is distinct from a tenancy at will whereby a person is given exclusive possession of premises under an express or implied agreement with the landlord until terminated at the will of either party.
Where a valid notice terminating a periodic tenancy is issued and expires, a lessee is protected from repossession in usual circumstances until an order for possession is made by the court. The personal right of possession subject to a court order does not alter the obligation of the tenant to comply with the terms of the lease and continue to pay rent in the meantime: Anderson v Bowles [1951] HCA 61; 84 CLR 310 at 320 (Dixon, Williams, Fullagar and Kitto JJ); Arnold v Mann [1957] HCA 64; 99 CLR 464 at 466 (Dixon CJ).
The applicable statutory framework
Retail and commercial tenancies in the Australian Capital Territory are governed by the Leases (Commercial and Retail) Act 2001 (ACT) (the LCR Act) and the Leases (Commercial and Retail) Regulations 2002 (ACT). The LCR Act applies to small commercial premises. They are defined as premises having a net lettable area of less than 300 m². Retail premises are also commercial premises within the meaning of the LCR Act. A retail business is defined as a business involving: (a) the sale or hire of goods by retail; or (b) the supply of services by retail.
It is unclear whether the subleased area comprising the First Part constitutes a small commercial premises as the net lettable area is not evident from the sublease issued to Forced, and there is no other evidence on the topic that has been placed before me. The sublease entered into with Forced is also silent as to the use to be made of the premises by that entity and the affidavit of Mr He also fails to disclose that use. Although it appears probable the use made of the premises by Forced, and in turn Diamond Detail, would meet the definition of a retail business for the purposes of the LCR Act, I am unable to reach a concluded view on the present evidence. I will return to this issue later.
Where the LCR Act applies, it imposes a number of express duties upon a landlord including, relevantly: (a) To give the tenant a disclosure statement for a proposed lease at least 14 days before the lease is entered into. (b) Not to engage in conduct that is unconscionable harsh or oppressive in the context of lease negotiations. (c) To provide retail tenants with a minimum term of at least five years (there are exceptions to this requirement, none of which appear to have application in this case). (d) The regulation of rent reviews. (e) A prescribed termination process in s 122 in the following terms: (1) If the lessor has a right to terminate the lease, the lessor may give written notice of termination to the tenant (the termination notice). Note For how documents may be given, see the Legislation Act, pt 19.5. (2) Within 14 days after being given the termination notice (the allowed period), the tenant may— (a) contest the termination by application to the Magistrates Court; or (b) agree to the termination by written notice to the lessor. (3) The termination takes effect in accordance with the terms of the termination notice if, within the allowed period, the tenant— (a) does not contest the termination by application to the Magistrates Court; or (b) agrees to the termination by written notice to the lessor. (4) If the tenant contests the termination by application to the Magistrates Court within the allowed period— (a) the termination does not have effect unless it is confirmed by the Magistrates Court; and (b) if the termination is confirmed—it has effect on the day ordered by the court. (5) The lease may be terminated by the lessor only in accordance with this section. (6) If the tenant is in possession of the premises, the lessor may enter the premises to recover possession of the premises only— (a) under a court order or warrant; or (b) if the lease has been terminated in accordance with this section.
Significantly in the context of the orders sought in this application, the Magistrates Court is given jurisdiction to hear and decide applications under the Act pursuant to s 144. Disputes in respect of which that jurisdiction may be exercised include a claim for recovery of possession of premises in accordance with s 17.
Chapter 4 of the Civil Law (Property) Act 2006 (ACT) (the CLP Act) also has application to certain leasing disputes. Relevantly, pt 4.5 deals with forfeiture of leases and restrictions on re-entry. In providing its notice to remedy and notice of termination, HC made reference to s 426 of the CLP Act imposing certain requirements on a lessor to give notice of a breach of a lease in specific terms before seeking to enforce by proceeding or otherwise a right of re-entry. Section 426 entitles the lessor to apply to the Supreme Court for relief in the nature of orders permitting re-entry to leased premises.
Part 4.7 of the CLP Act deals with recovery of possession of leased premises. A lessor may apply to the Supreme Court or Magistrates Court for an order for recovery of possession of the premises. However, s 436 provides pt 4.7 does not apply to a lease under the LCR Act.
Was there an agreement and if so, what was it?
The First Part of the premises
HC asserts a periodic tenancy in favour of Diamond Detail by virtue of the agreement to lease entered into between Mr He and Mr Taylor in about March 2022. At that time, the premises were still subject to a four year lease between HC and Forced. Mr Taylor was one of two directors of Forced and a question arises as to his capacity to procure an arrangement which was in effect to assign the lease then held by Forced to a new entity.
Where the lease in question is subject to the LCR Act, there are specific provisions dealing with assignment of a lease set out in pt 11. Of importance here, s 95 requires any request for an assignment of the lease to be in writing and there is no suggestion in this case that a proposed assignment of the lease from Forced to Diamond Detail was at any relevant time reduced to writing. The same obligation arises under s 201 of the CLP Act. The terms of the lease to Forced in the document in evidence before me does not make any provision at all for assignment of the lease. The position at common law in that regard is that an assignment of lease is required to be in writing: Chronopoulos v Caltex Oil (Australia) Pty Ltd [1982] FCA 298; 70 FLR 8 at 15-16 (Fox J).
The evidence before me is insufficient to establish an effective assignment of the lease from Forced to Diamond Detail. The purported assignment was not reduced to writing and there is an absence of evidence demonstrating that Forced consented to the assignment. There is no evidence Mr Taylor was authorised on behalf of Forced to act as he did. I am therefore not satisfied that in respect of the first part of the premises there was a valid assignment of the lease entered into by Forced.
From the time of expiry of the Forced lease, there is evidence that Mr Taylor remained in the premises and continue to trade and that rental payments continued to be made. In the bank statements of HC, those payments are mostly identified as being made by Michael Taylor with periodic references to “Diamond Rent”. From January 2024 to April 2024 inclusive, the payments bear the descriptor “Paige Erntner”. The asserted connection, if any, between that person and Diamond Detail is not apparent. From April 2024, the payments are again attributed to Michael Taylor until they cease altogether on 28 May 2025.
As at March 2022, when the new arrangement with Diamond Detail in relation to the First Part of the premises purportedly begins, the records establish the rental charge applied to the account was $5,200 per month. Payments received were generally in that amount on a monthly basis. From September 2022, the monthly rental charge increased to $6,000 and payments increased accordingly. From August 2024 onwards, there was some variation in the monthly rent invoiced. In some months, it was as high as $6,500 and in others only $5,950. From May 2025, the rental charge was consistently $6,250 until September 2025 when it increased to $6,700. The last payment that accorded directly with an invoiced amount was on 28 March 2025 when the amount of $6,100 was paid against invoice 3447. That invoice was issued on 1 March 2025 in the amount of $6,100.
On balance, I am satisfied there was an agreement reached between HC and Mr Taylor on behalf of Diamond Detail to continue in occupation of the subject premises on a month-to-month basis from April 2022. It was a condition of the periodic tenancy that the commencing rent for the first part of the premises would be $5,200 and the rent would be subject to variation from time to time by agreement. As at March 2025, the agreed rent was not less than $6,100 per month. The matters relied upon in reaching that view are: (a) The evidence of the conversation between Mr He and Mr Taylor giving effect to the agreement. (b) The fact of Mr Taylor’s continued occupation of the premises and his continuing to trade from them. (c) The evidence of periodic rental payments made by Mr Taylor to HC either in his own name or in respect of “Diamond Rent”. (d) Mr Taylor’s execution of a deed of acknowledgement of debt on 30 March 2025 in circumstances where the deed expressly identifies Diamond Detail Group as the lessee of the premises. The Second Part of the premises
HC places reliance on an agreement to sublease entered into with Diamond Detail with a commencement date of 1 April 2025 and terminating on 31 August 2026. The document in evidence is not signed by either of the parties. Michael Taylor is named as guarantor in the schedule to the lease and he also has not signed the document. The area to be leased is identified by way of photographs annexed to the reference schedule to the lease agreement. The rent identified in the reference schedule is $1,900 per month including GST. Mr He attests to Michael (Mr Taylor) through Diamond Detail having entered into a formal sublease arrangement in the terms of the document I have described. The only other evidence concerning the arrangement is the schedule of payments received from Diamond Detail by HC, which identifies invoices issuing for “office rent” in the amount of $1,900 on a monthly basis commencing on 3 May 2025. There is no evidence of any rental payment having been made in accordance with the purported agreement. In his affidavit, Mr He does not attest to the occupation by Mr Taylor or Diamond Detail of the second part of the premises although that is implied as a consequence of his claim to be entitled to rent in accordance with the purported lease from shortly after the date of its commencement.
In relation to the Second Part, I am not satisfied on the evidence before me the existence of a lease between HC and Diamond Detail is established. The evidence falls short of establishing even an agreement to lease in circumstances where there is no confirmation of conduct by Mr Taylor or Diamond Detail demonstrating acceptance of the lease terms. In that regard, the situation of the Second Part of the premises is quite unlike the First Part. Put at its highest, the material supports a finding on balance of an offer to lease made by HC to Diamond Detail in the terms of the document in evidence, with uncertainty as to whether that offer was ever accepted.
In summary, I accept the existence of a periodic tenancy between HC and Diamond Detail applying to the First Part of the premises on a calendar monthly basis commencing on 1 September 2022 when the Forced lease terminated. I am not satisfied on the evidence presently before me that HC has established the existence of a lease or agreement to lease applying to the Second Part of the premises.
Was there a valid notice to terminate the tenancy?
Is there a right to re-entry and possession?
Is there an entitlement to damages for unpaid rent?
Is the deed of acknowledgement of debt enforceable?
The document is executed by each of the parties as a deed. On its face, it acknowledges a debt due from Diamond Detail to HC in the sum of $4,600. It is compliant with s 219 of the CLP Act in that it is signed and attested by a witness who is not a party to the deed. Execution of the document on behalf of Diamond Detail by Mr Taylor as sole director is compliant with the requirements of s 127 of the Corporations Act 2001 (Cth).
As the deed is validly executed, I am satisfied it is enforceable as an acknowledgement of debt by Diamond Detail. As for Mr Taylor, although he has signed the document as guarantor, the deed itself does not by its express terms provide for Mr Taylor to guarantee the performance of the company under the deed. As a consequence, the deed does not create any right to enforce the acknowledgement of debt against Mr Taylor personally.
Orders
I certify that the preceding forty-two [42] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Muller.
Associate: Date:
HC Quality Cars Pty Ltd
Diamond Window Tints Pty Ltd