27 Mr Simpkins strongly urged that no relief against forfeiture should be granted even if all arrears under the lease were paid, a new bank guarantee for six months' performance were provided, the Defendant were given a right of recourse in the event of default against the New Zealand parent company, which it had not previously had, and the Plaintiff were to pay the Defendant's costs of these proceedings.
28 Mr Simpkins said that even in those circumstances insistence by the Defendant on termination of the lease was not unconscionable because of the long history of default by the Plaintiff and because of the repeated assertions by its managing director, Mr Lowery, that the Plaintiff was on the verge of liquidation. Mr Simpkins also said that there had been insufficient time to investigate adequately the financial position of the Plaintiff's parent company and the worth of the guarantee which it promised to give. In those circumstances, Mr Simpkins said the Court should exercise its discretion against the grant of relief: see Direct Food Supplies (Vic) Pty Ltd v DLV Pty Ltd [1975] VR 358; Tannous v Cipolla Bros Holdings Pty Ltd [2001] NSWSC 236 at [28] per Barrett J; Wilkinson v S & S Gikas Pty Ltd [2006] NSWSC 1314 at [24] per Campbell J.
29 If one were to believe the desperate pleas for rent reduction made by the Plaintiff's managing director, Mr Lowery, throughout the term of the lease to date, one would conclude that the Plaintiff's prospects of being able to pay its future rent were virtually non-existent. However, it emerges that Mr Lowery was not telling the truth - or so the Plaintiff now says.
30 Mr Giles says that the Plaintiff, rather than hovering on the brink of collapse, actually made a profit of just under $168,000 in the last twelve months. He said that the Plaintiff "does not adopt, doesn't accept everything that Mr Lowery said by any means … we come to the Court accepting he has said things we do not stand by … I accept some of the later statements of Mr Lowery are unattractive and we don't stand by them".
31 What Mr Giles was saying, although far more elegantly, was that Mr Lowery had not been telling the truth to the Defendant. In misrepresenting the Plaintiff's financial circumstances, he had been improving the Plaintiff's financial position at the Defendant's expense, by achieving a rent reduction and by deferring payments of rental and outgoings. Doubtless, the Board of the Plaintiff's New Zealand parent congratulated Mr Lowery on his negotiating skills when he achieved the rent reduction of 20% in March 2009.
32 However, it seems that Mr Lowery's negotiating skills have cost the Plaintiff and its New Zealand parent dearly. In order to have any hope of remaining in what are obviously valuable commercial premises, the Plaintiff has had to pay within a very short time all rent and outgoings in arrears, totalling about $534,000, and it has had to satisfy its bank's security requirements for the provision of a new bank guarantee for six months' performance under the lease. Further, it has had to offer direct recourse to the New Zealand parent by guarantee and it will have to pay the Defendant's costs of these proceedings.
33 The conduct of the Plaintiff in misleading the Defendant in order to obtain a rent reduction and to excuse defaults in punctual payment of rent and outgoings is reprehensible. However, the Plaintiff has now paid the price of that conduct in full. The Plaintiff's ability to continue performance of the lease duly and punctually is underwritten by the new bank guarantee now proffered and the guarantee of the parent company. If the promises to procure the two guarantee were performed, the Defendant would be put back in the same position as before the forfeiture or re-entry. Indeed, it would have the benefit of an additional guarantee from the parent company. Those circumstances would constitute strong grounds for relief against forfeiture: see e.g. Wilkinson v S & S Gikas (supra) at [23].
34 Because these proceedings were brought on urgently, the Defendant did not have as much opportunity as it wished to investigate the financial position of the Plaintiff and its parent company. In those circumstances, I was not willing to grant relief against forfeiture merely on the basis of undertakings or promises by the Plaintiff to procure the new bank guarantee and the guarantee of the New Zealand parent. I stood the proceedings over for a few days to enable the Plaintiff to carry out and procure what it had promised, to the Defendant's satisfaction. I took the view that if the Plaintiff were able to perform its promises at short notice - particularly in procuring a new bank guarantee which would require the bank to be given adequate security - then it and its parent company would demonstrate sufficient financial substance to warrant the granting of relief.
35 When the matter returned to Court a few days later, the parties had agreed upon Short Minutes of Order which disposed of the proceedings. I made the order sought and granted relief against forfeiture.
36 I also ordered the Plaintiff to pay the Defendant's costs of the proceedings on the indemnity basis. I did so because the Defendant should never have been put to the expense of defending these proceedings. What the Plaintiff was able to do in a matter of days in rectifying all breaches of the lease in order to support its application for relief against forfeiture, it ought to have done voluntarily before the Defendant terminated the lease. In the particular circumstances of this case, the Plaintiff should not obtain the indulgence of the Court and a discretionary interference with the Defendant's contractual rights and, at the end of the process, leave the Defendant with legal bills to pay.