Application for interlocutory injunction dismissed.

1. In this proceeding the applicant La'Maison D'idees Pty Ltd seeks an interlocutory injunction restraining the respondents Mr & Mrs Di Pilla and Mr & Mrs Verrocchi from re-entering and terminating a lease held by La'Maison D'idees Pty Ltd over premises at 154-159 Marine Drive, Safety Beach.
2. The applicant tenant's possession of the premises goes back to 2003. Its current lease was entered into in 2009. A notice has been served under Section 146 of the Property Law Act 1958 which is about to expire. It threatens that unless a number of alleged breaches of covenant are remedied within 14 days the lessors, respondents in this proceeding will re-enter and terminate the lease. The parties are agreed that of the contractual rent stipulated for in the document which the applicant company executed in 2009 rental arrears of some $24,642.04 exist. There are other allegations of arrears of outgoings and failure to pay penalty interest but those matters have not been agitated before me today.
3. The lease itself to which I need not go in detail is in orthodox Law Institute form. Clause 7.1 of the lease renders a failure to pay rental due for 14 days or more, a ground for re-entry and forfeiture. The lease modifies what would otherwise be the effect of Section 146 of the Property Law Act 1958 which according to its terms restricts forfeiture of leases for breach of covenants other than non-payment of rent requiring a notice to remedy to be given before forfeiture. In the case of this lease as with other Law Institute standards of its vintage, it is stipulated that even for failures to pay rent the notice under Section 146 is a necessary pre-condition to the exercise of a right of forfeiture. Such a notice has been served and it is not in dispute that a substantial portion of contractual rent long exceeding 14 days rent is in arrear.
4. Ms Fielding represents the applicant company. She says it conducts a milk bar business at the premises. The takings of that milk bar at one stage were very satisfactory, however in the last couple of years they have fallen back. She traces the fall in the business' fortunes to the global financial crises which hit in the second half of 2008. In addition she says there was a major marina development in the area which has been twice placed in receivership. The rise and fall of that development twice over has had a disruptive effect in the area and has depressed business sentiment. The business is encountering very difficult trading conditions and her company is simply unable to pay the contractual rent. She also complains about the state of the premises. She says as a result of these difficulties she entered into consultations with the lessors or one or more of them. The effect of those consultations, she said, was that the premises would be remodelled such that her company would occupy a much smaller area of the total and another tenancy would be created at which a My Chemist franchise would operate. Arising out of those discussions she instructed her company's solicitors Hill Legal, to prepare a proposed variation of the lease. I have been shown a copy of this document but have not been taken to the detail of it. The effect as I understood Ms Fielding was that the rental for her company's tenancy would be cut by 50% reflecting the downsizing of the area occupied. She says in any event the rent agreed to at the outset of the 2009 lease was excessive. This may be demonstrated by its being more than twice the rate per square metre of a nearby boat shop and also far in excess of the net annual value assessed by council for rating purposes. She says that her company in the circumstances can pay 50% of the rent but no more. She contends that in the circumstances the just outcome is for an injunction to be granted maintaining her company in possession but allowing it to pay 50% of the rental only. She notes that the initial and second lease from 2009 held by her company was for four years only. She says that this is in breach of Section 21 of the Retail Leases Act 2003 and further that failure to intervene with an injunction would impose hardship not only on her company but on the local staff who work there and also on three subtenants who she says are now in occupation and will have their businesses destroyed if no injunction is granted.
5. I turn at the outset to the issue raised under Section 21 of the Retail Leases Act 2003. Section 21(1) provides:

(1) The term of a retail premises lease, including any further term or terms provided for by an option for the tenant to renew the lease, must be at least 5 years or, if the term remaining under any head lease under which the landlord holds the retail premises is 5 years or less, the length of that remaining term less one day.

1. As I understood the situation the first lease granted in 2005 was of four years duration and it included an option to renew for a further four years. The total term allowing for the option therefore was eight years which seems to be in accordance with Section 21(1). Even if that were not the case, the effect of Section 21(1) would be, if it operated, to enlarge the duration of a lease in the present case from four years to five years. There would be nothing in Section 21 which would protect a tenant from a landlord's entitlement to forfeit for non-payment of rent if that entitlement otherwise existed. I can therefore put Section 21 of the Retail Leases Act 2003 to one side.
2. Axiomatically to succeed in a proceeding such as this, a tenant must establish three things, first, that lack of injunctive intervention would inflict irreparable damage; secondly, that there is a serious question to be tried and thirdly, that the balance of convenience favours the grant rather than the refusal of the interlocutory injunction. So much appears from a decision a few years ago by the High Court of Australia in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57. Their Honours in postulating these requirements were doing no more than restating what had long since been established. In the same case however, their Honours said that to make out a serious question to be tried it was necessary to establish a case which was stronger than one which could merely withstand an application for summary dismissal as being frivolous or vexatious. It had to be of such substance as to justify injunctive intervention to maintain the status quo. I accept that eviction of a company carrying on a single enterprise being a retail business from the premises where that business is located would inflict irreparable damage on such a company. I must turn then to consider whether the other two requirements for the grant of an interlocutory injunction had been made out. The first and perhaps more important of them is the question whether there is a serious question to be tried or not. It is accepted that the contractual rent has not been paid and further, that the applicant company simply cannot pay at the contractual rate. Insofar as the contention is that the rate agreed upon under the lease was excessive, this if I accept it as being the case, does not in itself create a ground for resisting paying the agreed rent. There is no rent control here and the Tribunal has no power to act as a fair rents board. The rental has been agreed and the old maxim that equity mends no man's bargain applies. Therefore I cannot give ear to any arguments that the rent though agreed is excessive. That is the rent which has been agreed and the lease stipulates that failure to pay it creates a liability on the part of the tenant potentially to have the lease forfeited. The more substantive ground which is urged is that the lessors or one of them on behalf of the others made an arrangement whereby only half the rental would be required with the premises being remodelled in the manner which I earlier described. An instrument was prepared by solicitors acting for the tenant embodying the terms of that arrangement. A response made by solicitors acting for the lessors was to deny that any agreement had been made. In fact, no written instrument was executed. In the circumstances therefore, the question is whether a representation made by the lessors that such an arrangement would be agreed to precludes them now from relying on the written terms of the lease, requiring the payment of 100% of the contractual rent at peril of forfeiture if that 100% is not paid.
3. This somewhat difficult issue was considered recently by the High Court of Australia in Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570. One of the matters before the Court for consideration was whether an indemnity which was part of a fairly elaborate allegedly tax effective rural financing project was enforceable in circumstances where it was alleged that those granting the indemnity had represented to those having the benefit of the indemnity that it would be enforceable despite breach of a condition requiring the borrowers to make payments punctually. In a joint judgement Gummow, Hayne and Kiefel JJ conducted an exhaustive analysis of the various doctrines which might lead to such a conclusion including election forbearance and waiver. They excluded each of these as operating in the case before them. At paragraph [95] of that joint judgment 2008 238 CLR 570, 601 their Honours said:

If, as the particulars alleged, both ARF and OAL unequivocally represented to Mr Gardiner, in effect, that the indemnity remained effective and enforceable despite his past failures to pay punctually, his several arguments about waiver depended upon attributing determinative significance to the fact of the representation. That is, no matter which of the three ways in which the argument for waiver was put, the fact that ARF as Lender and OAL as Indemnifier represented that the indemnity remained effective and enforceable, despite past defaults, was said to be sufficient to hold those parties to that represented state of affairs. But if, as is the case here, there was no election between inconsistent rights, there was no variation of the contract, and there was no detrimental reliance upon the representation, no reason is given for holding the party concerned to its earlier expressed attitude beyond the fact that the representation was made. To hold that the making of the representation, without more, suffices to alter the rights and obligations for which the parties stipulated by their contract is a step that should not be taken.

1. In my view the situation alleged here is to similar effect. The lessors have not agreed to sign any agreement. They have perhaps represented that an arrangement would be entered into but ultimately have not entered into it. They seem to have made no election between inconsistent rights and the only detrimental reliance that is said to have occurred here is that the applicant company engaged its solicitors to draw up a document to give effect to the proposal. In my view that is an insufficiently insignificant reliance to bring into effect any estoppel. The joint judgement dealing with the endlessly contentious and difficult decision of the High Court of Australia in Verwayen v The Commonwealth (1990) 170 CLR 394 said that this decision represented a special manifestation of the features of the adjudicative process. That is, it was reflective of special rules that applied once a matter was before a court for determination and representations were made about what defences would or would not be relied upon. Verwayen's case has no application here, therefore the analysis in Gardiner's case at paragraph [95] which I have just quoted applies and the discussions and representations which occurred have not altered the legal rights which the lessors had. On the material before me it is plain that according to the rights set out in the lease events have occurred now which entitle the lessors to proceed to a forfeiture of the lease and the representations that were made or allegedly made do not change this. It follows therefore that there is no serious question to be tried and in the circumstances it is unnecessary and inappropriate for me to express any view as to where the balance might have lain. The result therefore is that the application for an interlocutory injunction is dismissed.