Paramount Investments Group Pty Ltd v Club Fogolar Furlan Melbourne (No 3) (Building and Property) [2024] VCAT 666

1. Subject to these orders, the date by which the respondent must comply with Order 4 of the Tribunal's orders 14 December 2023 is extended to 29 July 2024.
2. Subject to further order, the amount of rent and outgoings payable from 15 December 2023 until 22 February 2024 is 80 percent of the amount that would otherwise be due and payable under the lease between the parties ('the Lease').
3. Subject to further order, the total amount payable by the respondent to the applicant in compliance with Order 1 and Order 2 of these orders is $314,822.75, which sum must be paid by 29 July 2024.
4. If the respondent fails to make payment of the amount stated in Order 3 of these orders by 29 July 2024, Order 1 is revoked and is of no effect.
5. The amount of rent and outgoings payable under the Lease after 22 February 2024 is to be agreed between the parties, failing which it is to be determined by the Tribunal.
6. Any claim for interest on the amount stated in Order 3 is to be heard and determined at a further hearing.
7. This proceeding is listed for an administrative mention on 2 August 2024 by which date the parties (either collectively or individually) must advise the Principal Registrar and each other in writing as to the status of this proceeding and their recommendation for the further conduct of the proceeding.
8. If by 2 August 2024, no party advises the Principal Registrar as to the status of this proceeding or their recommendations or the further conduct of the proceeding, the proceeding will be listed for a directions hearing before Deputy President E Riegler (if available) at the Tribunal's earliest convenience.
9. Liberty to apply.
10. Costs are reserved.

Mr N Andreou of counsel with Mr J O'Halloran of counsel

1. On 14 December 2023, I heard and determined two applications, both filed in this proceeding. The first application was filed by the applicant ('the Landlord'), who is the registered proprietor and landlord of retail premises located at 1 Matisi Street, Thornbury ('the Premises').
2. The second application was filed by the respondent ('the Tenant'), who is the tenant under a lease dated 21 February 2021 in respect of the Premises ('the Lease').
3. In the Tenant's application, the Tenant sought, inter alia:

(a) an order in the form of an interlocutory injunction restraining the Landlord from re-entering or taking possession of the Premises; or alternatively,

(b) an order that it be relieved from forfeiture of the Lease.

1. Ultimately, I dismissed the injunction but ordered that the Tenant be relieved from forfeiture of the Lease subject to the following conditions:

(a) By 12 January 2024 or such further time as may be agreed between the parties, the respondent must pay the applicant 65% of the rent in arrears, as set out in the notice of breach of lease dated 5 September 2023 ($168,244.48).

(b) From 2 July 2023 until 14 December 2023, the respondent must pay the applicant 80 percent of all rent and outgoings due and payable under the Lease.

1. The Tenant subsequently filed an application with the Supreme Court of Victoria seeking leave to appeal my orders ('the Appeal'). By further order of this Tribunal and of the Supreme Court of Victoria, those orders (and the order that the Tenant be relieved from forfeiture) were stayed, pending the outcome of the Appeal.
2. On 2 May 2024, Croft J refused leave to appeal and dismissed the Appeal.[1]
3. The Tenant now seeks an order to extend the date for the payment of the Conditions or alternatively, if that application is refused, to renew its application for an order giving relief against forfeiture of the Lease.
4. The Tenant also seeks an order that, if successful in either extending the date by which to make payment of the amount set out in paragraph 4(a) and (b) or in obtaining a fresh order that it be relieved from forfeiture of Lease, rent should be wholly abated as from 22 February 2024, being the date that a fire substantially damaged the Premises. It contends that Premises cannot be occupied until such time as the damage has been repaired and the municipal building surveyor has cancelled a building order preventing occupation of the Premises.
5. The proceeding was listed for a compulsory conference on 11 June 2024. It appears from the orders made following the conclusion of that compulsory conference that the dispute between the parties remains unresolved. Consequently, it is appropriate that I now determine the Tenant's applications.

1. It is common ground that the Premises were damaged by a fire on 22 February 2024. Consequently, the municipal building surveyor issued a building order dated 15 March 2024 preventing occupation of the Premises. As of the date of this hearing, the area known as the Gaming Room/Bistro is the area that is most damaged, including some structural damage. The remaining areas of the Premises are smoke damaged.[2]
2. I am unaware whether the building order has been cancelled or varied, or whether any or all of the Premises have been repaired and are fit for occupation. Accordingly, and given that the circumstances which existed when this application was heard in early June 2024 may have changed considerably, it is inappropriate for me to determine the Tenant's application that rent and outgoings be wholly abated without hearing further evidence as to the current status of the Premises.
3. As indicated above, the Tenant seeks an order extending the time for it to satisfy the Conditions. Mr Andreou of counsel who appeared with Mr O'Halloran of counsel submitted that the sum payable pursuant to those orders plus 80 percent of the rent and outgoings due under the Lease from 15 December 2023 to 22 February 2024 is $314,822.75.[3] Mr Parker of counsel, who appeared on behalf of the Landlord, did not dispute the calculation of that amount.
4. Consequently, the Tenant contends that if the date to satisfy the Conditions was extended to the date of these orders, the Landlord would essentially be in the same financial position as if the Conditions had been satisfied by 12 January 2024 and the Tenant continued to pay 80 percent of the rent and outgoings due under the Lease until 22 February 2024.
5. The Tenant submitted that it was open for the Tribunal to extend the date for satisfying the Conditions either under s 126(2)(a) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) or alternatively, pursuant to the Tribunal's general powers to regulate its own procedures under s 98(3) of that Act. It is not in contention that the Tribunal has jurisdiction to extend the time for satisfying the conditions upon which relief against forfeiture was granted.
6. However, the question remains whether the Tribunal should exercise its discretion to do so. Mr Andreou referred to several authorities in support of his submission that, when weighing the parties' interests, the balance favours granting the extension sought. Mr Andreou's submissions followed the line of reasoning in the often-cited judgment of Wilcox J in Hunter Valley Developments Pty Ltd v Home Affairs and Environment ('Hunter Valley Developments').[4] In that case, his Honour summarised the relevant factors to consider as follows:

(a) whether a party seeking the extension can show an acceptable explanation for the delay;

(b) whether it is fair and equitable in the circumstances to extend time;

(c) the actions of the party applying for the extension;

(d) whether the delay may result in the unsettling of other people or of established practices;

(e) the merits of the substantial application; and

(f) considerations of fairness between the applicant and other persons in a like position.

1. It is generally accepted that the factors listed above are non-exhaustive and that a court or tribunal may also consider wider factors, including, in general terms, what the justice of the case requires.
2. In that regard, I note that the circumstances in Hunter Valley Developments, and the many cases which have relied upon that authority, relate to proceedings where a party wishes to extend the date by which it is entitled to seek a review of a decision made by the original decision maker. This case is different. This is not a review hearing. The timeframe imposed by the orders that I made on 14 December 2023 ('the 14 December Orders') constituted a precondition to the granting of relief against forfeiture. Consequently, not all the factors highlighted in Hunter Valley Developments may be entirely relevant to the exercise of my discretion to extend time in this case.
3. In my view, the exercise of my discretion to extend time is underpinned by questions of fairness and by extension, whether extending time would unsettle rights which may have crystallised - to a point where it would be unfair to extend time. In that regard, the exercise of my discretion to extend time involves assessing the prejudice that might be suffered by the Landlord if time was extended against the prejudice that might be suffered by the Tenant if time was not extended. That is not to say that the factors highlighted in Hunter Valley Developments are to be ignored. Clearly, determining what the justice of the case requires also involves some consideration of why the payment was not made by the date specified, the merits of the substantial application, whether third parties might be affected by extending time and the actions of the Tenant in applying for the extension of time.

1. Mr Andreou submitted that the Tenant was unable to make the payment of the Conditions because it did not have the funds to do so at that time. He submitted that the Tenant had lost revenue by reason of the COVID-19 pandemic which had adversely impacted on its business activities.
2. Mr Andreou submitted that the Tenant's financial position changed following the fire on 22 February 2024. He referred to the supporting affidavit of Patricia Correlli dated 21 May 2024 where she deposes to having received confirmation that the Tenant's contents and business interruption insurance policy was likely to make a payment of $500,000 in respect of a claim arising out of the fire. Indeed, a Trust Account Receipt from the Tenant's solicitors was produced verifying that $314,822.75 is now held in their trust account.
3. In contrast, Mr Parker submitted that the Tenant's application to extend time only arises because it was unsuccessful in its Appeal, where it sought to overturn the 14 December Orders. He submitted that the Tribunal should focus on the circumstances which existed as at the date when the Conditions should have been satisfied; namely, that the Tenant was not able to satisfy those Conditions at that time. Mr Parker further submitted that the Tenant deliberately chose not to seek an extension of time closer to the date of 12 January 2024, presumably because it simply did not have the funds to satisfy the Conditions, even if an extension of time had been granted. He argued that the only reason why the Tenant now seeks an extension of time is because it was unsuccessful in the Appeal and, paradoxically, was favoured with a substantial insurance payout.
4. Mr Andreou submitted that the chronology of facts leading to this application demonstrates that the Tenant had acted diligently and not sat on its rights. For example, following the making of the 14 December Orders, an application was made and granted to stay those orders until 5 February 2024 on condition that by 29 January 2024, the Tenant filed its notice of appeal with the Supreme Court of Victoria. That was done and the 14 December Orders were then further stayed by consent and by order of the Supreme Court of Victoria, pending the outcome of the Appeal. That occurred on 2 May 2024.
5. On 6 May 2024, the Tenant wrote to the Landlord and offered to pay $314,822.75, being the amount of the Conditions plus additional rent and outgoings up to 22 February 2024. That offer was rejected, following which the Landlord indicated that it would re-enter and take possession of the Premises, as it was then entitled to do. On 22 May 2024, this application was filed with the Tribunal.
6. I accept that the Tenant did not sit on its rights, notwithstanding the unorthodox pathway it adopted in seeking an extension of time. Clearly, the Tenant was lawfully entitled to seek a stay of the 14 December Orders and indeed, orders were made to that effect. Similarly, the Tenant was entitled to make an application for leave to appeal the 14 December Orders, notwithstanding that the Appeal was ultimately unsuccessful.
7. I accept that, given the Tenant's financial standing in January 2024, the Tenant may have held the view that there was little utility in seeking an extension of time for the payment of the Conditions prior to the date for payment; or that it was obligated to do so given that the 14 December Orders had been stayed pending the outcome of the Appeal. I also accept that it was reasonable to await until the outcome of the Appeal before offering to make payment of the Conditions (and 80 percent of the rent and outgoings to 22 February 2024), given that abandoning the Appeal may have had its own inherent risks.
8. In my view, the Tenant acted reasonably diligently after it was informed that the Appeal was unsuccessful. Specifically, it immediately offered to make payment of the Conditions, plus 80 percent of rent and outgoings to 22 February 2024 and when that offer was refused, made this application for an extension of time.
9. Therefore, and to the extent that is relevant to the exercise of my discretion, I do not accept that the delay in making the application for an extension of time, of itself, warrants the application being refused.
10. Mr Andreou's written submissions were structured to address each of the factors highlighted in Hunter Valley Developments. However, as I indicated above, this case is somewhat different to what was considered in Hunter Valley Developments and the many cases which have relied upon that authority. Not all those considerations are materially relevant to this case. Nevertheless, what underpins each of those considerations is the question whether it would be fair and equitable to extend time. In my view, that is the same central question which underpins the exercise of my discretion to extend time.
11. As Mr Parker forcefully submitted, the Tenant is only now able to make payment of the Conditions because, paradoxically, it has received an insurance payout by reason of the Premises not being able to be occupied. Although that is correct, I do not accept that circumstance, of itself, warrants refusing to extend time.
12. From a mathematical viewpoint, paying the Conditions now would not be materially different had the Conditions been paid by 12 January 2024 (leaving aside any question of interest on late payments) - if rent and outgoings is to be abated from 22 February 2024 (noting this is an observation only and this question is yet to be determined). As the 14 December Orders contemplated, had the Conditions been paid by 12 January 2024, the Tenant was to be relieved against forfeiture and lawfully entitled to occupy the Premises in accordance with the terms of the Lease, save that rent and outgoings were to be capped at 80 percent pending a final determination of the Tenant's abatement claim. It is only the fire on 22 February 2024 that has impacted on the Tenant's obligation to pay 80 percent of the rent and outgoings going forward.
13. What then is the prejudice suffered by the Landlord? In my view, the prejudice is the late payment of the Conditions, including rent and outgoings up to 22 February 2024. However, as Mr Andreou submitted, that prejudice can be easily compensated by an order for costs or compensation. In other words, the Landlord's position would not be materially different if the Landlord was compensated for the late payment of the Conditions. In that sense, it is reasonable to assume that the fire would have occurred irrespective of whether the Conditions were paid on 12 January 2024, given that the Tenant remained in possession even though the Conditions were not paid.
14. There is no evidence before me of any prejudice suffered by the Landlord if it were not able to rely on its right of forfeiture which would have crystallised after the Conditions were not satisfied on 12 January 2024 but for the orders that stayed that right until the Appeal was determined on 2 May 2024. Until that time, it is not suggested that the Landlord was lawfully entitled to re-enter, especially when one considers that that question was central to the Appeal.
15. This is not a case where there is evidence of the Landlord having materially altered its position after 12 January 2024 by, for example, re-leasing the Premises to a third party. Indeed, that course would have been fraught with risk as the Appeal was yet to be determined.
16. Similarly, there is no evidence to suggest that the Tenant was responsible for the fire, either directly or indirectly, notwithstanding that it remained in possession of the Premises at the time when the fire broke out.
17. In contrast, the Tenant's position would be materially different if an extension of time was not granted, as it would lose its leasehold interest. The affidavit material filed in this proceeding highlighted detriment that would be suffered by the Tenant and its employees if tenure was not retained.
18. I accept that the Landlord now finds itself in a significantly worse position, given that the fire might entitle the Tenant to wholly abate rent and outgoings, at least until such time as the Premises are able to be reoccupied either wholly or partially.
19. I accept that the fire has, paradoxically, given the Tenant funds to pay the Conditions. I also accept that the fire is likely to cause detriment to the Landlord, at least in the short term. However, that detriment is not the same as prejudice arising from extending time to pay the Conditions; nor is that detriment caused by late payment of the Conditions. It is a detriment that is separate and distinct from the late payment of the Conditions.
20. Mr Parker also submitted that the Tenant has failed to honour an undertaking given to the Tribunal when it sought to stay the 14 December Orders. Specifically, by her affidavit dated 11 January 2024, Patricia Corelli gave an undertaking that the Tenant would pay $100,000 into the Supreme Court of Victoria and a further $100,000 by 15 April 2024. This did not occur. According to Patricia Corelli, the Tenant simply did not have the funds to make those payments at that time. In that regard, I accept Mr Parker's submission that a party should not give an undertaking that is hollow.
21. However, Mr Andreou submitted that although the undertaking was referred to in the Reasons of the Tribunal's decision to grant the stay,[5] it did not form part of the actual orders made. In other words, the orders which stayed the Orders were not conditional upon the undertaking being honoured.
22. It is not clear to me how the failure to meet that undertaking impacts on my discretion to extend time. I note that Mr Parker submitted that the Tenant "did not have clean hands" and that "those who seek equity must do equity". However, I am not exercising equitable relief, notwithstanding that I must act fairly in exercising the discretion to extend time.
23. Consequently, I find that the failure to pay the funds into the Supreme Court of Victoria, of itself, is insufficient to warrant refusing an application for an extension of time. Further, had that undertaking been critical to the grant of the stay, it would have been open for the Landlord to have raised that as an issue prior to the Appeal being determined or, at the very least, not consented to an extension of the stay order pending the outcome of the Appeal. I am not aware of that occurring. From what I understand, the first time that issue was raised was in opposition to this application for an extension of time.
24. Mr Parker also submitted that the application for an extension of time is analogous to the Tenant seeking relief against forfeiture afresh because it had the same effect as if the application were brought on that footing. He submitted in that in equity, a six-month equitable limitation is imposed on bringing claims for relief against forfeiture. Reference was made to Commercial Tenancy Law,[6] where the learned authors stated:

In cases of applications for relief from forfeiture for non-payment of rent, equity by analogy applies the six-month limit that s 79 of the Supreme Court Act 1986 (Vic) imposes in a case where the lessor has preceded by action to execution and will refuse relief to the tenant where more than six months has elapsed from re-entry.[7]

1. In Beamer Pty Ltd v Star Lodge Supported Residential Services Pty Ltd & Ors ('Star Lodge Supported Residential Services'),[8] Hollingworth J stated:
   1. There is in equity a six month equitable limitation of bringing claims for relief against forfeiture. Although statute enshrines this limitation in cases involving forfeiture due to non-payment of rent, I see no reason why it should not be considered by analogy in cases of forfeiture involving breach of other covenants of the lease.
2. I do not accept that the application for an extension of time in which to satisfy the Conditions is sufficiently analogous to an application for relief against forfeiture. In an application for relief against forfeiture, the Tribunal is exercising a limited and discrete equitable jurisdiction conferred upon it. In exercising its discretion to extend time or to vary orders, the Tribunal is not exercising equitable jurisdiction; nor is it empowered to do so. Moreover, as I have already set out above, I do not consider that the Tenant has sat on its rights, notwithstanding that the pathway chosen by it to achieve an extension of time to comply with the 14 December Orders is somewhat unorthodox.
3. Critically, the 14 December Orders were stayed until 2 May 2024. The application for an extension of time was made on or about 20 May 2024. Between those two periods, an attempt was made to resolve the issues which are currently before me. In those circumstances, I do not accept that it can be said that the Tenant has unreasonably delayed this application for an extension of time. In Star Lodge Supported Residential Services, Hollingworth J, further stated:
   1. The starting point is the equitable maximum that "equity assists the diligent not the tardy". This maxim finds its modern expression in the concepts of laches, acquiescence, and the analogies which equity drew to the statute of limitations.
   2. The equitable doctrine of laches provides a defence to an equitable claim if the defendant can demonstrate that the plaintiff, by delaying the institutional prosecution of its case, has either acquiesced in the defendant's conduct, because the defendant to alter its position in reasonable reliance on the plaintiff's acceptance of the status quo, or otherwise permitted a situation to arise which would be unjust to disturb. Mere delay, of itself, is not enough to constitute either laches or acquiescence.
4. Having regard to the Tenant first seeking a stay of the 14 December Orders, then filing an application for leave to appeal those orders, then making an offer to belatedly pay the Conditions before ultimately filing this application, satisfies me that there is no case for laches or acquiescence. Consequently, even if an analogy can be drawn to an application for relief against forfeiture, I am not satisfied that there is sufficient delay to justify refusing the application for an extension of time.

1. Having regard to the affidavit material, the written submissions and the oral submissions made by each of the parties, I find that the interests of justice weigh in favour of granting an extension of time to satisfy the Conditions, subject to the tenant also paying 80 percent of the rent and outgoings after 14 December 2023 until 22 February 2024.
2. However, as I indicated above, I am presently not aware of the status of the Premises and whether they have been repaired, either partly or wholly or whether the building order has been cancelled or amended. Therefore, I am not prepared to make any finding that the Tenant is entitled to 100 percent abatement of rent and outgoings until that question is able to be considered against current evidence.
3. The Tenant's application for an order that rent and outgoings be wholly abated is therefore to be determined pending further hearing. In other words, although I will order that the Tenant pay $314,822.75 within 14 days of the date of these orders, the question as to what, if any, of the 80 percent proportion of rent and outgoings are to be paid after 22 February 2022 is reserved pending further hearing or agreement between the parties.

[1] Club Fogolar Furlan Melbourne v Paramount Investments Group Pty Ltd [2024] VSC 208.

[2] RIC Fire & Smoke Damage Assessment Report (Report R-6861), 20 April 2024.

[3] This amount was calculated in the affidavit of Patricia Corelli dated 21 May 2024, [16(d)].

[5] Paramount Investments Group Pty Ltd v Club Fogolar Furlan Melbourne (Building and Property) [2024] VCAT 73, [17].

[6] Croft C, Hay R and Virgona L, 5th edition, 2024, Lexis Nexis.

[8] [2005] VSC 236.