1. I find and declare that the transfer of shares in the applicant from one of two shareholders (Kalubon Pty Ltd) to the other shareholder (Buca Investments Pty Ltd) did not breach clause 1(t)(iii) of each of the Leases dated 8 March 2022 between the applicant and the respondent.
2. I find and declare that the notices dated 17 February 2023 served by the respondent on the applicant pursuant to s 146 of the Property Law Act 1958 (Vic) are invalid.
3. Any application for costs must be made by 5 December 2025. The parties are reminded that any application must address s 92 of the Retail Leases Act 2003 (Vic).

1. This proceeding arises from a dispute relating to premises located at 361, 363 and 365 Nicholson Street, Carlton North ('Premises'). The applicant ('Tenant') is the tenant of the Premises which it leases from the respondent ('Landlord) and has done so for more than a decade under successive leases and renewals. There are two separate leases: one for 361 Nicholson Street which is used as a storeroom. The current lease commenced on 8 March 2022 for a 5 year term, with an option for one further term of 5 years. The second lease is for the premises at 363 and 365 Nicholson Street and commenced on 8 March 2022 for a 5 year term with options for two further 5 year leases. With respect to this dispute, the relevant terms of each of the leases is the same and for the purpose of this decision, the leases will be described together as the 'Leases.'
2. The essence of the dispute lies in whether a transfer of shares which occurred on 1 December 2022, constitutes a change of control and therefore a breach of the Leases. And if it does, what are the consequences of the breach.
3. The issue of whether a change of control has occurred, arose when one corporate shareholder (Buca Investments Pty Ltd) acquired full ownership of the shareholding of the Tenant from the other corporate shareholder (Kalubon Pty Ltd). Each corporate shareholder is associated with an individual who has been involved in the running of the business from the Premises.
4. Buca Investments Pty Ltd ('Buca') is the corporate entity associated with Ms Mary Cadoni ('Cadoni') and it acquired full ownership of the Tenant by purchasing the 51% shareholding previously held by Kalubon Pty Ltd ('Kalubon') which is the corporate entity associated with Mr Raphael Hirsh ('Hirsh').
5. The Landlord argues that the change of ownership of the shareholding of the Tenant constitutes a change of control and is therefore a breach of the Leases.
6. The Tenant argues that no effective change in control took place as Cadoni, the sole director of the Tenant and Buca, was in operational and practical control of the business well before the Leases' commencement and remained so afterward.
7. The dispute has been complicated by several additional matters, including the validity of the financial documentation submitted in support of the share transfer, questions surrounding the role and withdrawal of Hirsh and historical communications regarding potential restructuring of the tenancy.
8. The Tribunal must determine:

(a) What is the legal meaning of 'change of control' in this context?

(b) Can reference be had to the Corporations Act 2001 (Cth) ('CA') in determining whether a change in control has occurred?

(c) Was there, on the facts, a change of control in breach of the Leases?

(d) If there was a breach of the Leases, did the Landlord unreasonably withhold consent under s 60 of the Retail Leases Act 2003 (Vic) ('RLA')?

1. The San Remo Ballroom is a long-established events venue. The business has been operated by the Tenant since at least 2010 ('San Remo'). As noted above, 361 Nicholson Street operates as a storeroom, 363 Nicholson Street operates as an office and 365 Nicholson Street operates as the ballroom premises. The tenancies are all for the ground floor; there is a second floor although a different tenant occupies it.
2. The Premises were initially demised under three leases, which have been renewed and consolidated over the years. These leases and renewals and consolidations are set out below.

1. This lease was initially entered into on 10 June 2011 for a term of 3 years, 10 months, and 5 days with three further options of 5 years renewal. It was then.
   • varied on 15 December 2014 to include Hirsh and Cadoni as guarantors.
   • renewed on 8 October 2015 for 5 years (with two further options).
   • further renewed on 8 March 2022 for another 5 years (with one further option).
   • Hirsh and Cadoni remained guarantors throughout.

1. This lease commenced on 16 June 2010 for a term of 5 years with three further options of 5 years. It was then:
   • Varied on 15 December 2014 to include Hirsh and Cadoni as guarantors.
   • Renewed on 29 June 2015 for another 5 years with three further options.
   • Renewed on 8 March 2022 and consolidated into one lease with the premises at 365, for a term of 5 years with two further options of 5 years.

1. This lease commenced on 16 June 2010 for a term of 5 years with three further options of 5 years. It was then:
   • Varied on 15 December 2014 to include Hirsh and Cadoni as guarantors.
   • Renewed on 29 June 2015 for another 5 years with continuing options.
   • Renewed on 8 March 2022 and consolidated into one lease with the premises at 363, for a term of 5 years with two further options of 5 years.

1. As set out above, on 8 March 2022, the 363 and 365 Leases were consolidated, and a new lease of both premises was entered into for a term of 5 years with two further options of 5 years. Hirsh and Cadoni are guarantors under the Leases.

1. Each lease contains clauses prohibiting transfer, subletting or assignment without the Lessor's written consent with specific provisions dealing with changes to the effective control of the corporate tenant.
2. Clause 1(t)(iii) of the leases provides, with respect to changes to the effective control of a Tenant that is a body corporate, as follows

(iii) Where

• (A) the Lessee is a body corporate;

• (B) A change occurs during the Term in:-

  • (I) The membership of the body corporate or any holding company of the body corporate; or

  • (II) The beneficial ownership of any shares in the capital of the body corporate; or

  • (III) The beneficial ownership of the business or assets of the body corporate;

  • (C) As a result of that change, the body corporate or the business of the body corporate is after the change effectively controlled by a person or persons who at the Commencement Date did not effectively control the body corporate or the business of the body corporate -

the Lessee shall, unless the prior written consent of the Lessor has been obtained to the change, be deemed to have assigned the Lease;

(iv) The Lessor must not unreasonably withhold its consent to a change referred to in sub-clause (III)(B) if the Lessee complies as far as possible with the requirements of Clause 1(f).

(v) The Lessor may require any new director of a body corporate to execute an indemnity and guarantee of the performance and observance of the Lessee's covenants contained in this Lease and to lodge a bond or bank guarantee as security for the amount described in Clause 1 (v) below.

1. 'Commencement Date' is defined in the original leases as 18 April 2010 (for 363 and 365), 18 April 2010 for 363 and 13 June 2011 for 361.[1]
2. Clause 1 (t) sets out the Tenant's obligations regarding assignment and subletting of the Premises. It states:

(t) Not to assign, transfer, sub-let, mortgage, charge, license or otherwise part with possession of the Premises without the prior written consent of the Lessor in the provisions of Section 144(1) of the Property Law Act 1958 are expressly provided that: -

....

except if the Act applies when consent may: -

(a) only be withheld to an assignment if: -

(I) the proposed use is inconsistent with the use permitted under this Lease;

(II) the Lessor considers that the assignee does not have sufficient financial resources or business experience to meet the obligations under this Lease;

• (III) the assignor has not complied with the assignment provisions of this Lease;
• (IV) the assignor has not supplied the assignee with the business records for the previous three years (or any shorter period that the assignor was carried on business from premises);

(b) be withheld (at the absolute discretion of the Lessor) to a sub-lease, license, concession, parting occupancy, mortgage, charge, or other encumbrance upon the estate or interest of the lessee, that in any way relates to this lease;

1. Originally, the shares in San Remo were owned by two entities: Buca and Kalubon. In the years following their partnership, Cadoni gradually assumed greater responsibility for the business. During 2014 to 2015, as Hirsh's health declined and he withdrew from day-to-day operations, Cadoni took on more of the day to day management and decision making for the business and effectively assumed sole control of the Tenant and the business.
2. Both Mr Roberto Cadoni (Cadoni's husband and business partner) and Cadoni herself gave uncontradicted evidence of this. They each detailed the trajectory of her involvement in the business since 2004.
3. Mr Cadoni began as an events coordinator and eventually became its principal operator and director. Hirsh, while remaining a director and shareholder until 2022 had ceased all meaningful engagement in the business by 2020. His age and health were a significant factor in his withdrawal from the business, and sadly he passed away in 2023.
4. In April 2020, in anticipation of a future restructure, Mr Cadoni raised with the Landlord in correspondence, the prospect of adding a clause to each of the leases to permit the transfer of the tenancy to a related entity without further documentation.
5. Although the Landlord's agent, CRS Property responded with a willingness to consider the proposal, subject to conditions, no such clause was included in the Leases renewal and variation in 2022.
6. At the time of the latest renewal and variation of leases were entered into in March 2022 both Hirsh and Cadoni signed the documents as directors and guarantors. This is despite the director of the Landlord, Ms Rowena Mazzetti agreeing to the lease being varied to reflect that the Tenant would only have one director and one guarantor for the Leases as anticipated in the transfer of the shares from Kalubon to Buca. This consent is in writing and set out in an email dated 15 February 2022.[2]
7. At the time the Leases were signed, Kalubon remained a shareholder and Hirsh remained a director as the transfer of shares between the shareholders remained to be finalised. This was finalised in December 2022.
8. On 1 December 2022, Kalubon transferred its 51% shareholding ('shares') in the Tenant to Buca, giving Buca (and thereby Cadoni) 100% ownership of the Tenant. No prior written consent was sought from the Landlord.
9. Upon becoming aware of the transfer via an ASIC notification, the Landlord served on the Tenant notices of default pursuant to s 146 of the Property Law Act 1958 (Vic) ('PLA') dated 17 February 2023 (the 'default notices').
10. The default notices rely on a breach of clause 1(t)(iii) namely that the share transfer constituted a change in control. The default notices required the Tenant to remedy the default within 14 days of service of the default notices. This period was extended to 20 March 2023 pursuant to Terms of Settlement agreed during a mediation conducted by the Victorian Small Business Commissioner (VSBC). It was also agreed that Cardoni would provide to the Landlord details of her financial position and the businesses financial information within 14 days of 27 February 2023 in order for the Landlord to consider giving its consent to the alleged assignment of the Leases arising from the alleged change of control of the Tenant (the 'ToS').
11. The Tenant considered that no consent was required but agreed to provide the information to avoid having a dispute with the Landlord about the change in shareholding. Subsequently on 17 March 2023 the share transfer was reversed by transferring the 51% back to Kalubon to avoid any alleged breach of the Leases.
12. Financial documents were provided to the Landlord in accordance with the ToS. Upon receipt of this financial information, the Landlord questioned the reliability of these documents, particularly the valuation of 51% of the company at $51.
13. It later emerged that a valuation was conducted (in accordance with a shareholders' agreement between Buca and Kalubon). This valuation was conducted by Rose Partners but was not provided to the Landlord by the Tenant.
14. The Tenant maintains that the transfer was compliant with the shareholders agreement between Buca and Kalubon, which permitted a buyout in circumstances where one party became incapacitated. The notice was served in February 2022, and the transfer followed in December 2022 thereafter no response was received.
15. Hirsh passed away on 17 March 2023. It is understood his estate is being managed by the State Trustees. On the same day of Hirsh's death, the shares were transferred back to Kalubon. The Landlord has continued to assert that consent was not granted and that it was entitled to serve the default notices.

What is the legal meaning of 'change of control' in this context?

1. In the context of the Leases, a 'change of control' is governed by clause 1(t)(iii), the definition of which is set out above.
2. The legal meaning of 'control' under this clause must be interpreted in accordance with established principles of contractual interpretation, including those outlined in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd.[3] That case confirms that the meaning of contractual terms should be determined objectively, based on the natural and ordinary meaning of the words in the context of the agreement as a whole, and having regard to the commercial purpose of the clause.
3. The commercial purpose of clause 1(t)(iii) is to protect the Landlord from material changes in the financial standing, operational capacity, or business character, of the Tenant. It is not concerned with merely formal or internal structural changes that have no real impact on who exercises effective control over the business.
4. Although the RLA governs retail leases in Victoria, it does not define 'change of control.' However, s 60 of the RLA reflects a similar concern, in that it permits landlords to withhold consent to an assignment of lease in limited and defined circumstances. These provisions support the view that commercial landlords are entitled to maintain oversight over the identity and financial capability of their tenants.
5. Definitions of 'control' in other legal contexts may also provide interpretive assistance. For example, s 50AA of the CA defines control as the capacity to determine the outcome of decisions about an entity's financial and operating policies, taking into account practical influence. While not directly applicable, this legislative definition aligns with the commercial objective of clause 1(t)(iii) which is to capture genuine shifts in decision-making power or beneficial ownership. Similarly, in Plzen Pty Ltd v P&O Wharf Management Pty Ltd,[4] the Court recognised a change of control as a situation where there is a change in the identity of the persons who hold the majority of capital or control within a corporate structure.
6. Further, clause 1(t)(v) entitles a landlord to require a new director to execute an indemnity and guarantee to secure the performance of the Tenant's covenants under the Leases. That it is directed towards the introduction of a new person as a director of the body corporate tenant, supports this interpretation of the Leases.
7. Having regard to these principles, a 'change of control' under clause 1(t)(iii) must involve a substantive shift in the power to direct the Tenant's operations or business affairs. It is not enough that there be an internal reorganisation or a mere change in the shareholding structure if effective control remains with the same person or group.

1. Although the term 'control' is not defined in the Leases beyond clause 1(t)(iii), reference may be made to statutory definitions and judicial interpretations for guidance, particularly where the clause is ambiguous or lacks sufficient detail.

Meaning of control- Section 50AA Corporations Act 2001 (Cth)

(1) For the purposes of this Act, an entity controls a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity's financial and operating policies.

(2) In determining whether the first entity has this capacity:

(a) the practical influence the first entity can exert (rather than the rights it can enforce) is the issue to be considered; and

(b) any practice or pattern of behaviour affecting the second entity's financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).

(3) The first entity does not control the second entity merely because the first entity and a third entity jointly have the capacity to determine the outcome of decisions about the second entity's financial and operating policies.

(4) If the first entity:

(a) has the capacity to influence decisions about the second entity's financial and operating policies; and

(b) is under a legal obligation to exercise that capacity for the benefit of someone other than the first entity's members;

the first entity is taken not to control the second entity.

1. Section 50AA of the CA defines 'control' to mean the capacity to determine the outcome of decisions about an entity's financial and operating policies, having regard to practical influence rather than strict legal rights. Once again, although this definition does not have a direct application on the leases, its emphasis on effective or practical control aligns with the commercial purpose of clause 1(t)(iii) and can assist in resolving interpretive uncertainty.
2. The utility of s 50AA in this context lies in its recognition that control is not merely a question of shareholding or formal title but includes the ability to influence decision making and strategic direction. In Kay v KRM (Vic) Pty Ltd, Classic Bet (NSW) Pty Ltd v Kay & Ors[5] ('Kay'), the New South Wales Court of appeal confirmed that 'control' may include changes in effective influence, even where legal ownership remains unchanged. 'Control' was interpreted using both the statutory test relying on the CA and its practical application, focusing on who had the real influence over the company's financial and operational decisions.
3. In Kay, the Court found that a 'change of control' occurred where a new party acquired practical control over an entity's operations, despite no formal transfer of shares or titles. The clause in that agreement was interpreted considering the actual substance of the control arrangement consistent with commercial expectations.
4. These authorities support the approach that where a lease does not define 'control' in strictly legal or mechanical terms, its interpretation should be informed by commercial realities and practical arrangements. It follows that external definitions such as s 50AA may serve a useful interpretive role, although the controlling factor remains the text of the lease which is read in context.

Was there a change of control? If so, was there a breach of the Leases?

1. The Tribunal must determine whether the transfer of 51% of the shares in the Tenant on 1 December 2022 from Kalubon to Buca constituted a 'change of control' under clause 1(t)(iii) of the Leases and if so, whether it occurred in breach of the requirement for Landlord consent.
2. Clause 1(t)(iii) deems a 'change in control' of the Tenant or its business to be an assignment of the Lease, requiring the Landlord's consent. The clause is triggered when there is a change in the effective control of the Tenant or its business to a person or persons who did not control it at the Commencement Date, which is 29 June 2015.
3. The definition of 'control' under s 50AA CA is not determinative, but it provides persuasive guidance. It adopts a functional, rather than a formal approach focusing on who has the capacity to determine the outcome of decisions about financial and operational policy.
4. Similar views were taken in Plzen Pty Ltd v P&O Wharf Management Pty Ltd and Kay v KRM (Vic) Pty Ltd, Classic Bet (NSW) Pty Ltd v Kay & Ors,[6] where courts have emphasised practical control over formal ownership or directorship.
5. As set out above, clause 1(t)(iii)(C) states inter alia:

As a result of that change, the body corporate or the business of the body corporate is after the change effectively controlled by a person or persons who at the Commencement Date did not effectively control the body corporate or the business of the body corporate

1. This deems a change in effective control by reference to membership, beneficial ownership, or operational control to constitute an assignment. The provision is designed to protect the Landlord from a change in the risk profile of the tenancy that may arise if control shifts to an unknown or untested party.
2. On the evidence before the Tribunal, Cadoni had assumed effective control of the Tenant's operations by 2014-2015, largely due to Hirsh's declining health. By 2020, Hirsh had ceased any involvement in the business and passed away in March 2023. The transfer of shares in December 2022 increased Cadoni's legal shareholding from 49% to 100% but did not result in a substantive change in who controlled the Tenant at a practical or operational level.
3. In Plzen Pty Ltd v P&O Wharf Management Pty Ltd, Habersberger J reinforced the view that not every change in shareholding equates to a change of control, unless the change alters the effective or ultimate control over the majority of shares, whether directly or indirectly.[7]

...I am satisfied that there is reasonable cause to believe that Plzen may have the right to obtain relief from POWM. I accept for the purposes of this application that POWM is partially correct in its construction of clause 13.8 of the joint venture agreement and that what is therefore required is a transfer of shares in the capital of POWM which has the effect of altering the identity of the person or group of persons holding directly or indirectly more than one half of that capital.

1. A change in shareholding does not, of itself, amount to a 'change of control' if the same person or group remains in effective control before and after the transaction. Similarly, in Kay v KRM (Vic) Pty Ltd, Classic Bet (NSW) Pty Ltd v Kay & Ors,[8] the Court emphasised the importance of assessing actual decision-making authority and practical influence rather than formal legal ownership. Those principles support the conclusion that clause 1(t)(iii) was not triggered by the share transfer in this case.
2. The acquisition of shares from Kalubon on 1 December 2022, although formalising her majority ownership did not result in a substantive change in control. There was no alteration in the identity of the person who determined the financial and operational policy of the Lessee.
3. The Tribunal finds that clause 1(t)(iii) was not triggered by this transaction. While the shareholding changed on paper, there was no effective change in who controlled the Tenant's business. Accordingly, there was no deemed assignment and no requirement to seek the Landlord's consent under that clause.
4. For these reasons, the Tribunal finds that there was no change of control within the meaning of clause 1(t)(iii), and therefore no breach of the Leases.
5. If I am wrong and there has been a change of control contrary to clause 1(t)(iii), the Tenant was required to obtain the Landlord's consent to the change of control or the Tenant would be in breach of the Leases. In such a case, regard must be had to s 60 of the RLA which prevents a landlord from unreasonably withholding consent. This is also reflected in clause (1)(t)(iv) of the Leases.
6. The Landlord objected to the financial materials provided by Cadoni and requested more information. These materials were stated to be required due to the request that Hirsch be released as guarantor of the Tenant's obligations under the Leases as a term of the assignment of the Leases.
7. In the circumstances where the day to day management of the business of the Tenant and the personal guarantee of Cadoni remained unchanged, and therefore the financial position of the Tenant has not changed by reason of the share transfer, the withholding of consent by the Landlord is unreasonable and contrary to clause (1)(t)(iv) of the Leases and s 60 of the RLA.

1. I find that the share transfer from Kalubon to Buca on 1 December 2022 did not constitute a 'change in control' under clause 1(t)(iii) of the Leases.
2. The notices of default issued by the Landlord on 17 February 2023 are therefore invalid and the Landlord is not entitled to rely on those notices to terminate the Leases or to re-enter the premises.
3. The Tribunal will make orders to reflect the above.

[1] This definition was not amended by any of the Deeds of Renewal and Variation.

[3] [2015] HCA 37 at [46-47].

[4] [2007] VSC 318 at [36].

[5] [2020] NSWCA 92.

[6] [2007] VSC 318 and [2020] NSWCA 92.

[7] [2007] VSC 318 at [36].

[8] [2020] NSWCA 92.