37 In Sufigoe Pty Ltd v Amber Properties Pty Ltd, (01/08/95, unreported, McClelland CJ in Eq), treated the question of the grant of an interlocutory injunction in proceedings for relief against forfeiture where the lessor had re-entered as raising no question of principle. His Honour addressed the question by reference to whether the plaintiff had an arguable case for final relief against forfeiture, and where the balance of the convenience lay.
38 In Horwath Corporate Pty Ltd v Huie [1999] NSWSC 242 Young J (as his Honour then was), said (at [13],) that he had no doubt, as Powell J had deciding in Riddington v Pye, that in an appropriate case an interlocutory injunction should go to protect an application for relief against forfeiture.
39 Here the balance of convenience is heavily in favour of protecting the plaintiff's possession. The plaintiff is undertaking a business from the premises which is its sole source of income. It opens on Friday and Saturday and on the long weekend, and on average takes about $70,000 during such periods. No doubt there are employees whose employment would be at risk if the plaintiff's business were forced to close.
40 Nor, it seems to me, would there be any countervailing advantage to the defendant if the injunction were refused. The plaintiff, at least prima facie, would in any event be entitled to an interlocutory injunction restraining the defendant from re-letting the premises until after the determination of its claim to be relieved from forfeiture of its estate. If that is so, but the plaintiff were kept out of possession of the premises until its claim for relief against forfeiture were determined, the defendant would find itself in all probability with vacant premises and no rent.
41 It seems to me that there is a serious question to be tried, both as to whether the defendant was entitled to terminate the lease and as to whether the plaintiff will be entitled to relief against forfeiture if the lease was validly terminated. Subject to the questions of what condition should be imposed on any interlocutory injunction, the balance of the convenience favours the grant of such an injunction.
42 No point was taken that it was not open to the plaintiff both to deny that the defendant had validly terminated the lease and in the alternative to seek relief against its forfeiture. Notwithstanding the observations of Austin J in Kumaragamage v Rallis [2001] NSWSC 466 at paragraphs 10 to 19, it is at least arguable that such claims can be made in the alternative. (MI Design Pty Ltd v Dunecar Pty Ltd (2000) 10 BPR 18,387 at 18,399 [56]; Islam v South Sydney City Council (1998) 9 BPR at 16,865 at 16,870). Indeed, it might be thought that s 63 of the Supreme Court Act required such an alternative claim to be made. Tannous v Cipolla Bros Holdings Pty Ltd [2001] NSWSC 236 is an example of a plaintiff obtaining relief against forfeiture after unsuccessfully disputing the validity of the termination of the lease.
43 On both grounds, I consider the plaintiff is entitled to interlocutory injunctive relief if it meets appropriate conditions to ensure that it does equity.
44 On the materials before me which, unsurprisingly, are not very satisfactory, it does seem to me that the defendant is correct in saying that it is owed a substantial sum. The defendant calculates that the rent and outgoings due for the period from 1 April 2004 to 31 August 2005 totals $419,144.81. This includes CPI increases which the defendant only belatedly charged. However, the lease provides for automatic CPI adjustments. On the present materials, I do not think there is a serious question that that is not the amount due under the lease.
45 The next question is how much of that sum has been paid to the lessor. There is evidence that the between 16 April and 6 May 2004, the plaintiff paid $32,136.40 to the lessor's agent, Mr Green. $9,000 of that sum seems to referable to rent due in March 2004. There is no evidence from the defendant, on whom on this question the onus lies, to show that the balance of $23,136.40 related to rent or outgoings due before 1 April 2004. I therefore start from the position that the unpaid rent and outgoings totals $396,008.41 so far as the materials before me show.
46 The next question is how much of that amount the plaintiff can contend should be allowed as 80 percent of Incurred and Future Development Costs in respect of which rent and outgoings abate. On the materials before me the total amount of such development costs paid to date is $340,055.24. This includes sums totalling $93,569.58 which the defendant says are disputed, and therefore pursuant to clause 2.3.4 of the deed cannot be allowed under clause 2.2.1 whilst the dispute is unresolved.
47 However, that issue itself raises questions of what constitutes a dispute for the purposes of that clause, whether the lessor is required to act reasonably and in good faith in raising a dispute, and whether there is a genuine dispute in relation to those amounts.
48 The accountant who has carried out an audit for developmental expenses, Ms Yip, said in a fax to Mr Green of 7 June 2005 that "we excluded expenses related to the invoices for the work to carried out and the legal fees incurred during the period from October 2003 to January 2004 even though that were related to the DA submission, but not necessary (sic) related to the particular DA dated 17/5/04 as mentioned in the deed of agreement". I emphasise the intended word "necessarily".
49 Even if the earlier payments are not directly related to the development application dated 17 May 2004, they may be covered by the earlier oral agreement. I think there is an arguable question about this notwithstanding the terms of clause 6.1 of the deed.
50 In the same facsimile, Ms Yip also said "we believe that the following payments (with no invoices supplied) are likely related (sic) to the relevant DA and would be included as approved expenses if invoices are supplied to our office...". Then there followed a number of expenses totalling $28,659.27.
51 In relation to the major item of expense which is so referred to, it is clear from the correspondence from the plaintiff to the defendant that the amount in question has been paid and there is at least a serious question to be tried as to whether the alleged absence of invoices raises a genuine dispute.
52 In calculating what sum, if any, the plaintiff should pay as a condition of obtaining injunctive relief, it would not be right in my view to say that the plaintiff is not entitled to be allowed 80 percent of the amounts in question which are said to be disputed as an abatement of rent, being amounts which it is clear the plaintiff has paid. Eighty percent of $340,055.24 is $272,044.19.
53 The defendant says that there should be deducted from that sum an amount of $62,427.31 which the defendant has paid. Two issues arise about this. First, whether the defendant has paid those sums. Secondly, if it has paid those sums, whether they should be deducted from the sum of $272,044.19, or from the sum $340,055.24, before the 80 percent calculation is made.
54 As to the first, the evidence is somewhat sparse. It consists of Ms Yip's statement that in the process of auditing the DA expenses, she verified that the defendant had paid the sum $62,427.31 in respect of certain invoices that were supplied to her and were marked as having been paid directly by the defendant. The particulars of those payments are given at page 16 of Ms Yip's affidavit. They are said to have consisted of five payments towards engineering, electrical, and air-conditioning costs.
55 The plaintiff submitted that I should find it paid one of the amounts in question namely a sum of $25,000 said to have been paid by the defendant to Barnwall Cambridge Pty Limited on invoice 21168 dated 11 February 2005. However, it seems to me that the only part of that invoice paid by the plaintiff was an amount of $2,940. (See pages 27 to 29 of Mr Riggs' affidavit.) Although the material is somewhat sparse, I should proceed on the basis that the Ms Yip is correct in saying that the defendant has paid development costs of $62,427.21.
56 The consequence is that these are not Incurred or for Future Development Costs under the deed as they were not paid by the lessee. They should therefore be deducted from the sum of $340,055.24, before the allowance under clause 2.2.1 is calculated. Had the costs been paid by the lessee, only 80 percent of the costs would be an allowance against rent, and the lessee would have had, and discharged, a personal liability under clause 2.2.2 of the deed in respect of the remaining 20 percent. It is at least arguable that failure by the lessee to meet a liability under clause 2.2.2 of the deed would not be a breach of the lease, or at least not one which could attract the termination provision in clause 18.
57 The effect of the deducting the lessor's payment from the development costs is to give an allowance under clause 2.2.1 to the lessee of 80 percent of the difference between $340,055.24 and $64,427.31; an amount of $222,102.34.
58 On the materials available to me, it seems that the plaintiff, prima facie, owes the defendant at least the difference between $396,008.41 and $222,102.34. That sum is $173,906.07.
59 It will be condition of the injunctive relief that the plaintiff pay that sum to the defendant. This will not preclude either party when accounts are taken from contending that a greater or lesser sum is due. I understood the plaintiff to have accepted as a condition of the relief that a sum of this order should be paid. Indeed, it offered to make such a payment to an interest-bearing account.
60 I see no reason why the payment should not be made directly to the defendant. No question has been raised about its ability to repay any moneys which may be found on the taking of accounts to have been over paid.
61 For the sake of clarity, I should say that in my view there was no reason that payment cannot be paid using moneys currently standing to the credit of the solicitor's trust account. The source of funds for payment will be a matter for the plaintiff.
62 I will give directions for the filing of a notice of motion for expedition. That notice of motion is to be filed and served by 19 August 2005 returnable before the expedition list judge on 26 August 2005. I direct that affidavits in support of the notice of motion be filed and served by 23 August 2005.
63 I make the following orders: