"Goodwill payable on signing lease. Further $90,000 to be paid , 1st option 4 years".

1. This document was signed by Mr Borazio as an offer, and on 22 January 2008 by Mr Spirovski by way of acceptance. The document allowed Mr Borazio to nominate another tenant, and he nominated the First Respondent.
2. The second document recording the agreement to pay $180,000.00 is a "Contract of Sale of Business", which was sent by the Applicants' solicitors to Mr Borazio on 12 February 2008. It was in the REIV / Law Institute 2000 copyright form, and contained General Conditions, Special Conditions and Particulars of Sale. After getting legal advice Mr Borazio refused to execute it.
3. The "Contract of Sale of Business" was a sham.
4. The Particulars of Sale said that the type of business was "Hotel & Accommodation". It said there was no registered business name. The price was stated at $180,000.00, to be paid by a deposit of $45,000.00 which had already been paid and then $135,000.00 in accordance with the Special Conditions. It said that "The business premises are occupied by the Vendor as Owner", but also said "The Purchaser is already in possession". The space where the "maximum stock value" could be inserted was left blank. The "Assistance period" was stated as "Nil".
5. Special Condition 1 said that the residue of the purchase price was to be paid by a sum of $45,000.00 on 11 February 2008 and $90,000.00 "on the same date but four years later on representing the balance of sale proceeds due under this Contract in full and final settlement".
6. Special Condition 2 said "The (First Respondent) warrants that it will make immediate Application for the Transfer of Licence no 31912098 and will purse (sic) the matter expeditiously to completion".
7. Special Condition 6 said that despite anything in the General Conditions, the First Respondent would not require a Health Inspection or Report from the Council and "will purchase the business, stock, equipment, fittings and other assets, as inspected, by the (First Respondent) at the time of acceptance or possession of the premises".
8. Special Condition 7 said, "It is agreed by the (First Respondent) that the (Applicants) will not supply a Statement pursuant to section 52 of the Estate Agents Act".
9. Mr Spirovski said that this Contract was drawn by the Applicants' solicitor on his instructions, but I find that he regarded it as a means to an end. He was not concerned with the contents of the document, but only its function of getting $180,000.00 paid to the Applicants. When asked what he understood the Contract to say, he answered "whatever was written down" and that its purpose was to get the Applicants $180,000.00.
10. In cross examination Mr Spirovski was asked how the sum of $180,000.00 had been calculated. He answered that "that is what they were going for", which I take to mean hotel businesses in the area, and also that $180,000.00 was for "all of it".
11. Special Condition 7 confirms that the "Contract" was a means to an end, and not genuinely a contract for the sale of a business. Section 52(1) of the Estate Agents Act 1980 requires a vendor of a small business to give a prospective purchaser information about the financial performance of the business, in a prescribed form. If a vendor breaches the section, there are consequences in relation to the enforceability of the contract. More significantly, though, s52(7) renders the vendor guilty of an offence and liable to a penalty of not more than 10 penalty units. A vendor cannot contract out of the obligation to comply with section 52(1) of the Estate Agents Act 1980 in the manner adopted in Special Condition 7.
12. When the Applicants' solicitors sent Mr Borazio the "Contract of Sale" on 12 February 2008 they included a Disclosure Statement under the Retail Leases Act 2003. It said that the "Structure, fixtures, plant, equipment and services to or in the premises provided by the (Applicants) [was] Nil".
13. Mr Peter Markovic gave evidence about his marketing of the premises for lease.
14. In his evidence in chief Mr Markovic said that he was retained to sell the business on 15 November 2011. He inspected the premises and saw that the hotel was closed. He said that it was ready to operate as soon as beer barrels were connected. As well as the hotel business, there was a rooming house upstairs. There was one permanent tenant upstairs but some other people were coming and going, and they had locked their rooms to prevent access. Mr Markovic indicated that the clientele of the rooms upstairs were basically homeless people.
15. Mr Markovic said that when he was retained, the premises were run down and dilapidated and the floors were filthy.
16. He put up "For Lease" signs on the building which generated a lot of interest. As well as saying "For Lease" the main sign said "Goodwill available for immediate possession".
17. In cross examination Mr Markovic produced the "Exclusive Leasing / Managing Authority" that the Applicants had signed on 15 November 2007 in favour of his estate agency. It recorded the premises and the desired rent. In handwriting was written, "Lease. 3 years goodwill $50,000. 3 x 3 x 3 years goodwill $180,000". When asked what those words meant to him, Mr Markovic said that they recorded the Applicants' instructions that if a person wanted to lease the premises for one term of 3 years without the possibility of an extension, they would pay $50,000.00 in addition to the rent and outgoings. If however they wanted a 3 year term and 2 options of 3 years they would pay $180,000.00 plus rent and outgoings.
18. Mr Markovic said that he had been speaking to the Applicants between the surrender of the previous lease on 15 October 1997 and the signing of the Authority. It was not unusual for landlords to defer signing an Authority until it suited them.
19. Mr Markovic was cross examined at some length about the subject of "key-money". Mr Markovic denied having used that expression in his discussions with Mr Borazio, but said that he had told Mr Borazio that another interested person had offered $150,000.00 in goodwill.
20. When asked about the words, "Goodwill available" on the "For Lease" sign, Mr Markovic said that it was the goodwill attached to the hotel premises, and that it was part of the rent and outgoings.
21. Mr Markovic did not show Mr Borazio the Contract of Sale of Business, because Mr Markovic did not prepare it and it was not brought into existence until after Mr Borazio signed the "Offer and Acceptance to Lease".
22. Mr Markovic is familiar with the requirements of section 52 of the Estate Agents Act 1980.
23. In cross examination it was put to Mr Markovic that the Contract of Sale of Business was a sham, intended to avoid the prohibition on the procuration of key-money. Mr Markovic denied that proposition, but agreed that Mr Borazio had only enquired about leasing the premises and had not enquired about buying a business. Mr Markovic said that the $180,000.00 was the purchase price of the goodwill, and even though the premises were derelict it had been successfully run as a derelict hotel.
24. Mr Borazio gave evidence that when he saw the "For Lease" sign on the hotel premises, the windows had been blacked out. When he inspected the premises it was uninhabited, dirty and derelict, and he did not see any occupants on the first floor. The liquor licence that had been held by Traynor Barrett had been suspended because the business was not running.
25. Mr Borazio said that when he spoke to Mr Markovic about the $180,000.00, Mr Markovic alluded to it being "key-money" but in fact it may have been Mr Borazio who used that expression. Mr Markovic said it was the money that had to be paid to get a lease. Mr Borazio agreed to pay the $180,000.00, not realising at that stage that it was unlawful for a landlord to seek key-money.
26. Mr Borazio said that he did not ask to buy a business, and that neither Mr Markovic or Mr Spirovski said that a business was being sold. He agreed to pay the $180,000.00 because he had to in order to get the lease.
27. Mr Borazio said that the First Respondent paid the $90,000.00 before taking possession of the premises, and began renovations soon after taking possession. He said the First Respondent had spent a large sum by the time he received the draft lease and Contract of Sale of Business in February 2008. He referred the drafts to solicitors, who advised him that there were legal issues with the drafts and that the extraction of key-money was unlawful. After an exchange of correspondence the parties went to mediation. By that time the First Respondent had spent around $600,000.00 on renovations, which made it very important that the First Respondent obtain a lease.
28. The correspondence which led to the mediation came from Mr Borazio's solicitors. The only issue still of importance in this proceeding is that of "key-money", but the correspondence raised other issues and as a result Counsel for Mr Borazio put two of those issues to Mr Spirovski and Mr Markovic. The first was Mr Borazio's allegation that Mr Spirovski agreed to make sure the airconditioning was in good order, and the second was that Mr Markovic agreed on the Applicants' behalf that Mr Borazio would have a 3 month rent free period. Mr Spirovski said in his evidence that Mr Borazio was taking the premises "as is", and he denied that the Applicants had agreed to make sure the airconditioning was in good order, or that they agreed to give Mr Borazio a rent free period of 3 months. Mr Markovic said that Mr Borazio had raised these issues and Mr Markovic had told him that he would consult the Applicants about them, and that Mr Markovic had no authority to reach agreements on the Applicants' behalf.
29. Mr Spirovski acknowledged that by the time the parties went to mediation the First Respondent had carried out extensive renovations to the premises, and that the premises were looking good.
30. When asked in cross examination about the mediation, Mr Spirovski acknowledged that neither the lease nor the Contract of Sale of Business had been executed by then. Mr Spirovski said that at the mediation the Applicants maintained their requirement that $180,000.00 be paid to them. When asked what Mr Borazio was getting for the $180,000.00 apart from the right to lease the premises, Mr Spirovski answered, "Nothing. Just a 12 year lease". He also said that, had Mr Borazio not agreed at the mediation to pay a total of $180,000.00 all up, the Applicants would not have agreed to sign the lease.
31. Mr Borazio said that the $180,000.00 was the biggest issue in the mediation. The Applicants were adamant about enforcing their claim to that money. Because the First Respondent had spent so much, Mr Borazio felt that he had "a gun to his head" and that he had to reach a settlement which provided for a lease to be executed. Mr Borazio signed the Terms of Settlement on legal advice. Mr Borazio was pretty sure that his barrister had drafted the Terms of Settlement. The Terms record that the duration of the lease was extended by 3 years, and that the First Respondent got one more rent free period of one month.
32. Another aspect of the Terms of Settlement was that the Second Respondent, in which Mr Borazio is also involved, became the tenant in lieu of the First Respondent.
33. The Terms of Settlement included the following. The underlining is in the original, and signifies that a term is defined.
    1. The (First Respondent) agrees that the (Applicants) may retain the payment of $90,000.00 received by the (Applicants) under the contract of sale of business which the parties agree to sign and exchange under this agreement (the business contract).
    2. The (First Respondent) agrees that it will pay the further $90,000 provided for in the business contract on the earlier to occur of:

(a) settlement under any sale of the (First Respondent's) business during the first term of the lease which the parties agree to sign and exchange under this agreement (the lease); or

(b) the exercise of the first option to renew the lease for a further term.

1. The (Applicants) agree that the (First Respondent) has the benefit of a further one month's rent free period after the date of these terms of settlement.
2. The parties agree to sign and to be bound on the signing of these terms of settlement to a lease and the business contract on the following terms:

(a) the lease will be in the form of lease prepared by the (Applicants') solicitor and provided to the (First Respondent) under cover of their letter dated 12 February 2008 subject to the amendments below.

(b) the lease will contain a further term of 3 years after the final term already included by the (Applicants') solicitor, with a review to market on the commencement date and fixed 4% increases each year during the term.

(c) The lease will be guaranteed by the directors of the (First Respondent)...

(f) the business contract will be amended to give effect to clause 2 above.

6A. The parties agree that these terms of settlement reflect their agreement about the terms of their contract documents and will not make any further claim in relation to them, except as expressed in these terms or the documents they contemplate.

1. The (Applicants) agree to sign the transfer of the lease from the (First Respondent) to the (Second Respondent) in the form of the current standard transfer of lease published by the Law Institute of Victoria, signed by the (First Respondent) and the new tenant and Jerome Borazio, Justin Derrick, John Deallesandro and John Katsoulakos as guarantors, to confirm the (Applicants') consent to the transfer. The (Applicants) agree that a transfer under this clause is not a sale of business that triggers the (First Respondent's) obligation to pay the additional $90,000.00 under clause 2 or any such provision in the business contract. On transfer of the lease to (the Second Respondent), the (First Respondent) will be released from all future liability arising after the date of the transfer, but without prejudice to any accrued rights of the (Applicants) as at the date of the transfer.
2. Referring to clause 4(a) above, at the end of the Terms of Settlement was a typed schedule of two pages, setting out amendments to various clauses of the lease. It did not refer to any clauses of the Contract for the Sale of Business.
3. The lease and Contract of Sale of Business were signed after the mediation, in the terms agreed in the Terms of Settlement. Since then, the Second Respondent has exercised the first option of 3 years, and whilst according to the documents that triggered the First Respondent's liability to pay the second $90,000.00, it has not done so.
4. In cross examination Mr Borazio agreed that he was an experienced entrepreneur in the hospitality industry and that he was and is involved in many venues and companies. He is well versed in negotiating contracts and leases in that industry. He knew about the concept of key-money in 2008, although he said that he did not know it was unlawful.
5. Mr Borazio said that he does not sign agreements that he does not intend to comply with. He gave as an example, the fact that he had caused the First Respondent to pay the first $90,000.00 under the Offer and Acceptance to Lease, before receiving legal advice that it was unlawful key-money. His legal advice prior to the mediation was not to sign the lease or Contract of Sale of Business.
6. Mr Borazio attended the mediation with a barrister, whom he understood to be an expert in retail lease disputes. He signed the Terms of Settlement on legal advice. He knew what key-money was when he signed that document.
7. All of Mr Borazio's previous ventures have been started from scratch. He has never purchased a hospitality business before, instead establishing them in vacant premises.
8. He did not regard the hotel premises as being iconic, thus carrying 'goodwill'. He said that to the contrary, the number of tenants in the recent past, and the fact that Traynor Barrett surrendered its sub lease, suggests that it is not an easy place to make money.
9. Mr Borazio said, expressing his understanding since he obtained legal advice, that goodwill cannot be charged where there is no business.
10. Mr Borazio was asked in cross examination why he had signed the Terms of Settlement, given that it contained clause 6A. Mr Borazio answered that if he had not signed the Terms of Settlement, he would not be able to lease the premises, and the amount spent on renovations would have been lost. It seems to me that there are two ways to look at this statement. The first is that Mr Borazio is brave enough to sign a document which contains an express obligation, on the basis that it is unenforceable. The second is that he was still being forced to pay key money, even though this time it was disguised in a sham Contract of Sale and Terms of Settlement.

1. I have no doubt that the agreement to lease, contained in the Offer and Acceptance to Lease dated 22 January 2008 required the First Respondent to pay $180,000.00 in contravention of section 23 of the Retail Leases Act 2003.
2. The exceptions in s23(3)(c) and (f) are inapplicable.
3. Section 23(3)(c) does not apply because the Applicants were not operating a business from the premises, and they were not selling the business. There was no business to be sold, so the lease which was to be granted to the First Respondent was not being granted in the course of such a sale. The Applicants' device of preparing for execution a Contract of Sale of Business was a sham.
4. Section 23(3)(f) does not apply because no part of the $180,000.00 was for plant, equipment, fixtures or fittings. The items which Open Door Pub and Traynor Barrett left behind on surrender of their leases were of no value. They benefitted from being allowed to leave those items behind, thus avoiding the cost of removing them.
5. Ironically, the $180,000.00 does not fall within section 23(1)(b) of the Act, because no business was being carried on at the premises in January 2008. When read with s23(3)(c), it is clear the Parliament intended that a landlord could charge goodwill on the sale of its own business conducted from the premises, but that it could not seek a goodwill payment in respect of a business being conducted by a tenant. As I have found that no business was being carried on at the premises, section 23(1)(b) of the Act does not apply.
6. However, the $180,000.00 is key-money, as defined in section 3, and the Applicants' seeking and acceptance of it was unlawful under section 23(1)(a). The sum was in the nature of a premium, in that there was no real or true consideration for it, and it was in consideration of an agreement being made to grant a lease [9] or of a lease being granted [10]. This is established by the documentary evidence, including the inconsistency between the sham Contract of Sale of Business and the Disclosure Statement under the Retail Leases Act 2003 which said that the "Structure, fixtures, plant, equipment and services to or in the premises provided by the (Applicants) [was] Nil"; Mr Markovic's evidence that if a tenant wanted a 3 year lease they would pay $50,000.00 "goodwill" but if the tenant wanted a 3 year lease with options to renew they would pay $180,000.00 "goodwill"; and Mr Spirovski's evidence that his extraction of $180,000.00 from the First Respondent "(was) business".
7. In the Applicants' final submissions they submitted that Mr Markovic advertised the property with goodwill and did not demand key-money [11]. I am not persuaded by this submission. It is not a requirement of section 23(1)(a) or the definition in section 3 that the person seeking the payment or benefit calls it "key-money". Merely calling a payment "goodwill" does not take it out of being "key-money", if in substance that is what it is.
8. The next issue is the effect of the Terms of Settlement. This could be expressed in two ways: whether the First Respondent can still avoid liability to pay the second $90,000.00 and recover the first $90,000.00 in the face of the Terms of Settlement; or whether the Applicants can avoid the consequences of s23(1)(a) of the Retail leases Act 2003 by entering into Terms of Settlement. Put another way, given that section 23(4) of the Retail Leases Act 2003 empowered the First Respondent to recover the first $90,000.00, could the First Respondent abandon that right in Terms of Settlement? Or would the purported abandonment of that right simply perpetuate the Applicants' unlawful behaviour under section 23(1) of the Act?
9. Terms of Settlement are a form of contract. As such they are subject to the principles and requirements of contract law.
10. The Terms of Settlement identified the parties, as the Applicants and the First Respondent. The provisions were certain. The Terms recorded the consideration passing between the parties. Consideration passing to the Applicants included that the lease to the Second Respondent would be guaranteed by three more individuals Justin Derrick, John Deallesandro and John Katsoulakos, whereas the original draft submitted in February 2008 had named only Jerome Borazio and Andrea Borazio as guarantors; and the First Respondent's (now disputed) agreement that the Applicants could retain the first $90,000.00 and would be paid the second $90,000.00. Consideration passing to the First Respondent included the provision that the new lease would contain a further term of 3 years, and the Applicants' agreement to the lease being assigned by the First Respondent to the Second Respondent without that assignment triggering the First Respondent's obligation to pay the second $90,000.00.
11. Clause 6A was consideration passing to both sides. It said

The parties agree that these terms of settlement reflect their agreement about the terms of their contract documents and will not make any further claim in relation to them, except as expressed in these terms or the documents they contemplate.

1. Clearly these words were expressed to prevent the First Respondent from agitating again the arguments about the $180,000.00. But they also prevented the Applicants from making any further claims about the parties' contract documents.
2. In the absence of section 23(2) of the Retail Leases Act 2003, clause 6A of the Terms of Settlement would result in the Applicants being entitled to the $180,000.00. Read together, sub sections 23(1) and (4) would confer on the First Respondent a cause of action, and the First Respondent could compromise that cause of action. Simply as an illustration, it is unlawful for a defendant negligently to injure a plaintiff in a motor vehicle collision, and in that event the plaintiff may recover compensation. If a plaintiff compromises their claim for damages and signs a settlement agreement, there can be no argument that the unlawful nature of the negligent driving renders the settlement agreement unenforceable, allowing the plaintiff to pursue a claim for damages.

81 As a matter of drafting Terms of Settlement, there is a distinction between a 'release' and a 'covenant not to sue'. The former is an abandonment of a claim or right[12] whereas the latter is a promise not to bring the claim [13]. By saying, "The parties agree ... (they) will not make any further claim" clause 6A of the Terms of Settlement is a covenant not to sue.

1. The commentary on Contract: General Principles in "The Laws of Australia" [14] says the following on construction of contracts at paragraph 7.4.680. " 'The expressions, and particularly any elliptical expressions, in a mercantile contract are to be read in no narrow spirit of construction, but as the court would suppose two honest businessmen would understand the words they have actually used with reference to their subject matter and the surrounding circumstances' [15]. The inquiry is concerned with what reasonable persons put into the position of the parties would be objectively taken to have intended [16]. "In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements" [17]. "If detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense" [18].
2. Clause 6A does not use legalese. It contains a plain statement that the parties will not make any further claim. It would prevent the First Respondent from claiming back the $90,000.00 paid to date.
3. What then is the effect of section 23(2) of the Retail Leases Act 2003, "A provision of a retail premises lease is void to the extent that it requires the payment of key-money or consideration for goodwill or has that effect"?
4. The definition of "lease" includes "an agreement for a lease or sub-lease, whether or not in writing; and ... a former lease".
5. Whilst clause 1 of the Terms of Settlement seeks to maintain the fiction that that the first $90,000.00 was paid under a contract of sale of business[19], clause 2 (a) refers to "the lease which the parties agree to sign and exchange under this agreement", and clause 4 says "(t)he parties agree to sign ... a lease" in the form described. The Terms of Settlement are an agreement for lease.
6. Accordingly, section 23(2) of the Retail Leases Act 2003 is to be read as saying, "A provision of the Terms of Settlement is void to the extent that it requires the payment of key-money or consideration for goodwill or has that effect".
7. The Terms of Settlement purport to have the effect of requiring the payment of key-money or consideration for goodwill both in clause 1 and 2 which refer to payments of $90,000.00, and by the covenant not to sue in clause 6A. To that extent the Terms of Settlement are void.
8. I reach this conclusion with some disquiet given that the First Respondent signed the Terms of Settlement after the issue of key money had been raised, after a mediation which Mr Borazio attended with Counsel, and where the First Respondent extracted from the Applicants a further term of 3 years. A party should be bound by its agreements. However, the law makes some transactions unlawful and in this instance the Parliament has provided that key money cannot be sought or accepted and that provisions of a retail premises lease that have the effect of requiring payment of key money are void. Mr Spirovski confirmed that at the mediation the Applicants would not have agreed to sign a lease had the First Respondent not conceded the $180,000.00. The Applicants are not entitled to the $180,000.00.
9. The Applicants submitted that the First Respondent was estopped from making a claim about the $180,000.00. However I accept the First Respondent's submission that an estoppel cannot prevail against section 23 of the Retail Leases Act. That submission was based on the judgment of the Privy Council in Kok Hoong v Leong Cheong Kweng Mines Ltd [20]. In that case, the appellant had obtained a default judgment against the respondent for rent arrears on business equipment. When it sued for further rent on the same equipment in a second proceeding, the respondent defended the claim on the basis that the transaction was void because it offended an Act on moneylending, being in substance a loan which had not been made in accordance with the requirements of the Act, and not a contract for hire. The appellant contended that the earlier default judgment estopped the respondent from running that defence.
10. On the estoppel issue Viscount Radcliffe spoke of "those rules which preclude a court from allowing an estoppel, if to do so would be to act in the face of a statute and to give recognition through the admission of one of the parties to a state of affairs which the law has positively declared is not to exist"[21].
11. It is appropriate to quote Viscount Radcliffe at some length because the rule precluding an estoppel is based on public policy.
12. His lordship said,

"The respondent has invoked in support of its defence a principle which appears in our law in many forms, that a party cannot set up an estoppel in the face of a statute. Thus the corporation on which there is imposed a statutory duty to carry out certain acts in the interest of the public cannot preclude itself by estoppel in pais from performing its duty and asserting legal rights accordingly. ... Similarly, there is, in most cases, no estoppel against a defendant who wishes to set up the statutory invalidity of some contract or transaction on which he is being sued, despite the fact that by conduct or other means he would otherwise be bound by estoppel. ... It does not appear to their Lordships that the principle invoked is confined to transactions that have been made the subject of legislation or that, where legislation is in question, the bare prescription that a transaction is to be void or unenforceable is sufficient by itself to justify the principle's application. Thus, ... the common law may itself prohibit the enforcement of certain contracts, such as those of an infant not for necessaries, and it cannot be supposed that it would any less refuse to base a judgment on an estoppel against an infant who had so contracted. An infant who has obtained goods from a tradesman by representing himself to be of full age cannot be estopped from setting up his infancy, if sued for the price of the goods" [22].

1. Viscount Radcliffe said that the rule was based on public policy, which he noted was difficult to define with precision. After noting that

"It has been said that the question whether an estoppel is to be allowed or not depends on whether the enactment or rule of law relied on is imposed in the public interest or on grounds of general public policy. However, a principle as widely stated as this might prove to be rather an elusive guide, since there is no statute, at least public general statute, for which this claim might not be made"

"In their lordships' opinion a more direct test to apply in any case, such as the present, where the laws of moneylending or monetary security are involved, is to ask whether the law that confronts the estoppel can be seen to represent a social policy to which the court must give effect in the interests of the public generally or some section of the public, despite any rules of evidence as between themselves that the parties may have created by their conduct or otherwise. Thus the laws of gaming or usury override an estoppel: so do the provisions of the Rent Restriction Act with regard to orders for possession of controlled tenancies ... General social policy does from time to time require the denial of legal validity to certain transactions by certain persons. This may be for their own protection, as in the case of the infant or other category of person enjoying what is to some extent a protected status, or for the protection of others who may come to be engaged in dealings with them, as, for instance, the creditors of the bankrupt. In all such cases there is no room for the application of another general and familiar principle of the law that a man may, if he wishes, disclaim a statutory provision enacted for his benefit, for what is for a man's benefit and what is for his protection are not synonymous terms. Nor is it open to the court to give its sanction to departures from any law that reflects such a policy, even though the party concerned has himself behaved in such a way as would otherwise tie his hands. ... These principles, as their Lordships understand them, would point very directly to the conclusion that there can be no estoppel in face of" the relevant moneylenders ordinance [emphasis added].

1. It is difficult today to know what public policy was behind the moneylending legislation in this case, particularly given the reference to "monetary security" which might relate to exchange rates between currencies. However, the references to the laws on gaming, usury and Rent Restriction overriding an estoppel seem to me to establish that the public policy which "require(s) the denial of legal validity to certain transactions by certain persons" applies to the attempted seeking and acceptance of key money by the Applicants.
2. In their submission[23] in reply the Applicants submitted that whilst an estoppel cannot prevail against an illegality, the illegality needs to be proved which, they submitted, the First Respondent had not done. The Applicants then noted that in reliance on Kok Hoong v Leong Cheong Kweng Mines Ltd the Respondents contended that an estopel cannot prevail against a statute, a common law rule of public policy or protect against an illegality, and referred to and quoted the judgment of Hargrave J in Equus Corp Pty Ltd v Belperio (2006) VSC 14 at paragraphs 292-294. I am not assisted by that passage. It does not, for example, suggest that Kok Hoong is not good law. The Applicants submit that the purpose of the prohibition of seeking key money can be waived because the policy behind it is not similar to that behind the bankruptcy statute. With respect I am not persuaded by that submission given, as I have noted above, Viscount Radcliffe's reference to the laws on gaming, usury and Rent Restriction overriding an estoppel. The policy behind the bankruptcy statute might be said to be the protection of creditors by causing them to be dealt with equally, rather than having some creditors preferred over others. But the policy behind the old law of Rent Restriction would have been the same as the policy behind the prohibition of key money.
3. I find that the First Respondent is not estopped from making a claim about the $180,000.00.
4. In the circumstances I will make orders to the effect that the Applicants must pay the First Respondent $90,000.00 and that the Applicants are precluded from claiming the second sum of $90,000.00.
5. The First Respondent paid the $90,000.00 in February 2008, and it seeks interest on that sum from 1 March 2008. The Tribunal is empowered to award interest under sub sections 91(1)(b) and 91(2) of the Retail Leases Act 2003, "at the rate fixed from time to time under section 2 of the Penalty Interests Rates Act 1983 or at any lesser rate it thinks appropriate".
6. I award interest from the date the First Respondent's counterclaim was issued, being 31 October 2012. It would be inappropriate to award interest on the sum before that date. The First Respondent effectively sat on its rights between February 2008 and 31 October 2012, and did not even issue the proceeding first to recover the money but instead waited until the Applicants had sued. I have calculated the interest under the Penalty Interests Rates Act 1983 from 31 October 2012 to 30 January 2013, at $2.113.36.
7. As the Retail Leases Act 2003 leaves some, very limited, scope for costs to be awarded, I will reserve costs.

[1] The Applicants' submissions were filed at the hearing; the Respondents on 18 December 2012 with copies of 8 authorities; and the Applicants replied on 21 December 2012.

[2] For most purposes under the Act "landlord" is given a conventional definition in section 3 of "the person who under the lease is entitled to the rent payable for the premises". However for the purposes of section 23 "landlord" includes agents and prospective landlords - see s23(5)

[3] "key money" is defined in section 3 - see below

[4] "lease" is defined in section 3 to mean "a lease, sub-lease, or an agreement for a lease or sub-lease,

[5] This approach is very different to that under the Retail Tenancies Act 1996, which focussed on the method by which the benefit was conferred. Section 9(1) of the 1996 Act said that a provision in a retail premises lease was void if it entitled the landlord to "get" key money. In Gillett v Burke [1997] 1 VR 81 the tenant was looking to sell its business. It entered an agreement with the landlord which said that in consideration of a payment by the tenant by a date about 7 weeks away , the landlord agreed to grant an option for a further 4 years. The Court held that this did not offend the section. The agreement did not bind the tenant to pay the sum. The landlord agreed to grant an option on receiving the sum by the date. Accordingly the agreement did not entitle the landlord to "get" the sum. The tenant paid the sum by choice and not by obligation: Tadgell J in Gillett v Burke [1997] 1 VR 81, at pp 84 - 85 and 89.

[6] This also seems to be inspired by the outcome in Gillett v Burke.

[7] That is, the Applicants argued that the $180,000 did not fall within s23(1), but in the alternative that if it did, ss23(3)(c) & (f) applied

[8] It was tendered as part of the Applicants' folder of relevant documents, exhibit A4

[10] Consistent with the definition of "lease" in section 3, the lease comprised of the signed Offer and Acceptance to Lease, the First Respondent's entering into possession and payment of rent.

[11] Paragraphs 14 and 15 of the Final Submissions

[12] A common form of words - not used by the parties in this case - is "the Plaintiff hereby releases and forever discharges the Defendant from all proceedings claims suits demands damages costs and expenses of every description whatsoever arising out of or accruing from ..."

[13] A common form of words - also not used by the parties in this case - is "the Plaintiff covenants in favour of the other party and each other person in favour of whom a release is given not to bring or pursue, procure that a third party bring or pursue, provide financial support for or otherwise support any claim, action, dispute, demand or proceeding in any Court or Tribunal in respect of any matter which is the subject of a release..."

[14] J L R Davis, ed , 2006 Thomson Lawbook Co, at paragraph 7.4.680

[15] Citing Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288, per Isaacs J at 300

[16] Citing Schenker & Co (Aust) Pty Ltd v Maplas Equipment & Services Pty Ltd {1990] VR 834, per McGarvie J at 840

[17] Citing Upper Hunter County DC v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 per Barwick CJ at 437

[18] Citing Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 per Lord Diplock at 201

[19] It is a fiction; the payment was made in around February 2008; the First Respondent refused to execute the Contract for the Sale of Business; and the Terms of Settlement provided for that Contract to be signed

[20] [1964] 1 All ER 300

[23] Paragraph 17 of the Submissions in Response