STG Dental Pty Ltd v Mannerside Holdings Pty Ltd (Building and Property) [2025] VCAT 842

1. UPON THE UNDERTAKING BY THE APPLICANT to abide by any order the Tribunal may make as the damages in case the Tribunal shall hereafter be of the opinion that the respondent shall have sustained any damages by reason of this order for which the applicant ought to pay the respondent, the Tribunal orders that until further order or agreement between the parties, the respondent by itself, its servants and agents must reinstate the applicant's occupation of the premises located at 109 Main Road, Lower Plenty, Vic, 3093.
2. Order 1 of these orders is subject to the applicant making an application for relief against forfeiture within seven days of receiving these orders.
3. For the avoidance of doubt, Order 1 of these orders does not come into effect unless the applicant makes an application for relief against forfeiture within seven days of receiving these orders.
4. Order 1 does not restrain the respondent from otherwise exercising its rights under the lease as against the applicant, other than for matters which are the subject of the Notice of Default dated 4 August 2025.
5. Costs reserved.

1. The respondent is the registered proprietor of retail premises located in Lower Plenty, Victoria ('the Premises'). Under a lease dated 25 July 2025 ('the Lease'), the respondent, as landlord ('the Landlord'), leased the Premises to the applicant, as tenant ('the Tenant').
2. On or about 4 August 2025, the Tenant received a Notice of Default from solicitors acting on behalf of the Landlord ('the Default Notice'). The Default Notice alleged that the Tenant had failed to pay rent of $179,467.89 and outgoings of $5,829.06.
3. On 22 August 2025, the Landlord re-entered the Premises and purported to forfeit the Lease.
4. On 22 August 2025 and after the Landlord had re-entered the Pemises, the Tenant filed this application, seeking an order in the form of an interlocutory injunction compelling the Landlord to allow the Tenant to reoccupy the Premises, pending the final hearing or determination of the substantive issues in dispute.

1. The legal principles relevant to the granting of an interlocutory injunction are well established and not in dispute. It is unnecessary to extensively repeat those principles in these short reasons, suffice to say that the Tenant must establish that there is a serious question or questions for trial and that the balance of convenience favours the granting of an injunction.[1] In Sudjalim Pty Ltd v Homle Pty Ltd,[2] Almond J summarised those principles as follows:

It is common ground that on an application for an interlocutory injunction, the Court will need to determine whether there is a serious question to be tried as to the plaintiff's entitlement to relief; whether the balance of convenience favours the granting of an injunction, including whether the plaintiffs are likely to suffer an injury for which damages will not be an adequate remedy; and whether there are any discretionary considerations which weigh for, or against, the grant of relief. These questions must be examined together.[3]

1. I shall apply those principles in determining this application for injunctive relief.

Did the Tenant fail to pay rent and outgoings?

1. The arrears of rent and outgoings span the period April 2023 to June 2025. From and after June 2025, rent and outgoings were paid in accordance with the Lease. However, prior to that time, the Tenant submitted that the Premises were unable to be wholly used for their permitted purpose as a dental surgery because of significant water ingress issues. It is common ground that in or around May 2025, the roof of the Premises was replaced and the water ingress arrested.
2. The Tenant has filed several expert reports detailing defects in the roof cladding and roofing plumbing as evidence of the problems associated with water ingress. In addition, the Tenant has filed several affidavits of its director in support of its application for interlocutory relief. Mr Donald of counsel, who appeared on behalf of the Tenant, drew my attention to various parts of that affidavit material to substantiate his submission that the restricted use of the Premises, coupled with the loss and damage suffered by the Tenant because of water ingress, far exceeded the amount of rent and outgoings in arrears. He submitted that it was open for the Tenant to set off that loss and damage against rent and outgoings in arrears.
3. Mr Parker of counsel, who appeared on behalf of the Landlord, submitted that it was not open for the Tenant to set off loss and damage purportedly suffered by it against rent and outgoings in arrears because the Lease contained a 'no deductions' clause.
4. In contrast, Mr Donald relied on an earlier decision of this Tribunal in AMTB Pty Ltd v Chan ('Chan'),[4] where the Tribunal found, prima facie, that a no deductions clause could not impeach a tenant's right to rely upon s 52 of the Retail Leases Act 2003 (Vic) ('the RLA') and by extension, deprive a tenant of its right to set-off its loss and damage against rent and outgoings in arrears.
5. Mr Parker submitted that there were several factors distinguishing this proceeding from what was before the Tribunal in Chan. First, he submitted that there was no evidence before the Tribunal as to the condition of the Premises prior to the Tenant entering into the Lease. Therefore, without a comparator, it was impossible to know whether any defects in the roof structure or plumbing were pre-existing and therefore not caught by s 52 of the RLA.
6. Mr Parker further submitted that even if there was subsequent water ingress or increased water ingress, it was open for the Tenant to abate some rent and outgoings, proportionate to any reduction in use of the Premises.[5] Mr Parker referred to the affidavit material filed by the Landlord,[6] and to a lesser extent the Tenant, as evidence that only a part of the Premises were unable to be used because of water ingress and on that basis, there was no justification to not pay any rent and outgoings over the relevant period.
7. Mr Parker submitted that even if there was a serious question for trial that some rent should have been abated, there is no evidence to substantiate that the water ingress would have entitled the Tenant to wholly abate rent and outgoings in circumstances where it continued to operate its dental surgery practice from the Premises, albeit that one or two consulting rooms were unable to be used. In that respect, Mr Parker referred to the observations of Osborne J In Vincent Cold Storage Pty Ltd v Centuria Property Funds No 2 Ltd,[7] where His Honour reviewed several other authorities, which stood for the proposition that the inclusion of an amount in a default notice which is overstated does not necessarily invalidate the notice if some amount remains unpaid and unremedied. I accept that as a general proposition of law.[8]
8. However, in my view, the critical question is not whether the amount of rent and outgoings that might be abated equates to the rent and outgoings in arrears but rather, whether the combination of any potential abatement plus the loss and damage allegedly suffered by the Tenant together exceeds the amount of rent and outgoings in arrears.
9. In Chan, the Tribunal referred to C & A Delaveris Pty Ltd v Bretair Pty Ltd ('Delaveris'),[9] which concerned corresponding provisions contained in the now repealed Retail Tenancies Reform Act 1998 (Vic). In that determination, Deputy President Macnamara considered the relationship between the "no deductions" rent covenant and the statutory repair covenant. He stated:
   1. It seems to me arguable first, that the withholding or at least delay of the payment of rent was justified and secondly, that there were no threats of legal action which could be regarded as economic duress in the circumstances. It will be recalled that the covenant to pay rent under this lease was a covenant to pay 'without deductions'. The authorities are not at one as to whether the inclusion of these words is sufficient to prevent any equitable set-off being relied upon to impeach the demand for rent. For the reasons which I gave in Wytell Pty Ltd v Glowinski [2006] VCAT 454 the balance of authority in Victoria favours the view that the words 'without deduction' exclude a tenant from relying upon equitable set-offs to impeach the demand for rent. Here, however, the covenant which the tenant alleged was being breached was one which in accordance with Section 25 of the 1998 Act as amended, the lease was 'taken to provide', that is, it was a statutory implied covenant. Section 47 of the 1998 Act provides that a provision in a retail lease is void to the extent that it claims to 'exclude the application of any provision of this Act'. In my view, the inclusion of the words 'without deduction' in the covenant to pay rent is avoided by Section 47 to the extent that it limits the effect of the statutory implied covenant to repair would otherwise have, hence a breach of the repair covenant would be available as a set off in the present case.

1. ... It is in accordance with well established practice to allow a set off of the liquidated sum incurred by a tenant in meeting a repair obligation owed by the landlord and reducing the rental liability accordingly Lee-Parker v Izzet [1971] 1WLR 1688, 1692-3 per Goff J. The amount of the outlay is liquidated and so the complication relating to an unliquidated setoffs do not exist. The claim for possession fails.
2. Mr Parker submitted that Delaveris referred to liquidated losses. However, in Chan, the Tribunal, correctly observed that the same rationale might not apply to an unliquidated sum, such as what is said to be claimed in this case.
3. I do not accept that the amount claimed by the Tenant in this proceeding can be defined as a claim wholly for unliquidated damages. The affidavit material discloses losses which relate to repair of dental equipment damaged through water ingress and other matters which have resulted in the Tenant expending its own funds to make good. Moreover, in Chan, like this case, the application was interlocutory and the Tribunal did not consider it appropriate within the context of that type of hearing to make a finding as to whether an unliquidated claim for damages could not be raised to set off a claim for rent and outgoings in arrears.
4. Having said that, I accept that a mere suggestion or foreshadowing of a claim for damages may not be sufficient to even raise a serious question for trial as to whether an equitable set-off survives a 'no deductions' clause. However, this case does not fall into that category. Here, there is affidavit material, coupled with allegations detailed in the Tenant's Points of Claim, which quantify the amount claimed against the Landlord - specific to issues relating to water ingress.
5. However, Mr Parker submitted that even if there was a right to set off the Tenant's damages against rent and outgoings in arrears, the Tenant did not seek an injunction to restrain the Landlord from exercising its right of forfeiture before that occurred. In other words, re-entry and forfeiture occurred before this application was filed. Mr Parker referred to an earlier decision of this Tribunal in Qian Long Zan Pty Ltd v Ka Yan Butt No 2 ('Qian'),[10] where the Tribunal observed:
   1. Mr Brimfield submitted that it is now too late for the Tenant to raise an equitable set-off to impugn the Landlord's right to re-entry and forfeiture of the Leases. I accept that proposition. This is not a case like AMTB Pty Ltd v Chan, which concerned an application for an interlocutory injunction to restrain the landlord from exercising its right of re-entry and forfeiture. In that case, I accepted that there was a question for trial whether the amount that the landlord claimed could be extinguished if the tenant's counterclaim succeeded and was set-off against the amount of the landlord's claim. Therefore, I found that it was appropriate to maintain the status quo and keep the lease on foot until that question could ultimately be decided at trial.
   2. However, here, re-entry and forfeiture of the lease has already occurred. This is not an application to restrain the Landlords from exercising rights of re-entry and forfeiture. That ship has sailed. Importantly, at the time when the Landlords exercised their right of re-entry and forfeiture, it is uncontested that rent and outgoings were in arrears. This was so notwithstanding that the Tenant had foreshadowed that it had a claim against the Landlords. In other words, the mere fact that the Tenant had foreshadowed or made a claim against the Landlords did not, at any time during March 2023 to March 2025, make invalid the contractual obligation to pay rent and outgoings pursuant to the Leases. Consequently, the Landlords exercised what was, as of 15 April 2025, a lawful right of re-entry pursuant to clause 7 of the general terms of the Leases.
   3. Consequently, I find that the Leases were terminated when the Landlords exercised their right of re-entry on 15 April 2025. I accept Mr Brimfield's submission that the failure to seek injunctive relief prior to re-entry effectively bars the Tenant from undoing what has already been done.
   4. That does not mean, however, that the Tenant's claim for damages or compensation cannot be prosecuted in the normal way. It does mean, however, that the failure to act in a timely manner has resulted in the Tenant's proprietary rights ending.
   5. That said, I also accept Mr Brimfield's submission that the only option now is for the Tenant to make an application for relief against forfeiture.
6. In my view, a similar situation arises here. The re-entry occurred prior to the Tenant's claim for loss and damage and this interlocutory injunction application being commenced.
7. Mr Donald submitted that the Lease could not be at an end if the Landlord did not have a right to terminate. In those circumstances, the purported termination or forfeiture results in the Landlord having repudiated its obligations but that, of itself, does not bring the Lease to an end unless the Tenant accepts the Landlord's repudiation and elects to terminate the Lease at common law. Mr Donald submitted that the Tenant did not act in that manner and continues to stand ready, willing and able to perform its obligations under the Lease.
8. I accept that as a general proposition of law. However, this case is different. Although the Tenant may have had a right to abate some rent and outgoings by reason of its restricted use of the Premises, it is not submitted that during the relevant period, the Premises could not be wholly used. Therefore, some rent and outgoings would have been payable during that period. Moreover, at the moment when the Lease was forfeited, there was no claim for loss and damage on foot. Therefore, at that point, the Landlord's right to re-enter the Premises and forfeit the Lease had crystallised because some of the rent and outgoings detailed in the Default Notice were undeniably in arrears.
9. In my view, the only option for the Tenant is to make an application for relief against forfeiture. I accept that there may be reasonable grounds for succeeding with such an application, subject to the usual preconditions. For example, by paying the amount of rent and outgoings in arrears, even if the amount so paid reflected some abatement of rent and outgoings because of the reduced use of the Premises. In other words, there would need to be some evidence of restricted use of the Premises proportionate to how much rent and outgoings should be abated.
10. In conclusion, I find that there is a serious question for trial that the Tenant will succeed in an application for relief against forfeiture, be it for the full amount of rent and outgoings in arrears or for a lesser sum commensurate with how much rent and outgoings should be abated by reason of its limited use of the Premises.

1. As is often the case where a tenant seeks to restrain a landlord from re-entering retail premises or seeks an order to restore occupation, the balance of convenience will favour granting interlocutory relief. This is because the business operations of the retail tenant are often so interconnected with the leased premises. Consequently, depriving the retail tenant of occupation makes it difficult if not impossible to compensate that party by an award of damages alone.
2. This case is no different. In that respect, I note that the Tenant operates an established dental surgery practice, has bookings for patients who rely upon that dental surgery practice and has invested significant sums in fitting out the Premises with specialist equipment.
3. In contrast, there is limited or no evidence of what prejudice might be suffered by the Landlord if the Tenant were permitted to reoccupy the Premises on an interlocutory basis, subject to paying the arrears of rent and outgoings, or such lesser sum if the Tenant can establish on reasonable grounds what amount of rent and outgoings should be abated, having regard to its reduced use of the Premises.
4. Therefore, when weighing the interests of both parties, I am of the view that there would be a lower risk of injustice by granting the injunction, subject to certain conditions. Specifically, the injunction should be made conditional upon the Tenant filing an application for relief against forfeiture.

1. Having regard to my findings, I will make an order compelling the Landlord to restore the Tenant's occupation of the Premises, subject to the Tenant filing an application for relief against forfeiture. Obviously, if the application for relief against forfeiture is refused, then no injunction will come into operation unless otherwise ordered by the Tribunal.
2. I will reserve the costs of this aspect of the proceeding, noting that under s 92 of the RLA, costs are not awarded in retail tenancy disputes unless special circumstances exist, as set out in that provision.

[1] Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57; Bradto Pty Ltd v State of Victoria [2006] VSCA 89; (2006) 15 VR 65.

[2] [2020] VSC 838.

[4] (Building and Property) [2025] VCAT 236.

[5] Retail Leases Act 2003 (Vic), s57; clause 8.1 of the Lease.

[6] Specifically, the affidavit of Wassam Tossoun dated 2 September 2025, [27].

[7] [2022] VSC 766.

[8] Primary RE Ltd v Great Southern Property Holdings Ltd (Receivers and Managers appointed) (in liq) & Ors [2011] VSC 242, per Judd J.

[9] [2009] VCAT 1663.

[10] (Building and Property) [2025] VCAT 546.