[2025] VCAT 988
General information, not legal advice.
Victorian Civil and Administrative Tribunal
2025-11-06
Original judgment source is linked above.
(a) the names and addresses of the parties;
(b) the date of the Deed being 5 October 2022;
(c) the date on which the applicant was to surrender the premises, being '15 September 2023 or earlier by mutual agreement';
(d) the amount to be paid by the respondent to the applicant in consideration of it surrendering the premises, being $368,000.00 plus GST;
(e) the date on which the payment was to be made, being '50% at the end of January 2023 and the balance at the surrender date';
(f) the absence of make good obligations - in this respect I set out clause 4 of the Deed, which was wholly typewritten and not amended by any handwriting:
4.1 On or before the Surrender Date, the Tenant must vacate the premises as though the term of the Lease has expired or come to an end.
4.2 The Premises will be returned in the condition as is and the Tenant will be released from its obligation under the Lease and this Deed to make good of the premises. The Tenant will not be required to remove the fixtures or fitting in the Premises.
4.3 The Landlord must not make any deductions from the security bond with respect to the condition of the Premise
4.4 Nothing in this Deed affects or limits the Tenant's obligations under the Lease for the period up to and including the date that the Tenant surrenders the Lease, including but not limited to the payment of rent, outgoings and any other monies under the Lease. (sic)
(a) the applicant was 'required to return the premises in original condition, free of damage, fair wear and tear excepted, and to remove all stock and rubbish';
(b) the applicant failed to vacate the premises on the surrender date, and instead returned the keys on 28 November 2023 but stored goods at the premises and directed its clients to access stock at the premises thereafter;
- 'Harassment and disruption: On 25 May 2024, a representative of the applicant namely Mr Xiao Lu attended the respondent's office without appointment, entered restricted areas, refused to leave, and harassed Aultun's staff. This caused significant distress and additional costs for security and staff support'.[2]
(d) The respondent sold the property and settlement of the sale took place on 8 August 2025. 'Due to the applicant's breaches and continued occupation well beyond the agreed surrender date, the respondent incurred additional holding costs, suffered a reduction in sale price, and was forced to absorb extra expenses to clean and remediate the property before settlement'.[3]
(e) The respondent sought to set off its claims against its liability to pay the balance under the deed, thus extinguishing that liability.
(a) Mr Zhenhua Yang's statement, on oath, that the applicant was 'required to return the premises in original condition, free of damage, fair wear and tear excepted, and to remove all stock and rubbish' is plainly wrong and inconsistent with the clear words of the deed. As the respondent was proposing to demolish the premises and redevelop the property when the surrender was negotiated with the applicant, it is perfectly understandable why the respondent would release the applicant from its 'make good' obligations under the lease. To then swear in his affidavit that the applicant had those obligations does great harm to Mr Zhenhua Yang's credit.
(b) Mr Zhenhua Yang's argument that the words in clause 4.2 of the deed that the 'Premises will be returned in the condition as is' meant that when the applicant surrendered the premises, they had to be in precisely the condition they were in on 5 October 2022 is an artificial argument which is illogical and unsustainable. The commercial and appropriate construction of clause 4.2 is that the premises word to be surrendered but not made good.
(c) Mr Zhenhua Yang's assertion that the applicant had stored goods on the premises after surrendering them is, in simple terms, most artificial. I am satisfied on the evidence given by the witnesses in cross examination, that Mr Zhenhua Yang is actually referring to some 'display' tiles which the applicant had been exhibiting in the premises when it was running its business from them, which the applicant stacked neatly but left in an area of the property on the basis that they would be thrown away with the demolition materials when the respondent demolished the premises. There was not a large collection of such tiles, and referring to this as the 'storage' of goods is an exaggeration. Additionally, whilst the old display tiles had no benefit to the applicant, Mr Xiao Lu was somewhat reluctant to waste them by throwing them away. A customer of the applicant contacted him and asked if they could have them. Mr Xiao Lu asked Mr Zhenhua Yang if he could have the keys for a little while so that he could let the customer into the property to collect the tiles. Mr Zhenhua Yang agreed. Mr Xiao Lu frankly conceded that he could no longer precisely remember whether he obtained the keys from Mr Zhenhua Yang, or whether the customer obtained them directly. In any event, this was an informal arrangement for which the applicant is not to be criticised. It certainly does not amount to the applicant having remained in possession of the property after the surrender date.
(d) The respondent's attempt to seek compensation for the alleged harassment of another company, Aultun, is legally unsound - there being no legal basis for a claim for damages for harassment of the kind alleged, let alone harassment of a corporation, and further let alone harassment of a corporation which is not the respondent - and the making of that claim also greatly diminishes Mr Zhenhua Yang's credit. I note in this respect that Mr Zhenhua Yang gave evidence that he was formerly a real estate agent. I am satisfied that as such he would have sufficient understanding of the law to know that this claim was nonsensical.
[1] The Deed was prepared by a well-known law firm. The presence of spelling errors in the document suggests that it is an early draft, which the parties then altered in hand and executed rather than instructing the law firm to re-engross the document with the agreed amendments.
[3] The respondent did not give discovery of any documents relating to reduction in sale price, or extra expenses to clean and remediate the property.
Stone World Australia Pty Ltd
1240 Nepean Hwy Pty Ltd