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File Number(s): 2025/481644

Publication restriction: Nil

JUDGMENT

1. HIS HONOUR: I have already published two judgments in these proceedings: Valor and Pride Hospitality Group Pty Ltd v Ord Developments Pty Ltd [2026] NSWSC 862; Valor and Pride Hospitality Group Pty Ltd v Ord Developments Pty Ltd (No 2) [2026] NSWSC 990. A familiarity with those decisions is assumed for present purposes.

2. By notice of motion filed on 9 September 2026, Valor and Pride Hospitality Group Pty Ltd (the company) seeks a suite of orders, the burden of which is that I extend the date for compliance with a series of conditions I imposed as the price of my original order granting the company relief against forfeiture of its lease and an order that it be permitted to meet its outstanding obligations under the lease by the payment of arrears of rent and other monies due to the lessor by instalments: see, for example, Hellier Capital Pty Ltd v Richard Albarran [2009] NSWSC 403 at [8]-[11]. Unless I vary the orders that I made originally to make the orders that are now sought, and the company fails to pay what is due by 4.00pm on Friday 11 September 2026, the lessor will become entitled to forfeit the lease and re-enter the premises.

3. The application is opposed.

4. The company relies upon the affidavit of its director, Mark Smith, sworn 9 September 2026. That affidavit was read on this application without objection. Mr Smith, who is the second cross-defendant and the guarantor of the company’s obligations under the lease, maintains an argumentative view concerning my principal decision in general and certain aspects of my conclusions in particular. As such, references by Mr Smith to such matters are technically irrelevant and can be put aside. However, Mr Smith has also foreshadowed in his affidavit, and elsewhere, that he has filed a notice of intention to appeal against my decision. That is a perfectly proper course for him to take. I simply wish to observe that, upon my understanding of the orders he asks me to make, the varied money judgment he asks me to enter, and the default machinery that he offers as part of his instalment application, there is a significant risk that a failure by the company to meet his proposed instalment payment obligations will likely have the effect of rendering his proposed appeal nugatory.

5. I should also observe that, in circumstances where Mr Smith and the company press for equitable relief, Mr Smith’s persistent assertions that my decision is wrong, might appear at one level to be at odds with his obligation to do equity: Mr Smith is approbating the correctness of my decision for the purposes of the present application but reprobating the correctness of my decision for his appeal. Mr Smith has passionately asserted the correctness of his position in this litigation from day one. However, I wish to make it clear that I do not consider his continued insistence that he and the company have existing rights to challenge or contest what I have determined are the lessor’s legal entitlements in any way reduces or adversely affects my conclusion that he genuinely wishes to meet the company’s obligations to pay rent and other monies in accordance with the orders I have made or the varied orders he now asks me to make.

6. Both parties referred me to the helpful and uncontroversial summary of the principles that apply when determining whether the Court might grant relief against forfeiture in an appropriate case offered by Robb J in Sneakerboy Retail Pty Ltd trading as Sneakerboy v Georges Properties Pty Ltd [2020] NSWSC 996 at [75] as follows:

“For the purpose of the determination of the present case, the following propositions emerge from the above consideration of the applicable principles:

(1) Where a lease is terminated for non-payment of rent, the Court will generally grant relief against forfeiture.

(2) That is because the power in the landlord to terminate the lease by re-entry is generally regarded as being in substance a security for the rent.

(3) The power to relief against forfeiture will generally only be exercised on the condition that the tenant pay the outstanding rent and put the landlord in the position it would have been in if there had been no default in payment of the rent, including that the tenant pay the landlord’s costs of the application.

(4) The conditions to the grant of relief may include that the tenant reinstate a bank guarantee or other security to which the landlord is entitled under the lease.

(5) Although it is rare for the Court to decline relief against forfeiture where the tenant is able to meet the conditions for the grant of that relief, the remedy is discretionary and not as of right.

(6) The circumstances in which the Court may decline relief against forfeiture will depend upon the facts of each case, but they may include where the relief would be futile because the tenant is incapable of meeting rent payments in the future, so that a later termination by re-entry for failure to pay rent is probable.

(7) The Court will be disinclined to oblige a landlord to suffer the continuation of the lease to an insolvent tenant.

(8) However, the instances in which courts have declined to grant relief against forfeiture show that the courts have a strong predilection towards granting the relief. This has often occurred in cases of relatively extreme doubt about the capacity of the tenant to meet rent payments into the future, where there appears to be some real benefit to the tenant in relieving against forfeiture.

(9) It is relevant that the landlord has alternative security such as a bank guarantee that may be required to be renewed as a condition to the grant of relief.

(10) The courts can often be liberal in granting relief against forfeiture because, even though inconvenient to the landlord, the relief does not necessarily finally determine the issue, as the landlord will have a further right to terminate the lease by re-entry if there are later failures to pay rent. In that case, the courts may be less sympathetic to a further application for relief against forfeiture than was the case on the initial application.”

7. My original grant of relief against forfeiture took account of matters such as these. It was also based on the usual condition that the company paid the outstanding rent and other monies that were due under the lease and put the lessor in the position it would have been in if there had been no default in payment. In this case, I originally allowed some six weeks for that to be done. Despite efforts to raise money for that purpose, the company has so far been unable to do so.

8. Mr Smith’s current proposal is that he and the company should be permitted to vary the requirement that the lessor immediately be put in the position it would have been in, by staging by the payment of the monies that are due over a period of approximately 12 months. Mr Smith’s contention is that the payment of interest at an appropriate rate will ameliorate the fact that the lessor will not have immediate access to all that is owed and that it will in purely financial terms be in what amounts to the same position [sic] after 12 months.

9. Mr Smith has also offered to submit immediately to a judgment for the whole of the monies owed by the company and by him as its guarantor. For reasons to which it is unnecessary to refer, but which will be obvious, that is a significant advantage for the lessor that did not flow from my earlier orders.

10. The unstated proposition supporting this application is that any failure by Mr Smith or the company to comply with the proposed instalment payment conditions will put the lessor in the same position it would have been in if I refused the present application and the lessor terminated the lease and re‑entered after 4.00pm on 11 September 2026 as I had originally ordered. That proposition obviously fails to take account of the lessor’s preferred position that it wants possession as originally ordered and is presumably content to take whatever steps are available to it in the market to secure an alternative tenant if the company’s lease is terminated. The lessor has submitted that the company appears to be insolvent based upon the material in Mr Smith’s affidavit and that a failure to comply with the proposed instalment plan is an inevitability in either the short or longer term. That is no less than a formulation of the futility argument that both parties acknowledge I must take into account.

11. As trite as it is to say so, each case must turn on its own facts. One such significant circumstance is that the company is currently indebted to the Australian Taxation Office. The precise status of the company’s negotiations with the ATO seeking some relief with respect to its debt is uncertain.

12. Mr Smith maintains that the company is not insolvent and he has outlined a plan that would see the income from the hotel increased on the one hand and outgoings hopefully reduced on the other hand. It is obviously impossible to know if that will succeed. It is almost equally difficult to predict whether it will. The lessor quite reasonably emphasises that I should be slow to take any course that effectively obliges it to suffer the continuation of the lease to an insolvent tenant and that I should decline to do so.

13. I am of course required to do equity between the parties. The discretion I am required to exercise is at large: provided that I take account of all relevant matters, do not take irrelevant matters into account and do not mistake or misapprehend the facts, there is considerable scope available to me in the way that I deal with the present application.

14. I am particularly mindful that in granting relief against forfeiture I may take comfort from the fact that, even though inconvenient to the landlord, the relief does not necessarily finally determine the issue. The lessor in this case will have a further right to terminate the lease by re-entry if there are the slightest failures to comply with the proposed instalment proposal or to pay rent and other outgoings that fall due on a monthly basis. It would of course follow, were I to take such a course, that the company’s prospects of securing further relief against forfeiture would arguably be very significantly diminished.

15. Doing the best I can, I consider that the company and Mr Smith should be given an opportunity to retain the lease and the potentially valuable commercial enterprise that is conducted from the premises. It is also difficult not to be aware of the significant disruption to the several employees of the company that the termination of the lease would cause. Lest I be thought to have taken an irrelevant matter into account, I should make it clear that I have not formed my decision on the basis that any third parties might be affected in some way.

16. In the circumstances, I make the following orders and notations:

17. Pursuant to UCPR 1.12, abridge the time for service of the plaintiff’s notice of motion and the affidavits in support to 10.00am on 10 September 2026.

18. In lieu of judgment debts referred to in orders (13) and (14) made on 20 August 2026 in Valor and Pride Hospitality Group Pty Ltd v Ord Developments Pty Ltd (No 2) [2026] NSWSC 990, direct the entry of judgment in favour of Ord Developments Pty Ltd as against Valor and Pride Hospitality Group Pty Ltd and Mark Joseph Smith in the amount of $127,741.48 (“the judgment debt”).

19. Extend the stay in orders (2), (4) and (5) made on 20 August 2026, and grant Valor and Pride Hospitality Group Pty Ltd relief against forfeiture of the lease, upon the condition that Valor and Pride Hospitality Group Pty Ltd and/or Mark Joseph Smith makes payments to Ord Developments Pty Ltd in compliance with order (4) below.

20. Pursuant to s 107(1)(b) of the Civil Procedure Act 2005, order that the judgment debt may be paid to the defendant by instalments as follows:

(a) the sum of $39,360.42, being the security deposit held by the defendant pursuant to Item 13B of the Reference Schedule to the lease and clause 22.2 of the lease, be applied by the defendant in reduction of the judgment debt; (b) the balance of the judgment debt, together with interest accruing under s 101 of the Civil Procedure Act, by fortnightly instalments of $3,500.00, the first such instalment to be paid on or before Wednesday, 16 September 2026 and each subsequent instalment to be paid on or before every second Wednesday thereafter until the judgment debt is satisfied in full or further order of the Court.

5. Pursuant to UCPR 1.12 and 36.5(1) and in the exercise of the Court’s jurisdiction to vary the terms upon which relief against forfeiture has been granted, extend the time for compliance with the condition in order (13) made on 20 August 2026 to 15 September 2027 in accordance with the orders above.
6. Subject to compliance by the plaintiff and the second cross-defendant to the cross-claim with order (4) above, stay the operation of orders (2), (4) and (5) made on 20 August 2026 until the judgment debt is satisfied in full or further order of the Court.
7. Extend the stay of execution against occupants of the premises, other than the plaintiff, provided for in order (6) made on 20 August 2026 and presently expiring at 4.00 pm on 21 September 2026, in accordance with the orders above.

Default machinery

8. In the event that any payment required by order (4) is not made within 7 days after its due date:

(a) the stays granted above cease to have effect; (b) the instalment order made under order (4) is rescinded and the whole of the balance of the judgment debt then outstanding becomes immediately payable; and (c) the defendant has liberty to restore the proceedings to the list on 3 days’ written notice.

General

9. Order Valor and Pride Hospitality Group Pty Ltd to pay the costs of this application.
10. Grants liberty to the parties to apply on 3 days’ notice in writing.

Undertakings

11. The Court notes the following undertakings given by Mark Joseph Smith, director of Valor and Pride Hospitality Group Pty Ltd:

(a) to pay the accruing rent in accordance with the lease from 1 October 2026; (b) to keep the premises insured in accordance with the lessee’s obligations under the lease; (c) not to assign, sublet or in any way depart from the existing possession agreement without the defendant’s consent; (d) to maintain the liquor licence in good standing and notify the defendant within 5 business days of any applicant, complaint or disciplinary issues affecting it; (e) to pay the costs of this application; and (f) to sign and procure the licensee to sign all forms reasonably required to effect the variation of gaming machine entitlement leases attached to the liquor licence LIQH400120095.

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