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[2026] NSWDC 85
General information, not legal advice.
District Court of NSW
2026-04-02
Cole DCJ
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Vicinity Custodian Pty Ltd atf Vicinity Galeries Trust ABN 26 170 108 182 v Svoronov [2026] NSWDC 85
Hearing dates: 26-28 May 2025, 2-3 March 2026
Date of orders: 2 April 2026
Decision date: 02 April 2026
Jurisdiction: Civil
Before: Cole DCJ
Decision: (1) The defendant is to pay to the plaintiffs the sum of $471,916.47.
Catchwords: LEASES AND TENANCIES — Retail leases — Assignment – extend to which assignor is bound by provisions of lease and other agreements – failure to pay rent and other charges under the lease and other agreements – make good costs after termination – allegations of disturbance under the Retail Leases Act 1994 (NSW) – whether Covid-19 rent relief claimed – eligibility to claim – tenant’s claim for ‘equitable set-off’
GUARANTEE AND INDEMNITY — Actions to enforce guarantee — claim that guarantee is unenforceable
LAND LAW — claim of fraud under the Real Property Act 1900 (NSW)
Legislation Cited: Civil Procedure Act 2005 (NSW), s 100
Conveyancing Act 1919 (NSW), ss 117, 118
Real Property Act 1900 (NSW), ss 51, 52, 55
Retail Leases Act 1994 (NSW), ss 34, 39, 41, 62B, 71A
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Anka (Civic Centre) Pty Ltd v Sahyoun [2014] NSWSC 17
Ankar Pty Ltd v National Westminster Finance (Aust) Ltd (1987) 162 CLR 549
Attorney General (NSW) v World Best Holdings Ltd [2005] NSWCA 261
Australian Securities and Investment Commission v Kobelt [2019] HCA 18
Bank of Queensland v Y & L Promising Pty Ltd [2022] QCA 217
Bank of Queensland v Y & L Promising Pty Ltd [2022] QCA 217
Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd [2008] HCA 10; 234 CLR 237
Measures v McFadyen (1910) 11 CLR 723
P & A Swift Investments (A Firm) v Combined English Stores Group p/c [1989] AC 632
Southport Memorial Club Inc v Returned and Services League of Australia (Queensland) Southport Sub-Branch Inc [2023] QCA 146
Category: Principal judgment
Parties: Vicinity Custodian Pty Ltd in its capacity as trustee of the Vicinity Galeries Trust ABN 26 170 108 182 (First Plaintiff)
Ipoh Property Pty Ltd in its capacity as trustee of the Galeries Property Trust ABN 86 577 818 528 (Second Plaintiff)
Alyssa Svoronos (Defendant)
Representation: Solicitors:
JKR Lawyers (Plaintiffs)
Green & Associates Solicitors (Defendant)
File Number(s): 2022/119925
Publication restriction: Nil
Vicinity Custodian Pty Ltd (‘Vicinity’), the first plaintiff, and Ipoh Property Pty Ltd (‘Ipoh Property’), the second plaintiff, each owned a one-half share of the property (‘the property’) which contains The Galeries Shopping Centre (‘the Centre’), as tenants in common, from 30 April 2018 to 1 July 2022.
Svorosumo Pty Ltd (‘Svorosumo’) took an assignment of a lease over Shop RG015 (‘the shop’) on 9 April 2018. Ms Alyssa Svoronos signed a guarantee of the performance of the obligations of Svorosumo under the lease, as the guarantor.
On 23 February 2021, the lessors re-entered the shop and took possession of it from Svorosumo.
Svorosumo went into liquidation on 28 May 2021.
In a statement of claim filed on 27 April 2022, the plaintiffs seek orders against Ms Svoronos, as the guarantor of Svorosumo’s obligations under the lease, for the payment of:
monies allegedly due, owing and payable under the lease, the guarantee and the assignment of lease, amounting to $326,060.16;
“Fitout Contribution Clawback costs” in the sum of $45,499.55 pursuant to clause 3.2 of the “Incentive Deed” (see [17], below);
damages for loss of rent in the sum of $210,181.75 pursuant to clause 20.3 of the lease; and
damages for make good costs in the sum of $704.00.
The total amount claimed is $582,445.46 plus interest and costs.
The defendant, in her Further Amended Defence, filed on 23 April 2025, denies that she is liable to pay any of the debts or damages the subject of the statement of claim.
The defendant, in her Further Amended Defence, “Relies upon s 42 of the Real Property Act 1900 (NSW) and says that the Guarantee was procured by equitable fraud, which defeats covenant’s attachment to the land upon transfer”.
The defendant further pleads, in paragraph 13 of her Further Amended Defence:
a. during the Lessee’s occupation of the Premises, the Original Landlord and/or the Plaintiffs:
i. Failed to control vermin in and around the Shopping Centre and the Premises from October 2017 to April 2018;
ii. Introduced four direct competitors of SvoroSumo and leased premises to them within the vicinity of the Premises, over the course of the period from June 2017 to February 2019, all of which were still trading at the Shopping Centre when SvoroSumo assumed occupation of the Premises;
iii. Arbitrarily removed SvoroSumo’s seating and space for its customers to eat its food, from May 2018;
iv. Allowed a-pop-up stores [sic] to trade directly in front of the Premises, blocking the view of, and foot traffic to, the Premises from November 2018;
v. Refused or otherwise failed to remedy the disturbance despite written request;
vi. By reason of subparagraphs i to v inclusive above, persistently breached s 34 of the Retail Leases Act 1994 (NSW) and the Lease and if valid, the Guarantee;
vii. It follows that the Plaintiffs were required to compensate the Lessee and yet despite demand, failed to do so (the compensation owed); and
viii. The compensation owed would have exceeded the quantum sought in the SOC.
In her cross-claim, filed on 27 December 2024, the defendant seeks the following:
A declaration that the requirement to enter into the Deed of Consent [to the assignment of the lease to Svorosumo] constituted unconscionable conduct within the meaning of s 62B of the Retail Leases Act 1994 (NSW) (‘the RLA’).
Alternatively, a declaration that the requirement to enter into clause 5 of the Deed of Consent constituted unconscionable conduct within the meaning of s 62B of the RLA.
Damages in the amount to be determined by the Court for losses suffered as a result of the unconscionable conduct.
Interest and costs.
The plaintiffs relied upon the evidence of Ms Madeline Downer, a Retail Manager employed by Vicinity, Ms Melanie Vale, a Centre Manager of the Centre employed by the plaintiffs, Ms Suzanne Naidu (nee Ryan), who was the Centre Manager of the Centre from October 2016 to January 2019, as well as being the Centre Manager for The Strand Arcade from May 2018 to January 2019 and Ms Anne Dale, an independent chartered accountant. Documentary evidence was also provided.
The defendant relied upon the evidence of Ms Svoronos, Mr Mark Dopson, the former General Manager of Svorosumo, Mr Hassan Ayache, the accountant for Svorosumo and Ms Svoronos, Ms Pamela Katsantonis, a solicitor employed by the defendant’s solicitors and Mr Malcolm Gunning, a licensed real estate agent and certified practising valuer.
In November 2015, the owners of the property were Ipoh Pty Ltd and Abrocoona Pty Ltd, in equal shares as tenants in common.
Ipoh Pty Ltd and Abrocoona Pty Ltd entered into a lease of the shop to Sumo Salad (Leasing) Pty Ltd with a commencement date of 3 November 2015 and a term of seven years, ending on 2 November 2022. The lease was registered.
Also on 3 November 2015, Ipoh Pty Ltd, Abrocoona Pty Ltd and Sumo Salad (Leasing) Pty Ltd entered into a Deed of Storage Licence, a Deed of Seating Licence and a Deed of Additional Seating Licence.
At some time in November or December 2015, Ipoh Pty Ltd, Abrocoona Pty Ltd and Sumo Salad (Leasing) Pty Ltd entered into an Incentive Deed (‘the Incentive Deed’) providing for Ipoh Pty Ltd and Abrocoona Pty Ltd to pay Sumo Salad (Leasing) a fitout contribution of $122,878.25 on stated terms and conditions.
Ipoh Pty Ltd transferred its half share in the property to Ipoh Property on 31 March 2016. On the same day, Abrocoona Pty Ltd transferred its half share in the property to Ipoh Property. Ipoh Property thus became the sole registered proprietor of the property.
On 3 August 2016, the lease of the shop to Sumo Salad (Leasing) Pty Ltd was registered on the title of the property.
On 5 June 2017, Ms Svoronos registered Svorosumo Pty Ltd. She was the sole director and shareholder of Svorosumo Pty Ltd and she was also the secretary.
Mr Mark Dopson, who was then Ms Svoronos’ fiancé, was the General Manager of Svorosumo.
On 9 June 2017, Svorosumo entered into a contract with Sumo Salad (Franchising) Pty Ltd. The contract conferred upon Svorosumo “the right to manage Sumo Salad’s Business at the Premises on the terms and conditions set out in this Agreement.” The “Premises” the subject of the contract were defined in Schedule 1 Item 1 to be “The premises occupied by the existing Sumo Salad corporate stores located at the MLC Centre, Darling Park, Galeries and Barangaroo, Sydney NSW”. The reference to “Galeries” is a reference to the shop.
On 13 June 2017, Sumo Salad (Leasing) Pty Ltd was placed into administration. By 29 June 2017, Sumo Salad (Leasing) Pty Ltd was in arrears under the lease in the amount of $19,884.52 including GST.
By application dated 7 August 2017, Ms Svoronos applied for an assignment of the lease of the shop to her, personally (see AS-2 p 114 to 121). The application said that the proposed trading name was to be “Sumo Salad”.
In her affidavit of 1 November 2024, Ms Svoronos said that she gave the application for an assignment of the lease to Ms Suzie Ryan on 7 August 2017. Ms Svoronos said that Ms Ryan was the Centre Manager of The Galeries from 1 July 2017 to January 2019. Ms Ryan’s name is now Ms Naidu, but I will refer to her as Ms Ryan. It was Ms Ryan’s evidence that she was the Centre Manager of the Centre from October 2016 to January 2019. From May 2018 to January 2019, Ms Ryan was the Centre Manager of both the Centre and The Strand.
Ms Svoronos exhibited to her affidavit, in AS-2, a copy of an email chain which includes an email from Ms Ryan to Ms Svoronos, copied to Mr Dopson, dated 5 September 2017, saying “We have an outstanding admin fee for the assignment of $1650 + GST” and giving the EFT details for the bank account to which the fee could be remitted. The subsequent emails in the chain provided do not evidence the payment of the “admin fee”.
On 19 September 2017, Sumo Salad (Leasing) Pty Ltd was placed into liquidation.
On 30 October 2017, Rentokil carried out a routine inspection of the shop and made recommendations for the management of vermin within the Centre.
On 29 November 2017, Ms Svoronos told Mr Ryan that she had engaged a pest control contractor for the shop.
On 9 April 2018, a Deed of Consent to Assignment of Lease and Fitout Contribution Deed (‘the Deed of Assignment’) was entered into by Ipoh Property, the liquidators of Sumo Salad (Leasing) Pty Ltd, Svorosumo Pty Ltd, Ms Svoronos and Sumo Group Australia Pty Ltd.
On 9 April 2018, a Transfer of Lease of the shop from Sumo Salad (Leasing) (in liquidation) to Svorosumo Pty Ltd was registered.
On 9 April 2018, a Variation of Lease of the shop between Ipoh Property and Svorosumo was also registered.
On 30 April 2018, Ipoh Property transferred one half of its interest in the property to Vicinity, so that they each became the owner of a one half share in the property as tenants in common.
On 17 May 2018, the Registrar issued two new folios for the property, each containing an undivided one half share in the property. The property was not physically subdivided. Ipoh Property was the owner of Folio 111/1014769A and Vicinity was the owner of Folio 111/1014769B.
On 29 May 2018, Svorosumo was given one month’s notice that the Additional Seating Licence has been terminated at the request of Mr Dopson.
In October 2018, a “pop-up” retailer took up occupation of a space near the shop. The “pop-up” retailer vacated the space on 31 May 2019.
On 21 June 2019, Svorosumo submitted an application for the refurbishment of the shop. The parties participated in a mediation on 3 December 2019. On 9 March 2020, Vicinity and Ipoh Property approved a version of the proposed refurbishment which complied with the Centre fitout guidelines.
On 19 March 2020, regulatory measures to deal with Covid-19 came into operation.
On about 19 March 2020, Svorosumo ceased trading from the shop until 15 June 2020.
On 29 January 2021, Svorosumo and Ms Svoronos were issued with a Notice of Breach of Covenant, as Svorosumo had fallen into arrears under the Lease. The arrears were not paid.
On 22 February 2021, Svorosumo was served, by letter to Ms Svoronos and Mr Dopson, with a Notice of Termination of Lease and Re-Entry of Premises.
Svorosumo and Ms Svoronos were requested to make good the shop by 8 March 2021. They did not do so.
On 23 April 2021, Svorosumo was placed into administration.
On 28 May 2021, Svorosumo was placed into liquidation.
In June 2021, the bank guarantee provided under the lease was drawn down and applied to a portion of the arrears owning.
On 25 September 2021, Ipoh Property and Vicinity entered into a new lease of the shop with a new tenant.
On 1 July 2022, Ipoh Property transferred its one half share in the property to Galeries TC Pty Ltd.
It is alleged in the statement of claim that, in breach of the lease, for the period up to and including 28 February 2021, the lessee, Svorosumo, failed to pay:
rent,
services,
“promotional levies”,
goods and services tax, and
the plaintiffs’ reasonable costs, charges and expenses in relation to the lessees defaults or breaches of the lease,
in the sum of $326,060.16, $210,181.75 of which is rental arrears.
The plaintiffs claim that Svorosumo became liable, under the Deed of Assignment and the Incentive Deed, to pay to the plaintiffs a portion of the fitout contribution made by the previous owner to the previous lessee. Svorosumo has gone into liquidation. The plaintiffs claim that Ms Svoronos, as Svorosumo’s guarantor, is now liable to them for the repayment of the portion of the fitout contribution which Svorosumo was liable to pay. The sum claimed is $45,499.55. The fitout contribution was $122,878.25. The length of the term of the lease remaining when the lessee took possession was 1669 days, and, when the lessee vacated the shop, the number of days of the term remaining was 618. The amount due is calculated, by the plaintiffs, to be (618 ÷ 1669) x $122,878.25 = $45,499.55.
The plaintiffs claim that Svorosumo did not make good the shop in accordance with the lease when it ended its tenancy, and the plaintiffs claim $704 in costs for making good the shop against Ms Svoronos, as guarantor.
The plaintiffs claim from Ms Svoronos, as guarantor, costs, charges and expenses in relation to Svorosumo’s alleged breaches of the lease, under the lease, or alternatively, under the Uniform Civil Procedure Rules 2005 (NSW).
The plaintiffs claim interest on all overdue amounts under the lease, or, alternatively, under s 100 of the Civil Procedure Act 2005 (NSW).
The plaintiffs relied on business records of the plaintiffs which record the payments due and owing by Svorosumo under the lease (Exhibits P 23 and P 24).
The plaintiffs argued that, upon the transfer of a one half interest in the property to Vicinity on 30 April 2018, Ipoh Property and Vicinity, as co-owners of the property, became jointly entitled to the benefit of the lease of the shop which was registered on the title of the property, which had been assigned to Svorosumo, and which still had four years and nearly seven months to run.
The plaintiffs relied upon ss 117 and 118 of the Conveyancing Act 1919 (NSW) which provide:
117 Rent and benefit of lessees’ covenants to run with reversion
(1) Rent reserved by a lease and the benefit of every covenant or provision therein contained having reference to the subject-matter thereof and on the lessee’s part to be observed or performed, and every condition of re-entry and other condition therein contained shall be annexed and incident to, and shall go with the reversionary estate in the land or in any part thereof immediately expectant on the term granted by the lease, notwithstanding severance of that reversionary estate, and shall be capable of being recovered, received, enforced, and taken advantage of by the person from time to time entitled, subject to the term, to the income of the whole or any part as the case may require of the land leased.
This subsection extends to a covenant to do some act relating to the land, notwithstanding that the subject-matter may not be in existence when the covenant is made.
(2) The benefit of every condition of re-entry or forfeiture for a breach of any covenant or condition contained in a lease shall be capable of being enforced and taken advantage of by the person from time to time entitled, subject to the term, to the income of the whole or any part, as the case may require, of the land leased, although that person became, by conveyance or otherwise, so entitled after the condition of re-entry or forfeiture had become enforceable.
(3) This section shall not render enforceable any condition of re-entry or other condition waived or released before the person became entitled as aforesaid.
(4) This section applies to—
(a) leases made after the commencement of this Act, and
(b) leases made before the commencement of this Act, but with respect only to rent accruing due after the commencement of this Act and to the benefit of a condition of re-entry or forfeiture for a breach committed after the commencement of this Act of any covenant, condition, or provision contained in the lease.
118 Obligation of lessors’ covenants to run with reversion
(1) The obligation of a covenant entered into by a lessor with reference to the subject-matter of the lease shall, if and as far as the lessor has power to bind the reversionary estate immediately expectant on the term granted by the lease, be annexed and incident to, and shall go with that reversionary estate, or the several parts thereof, notwithstanding severance of that reversionary estate, and may be taken advantage of and enforced by the person in whom the term is from time to time vested by conveyance, devolution in law, or otherwise, and if and as far as the lessor has power to bind the person from time to time entitled to that reversionary estate, the obligation aforesaid may be taken advantage of and enforced against any person so entitled.
(2) This section applies to—
(a) leases made after the commencement of this Act, and
(b) leases made before the commencement of this Act so far only as relates to breaches of covenant committed after the commencement of this Act.
51 Interest and rights of transferor pass to transferee
Upon the registration of any transfer, the estate or interest of the transferor as set forth in such instrument, with all rights, powers and privileges thereto belonging or appertaining, shall pass to the transferee, and such transferee shall thereupon become subject to and liable for all and every the same requirements and liabilities to which the transferee would have been subject and liable if named in such instrument originally as mortgagee, chargee or lessee of such land, estate, or interest.
52 Transfer of mortgage or lease transferee’s right to sue
(1) By virtue of every such transfer, the right to sue upon any mortgage or other instrument and to recover any debt, sum of money, annuity, or damages thereunder (notwithstanding the same may be deemed or held to constitute a chose in action), and all interest in any such debt, sum of money, annuity, or damages shall be transferred so as to vest the same at law as well as in equity in the transferee thereof.
(2) Nothing herein contained shall prevent a Court from giving effect to any trusts affecting the said debt, sum of money, annuity, or damages, in case the transferee shall hold the same as a trustee for any other person.
…as the guarantee given by the Defendant secured the performance of the obligations of the Lease as varied, the obligations owed under the guarantee run with the reversion and can be enforced by the Plaintiffs without express assignment. It is not in dispute that the guarantee given in this proceeding is one which touches and concerns the land.
(h) Were the second and third respondents liable on the Guarantees for the whole of the judgment against the Lessee?
[90] The liability of the guarantors is an issue raised in the Lessee’s Notice of Cross-Appeal. Since s 117 of the Conveyancing Act deals only with covenants, provisions and conditions in a lease to be observed or performed by a lessee, it cannot apply to a covenant in a guarantee given by a third party guaranteeing performance of the lessee’s obligation to pay rent. Hence the appellant relied on, and the Court of Appeal applied, a common law doctrine stated in 1583, after the precursor to s 117, the Grantees of Reversions Act 32 Hen VIII c 34, had been enacted in 1540.
[91] The Court of Appeal held that cl 2 of the Guarantees applied to the monies owing under cl 10.2(c) and (d) of the 1999 Deed (a total of $362,232 as at 28 March 2006). It held, reversing the trial judge, that there was no variation of the Lease which so altered the obligations of the second and third respondents without their consent as to discharge the Guarantees. It also held that their covenants touched and concerned the land, and were enforceable by the appellant as assignee of the reversion without express assignment. This last conclusion was challenged in the Notice of Cross-Appeal. The second and third respondents, however, took no other point: it was accepted that if that point failed, they were liable for the totality of the judgment against the Lessee.
[92] The Court of Appeal’s reasoning. The Court of Appeal held that where the covenant of a guarantor to guarantee payment of rent by a lessee touched and concerned the land, it ran with the land, and could be enforced by a transferee of the reversion. It followed its own decision to that effect in Ryde Joinery Pty Ltd v Zisti.
[93] Submissions of the second and third respondents. The second and third respondents put only two submissions.
[94] The first was that this Court should not follow the House of Lords decision in P & A Swift Investments (A Firm) v Combined English Stores Group plc67 but “prefer the reasoning underlying [Consolidated Trust Co Ltd v] Naylor that a surety’s covenant, being a collateral obligation not affecting land, does not run with demised land”.
[95] The second submission is that Swift’s case was distinguishable “as a case concerned only with ‘arrears of rent’, not a claim to loss of bargain damages arising … on a secondary legal obligation imposed by law … upon termination of a lease for breach”.
[96] Can a guarantor’s covenant run with demised land? It is to be noted that the second and third respondents did not attack Lord Oliver of Aylmerton’s statement in Swift’s case of the tests to determine whether a covenant runs with the land. They only attacked the conclusion reached by the House of Lords that those tests were satisfied by the obligation of the guarantor in that case. Those tests are satisfied in this case.
[97] As to the first test, the relevant covenant in cl 2, read with Recital B and cl 1(f) of the Guarantees, benefits only the reversioner for the time being. That is because the Guarantees are guarantees to the “Lessor”. The expression “Lessor” is defined as meaning the “First Lessor” while the First Lessor holds the freehold, and thereafter means whoever is the owner of the freehold. Hence after the “First Lessor” (ie the Lessor under the Lease) sold to the appellant, it lost all benefits under the Guarantees (save for rights accrued before the change of ownership). Thus the covenant benefits only the reversioner for the time being, and once separated from the reversion it ceased to be of benefit to the covenantee (save for accrued rights).
[98] As to the second test, the covenant affects the value of the reversioner’s land: where land is sold subject to a subsisting tenancy, a guarantee of the tenant’s rental obligations will commonly enhance the value of the land.
[99] As to the third test, by reason of Recital B and cl 1(f) of the Guarantees, the covenant is not expressed to be personal to a specific reversioner and by reason of cl 1(g) it is not expressed to be personal to a specific tenant.
[100] The fourth test is satisfied. The fact that the covenant is to pay a sum of money will not prevent it from touching and concerning the land, since the first three conditions are satisfied and the covenant is connected with something to be done in relation to the land, namely the payment of rent for its occupation.
[101] There is a more direct route to the conclusion that the Guarantees touch and concern the land:
A covenant by a surety that a tenant’s covenant which touches and concerns the land shall be performed and observed must itself be a covenant which touches and concerns the land.
With respect, that is correct. As McPherson JA has said: “If rent runs with the land, it is not a long step to say that a guarantee of that rent also does so.”
[102] Accordingly, contrary to the submissions of the second and third respondents, the covenants in the Guarantees cannot be regarded as collateral obligations not affecting land, and they run with the land.
Formulations of definitive tests are always dangerous, but it seems to me that, without claiming to expound an exhaustive guide, the following provides a satisfactory working test for whether, in any given case, a covenant touches and concerns the land: (1) the covenant benefits only the reversioner for time being, and if separated from the reversion ceases to be of benefit to the covenantee; (2) the covenant affects the nature, quality, mode of user or value of the land of the reversioner; (3) the covenant is not expressed to be personal (that is to say neither being given only to a specific reversioner nor in respect of the obligations only of a specific tenant); (4) the fact that a covenant is to pay a sum of money will not prevent it from touching and concerning the land so long as the three foregoing conditions are satisfied and the covenant is connected with something to be done on to or in relation to the land.
The plaintiffs argued that Svorosumo’s estate in the property was determined at the termination of its lease, on 22 February 2021 (see Real Property Act 1900 (NSW) s 55). The plaintiffs had claims against Svorosumo which are choses in action which arose prior to the commencement of these proceedings on 27 April 2022. The subsequent transfer of Ipoh Property’s interest to Galeries TC Pty Ltd does not affect the plaintiffs’ right to sue on a completed breach of lease, whether for debt or for damages.
In Measures v McFadyen (1910) 11 CLR 723 (‘Measures v Mc Fadyen’) it was held by Griffith CJ, O’Connor and Isaacs JJ that, properly construed, ss 51 and 52 of the Real Property Act 1900 (NSW) did not transfer the right to sue for damages on a completed breach of covenant to the new owner of the land. Griffiths CJ said, at [731]:
The question is whether the right to sue for damages for a breach of covenant, not being a continuing breach, which is complete before transfer passes by virtue of these provisions to the transferee. The term “transfer” in sec. 51 means the transference of estate resulting from registration, and the word “thereto” refers to the estate or interest transferred. The estate or interest transferred is one thing, and the personal right of action in respect of an antecedent completed breach of contract is another. In my opinion the words of this section are not sufficient to transfer the right to bring an action in respect of such a past breach.
The plaintiff, however, contends that the words “the right to sue upon any ... instrument and to recover any ... damages thereunder” in sec. 52 (1) are sufficient to transfer the right. The state of the law before the Act is shown by the case of Coward v. Gregory, and in my judgment these words are not sufficient to alter it. The purpose of the Act was to transfer the estate or interest of the transferor in the land with all the rights incidental to present and future possession, but I do not think that it was intended to transfer also mere choses in action in respect of past and completed breaches of covenant.
(see also Bank of Queensland v Y & L Promising Pty Ltd [2022] QCA 217 at [49] – [62] and Southport Memorial Club Inc v Returned and Services League of Australia (Queensland) Southport Sub-Branch Inc [2023] QCA 146 at [42] – [44])
The plaintiffs submitted that Ipoh Property’s right to sue did not pass to the purchaser of its interest in the property on 1 July 2022.
The defendant did not argue that the rent claimed had been paid, or that some different amount was owed.
The defendant argued that the plaintiffs do not have standing to bring these proceedings.
The defendant conceded that, having regard to the decision in Gumland, where a guarantee secures the performance of lease obligations and satisfies the test of “touching and concerning the land”, it is capable of running with the reversion and being enforced by an assignee without express assignment.
The defendant argued, in her written submissions:
In the present case, the guarantee was purportedly given in connection with the Assignee’s obligations under the Lease and Deed of Consent and is not expressed to be personal. It secures the payment of rent and performance of covenants under the Lease, thereby benefitting the reversioner for the time being and enhancing the value of the reversion. Applying the fourfold test set out by Lord Oliver in P & A Swift Investments v Combined English Stores Group p/c [1989] AC 632, and adopted in Gumland at [74], the guarantee clearly touches and concerns the land. Accordingly, where the freehold was transferred following execution of the Deed, the benefit of the guarantee passed to the purchaser of the reversion, who now holds standing to enforce it as the Lessor for the time being. It follows that proceedings may only properly be brought by the current reversioner(s).
The defendant argued that the guarantee is unenforceable because the lease was assigned to Svorosumo by no later than 29 August 2017.
As referred to above at [22], Svorosumo entered into an agreement, on 9 June 2017, with Sumosalad (Corporate Stores) Pty Ltd and Sumo Salad (Franchising) Pty Ltd, to manage the shop for Sumosalad Corporate Stores Pty Ltd. Sumo Salad (Leasing) Pty Ltd went into voluntary administration later in June 2017.
Ms Svoronos exhibited to her affidavit an “Assignment of Lease Application Form The Galeries” which was signed by her and dated 7 August 2017. In her affidavit, Ms Svoronos said that this application was submitted through the Sumo Salad (Leasing) Pty Ltd administrators. The application form identified the shop and said that the “Proposed Lessee” was “Alyssa Svoronos”. The proposed trading name was “Sumo Salad”. The sole applicant for the application is said to be “Alyssa Svoronos”. No mention is made of Svorosumo on any part of the application.
In her affidavit, Ms Svoronos refers to emails from Ms Ryan of 5 and 6 September 2017 and implies that she, Ms Svoronos, heard nothing further about the application for assignment of lease after 6 September 2017.
The email of 5 September 2017 says:
Subject: RE: Galeries – Assignment Application
Hi Alyssa
Just to update you, I am in the process of finalising everything.
We have an outstanding admin fee for the assignment of $1650 + GST.
Details can be done via EFT – can you send me the remittance once completed
[Bank details given]
Thanks,
Suzie Ryan
Centre Manager
The Galeries
On 6 September 2017, Mr Green, Ms Svoronos’ solicitor, emailed Ms Ryan seeking a copy of the lease the subject of his client’s assignment application “before this payment is made”. By return email on the same day, Ms Ryan provided Mr Green with a copy of the lease. There is no evidence that payment of the fee referred to by Ms Ryan on 5 September 2017 was ever made.
The Retail Leases Act 1994, in s 41, says:
41 Procedure for obtaining consent to assignment
The following procedure applies to the assignment of a retail shop lease that requires the consent of the lessor—
(a) A request for the lessor’s consent to an assignment of the lease must be made by the lessee in writing.
(b) The lessee must provide the lessor with such information as the lessor may reasonably require to be satisfied that the financial resources and retailing skills of the proposed assignee are not inferior to those of the lessee.
(c) The lessee must provide the proposed assignee with an updated lessor’s disclosure statement (comprising a copy of the lessor’s disclosure statement given to the lessee in respect of the lease together with details of any changes that have occurred in respect of the information contained in that disclosure statement since it was given to the lessee).
(d) For the purpose of enabling the lessee to provide the proposed assignee with the required updated lessor’s disclosure statement, the lessor must provide the lessee with an updated lessor’s disclosure statement within 14 days after being requested to do so by the lessee.
(e) If the lessor fails to provide the updated lessor’s disclosure statement, it is sufficient compliance with the requirement to provide the proposed assignee with an updated lessor’s disclosure statement if the lessee instead provides a lessor’s disclosure statement completed by the lessee to the best of the lessee’s knowledge (but with information as to current outgoings in place of information as to estimated outgoings).
(f) The lessor must deal expeditiously with a request for consent to assignment of the lease.
(g) The lessor has 28 days (the decision period) to decide whether to consent or to refuse consent to assignment. The decision period starts from when the request for consent was made by the lessee or from when the lessee has complied with the requirements of this section (whichever is later).
(h) The lessor is taken to have consented to assignment if the lessee has complied with this section and the lessor has not, within the decision period, given notice in writing to the lessee either consenting or withholding consent to assignment.
(i) The regulations may prescribe a period that is to replace the period of 28 days as the decision period in this section.
It was asserted in the defendants’ written submissions that, by on or about 6 September 2017, “all requirements for a deemed assignment under s 41 of the Retail Leases Act 1994 (NSW), were satisfied”. It was argued that consent to the assignment was either unreasonably withheld or deemed to have been given by, at the very latest, 28 days from 6 September 2017, which is 4 October 2017. It is asserted that Svorosumo had met the conditions required and Ipoh Property had failed to respond within the statutory time frame.
I reject the defendant’s argument. There is insufficient evidence to form the basis of a finding that all of the elements of s 41 of the Retail Leases Act 1994 were complied with. In addition, a plain reading of the application form shows that Ms Svoronos was the proposed assignee in the application. Svorosumo is not mentioned in the application or in the email correspondence provided with respect to it. There is no evidence that the financial information which was sought on behalf of the lessor was provided about Svorosumo, and no reason to think that it was. Some financial information was provided about Ms Svoronos. There is no evidence that any application for the assignment of the lease to Svorosumo was ever made by the existing lessee, as required under s 41, or by anyone else. Ms Svoronos says, in her affidavit at paragraph 41, that Ms Ryan said to her sometime between October 2017 to May 2018:
… We don’t care about your assignment. It was never registered. …
For the reasons set out in [86(1)], below, I do not believe that Ms Ryan said the things Ms Svoronos asserts in her affidavit in paragraphs 24, 28 and 41. In paragraph 8.d. of her affidavit, Ms Ryan denies saying the words attributed to her by Ms Svoronos in paragraph 41 of Ms Svoronos’ affidavit, and I believe Ms Ryan.
The lessor communicated in writing that further consideration was contingent on the payment of a fee, so it can be inferred that consent would not be given in the absence of payment (see s 39(2) of the Retail Leases Act 1**994). The requirement of s 41(h) had not, therefore been met.
Even if all of the requirements of s 41 of the Retail Leases Act 1994 had been met, the consequence would have been that the lessors would have been taken to have consented to the assignment of the lease to Ms Svoronos, not to Svorosumo.
The plaintiffs argued that, even if s 41 had operated to give Svorosumo consent to the assignment of the lease, that did not amount to the actual assignment of the lease, which could be accomplished only with the undertaking of the kind of process which occurred between Ipoh Property and Svorosumo on and around 9 April 2018, involving the documentation of the terms and conditions of the assignment. I agree.
The defendant’s argument that the lease was assigned to Svorosumo by operation of s 41 of the Retail Leases Act 1994 is rejected. There was no such deemed assignment or even consent to assignment.
The defendant argued that, by the time the Deed of Assignment was signed on 9 April 2018, Svorosumo had been trading from the shop for nearly ten months. This is a reference to the management contract Svorosumo entered into with Sumo Salad (Franchising) Pty Ltd and Svorosumo Pty Ltd on 9 June 2017 in relation to Sumo Salad shops in the MLC Centre, Darling Park, the Galeries and Barangaroo. However, I note that, under that agreement, Svorosumo managed the shop in exchange for a management fee. It did not have a legal relationship with the lessors of the shop. The management contract did not make Svorosumo the lessee (or even the sub-lessee) of the shop.
The defendant argued that the Deed of Assignment placed “new and onerous” obligations on Ms Svoronos personally, including an unconditional guarantee of SvoroSumo’s payment of rent and outgoings, and a broad indemnity extending to any loss suffered by the lessor. The defendant submitted that these “obligations were not foreshadowed in the lease, nor were they required by law or necessary to effect the assignment, which had already occurred by operation of s 41 of the Retail Leases Act.” The defendant argued:
The plaintiff’s insistence on such terms, after the assignment had taken effect and in circumstances where SvoroSumo was already in possession and actively trading, amounted to a form of fraud sufficient to defeat indefeasibility of the covenant under s 42(1)(d) of the Real Property Act 1900 (NSW). That is, the purported guarantee does not “touch and concern the land”, and thus does not run with the reversion.
The defendant’s argument is predicated upon the assertion that the lease had been assigned to Svorosumo by operation of s 41 of the Re**tail Leases Act 1994 prior to the execution of the Deed of Assignment. For the reasons set out above at [69] to [80], I reject that argument. There is no doubt that the guarantee touches and concerns the shop the subject of the lease.
There is no evidence to support the allegation of “equitable fraud”. The fraud exception in s 42(1) of the Real Property Act 1900 has no application to the guarantee.
According to the English cases, the principle applies so as to discharge the surety when conduct on the part of the creditor has the effect of altering the surety’s rights, unless the alteration is unsubstantial and not prejudicial to the surety. The rule does not permit the courts to inquire into the effect of the alteration. The consequence is that, to hold the surety to its bargain, the creditor must show that the nature of the alteration can be beneficial to the surety only or that by its nature it cannot in any circumstances increase the surety’s risk, eg, a reduction in the debtor’s debt or in the interest payable by the surety. The mere possibility of detriment is enough to bring about the discharge of the surety.
The foundation of the rule is that the creditor, by varying the principal contract or extending time, has altered the surety’s rights without consulting it though the surety has an interest in the principal contract, and that the creditor cannot be permitted to do: see Rees v Berrington (1795) 2 Ves Jun 540; 30 ER 765. Thus the liability of the surety was seen to be strictissimi juris and the suretyship contract was construed strictly in his favour.
In his concurring judgment in Ankar, Deane J expressed the principle in the following way, at p 654:
a relevant failure by the creditor to perform the terms of his contract with the surety will “discharge” the surety for the reason that the creditor’s failure to perform the terms of his contract would otherwise result in a situation where the surety was held liable in circumstances other than those in which he had agreed to be bound.
NO WARRANTIES
The Lessor does not make any representations or warranties to the Assignee in relation to:
(a) the level of turnover, the level of passing traffic and the layout of the Premises; or
(b) the level of occupancy and tenancy mix of the Centre.
The Assignee covenants with the Lessor that it will, from the Effective Date until the end of the term of the Lease, observe all of the terms and lessee’s covenants contained in the Lease as if it had originally been a party including but not limited to the obligation to pay rent and other money.
The Lessee agrees that:
(a) this Lease comprises the whole of the agreement between the parties with respect to the leasing of the Premises; and
(b) before executing this Lease, the Lessee has disclosed to the Lessor in the Lessee’s Disclosure Statement any promise, representation, warranty or undertaking (other than as is expressly contained in this Lease) that the Lessee has relied on in entering into this Lease or which has in any material way induced the Lessee to enter into this Lease.
The location of this store is unbeatable. You’ve got 17.5 million office workers passing through here every year, with most of them looking for a coffee and some breakfast to go, with no competitors for coffee or breakfast or healthy options, nobody else with seating areas, and as soon as they come up the escalator you’re literally in their face.
c. to the extent I did have a conversation with Ms Svoronos in June 2017, given the passage of time that has passed, I do not recall the precise words used in that conversation;
d. I am positive however that I did not say the words alleged in paragraphs 24 and 28 of the AS Affidavit or words to that effect. I am positive I did not say those words as:
i. these are not words I use;
ii. I would never make a pre-lease representation or a promise to a potential incoming retailer as this is not how I operate;
iii. I did not negotiate leases as all leasing deals were handled by the landlord’s leasing team subject to delegation and sign offs; and
iv. any conversations I had with retailers would be followed with emails to capture actions and outcomes.
4. DEED OF STORAGE LICENCE AND DEEDS OF SEATING LICENCE
(a) The Lessor and the Assignor agree and acknowledge that the Deed of Storage Licence is terminated on the day immediately prior to the Effective Date.
(b) The Assignor agrees and acknowledges that the Deeds of Seating Licence are terminated on the day immediately prior to the Effective Date, in accordance with clause 3(c)(ii) of the Deeds of Seating Licence.
(1) I note that Svorosumo did not become the lessee of the shop until 9 April 2018.
(2) Ms Svoronos’ evidence with respect to the presence of vermin in the Centre was all hearsay, based upon stories she said that she had been told by others. The time frame for the stories is uncertain. Ms Svoronos did not directly observe the presence of any pests in the Centre or the shop. It is plain from her evidence that both she and the lessor arranged pest control inspections from time to time and some pest control measures were taken. There is no evidence that the pest control measures in the Centre fell below the applicable standard.
(3) The evidence falls far short of establishing that anything relating to the lessor’s pest control measures affected the guarantor’s rights.
The defendant has not established that any of the matters pleaded affected the guarantor’s rights so as to cause the discharge of the guarantee. The guarantee remained in operation.
The defendant pleaded, in her defence, that matters one to five in [86] constituted breaches of s 34 of the Retail Leases Act 1994 and that the plaintiffs were required to compensate Svorosumo for those breaches.
The Retail Leases Act 1994 says, in s 34:
34 Lessee to be compensated for disturbance
(1) A retail shop lease is taken to provide that if the lessor—
(a) inhibits access of the lessee to the shop in any substantial manner, or
(b) takes any action that would inhibit or alter, to a substantial extent, the flow of customers to the shop, or
(c) unreasonably takes any action that causes significant disruption of, or has a significant adverse effect on, trading of the lessee in the shop, or
(d) fails to take all reasonable steps to prevent or put a stop to anything that causes significant disruption of, or which has a significant adverse effect on, trading of the lessee in the shop and that is attributable to causes within the lessor’s control, or
(e) fails to rectify any breakdown of plant or equipment under the lessor’s care or maintenance, or
(f) in the case of a shop within a retail shopping centre, fails to adequately clean, maintain or repair the retail shopping centre (including common areas),
and the lessor does not rectify the matter as soon as reasonably practicable after being requested in writing by the lessee to do so, the lessor is liable to pay the lessee reasonable compensation for any loss or damage (other than nominal damage) suffered by the lessee as a consequence.
(2) In determining whether a lessor has acted unreasonably for the purposes of subsection (1) (c), due consideration is to be given to whether the lessor has acted in accordance with recognised shopping centre management practices.
The defendant has failed to show that the plaintiffs, or either of them, breached s 34 of the Retail Leases Act 1994. The evidence about the five factors set out in the defence (see [86](1) above) falls well short of bringing any of them within s 34. The causal link between any of them and any drop in profit has not been established on the balance of probabilities. There is also no evidence that any request in writing was ever made by Svorosumo to the plaintiffs or either of them for the rectification of any disturbance. In these circumstances, no right to compensation arose.
The material provided by Mr Dopson as an exhibit to his affidavit does not amount to proof on the balance of probabilities of loss of revenue attributable to anything amounting to disturbance under s 34 of the Retail Leases Act 1994.
Mr Ayache, the accountant for Ms Svoronos, gave evidence. Mr Ayache is a public accountant registered with the Institute of Public Accountants. He has acted for Ms Svoronos for seven years. He also acted for Svorosumo. His evidence was based, in part, on Mr Dopson’s evidence.
A report of Mr Gunning, real estate agent and business valuer, was tendered. Mr Gunning died before the trial in this matter and was not cross-examined. Mr Gunning’s evidence was dependent upon his instructions. His evidence does not persuade me that anything done by the lessor constituted disturbance under s 34 of the Retail Leases Act 1994 or that Svorosumo occasioned any loss directly attributable to anything done by the lessor.
Ms Dale, an independent chartered accountant and business valuation specialist also gave evidence. Ms Dale says that Mr Ayache’s estimates of the value of the business conducted by Svorosumo at the Centre as at 30 June 2018 and February 2021 are unreliable “because Mr Ayache does not employ a generally accepted valuation methodology”. Mr Ayache conceded, in cross-examination, that he did not use a single valuation methodology, but used aspects of several different methods. Ms Dale set out her methodology in detail, in her report. Ms Dales approach is consistent with APES 215 and 225, and Mr Ayache’s approach is not. Ms Dale’s report is detailed, fact based and consistent with the relevant standards. Ms Dale is a qualified and experienced chartered accountant and business valuer. I prefer and believe her evidence in preference to Mr Ayache’s evidence and Mr Gunning’s evidence.
Ms Dale’s report includes a graph which illustrates monthly sales from March 2016 to January 2021. None of the events complained of by the defendant co-relates with a drop in sales.
Even if one of the matters set out in [86] had constituted disturbance, the defendant has failed to prove, on the balance of probabilities, that it caused a loss of sales.
62B Unconscionable conduct in retail shop lease transactions
(1) A lessor must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable.
(2) A lessee must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable.
(3) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessor has contravened subsection (1) in connection with a retail shop lease, the Tribunal may have regard to—
(a) the relative strengths of the bargaining positions of the lessor and the lessee, and
(b) whether, as a result of conduct engaged in by the lessor, the lessee was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the lessor, and
(c) whether the lessee was able to understand any documents relating to the lease, and
(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessee or a person acting on behalf of the lessee by the lessor or a person acting on behalf of the lessor in relation to the lease, and
(e) the amount for which, and the circumstances under which, the lessee could have acquired an identical or equivalent lease from a person other than the lessor, and
(f) the extent to which the lessor’s conduct towards the lessee was consistent with the lessor’s conduct in similar transactions between the lessor and other like lessees, and
(g) the requirements of any applicable industry code, and
(h) the requirements of any other industry code, if the lessee acted on the reasonable belief that the lessor would comply with that code, and
(i) the extent to which the lessor unreasonably failed to disclose to the lessee—
(i) any intended conduct of the lessor that might affect the interests of the lessee, and
(ii) any risks to the lessee arising from the lessor’s intended conduct (being risks that the lessor should have foreseen would not be apparent to the lessee), and
(j) the extent to which the lessor was willing to negotiate the terms and conditions of any lease with the lessee, and
(k) the extent to which the lessor and the lessee acted in good faith.
(4) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessee has contravened subsection (2) in connection with a retail shop lease, the Tribunal may have regard to—
(a) the relative strengths of the bargaining positions of the lessee and the lessor, and
(b) whether, as a result of conduct engaged in by the lessee, the lessor was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the lessee, and
(c) whether the lessor was able to understand any documents relating to the lease, and
(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessor or a person acting on behalf of the lessor by the lessee or a person acting on behalf of the lessee in relation to the lease, and
(e) the amount for which, and the circumstances under which, the lessor could have granted an identical or equivalent lease to a person other than the lessee, and
(f) the extent to which the lessee’s conduct towards the lessor was consistent with the lessee’s conduct in similar transactions between the lessee and other like lessors, and
(g) the requirements of any applicable industry code, and
(h) the requirements of any other industry code, if the lessor acted on the reasonable belief that the lessee would comply with that code, and
(i) the extent to which the lessee unreasonably failed to disclose to the lessor—
(i) any intended conduct of the lessee that might affect the interests of the lessor, and
(ii) any risks to the lessor arising from the lessee’s intended conduct (being risks that the lessee should have foreseen would not be apparent to the lessor), and
(j) the extent to which the lessee was willing to negotiate the terms and conditions of any lease with the lessor, and
(k) the extent to which the lessee and the lessor acted in good faith.
(5) A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with a retail shop lease by reason only that the first-mentioned person institutes legal proceedings in relation to that lease or refers to arbitration a dispute or claim in relation to that lease.
(6) A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with a retail shop lease by reason only that the first-mentioned person fails to renew the lease or issue a new lease.
(7) For the purpose of determining whether a lessor has contravened subsection (1) or whether a lessee has contravened subsection (2)—
(a) the Tribunal must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention, and
(b) the Tribunal may have regard to circumstances existing before the commencement of this section but not to conduct engaged in before that commencement.
(8) A lessor or lessee, or former lessor or lessee, who suffers loss or damage by reason of unconscionable conduct of another person that is in contravention of this section may recover the amount of the loss or damage by lodging a claim against the other person under section 71A.
(9) If the matter of such loss or damage arises in connection with a matter the subject of proceedings in the Tribunal, the Tribunal may proceed to decide it, and in so doing may award such sum as it thinks fit.
(10) In this section—
lessee or former lessee includes a person who is a guarantor or covenantor under a lease or former lease.
Ms Svoronos had no genuine commercial choice but to execute the Deed to preserve the continuity of her business and did so without legal representation or independent advice. In these circumstances, the imposition of the personal guarantee is unconscionable within the meaning of s 62B of the Retail Leases Act. It is a personal, collateral undertaking imposed after the lease had passed, and accordingly is not enforceable by the plaintiffs.
This is the only basis put forward for the allegation of unconscionable conduct.
To prove unconscionable conduct, the defendant must show that Ipoh Property engaged in conduct demonstrating a high level of moral obloquy when negotiating the Deed of Assignment (see Attorney General (NSW) v World Best Holdings Ltd [2005] NSWCA 261 per Spigelman CJ at [121]). The term implies an element of exploitation of someone who is in a weaker position (see Australian Securities and Investment Commission v Kobelt [2019] HCA 18 per Gageler J at [1] and [91]-[92]).
In executing the Deed, Ms Svoronos was not preserving the continuity of her business, as the defendant argued. She was facilitating the assignment of the lease from Sumo Salad (Leasing) Pty Ltd to Svorosumo. Instead of continuing to be the manager of the shop, and being paid a management fee under the management agreement, under the suite of documents which included the Deed of Assignment, Svorosumo became the lessee of the shop, acquiring property rights it did not formerly have.
Having regard to the matters set out in s 62B of the Retail Leases Act 1994, and bearing in mind that what constitutes unconscionable conduct under that section is not confined to the matters set out, there is simply no evidence that Ms Svoronos had “no genuine commercial choice but to execute the Deed”. It is argued, in the defendant’s written submissions, that the guarantee was entered into “after the lease had passed”. I take it, therefore, that this argument also is predicated upon the notion that an assignment had taken place under s 41 of the Retail Leases Act 1994, and I have rejected that notion. There is no evidence of any exploitation or moral obloquy on the part of Ipoh Property. There is no evidence that Ms Svoronos was in a vulnerable position. There is simply no basis, on the evidence, for an assertion that the lessor engaged in unconscionable conduct when the Deed of Assignment was executed, or at any other time.
The Retail Leases Act 1994 expressly gives powers to NCAT and does not expressly give power to the District Court. The plaintiffs referred to Anka (Civic Centre) Pty Ltd v Sahyoun [2014] NSWSC 17 at [86] – [87], where Beech-Jones J said:
86 … Section 62B of the RLA contains a general prohibition on the lessor engaging in unconscionable conduct in connection with a retail lease. Section 72AA, which is found within Division 3 of Part 8 of the RLA, confers on the NCAT a number of powers in respect of proceedings concerning a claim of unconscionable conduct in relation to a retail lease.
87 Aside from s 76(1), which is not presently relevant, there is nothing in the RLA which appears to evince an intention that the NCAT’s jurisdiction to deal with an alleged breach of s 62B(1) is exclusive of all other courts, including this Court. There may be a question as to whether this Court could exercise the power to grant relief under s 72AA, but there is no reason why this Court could not at least mould some form of injunctive relief if a breach of s 62B(1) was established.
Accordingly, this Court has the power to grant the relief sought in the cross-claim where a basis for the exercise of that power is established. However, no evidentiary basis has been established by Ms Svoronos for the allegation that the plaintiffs engaged in unconscionable conduct within the meaning of s 62B of the Retail Leases Act 1994 or in any other context.
The Retail Leases Act 1994 provides, in s 71A:
71A Lodging of unconscionable conduct claims with Tribunal
(1) A lessor or lessee, or former lessor or lessee, under a retail shop lease or former retail shop lease may lodge an unconscionable conduct claim with the Tribunal for determination of the claim.
(2) A claim may not be lodged more than 3 years after the alleged unconscionable conduct occurred.
(3) In this section—
lessor or lessee under a retail shop lease or former retail shop lease includes a person who is a guarantor or covenantor under a lease or former lease.
The defendant claims that the plaintiffs engaged in unconscionable conduct in relation to the execution by the defendant of the Deed of Assignment, which occurred on 9 April 2018. The cross-claim was filed on 27 December 2024, six years and eight months after the signing of the Deed of Assignment. The claim is time-barred under s 71A of the Retail Leases Act 1994.
The defendant has not established that it is entitled to the relief sought in its cross-claim. The cross-claim is also time barred to the extent that it relied on the provisions of the Retail Leases Act 1994. The cross-claim will be dismissed.
The defendant complained that Svorosumo was not given rent relief under the measures legislated during the Covid-19 pandemic.
There is no evidence that Svorosumo ever made a formal application for rent relief under the Covid-19 regulations. No evidence was provided to show that Svorosumo was an “impacted lessee” under the Retail and other Commercial Leases (COVID-19) Regulation 2020, the Retail and other Commercial Leases (COVID-19) Regulation (No 2) 2020 and the Retail and other Commercial Leases (COVID-19) Regulation (No 3) 2020. I bear in mind that Svorosumo was involved with sushi outlets elsewhere in New South Wales. These regulations have been repealed.
In her defence, Ms Svoronos claims to be entitled to an equitable set-off for rent relief which allegedly should have been given under the regulations referred to in [108], but that claim has not been made out on the evidence before me.
- GUARANTEE AND INDEMNITY
In consideration of the Lessor and Assignor at the request of the New Guarantor consenting to this assignment and entering into this Deed, the New Guarantor covenants and agrees with effect from the Effective Date as follows:
(a) to jointly and severally with the Assignee be liable to the Lessor for the due performance of all the terms, covenants and conditions on the part of the Assignee contained in the Lease and this Deed;
(b) to indemnify the Lessor against any loss resulting from:
(i) the Assignee’s failure to duly and punctually pay any and every sum payable by the Assignee under the Lease and this Deed or to duly perform and observe the terms thereof; or
(ii) the inability of the Lessor to enforce any terms, covenants and conditions to be performed by the Assignee under the Lease;
…
Ms Svoronos is named in the document as “the New Guarantor” and signed the document.
I reject the defendant’s arguments that Galeries TC Pty Ltd is required to be a party to these proceedings or that the assignment of some interest of Galeries TC Pty Ltd’s is required for these proceedings to be maintained. There is no basis in law for those arguments. Galeries TC Pty Ltd did not acquire its interest in the property until 1 July 2022, subsequent to the termination of Svorosumo’s lease on 22 February 2021 and Svorosumo’s liquidation on 28 May 2021. The breaches of covenant by Svorosumo which give rise to the debt were well and truly complete and in the past by the time Galeries TC Pty Ltd acquired its interest.
The lease was terminated under clause 20 of the lease. The plaintiffs relied on clause 20.3 of the lease, which says:
20.3 If this lease is terminated under this clause 20:
(a) the Lessee indemnifies the Lessor against any liability or loss arising and any cost incurred (whether before or after termination of this Lease) in connection with the Lessee’s breach of this Lease and the termination of this Lease including the Lessor’s loss of the benefit of the Lessee performing its obligation under this Lease from the date of that termination until the Terminating Date; and
(b) the Lessor must take reasonable steps to mitigate its loss.
The plaintiffs provided a document (Exhibit P 23) recording the amounts due to the lessor and unpaid by Svorosumo up to 1 February 2021.
The amount claimed for unpaid rent, services pursuant to clauses 6.12 and 6.13 of the lease, promotional levies pursuant to clause 7.2 of the lease, Goods and Services Tax pursuant to clause 8.7 and by force of statute and the plaintiffs’ reasonable costs, charges and expenses in relation to Svorosumo’s breach and default up to and including 28 February 2021 amounts to $326,060.16, when the use of the Bank Guarantee is included in the calculations. I find that the plaintiffs are entitled to recover this amount from the defendant as a debt.
Despite the Covid-19 pandemic, the plaintiffs were able to re-lease the shop on 25 September 2021 for a term of five years. In addition to rent due and owing at the termination of the lease, the plaintiffs claim damages for the period between the termination on 22 February 2021 and the beginning of the subsequent lease to the new tenant. The period in question is 213 days long. The rent at the time, under the lease, was $170,766.47 per annum. The plaintiffs claim damages calculated in the following way:
($170,766.47 ÷ 365 days) x 213 = $99,652.76
This liability is subject to the guarantee. The plaintiffs are entitled to an award of damages in this amount against the defendant, as guarantor.
3.2 Calculation of Repayment
If Svorosumo Pty Ltd ACN 619 539 758 fails to remain in lawful occupation of the Premises as lessee for the balance of the Term of the Lease commencing from the date on which the assignment of the Lease is effected for any reason whatsoever (including but not limited to an assignment of the Lease, surrender of the Lease or termination by the Lessor of the Lease as a result of a breach by Svorosumo Pty Ltd ACN 619 539 758), Svorosumo Pty Ltd ACN 619 539 758 will refund to the Lessor on demand a proportion of the Fit-out Contribution to be calculated as follows:
A/B x C = D
Where:
A = Number of days remaining in the Term
B = Number of days in the Term commencing from the date on which the assignment of the Lease from Sumo to Svorosumo Pty Ltd ACN 619 539 758 is effected
C = Amount of Fit-Out Contribution
D = The amount payable by Svorosumo Pty Ltd ACN 619 539 758 to the Lessor on demand; …
(618 days ÷1669 days) x $122,878.25 = $45,499.55.
This amount is owed under the Deed of Assignment and is subject to the guarantee. The plaintiffs are entitled to recover it from the defendant as a debt.
In addition, the plaintiffs claim the make-good costs of $704.00 for work required because of Svorosumo’s failure to make good the premises. This is subject to the guarantee. The plaintiffs are entitled to be awarded this amount by way of damages against the defendant.
The defendant did not join issue with the figures provided by the plaintiffs, and I accept the plaintiffs’ figures.
The following order will issue:
The defendant is to pay to the plaintiffs the sum of $471,916.47.
I will hear the parties with respect to the issues of interest under s 100 of the Civil Procedure Act 2005 and costs.
**********
Vicinity Custodian Pty Ltd atf Vicinity Galeries Trust ABN 26 170 108 182
Svoronov [2026] NSWDC 85
(1987) 162 CLR 549
(1910) 11 CLR 723