Global Sources Australia Pty Ltd v REN Australia Management Pty Ltd [2018] NSWSC 975

Supreme Court New South Wales

Medium Neutral Citation: Global Sources Australia Pty Ltd v REN Australia Management Pty Ltd [2018] NSWSC 975 Hearing dates: 20 June 2018 Date of orders: 27 June 2018 Decision date: 27 June 2018 Jurisdiction: Equity Before: Darke J Decision: Order made for specific performance of obligation to grant new lease. Catchwords: LEASES AND TENANCIES – leases – option to renew lease – alleged breach of lease by lessee –prescribed notice under s 133E of Conveyancing Act not served – lessee seeks specific performance of obligation to grant new lease – lessor complains of continuing breaches by lessee – discretion to grant or withhold specific performance – specific performance granted Legislation Cited: Conveyancing Act 1919 (NSW), ss 129, 133E Environmental Planning and Assessment Act 1979 (NSW), s 4.2 Cases Cited: Sydney West Area Health Service v Staracek (2008) 73 NSWLR 68; [2008] NSWSC 744 Kyrollos 4M Pty Ltd v Bassal [2018] NSWSC 833 Category: Principal judgment Parties: Global Sources Australia Pty Ltd (Plaintiff) REN Australia Management Pty Ltd (Defendant) Representation: Counsel: Mr G George (Plaintiff) Mr C Stomo (Defendant)

Solicitors: Wood Marshall Williams (Plaintiff) Lou Baker & Associates (Defendant) File Number(s): 2018/102866 Publication restriction: None

Judgment

Introduction 1. These proceedings concern a lease of certain premises in McEvoy Street, Alexandria. The property is owned by the defendant. In December 2015 the defendant ("REN") granted a lease to the plaintiff ("Global") for a two year term commencing on 20 January 2016 and terminating on 20 January 2018. The lease contains four options to renew, each for a further term of two years. 2. A dispute arose between the parties concerning the validity of the exercise by Global of the first option to renew. Global exercised the option on about 21 July 2017. There is no dispute that this was done in accordance with the requirements of the lease. REN claimed, however, that Global was not entitled to the grant of a new lease because it had committed breaches of the lease. REN initially asserted only that the rent was often not paid on time. Later, REN asserted that Global was in breach of cl 16 of the lease, essentially because it used the premises for retailing which is not an approved use or lawful purpose. 3. The lease provides in cll 7.1 and 7.4 that the entitlement to the grant of a new lease is conditional upon Global punctually paying all of the rent and complying with all the terms and conditions of the lease. Those are provisions of the kind referred to in s 133E(1)(b) of the Conveyancing Act 1919 (NSW). Nevertheless, REN did not serve any prescribed notice pursuant to s 133E of the Conveyancing Act. Accordingly, breaches of those provisions do not preclude the entitlement of Global to the grant of the new lease (see s 133E(2)). 4. In these circumstances, REN accepts that Global has not, by reason of any breaches, lost its right to the grant of the new lease. However, REN maintains that breaches of the lease by Global, in particular breaches of cll 16 and 30 arising from the manner in which Global uses the premises, should result in the withholding of orders for specific performance of the contractual obligation of REN to grant the new lease (see Sydney West Area Health Service v Staracek (2008) 73 NSWLR 68; [2008] NSWSC 744 at [21]; Kyrollos 4M Pty Ltd v Bassal [2018] NSWSC 833 at [35]-[36]). A suggestion that Global has impermissibly assigned the lease or sub-let the premises was ultimately not pressed. 5. The parties were also in dispute on the question whether REN was obliged to provide its consent to the making of a development application by Global for approval of retailing at the premises. On 23 May 2018 Global's solicitors sought to obtain REN's consent to the lodgement of a development application "in respect of the permissible use" under the applicable zoning. On 24 May 2018 REN's solicitors stated that their client would not consent to the lodging of a development application. Nevertheless, REN now accepts that it is obliged to provide its consent to the making of a development application by Global to obtain any approval necessary for the carrying on of its business. That issue thus fell away. 6. That being so, the issue left for determination is whether orders for specific performance of the contractual obligation of REN to grant a new lease should be made, or whether specific performance should be withheld on discretionary grounds due to breaches of the lease by Global.