LESSEE FILES FOR URGENT APPLICATION TO SEEK RELIEF FROM FORFEITURE OF LEASE DUE TO THE LATE PAYMENT OF LEASE BY REASON OF THE PANDEMIC
The Heat Group Pty Ltd v Paragon Care Limited [2021] VSC 204 (27 April 2021)
This is an urgent application by the plaintiff seeking relief from the forfeiture of the lease. The plaintiff was behind the payment of rent and outgoing which promoted the defendant to re-enter the premises and forfeit the lease.
Facts:
The plaintiff, tenant of the premises at 11 Dalmore Drive, Scoresby Victoria 3179 (the premises), made an application to the Practice Court for urgent relief against forfeiture of the lease.
The plaintiff was behind in payment of rent and outgoings. Like many businesses, COVID-19 interruptions to the supply chain had a disruptive effect on the business. A request for rent relief and a payment plan on this basis had been refused. The defendant then served a Notice demanding payment of $113,510.04, being outstanding rent for the months of February and March which fell due at the start of each month. The Notice expired on 8 April.
On 13 April the plaintiff had made a payment of $40,000. On 14 April the defendant responded indicating that because of non-compliance with the Notice was re-entering the premises and intended to do so on 15 April. The plaintiff paid the balance owing pursuant to the Notice on 14 April and advised the defendant that if the defendant still intended to re-enter the premises on 15 April it would make application to the Court.
The defendant submitted that the plaintiff had been persistently in breach of its obligations under the lease since its commencement and that the Court ought not be satisfied that the plaintiff can meet its future obligations so that relief should be refused.
Issue: Should the relief be granted?
Law:
Analysis:
The plaintiff’s business was considered an essential service and so was able to continue trading through the 2020 lockdowns in Victoria but it was nevertheless sufficiently affected that it qualified for JobKeeper between March and September of that year. The plaintiff’s business, despite being disrupted has otherwise demonstrated an ability generally to meet its obligations under the lease, although not always in a timely fashion. An application for rent relief in the context of the COVID effects on the business is not necessarily demonstrative of a company in sufficient financial difficulty such that relief ought be refused.
Conclusion: The court is not satisfied that the past non-payments have been persistent or that the ability to meet future obligations is so precarious that it should refuse the relief sought.
