Sneakerboy Retail Pty Ltd trading as Sneakerboy v Georges Properties Pty Ltd (No 2) [2020] NSWSC 1141

Sneakerboy Retail Pty Ltd trading as Sneakerboy v Georges Properties Pty Ltd (No 2) [2020] NSWSC 1141

The Court held that, as a condition of relief against forfeiture, Sneakerboy is required to reinstate the bank guarantee in a staged manner reflecting both the pre-existing financial arrangements and a notional COVID-19 rent reduction. The rent reduction is to be calculated at 75% reduction (based on turnover loss) for April 2020 to April 2021, with rent split equally between waiver and deferral, and outgoings payable. The Court lacks jurisdiction to itself vary rent in the lease beyond conditions for relief, or to prescribe future rent adjustments; instead, the parties are directed to renegotiate rent and other terms in good faith pursuant to the COVID-19 Regulation.

Parties
Plaintiff: Sneakerboy Retail Pty Ltd trading as Sneakerboy; First Defendant: Georges Properties Pty Ltd; Second Defendant: Georges Investments Pty Ltd
Jurisdiction
Australia
Judgment Date
26 August 2020
Procedural Posture
Equity Relief Against Forfeiture Lease Dispute / Post Trial Judgment Orders and Directions Following Principal Judgment
Outcome
Orders to be made after further submissions - relief against forfeiture granted, with staged bank guarantee reinstatement and direction to renegotiate lease terms; parties to submit short minutes of order.
Legal Topics
Relief Against Forfeiture, Retail Leases, Bank Guarantees, COVID 19 Regulation, Rent Renegotiation
Equity Commercial Leasing Relief Against Forfeiture Retail Leases Bank Guarantees COVID 19 Regulation Rent Renegotiation

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Parties

Sneakerboy Retail Pty Ltd trading as Sneakerboy

Plaintiff

Georges Properties Pty Ltd

First Defendant

Georges Investments Pty Ltd

Second Defendant

Procedural Posture

Equity Relief Against Forfeiture Lease Dispute / Post Trial Judgment Orders and Directions Following Principal Judgment

Legal Issues

  1. 1 On what terms should relief against forfeiture be granted to Sneakerboy under the lease in light of the COVID-19 regime?
  2. 2 How should the bank guarantee be reinstated, and in what amount and schedule?
  3. 3 What orders, if any, should be made concerning rent renegotiation or variation of the lease under the COVID-19 regime?

Ratio Decidendi

The Court held that, as a condition of relief against forfeiture, Sneakerboy is required to reinstate the bank guarantee in a staged manner reflecting both the pre-existing financial arrangements and a notional COVID-19 rent reduction. The rent reduction is to be calculated at 75% reduction (based on turnover loss) for April 2020 to April 2021, with rent split equally between waiver and deferral, and outgoings payable. The Court lacks jurisdiction to itself vary rent in the lease beyond conditions for relief, or to prescribe future rent adjustments; instead, the parties are directed to renegotiate rent and other terms in good faith pursuant to the COVID-19 Regulation.

Court Disposition

Orders to be made after further submissions - relief against forfeiture granted, with staged bank guarantee reinstatement and direction to renegotiate lease terms; parties to submit short minutes of order.

Orders

  • Within seven days, the parties are to attempt good faith renegotiation of lease terms as required by the COVID-19 Regulation.
  • Sneakerboy to partially reinstate the bank guarantee (initial $65,000 by 4 September 2020 and further $67,602 upon repayment by Lessors), with full reinstatement ($253,668.90) by 31 March 2021.