Background

We recently wrote about the decision of MIR Holdings Pty Ltd & Anor v Marina Square Retail Pty Ltd [2020] NSWSC 1418, where the Court considered:

1. the application of the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW) (Regulation); and
2. the principles relevant to the grant of relief against forfeiture.

The facts and decision at first instance are discussed in our article titled ‘COVID-19 Leasing Regulations: No Protection for Pre-Pandemic Defaults’.

In the recent decision of MIR Holdings Pty Ltd v Marina Square Retail Pty Ltd [2020] NSWCA 286, the applicants sought leave to appeal the primary judge’s decision not to grant relief against forfeiture. The application was refused with no order as to costs.

Leave to Appeal

The applicants filed a Summons seeking leave to appeal and draft notice of appeal (Notice) seeking:

(a) a declaration on an interlocutory basis that the landlord’s re-entry and re-possession of the leased premises was unlawful under the Regulation; and

(b) an order that the landlord’s Notice of Re-entry and Termination dated 1 October 2020 (Termination) be set aside.

The remaining orders in the Notice were not pursued at hearing.

Decision

The Court’s decision turned on the applicants’ failure to join the new lessees as parties to the proceedings, a matter that had been raised at first instance.

After the applicants’ leases were terminated, new lessees took possession of the premises. Rein J and Stevenson J, who heard the initial and renewed applications for relief, both considered that the adverse impact on third party rights was sufficient reason not to grant relief against forfeiture. They each advised that the new lessees should be joined to the proceedings due to the potential effects to their rights and interests.

On application for leave to appeal, the Court reiterated the need to join the new lessees. The Court described the applicants’ failure to join the new lessees as both “unfortunate” [at 43] and “surprising” [at 48].

It held, in respect of order (a) and (b) respectively, that:

1. the declaratory relief would not have bound the new lessees and, in any event, such relief would have been problematic as “[i]t follows from the very nature of declaratory relief that it is final relief, and that there can be no such thing as an interlocutory declaration” (International General Electric Co of New York Ltd v Commissioner of Customs and Excise [1962] Ch 784 at 789 and D Wright, Remedies (1st ed, Federation Press, 2010) at 283); and
2. to set aside the Termination would result in concurrent leases, or alternatively “the new lessees would potentially become trespassers on the premises” at [41].

The Court upheld the well-known authority that:

“Where the orders sought establish or recognise a proprietary or security interest in land, chattels or a monetary fund, all persons who have or claim an interest in the subject matter are necessary parties. This is because an order in favor of the claimant will, to a corresponding extent, be detrimental to all others who have or claim an interest.” – News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at 524–525.