Australia: Liquidation and assignment

This Victorian case involved a restaurant in Cowen on Phillip Island. The five year lease expired on 31 March 2017, but contained 3 five year options to renew.

On 7 August 2017, the lessee was placed into voluntary administration, and then a few weeks later, went into liquidation. Just before all that, one of the directors of the lessee incorporated a new company. That new company entered into negotiations with the liquidator to buy the business and become the tenant.

The liquidator of the lessee agreed to sell the business to that new company. The new company claimed that the landlord agreed to consent to the assignment of lease provided the arrears were paid. On that basis the new company paid the arrears, but soon after, the landlord made attempts to end the lease. The new lessee sought an injunction from the Tribunal to prevent the landlord from terminating the lease.

En Avant Pty Ltd v Baltars [2018] VCAT 367

Just after the liquidator was appointed, the landlord sought to ensure all arrears (approximately $10,000) would be paid. The new company was trading as a licensee of the old lessee. The landlord was aware that the new company wanted the lease to be assigned to it, and this would not be possible if the landlord terminated the lease for unpaid rent. The landlord demanded the new company pay the arrears. The new company responded stating that the Australian Motorcycle Grand Prix was on Phillip Island the next weekend (19-22 October 2017), and with the increased in trade it would be able to pay the arrears. The arrears were not paid, and in December 2017 the landlord sent the new lessee another breach notice for unpaid rent, locked the premises and demanded payment. The new lessee paid the arrears and was permitted to re-enter the premises.

The landlord then served a notice terminating the lease on the basis that it had expired and was only a month-to-month tenancy.

The new company argued that in September 2017, the landlord had represented to them that they would consent to the assignment provided the arrears were paid. This representation was alleged to have been made during a phone conversation.

The new company claimed that the payment of the arrears in December 2017 was in reliance on that representation. They claim they paid the arrears (which were owed by the old lessee, in liquidation) because they understood that the lease would not be terminated if they did. They also claimed that they completed the purchase of the business by paying the purchase price (approximately $50,000), took possession of the premises and operated the business and also made goodwill payment to other creditors of the former lessee (approximately $50,000), all in reliance of the landlord's representation.

The landlord claimed that the representation was only a promise to work with the new lessee if they paid the arrears and consider consenting to a assignment of the lease.

On the basis of the representation of consent to the assignment, the new company sought an injunction to prevent the landlord from terminating the lease. Although the lease had expired, if the landlord was prevented from terminating the lease, the tenant would be able to take advantage of section 28 of the Retail Leases Act.

Section 28 of the Retail Leases Act requires the landlord to give the tenant a reminder that the option exercise period is approaching. This reminder needs to be given between 6 and 12 months prior to the last day the tenant can exercise the option. If the landlord fails to give that reminder, the option exercise window is extended to the day 6 months after the landlord does give that reminder. If that extension is beyond the end of the lease, then the lease is extended until that date.

It seems that the landlord had not given the section 28 reminder. If they win the case, the new company would seek that extension, and with that extension, they would have time to exercise the option to renew and have the benefit of a new five year lease.

These are complicated issues and the parties disagree on the facts, especially regarding what was said in the phone call. Ultimately, the new company will need to prove:

  • that the landlord did make the representations over the phone in September 2017, and
  • that the payments made by the new company were in reliance of those representations;

But the Tribunal did not have to resolve those issues in this case. The Tribunal had to decide whether to grant an injunction preventing the landlord from terminating the lease until the matter could be properly heard. To obtain an injunction, the new company needed to prove three things:

  1. That it had an arguable case – or that there was a serious question to be tried;
  2. That the balance of convenience favoured the grant of the injunction; and
  3. That damages would not be an adequate remedy for the new lessee if the injunction was not granted but it later won the case.

The Tribunal divided the alleged representations into two: the first, that the landlord would not terminate the lease based on the lessee being in liquidation – which it was entitled to do; the second, that the landlord would consent to the assignment.

The Tribunal found that the evidence presented showed that it was arguable that the new company paid the arrears and purchase price for the business in reliance of the representations. As this was only an application for an injunction, the Tribunal did not have to make a final decision, but only find that the case was arguable. The Tribunal made this finding.

Balance of convenience – the Tribunal found it clear that if the injunction were not granted the new company's business would be destroyed. Whereas, if the injunction was granted, the landlord was not inconvenienced at all because the new company would just continue to pay the rent while the injunction was current. In those circumstance, granting the injunction was the least risky course of action.

Damages adequate remedy – the new company argued that if it were to be evicted, it may become insolvent, and that later winning a court case would be of no benefit. The landlord pointed to the history of late payments of rent, and also suggested that the new company may become insolvent anyway, and be unable to pay any damages. The Tribunal found that the balance of convenience favoured the new company, and granted the injunction.

The new company and its director had to undertake to abide by any order for damages resulting from the injunction and it was a condition of the injunction that the new company pay all rent and other money in full and on time.

The injunction was granted, and the landlord is prevented from terminating the lease until the substantive issues can be resolved by the Tribunal (and any appeals are finalised).

Presumably the landlord has now served its section 28 notice giving the lessee 6 months to exercise its option, and the clock is ticking. The liquidator is unlikely to exercise an option to renew. Will the substantive case be heard in time for the new company to exercise the option?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions