Retail Lease Termination: Can an Equitable Set-off for Water Ingress Damages Invalidate a Landlord’s Forfeiture and Support an Interlocutory Injunction for Reinstatement?

Introduction
Based on the authentic Australian judicial case STG Dental Pty Ltd v Mannerside Holdings Pty Ltd [2025] VCAT 842, this article disassembles the Court’s judgment process regarding evidence and law. It transforms complex judicial reasoning into clear, understandable key point analyses, helping readers identify the core of the dispute, understand the judgment logic, make more rational litigation choices, and providing case resources for practical research to readers of all backgrounds.

Chapter 1: Case Overview and Core Disputes

Basic Information:

Court of Hearing: Victorian Civil and Administrative Tribunal, Civil Division, Building and Property List
Presiding Judge: Deputy President E Riegler
Cause of Action: Interlocutory injunction to restore possession of leased premises after purported forfeiture.
Judgment Date: 22 September 2025
Core Keywords:
Keyword 1: Authentic Judgment Case
Keyword 2: Retail Lease
Keyword 3: Equitable Set-off
Keyword 4: Interlocutory Injunction
Keyword 5: Lease Forfeiture
Keyword 6: Water Ingress

Background:

This case involved a dispute between a landlord (the Respondent) and a tenant (the Applicant) concerning a retail lease. The Applicant, operating a dental surgery, alleged significant water ingress issues at the leased premises, leading to restricted use and claimed substantial loss and damage. The Respondent, in turn, issued a notice of default for outstanding rent and outgoings, then re-entered and forfeited the lease. The Applicant subsequently sought an interlocutory injunction from the Tribunal to regain occupation of the premises.

Core Disputes and Claims:

The central legal focus of the dispute was whether the Respondent’s forfeiture of the lease was valid, given the Applicant’s claim for an equitable set-off against rent arrears. The core questions for determination were:
* Whether there was a serious question to be tried regarding the Applicant’s entitlement to an equitable set-off against claimed rent and outgoings in arrears.
* The impact of a “no deductions” clause in the lease on the Applicant’s rights under Section 52 and Section 94 of the Retail Leases Act 2003 (Vic) (“the RLA”).
* Whether an equitable set-off could prevent an order for possession where the lease had already been lawfully terminated.
* Whether the balance of convenience favoured the granting of an interlocutory injunction to reinstate the Applicant’s occupation.
The Applicant sought an interlocutory injunction compelling the Respondent to allow reoccupation of the premises pending the final determination of the substantive issues. The Respondent contended that the lease was lawfully terminated prior to the injunction application and that the set-off claim was insufficient to prevent forfeiture.

Chapter 2: Origin of the Case

The relationship between the Landlord and the Tenant commenced with the execution of a retail lease on 25 July 2025, for premises located in Lower Plenty, Victoria. The Tenant established and operated a dental surgery practice from these premises, investing in specialised equipment and building a client base. However, from April 2023 to June 2025, the business operations were significantly hampered by persistent water ingress issues affecting the premises. This critical structural defect rendered parts of the dental surgery unusable, causing disruption and financial losses for the Tenant. While the roof of the premises was eventually replaced around May 2025, addressing the water ingress, the period of disruption left a lingering dispute over financial obligations. The Landlord subsequently issued a Notice of Default on or about 4 August 2025, alleging substantial arrears in rent and outgoings. This notice served as the definitive “decisive moment” that propelled the matter into litigation, escalating what had been a commercial dispute over property maintenance into a legal battle over leasehold rights and financial liabilities. On 22 August 2025, acting upon the alleged default, the Landlord re-entered the premises and purported to forfeit the Lease, effectively locking the Tenant out of its business. On the same day, the Tenant filed an urgent application with the Tribunal seeking an interlocutory injunction to restore its occupation.

Chapter 3: Key Evidence and Core Disputes

Applicant’s Main Evidence and Arguments:

The Applicant presented detailed evidence and arguments to substantiate its claim for an equitable set-off against the alleged rent and outgoings arrears:
* Expert Reports: Several expert reports were filed detailing significant defects in the roof cladding and roofing plumbing systems of the premises. These reports served as a primary source of evidence demonstrating the structural issues that caused the water ingress.
* Affidavit Material: Affidavits from the Applicant’s director outlined the extent of the water ingress, its impact on the dental surgery’s operations, and the resultant loss and damage incurred. This included evidence of restricted use of consulting rooms, damage to dental equipment, and other expenditures by the Tenant to mitigate the issues. The Applicant argued that these losses far exceeded the amount of rent and outgoings claimed to be in arrears.
* Legal Argument on Set-off: The Applicant contended that, despite a “no deductions” clause in the lease, it was entitled to an equitable set-off, citing the Tribunal’s decision in AMTB Pty Ltd v Chan (Building and Property) [2025] VCAT 236. This argument suggested that such a clause could not impeach a tenant’s rights under Section 52 of the RLA, thereby allowing the set-off of loss and damage against rent and outgoings.

Respondent’s Main Evidence and Arguments:

The Respondent countered the Applicant’s claims with arguments focused on the validity of the forfeiture and the inapplicability of the equitable set-off:
* “No Deductions” Clause: The Respondent relied on the “no deductions” clause in the lease, arguing that it contractually prevented the Tenant from setting off any alleged losses against rent and outgoings.
* Pre-existing Defects: The Respondent challenged the lack of evidence regarding the condition of the premises prior to the lease, making it difficult to ascertain if the roof defects were pre-existing and thus not covered by Section 52 of the RLA.
* Partial Abatement: The Respondent argued that even if a set-off were permissible, the water ingress only affected a part of the premises, meaning a total abatement of rent and outgoings was not justified, especially since the dental surgery continued to operate. Affidavit material filed by the Landlord supported the view that only a part of the Premises were unable to be used because of water ingress.
* Timeliness of Injunction Application: Citing Qian Long Zan Pty Ltd v Ka Yan Butt No 2 (Building and Property) [2025] VCAT 546, the Respondent argued that since re-entry and forfeiture had already occurred before the injunction application was filed, it was too late for the Tenant to seek to impugn the Landlord’s right to possession.

Core Dispute Points:

1. Validity of Equitable Set-off: Whether the “no deductions” clause in the lease could override the Tenant’s potential right to an equitable set-off for damages under the RLA.
2. Quantum of Arrears: Whether the Applicant’s claimed losses from water ingress fully extinguished the rent and outgoings arrears, or if some amount remained unpaid, justifying the forfeiture.
3. Effect of Pre-emptive Forfeiture: Whether the Landlord’s re-entry and forfeiture of the lease before the injunction application was filed rendered the application futile, as the proprietary rights had already ended.
4. Balance of Convenience: Which party would suffer greater irreparable harm if the interlocutory injunction was granted or refused.

Chapter 4: Statements in Affidavits

Both parties presented their versions of the facts through affidavit material, each constructing a narrative designed to support their legal position. The Applicant’s affidavits, particularly from its director, focused on detailing the timeline and impact of the water ingress, the restricted use of the premises for a dental surgery, and the specific financial losses incurred, including costs related to damaged equipment and efforts to remediate. These statements aimed to demonstrate a substantial claim for damages, which the Applicant argued should be set-off against any rent arrears. For instance, specific paragraphs in the Applicant’s affidavits delineated how individual consulting rooms became unusable due to leaks, directly linking this to a quantifiable reduction in business capacity and expenditure.

The Respondent’s affidavits, including that of Wassam Tossoun, presented a different account, often emphasising that the Tenant continued to operate its business, implying that the impact was not as severe as claimed. These affidavits selectively highlighted aspects of the premises’ usage to suggest that only a portion was affected, thereby questioning the justification for a complete non-payment of rent and outgoings. The Respondent’s strategic intent in these affidavits was to challenge the quantum of the Applicant’s damages claim and to assert that a significant portion of rent remained undeniably in arrears, thereby validating the Landlord’s right to re-entry and forfeiture. The Judge’s procedural directions regarding the affidavits implicitly sought to clarify these contrasting factual assertions, directing the parties to present specific details that could delineate the precise extent of the alleged defects and their financial consequences, laying the groundwork for assessing the veracity and weight of each party’s claims.

Chapter 5: Court Orders

Prior to the final hearing of the substantive issues, the Court issued orders to maintain the status quo and manage the interlocutory application for an injunction. These orders included an undertaking by the Applicant to abide by any order the Tribunal might make regarding damages if the injunction was later found to have been improperly granted. A critical order was that the Respondent must reinstate the Applicant’s occupation of the premises located at 109 Main Road, Lower Plenty, Vic, 3093. This order, however, was made conditional upon the Applicant filing a separate application for relief against forfeiture within seven days of receiving the Tribunal’s orders. For clarity, the Tribunal explicitly stated that the reinstatement order would not come into effect unless the application for relief against forfeiture was duly made. Furthermore, the injunction was explicitly not to restrain the Respondent from otherwise exercising its rights under the lease, save for matters related to the specific Notice of Default dated 4 August 2025. Costs for this aspect of the proceeding were reserved, pending further determination and considering the specific cost provisions of the RLA.

Chapter 6: Hearing Scene: Ultimate Showdown of Evidence and Logic

The interlocutory injunction hearing represented the ultimate confrontation of evidence and legal arguments, albeit on an interim basis. The process involved meticulous examination of the affidavit material from both sides, complemented by submissions from counsel. The core of the confrontation centred on whether the Tenant’s alleged losses due to water ingress were sufficient to establish a serious question for trial regarding an equitable set-off, thereby invalidating the Landlord’s forfeiture.

The Applicant’s counsel, Mr A Donald, meticulously guided the Tribunal through various parts of the Tenant’s affidavit material. He highlighted specific details of water damage to dental equipment and other expenditures, arguing that these constituted liquidated or ascertainable losses that far exceeded the rent and outgoings in arrears. He submitted that this quantum of loss, coupled with the restricted use of the premises, justified an equitable set-off, which should override the “no deductions” clause in the lease, citing precedents such as AMTB Pty Ltd v Chan.

Conversely, Mr B Parker, counsel for the Respondent, vigorously challenged these assertions. He argued that the “no deductions” clause contractually precluded any set-off. More fundamentally, he contended that the Landlord’s re-entry and forfeiture occurred before the injunction application was filed, effectively terminating the lease. He relied on the principle established in Qian Long Zan Pty Ltd, asserting that “the ship has sailed” once re-entry has lawfully occurred. He also questioned the extent of the impact of the water ingress, submitting that the Tenant’s continued operation of the dental surgery, even with some affected rooms, did not justify a complete non-payment of rent. He argued that any overstatement in the default notice did not necessarily invalidate it if a significant unremedied amount remained outstanding.

The Tribunal’s reasoning focused on the interplay between the alleged equitable set-off and the timing of the lease forfeiture. The Court held that even if the Applicant had a right to abate some rent due to restricted use, and even if a claim for loss and damage could potentially be set off, at the precise moment of forfeiture, no formal claim for loss and damage was actively on foot. This meant that some rent and outgoings were undeniably in arrears, crystallising the Landlord’s right to re-enter.

The Deputy President articulated this critical point with precision:

“Although the Tenant may have had a right to abate some rent and outgoings by reason of its restricted use of the Premises, it is not submitted that during the relevant period, the Premises could not be wholly used. Therefore, some rent and outgoings would have been payable during that period. Moreover, at the moment when the Lease was forfeited, there was no claim for loss and damage on foot. Therefore, at that point, the Landlord’s right to re-enter the Premises and forfeit the Lease had crystallised because some of the rent and outgoings detailed in the Default Notice were undeniably in arrears.”

This statement was determinative in establishing that, at the time of forfeiture, the Landlord acted within its legal rights. However, the Tribunal also recognised the potential for the Applicant to succeed in an application for relief against forfeiture, particularly given the nature of the claimed damages, which included liquidated amounts for equipment repair. The cross-examination revealed that while the exact quantum of the set-off was disputed, the existence of the water ingress and resultant costs was not entirely speculative, creating a serious question for trial in the context of an application for relief against forfeiture.

Chapter 7: Final Judgment of the Court

The Tribunal’s final judgment granted the interlocutory injunction, but importantly, it was made conditional. The Court ordered:

1. Upon the undertaking by the Applicant to abide by any order the Tribunal may make as to damages, if the Tribunal subsequently finds the injunction was improperly granted, the Respondent must reinstate the Applicant’s occupation of the premises located at 109 Main Road, Lower Plenty, Vic, 3093.
2. Order 1 is subject to the Applicant making an application for relief against forfeiture within seven days of receiving these orders.
3. For the avoidance of doubt, Order 1 does not come into effect unless the Applicant makes an application for relief against forfeiture within seven days of receiving these orders.
4. Order 1 does not restrain the Respondent from otherwise exercising its rights under the lease, other than for matters which are the subject of the Notice of Default dated 4 August 2025.
5. Costs reserved.

The Tribunal, therefore, conditionally restored the Tenant’s possession, providing a window for the Tenant to pursue a more appropriate remedy—relief against forfeiture—which directly addresses the consequences of a terminated lease.

Chapter 8: In-depth Analysis of the Judgment: How Law and Evidence Lay the Foundation for Victory

Special Analysis:

This case holds significant jurisprudential value, particularly in its nuanced application of interlocutory injunctions following a lease forfeiture and its interaction with equitable set-off claims under retail tenancy legislation. The unusual aspect is the Tribunal’s decision to grant an injunction after re-entry had already occurred, albeit conditionally. This demonstrates a pragmatic approach to preventing irreversible commercial harm to the Tenant while directing the parties towards the correct substantive legal pathway—relief against forfeiture. It highlights the Tribunal’s role in balancing competing interests and preserving potential rights, even when procedural missteps have occurred. The case underscores that the timing of legal action, while crucial, might not be an absolute bar if the balance of convenience and the potential for a more direct equitable remedy (relief against forfeiture) strongly weigh in favour of interim relief.

Judgment Points:

The Tribunal made several noteworthy points:
* Set-off of Unliquidated Damages: The Tribunal acknowledged that while previous authorities (such as Delaveris) often refer to liquidated losses for set-off, it did not definitively rule out the potential for unliquidated damages to be raised, especially at an interlocutory stage where the full quantum is yet to be proven. The inclusion of equipment repair costs, deemed as liquidated losses, also bolstered the Applicant’s position.
* Default Notice Validity: The principle that an overstated amount in a default notice does not necessarily invalidate it if some unremedied amount remains unpaid was accepted by the Tribunal. However, this was counterbalanced by the overall magnitude of the Tenant’s alleged losses.
* Risk of Injustice: The Tribunal explicitly based its decision on a lower risk of injustice by granting the injunction, given the significant prejudice to the Applicant’s established dental practice. This reflects a key discretionary factor in injunctive relief.

Legal Basis:

The Judge referred to several specific statutory provisions and legal principles when resolving evidentiary contradictions and determining the interlocutory injunction:
* Section 52 of the Retail Leases Act 2003 (Vic): This section relates to a landlord’s obligations regarding the condition of the premises and repairs, which was central to the Tenant’s claim for loss and damage.
* Section 94 of the Retail Leases Act 2003 (Vic): This section generally voids provisions in a retail lease that seek to exclude the application of the Act’s provisions. The Applicant argued that the “no deductions” clause was void to the extent it impinged on rights derived from the RLA.
* Section 57 of the Retail Leases Act 2003 (Vic): This section allows for a proportionate abatement of rent if the tenant’s use of the premises is substantially hindered by a landlord’s default.
* Section 21A of the Retail Leases Act 2003 (Vic): While not directly cited in the excerpt, the reference to special circumstances for costs indicates an awareness of the general cost principles within the RLA.
* Equitable Set-off: The common law doctrine allowing a party to set off a claim for damages against a claim for arrears of rent, subject to the contractual terms of the lease and statutory overlay.
* Interlocutory Injunction Principles: The two-limb test requiring a serious question to be tried and a balance of convenience favouring the grant of an injunction.

Evidence Chain:

The evidence chain supporting the Applicant’s successful conditional injunction was multifaceted:
1. Existence of Water Ingress: Expert reports detailing roof defects provided objective evidence of the structural problems.
2. Impact on Business Operations: Affidavit material from the Applicant’s director, detailing restricted use of consulting rooms and specific damage to equipment, directly linked the structural defects to commercial prejudice.
3. Quantified Loss and Damage: The affidavits presented specific figures for losses, some of which were argued to be liquidated (e.g., equipment repair costs), providing a tangible basis for the set-off claim.
4. Jurisprudential Support for Set-off: Reference to Chan and the interpretation of corresponding provisions in Delaveris provided a legal framework for arguing that a “no deductions” clause might not entirely bar an equitable set-off under retail lease legislation.
5. Risk of Irreparable Harm: Evidence of an established dental practice, patient bookings, and significant investment in specialist equipment underscored the irreparable harm the Applicant would face if denied interim relief.

Judicial Original Quotation:

The core of the Tribunal’s balancing act is captured in this passage:

“Therefore, when weighing the interests of both parties, I am of the view that there would be a lower risk of injustice by granting the injunction, subject to certain conditions. Specifically, the injunction should be made conditional upon the Tenant filing an application for relief against forfeiture.”

This statement was determinative as it clearly articulated the Tribunal’s rationale for granting the injunction: to minimise injustice by temporarily restoring the Applicant’s business, provided the Applicant promptly pursued the appropriate substantive remedy (relief against forfeiture). This reflects a protective and pragmatic judicial approach in retail tenancy disputes.

Analysis of the Losing Party’s Failure:

The Respondent’s argument, primarily relying on the principle from Qian Long Zan Pty Ltd that re-entry prior to an injunction application is determinative (“that ship has sailed”), did not fully prevail in preventing the interim injunction. The failure lay not in the Landlord’s right to forfeit, which the Tribunal acknowledged as having crystallised due to undisputed arrears, but in underestimating the Tribunal’s willingness to grant interim protective measures where significant commercial injustice to the Tenant was evident, and where a more direct equitable remedy (relief against forfeiture) was available for the Tenant to pursue immediately. The Landlord’s arguments did not adequately address the balance of convenience, particularly the irreparable harm to the Tenant’s business, which ultimately outweighed the Landlord’s immediate right to possession in the context of an interlocutory application. The Landlord’s emphasis on the “no deductions” clause also faced challenge from the statutory overlay of the RLA, which limits such clauses.

Key to Victory:

The Applicant’s victory lay in two critical areas:
1. Demonstrating a Serious Question for Trial: Despite the Landlord’s successful forfeiture, the Applicant presented sufficient evidence to raise a serious question that it could succeed in an application for relief against forfeiture. This included evidence of liquidated damages (e.g., damaged equipment) that could potentially offset or significantly reduce the alleged arrears, and legal arguments regarding the RLA’s impact on “no deductions” clauses.
2. Overwhelming Balance of Convenience: The Applicant effectively demonstrated that denying the injunction would cause far greater and likely irreparable harm to its established dental practice than the prejudice the Landlord would suffer by temporarily reinstating the lease. The nature of the Applicant’s business, with its reliance on the physical premises and patient bookings, made damages an inadequate remedy. The undertaking provided by the Applicant also mitigated the Landlord’s risk.

Implications

1. Timeliness of Legal Action is Paramount: Do not delay. If you believe your landlord is wrongfully pursuing forfeiture, seek legal advice and apply for an injunction before they re-enter the premises to preserve your rights.
2. Equitable Remedies Can Offer a Lifeline: Even if a lease is forfeited, avenues like relief against forfeiture exist. These require prompt action and a compelling case, demonstrating your willingness to remedy the default.
3. Know Your Lease and Your Rights: Understand clauses like “no deductions” and how they interact with statutory protections under the Retail Leases Act. Not all contractual clauses are absolute; legislation can override them.
4. Document Everything Thoroughly: From property defects to financial losses, meticulous record-keeping is crucial. Detailed evidence is the bedrock of any successful claim for set-off or damages.
5. The Courts Prioritise Preventing Injustice: While legal procedures are strict, courts often weigh the potential for severe injustice. Demonstrating that an adverse decision would cause irreversible harm to your livelihood can be a powerful argument for interim relief.

Q&A Session

Q1: What is an equitable set-off, and how does it apply in a retail lease dispute?
A1: An equitable set-off is a legal principle that allows a tenant to reduce or extinguish a debt owed to a landlord (like rent arrears) by counter-claiming for damages or losses suffered due to the landlord’s breach of the lease. In a retail lease dispute, this could arise if, for example, a landlord fails to maintain the premises, causing the tenant to incur costs or lose business. The tenant might argue that these losses should be deducted from the rent they owe. However, the lease terms (e.g., a “no deductions” clause) and specific retail leases legislation (like the Retail Leases Act 2003 in Victoria) will significantly influence whether such a set-off is permissible. The key is typically to establish a close connection between the landlord’s breach and the tenant’s claim.

Q2: Can a “no deductions” clause in a lease prevent a tenant from claiming an equitable set-off?
A2: A “no deductions” clause aims to prevent a tenant from unilaterally withholding rent. While these clauses are generally enforceable, their effect can be limited by consumer or retail leases legislation. For instance, under the Retail Leases Act 2003 (Vic), certain provisions are designed to protect tenants, and a “no deductions” clause might be deemed void to the extent that it seeks to circumvent these statutory protections. The Tribunal in this case acknowledged that there was a serious question as to whether such a clause could impede a tenant’s statutory rights, especially concerning a landlord’s repair obligations under the Act. Therefore, while it presents a challenge, it is not always an absolute bar.

Q3: Is it possible to obtain an interlocutory injunction to regain possession if a landlord has already re-entered and forfeited a lease?
A3: Generally, it is more challenging to obtain an injunction to regain possession after a landlord has lawfully re-entered and forfeited a lease, as proprietary rights are considered to have ended. However, this case demonstrates that it is not impossible, especially if there are strong grounds for a subsequent application for “relief against forfeiture.” The Court may grant a conditional injunction to temporarily reinstate possession to prevent significant commercial injustice to the tenant, provided the tenant promptly pursues the relief against forfeiture. This allows time for the substantive issue of whether the forfeiture should be overturned to be properly heard. The balance of convenience, particularly the irreparable harm to the tenant’s business, is a critical factor in such decisions.

---

[Appendix: Reference for Comparable Case Judgments and Practical Guidelines]

1. Practical Positioning of This Case

Case Subtype: Commercial Lease – Retail Lease Forfeiture and Equitable Set-off Dispute
Judgment Nature Definition: Interlocutory Judgment

2. Self-examination of Core Statutory Elements

This case predominantly falls under Property, Construction and Planning Law and Civil Litigation and Dispute Resolution, with strong intersections with Commercial Law.

④ Commercial Law and Corporate Law

• Core Test (Contract Formation): Are the four essential elements present: Offer, Acceptance, Consideration, and Intention to create legal relations? (The lease itself constitutes a binding contract).
• Core Test (Section 18 of the Australian Consumer Law): Has the person, in trade or commerce, engaged in conduct that is misleading or deceptive or is likely to mislead or deceive? (While not the primary focus here, allegations of misrepresentation regarding the premises’ condition could potentially trigger this).
• Core Test (Unconscionable Conduct): Did one party take advantage of a special disadvantage of another (e.g., language barrier, illiteracy, urgent need) to such an extent that the transaction is against good conscience? (Not directly argued here but could be an ancillary argument in some extreme forfeiture scenarios).

⑤ Property, Construction and Planning Law

• Core Test (Retail Leases Act 2003 (Vic) – Landlord’s Obligations):
  • Section 52: Obligations to maintain the premises in good repair, including the structural elements (e.g., roof cladding, plumbing), subject to wear and tear. A breach of this section forms the basis for a tenant’s claim for damages.
  • Section 57: Allows for a proportionate abatement of rent where the tenant’s use of the premises is substantially hindered by the landlord’s breach.
  • Section 94: Any provision of a retail lease is void to the extent that it purports to exclude, restrict or modify the operation of any provision of this Act or a right or liability implied by this Act. This is highly relevant to the “no deductions” clause.
• Core Test (Lease Forfeiture): Was there a clear breach of a covenant in the lease (e.g., non-payment of rent)? Was a valid notice of default served? Was the grace period allowed to expire without remedy? Was there a lawful re-entry?
• Core Test (Relief Against Forfeiture): Is the tenant willing and able to remedy the breach (e.g., pay arrears)? Would forfeiture result in undue hardship to the tenant disproportionate to the breach? Are there any unconscionable aspects to the landlord’s conduct?

⑨ Civil Litigation and Dispute Resolution

• Core Test (Interlocutory Injunction):
  • Serious Question to be Tried: Is there a serious question that the Applicant’s substantive claim (e.g., for an equitable set-off, or relief against forfeiture) has a real prospect of success, and is not merely vexatious or frivolous?
  • Balance of Convenience: Which party would suffer greater irreparable harm if the injunction is granted versus refused? Could damages adequately compensate for any harm?
• Core Test (Equitable Set-off): Is there a claim for liquidated or unliquidated damages that is so closely related to the claim for rent that it would be unconscionable for the landlord to enforce the full rent without allowing for the deduction of the tenant’s counterclaim?
• Core Test (Limitation Period): Has the Limitation Period expired for any of the claims (e.g., contract, negligence)? (While not a central issue in this interlocutory application, it is always a fundamental consideration for any substantive claim).
• Core Test (Jurisdiction): Does the Court have Jurisdiction over the matter? (VCAT has specific jurisdiction over retail tenancy disputes).

3. Equitable Remedies and Alternative Claims

Given the facts, where statutory law regarding “no deductions” clauses and lease forfeiture interacts with common law principles, several equitable remedies are highly relevant:

• Promissory / Proprietary Estoppel:
  • Did the Landlord make a clear and unequivocal promise or representation (e.g., “we will fix the roof, don’t worry about the rent in the meantime”)?
  • Did the Tenant act in detrimental reliance on that promise (e.g., continuing to operate in a damaged premises, incurring repair costs, delaying seeking legal advice for set-off)?
  • Would it be unconscionable for the Landlord to resile from that promise now that the Tenant is in arrears and faces forfeiture?
  • Result Reference: Even without a formal written amendment to the lease, Equity may “estop” the Landlord from going back on their word, particularly if their conduct induced the Tenant’s detrimental reliance on a promise concerning rent payments or repairs. This could potentially form a defence against the full amount of arrears.
• Unjust Enrichment / Constructive Trust:
  • Has the Landlord received a benefit (e.g., Tenant’s continued payment of some rent despite significant defects, Tenant’s expenditure on repairs that benefited the Landlord’s property) at the Tenant’s expense?
  • Is it against conscience for the Landlord to retain that benefit without payment or acknowledgement, especially if the forfeiture means the Tenant loses its investments without compensation?
  • Result Reference: The Court may order the restitution of the benefit to the Tenant. In extreme cases, if the Tenant had made substantial improvements to the property, a Constructive Trust over the improved value of the premises might be considered, declaring the Tenant holds a beneficial interest.

4. Access Thresholds and Exceptional Circumstances

Regular Thresholds:

• Lease Covenants: Strict adherence to lease covenants, including payment of rent and outgoings, is a hard threshold.
• Notice of Default: A valid Notice of Default must be issued, providing a reasonable period for the tenant to remedy the breach (e.g., 14 days, depending on the lease terms and statutory requirements).
• Re-entry: Re-entry and forfeiture typically occur only after the notice period expires without the breach being remedied.

Exceptional Channels (Crucial):

• Relief Against Forfeiture (Section 146 of the Property Law Act 1958 (Vic) and inherent equitable jurisdiction):
  • Regular Threshold: The tenant must generally be willing and able to pay all rent arrears and compensate the landlord for any losses.
  • Exceptional Exemption: The Court can grant relief even if the tenant cannot immediately remedy the breach, especially if the forfeiture is disproportionate to the breach, if the tenant has a strong counterclaim, or if there are unconscionable aspects to the landlord’s actions. The Court considers the whole circumstances, including the value of the leasehold to the tenant, the nature of the breach, and any hardship.
  • Suggestion: Do not abandon a potential claim for relief against forfeiture simply because you do not meet the standard time or conditions or because you disputes the exact quantum of arrears. The Court’s equitable jurisdiction is broad and can weigh fairness and proportionality heavily. Carefully compare your circumstances against the exceptions, as they are often the key to successfully filing a case and obtaining reinstatement of your lease.

5. Guidelines for Judicial and Legal Citation

Citation Angle:
It is recommended to cite this case in legal submissions or debates involving interlocutory injunctions post-lease forfeiture, the interplay between “no deductions” clauses and the Retail Leases Act, and the application of equitable set-off in retail tenancy disputes.

Citation Method:
* As Positive Support: When your matter involves a retail tenant facing significant commercial hardship due to an alleged landlord breach, and you seek an urgent interim order to restore possession despite prior forfeiture, citing this authority can strengthen your argument, particularly regarding the balance of convenience and the Court’s willingness to grant conditional relief pending an application for relief against forfeiture.
* As a Distinguishing Reference: If the opposing party cites Qian Long Zan Pty Ltd v Ka Yan Butt No 2 to argue that forfeiture prior to an injunction application is an absolute bar, you should emphasize the Applicant’s strong underlying claim for damages/set-off, the irreparable harm to an operating business, and the immediate willingness to pursue relief against forfeiture, to argue that this precedent is not applicable in a similar absolute sense where a conditional remedy is appropriate.

Anonymisation Rule: Do not use the real names of the parties; strictly use professional procedural titles such as Applicant / Respondent or Appellant / Respondent.

---

Conclusion
This case powerfully illustrates the Tribunal’s protective role in retail tenancy disputes, balancing established legal procedures with the need to prevent commercial injustice. The conditional grant of an interlocutory injunction, even after lease forfeiture, underscores the importance of equitable considerations and the availability of relief against forfeiture as a vital mechanism for tenants. Everyone needs to understand the law and see the world through the lens of law. The in-depth analysis of this authentic judgment is intended to help everyone gradually establish a new legal mindset: True self-protection stems from the early understanding and mastery of legal rules.

Disclaimer
This article is based on the study and analysis of the public judgment of the Victorian Civil and Administrative Tribunal (STG Dental Pty Ltd v Mannerside Holdings Pty Ltd [2025] VCAT 842), aimed at promoting legal research and public understanding. The citation of relevant judgment content is limited to the scope of fair dealing for the purposes of legal research, comment, and information sharing.
The analysis, structural arrangement, and expression of views contained in this article are the original content of the author, and the copyright belongs to the author and this platform. This article does not constitute legal advice, nor should it be regarded as legal advice for any specific situation.

---

Original Case File:

👉 Can’t see the full document?
Click here to download the original judgment document.