Citation: Vicinity Custodian Pty Ltd atf Vicinity Galeries Trust ABN 26 170 108 182 v Svoronov [2026] NSWDC 85
Court: District Court of New South Wales
Date: 2 April 2026
Judge: Cole DCJ
Background
The plaintiffs co-owned The Galeries Shopping Centre in Sydney. In April 2018, the tenant company (a special purpose vehicle incorporated by its sole director, who also served as its sole shareholder) took an assignment of a retail lease over a food premises in the centre. The sole director personally executed a guarantee of the tenant company's obligations under the lease at the time of that assignment.
The lessors re-entered the premises in February 2021 following the tenant company's failure to pay rent and other charges. The tenant company subsequently went into liquidation in May 2021. The plaintiffs then pursued the guarantor personally for unpaid rent, a fitout contribution clawback, loss of rent damages, and make-good costs, claiming a total of approximately $582,000.
The guarantor denied all liability. She raised defences based on alleged equitable fraud affecting the registered title, alleged breaches by the landlord of the quiet enjoyment provisions in the Retail Leases Act 1994 (NSW) (section 34), a claimed entitlement to Covid-19 rent relief by way of equitable set-off, and a cross-claim alleging the landlord's conduct in requiring her to enter the Deed of Consent constituted unconscionable conduct under section 62B of the same Act.
Legal Issues
- Whether the guarantee was enforceable, or was instead defeated by equitable fraud affecting the land title under the Real Property Act 1900 (NSW)
- Whether the landlord had persistently breached section 34 of the Retail Leases Act 1994 (NSW) by failing to provide quiet enjoyment, through alleged vermin infestation, introduction of competing tenants, removal of seating, and obstruction by pop-up stores
- Whether the guarantor was entitled to claim Covid-19 rent relief by way of equitable set-off against the landlord's claim
- Whether the fitout contribution clawback and loss-of-rent damages were recoverable under the Deed of Assignment and the lease
- Whether the requirement to enter the Deed of Consent (including clause 5) constituted unconscionable conduct under section 62B of the Retail Leases Act 1994 (NSW)
Decision
The court rejected the fraud defence under the Real Property Act 1900 (NSW). Cole DCJ found that the guarantee was not rendered unenforceable by any equitable fraud in connection with the transfer of the property title. The registered title provisions did not operate to defeat the guarantee in the circumstances established by the evidence.
The section 34 disturbance claims were also rejected. The court found that the landlord had not persistently breached the quiet enjoyment covenant. On the vermin issue, the court accepted that routine pest management was conducted and that the tenant's own contractor was engaged. On the seating and pop-up store complaints, the court found the evidence did not establish actionable breaches of section 34, whether taken individually or cumulatively.
The Covid-19 rent relief set-off argument failed on eligibility grounds. The court found the tenant company did not qualify for the relief sought, and accordingly the equitable set-off claim based on that entitlement could not succeed. The unconscionable conduct cross-claim was also dismissed.
On the quantum of the plaintiffs' claims, the court accepted the plaintiffs' figures for unpaid rent and outgoings, loss of rent (calculated on a per-diem basis for the remaining unexpired term following re-entry), the fitout contribution clawback under the amended Incentive Deed formula, and make-good costs. All of these liabilities were found to be covered by the guarantee and recoverable from the guarantor. The total award was $471,916.47, which is less than the amount originally claimed, reflecting the court's assessment of the recoverable components.
Orders Made
- The defendant (guarantor) is to pay to the plaintiffs the sum of $471,916.47.
- The question of interest under section 100 of the Civil Procedure Act 2005 (NSW) and costs was reserved for further hearing.
Key Takeaways
- The District Court confirmed that a personal guarantor of a retail lease remains exposed to the full scope of guaranteed liabilities, including loss-of-rent damages and fitout contribution clawbacks, even where the primary tenant has entered liquidation.
- A defence that a guarantee was procured by equitable fraud and is therefore defeated by the indefeasibility provisions of the Real Property Act 1900 (NSW) requires more than assertion: the court found the evidence did not establish the necessary fraud to displace the registered title.
- Persistent breach of the quiet enjoyment obligation under section 34 of the Retail Leases Act 1994 (NSW) was not established by evidence of vermin complaints, the introduction of competing tenants, seating changes, or the placement of pop-up stores, at least on the facts presented here.
- Eligibility for Covid-19 rent relief under the relevant regulations is a threshold requirement: where a tenant does not qualify, an equitable set-off claim built on a notional entitlement to that relief cannot be sustained.
- Fitout contribution clawbacks calculated under a deed formula (expressed as a proportion of the remaining unexpired lease term) were treated as a recoverable debt subject to the guarantee, not merely a contractual penalty.
Legislation and Cases Referenced
Legislation:
- Retail Leases Act 1994 (NSW), ss 34, 39, 41, 62B, 71A
- Real Property Act 1900 (NSW), ss 51, 52, 55
- Conveyancing Act 1919 (NSW), ss 117, 118
- Civil Procedure Act 2005 (NSW), s 100
- Uniform Civil Procedure Rules 2005 (NSW)
- Retail and Other Commercial Tenancies (Covid-19) Regulations
Cases:
- Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd [2008] HCA 10; 234 CLR 237
- Ankar Pty Ltd v National Westminster Finance (Aust) Ltd (1987) 162 CLR 549
- Attorney General (NSW) v World Best Holdings Ltd [2005] NSWCA 261
- Australian Securities and Investment Commission v Kobelt [2019] HCA 18
- Bank of Queensland v Y & L Promising Pty Ltd [2022] QCA 217
- Southport Memorial Club Inc v Returned and Services League of Australia (Queensland) Southport Sub-Branch Inc [2023] QCA 146
- Anka (Civic Centre) Pty Ltd v Sahyoun [2014] NSWSC 17
- P & A Swift Investments (A Firm) v Combined English Stores Group plc [1989] AC 632
- Measures v McFadyen (1910) 11 CLR 723