A missed design deadline cost a hospitality operator two Melbourne CBD leases
A conditional lease collapsed after the tenant let a design deadline lapse, and the Federal Court upheld the landlord’s termination.
Justice Moshinsky ruled in Pheonix A Pty Ltd v Spring UT Pty Ltd ATF Spring Unit Trust [2026] FCA 728 that the landlord, Spring UT, part of the Pelligra Group, validly terminated two agreements for lease and related leases at a Melbourne CBD building on 21 February 2024, because the parties never agreed on the scope and design of the tenant’s plans and specifications.
The two corporate tenants, special purpose vehicles that Stephanie Doyle established to run hospitality venues, argued the parties had agreed the tenant’s plans by 11 October 2023, or alternatively by 15 November 2023 through an email exchange. The court rejected both contentions.
Justice Moshinsky found that Doyle’s 15 November email confirmed only that the tenant approved the landlord’s plans and specifications, not that the parties had settled both sets of plans. A later email that same day, which attached floor plans “for approval”, showed the tenant did not treat its own plans as approved.
Each agreement made the lease conditional on the parties agreeing the design within a set period after signing - 90 days for one agreement and 60 days for the other. A termination clause let either party walk away if the condition went unsatisfied. The court held that the parties never agreed on the scope and design of the tenant’s plans and specifications at any point up to 21 February 2024.
The tenant also ran estoppel and election arguments, claiming the landlord had treated the leases as unconditional. Justice Moshinsky rejected both, finding the tenant failed to establish the factual premise - a choice or common assumption that the condition was satisfied. He also dismissed allegations that the landlord breached a duty to cooperate or unreasonably withheld information, finding the landlord’s side stayed reasonably responsive and that the unresolved rooftop design on one level and an outstanding planning approval drove most of the delay.
On the landlord’s cross-claim, the court found the two tenant companies engaged in misleading or deceptive conduct under section 18 of the Australian Consumer Law. The companies represented that Doyle and a consultant, David Walls, would operate the venues, but did not disclose a condition on a liquor licence held by a related Doyle company that barred Walls from holding any interest in the licensee’s liquor business or entering the licensed premises. Justice Moshinsky held the landlord reasonably expected disclosure of any known impediment to obtaining a liquor licence, and that the non-disclosure was likely to mislead. The court did not decide whether the earlier venue had operated in breach of that condition, treating that allegation as unnecessary to resolve.
Despite that finding, the court declined to declare the agreements void from the outset. Because the landlord had already terminated validly, the conduct finding did not meet the statutory criteria for that relief, and such a declaration would serve no practical purpose. The court dismissed both the tenant’s application and the landlord’s cross-claim, and signalled that each unsuccessful side should pay the other’s costs.
The decision showed that conditional lease agreements turned on precise compliance with design conditions, and that a tenant who let a deadline lapse without seeking an extension risked losing the bargain.
