Decision after council sought to terminate lease of St Kilda bar and restaurant operators

The longtime operators of a landmark St Kilda restaurant and bar that faced having their lease terminated by council landlords, have scored a VCAT reprieve.

A default notice was issued on The Vineyard late last year but the iconic venue has won a reprieve. Picture: Supplied

The operators of St Kilda’s landmark The Vineyard Restaurant and Bar have managed to hold on to their lease - at least for now - amid a legal stoush with their Port Phillip Council landlords.

The council had sought to terminate the lease of brothers Johnny and Alex Iodice on the Acland St property, alleging they had broken its terms by not redeveloping the property in an agreed time frame.

But VCAT this week ordered the council be restrained from “exercising its right of termination” after it issued a default notice on The Vineyard late last year.

The notice related to agreed development of the property at a cost of not less than $1m, within three years of their July 2011, 15-year lease renewal.

The Iodice brothers have run the Acland St Vineyard Restaurant and Bar since 1999, continuing a long tradition of using the historic building as a hospitality venue for St Kilda locals and visitors to the popular beach and foreshore.

The St Kilda foreshore Vineyard bar and restaurant has had a reprieve. Picture: Nicole Cleary

The historic Vineyard building started life as a small boat shed in 1886, servicing the fishing boats that made their way along a small creek running behind the venue, to the St Kilda foreshore.

In 1906, it became the Continental Tea Gardens, with famous Italian architect Carlo Catani converting the boat shed into a European style cafe.

Then, in 1930, the property became San Remo’s Cafe, run by the same family for decades.

VCAT documents note the terms of the Iodice brothers’ updated lease “expressly required the tenant to carry out capital works to the premises within specific time periods”.

“The Landlord alleges that the Tenant has failed to carry out the Tenant Works and as a consequence, the Landlord is required under the terms of the Lease to terminate the Lease, which it purported to do by notice dated 21 October 2022 (the Default Notice),” tribunal deputy president Eric Riegler noted.

“The Tenant seeks interlocutory relief restraining the Landlord from re-entering the Premises and terminating the Lease, in reliance upon the Default Notice.”

Neither the “preferred” or “fallback” development works on the property had been completed in the agreed time frame, but “the Tenant contends that there are several reasons why this is the case”, the tribunal noted.

The historic venue started life as a humble boat house. Picture: Supplied

Those reasons included difficulty obtaining the necessary planning or other regulatory approvals and a large Melbourne Water drain running underneath the proposed redevelopment area, that could not be built over with any permanent structures.

The tribunal heard The Vineyard had “built up a significant reputation and business goodwill”, its rent was up to date and the operators had about four years remaining on their lease.

“Significant financial and reputational damage” would result if the lease was prematurely terminated, the tribunal was told.

Staff would also be adversely affected.

The matter is listed for a further administrative mention at VCAT on April 28.

“Should the parties reach an impasse in terms of redeveloping the Premises within a reasonable time, it is open for either to seek further assistance from the Tribunal in the form of alternative dispute resolution or a determination as to what is a reasonable time in which to complete the Tenant Works and the scope of those works,” Mr Riegler concluded.

Port Phillip Council mayor Heather Cunsolo said the VCAT ruling was being reviewed and the council would be in a position to comment next week.

The Herald Sun has also contacted The Vineyard for comment.

A historic photo of the venue, which was once tearooms. Picture: Supplied

The venue’s website states: “The Iodice brothers Johnny, Alex, Adrian opened The Vineyard Restaurant in 1999 quickly establishing a reputation as a place to be in St Kilda for locals and tourists alike. 22 years later The Vineyard is still holding on and serving the St Kilda crowds, with Johnny and Alex sailing this little boat shed 7 days and nights a week.”

St Kilda in early days. Picture: Supplied

The 2003 campaign to save the Vineyard. Picture: Supplied

The Vineyard website reveals that the brothers have previously fought the council to save the venue in its current form, calling on God to help them in their mission.

“God Save The Vineyard: Anything that is loved can be saved. The Vineyard owners, staff, locals and musicians head to counsel (sic) to fight for the Iodice brothers to renew their tender,” it states.

The website dubs the venue “the last dark heart of St Kilda”.

The Port Phillip Council, on its website, states The Vineyard Restaurant needs to be redeveloped “as the existing building is not fit for purpose and is in aged condition”.

“Since October 2013, there has been extensive negotiations between the tenant and Council, as the Landlord, towards developing a mutually agreed design for the proposed redevelopment of The Vineyard Restaurant,” it said.

“The design addresses a key site constraint, a major water drain that cannot be built over, identified following the signing of the current lease in 2011. In February 2018, a revised design was presented to councillors for their review and feedback. Further discussion then occurred regarding a possible new long-term lease to support the redevelopment.”

The tribunal granted leave to The Vineyard to amend its VCAT application “to an application for an interlocutory injunction restraining the respondent from re-entering the demised premises”, also ordering “the respondent is restrained until further order, whether by itself, its servants or agents . . . from entering into possession of the premises known as The Vineyard, located at 71A Acland Street, St Kilda, in reliance upon a notice of default dated 21 October 2022.”

That order did not restrain the council, however, “from exercising its rights under the lease between the parties in respect of a breach by the applicant (The Vineyard) which does not relate to the matters referred to in the notice of default (notice) dated 21 October 2022”, it said.