Bartlett v Anderson; Anderson v Bartlett
[2000] NSWADT 86
•07/04/2000
CITATION: Bartlett -v- Anderson & anor; Anderson & anor -v- Bartlett [2000] NSWADT 86 DIVISION: Retail Leases Division PARTIES: APPLICANT (File No 995027)
Amanda BartlettRESPONDENTS (File No 995027)
Colin Anderson
Jan AndersonAPPLICANTS (File No 005010)
RESPONDENT (File No 005010)
Colin Anderson
Jan Anderson
Amanda BartlettFILE NUMBER: 995027; 005010 HEARING DATES: 05/06/2000, 19/06/2000 SUBMISSIONS CLOSED: 07/19/2000 DATE OF DECISION:
07/04/2000BEFORE: Fox R - Judicial Member APPLICATION: Claim for declaration of rights, obligations and liabilities under a lease - Claim for payment of money MATTER FOR DECISION: Principal matter LEGISLATION CITED: Retail Leases Act 1994 CASES CITED: REPRESENTATION: APPLICANT/ RESPONDENT
In person
RESPONDENTS/APPLICANTS
R Ranken, solicitorORDERS: Matter number 995027: ; 1. The lease of the premises at Shop 1- 22 Lake Street, Laurieton between the Applicant and the Respondent, which commenced on 24 August 1998 by operation of the Retail Leases Act was validly terminated by re-entry, for failure to pay rent, on 28 October 1999.; 2. The Applicant is relieved from all obligations pursuant to the lease other than the obligation to pay rent, see order made in application 005010.; 3. Application for compensation refused.; Matter number 005010:; 1. In respect of the premises Shop 1- 22 Lake Street, Laurieton pursuant to lease implied by the Retail Leases Act, which commenced on 24 August 1998 by operation of the Retail Lease Act after allowing for proper set off, and taking into account the valid termination of the lease on 28 October 1999, rent payable by Lessee to Lessor is $540.00.
1 These proceedings were heard at Port Macquarie Court House on 5 and 19 June 2000, after failure of the mandatory mediation and after the refusal of a Preliminary Application by the Applicant Mrs Bartlett on 17 December 1999, for Interim Orders which would have allowed her back into possession of the pizza restaurant premises at Shop 1- 22 Lake Street, Laurieton premises. Mrs Bartlett, as tenant is the Applicant in matter number 995027 and the landlord Mr and Mrs Anderson are the Applicants in matter number 005010, which is in effect the cross-claim. Mrs Bartlett, before me, sought an order relieving her from any obligations following from her occupation between 24 August 1998 and 28 October 1999, and orders granting her compensation for the cost of installation of a pizza oven, the lease payments made for that oven, and the loss of value of the goodwill of the business which she had built up. The Andersons sought an order for the payment of rent in the sum of $8,350.00.
2 I had major written statements from Mrs Bartlett, Mr Bartlett, and Mr Anderson, and a confirmatory statement from Mrs Anderson, and each of the major witnesses were cross examined, on behalf of Mr and Mrs Anderson by their solicitor Mr Ranken, and by Mrs Bartlett on behalf of herself, she being unrepresented.
3 I note that Section 73(3) of the Administrative Decisions Tribunal Act directs me to act with as little formality as the circumstances the case permit, and consequently I was able to take a very informal approach to the hearing, in an attempt at addressing the obvious imbalance in forensic skills between Mr Ranken on the one hand, and Mrs Bartlett on the other. Although the broad outline of a formal Court hearing was adhered to as a method of orderly presentation and consideration of the evidence, I felt no constraint in, from time to time, highlighting and exploring aspects of the matter which the parties had not raised, but I considered to be important.
4 It seems appropriate at the outset of these reasons to indicate that Mr and Mrs Bartlett have a (now) 3 year old child who, apart from a known genetic condition, was, sometime during the currency of the occupancy, diagnosed as suffering from leukaemia necessitating long periods of treatment at the Randwick Children’s Hospital, during which, obviously, Mrs Bartlett, in Sydney, at her daughter’s bedside, was not able to attend directly to the needs of her shop and business.
5 When all the evidence was in, I was satisfied that, although there is strong conflict in some aspects, all parties before me were witnesses of truth.
6 The Bartletts, initially, knew of the business conducted from the premises when Mr Bartlett was approached by the previous occupant (Allen Harley) to drive deliveries for him, Mr Bartlett being in business as a “take out” meal delivery driver for the Chinese restaurants of the town.
7 It was common ground that in mid-1998 Mr Harley had abandoned the premises and that thereafter, for some months, they stood, unused, but advertised for rent.
8 Without plan, in July or August of 1998, the Bartletts were passing the shop when Mr Anderson was cleaning it, and they asked whether the premises could be rented. An informal inspection followed immediately, but nothing further was arranged until some days later when the Bartletts travelled to John’s River and met with the Andersons during business hours at the grocery store which the Andersons conducted there.
9 At this stage the recollections of the witnesses vary somewhat, but it is clear to me that Mr Anderson and Mrs Bartlett held discussions in which Mr Bartlett took an active part, but Mrs Anderson did not, she being engaged in the “counter” needs of the shop. It was clear to all parties that Mrs Bartlett had never conducted a food preparation business before, and that their only expertise was in the delivery side of it. Mr Anderson was of the view that pizza cooking was not difficult, and offered to teach Mrs Bartlett whatever little she needed to be taught, and volunteered that all the requisites for the business were within the premises, with the exception of the pizza oven itself, which, although in good usable condition, had been broken by Allen Harley’s abuse, and had been taken from the premises and stored at St John’s River whilst Allen Harley had had his own oven installed. Mr Harley’s preference (as he changed the emphasis of the business to an Italian restaurant rather than a pizza place) had been for a baker’s oven whilst the Anderson oven was a commercial conveyer oven.
10 Mr Anderson agreed to allow the return of the oven to the premises- and I accept that he believes that he was actually only letting the premises, and that he had just “thrown in” the equipment within the premises, and the oven, and I am also satisfied that the Bartletts believed that they were renting the premises fully fitted out with pizza oven and all other requisites which is why they both, in evidence before me, said they had leased the business. Having observed all of the parties in the witness box I did not find it difficult to comprehend how the misunderstanding arose.
11 The lease was effected by the offer of Mrs Bartlett to pay the rents on a variable basis, as set out by her on a piece of paper which was in evidence before me, being $100.00 per week initially, and at slow (non holiday) times of the year, and rising as high as $250.00 per week at the Christmas and Easter holiday times. Mrs Bartlett’s evidence was that she did not believe that such a scrap of paper could create a Lease, and thought that she had only set out the terms upon which the negotiations might commence, but I find that she certainly, at the time, intended that to be the rent she would pay for the property and, those figures being less than but not so completely removed from what Allen Harley had paid, Mr Anderson accepted, and occupancy commenced within a day or two thereafter, and that was the point of commencement of the tenancy, being 28 August 1998.
12 The Bartletts before me insisted that this paper was only a negotiating position, as a preliminary to a full written lease, but I am satisfied that that is the position which they eventually took, and that was not the position initially; at that time it was a genuine offer made by them and accepted by Mr Anderson, so effecting a lease.
13 I am satisfied that both parties intended there to be a relationship which involved an exclusive right of occupation for reward and so there was a lease (as opposed to a licence) by reference to the test of the common law (Radaich v Smith 1959 101CLR 209).
14 When I consider the clear terms of the Retail Leases Act, Section 3:-
- “Retail Shop Lease” or “Lease” means any agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop (a) whether or not the right is a right of exclusive occupation and (b) whether the agreement is expressed or implied and (c) whether the agreement is oral or in writing”,it is entirely beyond doubt that this broader test is satisfied; there was a lease. A lease (as it turned out) in desperate need of detailed terms, but nonetheless, a lease.
15 I find that the Bartletts took occupation on 24 August 1998, and Section 8 of the Retail Leases Act nominates that as the commencement date of the lease, and Section 16 renders that for a 5 year period.
16 The only difficult issue between the parties is the subject of the lease “bare” premises or fully fitted out? On balance I am satisfied that the letting was of the premises as fitted out suitable for the use as a pizza restaurant, with a fully functioning conveyor oven.
17 The rental regime proposed on “the scrap of paper” was as follows:
“17/08/98- 05/09/98 $100.00 per week 12/09/98- 30/11/98 $150.00 per week 31/11/98- 31/01/99 $250.00 per week 01/02/99- Easter $150.00 per week Easter Holidays $250.00 per week After Easter $100.00 per week
There is a further note which indicates “started 24 August, one week late”.
18 Regrettably, the mathematics of the first rent period do not tally, there are only 3 weeks between 17 August and 5 September.
19 Mr Anderson, in evidence, when I raised with him that I was unable to bring the calculations to the same figure which he claimed, indicated to me that he had made allowance for an early variation in the agreement between the parties. This was for an initial 2 week rent free period to cover the fact that he had not, as initially promised, with his daughter, assisted in the cleaning of the shop, and this “discount” was taken into account in his calculation of the rent due at the time of cesser of the occupation- $8,350.00. That, as best I am able to calculate it, does reflect an initial period of 7 or 8 weeks at $100.00 per week, followed by a relatively short period of $150.00 per week, and consequently I find that the agreement between the parties was as follows:
24/08/98- 18/10/98 $100.00 per week 19/10/98- 31/11/98 $150.00 per week 01/12/98- 31/01/99 $250.00 per week 02/02/99- 29/03/99 $150.00 per week 01/04/99- 14/04/99 $250.00 per week 15/04/99- 28/10/99 $100.00 per week Total Less subsequently agreed 2 week concession @ $100.00 per week Actual amount of rent due for occupancy from 24 August 1998 to 28 October 1998
20 I note that none of the parties were aware of their obligations or rights under the Retail Leases Act, and, clearly, were not aware of the lease imported by the law into these particular circumstances, or the consequences which flowed.
21 The combined effect of the Retail Leases Act and the Conveyancing Act is that the lease was for a period of 5 years (subject always to the Lessee’s initial right to abandon the premises for failure to comply with the disclosure requirements) and (by Sections 84 and 85 of the Conveyancing Act) contains the covenant by the lessee to “pay the rent thereby reserved at the time therein mentioned” and, gives the lessor the right, “in the case of rent or any part thereof is in arrear for the space of one month (although no formal demand therefore has been made) …………to re-enter upon the demised premises (or any part thereof in the name of whole) and then thereby determine the estate of the Lessee…..”.
22 The business opened on 26 August 1998 and the oven conveyor failed almost immediately. It was Mr Anderson’s evidence (he having conducted a successful pizza business with that same oven for many years) that the volume of trade in Laurieton meant that the oven could just as reliably achieve throughput with a broomstick or wooden pole, and accept that as a genuinely and honestly held view, which is perhaps at the heart of the misunderstanding which had arisen, and which led Mrs Bartlett to assume that the oven was working, and that if it failed, it was repairable.
23 I had in evidence a letter by Glen Vincent, an appliance repairer which said of the oven that it was, at that time, not repairable because no further parts were available. I note Mr Anderson’s evidence that the oven was repairable because “anything can be fixed” and also note that it is currently with a Taree engineer to have it repaired. It has been there for “a couple of months” and so am satisfied that in August of 1998 the oven could not be repaired with sufficient immediacy for the continuation of the business, and so find that Mrs Bartlett was justified on that first Monday in urgently seeking a replacement oven, especially in view of Mr Anderson’s comment to her “well, you’ll just have to do whatever is necessary to fix it”. I note that neither party at this time discussed the cost of replacing the oven and so the misunderstanding just continued. By telephone later on the Monday, Mrs Bartlett managed to find a similar suitable oven in Lithgow, which could be delivered and installed in time for the commencement of the Wednesday evening trade. Mr Anderson was asked to remove his faulty oven and, I find, on the Wednesday, saw the other oven in place and working.
24 The cost to Mrs Bartlett of installation was $1,000.00, and the lease for the oven was $110.00 per week, over a period of some years. I am satisfied that the details were orally disclosed to Mr Anderson at that Wednesday meeting, but never followed up or confirmed with any writing. I am also satisfied that Mr Anderson agreed on a rent moratorium for 2 months, rent to be “caught up” over the busy Christmas period.
25 It is a fair summation of the evidence thereafter to say that the Bartletts never did pay any rent, and that Mr Anderson, by telephone at 3 or 4 weekly intervals, after Christmas 1998 asked Mr Bartlett for rent. Georgina Bartlett’s illness had been diagnosed not long after commencement of the business, and treatment commenced in November and it was Mrs Bartlett’s evidence that she several times tried to contact Mr Bartlett from the hospital bedside. I am satisfied that this is only part of the story, it was certainly Mrs Bartlett’s position that she was not going to make any payment until she had a written lease presented to her and that that writing would be the basis of further rental negotiations which she intended to conduct, it being her (sadly mistaken) belief that she did not have a lease of the business.
26 Mr Anderson freely admitted that he never did effect direct communication with Mrs Bartlett out of deference to her personal difficulty with Georgina’s illness, and that only once did he actually raise a figure (about $8,000.00) with Mr Bartlett. When pressed for an explanation for this failure to nominate a figure, Mr Anderson, perhaps not unreasonably, said, “they made the offer, they could work it out as well as I could”. Whilst understandable as an approach, that did not really assist in communication with the Bartletts who (I am satisfied) had not kept a copy of the piece of paper.
27 On 27 September 1999 Mr Anderson attempted to terminate the tenancy by notice and lockout, but that notice complied with the statutory requirements of the Residential Tenancies Act, and (I find) had no effect in law, other than to alert Mrs Bartlett to the fact that her rent was overdue.
28 Mrs Bartlett, on advice, re-entered the premises and sought to carry on the business.
29 There was a second notice and lockout, and a second re-entry.
30 Then, on 28 October, a third notice and lockout had its effect, because Mrs Bartlett did not seek to re-establish the business, and eventually negotiated a return to her of those parts of the equipment within the premises which she and her husband had brought to it as the business grew.
31 I find that there was a Lease of the fully equipped premises for the stepped payments set forth in the initial written offer, and I find that the rent, with concessional allowances, amounted to $8,250.00 over the sixty-one week period of the occupancy. However I also find that the tenant was entitled to a setoff for the pizza oven lease payments of $110.00 per week, and for the cost of installing it in the sum of $1,000.00. This made the lease payment total $6,710.00, over the sixty one week period which together, with the installation cost, makes a grand total of $7,710.00.
32 Although I do not pretend that the calculations are completely accurate, the “high point” of the rent debt was, at the end of Easter 1999 holiday season. The total rent payable from commencement to that high point was of the order of $5,450.00, and the offset would have been $3,630.00 in lease payments and $1,000.00 in installation costs making a total offset of $4,630.00, resulting in an actual amount of rent outstanding at that time of $820.00. As the minimum rent in the off season was $100.00, the “stepped” rental agreement resulted in a negative rent situation when the $110.00 offset for the pizza oven Lease rent was taken into account. The end result, during the off-season, was that the rent debt was actually reducing at the rate of $10.00 per week.
33 The net arrears, at the time of the termination, were in the sum of $540.00.
34 It follows that, for many months, Mrs Bartlett had been in breach of her prime obligation, as tenant, to pay the rent, or face the risk of forfeiture. No doubt, the particular circumstances of the matter, and the interesting difficulties of calculation of the actual amount due and it’s relatively low total, would have meant that Mrs Bartlett had a good basis to succeed in an action or relief against forfeiture.
35 Had Mrs Bartlett only taken the bit in hand on the arrival of the first invalid notice, and sought to meet with Mr Anderson to work out some details of payment of the rent, rather than continuing to “dig in her heels” on a basis best summarised “I’m not going to talk to him until he gives me a written lease” she might well have been in a position to salvage her lease which, at that time, was still in existence, although open to termination by re-entry at any time.
36 However, this is all speculation, the law took its course, and the re-entry of 28 October 1999 terminated the Lease, and properly terminated it.
37 It is clear that both Mrs Bartlett and Mr Anderson each in their own way “got it wrong”. Mrs Bartlett’s error was the more readily resolved, by very small payment, and I am left to consider my obligation to act “according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms”.
38 In the end, I am not satisfied that the Section 73 (3) direction allows me to simply ignore the specific direction in the Conveyancing Act, and consequently I cannot not regard the lease as properly terminated, nor, considering another aspect of equity and good conscience, can I see how I can grant the orders which Mrs Bartlett sought initially, to in effect “re-establish” the lease, because to do that would be to do for her that which she failed to do (perhaps ill advisedly) for herself. The “equity, good conscience and substantial merits of the case” must be contemplated both from the view of the Applicant and the Respondent, and all of that, I am satisfied, is achieved by my orders, both in the amount of the monetary sum, and the direction that there be no interest.
39 Lastly, the evidence of the accountant which Mrs Bartlett (at my request) raised on the second day, although by no means conclusive, does bring up the clear suggestion that the Bartletts had established a business which had a potential good will value, by reference to the income earnt, of some $35,000.00, but of course that all would have depended on the viability of the lease, the only clear terms of which were those imported by statute. This very fact alone would have enormously reduced the potential value of the business to a prospective purchaser, but in any event, the Bartletts persistent failure to pay or offer to pay any rent, and the proper termination of lease which follows, disentitled them from little compensation might otherwise have reflected the goodwill value.
40 I note that Mr Ranken on behalf of Mr Anderson made an application for an order for costs; the legislation (Section 88 of the Administrative Decisions Tribunal Act) empowers me to make such an order, but sub-section 3 states:
- “however the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction make the decision provides for the awarding of costs”, and Section 77A of the Retail Leases Act does so empower, but of course this is all subject to sub-section 1 of Section 88 of the ADT Act which specifically directs me that I may only make an award of costs if I am “satisfied that there are special circumstances warranting an award of costs”.
41 This particular stricture indicates that there must be something greater than the normal rule of law “costs follow the event”, and I am not so satisfied.
42 I am also satisfied that an order for interest is not appropriate although, of course, once registered, my order will attract whatever rate of interest is appropriate consequent upon that judgment.
43 In matter number 995027 I make the following orders:
- 1. The lease of the premises at Shop 1- 22 Lake Street, Laurieton between the Applicant and the Respondent, which commenced on 24 August 1998 by operation of the Retail Leases Act was validly terminated by re-entry, for failure to pay rent, on 28 October 1999.
2. The Applicant is relieved from all obligations pursuant to the lease other than the obligation to pay rent, see order made in application 005010.
3. Application for compensation refused.
44 In matter number 005010 I make the following order:
- 1. In respect of the premises Shop 1- 22 Lake Street, Laurieton pursuant to lease implied by the Retail Leases Act, which commenced on 24 August 1998 by operation of the Retail Lease Act after allowing for proper set off, and taking into account the valid termination of the lease on 28 October 1999, rent payable by Lessee to Lessor is $540.00.
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