Behl v Hurstville Retail Pty Ltd

[2010] NSWADT 211

CITATION:

Behl v Hurstville Retail Pty Ltd [2010] NSWADT 211

DIVISION:

Retail Leases Division

PARTIES:

APPLICANT
Saurabh Behl

CROSS APPLICANT
Hurstville Retail Pty Ltd

RESPONDENT
Hurstville Retail Pty Ltd

CROSS RESPONDENT
Saurabh Behl

FILE NUMBER:

095079 and 095097

HEARING DATES:

27 August 2009

SUBMISSIONS CLOSED:

19 December 2009

 
DATE OF DECISION: 

25 August 2010

BEFORE:

Olsson E, SC - Deputy President; Harrison B - Non-Judicial Member; Griffiths G - Non-Judicial Member

LEGISLATION CITED:

Retail Leases Act 1994
Conveyancing Act 1919

REPRESENTATION:

APPLICANT
G Rice of counsel for Saurabh Behl

RESPONDENT
Ms Berberian of counsel for Hurstville Retail Pty Ltd

ORDERS:

i)The Application is dismissed
ii)As to the Cross Application:
iii)The Respondent has validly terminated the sub-lease
iv)The Respondent is entitled to immediate possession of the premises known as Kiosk 1, Hurstville Central, Hurstville
v)The letter from the Respondent to the Applicant dated 21 April 2009 notifying of breach, default or non-compliance with clause 3.1 of the sub-lease is a valid notification of breach, default or non-compliance with the covenants contained in the sub-lease
vi)The letter of 21 April 2009 is a valid notification within the meaning of s. 129 of the Conveyancing Act 1919 of breach, default or non-compliance with covenants contained in the sub-lease
vii)To the extent that the foregoing orders do not expressly provide for it, a declaration that the Respondent is entitled to terminate forthwith the sub-lease by reason of the Applicant’s failure to remedy a breach, default or non-compliance with clause 3.1 of the sub-lease notified by letter dated 21 April 2009 or its failure to take reasonable steps to either remedy such breach, default or non-compliance or its failure to take any reasonable or diligent action towards remedying the breach, default or non-compliance pursuant to the terms of the sub-lease or s.129 of the Conveyancing Act 1919 as the case may be.
viii)There is no order as to damages.
ix)There will be no order for costs in these proceedings unless a party files and serves an application for costs, with supporting submissions, within 14 days. In such event, the opposing party or parties must file and serve submissions in response within a further 14 days. The question of costs will then be determined ‘on the papers’, pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.

REASONS FOR DECISION

Background

1 By a further amended application filed on 6 August 2009, the Applicant, Saurabh Behl, sought the following orders against the Respondent, Hurstville Retail Pty Ltd:

i)That the Respondent breached ss.34 (1)(a), (b) and (c) of the Retail Leases Act 1994 (“the Act”) by unlawfully locking the Applicant out of his premises; ii)A declaration that the breach notices are defective and void;

iii)A declaration that the sale of coffee is a permitted use under the lease or alternatively a lawful ancillary use;

iv)A declaration that the Respondent has engaged in unconscionable conduct contrary to Part 7A of the NSW Retail Leases Act 1994 in its dealings with the Applicant;

v)An order that the Respondent pay damages to the Applicant in the amount of $50,000.00 ;

vi)An order for costs and interest;

2 The Respondent filed a Cross Application on 3 June 2009. In it, the Respondent sought orders that:

i)A declaration that the Respondent validly terminated the sub-lease; ii)A declaration that the Respondent is entitled to immediate possession of the premises;

iii)A declaration that the letter from the Respondent to the Applicant dated 21 April 2009 was a valid notification of breach, default or non-compliance with the covenants contained in that sub-lease;

iv)A declaration that the letter from the Respondent to the Applicant of 21 April 2009 and notifying breach, default or non-compliance with clause 3.1 of the sub-lease is a valid notification pursuant to section 129 of the Conveyancing Act 1919 of breach, default or non compliance with covenants contained in that sub-lease;

v)A declaration that the Respondent is entitled to terminate the sub-lease forthwith by reason of the Applicant’s failure to remedy the breach, default or non-compliance of clause 3.1 of the sub-lease notified by letter dated 21 April 2009 or its failure to take any reasonable steps to either remedy such breach default or non-compliance or its failure to take any reasonable or diligent action towards remedying the breach, default or non-compliance;

vi)A declaration that the Respondent is entitled to terminate forthwith the sub-lease by reason of the Applicant’s failure to remedy the breach, default of non-compliance of clause 3.1 of the sub-lease notified by letter dated 21 April 2009 pursuant to section 129 of the Conveyancing Act 1919 or its failure to take any reasonable steps to remedy such breach, default or non-compliance or its failure to take any reasonable or diligent action towards remedying the breach, default or non-compliance.

vii)An order that the Applicant pay damages to the Respondent

viii)An order that the Applicant pay the Respondent’s costs.

3 For ease of reference, Saurabh Behl will be referred to as the Applicant and Hurstville Retail Pty Ltd will be referred to as the Respondent herein.

The Main Issues

4 It was common ground that the Applicant purchased the sub-lease of the subject premises and that it was designated as a juice bar. A short time after taking over the sub-lease, the Applicant added coffee to his product for sale. Complaints were raised by other tenants and ultimately the Respondent purported to issue a notice of breach and then a notice of termination of the sub-lease. It took possession of the shop although as a result of an urgent interim order in this Tribunal, the Applicant has been trading in the premises since 7 July 2009.

5 Central to the Applicant’s case is the proposition that coffee is a juice, being a product extracted from a plant or pod, and therefore within the permitted usage. Alternatively, drawing on a distinction between ‘juice’ and ‘beverage’ it is said that on the proper construction of ‘beverage’, coffee should be included in the definition. Thirdly, the Applicant says that coffee should be a permitted ancillary use to a permitted use and that it is unconscionable within the meaning of the Retail Leases Act to deny it when other tenants have had the benefit of a liberal interpretation with respect to their own leases and permitted usages.

6 The Applicant said that it was entitled to compensation pursuant to s.34(1)(a), (b) and (c) of the Retail Leases Act by reason of the unlawful lock out from its premises by the Respondent from 1 to 7 May 2009. Its loss, it was said, was about $350 per week for the period in which it had been locked out plus 40% margin, plus the cost of product which was perishable and which had to be thrown out.

The Evidence

7 The subject premises are known as Kiosk 1, Hurstville Central, 225H Forest Road, Hurstville.

8 Hurstville Shopping Centre is a convenience based shopping centre located above Hurstville Railway Station. The refurbished centre opened on a staged basis from February 2008 to May 2008 after major refurbishment. The Respondent leases the shopping centre from Rail Corporation of New South Wales and the Respondent in turn, sublets shops to various tenants.

9 The evidence of Mr Michael Figg, director of the Respondent, was that no shop in the centre has exclusivity in relation to its permitted usages with the exception of the tobacconist and shops 2 to 5 to a hairdresser. Moreover he said that tenants were made aware of the absence of exclusivity in usage.

10 Squeeze Me Juice Pty Ltd (SMJ) was the sub-lessee of the premises pursuant to a sub-lease granted by the Respondent. The commencement date of the sub-lease was 15 April 2008 and it was due to expire on 14 April 2014. The sub-lease was in evidence in Exhibit WW1.

11 On or about 29 August 2008 the Applicant submitted an application to the centre manager of the Respondent for Assignment of the Sub-Lease. It was granted and the Applicant, SMJ and the Respondent entered into a Deed of Assignment and Consent to Assignment of Lease on or about 19 December 2008. Those documents were also in evidence in Exhibit WW1.

12 Pursuant to clause 3.1(a) of the sub-lease, the sub-lessee covenanted that he will not use the premises for any purpose other than the permitted use as defined in Item 14 of the sub-lease as: “the retail sale of fresh juices, bottled juices, smoothies, bottled water, packaged fruit salad and packaged yoghurt, fresh salads, soups.”

13 Mr Behl, the Applicant gave evidence. He said that he had purchased the business for about $190,000.00 from the previous owner and with associated costs, the purchase had cost him about $220,000.00 much of which was borrowed. He said that he had been excited about conducting a juice and beverage bar from a busy retail centre and had discussed the tenancy mix with the centre manager Mr Walker.

14 He gave evidence about his conversations with Mr Walker about which other tenants would be selling juice and water. It is important to note at this stage that the refurbishment of the shopping centre was still underway.

15 Mr Walker said that he made it clear that there was no exclusivity in the centre and that some retailers were part of national chains which had their own menus which changed from time to time. The evidence of the permitted usages of other shops, a summary of which was annexed to an affidavit of Mr Walker corroborated the fact that other retailers had national menus and others had specific permitted usages. In his affidavit filed 19 August 2009, annexure A was a list of lease disclosure usages: it revealed that Puffy Takeaway Foods could sell, inter alia, cold beverages and “milk tea with pearl”; Cho Express could sell inter alia cold beverages; Centre Deli Café could sell inter alia, hot and cold beverages; Tosca Seafood could sell cold drinks; Vickers Bakery could sell cold drinks and so on. McDonalds had its own menu as did Pie Face and Miami Ice Café.

16 This significance of the evidence of Mr Walker’s conversations with Mr Behl is that, if accepted, Mr Behl must have been made aware of the fact that other retailers could compete with his business usage but that without the same national chain benefits, he was left with whatever he could negotiate and whatever was included in the permitted usage.

17 The Tribunal does accept the evidence of Mr Walker in this regard. It is satisfied that not only did he mention the names of some national retailers, he also explained that the centre did not have any exclusivity policies and that therefore the Applicant might find he had competition in the sale of juices.

18 Mr Behl continued in his evidence to provide detail about which juices are freshly squeezed (from fresh product) and those which are packaged from other sources. Not surprisingly, orange juice forms the majority of juices sold and it is prepared freshly on the premises.

19 He said that he had sold iced coffee without complaint since September 2008. He said that he believed that coffee was a juice extracted from the coffee bean and that therefore its sale did not contravene the permitted usage. He also said that there was nothing in the lease documents which excluded coffee and he believed that he was only engaging on a level playing field, since most other food retailers sold hot and cold beverages, in some cases irrespective of their permitted usages.

20 Mr Behl also said that he had only really been breaking even in a financial sense and when he was locked out for the week in mid 2009 he had lost $5000.00 being his loss of business and the product which had to be thrown out.

21 The Applicant did not tender any particulars of the amount of product lost nor invoices or dockets or other records. There can be no doubt that some product was lost and overall, the Tribunal was of the view that Mr Behl was an honest witness. Were it necessary to do so, and for the reasons which follow, it is not, the Tribunal would accept that the loss of product and sales for the week in which he was locked out would approximate $5000.00 and that would be the appropriate amount of damages.

22 The Applicant’s counsel contended that other shops in the centre were selling product which was not specifically included in their permitted usages. He said that Pie Face sold pizzas and wraps, neither of which were in their standard menu; Yum Nuts sold fresh juice although that was not specifically in their permitted usage. The difficulty facing the Tribunal and the Applicant for that matter, is that a number of the vendors in the centre are part of national chain which publish national menus and changes to those usages are permitted in accordance with changes to national menus. The permission of those vendors to change their product in accordance with the national menu is a common clause in retail leasing and it was so in this case. Further the landlord retained the right to alter the tenancy mix at any time.

23 Moreover, a close examination of the evidence of Mr Walker, who was cross examined about the practices of other tenancies, tended to reveal the weakness in the Applicant’s argument on this score. There may have been some breaches by other retailers but they ceased when requested to do so. In order to make out a case of unconscionability, the Applicant bears a heavy onus of proof regarding the conduct of the Respondent and it was not discharged on the evidence before the Tribunal.

24 It is also worthy of note that the two retailers who complained about the Applicant, Pie Face and Centre Deli, both had the entitlement to sell coffee.

25 It follows that the evidence of the Mr Behl does not, in the Tribunal’s mind, establish unconscionable conduct. The leasing environment in a busy centre such as Hurstville Railway Station is such that no exclusivity and much cross over of product sale is inevitable but in the present instance, the centre manager endeavoured to ensure that retailers acted within the terms of their leases and the evidence that the Applicant was singled out in any way is scant.

26 The Applicant had also argued that coffee was, properly interpreted, a juice.

27 Dr Pye was called to give evidence for the Respondent. He is a plant expert from Sydney University. His report was tendered as Exhibit H. He gave compelling evidence that the substance known as ‘coffee’ is an infusion made from adding water to a ground powder and it differs from a juice in that a ‘juice’ is extracted from the plant itself. The Applicant did not call an expert in reply but instead sought to argue that juices which were made from dried imported ingredients were the same or similar to the process described by Dr Pye as pertaining to coffee.

28 The Tribunal prefers and accepts the evidence of Dr Pye. The coffee bean itself is not subjected to a process of extraction which results in a consumable substance and certainly not the substance commonly known as coffee. Whilst it is undoubtedly the case that some juices can be made by reconstituting dried material with water, the dried material is extracted from a plant in the first instance.

29 Accordingly the Tribunal is of the view that coffee is not a juice within either the normal everyday meaning of the word nor in the botanical sense.

30 Mr Wray Walker gave evidence. He was the Centre Manager of the subject shopping centre. He said that on 22 February 2009, Mr Walker received a request from the Applicant to extend the permitted use for the sale of other items including the sale of coffee.

31 Mr Figg, the representative of the Respondent said that the Respondent did not consent to the extension of the permitted usage and he instructed Mr Walker to that effect and that correspondence to that effect was forwarded to the Applicant on 23 February 2009.

32 A further written request was made by the Applicant on about 23 March 2009 to extend the permitted usage to include the sale of coffee but once again it was declined, by letter dated 24 March 2009. Copies of the correspondence were tendered in evidence and the fact of their service was not in dispute.

33 In about mid April 2009, Mr Walker observed that the Applicant had installed an espresso coffee machine on the premises and was selling hot coffee drinks.

34 A written complaint was received from the lessee of shop 11 whose lease included in the permitted use of those premises, the sale of “hot and cold beverages and meals”.

35 Mr Walker received instructions from the sub-lessor to notify the Applicant of various breaches of its sub-lease including breach of the permitted use and issued such a notice on 16 April 2009.

36 On about 19 April 2009, Mr Walker received a complaint from another lessee, Pie Face, whose lease included the permitted use of various specified coffees.

37 On 21 April 2009, on the instructions of the Respondent, Mr Walker withdrew the notice of breach of 16 April and issued fresh letters relating to breaches of clause 3.1. The letters were sent to the Applicant and also to his representative, Mr Peter Macauley of The Lease Police.

38 The letters required the Applicant to remove the espresso coffee machine or to cease selling coffee. They also referred to a leaking drain within the premises, the repair of which was the Applicant’s responsibility. The letters were ignored and Mr Walker obtained instructions from his principal to lock the Applicant out of his premises for failure to remedy the defaults, to accept his wrongful repudiation of the lease and to re-possess the premises.

39 Like Mr Figg, Mr Walker also said in evidence that there was no exclusivity in the centre, meaning that no shop had the rights to sell any particular product to the exclusion of all other tenants, and that there was a substantial overlap between the types of product sold by different shops.

40 The usage clauses pertaining to various shops in the centre were (as noted earlier) in evidence, attached to an affidavit of Mr Walker sworn 17 August 2009. Some shops were entitled to sell hot and cold beverages, some cold beverages only; the permitted usage of the Applicant according to clause 14 of the Reference Schedule of the sub-lease, did not include the word ‘beverage’.

41 The Applicant did not comply with the instruction to remove the espresso machine nor did he cease to sell coffee.

42 On or about 1^st May 2009 the Respondent re-entered the premises and changed the locks on the shop kiosk and storeroom premises. It did so in purported exercise of its right to do so pursuant to s.129 of the Conveyancing Act 1919. That section (repeated below) provides that the recipient of a notice of breach must act within a reasonable time to remedy the default. The Applicant did not do so. He was on notice by letter of 16 April that the Respondent considered him to be in breach and required him to remedy his default. A further notice was sent on 21 April 2009 to similar effect. It cannot be said that the Applicant did not have at least 10 business days’ notice of the Respondent’s intention to lock him out of his premises.

43 The Applicant sought and obtained from this Tribunal an urgent interim order on 7 May 2009 and he continued to trade again from 8 May 2009.

44 It is part of the Applicant’s case that in the period of lock out, albeit short, a great deal of his product was spoiled and had to be destroyed. The Tribunal accepts that evidence and in the event that there is a finding that the lock out was unlawful, the Applicant is entitled to an order for compensation for that loss.

45 The Applicant swore two affidavits and gave evidence. He said, inter alia, (and gave instructions to his then representative, the Lease Police to write to the sub-lessor in these terms) that as there was no exclusivity within the centre, the sub lessor could not be suffering any loss by reason of the Applicant’s sale of coffee. Furthermore, he asserted that coffee is the juice of a plant and therefore a juice and therefore within the terms of the permitted usage. Alternatively he argued that coffee fell within a permitted extension of the word ‘beverage’ and ought to have been permitted.

46 He denied that there was a drain leak in the storage area which was his responsibility and asserted instead that it was a result of the roof of the storage area requiring repair.

47 Mr Wayne Sugars gave evidence about the leak and in particular that he had shown the Applicant in person in February 2009 the leak from the tundish drain on the subject premises’ cool room. The Tribunal accepts the evidence of Mr Sugars as truthful and finds that he did in fact point out to the Applicant the source of the leak in the cool room and that it was a matter for the Applicant to address.

48 Mr Behl also gave evidence that his representative, Mr Macauley, was given a verbal undertaking that no action would be taken against the Applicant until he received a commercial proposal from him [Mr Macaulay] who undertook to provide this by close of business on 1 May 2009.

49 There was a factual dispute as to whether this conversation regarding the alternative commercial proposal took place and if it did, what were its terms. Mr Walker denied that he had agreed with Mr Macauley that he would wait for any particular period for a commercial proposal to be forthcoming; in fact he said he had no instructions to do so. Having heard both witnesses cross examined on this point, the Tribunal accepts Mr Walker’s version of events, finding it more probable than not that he had no instructions to agree to an extension of time and that it was unlikely therefore that he would say that he did, to the Applicant’s representative.

The law

50 It is convenient to set out the relevant provisions of the legislation.

51 Section 34(1) of the Act provides as follows:

34 Lessee to be compensated for disturbance

(1) A retail shop lease is taken to provide that if the lessor:
(a) inhibits access of the lessee to the shop in any substantial manner, or
(b) takes any action that would inhibit or alter, to a substantial extent, the flow of customers to the shop, or
(c) unreasonably takes any action that causes significant disruption of, or has a significant adverse effect on, trading of the lessee in the shop, or
(d) fails to take all reasonable steps to prevent or put a stop to anything that causes significant disruption of, or which has a significant adverse effect on, trading of the lessee in the shop and that is attributable to causes within the lessor’s control, or
(e) fails to rectify any breakdown of plant or equipment under the lessor’s care or maintenance, or
(f) in the case of a shop within a retail shopping centre, fails to adequately clean, maintain or repair the retail shopping centre (including common areas),

and the lessor does not rectify the matter as soon as reasonably practicable after being requested in writing by the lessee to do so, the lessor is liable to pay the lessee reasonable compensation for any loss or damage (other than nominal damage) suffered by the lessee as a consequence.

52 Section 62B of the Retail Leases Act provides as follows:

62B Unconscionable conduct in retail shop lease transactions

(1) A lessor must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable.
(2) A lessee must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable.
(3) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessor has contravened subsection (1) in connection with a retail shop lease, the Tribunal may have regard to:
(a) the relative strengths of the bargaining positions of the lessor and the lessee, and
(b) whether, as a result of conduct engaged in by the lessor, the lessee was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the lessor, and
(c) whether the lessee was able to understand any documents relating to the lease, and
(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessee or a person acting on behalf of the lessee by the lessor or a person acting on behalf of the lessor in relation to the lease, and
(e) the amount for which, and the circumstances under which, the lessee could have acquired an identical or equivalent lease from a person other than the lessor, and
(f) the extent to which the lessor’s conduct towards the lessee was consistent with the lessor’s conduct in similar transactions between the lessor and other like lessees, and
(g) the requirements of any applicable industry code, and
(h) the requirements of any other industry code, if the lessee acted on the reasonable belief that the lessor would comply with that code, and
(i) the extent to which the lessor unreasonably failed to disclose to the lessee:
(i) any intended conduct of the lessor that might affect the interests of the lessee, and
(ii) any risks to the lessee arising from the lessor’s intended conduct (being risks that the lessor should have foreseen would not be apparent to the lessee), and
(j) the extent to which the lessor was willing to negotiate the terms and conditions of any lease with the lessee, and
(k) the extent to which the lessor and the lessee acted in good faith.
(4) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessee has contravened subsection (2) in connection with a retail shop lease, the Tribunal may have regard to:
(a) the relative strengths of the bargaining positions of the lessee and the lessor, and
(b) whether, as a result of conduct engaged in by the lessee, the lessor was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the lessee, and
(c) whether the lessor was able to understand any documents relating to the lease, and
(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessor or a person acting on behalf of the lessor by the lessee or a person acting on behalf of the lessee in relation to the lease, and
(e) the amount for which, and the circumstances under which, the lessor could have granted an identical or equivalent lease to a person other than the lessee, and
(f) the extent to which the lessee’s conduct towards the lessor was consistent with the lessee’s conduct in similar transactions between the lessee and other like lessors, and
(g) the requirements of any applicable industry code, and
(h) the requirements of any other industry code, if the lessor acted on the reasonable belief that the lessee would comply with that code, and
(i) the extent to which the lessee unreasonably failed to disclose to the lessor:
(ii) any intended conduct of the lessee that might affect the interests of the lessor, and
(iii) any risks to the lessor arising from the lessee’s intended conduct (being risks that the lessee should have foreseen would not be apparent to the lessor), and
(j) the extent to which the lessee was willing to negotiate the terms and conditions of any lease with the lessor, and
(k) the extent to which the lessee and the lessor acted in good faith.
(5) A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with a retail shop lease by reason only that the first-mentioned person institutes legal proceedings in relation to that lease or refers to arbitration a dispute or claim in relation to that lease.
(6) A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with a retail shop lease by reason only that the first-mentioned person fails to renew the lease or issue a new lease.
(7) For the purpose of determining whether a lessor has contravened subsection (1) or whether a lessee has contravened subsection (2):
(a) the Tribunal must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention, and
(b) the Tribunal may have regard to circumstances existing before the commencement of this section but not to conduct engaged in before that commencement.
(8) A lessor or lessee, or former lessor or lessee, who suffers loss or damage by reason of unconscionable conduct of another person that is in contravention of this section may recover the amount of the loss or damage by lodging a claim against the other person under section 71A.
(9) If the matter of such loss or damage arises in connection with a matter the subject of proceedings in the Tribunal, the Tribunal may proceed to decide it, and in so doing may award such sum as it thinks fit.
(10) In this section:
"lessee" or "former lessee" includes a person who is a guarantor or covenantor under a lease or former lease.
129 Conveyancing Act 1919
Restrictions on and relief against forfeiture of lease
(1) A right of re-entry or forfeiture under any proviso or stipulation in a lease, for a breach of any covenant, condition, or agreement (express or implied) in the lease, shall not be enforceable by action or otherwise unless and until the lessor serves on the lessee a notice:
(a) specifying the particular breach complained of, and
(b) if the breach is capable of remedy, requiring the lessee to remedy the breach , and
(c) in case the lessor claims compensation in money for the breach , requiring the lessee to pay the same,
and the lessee fails within a reasonable time thereafter to remedy the breach , if it is capable of remedy, and where compensation in money is required to pay reasonable compensation to the satisfaction of the lessor for the breach .
(2) Where a lessor is proceeding by action or otherwise to enforce such a right of re-entry or forfeiture, or has re-entered without action the lessee may personally bring a suit and apply to the Court for relief; and the Court , having regard to the proceedings and conduct of the parties under the foregoing provisions of this section, and to all the other circumstances, may grant or refuse relief, as it thinks fit; and in case of relief may grant the same on such terms (if any) as to costs, expenses, damages , compensation, penalty or otherwise, including the granting of an injunction to restrain any like breach in the future, as the Court in the circumstances of each case thinks fit.
(2A) If such right of re-entry or forfeiture arises under a lease for a term of ten years or upwards by reason of a breach of a covenant by the lessee that the lessee will not make alterations in the demised premises without the consent of the lessor, and if it shall be proved to the satisfaction of the Court that the alterations made or proposed to be made have been or may be made without substantial injury to the lessor the Court may grant relief on such terms as the Court may think proper.
(3) The provisions of subsection (1) shall not extend to a covenant or condition or agreement against doing, committing, or suffering anything whereby or by means whereof either alone or with other circumstances any licence under the Liquor Act2007 is or may be endangered, or is or may be liable to lapse or be suspended, cancelled or refused.
(4) This section applies although the proviso or stipulation under which the right of re-entry or forfeiture accrues is inserted in the lease in pursuance of the directions of any Act of Parliament.
(5) For the purposes of this section a lease limited to continue as long only as the lessee abstains from committing a breach of covenant shall be and take effect as a lease to continue for any longer term for which it could subsist, but determinable by a proviso for re-entry on such a breach .
(6) This section does not extend:
(a) to any Crown lease or to any lease granted by an owner under section 69 of the Mining Act 1906 , or to any lease or tenancy for a term of one year or less, or
(b) to a covenant, condition, or agreement against the assigning, under-letting, parting with the possession or disposing of the land leased where the breach occurred before the commencement of the Conveyancing (Amendment) Act 1930 , or
(c) to a condition for forfeiture on the taking in execution of the lessee’s interest in any lease of:
(i) agricultural or pastoral land ,
(ii) mines or minerals,
(iii) a house used or intended to be used as licensed premises under the Liquor Act 2007 ,
(iv) a house let as a dwelling-house, with the use of any furniture, books, works of art, or other chattels not being in the nature of fixtures,
(v) any property with respect to which the personal qualifications of the tenant are of importance for the preservation of the value or character of the property , or on the ground of neighbourhood to the lessor or to any person holding under the lessor,
(d) in case of a mining lease to a covenant, condition, or agreement for allowing the lessor to have access to or inspect books, accounts, records, weighing-machines, or other things, or to enter or inspect the mine or the workings thereof,
(e) to a condition for forfeiture on the taking in execution of the lessee’s interest in any lease (other than a lease mentioned in paragraph (c)) after the expiration of one year from the date of the taking in execution, provided the lessee’s interest be not sold within such one year: But if the lessee’s interest be sold within such one year this section shall extend and be applicable to such condition for forfeiture.
(8) This section shall not affect the law relating to re-entry or forfeiture or relief in case of non-payment of rent .
(9) The notice mentioned in this section shall be in the form set out in the Sixth Schedule or to a similar effect.
(10) This section applies to leases made either before or after the commencement of this Act, and shall have effect notwithstanding any stipulation to the contrary.

The Submissions

53 Counsel for the Applicant provided written submissions on 17 December 2009. In it, he argued that the Applicant was selling product within his permitted usage because coffee was a juice, being extracted or extruded from a plant. This contention is rejected. The Tribunal accepts the evidence of Dr Pye as compelling and accepts also the distinction he drew between dehydrated juices which are reconstituted and liquid which is an infusion.

54 The Applicant also argued that the Respondent conceded that when the Applicant opened for business, there were four outlets permitted to sell coffee, one of which closed before the Applicant commenced business. Thus, it was said, that because of the closure of that business, the Applicant’s business made up the number of outlets which had been permitted to sell coffee. The point, it seems, is that since the landlord was prepared to allow four coffee vendors, it did not matter which four. This argument has little appeal: it seems to the Tribunal that the matter must be determined upon what the Applicant agreed to do by way of the permitted usage in his lease.

55 The next argument advanced was that selling coffee was an ancillary use or within the remit of the express usage. The Tribunal rejects this argument: the terms of the lease are very clear. Not only does the word ‘coffee’ not appear in the permitted usage, neither does the word ‘beverage’. Moreover, the Tribunal is entitled to look at the overall get-up and trade profile of the Applicant’s business. It is promoted as a fresh juice bar to which fruit salad and yoghurt products are adjunct. Nothing in the sub-lease nor the permitted usage terminology is remotely suggestive of coffee. The Tribunal also rejects the notion that because other tenants were allegedly operating in excess of their permitted usages, it was unreasonable not to allow the Applicant to do so. For reasons already provided, the Tribunal is not satisfied on the evidence that there were such other retailers operating in excess of their permitted usages.

56 The Applicant sought to persuade the Tribunal that the centre management had misled Mr Behl into entering into a sub-lease in the belief that he could expand his product line to include things like coffee but the Tribunal is not persuaded on the evidence that these conversations occurred. That is not to say that the Tribunal found Mr Behl to be a dishonest person, rather a person who allowed himself to be persuaded by wishful thinking. His evidence as to representations and conversations with Mr Walker did not convince the Tribunal that he was misled in any way about the prospects of his business.

57 It is clear from the evidence as a whole that at the time Mr Behl took over the sub-lease, the centre refurbishment had not been completed and there were a number of tenancies still to be filled. Of those that had been filled, a number were affiliated with national chains. Of those that had been filled, a number were specifically authorized to sell coffee and coffee products. It is telling and ultimately conclusive to the Tribunal’s mind that ‘coffee’ and ‘beverage’ are not included in the permitted usage pertaining to the Applicant’s lease.

58 The following orders are made:

i)The Application is dismissed
ii)As to the Cross Application:
iii)The Respondent has validly terminated the sub-lease
iv)The Respondent is entitled to immediate possession of the premises known as Kiosk 1, Hurstville Central, Hurstville
v)The letter from the Respondent to the Applicant dated 21 April 2009 notifying of breach, default or non-compliance with clause 3.1 of the sub-lease is a valid notification of breach, default or non-compliance with the covenants contained in the sub-lease
vi)The letter of 21 April 2009 is a valid notification within the meaning of s. 129 of the Conveyancing Act 1919 of breach, default or non-compliance with covenants contained in the sub-lease
vii)To the extent that the foregoing orders do not expressly provide for it, a declaration that the Respondent is entitled to terminate forthwith the sub-lease by reason of the Applicant’s failure to remedy a breach, default or non-compliance with clause 3.1 of the sub-lease notified by letter dated 21 April 2009 or its failure to take reasonable steps to either remedy such breach, default or non-compliance or its failure to take any reasonable or diligent action towards remedying the breach, default or non-compliance pursuant to the terms of the sub-lease or s.129 of the Conveyancing Act 1919 as the case may be.
viii)There is no order as to damages.
ix)There will be no order for costs in these proceedings unless a party files and serves an application for costs, with supporting submissions, within 14 days. In such event, the opposing party or parties must file and serve submissions in response within a further 14 days. The question of costs will then be determined ‘on the papers’, pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.