Bonzalie v Ersoy

[2010] NSWADT 81

CITATION:	Bonzalie v Ersoy [2010] NSWADT 81
DIVISION:	General Division
PARTIES:	APPLICANT Eddie Bonzalie RESPONDENT Aslihan Ersoy and Neslihan Ersoy
FILE NUMBER:	095091
HEARING DATES:	20 January 2010
SUBMISSIONS CLOSED:	3 March 2010
DATE OF DECISION:	24 March 2010
BEFORE:	Rickards K - Judicial Member
CATCHWORDS:	Termination of lease - subrogation
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997
CASES CITED:	Speno Rail Maintenance Australia Pty Ltd -v- Metals & Minerals Insurance Pte Ltd (2009)WASCA31 Insurance Commission (WA) –v- Kightly (2005) WASCA 154 Caledonian North Sea Ltd –v- Norton(No.2)Ltd (2002)UKHL 41
REPRESENTATION:	APPLICANT In person RESPONDENT C Koyuncu solicitor
ORDERS:	1.The Application is dismissed 2.Unless either party files written submissions as to costs within 14 days, there will be no order as to costs. If either party does file written submissions within 14 days, a copy of such submissions is to be served upon the party before or at the same time as filing, and the other party is to file and serve any written submissions as to costs within 14 days. Unless reasons are advanced for a hearing will be conducted, the matter will be resolved “on the papers” pursuant to Section 76 of the Administrative Decisions Tribunal Act.

REASONS FOR DECISION

Background

1 The Applicant in these proceedings, Mr Eddie Bonzalie, is the lessor of premises located at 195 Great Western Highway, Wentworth Falls. The Respondents, Aslihan and Neslihan Ersoy, are lessees of these premises upon which they conduct a take away food business which was purchased from Mr Bonzalie in early 2005. Mr Bonzalie is hereafter referred to as “the Lessor” and the Ersoy sisters referred to as “the Lessees”.

2 The subject lease between the parties commenced on 1 April 2005 and is to terminate on 31 March 2010. During the subsequent course of the tenancy, a number of issues arose between the parties, resulting in two separate sets of proceedings commenced in this Tribunal which included an application by the Lessor to terminate the lease pursuant to notice given on 8 August 2007 (“the first termination notice”) and a dispute as to whether or not there was a valid option to renew under the subject lease agreement. These two sets of proceedings were the subject of a hearing which took place over nine days before Deputy President Callaghan and Non Judicial Member Fagg. The decision in those proceedings was delivered on 4 January 2010. Two components of this decision were that the fist termination notice was of no legal effect and that the Lessee did not have any right to exercise of a further option period.

3 The present proceedings were commenced on 21 May 2009. In the original Application filed in the present proceedings by the Lessor, an order was sought for termination of the lease based upon alleged breaches by the Lessees of the subject lease agreement in failing to use the premises in a safe manner, failing to meet insurance requirements, and failing to properly repair and maintain the premises. The Application was expressed to be based upon a termination notice alleging these same breaches (“the second termination notice”), which was issued by the Lessor on the very same day as the date of the Application.

4 Had the Application remained in its original form, the Lessor would have had great difficulty in obtaining the orders sought because of the defects in the second termination notice in failing to properly specify the particular breaches complained of and in failing to allow the Lessees a reasonable time to remedy such breaches prior to commencement of proceedings. These requirements, which are set out within section 129 of the Conveyancing Act 1919, would have been likely to render the second termination notice void and of no legal effect, and the Application would have been likely to fail. However, following commencement of the present proceedings, the Lessor obtained access to the premises for the purpose of inspecting damage and then arranged for repairs to be effected, and on 1 October 2009 Judicial Member Fox made orders allowing the Application to be amended to include a liquidated claim by the Lessor for recovery of the cost of these repairs to the premises.

5 Following the decision made on 4 January 2010 in the previous proceedings between the parties, the Lessor re-entered the premises on 15 January 2010, changed the locks, and thereby purported to terminate the subject lease. The Lessor had given no new notice of any breach to the Lessees.

6 The Lessees filed an urgent application on 18 January 2010 seeking orders restoring them to the premises, and this application was also dealt with during the hearing before me on 20 January 2010.

7 At the hearing on 20 January 2010 the Lessor confirmed that the only orders which he now sought were for payment of the amounts of $7,887.00 in reimbursement of the cost of repairs of damage to the premises and for payment of the sum of $370.95 for locksmith charges incurred by the Lessor in having the locks changed on 15 January 2010.

8 In relation to the “lock out” on 15 January 2010, the Lessor submitted that he was entitled to re-enter the premises and terminate the lease without notice pursuant to the provisions of clause 26.1 of the lease agreement, which reads as follows:

“26.1 If:
(a) Rent or outgoings or any other moneys payable by the Lessees are unpaid or partly unpaid for 14 days after the date on which they were due (whether or not a formal or legal demand has been made), …. then the Lessor …. may re-enter the Leased Premises …. and thereby terminate this lease.”

9 It was common ground between the parties that the rent payment due for January 2010 in the sum of $3,755.44 had not been paid on the due date of 1 January 2010. The Lessor claimed that additional arrears of rent were also due and payable which brought the total amount due to a sum of $5,582.79 and that these arrears had arisen because of the continued failure of the Lessees to pay the increased increment of rent required under the terms of the lease agreement over the preceding 12 months or so. This claim was disputed by the Lessees who alleged that the increments of rent had been paid and produced as an example a deposit slip showing payment of one of these increments of rent in the sum of $110.00 into the Lessor’s account on 28 September 2009.

10 At the hearing, the Lessor’s records relating to receipt of rent consisted of a computer print-out covering only the period 1 December 2009 to 12 January 2010 and which had the account number obliterated. In the circumstances I could not be reasonably satisfied, for the purpose of determining the urgent application made and based upon the evidence before me, whether or not rent arrears existed prior to 1 January 2010. It was nevertheless clear in any event from the chronology of events in this matter and from the submissions made by the Lessor that he was relying upon non-payment of the rent instalment due on 1 January 2010 in seeking to invoke the provisions of Clause 26.1 of the lease agreement to justify termination of the lease and the taking of possession of the premises.

11 The Lessor elected to re-enter the premises and take possession and to purport to terminate the lease on 15 January 2010. Such action was determined by me to be premature because 14 days had not expired after the due date being 1 January 2010. In other words, the Lessor was unable to rely upon the provisions of clause 26.1 of the lease until 16 January 2010 at the earliest.

12 Although the action taken by the Lessor was not supported by the terms of the lease agreement, the Lessees conceded that there had been a conscious decision to withhold rent for January. There was dispute between the parties which could not be resolved upon the evidence before me as to whether or not there were unpaid additional payments due for increments of rent. The Lessees confirmed that they only sought to recover possession of the premises until 31 March 2010 when the term of the lease agreement was to end. Given these factors, I made orders on 20 January 2010 restoring possession of the premises to the Lessees upon condition of the immediate payment of the sum of $5,582.79 and maintenance of regular due payments of rent thereafter. This sum included the amount claimed by the Lessor for unpaid rental increments, but in making this order for payment as a condition of re-entry to the premises I have expressly made no finding as to whether or not such increments have previously been paid by the Lessees.

13 In relation to the Lessor’s claim for payment of the sum of $7,887 for the cost of repairs of damage to the premises, the Lessor conceded to me during the hearing that these repair costs had not in fact been paid by him but instead had been paid by his insurer GIO Insurance Ltd (“GIO”). Having made this concession, the Lessor then advised me that he now sought an order from the Tribunal that the amount of $7,887 be paid to GIO rather than to himself.

14 The Lessees submitted that, because GIO had paid these repair costs, it had acquired by subrogation from the Lessor the right to pursue recovery of any repair costs properly payable by the Lessees, and that accordingly the Lessor had neither the standing nor the authority to pursue an application before this Tribunal or any other forum for payment of these repair costs. The Lessor responded that he did have such authority from GIO and sought an opportunity to present documentary evidence of same. In order to allow the Lessor a fair opportunity to deal with this issue which had only arisen during the course of the hearing, I made orders allowing the Lessor to file and serve any such material by 17 February 2010. Pursuant to this direction, the Lessor provided a letter from GIO addressed to the Lessees dated 4 February 2010 in the following terms:

“Dear Aslihan and Neslihan
We refer to the below incident in which damage was sustained to our policy holders property.
Date of incident: 11 October 2008
Location: 195 Great Western Highway, Wentworth Falls NSW 2789
Our insured: Mr Bonzalie
From the information provided to us we are of the opinion that you are liable for the damage sustained.
We have settled our client for repairs to their property at a cost of $8,118.19. Copies of the relevant documents have been attached. …. Please make arrangements within 14 days to avoid legal action being taken. Thank you for your assistance and we look forward to hearing from you.
Yours sincerely
David Graham
Recovery Officer …”

15 I also made orders allowing the Lessee to file and serve any further submissions on or before 3 March 2010 but they did not do so.

16 As set out above, the Lessor conceded that he had been indemnified by GIO for the repair costs claimed by him against the Lessees in these proceedings, but contended that he was seeking orders for payment on behalf of the insurer. It is abundantly clear, based upon the letter set out above in which GIO now seeks payment from the Lessees to cover its payment of a sum which is conceded by the Lessor to include the subject repair costs , that the Lessor does not have the authority to make any demand or to act in these proceedings on behalf of GIO.

17 The Lessor is certainly not entitled to be paid or benefited twice for the same loss. Given that the subject repair costs have been paid by GIO, then it is only GIO which can now seek to recover compensation. The Lessor cannot enjoy double indemnity and, by virtue of payment by GIO of the subject repair costs, the principle of subrogation applies. It is up to the insurer to take such recovery action as it sees fit. The reciprocal operation of these principles of double indemnity and subrogation is conveniently summarised within the judgment of Martin CJ of the West Australia Court of Appeal in Speno Rail Maintenance Australia Pty Ltd v Metals and Minerals Insurance Pte Ltd (2009) WASCA 31 where the previous description of the operation of the principle of subrogation given by the Court in Insurance Commission (WA) v Kightly (2005) WASCA 154 was noted and applied:

“(178)The doctrine of subrogation is founded upon equitable principle. It prevents the insured from making a double recovery, once from the insurer and once from the tortfeasor (in a court case) in circumstances in which the insurer has undertaken to indemnify the insured against actual financial loss …”.

18 Further on in the Speno judgment, approval was given to the comments of Lord Hoffman in Caldenonian North Sea Ltd v Norton (No 2) Limited (2002) UKHL4I that:

“(218) It is certainly a general principle …. that a person who has more than one claim to indemnity is not entitled to be indemnified more than once”
and
“(219) In other words, in cases of double indemnity there is either an entitlement to subrogation, or payment by one discharges the liability of both indemnifying parties (and thereby gives rise to rights of contribution), but not both”.

19 Having been indemnified by GIO, the Lessor cannot now seek payment for the same loss. Further, the Lessor does not have the authority or standing to commence or maintain these proceedings on behalf of GIO. Accordingly, the Lessor’s claim for the cost of repairs to the premises must fail.

20 The claim made by the Lessor for locksmith charges arises from the lock-out on 15 January 2010 which the Lessor has claimed as justified by the terms of the lease agreement. I have already determined that this lock-out was not justified by the terms of the subject lease agreement. Accordingly, the locksmith charges incurred by the Lessor were not justified and the claim for payment to be made by the Lessees to compensate the Lessor for these charges must fail.

1.The Application is dismissed.

2. Unless either party files written submissions as to costs within 14 days, there will be no order as to costs. If either party does file written submissions within 14 days, a copy of such submissions is to be served upon the party before or at the same time as filing, and the other party is to file and serve any written submissions as to costs within 14 days. Unless reasons are advanced for a hearing will be conducted, the matter will be resolved “on the papers” pursuant to Section 76 of the Administrative Decisions Tribunal Act.