Christoforidis v Thi Thu Cuc Pham

[2009] NSWADT 241

CITATION:	Christoforidis v Thi Thu Cuc Pham [2009] NSWADT 241
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Nick Christoforidis and Sophie Christoforidis RESPONDENT Thi Thu Cuc Pham
FILE NUMBER:	085249
HEARING DATES:	6 August 2009
DATE OF DECISION:	17 September 2009
BEFORE:	Rickards K - Judicial Member
CATCHWORDS:	Compensation for breaches of retail lease agreement, assignment of lease
LEGISLATION CITED:	Retail Leases Act 1994
CASES CITED:	Mollina & anor –v- Leask & anor , Sup.Ct NSW(1998) unreported, 2293/93; Ferguson –v- Hullock (1995) CLR 202
REPRESENTATION:	APPLICANT S Aslan, solicitor RESPONDENT F Salama, barrister
ORDERS:	1.The Respondent is to pay to the Applicants the sum of $20,838.16 for unpaid rent together with the sum of $6,004.48 for interest, making a total amount payable of $26,842.64. 2.Unless either party files and serves written submissions as to costs within 14 days, there will be no order as to costs. If either party files and serves written submissions as to costs the other party is to file and serve any written submissions in reply within 14 days thereafter, and a decision as to costs will be made on the papers at the expiration of that 14 day period.

REASONS FOR DECISION

INTRODUCTION

1 The Applicants are the owners of a shop located at 107 Haldon Street, Lakemba NSW (“the shop”). All active dealings in relation to the shop and the subject dispute have been undertaken by the male Applicant, Mr Christoforidis.

2 The Applicants seek orders for compensation against the Respondent in respect of unpaid rent for the shop, interest, repairs to the shop and legal costs.

3 The Respondent asserts that she is not liable to the Applicants because she assigned her rights and obligations as Lessee to another party in November 2005, that such assignment was agreed to by the Applicants, and that the Applicants are estopped from seeking to enforce any liability of the Respondent purported to arise under the subject Lease.

BACKGROUND

4 From June 1993, the Respondent conducted an Asian grocery business at the shop in partnership with her sister pursuant to a lease agreement entered into between her sister and the Applicants. The term of this first lease expired on 4 June 1995, and thereafter the Respondent and her sister held over upon a monthly basis. In about September 1999 the Respondent’s sister withdrew from the business but the Respondent continued.

5 The Respondent’s husband passed away in August 2002 leaving her with a teenage daughter to support. The Respondent’s daughter completed her high school education at the end of 2004, and the Respondent says that she then decided that she wished to sell the business.

6 On 5 October 2005 the Respondent entered into a new lease with the Applicants. She asserts that she entered into this new lease because she had secured prospective purchasers, a Mr Ha and a Ms Truong, who were insisting upon a new lease as a condition of purchasing the business. The Respondent says that she made Mr Christoforidis aware of this requirement and that he then arranged for a lease to be prepared. It is common ground that Mr Christoforidis sought and obtained from the Respondent the sum of $500 toward lease preparation expenses. I note here that this procuring of payment of the sum of $500 was in contravention of section 14 of the Retail Leases Act 1994, and this will be reflected in the orders to be made.

7 Mr Christoforidis claims that it was at his instigation that this new lease was entered into, but this issue does not need to be determined in order to resolve the real issues in this dispute.

8 The Respondent’s solicitor wrote to the solicitors for Mr Ha and Ms Truong on 13 October 2005 forwarding a draft contract for sale of the business. This draft contract recited that the amount of $38,000 would be the sale price, comprising $37,700 for goodwill and $300 for equipment, together with a payment of a maximum sum of $20,000 for trading stock.

9 The Respondent says that some time shortly after 13 October 2005 she had a conversation with Mr Christoforidis in which the Respondent asked for his consent to the transfer of the lease so that the sale of the business could be finalised, and that Mr Christoforidis advised that consent to transfer of the lease would only be forthcoming if a number of items of repair were attended to. The Respondent says that she then arranged for a tradesman to come and assess the cost of such repairs but that there was some disagreement between the contractor and Mr Christoforidis as to the extent of repairs needed. It is common ground that, following this event, no repairs were ever arranged or paid for by the Respondent.

10 It is also common ground that on or about 5 November 2005, without the contact for sale being exchanged and without any request for assignment of lease having been made in compliance with section 41 of the Retail Leases Act 1994, the Respondent purported to sell the business conducted at the shop to Mr Ha and Ms Truong for the sum of $50,000, and that this sum was paid to her by the incoming purchaser.

11 The Respondent says that in the early November 2005, she spoke to Mr Christoforidis at the shop in the company of Mr Ha and Ms Truong and that she told Mr Christoforidis “I am too ill to run the business. I have sold it to Mr Ha and Ms Truong and from next month they will pay you rent direct”, following which Mr Christoforidis shook hands with Mr Ha and Ms Truong and replied “Its okay…Similar to Cuc, I will come here each month to collect the rent”. She says that she also asked “When can I get my bond money back?” to which Mr Christoforidis replied “I’ll give it to you once the shop has been fixed.”

12 Nothing further was done to repair the shop. No further written application for consent to assignment of the lease was made to the Applicants or to their solicitors.

13 On 1 February 2006 the then solicitors for the Applicants wrote to the solicitors for Mr Ha and Ms Truong. This letter was in response to a telephone conversation between those solicitors concerning what was needed to enable the assignment of lease of the shop to proceed. This letter did not receive any response, but on 24 August 2006 Mr Ha’s solicitor (Ms Truong was apparently now not to be involved any further in the matter) sent a letter confirming that the business had been purchased in November 2005 by Mr Ha, that Mr Ha had received the consent of Mr Christoforidis to enter into possession of the shop, and that Mr Ha had paid rent to Mr Christoforidis since November 2005. This letter asserted that “there must be a lease between our client and Mr Christoforidis under the Retail Lease Act 1994”.

14 The Applicants’ solicitor wrote to the Respondent’s solicitor on 1 September 2006 confirming the Applicants’ understanding that the Respondent had previously been negotiating the sale of the business, that contracts had never been exchanged, but that the Respondent had allowed Mr Ha to manage the business upon her behalf. In this letter, it was pointed out that the Respondent had the option of either transferring her existing lease to the purchaser or surrendering her existing lease so that a new lease could be entered into with the purchaser, but that all of this was subject to repair work being completed at the premises.

15 The Applicants’ solicitors also then wrote to Mr Ha’s solicitors confirming that they had been unaware of sale of the business and indicating that a choice was available to undertake an assignment of the existing lease or to enter into a new lease.

16 Neither the solicitors for the Respondent nor the solicitors for Mr Ha responded to these letters. It is common ground that Mr Ha remained in possession of the premises paying rent upon a monthly basis until early April 2007 when he vacated the shop without warning.

17 In the period between 5 November 2005 and early April 2007 when Mr Ha was operating the business at the shop, Mr Christoforidis would attend upon a monthly basis and be paid rent and would issue a receipt in the name of the Respondent. Mr Christoforidis says that this was because he received no notification of the sale of the business until September 2006 and that even after that date he still regarded the Respondent as the lessee responsible for payment of rent and other obligations pursuant to the lease agreement.

DISCUSSION OF ISSUES AND DECISION

18 Counsel for the Respondent has very helpfully provided a chronology, an outline of submissions and some authorities which he argues are relevant to the primary contentions of the Respondent that he is not liable for payment of any compensation to the Applicants because there was an equitable assignment of the lease to Mr Ha, and because the Applicants are estopped from now seeking payment of rent and repair costs from the Respondent.

19 The Respondent has referred the Tribunal to the decision of Mr Justice Santow in the unreported Supreme Court decision of Mollina and Anor v Leask and Anor (Sup.Ct.NSW, unreported [1998] 2293/93) which dealt with the liability of lessees under an agreement for lease of a retail shop in a large shopping complex in Penrith, following a series of assignments. In that decision, at page 3, His Honour referred to a number of earlier decisions, including that of the Supreme Court of Victoria in Ferguson v Hullock (1955) CLR202, as authorities for the proposition that “an assignment for value which is not a legal assignment will nevertheless be upheld as an assignment in equity where there is either written evidence or part performance of that assignment.”

20 The decision in Mollina does not support the Respondent in this matter. The court in Mollina was dealing with the respective rights and liabilities of successive lessees toward the lessor. There had been an executed agreement for sale, and partial performance pursuant to the terms of that agreement. That is not the situation existing in this matter. Further, there is no evidence capable of supporting the contention that the Applicants were party to any agreement for assignment of the lease between the Respondent and Mr Ha.

21 The Respondent also argues that the Applicants are estopped from seeking to enforce any provisions of the lease because Mr Christoforidis told the Respondent in the company of Mr Ha and Ms Truong in early November 2005 that he agreed with the sale of the business and was happy to accept payment of rent direct from them. It is argued that the Respondent relied upon this conduct to her detriment in then giving possession of the business and the shop to Mr Ha, and that accordingly the Applicants are now estopped from seeking payment of any compensation by the Respondent for unpaid rent or repairs.

22 The alleged conversation between Mr Christoforidis and the Respondent in early November 2005 did not have the effect which is asserted by the Respondent. This conversation did not, in its very terms, indicate that the Applicants were agreeing to an assignment of the lease to Mr Ha or Ms Truong. At best, the terms of the alleged conversation indicate that the Respondent was advising Mr Christoforidis that she had already sold her business, and that instead of her meeting him to pay rent, Mr Ha and Ms Truong would pay rent “direct”. The use of this term “direct” by the Respondent is significant as it imports an understanding on the part of the Respondent at that time that she still bore ultimate responsibility as tenant under the lease. The effect of Mr Christoforidis saying “Okay”, and agreeing to meet Mr Ha and Ms Truong each month at the shop to collect rent is, at its highest, no more than an acquiescence by Mr Christoforidis to the Respondent parting with possession of the shop and agreeing to collect rent “direct” from these people rather than from the Respondent. Of course, in any event, Mr Christoforidis denies that this conversation occurred as alleged by the Respondent. This alleged conversation does stand in stark contrast to the Respondent’s contention that there had recently been a dispute concerning the repairs which were required by the Applicants to be made to the premises before consent would be given to assignment of the lease. Further, there is no evidence provided from any other source to corroborate this alleged conversation, nor was the conduct of Mr Christoforidis in issuing receipts in the Respondent’s name as and from November 2005 indicative of any agreement or consent on the part of the Applicants to the lease having been assigned to Mr Ha.

23 No action has been undertaken by the Respondent to recover the bond which was taken by the Applicants in October 2007. This absence of action to recover the bond is inconsistent with the argument of the Respondent that she bears no liability to the Applicants for unpaid rent pursuant to the subject lease.

24 The provisions of sections 39 and 41 of the Retail Leases Act 1994 are clear in that a lessor is entitled to withhold consent to the assignment of a retail shop lease if the proposed assignee has financial resources or retailing skills that are inferior to those of the proposed assignor or the lessee has not requested consent to assignment in writing and provided information concerning the financial standing and business experience of the proposed assignee. The lessee must furnish the proposed assignee with a copy of any disclosure statement given to the lessee in respect of the lease. None of these things were attended to by the Respondent.

25 Accordingly, there has been no assignment of the subject lease by the Respondent which is effective as against the Applicant, nor are the Applicants estopped from seeking to enforce their rights as lessor as against the Respondent.

26 The due monthly rental was $5,625.80 inclusive of GST, and was payable for the six months from April until October 2007, resulting in an amount payable of $33,754.60 as at 5 October 2007.

27 Interest is payable at the rate of 12% pursuant to the terms of the lease agreement. When this rate is applied to each of the individual monthly amounts due until 5 October 1007, this comes to a total of $1,181.44.

28 The bond retained and applied by the Applicants as at the above date was in the amount of $12,416.44 inclusive of accrued interest. This amount, together with the sum of $500 obtained by the Applicants for lease preparation expenses, when deducted from the due rent amount of $33,745.60, leads to an amount payable by the Respondent of $20,838.16 for unpaid rent, to which is to be added the interest amounts of $1,181.44 as set out in paragraph 27 above and $4,823.04 for the period from 5 October 2007 to date, making a total interest amount payable of $6,004.48.

29 The Applicants claim the sum of $1,200 as the cost of repairs to the shop. This claim was originally in a higher sum, but the Applicants have adopted this sum which is what the Respondent says that she was told the repairs would cost. However, the Applicants have provided no evidence of any expenditure actually incurred for any repairs and the shop has subsequently been leased. As there is no evidence of actual loss, this aspect of the claim is accordingly dismissed.

30 The Applicants claim costs. In proceedings before this Tribunal, the presumption is that parties are to bear their own costs unless the Tribunal is satisfied that the criteria set down in section 88 of the Administrative DecisionsTribunal Act 1997 apply. For this reason, an opportunity will be given to the parties to make written submissions as to costs if they wish, failing which there will be no order as to costs.

31 Accordingly, orders are made as set out below.

ORDERS

1. The Respondent is to pay to the Applicants the sum of $20,838.16 for unpaid rent together with the sum of $6,004.48 for interest, making a total amount payable of $26,842.64.

2. Unless either party files and serves written submissions as to costs within 14 days, there will be no order as to costs. If either party files and serves written submissions as to costs the other party is to file and serve any written submissions in reply within 14 days thereafter, and a decision as to costs will be made on the papers at the expiration of that 14 day period.