Fasako Pty Limited v TianyD Beauty and Hairdressing Australia Pty Limited and Yao Zhu

The Civil and Administrative Tribunal of New South Wales dealt with a dispute between Fasako Pty Limited, the lessor, and TianyD Beauty and Hairdressing Australia Pty Limited, the lessee, along with Mr Yao Zhu, who is associated with TianyD. The core issue was whether the lessor’s notice of termination, dated 13 September 2017, was effective and whether there was an implied term of loyalty in the lease agreement. The Tribunal was required to determine if the notice was valid and whether there was a breach of an implied term of loyalty by the lessee.

The Tribunal first addressed the effectiveness of the Notice of Termination. It found that the notice did not comply with the requirements under sections 11 and 12 of the Retail Leases Act, and thus was ineffective. Consequently, the lease remained in force. The Tribunal then examined the existence of an implied term of loyalty in the lease, a concept derived from the equitable principle that parties should act in good faith. Given the nature of the lease and the obligations of the parties, the Tribunal determined that such a term was indeed implied. The Tribunal found that TianyD breached this term by engaging in conduct that undermined the commercial relationship.

In its judgment, the Tribunal declared the Notice of Termination ineffective and held that TianyD and Mr Yao Zhu were liable to pay all outstanding rent and outgoings under the lease, as well as damages for the breach of the implied term. Fasako was granted the right to apply its bond in reduction of any amounts owed by TianyD. Regarding costs, the Tribunal outlined a process for the parties to submit their costs applications and indicated that it intended to decide the matter on the papers unless a party requested an oral hearing.