Fresko Caf* Pty Ltd v Bassil

[2009] NSWADT 77

CITATION:

Fresko Café Pty Ltd v Bassil [2009] NSWADT 77

DIVISION:

Retail Leases Division

PARTIES:

APPLICANT in 085067
Fresko Cafe Pty Ltd

RESPONDENT
Nouhad Bassil

APPLICANT in 085128
Nouhad Bassil

RESPONDENT
Fresko Cafe Pty Ltd

FILE NUMBER:

085067, 085218

HEARING DATES:

26, 27 November 2008
5 December 2008
13 February 2009

SUBMISSIONS CLOSED:

13 February 2009

 
DATE OF DECISION: 

9 April 2009

BEFORE:

Callaghan P, SC, Deputy President; Tyler T - Non-Judicial Member

CATCHWORDS:

False or misleading representation – lessor’s disclosure statement – termination of lease – notice of alteration of building – bond money – unconscionable conduct

LEGISLATION CITED:

Administrative Decisions Tribunal Act 1997
Retail Leases Act 1994

CASES CITED:

AG v World Best Holdings Ltd [2005] 63 NSWLR 557
Andrews v Hogan (1952) 86 CLR 223
Poseidon v Adelaide Petroleum (1991) 105 ALR
25R v Marks ex parte ABCE & BLF (1981) 147 CLR 471

REPRESENTATION:

APPLICANT 085067
P Katsivardas, agent

RESPONDENT 085128
B Ralston, barrister

RESPONDENT 085067
B Ralston, barrister

APPLICANT 085128
P Katsivardas, agent

ORDERS:

085067 Application dismissed
085128 Declare that the lessor is entitled to be paid the current balance in respect of the security bond under the lease, namely, bond number 0446107-4.

REASONS FOR DECISION

Background

1 At 138 Beaconsfield Street, Revesby there had been for many years until May 2008, a small shop where there was conducted what could be described as, basically, a takeaway food business serving, in particular, the surrounding industrial area. The shop formed part of larger premises at that address which in recent years have been used as an auto-electrical business.

2 For the last three years of its existence, the shop business was run by Fresko Café Pty Ltd (“the Applicant”), the principals of which are Mr Pavlos Katsivardas and his partner, Ms Nicole Brillon. Mr Nouhad Bassil (“the Respondent”) purchased the property in 1999. A lease of the shop by the Respondent to the Applicant for a term of 3 years commencing on 1 August 2006 with an option to renew for a period of 3 years was entered into on or about 11 February 2008. The Applicant left the shop and abandoned the business in May 2008. The demise of the lease and the business and antecedent events are the subject of these proceedings.

Proceedings

3 Proceedings 085067 were instituted by Mr Katsivardas by way of Application for Original Decision filed as a combined retail tenancy claim and unconscionable conduct claim on 11 April 2008. At the same time there was filed an Application for an urgent interim order, framed by Mr Katsivardas in these terms:

“The landlord not to lock out our shop. The rent and outgoings payments to stop until we reach a Court decision.”

Mr Katsivardas expressed the grounds for that order thus:

“On September 2007 the landlord locked out our shop without any notice. The real estate office advised us that he is going to do it again. The landlord without the 2 months notice that he should give before we sign the lease, made a construction in front of our shop which affects dramatically our business. Our turnover went down 60-70% and the landlord is responsible for that.”

In the Application for Original Decision Mr Katsivardas alleged breaches of sections 10(1), 11(2), 11(4), 16C(2), 33, 34, 45(1), 45(2) and 71A of the Retail Leases Act1994 ( “the Act” ). He stated the grounds for the Application therein as follows:

“Under Section 11(2)(4) we are giving notice of termination.

We signed a renewal lease two months ago and the Lessor gave us a disclosure statement which the information was misleading.

Under 71(A) we are lodging a claim for unconscionable conduct. The Lessor in unreasonable, misleaded us to sign the lease, lying to us and even put an AVO interm order.

On September 2007 he locked the shop without any notice.

Under Section 62B(1)(3)(a)(b)(c)(d)(i)(ii)(j)(B)

The Lessor has done all these to us twice and even more

Under Section 62E we ask for compensation

Under Section 10(1) we ask for compensation

Under Section 34 we ask for compensation

The amount of compensation is $300,000

We are threatened from the real estate that the landlord will lock the shop again.”

The subject lease is in the name of the Applicant as Lessee and I directed that the proceedings continue on the basis that the Applicant was a party to them.

4 Proceedings 085128 were transferred to this Tribunal by the Consumer Trader and Tenancy Tribunal by order on 27 June 2008. The Respondent seeks in these proceedings an order that the whole of the rental bond of $1,996.50 under the subject lease be paid to the Respondent.

5 The proceedings have been heard together. Mr Katsivardas has represented the Applicant and Mr Ralston of Counsel, instructed by Colin Daley Quinn, Solicitors, has represented the Respondent.

6 On account of the unconscionable conduct aspect of the Lessee’s claim and in accordance with clause 4 of Division 3 of Part 3B of Schedule 2 to the Administrative Decisions Tribunal Act 1997 (“the ADT Act”), I was assisted during the hearing by Mr T. Tyler, a non-judicial member. There were to have been two such members but before the hearing got under way, the other such member became unable to sit. The assistance given by Mr Tyler has been significant and I am most grateful to have had it, but I have made the decisions herein alone.

Earlier History of Premises

7 When the Respondent purchased the premises in 1999, they included at the western side towards the front, a dwelling, or former dwelling, structure and at the back of the premises there were other buildings evidently of a shed or warehouse type. At the front of the dwelling-type structure there had been constructed a shop with a concrete apron and there was a concrete driveway going up the eastern side of the shop. On the concrete apron outside the shop were some tables, chairs and umbrellas. The shop was tenanted when the Respondent purchased the premises.

8 On 20 October 2000, the Respondent obtained a development consent (892/2000) in respect of the premises for a new auto electrical factory to be constructed and for the shop to remain with an office area to be built as a new floor above it. On 17 September 2001 a construction certificate was issued in respect of the industrial portion of the premises, not including the shop section, which was to be carried out as a second stage. On 16 April 2003 an interim occupation certificate was issued in respect of the new building on the premises.

9 By Lease bearing date 3 June 2004, the Respondent leased the shop to Pei Feng for a term of 3 years from 26 August 2003. By Deed bearing date 4 June 2004 the Respondent consented to the assignment of the lease to Watche Topajikian and Sandra Topajikian.

10 The lease commencing on 26 August 2003 of the shop made no mention of the area in front of the shop whether in relation to the use of tables, chairs and umbrellas, access to the shop or otherwise. Nevertheless, the tables, chairs and umbrellas had been, and continued to be, used in connection with the shop throughout. When the new auto electrical building was constructed the driveway leading into it on the eastern side of the premises was elevated such that the concrete area outside the shop on the western side of the property was lower than the driveway by up to about 450 millimetres. Along the line of the step down between those sections of the premises there was a line of planter boxes which served as bollards.

Applicant’s Acquisition of Shop - 2005

11 As from 10 June 2005 Mr Katsivardas took over the shop business, having paid to Mr and Mrs Topajikian $14,000.00 inclusive of GST. The Applicant had been incorporated on 9 June 2005 and thereafter the business was conducted in the Applicant’s name.

12 The arrangement between the Applicant and the Respondent whereby the Applicant went into occupation of the shop was informal and arose out of discussions between Messrs Katsivardas and Bassil, part at least of which was witnessed by Ms Brillon. It is clear that in those discussions Mr Bassil said that he would accept a monthly rent of $1,650.00 (which was lower than $1,987.75 per month payable under the existing lease and which Mr Bassil says, was to assist Mr Katsivardas “to get on his feet with the takeaway business”), that the existing lease would expire in August 2006, that renovation of the rest of the premises, including the shop, would have to be carried out and that a new lease of the shop would be given to the Applicant. Apart from those matters, there is a measure of controversy between the Applicant and the Respondent concerning these discussions. In particular, Mr Katsivardas says, and to an extent he is corroborated by Ms Brillon, that Mr Bassil represented that they could use tables, chairs and umbrellas in front of the shop, even offering to assist them in securing down the tables and chairs so that they did not have to be taken in and out of the shop every day; Mr Bassil denies this and says that shortly after the Applicant had taken over occupancy of the shop, Mr Katsivardas asked Mr Bassil whether he could put a shade cloth over the tables and chairs outside the shop and that Mr Bassil responded to the effect that the front of the shop was to be part of the renovation and nothing could be put out there. Further, Mr Katsivardas denied in his oral evidence that he was shown any plans concerning the renovation. The latter aspect of the controversy, it seems to me, is removed by this account by Peter Smart of Dorrough Smart, Solicitors, on behalf of the Applicant, in a letter dated 15 March 2007 to the Respondent’s Solicitors, Colin Daley Quinn:

“By way of background we are instructed that the lessor stated that he needed to carry out renovations before giving a new lease. At this time the new lessees (Mr Katsivardas and Ms Brillon) had been shown the plans prior to taking over the lease and it was agreed that the new lease, when prepared, would be in essentially the same terms as the then current lease. This was acceptable to the new lessees.”

These comments we made by Mr Smart in the course of negotiations for a lease to the Applicant of the shop and after he had spoken to another solicitor, Mr Peter Webb, who had earlier been acting for the Applicant. They seem to me to be a considered statement, on instructions, in respect of the Applicant’s position concerning redevelopment of the shop, which is appropriate to be accepted as a credible account of what had in fact occurred. I take that view notwithstanding that Mr Katsivardas subsequently dispensed with Mr Smart’s services because, he says, he had included in that letter a later paragraph with which Mr Katsivardas disagreed:

“While our client would clearly prefer to remain in the premises, it is not vital to its continued business that it does so remain…”

In any event, it is clear that Mr Katsivardas was aware of an impending second stage of the development of the premises, which would be carried out in the vicinity of the shop.

2006

13 In early 2006 Mr Katsivardas’ wife returned to Greece with their four children. Mr Katsivardas thereupon became involved in custody and/or access Court proceedings in Greece in respect of his children. There seems to have been up to about that time goodwill between Messrs Katsivardas and Bassil with Mrs Bassil helping out on occasions in the shop and members of the Bassil family eating there without charge from time to time.

14 In about April 2006, the Applicant was a month late in making a rent payment and Mr Bassil says that Mr Katsivardas “blamed the costs of the overseas Court case in Greece”.

15 Following discussions between Messrs Katsivardas and Bassil on 15 July 2006, the rent paid by the Applicant was increased by 10% to $1,815.00 per month including GST, as from 22 August 2006. Mr Bassil informed Mr Katsivardas that the renovations would not be done until the forthcoming Christmas/New Year period, that he would then create a six year lease and that no rent would be charged while the shop was closed for the renovations. Mr Katsivardas says that he argued with Mr Bassil about this increase and about the whereabouts of the new lease but accepted the situation on legal advice.

2007

16 The renovations were not done as discussed and in early 2007, Mr Bassil’s solicitors issued a lease providing for a term of three years commencing on 1 August 2006, at a monthly rent of $1,650.00 (excluding GST) and with an option to renew for a period of 3 years.

17 The draft lease included as Item 21:

“The tenant shall not at any time during the term of this lease…use or occupy the car parking area located at the front of the premises for the purpose of conducting permitted use. The tenant acknowledges that the car parking area located at the front of the premises do not form part of the demised premises”.

In the letter of 15 March 2007 from Dorrough Smart to Colin Daley Quinn, this aspect of the draft lease was commented on:

“We note that the apron/car parking area in front of the shop premises is specifically excluded in the tendered proposed lease [Item21(b)]. This apron measures 10 metres by 6 metres. It is our instructions that this area was previously agreed to be available to the lessee. We understand that the lessor seeks to utilise part of this area for placement of industrial waste skips previously located on the driveway to the rear of the premises…”

18 As noted above, Mr Katsivardas dispensed with the services of Dorrough Smart and by September 2007 he retained Tsavdaridis Lawyers.

19 No lease having been agreed upon by about August 2007, Mr Bassil again sought a 10% increase in the rent. There were developing arguments between Mr Katsivardas and Mr Bassil over that and other matters, including mail deliveries to the shop. Mr Bassil locked the Applicant out of the shop premises on the morning of 19 September 2007, asserting that the rent for that month and an amount for water rates were unpaid. Following some correspondence on that and the following day between Tsavdaridis Lawyers and Colin Daley Quinn, which appeared to culminate in an agreement for the Applicant to retake possession of the shop on payment of the allegedly outstanding moneys, Mr Katsivardas, on 24 September 2007, instituted proceedings 075176 in this Tribunal by way of Application for Original Decision and Application for Urgent Interim Order seeking orders preventing the lock out of the Applicant from the premises.

20 On 27 September 2007 this Tribunal made the following interim order:

“Lessor is restrained from any action to prevent Lessee’s access to the premises at 138 Beaconsfield Street, Revesby, until further order of this Tribunal.

Lessor has leave to apply on 7 days notice if Lessee does not pay $1,815.00 inclusive of GST on 9 October 2007 and 9 November 2007.

Note: Lessee’s requirement for access to roof to service refrigeration equipment.”

21 Mr Tsavdaridis did not, at that stage, represent the Applicant in these proceedings before the Tribunal and Mr Katsivardas appeared on behalf of the Applicant. Mr Michael Milgate of Colin Daley Quinn represented Mr Bassil. On 23 November 2007 a mediation took place at the Retail Tenancy Unit. Following that mediation, evidently by agreement made there, Colin Daley Quinn issued to Mr Tsavdaridis a new form of lease which described the property leased as:

“Existing lock up shop together with that area hatched in red on the plan annexed hereto and marked “A”.”

The hatched area covered the whole of the concrete area directly outside the shop up to the boundary of Beaconsfield Street. The lease included Item 25:

“Development Approval

The landlord shall consent to the tenant lodging, within one (1) month of the date hereof, a Development Application with Bankstown City Council for the grant of a licence to place table and chairs within the property leased.”

The term was stipulated to be 3 years commencing on 1 December 2007, there was an option for a further 3 years, and the rent was $2,200.00 per month (inclusive of GST).

22 There was correspondence between Messrs Milgate and Tsavdaridis concerning amendments to other sections of the lease which Mr Tsavdaridis sought and Mr Milgate declined. In the meantime, Mr Katsivardas approached the Bankstown City Council in relation to the tables and chairs. This led to a Council inspection of the premises and to a letter being written to each of Mr Katsivardas and Mr Bassil by the Council on 19 December 2007. The letter from the Council to Mr Katsivardas was in the following terms:

“I refer to the above matter and your request for a letter regarding the use of the front area for outdoor dining purposes.

At the time of inspection by Council Officers on 26 November 2007 it was noted that tables, chairs and rubbish were located in the area adjacent to the driveway.

A perusal of Council’s files has revealed that this area has been approved as three (3) car parking spaces and therefore, the use of this area for outdoor dining and storing of rubbish is contrary to DA892/2000/2.

It was also noted that the driveway was at a level much higher than the car parking area and therefore car parking spaces cannot be accessed via the driveway. Council has requested that the owners rectify this problem.

Therefore, it is requested that the tables, chairs and rubbish be removed and carparking spaces be kept clear at all times.

Furthermore, it is requested that all rubbish and recycling materials be kept in bins with lids and bins be located immediately adjacent to the car parking spaces at the front of the shop and be collected by a licensed waste contractor on a regular basis…”

The letter from the Council to the Respondent was of similar content but in the form of a notice of proposed order.

23 On 20 December 2007, Mr Tsavdaridis forwarded to Colin Daley Quinn a copy of the letter from the Council to Mr Katsivardas. He drew attention to the difficulties which the Council’s position meant for the Applicant’s use of the shop and concluded:

“In addition, we presume that your client’s excavation and rectification works in order to comply with the Council’s work order in respect of the raised driveway will take some time and cause some disadvantage to our client.

Please obtain your client’s instructions.”

24 By email dated 2 January 2008 Mr Bassil requested that the Council grant an extension of time to carry out the required work. Council responded by letter dated 7 January 2008, granting an extension of time to 5 pm on 15 February 2008 failing which, Council said, an Order would be issued. These matters were not communicated by the Respondent or his solicitors to the Applicant or its solicitors.

25 On 29 January 2008 Mr Tsavdaridis telephoned Mr Milgate and said words to the effect:

“I think it is in my client’s best interest to enter into a lease with your client even though the Tribunal may grant him a statutory lease.”

That telephone call was followed up with a “without prejudice” letter of the same date from Mr Tsavdaridis to Colin Daley Quinn confirming the request for a lease to be submitted and concluding:

“ It is anticipated that upon execution by your client, the proceedings in the Administrative Decisions Tribunal may be withdrawn.”

26 It is to be noted that Mr Milgate gave evidence in these proceedings. Mr Tsavdaridis did not, despite suggestions to Mr Katsivardas that he give consideration to calling Mr Tsavdaridis, and even that he be summoned to give evidence. In these circumstances, Mr Milgate’s evidence, which in any event was otherwise credible, has to be accepted.

27 On 30 January 2008, Colin Daley Quinn submitted to Mr Tsavdaridis a lease and disclosure statements. The lease was substantially in the form of that issued in March 2007 (including Item 21) except that Item 27 was added conferring on the Applicant a right of ingress and egress from the premises “from the lessor’s driveway adjacent to the car park in front of the shop”. The disclosure statements made no reference to the second stage of the development of the premises or to any work required by Council which may affect the premises. There followed communications between those solicitors concerning some amendments to the lease including a more precise definition sought by Mr Tsavdaridis of the route of ingress and egress to and from the shop, which culminated in a plan showing that route being prepared by Mr Tsavdaridis and added to the lease as Annexure C.

28 On 31 January 2008 Mr Tsavdaridis filed a Notice of Appearance on behalf of the Applicant in proceedings 075176 and in those proceedings had the following orders and notations made by consent in accordance with Short Minutes signed by himself and Mr Milgate:

“Orders

The Applicant file and serve an amended Application and any affidavits upon which it seeks to rely on or before 18 February 2008.

The proceedings be stood over for further directions on 21 February 2008 at 10.00 am.

There be no order as to costs.

Notations

1. The parties have been attempting to settle the proceedings and a further settlement conference has been scheduled between the parties and their legal representatives at 3.00 p.m. on 4 February 2008.”

29 The settlement meeting proposed for 3 pm on 4 February 2008 did not take place. Mr Tsavdaridis wrote to Colin Daley Quinn on that day stating that:

“The writer is anxious to finalise this matter and have our client execute all documents today.

Please confirm that your client agrees to the amendments set out in the Lease entitled ‘Fresko and Bassil Lease Annexures A and B Draft No.3’ attached to our email to you dated 30 January 2008.”

However, Mr Milgate spoke to Mr Tsavdaridis, evidently by telephone, and said:

“I am going to have to have an onsite meeting with my client to determine the extent of the works Council require him to carry out at the premises, until I establish the extent of those works I don’t see any practical benefit in our meeting.”

30 On 8 February 2008, Mr Milgate attended at 138 Beanconsfield Street, Revesby, and met with the Respondent and his wife. The Respondent supervised an inspection of the outside of the lock-up shop premises and indicated that the level of those premises would have to be raised to be same level as the driveway and in doing so access to the shop would be across the driveway of the Respondent’s auto electrical business and then down steps to the shop. In the presence of the Respondent and his wife, Mr Milgate rang Mr Tsavdaridis and recounts the telephone call in these terms:

“I said: ‘Theo, I’m over at Ned’s premises at the moment. Ned’s just shown me over the area where the work has to be done to comply with the Council’s Order. Effectively, the carpark in front of your client’s shop will have to be raised to the level of Ned’s driveway. That will mean that it will be necessary for access to your client’s shop to be via two concrete shops down from Ned’s driveway.’

Theo said: ‘How high will the steps be?’

I said: ‘’Theo, do you have any objection to my putting you on speaker phone? It would be easier for Ned to explain it to you.’

Theo said: That’s okay.’

I then placed the telephone on ‘speaker’ and the Respondent said words to the effect of:

‘there will be two steps down from the driveway. The drop will be less than the height of my knee. I will carry out the works when required by the Council and with as little disturbance as is possible to your client’s business.’

Theo said: ‘We don’t want any fencing which would obstruct the front of the shop either during the works or when they’re completed.’

The Respondent said:

‘I will use pool fencing. I will not be using barriers to block the view of the shop.’”

During the telephone conference Mr Tsavdaridis faxed over a copy of a site plan where an arrow was marked to confirm the entry point to the premises. This showed a line of access northwards up the driveway to the auto electrical business and then to the west immediately in front of the shop. At the end of the telephone conference, Mr Milgate says that Mr Tsavdaridis made the following comment:

“If my client has a lease and your proposed works do cause disruption to his business then he will be at liberty to pursue his rights under the lease. I will get my client in to discuss these matters and hopefully we can finalise this matter.”

31 It is apparent that there featured at this time in the minds of Messrs Katsivardas and Tsavdaridis and Ms Brillon the 2 months’ written notice provisions of s33 of the Act for “…any alteration or refurbishment of the building…of which the retail shop lease forms part which is likely to adversely affect the business of the lessee…” This was made particularly clear by Mr Katsivardas in his closing address to the Tribunal and I think that a few of his remarks should be set out:

“So, we signing the lease and we say that we thought with my partner that even if his starts this works which – which – which we suppose that we would receive a 2 month’s notice for this we had for minimum 2 months to sell the business…”

“That’s why when (Mr Tsavdaridis) mentioned to me about Council works from Mr Milgate he said to us I don’t know exactly what they will do but they give us notice, the proper notice the 2 months, because we didn’t time, duration and everything was very general statement, like, you know, we have to do Council works with that and that and we raise the floor. We didn’t know when and everything and Theo told me, Pablo, you are – he was my solicitor because if you don’t have 2 month’s notice because he knew that we signed the lease and we sell the shop. He knew it very well, everybody knew in here in this room except you that when we sign the lease we going to sell the shop…”

“…We were asking – we would get from this shop within the first 2 months that we signed the lease $120,000 to sell it, Your Honour.”

32 By 11 February 2008 Mr Tsavdaridis sent to Colin Daley Quinn the lease and disclosure statements, executed by the lessee together with various cheques effecting financial adjustments between the parties in respect of rent adjustments since 1 October 2007, an increase of the bond and registration fees. The copy plan designating the previously discussed ingress/egress route for the shop was prepared by Mr Tsavdaridis and included in the lease. In a statement tendered to the Tribunal, Mr Katsivardas sought to explain his attitude at this stage:

“With the solicitor’s advise to sign the lease and sell the business asap and with two people interested to buy our business we decided, instead of going to the court and spending more money and time, to sign the offered lease and sell the business straight away. So, on 11th of February 2008 we signed the lease hoping that we can sell the business and get our money…”

33 On 13 February 2008 Mr Tsavdaridis forwarded to Colin Daley Quinn draft Terms of Settlement pursuant to which the proceedings in this Tribunal were dismissed on or about 21 February 2008.

34 On 21 February 2008 the Council issued to Mr Bassil an order under s121B of the Environmental Planning and Assessment Act 1979 that he:

“1. Undertake works to ensure that the three (3) car parking spaces at the front of the take away shop are made accessible via the driveway, to comply with the approved site and drainage plans to Development Application 892/2000/2.

2. Upon completion of works, provide bollards to ensure that the front door to the take away shop is not obstructed by the parking of cars.”

It was specified that the order must be complied with by 5 pm on 20 March 2008.

35 On 21 February 2008, Starr Partners of Padstow, recently appointed as the Respondent’s managing agents, wrote to the Applicant following a visit to the premises on 20 February 2008, drawing attention to Item 21 in the Lease and seeking attention to a situation concerning the car parking area there referred to, which they expressed as follows:

“As you are currently using this area as outside seating for your clientele, this is in breach of the lease agreement. This area is clearly a non lettable area to be used solely by the landlord for his own purposes. The area that is let to Fresko Café is 77 sqm approx only and is referred to as the Lock up Shop.”

On 22 February 2008 Starr Partners forwarded to the Applicant a copy of the notice from the Council of 21 February 2008 and on 26 February 2008 Mr Katsivardas wrote to Starr Partners:

“I would like to have a plan of how the front area will be before any construction starts. I need to know how and from where the customers come in and out of the shop. Also, I need to know my deliveries and the rubbish bin will come in and out. I sent my considerations to Bankstown City Council too because I believe that the way the landlord is planning to fix it it’s not the appropriate way.”

36 On Saturday, 1 March 2008, with the shop closed for business over the weekend, the Respondent had a builder attend at the site to commence work called for by the notice from the Council. The builder describes the commencement of the work thus:

“Due to the car park being directly in front of the shop in consultation with the Respondent it was decided to use plywood sheets 1.2m high to stop dust entering the take away shop and to use a pool fence for the perimeter fence to allow customers to view the shop as open.

In order to provide safety for the shop, placement of a stormwater pit with an electrical pump to remove any surface water from entering the shop was constructed. Concrete pots were placed between the driveway and the perimeter fence as a walkway to the entire shop as discussed with Bankstown City Council. Placement of a temporary pre-cast step was made to allow customers to enter the shop from the driveway.”

On Monday, 3 March 2008, arguments arose on site between Mr Katsivardas and Mr Bassil which evidently continued during the week. The builder says that he “endured” two visits from the Police and five visits from Council officers. The concrete pour was carried out on Saturday, 8 March 2008, and after the concrete cured for a week, the fences were removed on 14 March 2008. On 17 and 18 March 2008 a retaining wall was constructed at the front of the property and on 23 March 2008 a sign writer painted a pedestrian pathway delineating the ingress and egress to and from the shop.

37 On 13 March 2008, an Interim Apprehended Violence Order was taken out by the Respondent at the Bankstown Local Court against Mr Katsivardas in respect of Mr and Mrs Bassil and their three children as protected persons. This order was revoked by the Court on 24 April 2008.

38 As previously noted Mr Katsivardas instituted the proceedings 085067 in this Tribunal on 11 April 2008.

39 On 22 April 2008, Mr Katsivardas made a Freedom of Information Application to Bankstown City Council and on 8 May 2008 the Council determined to grant access to certain documents. Material obtained by Mr Katsivardas included a development consent issued on 31 July 1984 for “inclusions to existing sandwich shop” at 138 Beaconsfield Street, Revesby, specifying as a condition thereof:

“On-site car parking provision shall be made available for a minimum of three (3) cars in marked spaces within the front setback area.”

Also included was the Consent of 20 October 2000 in DA 892/2000 with this provision concerning carparking and driveways:

“Carparking spaces for five (5) vehicles shall be provided in marked spaces in the manner generally shown on the approved site plan and such spaces are to be kept clear and available at all times. Three (3) spaces shall be marked and used for visitor parking.”

There was also an application dated 14 August 2007 for a Construction Certificate for the second stage of the work on the premises (that Construction Certificate was issued on 3 September 2007).

40 On 15 May 2008 the Applicant left the shop. Rent had been paid to 1 April 2008. In his oral evidence in the Tribunal Mr Katsivardas said “we terminated the lease” and he was asked how he said they terminated the lease and I think that his response should be set out in full:

“I put our application on April 2008, two months after the construction started, to the tribunal, asking that the business are dropping dramatically week by week and the business are not viable after the raising of the front area and the bringing of the rubbish bins and the cars in front of our shop and we asked from Mr Fox when we came in that tribunal, he asked us ifi we wanted to stay or to go and I said that under misleading and dramatically drop of the last two or three months we were not able to survive with the new conditions of the lease. Of course, by that time, your Honour, I didn’t have put an application in Bankstown Council to receive the information that I received after. I wasn’t aware of what exactly was the situation with the condition of the use and…because of that, the situation that we’ve been we said we want to terminate the lease. Mr Fox asked us how long we need to empty the shop and we required for a month and he gave us until 15 May and we put our claim for unconscionable and deceptive conduct and misleading, misrepresentations of the lease twice and that’s how we started this case. And just to complete, your Honour, something, that when we put the application in the tribunal we had still ongoing the orders for the AVO from the landlord. It wasn’t on the court yet to know that they going to be revoked and we had even the pressure that we going to live next to a person who ask not to – I mean we were, the customers and us, we had to walk, to go into our premises, through his driveway and he said that he didn’t want, when he put the order for the AVO, for us to go any close towards him. So we had this pressure as well because Bankstown Council actually, when I put 24 April, 22, my application and they inform me, they proposed, through Mr Ian Stromberg, who is the councillor the area in Bankstown Council and he knows that for many years there was seating area because he’s passing every day from the shop. He came with the general manager in my office. The respondent is here to disagree with that because they went to talk to him and they told me ‘What do you want, Mr Katsivardas? What can we do to rectify the problem because we can see that you’ve been damaged? Do you want us’ – they offer to me to put an application again to change the use of the front area and I said, ‘There is no way to communicate with the landlord anymore after having the AVO going on as well. I just want to get out of here and to get compensated for what I’ve been through’ and that’s how even Bankstown Council, when we put our application, they propose, they offer to help us, but we couldn’t stay anymore. It was too much for us after three years what we’d been through, especially from March 2007. The last year was a nightmare every day, your Honour. Even the council was asking, ‘Did the landlord provide any car parking spaces, even if not in front, somewhere else in the side?’ I said, “not only not even on in the side, but he was parking cars that he was using for the auto electrician business from customers in front of the street’, your Honour, every day.”

41 On 19 May 2008 Colin Daley Quinn forwarded a copy of the lease, as registered, to Tsavdaridis Lawyers.

42 On 20 June 2008 Mr Katsivardas went to Greece and he returned to Australia some time in September 2008.

43 By about September 2008 the Respondent had carried out the second stage of the development on the premises which included the construction of a new storey above the former shop premises, the raising of the floor level of the former shop to the height of the then parking area outside, and the removal of the steps down to the former shop level.

Further findings of fact

44 On 11 January 2008 when Mr Katsivardas and Ms Brillon, assisted by Mr Tsavdaridis, executed the lease:

(a) By reason of the communications between Mr Katsivardas and the Council in December 2007, the Applicant was aware that the concrete apron outside the shop could no longer be used for tables, chairs and umbrellas associated with the shop and that the two different heights of the concrete driveway to the auto electrical business and of the concrete apron area outside the shop would have to be levelled.

(b) By reason of Mr Tsavdaridis’ telephone conference involving Messrs Milgate and Bassil on 8 February 2008, the Applicant was on notice that to comply with the Council’s requirements, the Respondent was intending not to lower the level of the concrete driveway to the auto electrical business but to raise the level of the concrete apron outside the shop and to install steps leading down to the shop.

(c) By reason of information which Mr Katsivardas and Ms Brillon had been receiving since 2005, the Applicant was aware that the Respondent was proposing to carry out the second stage of the development of the premises above and around the shop.

(d) There was a hope in Mr Katsivardas and Ms Brillon that no work would be done for at least 2 months in the vicinity of the shop, whether as required by the Council and/or as the second stage of the development of the premises and that the Applicant would be able to sell the shop business in the meantime.

45 The above matters need to be now assessed in terms of the various provisions of the Act which feature in the Applicant’s complaints in these proceedings.

46 The lease executed on behalf of the Applicant on 11 January 2008 could not, in my opinion, properly be said to have been entered into “as a result of a false or misleading representation made by” or on behalf of, the Respondent under s10(1). Any representations that may have been previously made concerning the use by the Applicant of the concrete apron immediately outside the shop whether for tables, chairs and umbrellas, access or otherwise, had been dispelled by the Council’s statement to Mr Katsivardas of its position by its letter of 19 December 2007 and by Items 21 and 27 (with Annexure C) in the lease. The lessor’s disclosure statement may have been less than complete in that it did not refer to work to be done in the vicinity of the shop as required by the Council and as the second stage of the development of the premises. Nevertheless, there was virtually full knowledge by the Applicant concerning those matters with the only relevant aspect not explicitly communicated to the Applicant being a particular imminence of the work required by the Council by reason of the communications between the Council and the Respondent in early January 2008, which communications had not been passed on to the Applicant or his solicitors. In my opinion however, significant imminence of that work would in any event have been reasonably apparent to the Applicant from what the Council had already communicated to Mr Katsivardas. It seems to me that the Applicant, through Mr Katsivardas and Mr Tsavdaridis, chose to run the risk in respect of that imminence and in that regard I particularly note Mr Tsavdaridis’ comment at the end of the teleconference, as set out in par.30 above and Mr Katsivardas’s comments concerning 2 months set out in par.31 above.

47 By reason of the considerations set forth in the preceding paragraph, it could not be the case, in my opinion, that the lessor’s disclosure statement was misleading in that it failed to disclose the situation concerning work required by the Council in the vicinity of the shop (or, for that matter, the second stage of the development of the premises, but that had not become an issue before termination of the lease). Nevertheless, the prescribed form of lessor’s disclosure statement (Schedule 2 to the Act) calls for details to be given of any anticipated disturbance to trading:

“Give details of any disturbance likely to occur during the term of the lease, where known, where this will have a significant adverse effect on trading.”

No such details having been given of those matters, in my opinion, it was the case that the disclosure statement was incomplete. It should be confirmed, however, that terms of matters not otherwise then within the knowledge of the Applicant, the only incompleteness was the particular imminence of the work required by the Council by reason of the communications between Council and the Respondent in early January 2008. It is to be borne in mind that the disclosure requirements of the Act restrict the availability to an intending lessor (and to an extent also, to an intending lessee) of the “traditional secretiveness and obliquity of the bargaining process” (per Burchett J in Poseidon v Adelaide Petroleum NL (1991) 105 ALR 25 at 26).

48 There being thus non-disclosure to that extent in the lessor’s disclosure statement, the Applicant had a potential right of termination under s11(2) of the Act. It is suggested on behalf of the Respondent that the provisions of s11(3) apply in its favour:

“The lessee cannot terminate the lease under this section on the ground that the disclosure statement is incomplete or contains information that is materially false or misleading if:

(a) the lessor has acted honestly and reasonably and ought reasonably to be excused for the failure concerned, and

(b) the lessee is in substantially as good a position as the lessee would have been if the failure had not occurred.”

The communications between Messrs Milgate and Tsavdaridis from 29 January 2008 to about 21 February 2008 leading to the lease, as set out above, suggest to me that the non-disclosure of the communications between the Council and the Respondent in early January 2008 was an omission, probably solitary, in what were otherwise reasonably frank and open negotiations by and on behalf of the Respondent. Nevertheless, the omission, bearing as it did on the particular imminence of the work required by the Council and the lessor’s statutory obligation of disclosure, could not be said to involve reasonableness as referred to in s11(3), such that the lessee could not terminate the lease under s11(2).

49 The Applicant, it appears to me, consistently with s11(2) gave written notice of its termination of the lease in its Application for Original Decision in proceedings 085067 (see the first line of the grounds set out in par.3 above) and effected its termination by removing its equipment and other material from, and relinquishing possession of, the shop on 15 May 2008. The Respondent accepted that termination by resuming possession of the shop, confining its claims against the Applicant (in proceedings 085128) to unpaid rent to that date (to the extent of the amount of the bond) and by later altering the physical state of the shop when carrying out the second stage of the development of the premises later in 2008. If, contrary to my opinion, there was not thus a s11(2) termination of the lease, the lessee’s vacation of possession of the shop having thus been accepted by the lessor, there was a surrender of the lease by operation of law (Andrews v Hogan (1952) 86 CLR 223 at 253).

50 When the Applicant took over the shop in 2005, $1,650.00 was paid to the Respondent as bond money. That bond was not, contrary to s16C of the Act, deposited by the Respondent with the Director-General. That situation was retrieved when the lease was entered into in February 2008 and there was deposited with the Director-General on 19 February 2008, as bond number 0446107-4, $1,996.50 comprising the previous $1,650 plus $346.50 being one of the payments made under cover of the letter of 11 February 2008 from Tsavdaridis Lawyers to Colin Daley Quinn forwarding the lease executed on behalf of the Applicant. As has been emphasised throughout the Respondent’s submissions, these proceedings concern the February 2008 lease. Any prior breach by the Respondent of s16C is not directly relevant to the outcome of these proceedings.

51 The work required by the Council in respect of the concrete driveway to the auto-electrical business and the concrete apron in front of the shop, constituted alteration of the building of which the shop formed part and was likely to adversely affect the business of the Applicant such that two months’ notice in writing was required to be given by the Lessor under s33 of the Act. “Building” in that provision should, in my opinion, be given a wide meaning (R v Marks ex parte ABCE & BLF (1981) 147 CLR 471 at 485-6) such as to include the concrete apron. The Applicant did not make any application to restrain the work being done and it was completed before Application 085067 was commenced on 11 April 2008.

52 The Applicant complains also concerning s34 of the Act which relevantly provides:

“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…

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.”

A question would arise which was not the subject of submissions to the Tribunal, whether the provisions of the section apply by reason of sub-section (4):

“(4) The provisions implied by this section do not apply to any action taken by the lessor…

b)in compliance with any duty imposed by or under an Act or resulting from a requirement imposed by a public or local authority acting under the authority of an Act.”

Further, any relief under this section which could be given would depend on a written notice by the lessor to the lessee that the matter be rectified; no such notice was given. I cannot, in these circumstances, see any room for relief for the Applicant under s34.

53 Included in the sections in respect of which the Applicant seeks relief is s45 relating to the prohibition of key-money and lease preparation expenses for renewal or extension. There is no evidence that any such items were involved in respect of the lease and I cannot see that any claim in relation to this provision would exist.

54 A claim has been made by the Applicant for unconscionable conduct under s62B. Relevant conduct should be assessed in accordance with what Spigelman CJ said in AG v World Best Holdings Ltd [2005] 63 NSWLR 557 at [121]:

“Unconscionability is a concept which requires a high level of moral obloquy. If it were to be applied as if it were equivalent to what was ‘fair’ or ‘just’, it could transform commercial relationships in a manner which the Minister expressly stated was not the intention of the legislation. The principle of ‘unconscionability’ would not be a doctrine of occasional application, when the circumstances are highly unethical, it would be transformed into the first and easiest port of call when any dispute about a retail lease arises.”

In the circumstances leading up to the lease as I have canvassed above and particularly in light of the conclusions which I have expressed in pars 44 and 46 above, I am of the opinion that no case of unconscionable conduct on the part of the Respondent has been made out. By similar reasoning, and notwithstanding that s62D was not specified by the Applicant, I have formed the view that there was no misleading or deceptive conduct as referred to in that provision, on the part of the Respondent.

55 In these circumstances, I have to conclude that the Applicant’s claim for relief in proceedings 085067 fails entirely.

56 On the basis of that conclusion the quantum of any loss to, or other claim for compensation by, the Applicant does not arise. Nevertheless, it may assist if I still deal with the evidence on quantum that has been placed before the Tribunal. Mr Katsivardas sought to sustain a claim for $300,000.00 which he quantified as:

“(A) $120,000 loss of the value of the business

(B) $120,000 loss of future profits from the period March 2008 to August 2012 when the lease would expire. Minimum average yearly income $40,000

(C) $20,000 loss of a chance to buy a new business and continue trading

(D) $20,000 loss of credibility because of what happened and this affects seriously future potential new business

(E) $10,000 for overdue and unpaid accounts filed with our first affidavit

(F) $7,000 for legal expenses (receipts attached)

Total of losses $297,000”

Such evidence as Mr Katsivardas tendered in support of those matters was limited but included financial statements prepared by Accountants for the years ended 31 June 2006 and 30 June 2007 with Business Activity Statements for the first three quarters of the 2008 financial year. The 2006 accounts showed a gross profit from trading of $31,088.60 and after deducting expenses including directors’ fees of $5,200.00, there was an ultimate loss of $10,339.06. In the financial year 2007 there was a gross profit from trading of $65,456.32 and an eventual profit of $2,182.80 after deducting expenses including directors’ salaries of $16,800.00. Mr Katsivardas gave oral evidence that there were other benefits from the business to himself, Ms Brillon and the family involving motor vehicle, telephone and food. The three Business Activity Statements for financial year 2008 showed total sales (inclusive of GST) to 31 March 2008 of about $140,000.00; total sales recorded in the 2006 and 2007 accounts were $122,953.74 and $166,780.91 respectively; and Mr Katsivardas suggests that there was thus a trend of increasing sales by the business. As previously noted, Mr Katsivardas was looking to sell the business for $120,000.00 when the lease was entered into. Mr G.M. Henderson, Chartered Accountant, gave expert evidence on behalf of the Respondent; he said there were essentially two relevant ways of valuing such a business – “net tangible assets” and “multiple of earnings”; in his opinion, if a figure for commercial wages including superannuation and workers compensation were factored into the accounts for 2006 and 2007, such as $45,000.00, there were demonstrated an inability for the business to pay wages and an overall significant loss; any value of the business had to be determined on a net tangible assets basis; he rejected a suggestion that the unexpired lease on its own might be a relevant asset and said that the net tangible assets for the business would be the plant, equipment and stock. Mr Katsivardas removed plant, equipment and stock before the shop was vacated.

57 That evidence requires the conclusion that any loss and any other compensation would have to be assessed at nil.

Proceedings 085128

58 The Applicant did not pay any rent for the shop after 1 April 2008. In the circumstances dealt with above, there is no reason apparent why the Respondent is not entitled to the relief which he seeks in these proceedings, namely, the payment to him of the bond money.

Orders

Proceedings 085067

Application dismissed

Proceedings 085128

Declare that the lessor is entitled to be paid the current balance in respect of the security bond under the lease, namely, bond number 0446107-4.

Note as to Costs

My tentative and preliminary consideration is that there are no special circumstances warranting an award of costs. However, if the Respondent wishes to make an application for costs, he should do so in writing with submissions, filed and served within 21 days after the date of publication of this Decision and the Applicant should file and serve its submissions in response within 21 days after service on it of the Respondent’s submissions. I would propose that the Tribunal will deal with any such application on those written submissions and without holding a hearing.