Hanna v Lombardo
[2012] NSWADT 163
•09 August 2012
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Hanna v Lombardo [2012] NSWADT 163 Hearing dates: 14 & 16 December 2011, 14 March 2012 Decision date: 09 August 2012 Jurisdiction: Retail Leases Division Before: K Rickards, Judicial member Decision: 1. The Application in proceedings 115093 is dismissed.
2. The termination of the retail lease agreement between the parties on 27 June 2011 by the Respondent/Cross Applicant Domenic Lombardo in respect of premises known as 113 George Street Windsor is declared to be valid.
3. The Applicant/Cross Respondent Paul Hanna is to pay the sum of $18,891 to the Respondent/Cross Applicant Domenic Lombardo.
4. Unless either party files and serves submissions within 14 days as to why a costs order should be made in favour of either party, there will be no order as to costs. If either party files and serves submissions within this period of 14 days, the other party shall file and serve any submissions in reply within a further 14 days of receipt of the initial submissions, and the issue of costs will then be determined upon the basis of the written submissions filed and without any further hearing.
Catchwords: Pre-lease representations; breach of lease; compensation for breach Legislation Cited: Retail Leases Act 1994
Administrative Decision Tribunal Act 1997
Trade Practices Act (Cwlth) 1974
Fair Trading Act 1987Cases Cited: Kollias v Monzo Pty Ltd [2003] NSWADT 275
Samaha & Anor v Corbett Court Pty Ltd Corbett Court Pty Ltd v Samaha & Anor [2006] NSWSC 1441
Armstrong Jones Management Pty Ltd v Saies-Bond & Associates [2007] NSWADTAP 47Category: Principal judgment Parties: Paul Hanna (Applicant/Cross Respondent)
Domenic Lombardo (Respondent/Cross Applicant)Representation: Counsel
B Zipser (Respondent/Cross Applicant)
Herbert Weller (Applicant/Cross Respondent)
Pavlis & Co Solicitors (Respondent/Cross Applicant)
File Number(s): 115093, 115101
REASONS FOR DECISION
Background
The subject proceedings arise from a retail lease agreement ("the lease") between the lessee Mr Paul Hanna and the lessor Mr Domenic Lombardo relating to shop premises at 113 George Street, Windsor ("the premises"). The term of the lease was for a period of 3 years to commence from 2 August 2010 to 4 July 2013, together with an option to renew for a further period of 3 years.
As a result of being locked out of the premises for alleged non-payment of rent, Mr Hanna filed a Summons in the Supreme Court of New South Wales seeking restoration of possession of the premises to him, together with a declaration that he was entitled to set off against the rent due for the premises the amounts which he claims to have paid to repair or upgrade the premises or, alternatively, a declaration of estoppel.
The Supreme Court proceedings were subsequently transferred by consent for determination by this Tribunal on 15 July 2011.
In the subsequent Application filed by the lessor Mr Lombardo, he seeks: a declaration that the lease was validly terminated on 27 June 2011; an order that Mr Hanna pay rent arrears which were due and payable as at that date in the sum of $7,150 and; an order for payment of damages for rent otherwise payable by Mr Hanna from 27 June 2011 for a period which was originally claimed to be ongoing and of indefinite duration but which, subsequent to completion of the evidence, is reduced to finish on 2 April 2012 when a new lease of the premises commenced.
The monthly rent amount payable under the lease to 1 August 2011 was $1,430 which then increased to $1,473; accordingly, the total amount of unpaid rent and damages for lost rent claimed by Mr Lombardo is calculated to be $18,891.
The hearing of these proceedings took place over three days in December 2011 and March 2012. During the course of the hearing, the evidence given on behalf of Mr Hanna included his own oral evidence together with his Affidavit dated1 July 2011, the Affidavit of Mr Feliciano Di Natale dated 15 November 2011 together with his oral evidence, the Affidavit of Mr Michael Zupan dated 14 November 2011 together with his oral evidence, and the Affidavit of Ms Yasmin Aydin dated 29 November 2011 together with her oral evidence. There were also a number of other documents admitted on behalf of Mr Hanna comprising:
- extracts from editions of the Turkish News Weekly and an accompanying invoice;
- a handwritten statement of Mr Hanna setting out what was stated to be sales turnover figures for the business conducted by him at the premises;
- a letter from Mr Hanna's solicitor to Mr Lombardo's solicitor dated 29 June 2011, and ;
- a large bundle of copied documents previously lodged with the retail tenancy unit which, (disregarding the application for mediation) includes the lease document, the lessor's Disclosure Statement dated 24 June 2010, a list of transactions relating to the lease created by Wilkinsons Real Estate Windsor entitled "Tenant Detailed History Report", various tax invoices issued by Wilkinsons Real Estate in respect of the premises, letters from Westpac Bank to Wilkinsons Real Estate relating to dishonoured cheques, an invoice for $4,000 from Mahlenhoff Air Pty Ltd to Mr Hanna dated 25 March 2011 in respect of supply and installation of a new air conditioning unit, an earlier invoice for $400 dated 29 January 2011 to Mr Lombardo from the same supplier relating to service and checking of the previous air conditioning unit at the premises, an invoice from Glen Air Refrigeration Pty Ltd to Mr and Mrs Lombardo in respect of repair of refrigeration in a sum of $242.11, a letter from Mr Hanna to Wilkinsons Real Estate dated 6 July 2010 requesting permission to expand the front area of the shop, various printed email messages held by Wilkinsons Real Estate covering the period 19 July 2010 to 24 June 2011, a diary entry made by the agent Ms Wilkinson dated 27 January 2011, and various photographs showing different views of and from the premises.
The evidence given on behalf of Mr Lombardo during the hearing comprised his own oral evidence together with his affidavits dated 25 August 2011, 5 September 2011 and 1 November 2011, the affidavits of his agent Peter Peeters dated 25 August 2011 and 21 October 2011 together with Mr Peeters' oral evidence, the affidavit of his solicitor Constantine Pavlis dated 25 July 2011 and a number of coloured photographs of the premises.
After completion of the evidence, leave was given to Mr Lombardo to file and serve any further affidavit material relating to the proposed new lease of the premises within 14 days, and orders were made that any further submissions by either party were to be filed and served within 21 days, and any submissions in reply to be filed and served within 7 days thereafter.
The Parties' Claims
The claims made by Mr Hanna were formally amended during the course of the hearing; the claim for restoration to possession of the premises was abandoned (although it had been obvious for some time that this claim was not being pursued), a claim for damages for the cost of repairs to the premises borne by Mr Hanna was confirmed and particularised, as was a claim for damages for loss of sale of the business conducted by him at the premises. Additionally, declarations are sought by Mr Hanna to the effect that he is entitled to set off against the due rent the amounts claimed by him to have been paid for repairs. Despite the lack of notice which preceded these amendments and the possible forensic difficulties involved, counsel for Mr Lombardo reserved his position and then later advised the Tribunal that these amendments were not opposed.
Mr Hanna seeks the amount of $60,000 in damages for loss of sale of his business; he claims that this loss was caused by Mr Lombardo's breaches of the lease in refusing to agree to sale of the business on two occasions to different proposed purchasers, and then wrongfully purporting to terminate the lease and locking Mr Hanna out of the premises.
The claim made by Mr Hanna for the cost of rectification or repairs at the premises is in a "rounded off" amount of $70,000 and is pleaded upon three alternative bases:
- that false and misleading representations were made by Mr Lombardo to Mr Hanna before the lease was entered into to the effect that Mr Lombardo would himself undertake certain repairs to the premises, and that these representations induced Mr Hanna to enter into the lease, or
- that a separate oral agreement was made between the parties before the lease was entered into which was in the same terms as above, and that Mr Lombardo breached this agreement in failing to undertake the repairs, or
- that later, during the course of the term of the lease, Mr Lombardo represented to Mr Hanna that if Mr Hanna paid for and had the subject repairs completed then the amounts paid by him would be set off against rent due and payable for the premises, that these representations were false and misleading, and that they were relied upon by Mr Hanna to his detriment.
Mr Lombardo denies making any of the representations as claimed by Mr Hanna. He claims that outstanding rent was not paid by Mr Hanna, that the lease was lawfully terminated, and that he is entitled to unpaid rent covering the period up until a new tenant commenced paying rent for the premises on 2 April 2012.
The Tenant's Claim for Pre-lease Misrepresentations
It is submitted on behalf of Mr Hanna that Mr Lombardo made false and misleading representations to him prior to the commencement of the lease. In particular, as set out within the written submissions on behalf of Mr Hanna, it is claimed that at the parties' second informal meeting at a coffee shop in Windsor, Mr Lombardo asked Mr Hanna what needed to be done in the shop in order for Mr Hanna to commence occupation and trading. Mr Hanna asserts that he then said:
"The shop needs a new kitchen, new bench, new sink and hand basin, tiles on the floor, the electrical and plumbing fixed. The doors on the toilet and store room need to be changed. Both those ceilings are leaking. The toilet system is cracked and leaking. The cistern is cracked and leaking. The storage room needs a power point and the water leaks have to be fixed. The live wires over the front door have to be fixed. The lids to the drainage point in the back must be repaired. The waste pipe, drainage is broken and must be fixed. At the back the above units are causing leaks above the back door. I can organise this."
Mr Hanna asserts that Mr Lombardo then responded as follows:
"I know that. That will cost me about $20,000 to $25,000. Don't touch anything. I will do it, but because I am doing that for you the rent will have to go up $100, to $350 a week. But I will make it at $330 for you. I will start the work on Monday."
Mr Hanna says that he then telephoned Mr Lombardo during the ensuing week and was told by Mr Lombardo that he was
"... waiting for a couple of quotes. It will take 2 or 3 weeks. I will finish the whole thing."
The lease agreement had still not been signed by this time, according to Mr Hanna. He says that, by arrangement, he then met Mr Lombardo at the front of the shop about 2 to 3 weeks after the above conversation, and that Mr Lombardo said to him:
"I am very busy with my business at work. You have been waiting for me for 3 weeks. Whatever you need just start and do it. I will take if off the rent. Do the basics now, leave the tiling, the kitchen and the stainless steel until Christmas. It gets quiet after Christmas and I will do it then, that is my job."
Mr Hanna says that upon the basis of this representation, he then purchased a large quantity of electrical equipment and engaged an electrician at a cost of $4,500. Within his evidence, Mr Hanna has also set out payments which he then made to a plumber for replacement of gas pipes and gas fittings in a sum of $1,300 as well as details of other work performed or paid for by him prior to the lease being signed, including laid vinyl on the floor, painting of the shop, placing of decorative corrugated iron at the front of the shop and the purchase and installation of a range hood, all upon the expectation that he would be reimbursed this amount from the rent.
No receipts were produced by Mr Hanna to support the above items of expenditure. He explained, during the course of his evidence, that this was because invoices or receipts had not been provided to him for some of the work or services and that the other receipts and accounts had been kept at the premises before he was locked out but were found to be missing when he went to remove his belongings in August 2011. This aspect of Mr Hanna's evidence, given the importance of these alleged items of expenditure to his case, must be viewed with some doubt because these invoices were not referred to nor supplied with the letter sent by Mr Hanna to Wilkinson Real Estate on 22 April 2011 (Exhibit 8), they do not coincide with the amount of "between $9,000 to $10,000" which he claimed to be then owing in addition to his expenditure on a new air conditioning unit, nor was there any later attempt made by him to obtain copies of invoices or receipts from the relevant suppliers or providers.
Mr Lombardo denies making any of the representations or promises alleged by Mr Hanna, either before or after the commencement of the lease. These representations claimed to have been made by Mr Lombardo are inconsistent with clauses 7.1 and 31.1 of the lease:
"7.1 The lessor must -
7.1.1 maintain in a state of good condition and serviceable repair, the roof, the ceiling, the external walls and external doors and associated door jambs, and the floors of the property and must fix structural defects;
7.1.2 maintain the property in a structurally sound condition; and
7.1.3 maintain essential services"
and
"31.1 The lessee shall at its own cost fit out the demised premises to its occupation requirements by installing therein with the prior written approval of the lessor and all necessary authorities having jurisdiction in respect of the matter, its fitting, fixtures, partitions and plant and equipment ('fit out items')". All fit out items shall be to such standards as to type, quality, colour and size as the lessor shall from time to time specify, acting reasonably. The lessor and lessee acknowledge that the lessee will on expiry of the lease or earlier termination make good the premises after regard to the condition of the premises at the commencement date of this lease and replace as required any carpet removed or damaged as a result of the lessee's fit out. The lessee shall be responsible for the insurance and maintenance of the fit out equipment."
Mr Hanna conceded in cross examination that he was aware of clause 31.1 at the time that he executed the lease, and that he had obtained legal advice about the lease from his solicitor. This clause of the lease stands in stark contradiction to the oral agreement which Mr Hanna alleges the parties entered into prior to commencement of the lease, and must be preferred.
It is also difficult to accept as a matter of commercial practicality that a property owner in the position of Mr Lombardo would promise to undertake repairs to premises which he knew or reasonably expected would significantly exceed the total annual rent payable for the premises under a lease for 3 years, albeit with a 3 year option.
It is considered that a further aspect of the evidence adversely impacts upon the reliability of Mr Hanna's version of events. In the course of giving evidence, Mr Hanna at confirmed that the subject representations had been made to him by Mr Lombardo before the time that he went to see his solicitors AR Walmsley & Co in order to discuss the lease. In the course of cross-examination, Mr Hanna was asked whether, when he saw his solicitor, he had discussed these representations and his reply was:
"No, I only discussed the lease with the solicitor, not my agreement with Domenic".
Shortly after giving the above evidence, Mr Hanna agreed that he did in fact discuss these representations with his solicitor at the time of discussing a number of other matters relating to the lease, and that his solicitor told him that he would convey this information to Mr Lombardo's solicitors.
Following a morning tea adjournment which interrupted cross-examination, Mr Hanna's evidence then changed somewhat; he stated that he had told his solicitor about the representations made by Mr Lombardo, but that his solicitor did not then proceed to discuss these representations with Mr Lombardo's solicitor. Mr Hanna's explanation for this was that, although his solicitor told him that the representations made by Mr Lombardo "should be put in writing" and although there were other changes to the lease being sought upon his behalf by his solicitor, he did not instruct his solicitor to have the subject representations confirmed in writing because "the solicitor was charging me money every time I saw him" and "at first the solicitor told me to have it in writing but it was going to cost me money."
This change and contradiction in Mr Hanna's evidence, together with his explanation for not raising these matters through his solicitor in light of the fact that various changes to the lease were requested by Mr Walmsley in an email sent to Mr Lombardo's solicitor on 8 July 2010, makes it difficult to accept Mr Hanna as a reliable and credible witness in relation to the relevant factual issues in dispute before the Tribunal.
It is submitted on behalf of Mr Hanna that his losses, including the loss of sale of his business and the expenditure incurred by him both before and after commencement of the lease, arise from misleading and deceptive representations made by Mr Lombardo. It is submitted that this Tribunal should make orders in his favour based upon the provisions of either the Trade Practices Act 1974 (Cwlth) or the companion legislation of this state, namely the Fair Trading Act 1987.
The Tribunal does not have jurisdiction to hear claims based upon allegations of misleading or deceptive conduct which are made pursuant to the provisions of either of these two Acts. This Tribunal is only empowered to deal with a "retail tenancy claim" and not allegations of conduct as prohibited by either of these two pieces of legislation. This particular issue was considered by the Tribunal in Kollias v Monzo Pty Ltd [2003] NSWADT 275 where, after inviting submissions from the parties as to whether the Tribunal may have lacked jurisdiction to hear claims brought under the provisions of the Trade Practices Act or the Fair Trading Act, Deputy President Chesterman concluded as follows:
"7 In my judgment, the authorities cited in Mr Bartalesi's letter conclude this issue in his client's favour.
8 The ruling in the first two of them was that the Commercial Tribunal, which is the predecessor of this Tribunal in exercising jurisdiction under the Retail Leases Act, lacked jurisdiction to hear claims for damages based on a breach of s 42 of the Fair Trading Act (this being the NSW equivalent of s 52 of the Trade Practices Act (Cth)). The principal grounds for this ruling, as set out by Kirby J in Taylor Farms (Australia) Pty Ltd v A Calkos Pty Ltd and Ors [1999] NSWSC 186 (see paras 15 - 39), were twofold, and can be summarised as follows.
9 First, neither the Fair Trading Act nor the Commercial Tribunal Act 1984 conferred jurisdiction on the Commercial Tribunal to hear claims based on s 42 of the former Act. By contrast, jurisdiction to hear such claims clearly formed part of the general jurisdiction of the Supreme Court (under s 23 of the Supreme Court Act 1970) and had been expressly conferred on both the District Court (District Court Act 1973, s 135, inserted in 1992) and the Local Court (Local Courts (Civil Claims) Act 1970, s 12(9), inserted in 1996).
10 Secondly, the limits of the Commercial Tribunal's jurisdiction under s 71 of the Retail Leases Act 1994 to hear a `retail tenancy claim' were set by the phrase within s 70(a) with which the definition of such a claim commences. It was and still is as follows: `claims in connection with a liability or obligation with which a retail tenancy dispute is concerned'. Although `retail tenancy dispute' was widely defined in s 63(1) of this Act, the definition is not broad enough to include any liability that might arise between two persons who have the relationship of landlord and tenant under a retail shop lease within the meaning of the Act. In the absence of a provision expressly conferring jurisdiction, as had been enacted with reference to the District Court, the inference to be drawn was that Parliament did not intend that the Commercial Tribunal should have jurisdiction.
11 In the third of the cases referred to by Mr Bartalesi, New York Boutique Pty Ltd v Lend Lease Property Management (Australia) Pty Ltd, GPT Management Ltd, Government Superannuation Office [2001] NSWADT 55, at [36 - 40], it was held in the context of an application to this Tribunal under the Retail Leases Act that the Tribunal lacked jurisdiction to hear a claim by a lessee under s 51AC of the Trade Practices Act (Cth). Mr B Donald, Judicial Member, referred to arguments, put by the lessor, that (a) according to Kirby J's judgment in Taylor Farms, this Tribunal only has jurisdiction that is expressly conferred upon it by an enactment and (b) under s 86 of the Trade Practices Act (Cth), jurisdiction, so far as State courts and tribunals are conferred, is conferred only on `courts' and this Tribunal is not a `court'. Mr Donald's decision, upholding the lessor's argument, was however based on a third proposition, namely, that the wording of s 51AC was replicated in the proposed jurisdiction of the Tribunal under Part 7A of the Retail Leases Act to hear claims based on unconscionable conduct, and that Part had not yet commenced operation. He reserved his opinion as to whether the lessor's argument was supported by the first two propositions.
12 In my judgment, these two propositions, together with the principles laid down by Kirby J in Taylor Farms, do produce the result that the Tribunal has no jurisdiction to hear claims based on the two provisions of the Trade Practices Act (Cth) - s 52 and s 53A - on which the Applicant in this case relies. As was the case with the Commercial Tribunal, this Tribunal's original jurisdiction in applications under the Retail Leases Act depends on the express words or necessary intendment of this Act and of any other legislation purporting to confer jurisdiction. This is clear from the sections of the Administrative Decisions Tribunal Act 1997 - ss 37 and 45 - that provide for original jurisdiction to be conferred. The relevant jurisdiction is not conferred by s 86 of the Trade Practices Act (Cth), for the reasons outlined in the preceding paragraph. It is not conferred by s 71 of the Retail Leases Act because, for the reasons explained by Kirby J in Taylor Farms, it is not within the ambit of the phrase `retail tenancy claim'."
Relevant to the alternative case made on behalf of Mr Hanna that he is entitled to compensation for misleading representations made during the course of the lease, the Tribunal was given specific jurisdiction as and from 1 January 2006 to deal with deceptive and misleading conduct "in connection with" a retail shop lease, by the following amendments to the RL Act:
'Division 2 Misleading or deceptive conduct
62C Interpretation and application of Division
(1) In this Division:
misleading or deceptive conduct means conduct to which section 62D applies.
party or former party to a retail shop lease or former retail shop lease includes a person who is a guarantor or covenantor under a lease or former lease.
(2) Nothing in this Division affects the operation of Division 1.
62D Misleading or deceptive conduct in connection with retail leases
A party to a retail shop lease must not, in connection with the lease, engage in conduct that it is misleading or deceptive to another party to the lease or that it is likely to mislead or deceive another party to the lease.
62E Right to compensation
A party or former party to a retail shop lease who suffers loss or damage by reason of misleading or deceptive conduct of another party may recover the amount of the loss or damage by lodging a claim against the other party under section 71.'
In addressing the issue of the alleged misrepresentations made by Mr Lombardo prior to the lease being entered into, the submissions made on behalf of Mr Hanna also do not refer to section 10 the Retail Leases Act 1994 which is as follows:
Right to compensation for pre-lease misrepresentations
A party to a retail shop lease is liable to pay another party to the lease ( "the injured party") reasonable compensation for damage suffered by the injured party that is attributable to the injured party's entering into the lease as a result of a false or misleading statement or representation made by the party, or any person acting under the party's authority, with knowledge that it was false or misleading.
The giving of a lessor's disclosure statement to a prospective lessee under a retail shop lease is considered to be the making of a representation by the lessor to the lessee as to the information in the disclosure statement.
(2A) The making of a representation by a prospective lessee in a lessee's disclosure statement given to a prospective lessor under a retail shop lease that the prospective lessee has sought independent advice, or as to statements or representations relied on by the prospective lessee in entering the lease, is considered to be the making of a representation by a lessee to the lessor.
(3) This section extends to apply to a statement or representation made before the commencement of this section.
Sections 11 and 11A of the Retail Leases Act provide a mechanism for disclosure of all relevant information by a lessor about premises which are to be leased and also about the lease itself to a lessee before a lease is entered into; these sections also provide a system whereby any disclosures or representations made by the lessor to the lessee can be formally recorded and notified. The relevant provisions are as follows:
11 Lessor's disclosure statement
(1) At least 7 days before a retail shop lease is entered into, the lessee must be given a disclosure statement for the lease. A disclosure statement is a statement in writing that contains the information, and is accompanied by the material, that is contained in or required to complete or accompany the form of disclosure statement set out in the prescribed form (but only to the extent that is relevant to the lease concerned). The layout of the disclosure statement need not comply with that of the prescribed form. However, a lessor's disclosure statement is complete for the purposes of this section only if it has attached to it a form to be completed by the lessee in the form prescribed for the purposes of section 11A.
Note: Because the disclosure statement need only include information relevant to the lease, if the retail shop is not in a retail shopping centre the disclosure statement need not include information that is relevant only to shops in retail shopping centres.
If a lessee was not given a disclosure statement as required by subsection (1) or if the disclosure statement that was given to the lessee was incomplete or contained information that at the time it was given was materially false or misleading, the lessee may terminate the lease by notice in writing to the lessor at any time within 6 months after the lease was entered into, unless subsection (3) prevents termination.
(3) 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.
In these proceedings, there is no dispute that a Lessor's Disclosure Statement was prepared and provided to Mr Hanna. Within section 22 of this document it is recorded that:
"No information has been given or supplied to the lessee on the lessor's behalf to influence the lessee's decision, nor has any information been supplied to the lessee on the lessor's behalf that has been relied upon by the lessee other than as mentioned above."
There is no mention within this disclosure statement, nor within the terms of the lease itself which was executed by Mr Hanna in the presence of his solicitor Mr Walmsley, of the representations claimed to have been made by Mr Lombardo concerning the repairs or improvements which he was to make to the premises.
The manner in which the Tribunal has assessed the reliability of Mr Hanna's evidence concerning representations said to have been made to him by Mr Lombardo is set out previously within this decision. The disclosure material outlined above does not corroborate his evidence and tends to contradict it.
The evidentiary importance of the disclosure system in determining whether pre-lease representations were made and whether they were relied upon, was expressed by Palmer J in Samaha and Anor v Corbett Court Pty Ltd; Corbett Court Pty Ltd v Samaha and Anor [2006] NSWSC 1441:
"59 The Lessee's Disclosure Statement expressly and clearly called upon Mr and Mrs Samaha to state what representations made by Corbett Court, if any, they were relying upon in entering into the lease. The fact that, after having received legal advice, they did not specify any such representations must raise an evidentiary presumption that there were no relevant representations made or that, if any representations were made, Mr and Mrs Samaha did not place any reliance upon them."
The Appeal Panel decision of President O'Connor in Armstrong Jones Management Pty Ltd v Saies-Bond & Associates Pty Ltd [2007] NSWADT AP47 agreed with the approach taken in Samaha and referred with approval to the following commentary upon Samaha:
111 The commentary on this decision in Lang's Commercial Leasing in Australia (1999-, loose-leaf) notes at [85-281]:
'[O]f particular interest is the consequence of the lessee having failed to indicate any representations by or on behalf of the lessor in the lessor's disclosure statement. Lessees in New South Wales have been required to provide a lessee's disclosure statement since 1 March 1999. Para 5 and 6 of that statement cover statements and representations. This decision illustrates the care required by lessees' representatives to ensure that material statements and representations are concisely and adequately stated in the lessee's disclosure statement. The consequence of there being nothing contained in para 5 and 6 had the effect in this decision of negating reliance and operating also by way of estoppel.'
The appeal panel in Armstrong Jones was dealing with the pre-lease disclosure of a major anchor tenant within a shopping centre. The importance of having repairs and improvements undertaken by Mr Lombardo is stated on behalf of Mr Hanna to have been fundamental to his decision to enter into the lease. The disclosure required in this case and the disclosure required in Armstrong Jones can reasonably be compared as having similar significance to the prospective tenant in each case. The importance and relevance of the disclosure regime was further emphasised in Armstrong Jones:
"118 We do not share the Tribunal's view (one supported by Mr Gray for S-B in his submissions) that the lessee's disclosure statement obligations can be read down so as to exclude from the exchange process a representation as to a major anchor tenant. The lessor's disclosure statement obligations are wide ranging, and cover, as we see it, many matters to do with the overall operation of the shopping centre. The many warnings to which we have referred, found both in Part 1 and in the body of Part 2 (as set out above), are all designed, we think, to implant firmly in the minds of the parties the importance of transparency as to all matters of material significance to each party. In this regard, we agree with the approach adopted by Palmer J in Samaha.
119 In our view, lessees should see the disclosure statement regime as providing the place in which to record all material representations that induced them to enter the contract.
The evidence of Mr Hanna as to matters in dispute must be regarded with some caution, there is no independent corroboration of his evidence as to pre-lease representations said to have been made by Mr Lombardo, and there is no satisfactory explanation as to why, despite being legally represented, such representations were not sought to be formally recorded or why the statutory code relating to such representations was not followed. For these reasons, that part of Mr Hanna's claim which relies upon pre-lease representations must fail.
Representations made by Mr Lombardo During the Currency of the Lease
The relevant provisions of sections 62C, 62D and 62E of the RL Act are set out in above within paragraph 28 of this decision.
The lack of reliability of Mr Hanna relating to representations claimed to have been made by Mr Lombardo before the lease was entered into must also be taken into account when considering this basis for his claim, where he asserts that after the time that he had executed the lease and gone into possession, an oral agreement was made with Mr Lombardo that Mr Hanna would proceed to effect and pay for various repairs and refurbishment of the premises and that in return Mr Lombardo would give Mr Hanna a credit against rent.
There are a number of factual matters which point against there having been any oral agreement reached between the parties in the above terms.
There was no written demand made by Mr Hanna for repayment or reimbursement of amounts paid by him, until after the lock out which occurred in late June 2011. The Tribunal accepts the evidence of the agent Mr Peeters that he had many conversations with Mr Hanna between July 2010 and June 2011, that the only occasion when Mr Hanna told him about money claimed to be owed by Mr Lombardo was in March 2011 and that this conversation related to the air conditioning unit purchased by Mr Hanna.
Mr Hanna claims that his purchase of this new air conditioning unit was in accordance with the oral agreement made with Mr Lombardo that he could repair or improve the premises and that he would receive a credit against rent. Mr Lombardo denies knowing anything about the purchase of the air conditioning unit until after it had been installed and a receipt was presented to the agent seeking reimbursement. He asserts that the original air conditioning unit had only been recently repaired and that he had not authorised any new air conditioner.
These contentions of Mr Lombardo are supported by the earlier repair invoice dated 29 January 2011 addressed to Mr Lombardo by the same business which subsequently provided the new air conditioning unit, and also by the terms of the letter from Mr Hanna which is Exhibit 8, in which he states:
"The heat in the shop has been unbearable as you know. I have waited long enough for him to change the air conditioner. I have now changed the air conditioner, as I have previously said I would do if Dominic (sic) didn't arrange it, and enclose herewith a receipt for same."
It was put to Mr Peeters in cross examination that there had been many occasions after commencement of the lease upon which Mr Hanna had complained to Mr Peeters that Mr Lombardo had not carried out repairs which Mr Hanna wanted to be done, and that Mr Hanna had advised on these occasions that he would withhold rent if these repairs were not attended to. These contentions made in the course of cross examination must be presumed to be based upon instructions given by Mr Hanna, and are inconsistent with the assertions made within Mr Hanna's affidavit that Mr Lombardo had given permission for Mr Hanna to carry out the various repairs discussed between them pursuant to the oral agreement made by them shortly after the lease had commenced.
In support of his contention that an oral agreement was reached with Mr Lombardo that he would effect repairs and would be reimbursed by Mr Lombardo, Mr Hanna relies upon the evidence of Yasemin Aydin, Michael Zupan and Feliciano Di Natale. The Tribunal considers that the evidence of these witnesses does not in any significant way assist Mr Hanna's case.
Some allowance should be made in approaching and considering the oral and affidavit evidence of Ms Aydin, because English is not her first language. In relation to the oral agreement alleged by Mr Hanna, Ms Aydin states in her affidavit dated 29 November 2011 at paragraph 15 that at the end of April 2011, Mr Lombardo entered the shop while she was there, that there was a builder there doing some repairs who had been engaged by Mr Hanna, and that Mr Lombardo, whom Ms Aydin does not name but refers to as "the landlord", said:
"I don't want anybody to touch my building. I owe you enough money now. I'll fix the rest."
When giving evidence under cross examination, Ms Aydin no longer recalled any statement made by Mr Lombardo to the effect that he owed money to Mr Hanna. Ms Aydin's evidence given to the Tribunal does not therefore support the proposition that there was an agreement in existence before April 2011 between the parties, pursuant to which Mr Lombardo was indebted to Mr Hanna.
Mr Zupan states in his affidavit that Mr Lombardo came to the premises in about August 2010 while he was present, but accepts that this may have been as late as December 2010, and that Mr Lombardo said:
"Do not touch anything. I will fix it. I have already got a bill from Paul for around $15,000"
The above statement contradicts the evidence of Mr Hanna that he had made no demand for payment or reimbursement from Mr Lombardo until speaking to Mr Peeters in April 2011, and that there was no factual basis at that time for anything like the figure of $15,000; Mr Zupan was somewhat equivocal when questioned about the accuracy of this amount alleged to have been stated by Mr Lombardo, and replied in evidence:
"Yes, that's how I understood it".
The evidence of Mr Di Natale, in the Tribunal's view, did not support Mr Hanna's contention that he had undertaken a number of repairs based upon the agreement with Mr Lombardo that he would be reimbursed or given a rent credit; within Mr Di Natale's affidavit, he states that shortly before Christmas 2010 he was present when Mr Hanna received a telephone call which appeared to make Mr Hanna upset, and that during this conversation he heard Mr Hanna say:
"Look Domenic, I have waited long enough for you to do the work you agreed to do. You are leaving me no alternative. I will have to stop paying the rent to you."
Such a statement is inconsistent with the oral agreement alleged by Mr Hanna.
Having considered the above matters, the Tribunal is satisfied that there was no agreement made between the parties after commencement of the lease in the terms as alleged by Mr Hanna or by which Mr Lombardo is indebted to Mr Hanna for any alleged expenditure.
The Claim for Loss of Sale of Business
In relation to this aspect of his claim, Mr Hanna gave evidence that he had negotiated a sale of his business for $80,000 to an unnamed buyer. Evidence was admitted to show that the shop had been listed for sale in "the Turkish newspaper". Ms Aydin is not named as a potential purchaser of the business within Mr Hanna's affidavit. Mr Hanna only refers to a male person agreeing to buy the business at a price of $60,000 and then giving him a deposit of $6,000. There is no independent record verifying such payment.
Ms Aydin supports Mr Hanna's contention that an unnamed male buyer confirmed interest in acquiring the business in or about March 2011. By this time, there is no dispute that Mr Hanna was in arrears with the rent payable to Mr Lombardo.
The rent arrears continued and increased over the ensuing months after March 2011; at a point during this period, Ms Aydin says she also offered the sum of $60,000 to Mr Hanna for purchase of the business. Ms Aydin gave evidence that there were a number of conditions placed upon her offer, which included completion of various works which she considered as needing to be done at the premises.
Ms Aydin also stated in cross examination that she had not been prepared to pay a deposit to Mr Hanna, nor to travel back to Turkey to collect from unnamed sources the money which she would have needed in order to pay the offered purchase price, until she was sure that her conditions for repair of the premises would be met. This oral evidence, that Ms Aydin wanted to be assured of repairs being attended to before arranging to travel to Turkey, is contradicted by paragraphs 15 and 16 of her affidavit evidence that she persisted in working at the business right up until 27 June 2011 because she intended to buy the business, that she was at the travel agency on this particular day arranging to travel to Turkey in early July so as to collect funds for this very purpose, and that she was then told by Mr Hanna not to bother arranging travel because Mr Lombardo would not allow him to sell the business.
Putting aside the real doubt which the Tribunal considers must exist as to whether there was actually a purchaser who was ready willing and able to purchase the business during the period between March and the end of June 2011, it is clear upon the evidence that, given the situation with rent arrears, any alleged refusal by Mr Hanna to proposed purchasers was not in breach of the terms of the subject lease. There is also no satisfactory evidence of the existence of any agreement capable of performance by any intending purchaser which was merely contingent upon approval being given by Mr. Lombardo. Accordingly, this aspect of Mr Hanna's claim must also fail.
The Claim for Rent made by Mr Lombardo
The amount claimed by Mr Lombardo for rent arrears is not disputed. Despite the prolonged period of time which passed before the premises were re-let, and the evidence of Mr Peeters that he considered that the premises were difficult to lease for a significant portion of this period because there was mouldy food and personal belongings in the premises accompanied by a general lack of cleanliness, there is no claim made on behalf of Mr Hanna that Mr Lombardo has failed to mitigate his loss.
The Tribunal is not a forum which requires strict pleading or adherence to the rules of evidence; further, the provisions of section 73 (1) to (4) of the Administrative Decisions Tribunal Act 1997, in summary, permit the Tribunal to adopt a procedural approach which is comparatively informal and which can take various forms, subject to the overall dictates of fairness and observance of natural justice.
Consideration of the above matters, especially given the length of the hearing, the evidence given and the submissions presented, leads the Tribunal to conclude that there has been no intention on behalf of Mr Hanna to raise any argument that Mr Lombardo has failed to mitigate his loss, and that it would be procedurally unfair for the Tribunal to now seek to embark upon any journey in this area.
The amount of $18,891 is therefore due and payable by Mr Hanna to Mr Lombardo for rent, and the claims for compensation brought by Mr Hanna are dismissed. The Tribunal should also confirm by declaration that the termination of the lease on 27 June 2011 by Mr Lombardo was valid.
ORDERS
1 The Application in proceedings 115093 is dismissed.
2 The termination of the retail lease agreement between the parties on 27 June 2011 by the Respondent/Cross Applicant Domenic Lombardo in respect of premises known as 113 George Street Windsor is declared to be valid.
3 The Applicant/Cross Respondent Paul Hanna is to pay the sum of $18,891 to the Respondent/Cross Applicant Domenic Lombardo.
4 Unless either party files and serves submissions within 14 days as to why a costs order should be made in favour of either party, there will be no order as to costs. If either party files and serves submissions within this period of 14 days, the other party shall file and serve any submissions in reply within a further 14 days of receipt of the initial submissions, and the issue of costs will then be determined upon the basis of the written submissions filed and without any further hearing.
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Decision last updated: 09 August 2012
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