Hong Ha Mascot Bakery Pty Limited v G & J Drivas Pty Limited and Telado Pty Limited - [2012] NSWADT 113

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation: Hong Ha Mascot Bakery Pty Limited v G & J Drivas Pty Limited and Telado Pty Limited [2012] NSWADT 113
Hearing dates: 13,14 December 2011; 4, 5 April 2012
Decision date: 14 June 2012
Before: Deputy President Patten
M Lonie, Non judicial-member
G Pinter, Non judicial-member
Decision:
In application 115090:
(a) Declare that the lease of premises, being Shop 28, Greenway Arcade, 222-230 Church Street, Parramatta, between the parties was not validly determined when the Respondents purported to enter into possession on or about 11 July 2011.
(b) Declare that the said lease remains in full force and effect according to its terms.
(c) Order the Respondents to pay to the Applicant the sum of $14,164.54 inclusive of interest to the date of this decision.
2. Application 115161 is dismissed.
3. Subject to paragraph 101, the Respondents to pay the Applicant's costs as agreed or taxed.

Catchwords: Alleged breaches of retail lease - validity of Notice under s.129 of Conveyancing Act - whether breaches exist at time of service of Notice - waiver - consent - use of extrinsic material in interpretation.
Legislation Cited: Administrative Decisions Tribunal Act 1997
Conveyancing Act 1919
Retail Leases Act 1994
Cases Cited: Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSW CA
Silkdale Pty Ltd v Long Leys Co Pty Ltd (unreported 14 September 1995 BC 9505378
Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1981-1982) 149 CLR 337
Fisher v Westpac Banking Corporation Federal Court of Australia, 20 July 1993, WAG75 of 1993
Attorney General for NSW v World Best Holdings Ltd (2005) 63 NSWLR
Baltic Shipping Company v Dillon [1992-1993] 176 CLR 344
Byron Bay Retirement Villages Pty Ltd v Zandate Pty Ltd [2008] NSWSC 1123
Category: Principal judgment
Parties: Hong Ha Mascot Bakery Pty Limited (Applicant)
G & J Drivas Pty Limited and Telado Pty Limited (Respondents)
Representation: Counsel
M S Henry (Applicant)
M Sneddon (Respondents)
Shephard & Shephard (Applicant in 115090)
H W L Ebsworth (Applicant in 115161)

File Number(s): 115090; 115161

REasons for decision

These proceedings arise out of dealings between Hong Ha Bakery Pty Ltd (for convenience, the Applicant) and G & J Drivas Pty Ltd and Telado Pty Ltd (the Respondents). The Applicant in its amended application sought the following relief:

"1. A declaration that the Lease of premises at Shop 28, Greenway Arcade, 222-230 Church Street, Parramatta (Premises) has not been validly terminated.

2. Relief against forfeiture.

3. Orders for reinstatement of the Lease.

4. Damages for lost profit whilst the applicant is out of possession.

5. A declaration that the respondent has engaged in unconscionable conduct.

6. Orders for compensation.

7. Costs.

8. Further or other orders including such injunctions and interlocutory relief as the Tribunal deems fit."

The Respondents by their application seek:

"1. Order pursuant to Section 72(1 )(a) of the Retail Leases Act 1994 that the respondent pay to the applicants the sum of $10,849.85.

2. Order pursuant to Section 72(1)(c)(iv) of the Retail Leases Act 1994 that the respondent refrain from selling, or offering for sale, at the premises known as Shop 28, Greenway Centre, 222-230 Church Street, Parramatta (Premises):

(a) spring rolls and dim sims, either separately or as filling in bread rolls, and

(b) Vietnamese summer rolls.

3. An order pursuant to Section 72(1)(c)(iv) of the Retail Leases Act 1994 that the respondent restore the shopfront of the Premises so that the shopfront conforms with the respondent's plans for the fit out of the Premises approved by the applicants, being the plans which are annexure "A" to the Affidavit of Dimitris Drivas dated 9 September 2011 filed in Administrative Decisions Tribunal Retail Leases Division proceedings file number 115090.

4. An order pursuant to Section 72(1)(c)(iv) of the Retail Leases Act 1994 that the respondent complies with clauses E1.5 and G1 2 of the Building Code of Australia, as particularised in sub-paragraphs (h), (i), (j) and (k) of Notice of Breach of Covenants under Section 129 of the Conveyancing Act 1919 (NSW) dated 7 July 2011 given by the applicants to the respondent."

At all material times the Respondents owned property at 220-230 Church Street Parramatta known as the Greenway Centre. It comprised a number of retail shops and commercial offices.

In or about July 2010, negotiations commenced between the parties with a view to the Applicant becoming the lessee of a shop then vacant in the Centre, namely the shop known as Shop 28 (hereafter the premises). As a result of those negotiations a document purporting to be a lease was signed by Mr Tong Thuan Hua on behalf of the Applicant and sent by the Applicant's then solicitors, Than & Co, to the then solicitors for the Respondents, N C Coombes & Co under cover of a letter dated 19 October 2010:

"Hong Ha Mascot Bakery Pty Limited lease from G & J Drivas Pty Limited and Telado Pty Limited

Premises: Shop 28, 222-230 Church Street, Parramatta

We refer to the above matter and enclose the following in escrow pending our client's receipt of the construction certificate (CC):

1. Amended and executed Lease in duplicate;

2. Executed lessee's disclosure statement;

3. Bank guarantee for $14,575.00 in your client s' favour issued by St George Bank Limited;

4. Cheque for $97.00 payable to the LPMA being registration fee.

A certificate of currency will be delivered to your client's agent on the handover date.

Please be advised that our client is waiting for the CC and we will advise you as soon as it is received together with an authority for you to complete the commencement and termination dates of the lease."

The lease was expressed to be for a term of 5 years but it did not specify a commencement date. Provisions relevant to these proceedings include:

"Annexure "A"

Reference schedule:

Item 4: Permitted Use - Baking hot bread and retail sale of filled bread rolls, soft drinks, fruit juices, coffee and associated products.

Item 10: Option Term

Five years (5) years.

Item11: Redevelopment Clause

Applicable.

Annexure "B"

Clause 3

(c) That the Lessee will not without the consent in writing of the Lessor use or occupy the demises premises otherwise than for the use referred to in Item 4 of the Reference Schedule marked "A" and will ensure that the conduct and management of the premises shall at all times be of such standard as to enhance the status of and preserve the premises for the purposes aforesaid and the Lessee will during all proper business hours keep the premises open for business and will not in any case use the premises for any other use. The Lessee acknowledges that no promise, warranty or undertaking has been given by the Lessor in respect of the suitability of the premises or the building for any business to be carried out therein, or as to any necessary approval or consent for the abovementioned use by any relevant municipal, local or Statutory Authority or as to any fittings, finishes facilities or amenities of the premises or the building otherwise than as contained in this Lease.

Clause 3

(f) (i) The Lessee shall not make or cause or suffer to be made any alterations, additions, or improvements to the premises, or install or cause or suffer to be installed therein, or thereon any trade fixtures exterior signs, floor coverings, partitions, interior or exterior lighting, plumbing, fixtures, shades or awnings, or drive nails or screws into the premises or any part thereof or in anyway damage or deface ceilings walls, partitions, floors, wood, stone, concrete or ironwork thereof during the said term, without first obtaining the written approval of the Lessor. The Lessee shall present to the Lessor plans and specifications for such work at the time approval is sought. The Lessor shall be entitled to obtain the advice of its architects in respect thereof, and any fees payable by the Lessor to such architects shall be paid by the Lessee to the Lessor on demand.

(ii) Any such work carried out pursuant to sub-paragraph (i) hereof shall be carried out by contractors approved in writing by the Lessor, in a proper and workmanlike manner and to a standard in conformity with the requirements of any Statutory Authority and to the satisfaction of the Lessor, and in carrying out such work the Lessee shall ensure that a minimum amount of disturbance and inconvenience shall be caused to any other occupier of the building or adjoining buildings."

Clause 7

(a) ..................

(b) ..................

(c) ..................

(d) In the case of the breach or non-observance or non-performance of any of the covenants, conditions provisos or agreements herein contained or implied on the Lessee to be performed and observed,

THEN and in any such case it shall be lawful for the Lessor at any time thereafter and whilst such neglect or default continues and without further notice or demand to enter (forcibly if necessary) into and upon the demised premises or any part thereof in the name of the whole and to repossess the same as of his former estate and expel the Lessee and those claiming under him and remove his effects from the demised premises without being taken or deemed guilty of any manner of trespass or wrong but without prejudice to any action or right of action or any remedy of the Lessor in respect of any breach of the Lessee's covenants herein contained or implied; and that thereupon this Lease shall if the Lessor so elects determine cease and be at an end and the Lessee shall be and remain liable for the rent at the rate herein reserved.

Clause 28

28. (a) Detailed working drawings and specification disclosing full and complete particulars of the installation of all fixtures and fitting for fitting out and completion of the demised premises including full details of proposed finishes and decorative treatment and all other work proposed to be carried out by the Lessee to fit out the demised premises shall be submitted to the Lessor for its approval. The Lessor shall be under no obligation to approve any such plans and/or specifications, which in its reasonable discretion it considers unsuitable. If the Lessor shall require amendment thereto as a condition of approval of same it shall notify the Lessee and the Lessee shall be permitted such further period as the Lessor shall reasonably specify for submission of amended plans and/or specification as the case may require. Within four (4) weeks of receipt of the Lessor's final approval to such plans and specification (amended as necessary as aforesaid) the Lessee shall obtain the approval thereto of all relevant authorities.

28. (b)

(i) The Lessee agrees that during the period of the fit out of the demised premises it shall take all reasonable precautions to avoid any damage whatsoever being caused either to the common areas of the property or to the demised premises by the Lessee it's agents, servants, workmen or invitees and in the event of any damage being caused to the common areas or to the demised premises by the Lessee it's agents, servants, workmen or invitees the Lessee agrees to reimburse the Lessor upon request for the cost of the repair, replacement or making good of such damage;

(ii) The Lessee agrees that during the period of the fit out of the demised premises and at any other time when the Lessee in any way alters or adds to the fit out of the demised premises, the Lessee shall comply with the reasonable requests and requirements of the Lessor or its foreman or representative and in this regard the Lessee agrees that the fixing of all materials to the freehold shall be carried out and effected in accordance with the reasonable instructions of the Lessor or its foreman or representative;

Clause 32

32.1 The Lessee covenants and agrees with the Lessor that notwithstanding the grant and acceptance of the conditions herein expressed, if the Lessor requires the whole (or part) of the building for the purpose of refurbishment or redevelopment or reconstruction ("required purposes") this Lease may be determined by the Lessor at any time by not less that 6 months prior notice in writing from the Lessor to the Lessee. Upon expiry of the term of the notice the Lessee will deliver and yield up possession of the premises to the Lessor and the this Lease shall be at an end;

32.2 The Lessee shall not be entitled to challenge or call into question the Lessors determination that he requires the premises for the required purposes which question shall be determined by the Lessor in his absolute and uncontrolled discretion. The Lessee acknowledges that no representations or warranties have been given or made by the Lessor or on the Lessor's behalf as to whether or when the Lessor may elect to exercise its rights under this clause, and further acknowledges that no such representation or warranty hereafter made, shall be binding upon the Lessor unless made in writing and signed by the Lessor;

For the purpose of Section 35(3A) of the Retail Leases Act the Lessee acknowledges that the cost of its fit out of the premises is in an amount of $nil.

Clause 42

It is agreed that rent shall commence on the date which is six calendar months from the Commencement Date.

Clause 44

Notwithstanding anything else herein contained it is agreed in respect of clause 32 as follows:

a Clause 32 shall not apply for the period of three years from the Commencement Date.

b In the event that the Lessors exercise their rights pursuant to clause 32 in year 4 of this lease, the Lessors will compensate the Lessee for an amount not exceeding $20,000.00 in respect of the termination of this Lease;

c In this event that the Lessors exercise their rights pursuant to clause 32 in year 5 of this Lease the Lessors will compensate the Lessee for an amount not exceeding $10,000.00 in respect of the termination of this Lease;

d In the event that the Lease is terminated during the option period there shall be no compensation paid to the Lessee."

It is to be observed that the lease itself neither specifies the commencement date nor provides a means for determining that date. It seems to be common ground however, that the lease would commence when the Council issued a Construction Certificate in respect of alterations to and fitting out of the premises for the Applicant's purposes. On 17 January 2011, Than & Co wrote to N C Coombes & and Co:

"We refer to the above matter and enclose a copy of the Construction Certificate issued by Parramatta City Council on 5 January 2011 for your record.

Accordingly, you authorise (sic) to insert the commencement and termination dates to the lease as previously agreed by the parties."

The Construction Certificate referred to in the letter relevantly provided:

"Construction Certificate No: CC/600/2010

Property Address: Lot 1 DP 702291, Greenway Arcade

222 Church Street, Parramatta NSW 2150.

Description of Work: Fitout and use of shop 28 for the purposes of a bakery.

Determination: Approved

Determination Date: 5 January 2011

Development Consent DA/679/2010

BCA Classification: Class 6

Plans and Specifications: Location Plan, Issue A, prepared by D&P Designs dated April 2010

Proposed Floor Plan, Issue A, prepared by D&P Designs dated April 2010

Section A-A, Section B-B, Issue A, prepared by D&P Designs dated April 2010

Proposed RCP, Issue A, prepared by D&P Designs dated 5/9/2010

Certificate

Council certifies that, if the work is completed in accordance with the approved plans, specifications and such modifications as may be shown on the documentation it will comply with the requirements of Environmental Planning and Assessment Regulation 2000 as referred to in section 81A(5) of the Environmental Planning & Assessment Act 1979.

Attachments

PCA Agreement (if nominated)
Advisory notes
Evidence of compliance with conditions of consent and payment of fees and per Council file."

As it seems, the Applicant commenced trading in the premises on or about 5 March 2011. It is not clear when the lease was actually executed by the lessor but a letter from N C Coombes & Co to Than & Co dated 18 March 2011 states, "that the lease signed by all parties has been forwarded to our clients' mortgagee for consent prior to registration". It appears that by then the lease was expressed to commence on 5 January 2011.

On 25 March 2011, N C Coombes & Co wrote to Than & Co in these terms:

"RE: G & J DRIVAS PTY LTD & TELADO PTY LTD Lease to

HONG HA MASCOT BAKERY PTY LTD PREMISES; 28, 222-230 CHURCH STREET PARRAMATTA

We refer to the above matter and are instructed that your client is currently selling fast food products contrary to the use referred to in the Lease. As a consequence your client is in default of the Lease.

We are instructed that your client has been informed directly by our client to cease selling fast foods contrary to its permitted use and that it has failed to do so.

We are further instructed to confirm that in the event that your client does not cease selling fast food products forthwith and in the event your client sells products contrary to the permitted use referred 'to in the Lease our clients shall take whatever action, is open to them pursuant to the Lease in respect of your client's default including terminating the Lease."

This letter produced a reply from Than & Co dated 29 March 2011:

"We refer to your letter of the 25th instant and are instructed to advise that our client rejects the allegation raised in your letter.

We assume the items which you refer to as fast food products are 'dim sim' and 'spring rolls'. Our client advises us that such products are used as bread roll fillings. Occasionally, some customers wish to purchase the bread rolls and the dim sim or spring rolls separately so that they can make the filling themselves.

Accordingly we are of the view that those items are within the meaning of 'associated products' permissible under the lease."

The Respondents' response was to issue, through their solicitors, a document dated 7 April 2011 purporting to be a notice under s 129 of the Conveyancing Act 1919. Omitting formal parts the notice read:

Reference is made to the following covenants (to the extent relevant) of the Lessee contained in the Lease:

Covenant as to Permitted Use.

Item 4 - Reference Schedule "A"

Permitted Use - "Baking hot bread and retail sale of filled bread rolls, soft drink, fruit juices, coffee and associated products"

Clause 3(c)

"The Lessee will not without consent in writing of the Lessor use or occupy the demises premises otherwise than for the use referred to in Item 4 of the Reference.

Schedule marked 'A' and will not in any case use the premises for any other use".

Covenant as to Alterations.

Clause 3(f) (i) & (ii)

"The Lessee shall not make or cause or suffer to be made any alterations, additions, or improvements to the premises, or install or cause or suffer to be installed therein, or thereon any trade fixtures exterior signs, floor coverings, partitions, interior or exterior lighting, plumbing, fixtures, shades or awnings, or drive nails or screws into the premises or any part thereof or in anyway damage or deface ceilings walls, partitions, floors, wood, stone, concrete or ironwork thereof during the said term, without first obtaining the written approval of the Lessor".

And the breach by the Lessee of those covenants, the Lessor hereby gives the Lessee notice that the Lessor requires the Lessee to remedy those breaches within a reasonable time after the date of service of this notice as follows:

(a) Item 4 and clause 3(c) - the Lessee must cease the sale of deep fried springs rolls, deep fried dim sims, fresh dim sims (not deep fried), fresh spring rolls (not deep fried), shredded chicken pieces, shredded tuna and spicy meatballs with red sauce.

(b) Clause 3(f) (i) & (ii) - the Lessee must remove the current shopfront of the Premises and have the old shopfront re-installed to match the other shopfronts within the building in which the Premises are located and cause that work to be carried out by the contractors approved in writing by the Lessor.

If the Lessee does not rectify the breaches within a reasonable time after the date of service of this notice, the Lessor may without limitation:

(a) remedy the breaches at the Lessee's cost pursuant to clause 7(f) of the Lease;

(b) re-enter into and take possession of the Premises and terminate the lease, in accordance with clause 7(e) of the Lease; or

(c) determine the Lease in accordance with clause 7(e) of the Lease.

The Lessor reserves its rights under the Lease to seek compensation and/or damages against the Lessee for any loss or damage suffered by the Lessor as a result of the breaches and demand payment of interest under clause 7(g) of the Lease."

At its foot, the notice bore this endorsement:

"Note: The lessor will be entitled to re-enter or forfeit the Lease in the event of the Lessee failing to comply with this Notice within a reasonable time - see section 129 of the Conveyancing act 1919."

Thereafter, there was an exchange of correspondence between the solicitors containing threats and counter threats. It is unnecessary at this point to refer to that correspondence in any detail but I note that Than & Co's letter of 21 April 2011 deals with the alleged breach of clause 3(f) of the lease in these terms:

"In relation to the allegation of breach of clause 3(f)(i) &(ii):

We note that prior to our client carrying out the shop fittings and alteration to the shop front, detailed plans were submitted to the landlords via their agent for consent. The landlord consented to the plans and executed their consent in the DA application enabling our client to submit same to Parramatta City Council. Such DA application and attached plan clearly set out the works to be carried out at the demised premises including installation of the new sliding door to the shop front.

All works and alteration at the demised premises have been carried out in accordance with the development approval and construction certificate issued by Parramatta City Council of which your clients had consented to."

On 7 July, the Respondents purported to issue a further notice to the Applicant under s 129 of the Conveyancing Act. This notice relied on a number of grounds not mentioned in the previous notice, including reference to some 12 alleged breaches of statutory obligations. It became unnecessary for me to consider either the formal validity of this notice or whether any of the breaches it alleged were established, as Mr Sneddon, counsel for the Respondents, informed me during the hearing that he no longer placed any reliance upon it.

On 11 July 2011, the Respondents re-entered the premises and purported to terminate the lease pursuant to clause 7(e). The Applicant thereupon commenced proceedings in this Tribunal and applied for interim relief. Consent Orders were made on 21 July without admissions which, inter alia, had the effect of permitting the Applicant to resume occupation of the premises, which it has continued to do.

It is convenient to consider first the formal validity of the notice under s 129 of the Conveyancing Act dated 7 April 2011 (hereafter "the s 129 notice"). The section is in the following terms:

129 Restrictions on and relief against forfeiture of lease

(1) A right of re-entry or forfeiture under any proviso or stipulation in a lease, for a breach of any covenant, condition, or agreement (express or implied) in the lease, shall not be enforceable by action or otherwise unless and until the lessor serves on the lessee a notice:

(a) specifying the particular breach complained of, and

(b) if the breach is capable of remedy, requiring the lessee to remedy the breach, and

(c) in case the lessor claims compensation in money for the breach, requiring the lessee to pay the same,

and the lessee fails within a reasonable time thereafter to remedy the breach, if it is capable of remedy, and where compensation in money is required to pay reasonable compensation to the satisfaction of the lessor for the breach.

(2) Where a lessor is proceeding by action or otherwise to enforce such a right of re-entry or forfeiture, or has re-entered without action the lessee may personally bring a suit and apply to the Court for relief; and the Court, having regard to the proceedings and conduct of the parties under the foregoing provisions of this section, and to all the other circumstances, may grant or refuse relief, as it thinks fit; and in case of relief may grant the same on such terms (if any) as to costs, expenses, damages, compensation, penalty or otherwise, including the granting of an injunction to restrain any like breach in the future, as the Court in the circumstances of each case thinks fit.

(2A) If such right of re-entry or forfeiture arises under a lease for a term of ten years or upwards by reason of a breach of a covenant by the lessee that the lessee will not make alterations in the demised premises without the consent of the lessor, and if it shall be proved to the satisfaction of the Court that the alterations made or proposed to be made have been or may be made without substantial injury to the lessor the Court may grant relief on such terms as the Court may think proper.

(3) The provisions of subsection (1) shall not extend to a covenant or condition or agreement against doing, committing, or suffering anything whereby or by means whereof either alone or with other circumstances any licence under the Liquor Act2007 is or may be endangered, or is or may be liable to lapse or be suspended, cancelled or refused.

(4) This section applies although the proviso or stipulation under which the right of re-entry or forfeiture accrues is inserted in the lease in pursuance of the directions of any Act of Parliament.

(5) For the purposes of this section a lease limited to continue as long only as the lessee abstains from committing a breach of covenant shall be and take effect as a lease to continue for any longer term for which it could subsist, but determinable by a proviso for re-entry on such a breach.

(6) This section does not extend:

(a) to any Crown lease or to any lease granted by an owner under section 69 of the Mining Act 1906, or to any lease or tenancy for a term of one year or less, or

(b) to a covenant, condition, or agreement against the assigning, under-letting, parting with the possession or disposing of the land leased where the breach occurred before the commencement of the Conveyancing (Amendment) Act 1930 , or

(c) to a condition for forfeiture on the taking in execution of the lessee's interest in any lease of:

(i) agricultural or pastoral land,

(ii) mines or minerals,

(iii) a house used or intended to be used as licensed premises under the Liquor Act 2007,

(iv) a house let as a dwelling-house, with the use of any furniture, books, works of art, or other chattels not being in the nature of fixtures,

(v) any property with respect to which the personal qualifications of the tenant are of importance for the preservation of the value or character of the property, or on the ground of neighbourhood to the lessor or to any person holding under the lessor,

(d) in case of a mining lease to a covenant, condition, or agreement for allowing the lessor to have access to or inspect books, accounts, records, weighing-machines, or other things, or to enter or inspect the mine or the workings thereof,

(e) to a condition for forfeiture on the taking in execution of the lessee's interest in any lease (other than a lease mentioned in paragraph (c)) after the expiration of one year from the date of the taking in execution, provided the lessee's interest be not sold within such one year: But if the lessee's interest be sold within such one year this section shall extend and be applicable to such condition for forfeiture.

(8) This section shall not affect the law relating to re-entry or forfeiture or relief in case of non-payment of rent.

(9) The notice mentioned in this section shall be in the form set out in the Sixth Schedule or to a similar effect.

(10) This section applies to leases made either before or after the commencement of this Act, and shall have effect notwithstanding any stipulation to the contrary."

Unsurprisingly, the section has been the subject of much judicial authority, including recently of the Court of Appeal in Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSW CA 268 where Hodgson JA (with whom Allsop P and Macfarlan JA agreed) said:

323 In my opinion, the above authorities clearly indicate that a notice under s 129 must not only allege breach, but must also describe the particular acts or omissions constituting the alleged breach; and the notice must indicate the acts of the tenant which the landlord would consider sufficient for the lease to continue, and upon completion of which the landlord would abandon its claim to forfeit. The standard of particulars or degree of specificity depends upon the circumstances, including the nature of the covenant alleged to be breached, the tenant's actual or constructive knowledge, and whether the landlord claims reasonable compensation. To use the example of Lord Buckmaster LC, where there are several options open to a tenant to waterproof a leaking ceiling, then that choice is at the tenant's discretion. Thus s 129 is, in my opinion, directed at allowing the tenant to bring about (within a reasonable time) a state of affairs under which the landlord would not pursue forfeiture.

324 In particular, the lessee should not be left to speculate as to whether, if it took whatever action it could to remedy the specified breaches, the lessor might nevertheless proceed to terminate the lease on the basis that the breaches were not capable of remedy or that, because what the lessee did was insufficient to eliminate loss caused to the lessor by the late performance of the lessee's obligations, the lessee was still in breach."

In my opinion, in relation to the alleged breach of the permitted use obligation, the s129 notice was formally adequate. Although in terms the notice does not describe the acts and omissions constituting the alleged breach, it may, I think, on a fair reading be inferred that the breach complained of was the sale of "deep fried spring rolls, deep fried dim sims, fresh dim sims, fresh spring rolls, shredded chicken pieces, shredded chicken pieces, shredded tuna and spicy meat balls with red sauce". The notice is clear that cessation of the sale of those products constitutes the act of the Applicant which the Respondents would consider sufficient for the lease to continue.

In so far, however, as the s 129 notice refers to clause 3(f) of the lease, in my opinion, it is formally defective in that it does not identify, or even purport to identify, the alleged breach or breaches of the covenant relied on.

It was argued by the Applicant that, in any event, the s 129 notice was waived by virtue of the subsequent notice dated 7 July 2011. However, I do not think that to be so.

Relevant authorities are referred to by Young J in Silkdale Pty Ltd v Long Leys Co Pty Ltd (unreported 14 September 1995 BC 9505378). His Honour then said:

"There seems no doubt that in an appropriate case, long delay in enforcing one's rights under a notice may amount to waiver. However, it must be remembered that the law requires that waiver must be clear and unequivocal and that the other party must have altered his position in reliance on it, or at least acted on it, Chitty on Contracts, 26th ed para 22-040. There is no suggestion here that Mr Kerr or the defendant in any way made any assumption as to the Bank's conduct setting at nought the notice that it had given in 1985."

Here, there was a comparatively short time between the two notices and, significantly, the second notice did not allege the 2 breaches referred to in the earlier notice. Although possibly it might be suggested that the Respondents were abandoning the bases for the first notice in favour of the breaches alleged in the second notice, I think the proper inference to be drawn is that the second notice was intended to strengthen the first by adding further breaches. There was certainly, in my view, no clear and unequivocal waiver.

I turn now to consider whether a breach of lease was proved in respect of that part of the s 129 notice I have held formally valid and whether that breach was available to the Respondents on 7 April 2011 to found a s129 notice. In case I am wrong in my conclusion as to the invalidity of part of the s 129 notice, I will also consider whether, as at 7 April 2011, there was an existing breach of the covenant contained in clause 3(f) of the lease. For these purposes I will need to have regard to the evidence.

The first witness in the Applicant's case was Mr Thuan Tong Hua (Mr Hua). He swore 4 affidavits viz 13 July 2011; 20 July 2011; 15 August 2011 and 19 October 2011.

In the earliest affidavit Mr Hua said that he is the sole director and secretary of the Applicant. He exhibited to the affidavit a bundle of documents containing some 118 pages which included among other documents the lease as executed by the Applicant; a Leasing Proposal signed by Mr Simon Psaroudis on behalf of the Applicant with amendments noted by the Applicant; and the correspondence between solicitors leading up to the signing of the lease.

It is necessary for me to say something further about these documents.

The Leasing Proposal is entirely silent as to the use to which the premises may be put, merely noting "premises come as a clean shell".

The draft lease submitted by the Respondents' solicitors on 18 August 2010 restricted the use of the premises to "Hot Bread Baking". The Applicant's solicitors in their letter of 10 September 2011 proposed "Permitted use in Item 4 is to be amended by deleting the word "Bakery" and inserting "Takeaway" in lieu thereof. To this the Respondents' solicitors replied, "Not agreed. The lessors require the use to be specific and their understanding is that the premises are intended to be used as a bakery not a take away food shop. However, the lessors are willing to consider an expanded wording in respect of the use but "take away" is too broad". The Applicant's solicitors replied, "Our client shall bake bread rolls at the premises which are to be used for the retail sale of meat filled rolls. There will be no retail sale of bread at the premises. Accordingly, the permitted use can be amended to read "Baking hot bread and retail sale of take away foods, including sale of filled bread rolls, soft drinks, fruit juices, coffees and associated products".

Without giving reasons, the Respondents' solicitors in reply proposed the wording which found acceptance by the Applicant's solicitors and was incorporated in the lease.

In paragraph 26 of his first affidavit Mr Hua deposed as to the use to which the Applicant put the premises.

"The permitted use is for, among other things, "filled bread rolls ... and associated products". The products offered for sale from the demised premises are plain bread rolls and filled bread rolls. The fillings are those of the Vietnamese style and consist of a variety of fillings including sliced meats, vegetables, dim sim, canned tuna, cheese, salads, etc. I do not sell dim sims or other fast food except as part of a filled bread roll. For clarity I wish to explain that a "dim sim" is a style of meatball. It is put inside the bread roll. It is not fast food eaten without bread, such as cooked chips (French fries) or other ethnic style deep fried and battered dim sims, wontons, chicko rolls."

According to Mr Hua on the morning after the premises opened for business, a Mr Crescini and a woman named Georgina called upon him. There was this conversation:

"Georgina: Have you received the new redevelopment clause?

Hua: No. What is that?

Georgina: The landlords want to make a new redevelopment clause for your shop. It means no redevelopment for the first year. If the centre is redeveloped on the second year you will be compensated for $100,000.00..."

On 7 March 2011, the Applicant received an email from Mr Crescini:

"Hi Tong

As discussed please see the attached proposal for the Redevelopment Clause.

Year 1 - No redevelopment Clause

Year 2 - Should we issue you notice, $100,000 will be paid

Year 3 - Should we issue you notice, $50,000 will be paid

Year 4 - Should we issue you notice, $20,000 will be paid

Year 5 - Should we issue you notice, $10,000 will be paid

Please feel free to contact me if you have any questions regarding the above.

Regards,

Chris Crescini

Property Management"

Within a week, Mr Crescini sent a rather less friendly email to Mr Hua:

"Dear Tong,

RE: Lease agreement

PPTY: Shop 28, 222 Church Street, PARRAMATTA

We note that you have been selling fast foods from your premises including deep fried dim sims and spring rolls. Whilst you've only been trading for a short period, your sale of fast foods is in our view affecting the trade of the fast food retailers within the centre.

As per your lease agreement, the permitted use for your shop is bread rolls and drinks only. Please immediately refrain from selling any items of fast food. I will be inspecting your premises each day this week to confirm you are complying with your lease in this regard.

This issue is of such importance to us that in the event that you fail to comply with our request and your lease agreement, we'll take such action as is necessary for you to do so, including seeking an order from the court to have you desist from selling fast foods.

If you have any questions please do not hesitate to contact our office on 02 9806 8099.

Regards,

Chris Crescini

Property Management"

It is noteworthy that Mr Crescini's email significantly misquotes the terms of the lease, "Fast Food" is defined in the Macquarie Dictionary Third Edition as meaning "food for sale as chicken, chips, hamburgers etc which can be provided without delay". "Take Away" relevantly is given the meaning "to carry off or remove". Interestingly, the Application for Development Approval dated 7 August 2010, which bears the Respondents consent signed by Mr Psaroudis on their behalf, describes the development as "Proposed Hot Bread Bakery and Food Take Away".

Thereafter, there was the exchange of correspondence referred to earlier. According to the affidavit on 23 May, a Mr Peter Morgan came to the premises and there was this conversation:

"Morgan: "Tong, let forget (sic) about the spring rolls, forget about the shop front, the ceiling, the floor. Let forget everything. Now what do you think about the redevelopment clause?"

[Mr. Morgan then placed a printed email in front of me and pointed out the redevelopment clause for years 1, 2, 3, 4 and 5].

Hua: "Can you tell me why the landlords want to change the redevelopment clause, after the lease has been signed?"

Morgan: "The plan for redevelopment of the arcade has been drawn up long ago. Now there appears to be a big company that wants to invest and build a new building so that it can be leased back to them."

Hua: "Can you tell me when this will happen?"

Morgan: "I don't know. However the landlords want everything ready so that they can start whenever they are ready."

Hua: "If that is the case then I need to see it in paper."

Morgan: "Okay, it's fine"

This conversation was followed by emails between Mr Hua and Mr Morgan. On 6 June, Mr Morgan came to the premises and there was, according to Mr Hua, the following conversation:

Morgan: "Have you decided about my offer as we discussed last time?"

Hua: 'No. I have just opened the business. Whatever the landlords want should be sent to my solicitor so that I can seek advice before deciding.'"

Morgan: "How much did it cost you to set up the business?"

Hua: "I have to ask my accountant to work it out. I think it costs me over $200,000.00."

Morgan: "Does this mean you are not happy with $100,000.00 compensation?"

Hua: "Do you think that $100,000.00 will be sufficient to recover my cost? As I said before send to my solicitor whatever you want then I will consider. I need it in paper."

Morgan: "Fine. Ask your accountant to work out the cost figure and let me know."

Hua: "You must send letter to my solicitor outlining what you want before I make any decision."

In paragraphs 37 and 38 of the affidavit, Mr Hua deposed to a further conversation with Mr Morgan:

"37. On 16 June 2011 Mr. Morgan came to the demised premises and we had a conversation words to the following effect:

Morgan: "Tong, come with me to a shop nearby and I will tell you when we get there"

[I followed Mr. Morgan to a shop on Church Street which is about 150 meters away from my shop. This shop was currently used for sale of mobile phone accessories. ]

Morgan: "I have this idea. You move your business to this shop. If you do, the landlords will set up the shop the way you want. The rent for this shop is more than $80,000.00 a year but the landlords can give you the same rent as your current shop. You can sell whatever food you like. The landlords may consider not increasing the rent for a few years. You may also ask the landlords for some favour if you like."

Hua: "This is not a bad idea. But you have to put it in writing and send it to my solicitor so that I can discuss with him before deciding."

Morgan: "Okay I'll tell the landlords but you should think about this."

....................................

38. On 23 June2011 Mr Morgan came to the demised premises and we had a conversation, words to the following effect:

Morgan: "Have you though about moving to the other shop?"

Hua: "No. I am not going to decide anything until I see the paper from the landlord showing me exactly what they want."

Morgan: " What about the shop across the road (pointing his finger to shop number 89). We are going to set up that shop for you if you agree to move over."

Hua: "I don't want to do anything or to move anywhere until I see the paper works from the landlords."

Morgan: " What do you want? Do you want to move or not?"

Hua: "I don't' want to move. I have spent a lot of money, lot of time here; I don't want to move anywhere. Do not disturb anymore."

Morgan: "Oh! I see. You don't want to move eh?""

Mr Hua's affidavit proceeded to recite a series of events which, on their face, suggested a deliberate campaign of harassment by the Respondents. Those events included two visits by Mr Morgan accompanied by an "inspector" on 1 July and 4 July; the service of the document purporting to be a s 129 notice on 7 July; the delivery to the Applicant's solicitor of a report (subsequently shown to be false) from Smart Plumbing Solutions dated 28 June 2011, which apparently contradicted the terms of a permit previously issued by Sydney Water Corporation; and the subsequent locking of the Applicant out of the premises on 12 July 2011.

As to the assertion that the alterations to the premises were not approved by the Respondents, Mr Hua said that both the development application to the Council and the construction application were accompanied by the Respondents' letter of consent.

Mr Hua's second affidavit sworn 20 July 2011 dealt with his initial negotiations and conversations with Mr Psaroudis:

"2. In or about July 2010, in response to the For Lease sign affixed outside shop 28, 222-230 Church Street, Parramatta ("Shop"), I telephoned Mr. Simon Psaroudis, the centre manager of Greenway Arcade ("Psaroudis"). Mr Psaroudis arranged for me to meet him the Shop the next day.

3. Upon my arrival at the Shop on the next day, Mr Psaroudis was already in front of the Shop. Mr Psaroudis and I had a conversation words to the following effect:

Psaroudis: "What are you going to do in this shop?"

Hua: "I want to sell takeaway foods but Vietnamese style like pork rolls, chicken rolls...?"

Psaroudis: "Oh! Vietnamese pork rolls style?"

Hua: "Yes. We are going to bake the bread rolls here. We make everything fresh daily and right in the shop."

Psaroudis: "Have you done this before?"

Hua: "Yes, my family has been running this kind of business for more than 20 years. I myself had a shop in Hurstville for 8 years before the Council resumed the land for building the bus interchange terminal. That's why I need to look for another shop. "

Psaroudis: "Very good. You will do well here"

Hua: "To open the shop like this I need to have the grease trap and need to change the shop front to make the door wider. I need to completely refit this shop to meet the council requirements for selling food. Is there an existing grease trap in the centre? You must have one because there is a food court here."

Psaroudis: "Yes, there is an existing grease trap in the centre."

Hua: Can we connect with our shop?

Psaroudis: "Of course, you can. The PJ coffee can. I think you can but if it is too difficult to connect then you can install your own grease trap inside the shop. You have to pay for it though"

Hua: "What about the shop front? Because the swing door is too small and it is on the side of the shop, I'd like to change it to the sliding door and make the opening wider right in the middle."

Psaroudis: "Of course, you can. You can change the shop front so long as it is approved by the council."

The third affidavit sworn 15 August 2011 referred to the admission by the plumber that the report of 28 June 2011 in relation to the trade waste discharge was incorrect and recorded its apology. The affidavit also dealt with the loss suffered by the Applicant from being locked out of the premises from 11 July 2011 until 22 July when as a result of an interim agreement reached in these proceedings he re-entered the premises. The claim includes $2,454 for spoiled food, as a consequence of which the applicant was not able to re-commence trading until Monday, 25 July.

The affidavit of 15 August dealt with several other matters. It deposed to a conversation with the Respondents' solicitor on 2 August 2011, which seems to me to have no relevance to any matter I have to decide. It also sought to modify what Mr Hua had said in a previous affidavit about his use of the premises:

"11. The statement in paragraph 26 of my Affidavit of 13 July 2011 that I do not sell dim sims or other fast food except as part of filled bread rolls' may need clarification. I have mostly sold take away food in the form of filled bread rolls but up until the commencement of these proceedings I have sold my unique spring rolls and dim sims separately as an 'associated product' of filled bread rolls. I have also been selling Vietnamese summer rolls which are not fried and which I also consider to be an 'associated product'

.........................................

I was reinforced in my belief that what I was selling was within the permitted use by a conversation I had with the respondents' representative Simon Psaroudis ('Simon') in July 2010 at the premises. Parts of that conversation are set out in my Affidavit of 20 July 2011 but there were other parts. At that time my sister Thu and I were inspecting the premises for the first time to see if they were suitable for our purposes. Simon showed us through the premises and asked us what use we proposed to make of them. We showed him a photograph a copy of which is annexed and marked 'L'. The rolls in the middle of the photograph to the left are Vietnamese summer rolls and the rolls to the right are chicken spring rolls. On seeing the photograph he said words to the following effect:

"Wow. That's good. Parra needs something like this." .

In paragraph 16 of the affidavit, Mr Hua again addressed the allegation that the alterations to the premises were not approved by the Respondents:

"The second allegation in the first Notice is that I installed a shopfront without first obtaining the respondents' approval in writing. In about the middle of August 2010 my sister and I handed to the respondents' representative 'Georgina' the plans for the shop fitout which I wanted to submit to the local council for approval. Those plans clearly show the current shopfront and the sliding door. I had previously been to the council to try and lodge the plans but was told I had to lodge them with a letter of consent from the respondents. Georgina photocopied the plans, handed them back to me and a few days later I received the respondents' consent by letter dated 18 August 2010 which is page 113 of the said Exhibit."

On the afternoon of 11 July 2011, Mr Hua said he had a conversation with Mr Crescini during which he enquired "why is the landlord hassling me about the food" and received the reply "Simon made a mistake in signing the lease with you. There should not be any more food outlets in the building. There is another tenant complaining about you selling spring rolls and dim sims".

Mr Hua's affidavit of 19 October 2011 annexes photographs of the premises and other premises adjacent or nearby. They seem to support his assertion that there was no shop front uniformity. The affidavit, however, concedes that there was some deviation between the approved plans for the alterations and what was actually constructed:

"The plans for my shopfront approved by both the Respondents and Parramatta Council show only one sliding door, not the two I subsequently installed. This was an error on the part of the draftsman which, in the rush to get started, I did not notice. Further the old swing doors I replaced were already inconsistent with the shopfronts of 54 and 56 Macquarie Street, being off to the side of the shop, not in the middle."

As it seems to me the departure from the plans, which was apparently acceptable to the Council, should not be regarded as material. In answer to an affidavit of Dimitris Drivas sworn 9 September 2011, Mr Hua pointed out that section AA on the approved plans does not provide for a hob at the bottom of the shop front and the page of the approved plans entitled "Proposed RCP" shows a sliding door in place of the existing swinging door.

The affidavit also dealt with the Respondents' actual knowledge of the alterations as they were being carried out:

"Following notification of Council approval of my fitout I employed Ken Lu, a glazier, to do the shopfront. He did that work in about mid November 2010 and in taking out the old shopfront and installing the new he broke a small section of tiles on the external column separating my shop from number 50 Macquarie Street. Within a day or two the respondents' representative Georgina Amanonce asked me to come to her office which I did immediately. There she showed me a photograph on her computer of the shopfront without any frames and showing the broken tiles saying:

"One of the owners took this photo of this broken tile and he wants you to fix it."

I replied "We will. We will not leave it like that"

The photo was taken on the day the glazier Ken Lu pulled out the old shopfront. Ken Lu was in the photo. She did not complain about the newly installed shopfront at all.

I then tried without success to find the same coloured tiles as replacements and subsequently requested Georgina to help me find them. As a result of that request I received two emails from the respondents' representative Chris Crescini both on 24 February 2011. A copy of those emails is annexed and marked 'E'. Again there is no mention of the new shopfront in those emails. The respondents' representatives' office is just across the road from my shop and they walked past my shop every day for over four months without once complaining about the shopfront."

At issue in the proceedings before me was whether the Respondents' complaint that the Applicant was selling food beyond that permitted by the lease was a genuine complaint or one manufactured or contrived for the purpose of obtaining a tactical advantage in the Respondents' desire for commercial reason to obtain possession of the Applicant's premises.

The following passages from the affidavit of 19 October 2011 were admitted into evidence:

"3.5 Annexed and marked 'F' is a copy of page 5 of the lease of 56 Macquarie Street. The permitted use is 'Barber/Hairdresser yet that shop sells drinks which competes with my business.

3.6 Annexed and marked 'G' is a copy of page 2 of the lease to Mr & Mrs Ling of the shop called Bernards in the internal arcade of the Greenway Centre. The permitted use is 'Hot Food Bar" yet that shop sells sandwiches and cold salad dishes.

3.7 Annexed and marked 'H' is a copy of page 5 of the lease to Mr & Mrs Chiong of the shop called Deluxe Sushi in the internal arcade of the Greenway Centre. The permitted use is 'Retail sale of ice-cream and salad with the following products: ice-cream, yoghurt, jelly, pudding, tea, coffee flavoured milk shake, fruit salad, freshly squeezed fruit juice and sushi. Excludes the sale of coffee'. That shop sells curried chicken, Thai noodle soup and teriyaki chicken and has recently made and sold rice paper rolls which competes with my business.

3.8.......................

3.9 On or about 28 September 2011 I visited the tenants of the shops called Bernards, Deluxe Sushi and New Mings Kitchen to see if they were unhappy with what I was selling. These are the tenants referred to in paragraph 9 of the Affidavit of Chris Crescini sworn on 14 September 2011. Each tenant informed me that they had no complaint because their shops were located in the internal food court and my shop was external. At this moment I saw the said Chris Crescini in the food court and beckoned him over. These tenants repeated to him what they had told me.

My shop opened for business selling filled bread rolls, Vietnamese summer rolls, dim sims and spring rolls on 3 March 2011. The next day the respondents' representatives Georgina and Chris Crescini visited me in the shop where all of this food was clearly displayed. They did not complain about the shopfront or any breach of the permitted use but tried to negotiate with me on the redevelopment clause in the lease. I knew Chris Crescini as a customer of mine in my old Hurstville shop where he always ordered his usual 'combo' which was wholemeal chilli chicken roll with no coriander, a spring roll and a drink. On this day, Friday, 4 March 2011, he ordered the same combo including the spring roll. I asked him and Georgina to send me an email about their wish for me to change the redevelopment clause.

The next approach to me on behalf of the respondents was the email from Chris Crescini on Monday, 7 March 2011 (at page 70 of the Exhibit to my Affidavit of 13 July 2011) not to complain about my shopfront or any breach of the permitted use but to try to negotiate with me on the redevelopment clause in the lease. Between 7 and 14 March 2011 Chris Crescini came to my shop nearly every day for his lunch combo including the spring roll.

It was not until I had made it clear to Chris Crescini that I did not want to change the redevelopment clause in my lease that I started to receive complaints that I was exceeding the permitted use, the first by email from Chris Crescini on 14 March 2011, a copy of which is also at page 70 of the said Exhibit. There is no complaint about the shopfront in that email."

By leave, Mr Hua gave some evidence in chief before being cross-examined. He testified that the business makes a monthly net profit of $5,000 to $6,000.

He was asked to describe the food he sold and replied "Vietnamese food, such as pork roll, chicken roll and salad roll". None of those products, he said, were sold by any other shop in the Centre. He said he also sold spring rolls, rice summer rolls and rice paper rolls. One other shop in the Centre, he said, sold spring rolls but not the other products.

In cross-examination by Mr Sneddon, Mr Hua conceded that the business, at least before 11 July 2011, was selling deep fried spring rolls, deep fried dim sims and rice paper rolls separately, that is otherwise than enclosed in bread rolls. He also conceded that it was a mistake when he stated the contrary in his affidavit of 13 July 2011.

The second witness in the Applicant's case was Mr Hua's sister, Tuyet Thu Hua (Ms Hua). She said that she worked with her brother in the premises. As she pointed out, although they are part of the Greenway Centre, they have a frontage to Macquarie Street, whereas most of the other shops comprising a food court face an internal arcade.

She deposed to a conversation with Simon Psaroudis and her brother in the premises during July 2010 and to the following conversation:

"Simon What would you like to do in this shop?

Tong I want to make and sell Vietnamese food such as pork rolls and chicken rolls. We are going to bake the bread rolls here. We make everything fresh daily.

Simon Have you had any experience?

Tong Yes, my family has been running this sort of business for more than 20 years. I had a shop myself in Hurstville for 8 years but I have to relocate because the Hurstville council obtained the land to build the bus interchange."

She said that she then showed Mr Psaroudis a photograph a copy of which was annexed to her affidavit, which she said depicted the most popular food products which they sold at the Hurstville store. She said the conversation continued:

"Simon Wow, they look good. Parra needs something like this.

Tong I need to spend a lot of money to fit this shop out. I need to change the shop front to make the entrance wider. I want sliding doors opened from the middle.

Simon Of course you can. You can change the shop front as long as it's approved by the Council.

Tong Is there an existing grease trap in the Centre? I am sure you have one because there is a food court here. We also see a coffee shop at the corner.

Simon Yes, there is an existing grease trap in the Centre.

Tong Can we connect our shop to it?

Simon Yes if P J Coffee can, then you can. But if it's too much to do then you will have to install your own grease trap at your own expense.

Me Tong's business at Hurstville was very good. We have been called Vietnamese Subway because you can choose your own favourite roll and your own fillings. At lunch time the queue was out to the street. It was broadcast on 96.9FM as one of the best bakeries in Sydney making best pork rolls, recommended in the Sunday Telegraph as best Bargain Bite, became the Runner Up of Time Out Magazine 2009 Sydney Food Awards and became the Finalist of 2008,2009,and 2010 St George Business Awards. It is a shame that Tong had to relocate.

Simon You will do well here.

Me Thank you, that is what we are hoping for."

The coloured photographs depicted some bread rolls with a variety of fillings and two other items, one of which at least appeared to be fried food. During cross-examination, Ms Hua admitted that she was aware of the contents of her brother's affidavit, as he was of her affidavit. This circumstance, of course, tends to undermine the affidavits in so far as they purport to represent the independent recollection of the deponents.

Ms Hua was challenged by Mr Sneddon upon her evidence that at the first meeting with Mr Psaroudis she showed him a photograph of the products sold at Hurstville. However, she maintained the accuracy of her recollection and it seems to me unsurprising that Mr Hua and Ms Hua seeking to relocate their business would not make clear exactly what they wished to sell.

Further witnesses in the Applicant's case were Mr Ken Lu and Mr Minh Tam Tran. Neither was required for cross-examination.

Mr Lu, in an affidavit sworn 12 October 2011 deposed as follows:

"1. I am a glazier and was engaged by Hong Ha Mascot Bakery Pty Limited to change the shopfront of premises known as Shop 28, Greenway Centre, 222-230 Church Street, Parramatta otherwise known as 52 Macquarie Street, Parramatta.

2. I carried out this work in about mid November 2010 and during the course of the work, after the old shop front had been removed, I was approached by two or three men one of whom had a conversation with me.

3. That conversation was to the following effect:

Man "Who gave you permission to change the shopfront?"

Me "The tenant of this shop. May I ask who you are?"

Man "I am the owner of the building."

4. The man and the others with him then crossed to the other side of the road where they talked amongst themselves. I think I recall one of them either speaking on his mobile phone or taking photographs of the shopfront. After about 5 or 10 minutes they left without speaking to me again. No request was made for me to stop work."

Mr Tran, a licensed plumber, in 2 affidavits respectively sworn 13 and 20 July 2011, dealt with the assertion by the Respondents that the premises had not been connected to the Centre's grease arrester. This is no longer an issue in the case as indicated earlier in these reasons.

In the Respondents' case affidavits were read by Mr Dimitris Drivas, Mr Psaroudis, Mr Chris Crescini, Mr Peter Morgan, and Ms Georgina Amanonce

Mr Drivas swore 2 affidavits 9 September 2011 and 16 November 2011. In the earlier, he said that he is a director of the first Respondent. The affidavit complained that the premises as altered contained a sliding front door in the centre of the shop instead of at the side as depicted in the approved plans. It also asserted that, without the Respondents' consent, a tiled masonry hob supporting the front door and windows had been removed and that bronze coloured aluminium frames had been replaced with white coloured metal frames. I observe that the alteration of the position of the sliding door was, in my opinion, not only a very minor matter but also beneficial to the occupation of the premises. Documents in evidence seem to make it clear that the plans approved by the Respondents contemplated the removal of the tiled masonry hob. The plans are silent as to the colour of the new frames.

The second affidavit of Mr Drivas identifies invoices from the solicitors for the Respondents which are said to arise from the Applicant's default under the lease and to be payable by the Applicant.

Mr Drivas agreed in cross-examination that only the two shops immediately to the right of the premises as you face them have matching masonry hobs. Neither the shop front on the left nor the café further to the right have these hobs.

He also agreed that in the second half of 2010, the Respondents occupied offices directly across the road from the premises. In November 2010, he said that office was actually used by Mr Crescini, Georgina Amanonce and Marianne Psaroudis. He said that he visited the Centre regularly from his Sydney office. He agreed that he was provided with a copy of the plans for alterations to the premises, which are in evidence, and he also agreed that he signed a letter of consent addressed to the Council in respect of both the Development Application and the Construction Certificate Application. He told Mr Henry, counsel for the Applicant, that he could not recall being present when the work was actually carried out, but he said that he did see the shop front about the time trading commenced on 5 March 2011.

Mr Drivas was cross-examined about the sequence of events leading to the engagement of a Mr Chris Michaels to inspect the premises with this instruction, "We are seeking a letter or email from you with every non-compliance you identify under BCA or any other code known to you".

Mr Drivas had sworn in his earlier affidavit that Mr Michaels was engaged on 28 June, as a consequence of his receipt of the report from Smart Plumbing about the trade waste. The cross-examination established that Mr Drivas did not receive the Smart Plumbing report until 29 June. His explanation of the discrepancy was that he was aware that the Smart Plumbing letter was coming and, presumably, of its contents, even though he did not see it until 29 June.

There was this exchange:

Q. Sir look at your affidavit. Paragraph seven, the first sentence you say, "Having received the letter there were concerns." do you see that in the first sentence?

A. Yes.

Q. You've said you received the letter on the morning of 29 June, correct?

A. Yes,

Q. Your concerns didn't arise until you received the letter. Because that was the report, correct?

A. Correct.

Q. Do you still maintain that Mr Michaels was engaged by the landlord after you received the letter?

HIS HONOUR: Well I think to be fair,

Q. As a consequence of the letter

A. He was engaged as a consequence of the letter, yes.

HENRY

Q. That's absurd isn't it?

A. No its not.

Q. Have a look at this email?

A. Because we were aware of~

Q. I didn't ask you why. I just said, "That's absurd" and you disagree, have a look at this email on 28 June at 12.22. Do you see it?

A. Yes.

Q. Were you involved in any discussions with Chris Michaels on the morning of 28 June 2011?

A. I wasn't personally."

Mr Drivas was then asked about the retainer on 28 June of Tyrells Property Inspections to make a technical report on the premises. There were these questions and answers:

"Q. Do you say that the retainer of Tyrells - was also a consequence of your receipt of the letter from Mr Molluso of 28 June?

A. It was a consequence of the understanding that the dye test was done.

Q. Yes, which you learned about on the morning of the 29th, yes?

A. No, I learnt about the dye test on the day, the 28th

Q. You didn't learn about the outcome of it though until the following morning did you?

A. No, well he told me that the dye didn't go through and that therefore it's not connected and subsequent to that, we received the letter the next morning, a copy of the letter.

Q. What time do you say you spoke to Mr Molluso?

A. I can't recall. It was some time during the - from - the morning.

Q. In the morning?

A. Well, like I can't remember

Q. Some time before twelve, was it?

A. Yeah, it was before twelve.

Q. I'm sorry I don't have multiple copies of this but perhaps if I could just show the witness and we can have copies made. This you should see sir, is a tax invoice from Smart Plumbing Solutions, dated 28 June 2011, do you see that?

A. So the sheet, yeah

Q. Have you seen that document before?

A. I have.

Q. You have?

A. I have.

Q. That was provided to you, was it by - or on behalf of at least Mr Molluso?

A. Attached to a tax invoice, yeah.

Q. This is the invoice for the work he's performed?

A. Mm-hmm

Q. On 28 June, yes?

A. Yes.

Q. You'll see that there's a time sheet?

A. Yes.

Q. And it says that he started and there was a start time of 8am, do you see that?

A. Yes.

Q. A finish time of 3pm, do you see that?

A. Yes

Q. And that he was there working for seven hours?

A. Yes

Q. You say do you that although you don't refer to it in ;your affidavit, you had a conversation with Mr Molluso between twelve and 12.22 on 28 June, is that right?

A. It was around - up until 12 o'clock. I can't remember exactly what time. It was a bit -

Q. So now it's before twelve, is it?

A. Yeah it was a bit - before 12.22 definitely because we would then commission these consultants until after we found.

Q. You are just making this up?

A. No, I'm not.

Q. If you had've had a conversation with Mr Molluso, it would've been recorded in you affidavit wouldn't it?

A. I could not recall at the time that I did the affidavit. Whether I spoke - what time I spoke to and whether I spoke to him. I couldn't recall the contents of that day.

Q. But now you do, do you?

A. I was aware of - I was aware of it and it should've been in my affidavit."

And later:

Q. So Mr Drivas, just pausing for a moment, on 28 June we have Mr Molluso going out to check the grease-trap; Mr Michaels being asked to find every non-compliance he can with any code and Tyrrells being retained by the landlord to prepare a report, do you agree?

A. Yes.

Q. Do you say that it's a coincidence that all those three things happened on the one day?

A. No.

Q. What do you say the reason for that happening on that day was?

A. Because the dye test was done to confirm that the grease trap wasn't connected and we relied on our plumber.

Q. That's a lie isn't it?

A. No it's not.

Q. The truth is on the morning of that day the landlord agreed in principle, commercial terms with Leighton's to redevelop the property didn't it?

A. There'd been - in principle-

Q. Do you agree with that proposition or not?

A. -there's no agreement, there's no agreement.

Q. You disagree with that?

A. There's no agreement. Some of the terms have been agreed but other terms have not and we've still made an agreement.

...........................................

Q. There was agreement in principle between the landlord and Leighton's on the morning of 28 June for the redevelopment of the property wasn't there?

A. In principle Yes.

Q. And as soon as that happened you knew, didn't you, that it was important to either change the redevelopment clause in the Shop 28 Lease or for that tenant to relocate, isn't that right?

A. No."

Mr Drivas agreed that pursuant to an "agreement in principle" Leighton Properties would pay $18m to the Respondents under a proposal which, as I understand it, involved the demolition of Greenway Arcade and the adjoining premises owned by the Respondents in order that the site might be redeveloped. He acknowledged that it was a term of the "agreement in principle" that "all the leases pertaining to the total site have redevelopment clauses exercisable by giving no more than 6 months notice to obtain vacant possession".

He also agreed that the lease of the premises did not have such a clause. There was this further exchange with Mr Henry:

Q. Mr Drivas, isn't this the position? Once these terms had been agreed recorded in this 28 June letter it was important for the landlord to secure one of two things, either have the tenant agree to a change in the redevelopment clause such that the landlord could terminate upon no more than six months notice or the tenant vacate, isn't that right?

A. No, because the tenant was in breach prior to our discussions with Leighton.

Q. But you knew, didn't you, that you had an $18 million deal on foot, correct?

A. After the tenant was in breach of his lease.

HIS HONOUR

Q. Just listen to the question. We've understood the point you're trying to make but answer the question.

A. Yes.

HENRY

Q. You had an $18 million deal on foot with Leighton's, correct?

A. Yes.

Q. It was a term of that deal that every tenant in the total site had to have a redevelopment clause exercisable by giving no more than six months notice, correct?

A. Correct.

Q. And you had a tenant with a redevelopment clause that allowed for more than six months notice, didn't you?

A. A tenant, yes, but they were in breach.

Q. You had not terminated the lease, had you?

A. I believe a s. 129 certificate was issued in April.

Q. And you had not terminated the lease in reliance on that had you as at 28 June?

A. I think the termination happened in July.

Q. Yes. You see it was important to you, wasn't it, once this deal was struck to either have the tenant agree to change its redevelopment clause or to get rid of the tenant, isn't that right?

A. No, it wasn't.

Q. And that's why later on 28 June after the agreement in the morning Mr Molluso went out to check the grease trap, correct?

A. He went there, yes, because there were issues.

Q. Why Mr Michaels was retained to find any non-compliance he could of any BCA or other code, correct?

A. Correct."

Mr Psaroudis denied that before these proceedings commenced he was ever shown a photograph or any other document by or on behalf of Mr Hua which depicted the food he intended to sell from the premises. He also denied that Mr Hua ever told him that he wished to sell "dim sims, spring rolls, spicy meat balls or any other type of cooked Asian food". Further, he denied that he was made aware that the Applicant wished to cook food (other than bread rolls at (the premises)). He went on to say "It was my understanding from what Mr Hua said to me during my conversation with him (which included the words to the effect "I want to sell Vietnamese style pork rolls, chicken rolls and "we are going to bake the bread rolls here"). ........ that the Applicant "wished to use (the premises) as a bread shop and for the sale of Asian style filled bread rolls, and that the only food to be cooked at the shop would be bread". This statement seems to me to fit ill with the Applicant's Development Application which describes the proposed development as "Proposed Hot Bread Bakery and Food Take Away" and bears what purports to be the signature of Mr Psaroudis on behalf of the owners dated 6 August 2010.

Cross-examined upon the conversations which Mr Psaroudis referred to in his affidavits, he displayed no, or very poor recollection, of the details of them.

Somewhat fatuously Mr Psaroudis' affidavit concludes:

Any change to premises owned by the respondents proposed by a prospective tenant of those premises would first need the approval of the respondents, as the owners of the premises. It has always been my practice in my role as a Property Manager of premises available for lease to inform any prospective tenant who wishes to make changes to the proposed lease premises that any such changes must be approved by the owners of the premises. In any event, I am able to say from my experience as a Property Manager that a tenant's proposed alteration of a shopfront requires development consent from the local Council and an application for such development consent requires the consent of the property owner before it can be lodged with the Council.

Not only did Mr Psaroudis sign the owners consent on the Development Application but there are letters in evidence signed by directors of both Respondents authorising the Applicant in one case to lodge all necessary applications to Council in relation to "Development Approval", and in the other case identical words in relation to "Construction Approval".

Ms Amanonce said that she is the property manager for the respondents although she has been on maternity leave since 8 March 2011. She testified as to a conversation with Ms Hua on 3 March 2011 when she made the proposal for a variation of the development clause in the lease referred to earlier in these reasons. Ms Hua's response was that she would need to discuss the matter with her brother.

Mr Crescini said that he is Assistant Property Manager employed by the respondents and as such, visits the Greenway Centre on a regular basis. He annexed to his affidavit photographs which he claimed depicted items of fried food being offered for sale in the premises on 11 July 2011. He said that after the Applicant commenced trading in the premises he had observed the sale by him of fried items of food including spring rolls and dim sims otherwise than enclosed in a bread roll.

Mr Crescini denied that he ever told Mr Hua that he need not worry about the breaches of lease being alleged against him whether in conjunction with the proposal that he agree to a variation of the development clause or otherwise.

Mr Morgan commenced employment on 4 April 2011 as Property Manager for the Parramatta property portfolio of the respondents, working Tuesday, Wednesday and Thursday each week.

He said that his practice was to walk past each of the shops for which he had responsibility twice a week. He observed that food being sold in the premises included bread rolls, cold meats and salads, fresh spring rolls, dim sims, crumbed strips of chicken, fish meatballs in sauce and rice paper rolls.

He said that accompanied by Mr Crescini he met Mr Hua at the premises on 23 May 2011. His version of the conversation differed slightly from the version given by Mr Hua but not in a way which affects the outcome of this case. In any event I would prefer Mr Morgan's version.

He recounted further conversations with Mr Hua on 6 June, 16 June and 23 June. Again his version of the conversations differed insignificantly, in my opinion, from Mr Hua's versions. Again, if it be necessary to do so, I would prefer Mr Morgan's version.

He denied that in any of his communications with Mr Hua he negotiated on the basis that if Mr Hua agreed to the redevelopment clause proposed by the Respondents they would not seek to rely on the s 129 Notice. I accept this evidence.

The affidavit sworn by Mr Coombes was not, in the result, relied upon by Mr Sneddon, as Mr Coombes was away from Sydney and not available for cross-examination.

In my opinion, both Mr and Ms Hua were witnesses who did their best to speak the truth and assist the Tribunal although, as pointed out earlier, the fact that each was acquainted with the sworn testimony of the other to some extent undermines the credibility of both of them. Moreover, it was not, I think, until he gave oral evidence that Mr Hua faced up to the need to tell the Tribunal exactly what food, and in what form he was selling, from the premises. In general terms, however, I accept the testimony of both Mr Hua and his sister. I formed the view that of Mr Drivas, Mr Psaroudis and Ms Amanonce, none was a witness whose evidence could be relied on. Each seemed to have a poor recollection of relevant conversations and events. In the case of Mr Drivas, he seemed extremely reluctant to give any answer which might appear to be against his employer's interests, of which his evidence, which I find impossible to accept, as to the sequence of events on 28 and 29 June 2011 was a good example.

On the other hand, Mr Morgan was, in my assessment, a careful and truthful witness and I accept his testimony including as indicated earlier where, in relation to conversations, it conflicts with the evidence of Mr Hua and Ms Hua.

I turn now to the remaining issues which need to be resolved. In my opinion the reference to "associated products" in the permitted use provision of the lease is ambiguous enabling the Tribunal to have regard to surrounding facts and circumstances (Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1981-1982) 149 CLR 337 per Mason J at 352 where his Honour observed that "generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction unless they were known to both parties").

In this case, I regard as relevant the fact as I have found that the Applicant made known to the Respondents the nature of the business he wished to conduct in the premises and provided a photograph of the items of food he wished to sell. I accept the evidence that Mr Psaroudis encouraged him in this enterprise and I reject, what I regard as the spurious suggestion unsupported by evidence, that the Applicant's sale of these products illegitimately interfered with the business of other lessees in the Centre. This is particularly so in light of the fact that the other businesses, of which relevantly there were several, fronted the internal food mall whereas the premises fronted Macquarie Street.

Contrary to submissions made by the Respondent, I do not think that the interpretation of "associated products" is assisted by the Respondents' rejection in the lease negotiations of such imprecise expressions as "take away". The correspondence seems to me to indicate that while "take away" was regarded as too broad, the Respondents were willing to accede to the expression "and associated products" in order to accommodate what it knew the Applicant intended to sell.

The evidence establishes that after the Applicant commenced trading from the premises he did no more than continue the business he had previously conducted at Hurstville. In my opinion this was contemplated by both parties and within the meaning of the lease. The Applicant's conduct of the business therefore, in my opinion, did not constitute a breach of the lease and the s 129 notice was also for that reason defective.

The other breach relied on in the s 129 Notice related to cl 3(f) of the lease. The sub-clause is quoted above but is only partly quoted in the s 129 notice and, as mentioned earlier, the alleged breach is not specified. There is no doubt that the Respondents consented to the Applicant's application for a Development Approval and for a Construction Certificate, the applications being accompanied by plans and specifications, copies of which are in evidence. There is no evidence that the work done, which was apparently acceptable to the Council, departed in any way from the approved plans and specifications with the exception that the sliding front door was sensibly located in the centre rather than at the side. If it be the case, which I doubt, that the Respondents seriously cared about having a tiled hob and bronze coloured fittings as before, they should have ensured that the specifications which they approved so provided. As it seems to me, the plans in evidence clearly do not provide for a hob.

Of course, in any event, the alleged breach of cl 3(f) was committed before the lease commenced as it was common ground that the alterations were actually carried out about November 2010. This seemed to me an incongruous situation and I raised it during argument with counsel. Mr Sneddon referred me to the decision of French J in Fisher v Westpac Banking Corporation Federal Court of Australia, 20 July 1993, WAG75 of 1993. The case concerned a mortgage delivered in escrow. French J after reviewing authorities, some ancient, as to the effect of documents held in escrow observed (omitting references to authority):

It should also be noted that despite some difference of opinion in the cases the prevailing view appears to be that the title conveyed by a deed delivered as an escrow relates back, as between the parties to the deed, to the date of delivery and not the date upon which the conditions attaching to the delivery are fulfilled - Alan Estate Ltd v WG. Stores Ltd (above) at 486 (Lord Denning) and 492 (Sir Denys Buckley), contra at 489 (Ackner LJ).

To summarise the effect of these authorities, an escrow is an instrument delivered under conditions which prevent it from taking effect until their fulfilment. It is nevertheless an instrument capable of taking effect upon the fulfilment of those conditions. The better view appears to be that when it takes effect the instrument operates inter partes from the date of its delivery.

Mr Henry made no submissions upon this subject and I accept that, upon the commencement of the lease, rights accrued under it in favour of the Respondents in respect of breaches committed prior to commencement. The difficulty facing the Respondents, however, in this case, is that, in my opinion, they waived any pre-existing breach of the approved plans and specifications when, with knowledge and without complaint, they permitted the Applicant to enter into the premises, executed the lease and commenced action for its registration. I am satisfied that by 5 March 2011, the Respondents, through their employees, knew precisely what alterations had been carried out.

It was submitted by Mr Sneddon on behalf of the Respondents that the alterations carried out to the premises in about November 2010 were unlawful as the Construction Certificate was not issued until January 2011. It may be that there was a technical illegality, although the application and the plans and specifications were given to the Council in August 2010. However, this would not necessarily constitute a breach of clause 3(f)(ii) which speaks of work done "to a standard in conformity with the requirements of any Statutory Authority". Presumably, the Statutory Authority was happy with the result, as there is no evidence to the contrary. But, in any event, any breach of clause 3(f)(ii) was, in my view, waived. The Respondents knew when the work was carried out and they knew that the Construction Certificate was dated 5 January 2011. That was the time to object to what had occurred, not after several months had elapsed during which the Applicant commenced to trade and the lease was executed. Moreover, the s.129 notice does not even arguably rely on an alleged illegality.

The Applicant argues that there was unconscionable conduct within s.62 B(i) of the Retail Leases Act when the Applicant was locked out of the premises. Although the matter may be borderline, I am not persuaded that there was the high level of moral obloquy referred to by Spigelman CJ in Attorney General for NSW v World Best Holdings Ltd (2005) 63 NSWLR 557 at 583. On balance, I think the Respondents were doing no more than attempting to enforce what they believed to be their legal rights.

It follows from my findings that no breach of the lease by the Applicant was outstanding on the date of issue of the s.129 notice which, in any event, was, in my opinion, at least in part, formally defective. The Respondents are not entitled to relief in respect of their application, which should be dismissed.

The Applicant is entitled to succeed on its application but not in respect of its claim for unconscionable conduct. It is entitled to damages for the period he was unlawfully deprived of possession but these damages, in my opinion, are, in the absence of a finding of unconscionable conduct, limited to economic loss (Baltic Shipping Company v Dillon [1992-1993] 176 CLR 344).

Mr Hua, in his affidavit sworn 15 August 2011, quantified his economic loss at $13,064.54 and this claim seems reasonable being supported by documents and details of its components. I will allow interest upon the claim, amounting to $1,100.

It is unnecessary for me to consider the alternative claim for relief against forfeiture. If it had become appropriate, I would have considered the claim in light of what Palmer J said in Byron Bay Retirement Villages Pty Ltd v Zandate Pty Ltd [2008] NSWSC 1123 and I would have granted unconditional relief.

This was a commercial dispute and my provisional view is that it would be fair to order the Respondents, within s.88 of the Administrative Decisions Tribunal Act, to pay the Applicant's costs. However, the matter of costs was not argued and I give the Respondents leave to make submissions within 21 days as to why an order for costs should not be made. The Applicant will have the right to respond within 21 days and the question will then be decided on the papers. If no submission is made by the Respondents, the order will be that the Respondents pay the Applicant's costs.

Although I alone constituted the Tribunal, as there was a claim for unconscionable conduct, I was assisted by Mr M Lonie and Mr G Pinter, pursuant to Schedule 2, Part 3 B, clause 4 of the Administrative Decisions Tribunal Act. I gratefully acknowledge the benefit of their experience and knowledge.

I make these declarations and orders:

1. In application 115090:

(a) Declare that the lease of premises, being Shop 28, Greenway Arcade, 222-230 Church Street, Parramatta, between the parties was not validly determined when the Respondents purported to enter into possession on or about 11 July 2011.

(b) Declare that the said lease remains in full force and effect according to its terms.

(c) Order the Respondents to pay to the Applicant the sum of $14,164.54 inclusive of interest to the date of this decision.

2. Application 115161 is dismissed.

3. Subject to paragraph 101 above, the Respondents to pay the Applicant's costs as agreed or taxed.

**********

I hereby certify that this is a true and accurate record of the reasons for decision of the Administrative Decisions Tribunal.

Registrar

Decision last updated: 14 June 2012

Medium Neutral Citation:	Hong Ha Mascot Bakery Pty Limited v G & J Drivas Pty Limited and Telado Pty Limited [2012] NSWADT 113
Hearing dates:	13,14 December 2011; 4, 5 April 2012
Decision date:	14 June 2012
Before:	Deputy President Patten M Lonie, Non judicial-member G Pinter, Non judicial-member
Decision:	In application 115090: (a) Declare that the lease of premises, being Shop 28, Greenway Arcade, 222-230 Church Street, Parramatta, between the parties was not validly determined when the Respondents purported to enter into possession on or about 11 July 2011. (b) Declare that the said lease remains in full force and effect according to its terms. (c) Order the Respondents to pay to the Applicant the sum of $14,164.54 inclusive of interest to the date of this decision. 2. Application 115161 is dismissed. 3. Subject to paragraph 101, the Respondents to pay the Applicant's costs as agreed or taxed.
Catchwords:	Alleged breaches of retail lease - validity of Notice under s.129 of Conveyancing Act - whether breaches exist at time of service of Notice - waiver - consent - use of extrinsic material in interpretation.
Legislation Cited:	Administrative Decisions Tribunal Act 1997 Conveyancing Act 1919 Retail Leases Act 1994
Cases Cited:	Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSW CA Silkdale Pty Ltd v Long Leys Co Pty Ltd (unreported 14 September 1995 BC 9505378 Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1981-1982) 149 CLR 337 Fisher v Westpac Banking Corporation Federal Court of Australia, 20 July 1993, WAG75 of 1993 Attorney General for NSW v World Best Holdings Ltd (2005) 63 NSWLR Baltic Shipping Company v Dillon [1992-1993] 176 CLR 344 Byron Bay Retirement Villages Pty Ltd v Zandate Pty Ltd [2008] NSWSC 1123
Category:	Principal judgment
Parties:	Hong Ha Mascot Bakery Pty Limited (Applicant) G & J Drivas Pty Limited and Telado Pty Limited (Respondents)
Representation:	Counsel M S Henry (Applicant) M Sneddon (Respondents) Shephard & Shephard (Applicant in 115090) H W L Ebsworth (Applicant in 115161)
File Number(s):	115090; 115161