Kim v Kim
[2012] NSWADT 27
•21 February 2012
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Kim v Kim [2012] NSWADT 27 Hearing dates: 5 December 2011 Decision date: 21 February 2012 Jurisdiction: Retail Leases Division Before: D Patten, Deputy President
G Pinter, (Adviser)Decision: 1.Declaration that the lease registered AF 527342E is a retail shop lease within the Retail Leases Act 1994.
2.Order that Young Pil Kim, Kyung Suk Kim and and Paul Mercedes refund or procure the refund to Kwang Sun Kim of the bond of $46,800 paid under the said lease.
3. Order that Young Pil Kim, Kyung Suk Kim and Paul Mercedes Kim pay to Kwang Sun Kim the sum of $15,000 damages for wrongful repudiation of the said lease.
4. Order that Kwang Sun Kim pay to Young Pil Kim, Kyung Suk Kim and Paul Mercedes Kim the sum of $7,500 damages for breach of the covenants in the lease.
5. Either party has liberty to make submissions as to costs by filing such submissions with the Registry and serving a copy upon the other party within 21 days. The party served may reply within a further period of 21 days. Thereafter the matter to be decided on the papers.
6.Subject to order 5, no order as to costs.
Catchwords: Lease - failure to give notice under s 129 Conveyancing Act - wrongful repudiation - damages Legislation Cited: Retail Leases Act 1994
Liquor Act 2007
Conveyancing Act 1919Cases Cited: Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Services [2010] NSWCA 268
Johnson v Jones (1961) 78 WN861
Braidotti v Queensland City Properties Ltd (1990-1991) 172 CLR 293
Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1WLR 1129Category: Principal judgment Parties: Matter 105200
Matter 115109
Kwang Sun Kim (Applicant)
Young Pil Kim (First Respondent)
Kyung Suk Kim (Second Respondent)
Paul Mercedes Kim (Third Respondent)
Young Pil Kim (First Applicant)
Kyung Suk Kim (Second Applicant)
Paul Mercedes Kim (Third Applicant)
Kwang Sun Kim (Respondent)Representation: Counsel
Mr Nguyen (Applicant matter 105200)
Mr K Ginges (Respondents matter 105200)
AL C Hoang (Applicant matter 105200)
Norris Allen (Respondents matter 105200)
File Number(s): 105200 & 115109
REasons for decision
There are 2 applications before the Tribunal.
In the earlier application 105200 filed on 24 December 2010 Kwang Sun Kim (hereafter for convenience 'the Applicant') sought relief against Young Pil Kim, Kyung Suk Kim and Paul Mercedes Kim ('the Respondents') and in the later application 115109 filed on 4 August 2011, the Respondents sought relief against the Applicant.
There was an objection to the Tribunal's jurisdiction raised in respect of the earlier application which I decided on the papers. In effect, in the reasons published on 4 May 2011 I concluded that there was prima facie evidence that amusement and entertainment services were provided in the relevant premises and that accordingly such premises were capable of being the subject of a retail shop lease or lease for the purposes of the Retail Leases Act 1994 ('the Act').
It was not disputed that by lease registered AF527342E ('the lease') the Respondents leased to the Applicant premises being part of level 2, 41 Beecroft Road, Epping ('the premises') for a term of 3 years commencing 8 October 2009. It contained two options for renewal each for a further term of 3 years.
The 3-page document which constituted the lease incorporated the provisions set out in annexures A, B and C. Annexures A and B contained various terms and conditions. Annexure C constituted a plan of the premises. The only use permitted by the lease was 'Karaoke', an activity which I described in my reasons published on 4 May last year.. Other provisions relevant to this case include from Annexure "A":
CLAUSE 19 ALTERATION AND RESTORATION OF PREMISES
The Lessee shall not carry out any alterations or additions to the premises without the consent of the Lessor. The Lessee shall be responsible for and bear the cost of making any necessary applications to the local council or other statutory authorities in relation to any alterations or additions. The Lessee shall at the cost of the Lessee carry out any alterations, additions, removals or rectifications required by the council or any other statutory authority as a result of any work carried out by the Lessee.
The Lessee agrees that on removal of any of the tenant's fixtures the Lessee shall reinstate the property to the condition of the premises prior to the Lessees occupation of the premises. The Lessee agrees that should it fail to restore the premises as agreed then the Lessor shall be entitled to claim the cost of such restoration from the Lessee and interest on any moneys due at the rate of three (3) percent per annum above the prevailing overdraft rate for amounts exceeding $100,000.00 charged by the National Australia Bank until payment of the amount due.
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Clause 35 Operating Times
The Lessee will only operate the premises for the hours permitted in the liquor licence and the Development Approval and will not open the Karaoke lounge before 8.00 pm on any night that the Karaoke lounge is open.
The Lessee acknowledges and agrees that he will abide by the terms of the liquor licence and the operating times stipulated in the Development Approval. The Lessee further acknowledges that the currently applicable operating times as stipulated in the Development Approval are temporary and that a further application will need to be made for an extension of those operating times and the Lessee agrees to make such application and to do all things required in relation to the application and bear all costs and expenses in connection with the Application. The Lessee acknowledges and agrees that in the event that the Karaoke lounge is no longer able to operate as a result of the actions of the Lessee, his servants or agents the Lessee will immediately forfeit to the Lessor the amount of the security deposit.
Clause 36 Licence of Business and Use of Equipment and Fittings
The Lessee shall be entitled to operate the Lessor's business on the premises and to use the Lessor's fittings and fixtures located in the premises under licence provided that the Lessee shall be responsible for any damage to those fittings and fixtures occurring during the term of the lease of the premises and he shall be responsible for all repairs and maintenance of the fittings and fixtures required to keep them in good and operational order.
The fixtures and fittings are as follows:-
1. Furniture: tables, chairs and banquet seats;
2. Kitchen fittings and drink equipment;
3. Karaoke Sound System including:
a) KY Karaoke Machine;
b) Amplifier;
c) Speakers;
d) Wireless Microphone and Unit;
e) Wire Microphone;
f) Transformer;
4. TV Monitors.
Clause 37 Transfer of Liquor Licence
The Lessor agrees that subject to the terms of this lease as more fully set out below and during the currency of the lease the Lessor will allow the Lessee to operate the Karaoke lounge business under licence and agrees to transfer the liquor licence to the Lessee. The Lessee subject to the following terms will indemnify the Lessor in respect of any liability, penalty or other loss resulting from a breach of the terms of the licence by the Lessee during the period prior to transfer of the licence.
The Lessee agrees that in the event that the licence is revoked or terminated as a result of breaches of the terms of licensed (sic) by the Lessee his servants or agents that the Lessee will forfeit the security deposit as agreed compensation for the loss of the licence.
The Lessee agrees that on expiry or earlier termination of the lease to do all things and make all necessary applications as provided hereunder to effect a transfer of licence to the Lessor.
Interpretation
(a) "Licence" means the on-premises licence for a karaoke venue licence number LIQO624015681 attached to the Premises.
(b) "Licensed karaoke venue" means' the land and buildings as identified and approved by the Authority and premises trading as a karaoke venue and any other ancillary or permitted activity, trade or business that can lawfully be conducted at such premises.
(c) "Licensee" means the holder of the Licence.
(d) "Liquor Acts" means the Liquor Act 2007, the Casino Liquor and Gaming Control Authority Act 2007 and any Regulations to or amendments of those Acts or Regulations, as applicable and any replacement legislation or regulations.
(e) "Premises" has the same meaning as licensed karaoke venue.
LICENCE
(1) Licensee
The Lessee must appoint a Licensee and make any other appointments in respect of the Premises required by the Liquor Act or the terms of the Licence. The Lessee warrants that any Licensee so appointed is qualified to hold the Licence and that it is not aware of any matter or thing which may cause the Authority to refuse the appointment of the Licensee as the holder of the Licence.
(2) Licence to be maintained
The Lessee must not do or omit to do or permit or suffer any other person to do or omit to do, anything which:
(a) is a ground for, or renders, the Licence to be, or liable to be, cancelled, suspended, restricted, or removed from the Premises or the Licensee; or
(b) transfer the legal or beneficial ownership in the Licence away from the Lessor.
(3) Lessee's obligations
The Lessee must:
(a) at its own cost, do anything necessary within its control to keep the Licence current;
(b) not, without the prior written consent of the Lessor:
(i) transfer; or
(ii) part with possession of; or
(iii) in any way encumber the Licence; or
(iv) change the use of the Premises; or
(v) without the consent of the Lessor vary the terms and conditions of the Licence or endorsed on the Licence; or
(vi) extend or reduce the licensed area of the Premises,
(c) produce the Licence on demand for inspection on the Premises by the Lessor or any person authorised by the Lessor:
(d) the Lessee must itself and also cause the Licensee to comply with their respective obligations under the Liquor Acts, and under this Lease.
(4) Statements
The Lessee must promptly forward to the Lessor a copy of any statement, declaration and any other information furnished to, or received from, the Authority, a court or public authority including any documents prepared and lodged as required under the Liquor Act.
(5) Attorney Upon Default by Lessee
(a) The Lessee while ever he is in default of any of his obligations contained in this Lease irrevocably appoints the Lessor, its nominee and substitute as his attorney to act and to:
(i) execute and sign any application for the transfer or surrender of the Licence;
(ii) appear or make submissions to the Authority or proper court;
(iii) use all reasonable endeavours to obtain and/or maintain the necessary Licence;
(iv) pay all fees for the Licence to the Authority on behalf of the Lessee;
(v) take up and receive the Licence for the lessee or any other person entitled to it;
(vi) sign, seal, execute, make and do any application, notice, return, declaration, form, act, deed, matter or thing which is or may be (or which the Attorney deems is or may be) necessary for obtaining, preserving, renewing or transferring any licence (including the Licence) in respect of carrying on the business of a licensed karaoke venue or any subsidiary trade and business at the Premises, the due performance of the covenants and conditions (express or implied) in the Lease or appointing a substitute for any purpose in this clause and removing him;
(vii) appoint a solicitor to appear before the Authority or any other public authority or in any court for the Lessee or Licensee and request, apply for, consent or submit to (in the Lessee's or Licensee's name) any transfer of the Licence or any negative or mandatory interim injunction or appointment of a receiver in an ejectment action brought by the Lessor for the purpose of protecting the Licence or any part of the trade or business of the Premises or any other application to the Authority, or any other public authority or court, which is necessary or expedient in the reasonable opinion of the Lessor.
(b) Any appointment made under paragraph (a) above is joint and several.
(c) A statutory declaration by the Lessor or of any officer of the Lessor authorised by the Lessor for that purpose, is sufficient proof that the Lessee is in default of the Lessee's covenants for the purposes of paragraph (a) above.
(d) The Lessee, if required by the Lessor, must ratify and confirm anything the attorney does as attorney and for the Lessee or the Licensee, under this clause or if required by the Lessor cause the Licensee to do so.
(e) The Lessor may register this power of attorney wherever necessary and may do anything in the Lessor's reasonable opinion necessary to give validity and effect to this power of attorney and provided he is not negligent and acts without mala fides is not responsible for any loss in respect of the exercise of any of the Lessor's powers.
(6) Delivery of Licence
The Lessee, if the Lease is terminated or expires, must deliver the original Licence and if not already done so the documents referred to in (4) above to the Lessor or the Lessor's nominee on or before the expiry or earlier termination of the Lease.
(7) Trading
(a) The Lessee must:
(i) exercise and carry on (or procure the exercise and carrying on of) the trade and business of a licensed karaoke venue and any subsidiary trade and business on the Premises in a commercial and business like manner, and in a way which, to the best ability of the Lessee and Licensee, preserves, maintains and develops the attaching goodwill;
(ii) keep the Premises open and used (or cause them to be kept open and used) for the trade and business of a licensed karaoke venue and any subsidiary trade and business during the hours and for the purposes, which are customary or permitted in respect of the Licence;
(iii) manage and conduct the trade and business of a licensed karaoke venue and any subsidiary trade and business (or cause them to be managed or conducted) in a quiet, orderly and business-like manner;
(iv) do (or procure the doing of) anything which is necessary to keep the Premises licensed and carry on the trade and business of a licensed karaoke venue and any subsidiary trade and business.
(b) The Lessee expressly authorised the Lessor to obtain from the Authority (as and when the Lessor thinks fit) any information the Lessor requires including, without limitation:
(i) particulars and copies of all applications, statements, returns or assessments of the Licence,
(ii) details of any past or present offences, charges, infringements, complaints, disturbance complaints, closure orders, late hour entry declarations or any other directions, orders or findings made or issued by the Authority, a court or any other public authority, against the Licensee or the Premises.
(8) Transfer of Licence
The Lessee, at least 21 days prior to the expiry or termination of the Lease and at the request of the Lessor, must:
(a) sign and deliver (or cause to be signed and delivered) to the Lessor any applications for transfer and any other forms the Authority or the Lessor requires for transferring to the Lessor or nominee of the Lessor (in the manner the Lessor thinks fit) the Licence and any other licences, approvals, authorities, consents, permits or endorsements thereon held for the trade and business of the Premises as a licensed karaoke venue or any subsidiary trade and business including, but not limited to, the sale and supply of liquor, and the holding of public entertainment in respect of permits or endorsements thereon to enable that trade and business as a licensed karaoke venue to be carried on; and
(b) in addition to the Lessee's obligations referred to in (a) above, generally do, cause or permit to be done everything necessary to enable the Lessor or its nominee to obtain a transfer of all and any existing licences, approvals, authorities, consents or endorsements thereon for the trade and business of the Premises as a licensed karaoke venue.
(9) Proceedings Against the Licensee
(a) The Lessee must defend any proceedings instituted against the Lessee or Licensee in respect of a breach any (sic) law, including the Liquor Act and the applicable Planning and Local Government laws that, on the balance of probabilities, is likely to cause the Licence, approval, authority, consent, permit or endorsement thereon or which has or is utilised as part of the licensed karaoke venue, liable to be cancelled, surrendered, suspended, restricted, revoked or removed from the Licence or the Premises.
(b) The Lessor, may appear or be represented at those proceedings and employ and retain solicitors and counsel for that purpose.
(c) The Lessee must indemnify the Lessor (on demand) for any damages, expense, loss or liability the Lessor suffers or incurs in respect of those proceedings. Any amount in clause 10(c) not paid within fourteen (14) of the Lessor's demand carries interest at the rate applicable in respect of arrears of rental.
(10) NO CHARGE
The Lessee must not without the prior written consent of the Lessor give any bill of sale, charge or other security over the Licence.
(11) STANDARDS
The Lessee must:
(a) keep the Premises properly furnished and otherwise up to the standard required by any public authority (including the Authority); and
(b) fulfil and perform all the requirements of any public authority (including the Authority) in respect of the Licence.
(12) OWNER OF LICENCE
(a) The Lessor acknowledges and confirms that:
(i) the Lessee is entitled to the use of the Licence during the Lease but is not the legal or beneficial owner of the Licence; and
(ii) the Lessor as the legal and beneficial owner of the Licence has a financial interest in the Licence.
(b) The Licensee holds the Licence on behalf of the Lessor.
(c) The Lessee acknowledges that neither the Lessee nor the Licensee has any estate or interest in the Licence other than as set out in the Lease.
(13) INDEMNITY
(a) The Lessee shall indemnify and keep indemnified the Lessor against any claim or suits arising from the operation of the Licence and the performance of this Lease and any obligations made by the Lessee and/or the Licensee to any party in connection with the performance of this lease (including but not limited to any penalty, fine or order resulting from any prosecution, summons or complaint proceedings relating to any breach of the Local Government or Planning laws of New South Wales, the Liquor Acts or any loss or damage suffered from the removal of the Licence from the Premises).
(b) Nothing contained in this Lease shall constitute a partnership, employer and employee relationship, joint venture or association of any kind between the Lessor of the one part and any combination of the Lessee and the Licensee of the other part nor is the Lessor liable for the debts or liabilities incurred by the Lessee or Licensee.
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Provisions of Annexure "B" relevant to the case include:
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.
7.2 The lessee must otherwise maintain the property in its condition at the commencement date and promptly do repairs needed to keep it in that condition but the lessee does not have to -
7.2.1 alter or improve the property; or
7.2.2 fix structural defects; or
7.2.1 repair fair wear and tear.
8.1 The lessee must keep current an insurance policy covering:
8.1.1 liability to the public in an amount not less than the amount stated in item 18 in the schedule (for each accident or event); and
8.1.2 damage or destruction from any cause to all plate glass in the windows and other portions of the property
and must produce to the lessor, upon request the policy and the receipt for the last premium.
12.1 This lease ends -
12.1.1 on the date stated in item 3 in the schedule; or
12.1.2 if the lessor lawfully enters and takes possession of any part of the property; or
12.1.3 if the lessor lawfully demands possession of the property.
12.2 The lessor can enter and take possession of the property or demand possession of the property if-
12.2.1 the lessee has repudiated this lease; or
12.2.2 rent or any other money due under this lease is 14 days overdue for payment; or
12.2.3 the lessee has failed to comply with a lessor's notice under section 129 of the Conveyancing Act 1919; or
12.2.4 the lessee has not complied with any term of this lease where a lessor's notice is not required under section 129 of the Conveyancing Act 1919 and the lessor has given at least 14 days written notice of the lessor's intention to end this lease.
12.3 When this lease ends, unless the lessee becomes a lessee of the property under a new lease the lessee must -
12.3.1 return the property to the lessor in the state and condition that this lease requires the lessee to keep it in; and
12.3.2 have removed any goods and anything that the lessee fixed to the property and have made good any damage caused by the removal.
Anything not removed becomes the property of the lessor who can keep it or remove and dispose of it and charge to the lessee the cost of removal, making good and disposal.
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CLAUSE 17 SECURITY DEPOSIT
17.1 If an amount or a number of months appears in item 20 in the schedule, clauses 17.2 to 17.6 apply.
17.2 On or before the commencement date of this lease the lessee will deliver the security deposit to the lessor.
17.3 The lessor is entitled to deduct from the security deposit an amount equal to any monies due but unpaid by the lessee to the lessor under this lease.
17.4 Where the property is a retail shop, the security deposit will be held in accordance with Section 16C of the Retail Leases Act 1994. The lessee will not make an application to the Director General seeking the return of the security deposit (or so much of it as is then held by the Director General) until the later of:
17.4.1 the terminating date of this lease;
17.4.2 the expiry date of any holding over under this lease; and
17.4.3 the date that the lessee has no further obligations under this lease or at law.
17.5 Where the property is other than a retail shop the security deposit (or so much of it as is then held by the lessor) will be returned to the lessee on the later of the dates as specified in clause 17.4.
17.6 The lessee agrees to vary the amount of the security deposit immediately upon each rent review so that it represents the equivalent of the number of months referred to in the schedule.
In his affidavit sworn 23 December 2010, the Applicant set out the basis of his claim in the following paragraphs:
"2. From I (sic) ran a business known as Park & Kim Enterprises which was a Karaoke Bar from premises situated at Level 2 41 Beecroft road Epping.
3. During the course of m (sic) running the above business I always made a profit and paid my rent, I had paid my rent to the end of November 2010.
4. I was locked out of my business on 23 November 2010 - (rejected) - they have advertised the premises in a Korean Newspaper for a rent in excess of what I was paying, a copy of this advertisement is attached and marked "B"
5. On 23 November 2010, when I was locked out of 41 Beecroft Road. I requested to be let back into the premises but the landlord refused to let me back into the business.
6. I was forced to apply to the Tribunal on 9 December 2010 just to be allowed to get my personal belongings from the premises.
7. I do not want to return to the premises on a fulltime basis because I am fearful the landlord will make it impossible to run a karaoke bar from these premises, he as (sic) for months said things like "your business is too noisey" or you can't operate this business from these premises".
8. (Rejected).
9. I have not had my security bond of $46,800 returned to me even though I am entitled to it, I request an order for its return.
10. In relation to relocating my business this is very hard because you need premises with a liquor licence, council approval and a fit out, there are just not that many suitable premises in the Epping area .
11. I anticipate I will have to pay a higher rent at any new premises in the Epping area and suffer ongoing losses.
The Respondents' rather more fleshed out version of events is set out in the affidavit of Young Pil Kim sworn 4 August 2011 which in part reads as follows:
1.With my wife Kyung Suk KIM and our son Paul Mercedes Kim, I (collectively "we", "our") own premises located at 41 Beecroft Road in Epping, NSW, which is a 3-storey building. The Ground floor is Beschico cafe, which we own and operate. We also own the first floor, which we presently operate as a karaoke lounge and is referred to herein as "Level 1".
2. We own the second floor, which also operates as a licenced karaoke bar and is referred to herein as "Premises".
3. On or about 14 February 2007, we obtained approval for use of the Premises as a licenced karaoke lounge allowing operating hours to 12.30 am Sunday night/Monday morning - Thursday night/Friday morning, and 2.30am on Fri night/Sat morning and Sat night/Sunday morning (DA/761/2006).
4. We obtained a Liquor Licence , number LIQ0624015681
5. From about that time, we operated a licenced karaoke bar known as "iLounge" from the Premises.
6. On about 2 May 2007, we obtained an approved amendment of the DA, extending operating hours to 230 am on Fridays and Saturdays (until 2012), with a trial period up to 2.30am on other days for 12 months (DA/761/2006/A).
7. On about 14 May 2008, we obtained a further approval of the DA, extending the "trial" operating hours to 2.30 am for each night for a further 36 months (until 14 May 2011) (DA/761/2008B).
Introduction of the Respondent
8. In or about July 2009, Mr. Kwang Sun KIM ("the Respondent") attended the Beschico cafe and introduced himself to me. He asked me whether I would be interested in leasing out the Premises to him.
9. In or about September 2009, the Responded again asked me about leasing the Premises.
10. On about 2 October 2009, the Respondent met with me and told me that:
10.1. he wanted to lease Level 1 and intended to spend $150,000 fitting it out as a karaoke bar;
10.2. he wanted temporary use of the Premises until Level 1 was ready and a formal lease could be entered into with respect to Level 1.
11.1 I instructed my solicitor Mr. Greg Allen to draft a Deed of Agreement, which was sent to the Respondent. Attached hereto and marked with the letter "E" is a copy of that draft Deed of Agreement.
12. On 6 October 2009, the Respondent told me that he needed to use of the Premises urgently, as his staff from his former karaoke business would quit if he did not start business somewhere immediately.
13. On 7 October 2009, the Respondent attended the cafe and again told me that he needed to open immediately so as to keep his partner and staff.
Respondent commences possession of Premises
14. On 8 October 2009, the Respondent took possession of the Premises under a Commercial Lease for three months and commenced trading as a karaoke bar. Our fixtures and fittings all remained in the Premises for the Respondent's use under licence from us on condition that the Respondent maintain, repair and replace such fixtures and fittings as necessary.
15. By 4 November 2009, the Respondent had failed or refused to sign the Deed of Agreement. The Respondent was already operating his business from the Premises in breach of the Licence (including operating beyond the permitted operating hours).
16. After meeting with the Respondent and our lawyers, we allowed the Respondent to continue to operate his business from the Premises on the basis that a formal lease would be entered into.
17. On about 16 November 2009, the Lease was executed by the parties with a commencement date of 8 October 2009.
The affidavit annexed 4 letters from Norris Allen, the solicitors for the Respondents to the Applicant and his associates.
"Mr K Kim
Lot2, 41 Beecroft Road
Epping NSW
13 August 2010
Dear Mr Kim
We refer to your lease of the above premises and have been requested by the landlord to address the following matters:-
1. Evidence of insurance for public liability in respect of the premises has not been provided and we request that you forward a copy of the policy or certificate of currency to us as a matter of urgency;
2. We have also been instructed that the lease has been breached in respect of the following matters:-
(i) All of the music for the audio equipment has not been updated in accordance with the terms of the lease;
(ii) The premises have not been maintained to a reasonable standard in accordance with the terms of the lease;
(iii) The furniture and equipment has not been maintained and repaired in a proper manner and a significant number of damaged items have been stored rather than repaired;
(iv) there has been a failure to a fully clean the trade waste bins;
(v) there has been a general failure to maintain the premises in a clean and suitable order and to prevent damage to the timber flooring and carpet. There are cigarette burns and spillage of beverages which had damaged the flooring and carpet. There is also damage to the window lasts and banquet seats and smoking is being permitted in the internal rooms which is not permitted
(vi) the existing kitchen facility is not adequate for the current use and if you intend to continue to use it for food preparation it would need to be upgraded;
(vii) the access from the courtyard at the top four (sic) should only be used for delivery of heavy items and bins during certain hours and should not be used for general access;
(viii) The curtaining in the premises for the (sic) maintained in good order.
Our client is also concerned that the premises have been opened in excess of the permitted hours under the liquor licence and development approval and requires your confirmation that you will operate within the permitted times.
We are also instructed that The noise levels are exceeding those permitted under the development approval and are reaching levels which may cause damage to the building. Accordingly our client requires the equipment to be operated within the stipulated levels.
Our client has requested that the above items where necessary be rectified and wishes to appoint a date for inspection of the premises to confirm that all these matters have been attended to. Our client considers that 21 days should be adequate time which to rectify the above matters and proposes that an inspection be carried out at 9.00 am on the 7 th September 2010 to confirm that the above breaches have been rectified and the premises placed in good order.
Yours faithfully
Norris Allen"
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Mr K S Kim & Park & Kim Enterprises Pty Ltd
Level 2/41 Beecroft Road Epping NSW 2121
11 October 2010
Dear Mr Kim
RE: KIM, KIM AND KIM LEASE TO KIM
PPTY: LEVEL 2/41 BEECROFT ROAD, EPPING
We refer to the above matter and to our previous letters in relation to the lease of the above premises.
We note that our client has not received any satisfactory response from you in relation to the issues raised and in particular no arrangements have been made for an inspection of the premises in relation to the maintenance and damage issues raised in those letters.
Our client has advised us that the operating times for your premises are subject to a further application to the Council in January 2011 in order for the business to continue operating. In view of the adverse findings from the liquor licensing police, which have come to light when our client has sought a licence for the premises on level 1 of the building, there are serious concerns as to whether consent will be granted by the Council and the licensing police to the continued operation of your business after that date.
Our client has also been put to considerable additional expense in relation to the application for the liquor licence for the premises on level 1 of the building due to the adverse reports resulting from your breaches of the current liquor licence.
Accordingly our client requires a that immediate arrangements be made for a thorough inspection of the premises to determine the extent of the damage and maintenance work required in order to restore the premises and fixtures and fittings to the condition at the commencement of the lease.
We request that you contact our client as a matter of urgency as failure to do so may result in consent being withheld to your continued operation of the premises by the relevant authorities in January 2011 and our client taking all necessary action, including termination of the lease, due to your breaches of the terms of the lease.
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Mr K S Kim & Park & Kim Enterprises Pty Ltd
Level 2/41 Beecroft Road Epping NSW 2121
20 October 2010
Dear Mr Kim
RE: KIM, KIM AND KIM LEASE TO KIM
PPTY: LEVEL 2/41 BEECROFT ROAD, EPPING
We refer to the above matter and enter our previous letters in relation to the lease.
We are instructed by our client that to date no satisfactory evidence of public liability insurance has been provided to him for the premises.
Accordingly we requested you provide a copy of the same as a matter of urgency and we note that should such insurance not be effected it would constitute a breach of the lease. In the event that the insurance has not been affected and is not effected immediately our client will consider terminating the lease.
We note that no suitable response has been received to our previous letter in relation to the breaches of the lease and we request that you contact our client immediately to arrange to remedy these breaches.
Should our client not receive your response within 48 hours action will be taken without further notice.
........................................................
Mr K S Kim & Park & Kim Enterprises Pty Ltd
Level 2/41 Beecroft Road Epping NSW 2121
3 November 2010
Dear Mr Kim
RE: KIM, KIM AND KIM LEASE TO KIM
PPTY: LEVEL 2/41 BEECROFT ROAD, EPPING
We refer to the above matter and two previous correspondence and notices.
We are instructed that no action has been taken to comply with any of the matters raised in our previous letters.
Accordingly our client is left with alternative except to terminate the lease. Unless action is taken to comply with the matters raised in our previous letters by the 10 th November 2010 our client proposes to terminate the lease and retake position of the premises without further notice."
On 11 November 2010 and 16 November 2010, Mr AL C Hoang, solicitor, wrote to Norris Allen on behalf of the Applicant:
"11 November 2010
RE: KIMS to KIM PPTY: LEVEL 2/41 Beecroft Road, Epping NSW
Dear GREG,
We act for Mr. Kim Kwang Sun the lessee in this matter.
Our client has given your letters to us yesterday, 10 Nov 20101.
We are instructed to advise that:
1. Our client is in the process of obtaining PI Insurance certificate and send to your office urgently.
2. The matters you raised will be dealt with accordingly.
We thank you for your attention.
Yours faithfully,
AL C Hoang"
16 November 2010
RE: KIMS to KIM PPTY: LEVEL 2/41 Beecroft Road, Epping NSW
Dear GREG,
We act for Mr. Kim Kwang Sun the lessee in this matter.
We refer to your letter on 15 Nov 20101.
We are (Instructed to advise that;
1. Please find enclosed the proposal for PI Insurance.
2. The matters you raised will be dealt with accordingly.
We thank you for your attention.
The affidavit of Mr Y P Kim continued with these paragraphs:
30. On 16 November 2010, Mr. Hoang sent a letter to Norris Allen, enclosing a proposal for PI insurance, dated 15 November 2010. The proposal for PI insurance:
30.1 Stated the business commenced on 8 October 2010
30.2 Stated the business annual gross receipts $300,000
30.3 Did not include the lessors.
31. The Respondent did not obtain a cover note, even though he continued to trade from the Premises.
........................................
Termination of Lease
33. On 23 November 2010, we took physical possession of the Premises and changed the locks."
On 23 November 2010 Norris Allen wrote to Mr Hoang as follows:
Mr K S Kim & Park & Kim Enterprises Pty Ltd
Level 2/41 Beecroft Road Epping NSW 2121
We refer to the above matter and advise that neither we, nor our client, has received any evidence of the necessary insurance required under the lease.
There has not been any arrangements by your clients to attend to the other breaches of the lease raised in our previous letters.
Accordingly our client has now terminated the lease."
On the basis that the lease was validly determined the Respondents claimed damages, which included the alleged costs of reinstating premises to a proper state of repair and damages for lost rent.
As I held on 4 May 2011, the evidence then before me was capable of establishing that the premises were used for amusement and entertainment services. At the subsequent hearing to which these reasons relate, the Respondents maintained that the predominant use was the sale of beer, wine and spirits for consumption on the premises. However, I am satisfied that the premises were in fact used predominantly as a karaoke bar and, in my opinion, such a use constitutes the provision of amusement and entertainment services. It is true that alcohol was sold for consumption in the premises at what appeared to me to be very high prices. But, in my opinion, it is the predominant use rather than the primary revenue source, which is the test required by the statute and "Karaoke" was the use agreed to by the parties. There was no evidence that this was a sham.
The premises were divided into several rooms where there were microphones and other sound equipment and there were comfortable chairs and lounges. There was evidence, moreover, that the Applicant employed or provided "party girls" to entertain patrons, and perhaps ensure that they consumed copious quantities of expensive liquor. Still photographs taken from CCTV footage in the early hours of several mornings, admitted into evidence, show patrons and "party girls" all respectably dressed, sitting on lounges or dancing and apparently enjoying themselves.
In submissions made by leave following the conclusion of the hearing, Mr Ginges submitted that as the premises are the subject of a licence under the Liquor Act 2007 they cannot be regarded as having, as a predominant use, the provision of entertainment or amusement services. His argument depended upon a conclusion that karaoke was prescribed as a prohibited use of licensed premises by a combination of s 21 of the Liquor Act and regulation 18 of the Liquor Regulation 2008. This in turn depended upon a finding that karaoke falls within the phrase "premises that operate primarily as premises providing entertainment by way of amusement machines (such as pinball machines or video games); pool tables; games of poker using playing cards; or juke boxes".
I reject Mr Ginges submission that karaoke should, in effect, be regarded as a form of juke box. Karoake is a well defined and understood form of entertainment. It involves the personal participation of those involved whereas juke boxes do no more than require participants to insert coins in the slot of the machine. If the regulation making authority had wished to include karaoke as a prohibited use it could easily have done so.
I hold that the lease was accordingly a retail shop lease within the Act.
The question which next arises is whether the lease was validly determined. As indicated earlier, notice of determination of the lease was given by letter dated 23 November 2010 from the Respondents' solicitors to the Applicant's solicitor.
In my opinion, it is clear that the alleged breaches of the lease referred to in the correspondence quoted earlier, do not evidence an unwillingness or inability by the Applicant to render substantial performance of the contract and thus could not amount to a repudiation of the lease under the general law. Accordingly, before the Respondents terminated the lease they were required by s 129 of the Conveyancing Act to give the applicant notice. ( Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Services [2010] NSWCA 268 at 297). S 129 provides as follows:
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 Act 2007 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. "
Schedule 6 to the Conveyancing Act contains this form:
"Notice of breach of covenant
To
The lessee of [here describe premises with reasonable certainty, as for instance, "No. 369, George-street, Sydney.]
With reference to the lease of the abovementioned premises, dated the day of1, from A.B. to C.D., and the covenant by the lessee therein contained [here state concisely the nature of the covenant or covenants breach of which is complained of, as for instance, "to repair,"] and the breach by you of that covenant I hereby give you notice and require you to remedy that breach by [here set out the remedy as, for instance, "by putting the said premises in repair by doing and executing the repairs in and upon the said premises which are specified in the Schedule hereto annexed." Add if compensation is claimed.] And I further require you to pay to me the sum of, as compensation for the breach already committed.
Dated this day of19.
Lessor.
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 ."
Although Mr Ginges referred in submissions to the terms of s 129(3) there was no evidence that any alleged breach by the Applicant of the terms of the lease endangered in any way the licence held under the Liquor Act in respect of the premises.
It was contended, on behalf of the Respondents, that the letters from the Respondents' solicitors quoted above, namely the letters respectively dated 13 August 2010, 11 October 2010 and 3 November 2010, constituted a sufficient notice for the purposes of s 129.
Although it is plain from the terms of s 129(9) that a notice under the section need not follow the form in schedule 6, it is equally plain that it must comply with s 129(1). The notice must inform the lessee of the breach complained of with some degree of particularity so that, if remedy is possible, he will know what he is required to remedy or what it is he is required to make compensation in money.
In Johnson v Jones (1961) 78 WN861, Wallace J observed in relation to a notice under s 129 at page 862 (omitting case references):
"Section 129 is an important provision of the Conveyancing Act, 1919-1954, and is designed to protect lessees against re-entry or forfeiture except after notice of the particular breach complained of. By sub-s (9) it is provided that such notice "shall" be in the form set out in the Sixth Schedule to this Act "or to a similar effect".
The Sixth Schedule sets forth a form of notice, which is quite formal in its design. It begins "To ..." It goes on to refer with precision to the lease and the parties and directs that the nature of the covenants and breaches must be concisely stated and also the remedy required if the breach is capable of remedy. The form also contains a "Note" after the lessor's signature which reads: "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 one hundred and twenty-nine of the Conveyancing Act 1919-1932".
In my opinion this "Note" forms part of the Form, as a reference to the 1919 Statutes and the amendment made by s. 3(1)(i) of the Conveyancing (Amendments) Act, 1932, would indicate. This view is clearly enough in conformity with the reasoning of Davidson J in Dogan v Morton. There are some breaches which are incapable of remedy but this merely means that the notice is accordingly attenuated, but is still otherwise necessary. (It seems to me that part of the headnote in Ex Parte Dally-Watkins; Re Wilson (2) is inaccurate."
The correspondence relied on seems to refer to a number of matters some of which may constitute breaches of the lease, some not. With one exception the correspondence seems to me to lack not only the specificity required by s 129 but also fails to identify the remedy to be taken or the compensation to be paid. The exception is the allegation that evidence of public liability insurance had not been provided as required by the lease. The evidence is silent as to whether that was done prior to the letter of determination on 23 November.
But in any event, in my opinion, the letters relied on do not constitute a sufficient notice for the purposes of s 129. Apart from the fact that they assert matters which seem incapable of amounting to breaches of the lease, all but one fail to replicate the note at the foot of the prescribed notice in Schedule 6. The letter of 3 November 2010 comes close to doing so but contains neither identification of breaches of the lease intended to be relied upon, nor any proposal for remedying or compensating for such breaches.
In my opinion, the Respondents failed to give the Applicant a notice in compliance with s 129. As a consequence, the Respondents were not entitled to re-enter into possession of the premises. Their action in doing so constituted an unlawful repudiation of the lease which was accepted by the Applicant and as a consequence entitles him to damages (Braidotti v Queensland City Properties Ltd (1990-1991) 172 CLR 293; Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Services [2010] NSWCA 268).
As a consequence of the Applicant's acceptance of the repudiation, the lease became at an end. The Applicant is entitled to damages for loss of his bargain but in addition, the Respondents' rights in respect of any accrued causes of action are preserved (Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1WLR 1129].
Before coming to the assessment of damages, I should refer to a police report admitted into evidence as an annexure to Mr Y P Kim's affidavit of 4 August 2011. The report over the signature of Superintendent P J Marcon is dated 6 August 2010 and on its face relates to an application by Y P Kim for a "new on premises licence" in respect of premises 1/41 Beecroft Road, Epping for premises named "Epping Multi Karaoke". In general terms, the report seems to regard as unsatisfactory the activities of both the Applicant and the Respondents at 41 Beecroft Road, Epping. Various licensing breaches were identified and the report concluded:
"However, also taking into account the information within this submission, should the Casino, Liquor and Gaming Control Authority be inclined to grant a licence at the premises police would respectfully submit that specific conditions exists which reflect the following:
1. At least one (1) licensed security guard shall be present on level 1 from 8:00pm on Wednesday, Thursday, Friday, Saturday and Sunday nights until (30) minutes after the closing time or until the last customer has left the premises, whichever is the later.
2. Staff shall wear a uniform to clearly identify that they are working at 'Epping Multi Karaoke' (the subject premises), or whichever trading name the premises is authorised to trade as. The name 'Epping Multi Karaoke' (or whichever trading name the premises is authorised to trade as) on the uniform of staff shall be capable of being read from a distance of five (5) meters.
3. Staff shall wear name tags which are, as a minimum, 7cm in length and 2cm in height. The nametags must clearly state the name of the employee as well as the name of the premises and must be written in the English Language.
4. At no time is the premises to be used as a brothel, massage parlour or similar and at no time is the premises to be used for the purposes of prostitution.
5. The licensee shall ensure that the only entertainment provided at the premises is karaoke.
6. The licensee shall ensure that the sale/supply and service of alcohol occurs at the service counter/bar of the premises. No sale/supply or service of alcohol shall occur within any karaoke room of the venue.
7. The licensee shall ensure that any designated karaoke room is used solely for the purposes of karaoke or arranged functions; a karaoke room must not be used as a waiting, area for patrons or as a staff area.
8. The premises must at all times be operated in accordance with the Management Plan dated June 2010. A copy of the Management Plan is to be maintained in a register within the licensed premises and provided to Police, Council or Special Inspectors on demand. "
Although the report refers to breaches of the Liquor Act, I note that the maker of the report was not called and some of the conclusions in it seem inconsistent with other evidence, including the suggestion that "party girls" wore revealing clothing and were engaged to provide sexual services. However, the report is important in that it does reveal police concern about the conduct of people using the building, both as proprietors and patrons and indicates that police surveillance is likely to increase to the financial detriment of the operators. The requirement for a security guard alone imposed a significant financial burden. It should be borne in mind, however, that the report was not directed to the premises leased to the Applicant but rather to the application made by the Respondents in respect of the first floor of the building. I would not infer that any of the recommendations made in the report arose from breaches of the lease by the Applicant.
There was effectively no evidence to support the Applicant's claim for damages except the statement in his affidavit sworn 23 December 2010 that the business was profitable.
In the absence of evidence quantifying the Applicant's loss, doing the best I can and taking account of the adverse potentiality of the police report on his business, I assess damages for loss of his bargain at $15,000. He is also entitled to an order for the return of his security bond of $46,800.
As to the Respondents' claim for damages, they cannot recover in respect of anything other than accrued rights as at 23 November 2010 in light of my finding that they unlawfully repudiated the lease. They therefore cannot recover damages for any period beyond 23 November 2010, nor can they recover in respect of the asserted breach of the Applicant's obligation to restore or repair the premises upon the termination or expiration of the lease.
However, the Applicant is liable for proved pre-existing breaches of the lease, including of the covenants to maintain the property in a state of repair and to be responsible for damage to the lessor's fittings and fixtures (clause 7 of Annexure "B").
In their application the Respondents claimed $56,782 as the cost of making good the premises of which they allegedly have spent $40,069. The claim was supported by a "Statement of Dilapidation Fix Cost" and a bundle of copy invoices and receipts.
In his affidavit sworn 23 June 2011, the Applicant dealt in general terms with the claim made against him:
"4. I am aware of allegations against me regarding my occupation of the property. I dispute that the property was ever maintained at an unreasonable standard, or was ever in an unclean state. I engaged full-time staff as cleaners. I had made an arrangement for a full cleaning service to be done every 3 months. I repeatedly instructed employees to clean the premises as much as possible.
5. I dispute that the property and fixtures therein were ever maintained in an unreasonably damaged state. There was only one minor incident where there was damage to fixture property, which was immediately fixed. On one occasion, a TV was broken and I thereon immediately bought a new one to replace it. The business is of a Karaoke Bar, and any damage to the entertainment equipment would be fixed immediately, otherwise clients would not have karaoke equipment to use. This particularly applied for the entertainment equipment such as TV's and music system.
6. There was one other incident involving the broken glass downstairs. This was caused by one of my clients as they exited the bar, for which they were technically no longer under my control. I was able to obtain money from the client, and within a week the glass door was fixed.
7. The complaint about the timber flooring at the back entrance arose from a lack of awning at the verandah. When it rained, this would leak onto the timber flooring at the back verandah, which exacerbates the wear and tear at this location. I deny cigarette burns on the carpet, which if any, were on the steps leading to the premises."
The Applicant expanded upon this in his subsequent affidavit of 18 August 2011 sworn in light of the photographs and invoices annexed to Mr Y P Kim's affidavit of 4 August 2011:
"6. I refer to paragraphs 39 to 40 of affidavit of Mr Young Pil Kim dated 4 August 2011. The amounts being claimed for repairs are extremely excessive. I believe that the furniture in all the rooms, including lounges, benches, cushions and chairs, would not have cost more than $4,000 to $5,000 to replace with new items. Even this was not necessary, as the state of the premises upon my departure was good. It had to be, as I was operating a business and receiving clients everyday who were using the premises.
7. I refer to Annexure T to the affidavit of Mr Young Pil Kim dated 4 August 2011. I deny that any of this damage was caused by me.
8. In regards to the cigarette burns to the carpet, the only carpet was in the common area on the steps leading up to the premises on level 2. This was not my responsibility. I do not know if there were any cigarette burns on this carpet, as it was not my responsibility to check it.
9. I deny that I caused any cigarette burns to the banquette seat.
10. In regards to the floor and wall being stained, I deny they were damaged by me. I also deny damage to the Point paper. In any event, I cannot see any staining in the pictures provided to me.
11. In regards to the photos of the stairs, the steps are not my responsibility.
12. In regards to the photos showing some broken chairs, I concede that this may have been the case. These would have been fixed by me as and when the lease would have come to an end. In any event, I had actually approached a carpenter friend, and he indicated to me that the cost of such repairs for all the damaged chairs would only have been in the vicinity of around $300.
13. In regards to the photos depicting the dents and chips in the furniture, this could have been caused by the previous occupation of the premises before me. In any event, any damage caused would require proof by way of a pre-inspection report. None was made by the landlord, and as such, I believe that the damage that is depicted is actually pre-existing damage before my occupation.
14. In regards to the photo depicting the removed glass door, this could very easily have been replaced with some simple screws. This did not require replacing the door itself.
15. In regards to the photo depicting the missing television, this was not necessary for my business when I was operating. I had planned to replace it towards the end of the lease, and this would only have cost around $200 to replace.
16. In regards to the photo depicting the damaged plasma television, I agree with this. This would have cost only around $900 or so to replace.
17. In regards to the karaoke system being out of order, I deny ever causing this damage.
18. In regards to the damaged input jacks, I deny causing this damage. In any event, they would have maybe cost $50 to fix for each room.
19. In regards to the security system, I deny using it or damaging it.
20. In regards to the CCTV system, I deny using it or damaging it.
21. In regards to the ventilation covers, this was a simple case of putting them back into place. This illustrates the excessive claims for repairs being made.
22. In regards to the missing speaker, this was just on the floor nearby.
23. In regards to the projector, this is a very small stain that could have easily been removed with solvent.
24. In regards to the table of expenses for repairs, I would like to point out that none of those invoices are produced, and there is no verified proof of them having actually being done to repair any specific damage that I had caused. make the following points:
a. I do not know why I am liable to pay legal fees to Norris Allen for work that is not described
b. The glass and dent cover for the cabinet would not have cost $2,000 to fix. This only required some screws to put the door into place.
c. Removing the stain on the projector screen would have only cost around $100 and certainly not anywhere near $900.
d. I deny the need to engage a painter for painting work.
e. I disagree that the tiles were in need of any repair.
f. I deny causing any damage to the carpet.
g. I deny the need to engage a carpenter for such repairs.
h. The television monitor would have costed around $200 only.
i. Engaging a carpenter to fix the toilet door should only have cost $100.
j. The karaoke system was not broken.
k. The tiling work might have cost only $100, but I nevertheless deny that I had caused it.
I. The wireless microphone, I deny having damaged,
m. I deny damage to the CCTV system, or security alarm.
n. In regards to the need to replace the cabinets in each of the rooms, this was not necessary as I had not caused any damage to them. The amounts are nevertheless excessive. There was no damage to the cabinets from my usage,
o. In regards to the armchairs, I recall a carpenter friend telling me that this would have cost around $300 to fix. It was not necessary to purchase a new set or to replace the armchairs. My recollection is that only 4 of these chairs had broken legs. This was also for the lounge chairs, which I deny were damaged by me. These did not need to be replace.
25. In any event, I deny that there was any damage that required repair and replacement. The claims by Mr Young Pil Kim are far excessive to the furniture themselves."
Unfortunately, there was no evidence as to the state of the premises at the commencement of the lease, a subject upon which the Respondents bear the onus. No oral evidence or, indeed, any affidavit evidence was forthcoming from any of the persons whose invoices or quotations were admitted into evidence. Moreover, as the Applicant pointed out, no allowance was made for fair wear and tear. Rather the Respondents seemed to be claiming "new for old". The Applicant admits to some matters but otherwise I think that the Respondents have failed to satisfy their onus of proof in respect of them.
Again, doing the best I can, I allow $300 for damaged chairs; $200 for replacement of missing television set; $900 for damaged plasma screen; $300 for damaged imput jacks; $100 for removing the stain on the projector screen; $200 for a television monitor; $100 for a carpenter and $300 for repair of armchairs. All of these were admitted by the Applicant and total $2,400. There should, I think, be in addition a relatively modest general allowance in fairness to the Respondents. I would award them in all the total sum of $7,500 for repair and restoration work. None of their other claims, including the claim for legal costs are, in my view, maintainable in view of their own wrongful determination of the lease.
Finally, I should say that in my view nothing in the evidence amounted to unconscionable conduct within the meaning of the Act. But as there was a claim for unconscionable conduct I was advised in the matter by Mr Gary Pinter whose assistance I gratefully acknowledge.
As each party has had a measure of success and failure, my provisional view is that there should be no order as to costs. If either party wishes to make submissions about costs, however, they may do so within 21 days. The other party may reply within a further 21 days. Thereafter the matter to be decided on the papers.
I make orders and declarations as follows:
1. Declaration that the lease registered AF 527342E is a retail shop lease within the Retail Leases Act 1994.
2. Order that Young Pil Kim, Kyung Suk Kim and and Paul Mercedes refund or procure the refund to Kwang Sun Kim of the bond of $46,800 paid under the said lease.
3. Order that Young Pil Kim, Kyung Suk Kim and Paul Mercedes Kim pay to Kwang Sun Kim the sum of $15,000 damages for wrongful repudiation of the said lease.
4. Order that Kwang Sun Kim pay to Young Pil Kim, Kyung Suk Kim and Paul Mercedes Kim the sum of $7,500 damages for breach of the covenants in the lease.
5. Either party has liberty to make submissions as to costs by filing such submissions with the Registry and serving a copy upon the other party within 21 days. The party served may reply within a further period of 21 days. Thereafter the matter to be decided on the papers.
6. Subject to order 5, no order as to costs.
I hereby certify that this is a true and accurate record of the reasons for decision of the Administrative Decisions Tribunal.
Registrar
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Decision last updated: 21 February 2012
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