Lush Hair Designs Pty Ltd v Shopping Centres Australasia Property Group Re Limited

Case •

[2022] NSWCATCD 218

•

14 October 2022

No judgment structure available for this case.

Civil and Administrative Tribunal


New South Wales

  • Amendment notes
Medium Neutral Citation: Lush Hair Designs Pty Ltd v Shopping Centres Australasia Property Group Re Limited [2022] NSWCATCD 218
Hearing dates: 10 August 2022
Date of orders: 14 October 2022
Decision date: 14 October 2022
Jurisdiction:Consumer and Commercial Division
Before: D Bluth, Senior Member
Decision:

1. The Respondent is to pay the Applicant the sum of $21,000 within 7 days of these Orders together with interest from 15 August 2019 at the prescribed rate in accordance with Section 100 of the Civil Procedure Act 2005 (NSW).

2. The Respondent is to pay the costs of the Applicant as agreed or as assessed.

Catchwords:

Retail Lease dispute, jurisdiction

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (No 2) NSW

Retail Leases Act 1974 ( NSW)

Category:Principal judgment
Parties: Lush Hair Designs Pty Limited (Applicant)
Shopping Centres Australasia Property Group Re Limited (Respondent)
Representation: Solicitors:
Edmond Khoury Solicitors (Applicant)
JKR Lawyers (Respondent)
File Number(s): COM 22/03359
Publication restriction: NIL

REASONS FOR DECISION

  1. The Respondent is the registered proprietor of a shopping centre known as Clemton Park Shopping Village.

  2. The Respondent entered into a lease of shop T8 with Ali Hijazi for a term of five years commencing on 22 March 2017 (the Lease).

  3. Mr Hijazi traded with an ABN 13270814899 as the business ‘ATH - All Things Hair’ (the Business).

  4. Pursuant to clause 23.1 of the lease, Mr Hijazi provided a bank guarantee to the Respondent.

  5. Mr Nehme Chraif was an employee of the Business and he managed the business on behalf of Mr Hijazi. In early 2019 he approached the Respondent about an assignment of the Lease to himself.

  6. There were arrears owing under the lease and it was agreed by Mr Chraif (presumably on behalf of Mr Hijazi) for the Respondent to draw down the bank guarantee and the funds applied to reduce the outstanding rent.

  7. The Respondent says that Mr Chraif agreed to provide a replacement Bank Guarantee.

  8. The Tribunal notes that Mr Chraif is not a party to these proceedings nor did he provide any evidence, nor also did Mr Hijazi provide any evidence.

  9. In around late 2018 or early 2019, Mr Naji Doomid, who was a customer of the Business expressed an interest to Mr Chraif, then operating the Business (although not an approved assignee) that he was interested in purchasing the Business.

  10. On the evidence of Mr Doomid, he set up a company called Lush Hair Designs Pty Limited and was prevailed upon by Mr Chraif to obtain a Bank guarantee for $21,000 in favour of the Respondent, in anticipation of obtaining consent to the transfer of the Business including the Lease to Mr Doomid’s company.

  11. On or about 28 February, Mr Doomid obtained a Bank Guarantee for $21,000 from the ANZ Bank (ANZ Bank Guarantee) and handed it over to Mr Chraif. At the same time or before he completed a Retailer Application Form and provided that form to Mr Chraif, as well.

  12. Mr Chraif then provided the ANZ Bank Guarantee to the Respondent.

  13. Subsequently Mr Chraif (again as agent for Mr Hijazi, who by this time was no longer involved in the Business) submitted a Retailer Application Form to the Respondent requesting an assignment of the Lease.

  14. Mr Chraif was included in the Retailer Application Form as a guarantor as it was intended that Mr Chraif manage the Business.

  15. In late February 2019 Mr Doomid had a conversation with Mr Chraif and Mr Chraif advised him that he would pass on the ANZ Bank Guarantee and the Retailer Application Form to Ms Duniya Noor, the Centre Manager at the Respondent.

  16. Mr Doomid heard nothing further and contacted Ms Noor direct in May 2019 enquiring as to progress of the request for assignment of lease.

  17. Ms Noor advise him that further arrears of rent were owing and that the Respondent did not consent to the assignment of lease.

  18. Mr Doomid advised Ms Noor that he intended to remove Mr Chraif from the Business in the event that the Lease was assigned to him and Ms Noor requested that he complete a new assignment of lease application form which excluded Mr Chraif. Mr Doomid also enquired as to whether it was possible to negotiate a new lease.

  19. By 15 August 2019 the sum of $90,728.23 was owing under the Lease and the Respondent terminated the Lease and called on the ANZ Bank Guarantee.

  20. This is then a claim by the Applicant for either return of the ANZ Bank Guarantee or a claim for the sum of $21,000 plus interest and costs.

  21. The Applicant commenced proceedings for recovery in the Local Court on 25 April 2021.

  22. The Respondent maintained that the dispute was a retail lease dispute and moved the Local Court to transfer the proceedings to this Tribunal pursuant to section 75(1) of the Retail Leases Act 1974 (the Act).

  23. The Local court on 7 December 2021 transferred these proceedings.

  24. The Respondent has now submitted that the jurisdiction of the Tribunal is not enlivened by this dispute.

Jurisdiction

  1. Pursuant to section 72(1) of the Act the Tribunal in proceedings for a retail tenancy claim is empowered to make any one or more of orders contained in subsections (a) to (g).

  2. Section 70 of the Act provides that

‘70. In this Division

retail tenancy claim means any of the following:

(a) a claim in connection with a liability or obligation with which a retail tenancy dispute is concerned,…’

  1. 'A retail tenancy dispute’ is defined in section 63(1) to mean

‘Any dispute concerning the liabilities or obligations (including any obligation to pay money) of a party or former party to a retail shop lease or former lease, being liabilities or obligations which arose under the lease or former lease or which arose in connection with the use or occupation of the retail shop to which the lease or former lease relates, and ….’

  1. Mr Doomid on behalf of the Applicant, as its director gave evidence and was cross examined. From that evidence the following can be deduced

  1. The applicant never entered into a lease with the Respondent,

  2. There was never an assignment of the Lease

  3. The Applicant never occupied the Premises shop T8.

  4. The Applicant did not take possession of the shop.

  5. The Applicant was never a tenant of the Respondent.

  1. In these circumstances on the evidence, the Respondent submits that there is no lease between the parties to invoke a retail tenancy claim.

  2. The Applicant submits that the ANZ Guarantee was given as a “bond” to secure a proposed future lease which ultimately was not forthcoming from the Respondent. The evidence of discussions with Ms Noor of the Respondent supports that contention that there was preliminary discussion between the Applicant and the Respondent concerning an assignment of the Lease

  3. The Applicant points out that the Respondent called no witnesses and is relying on the documents and submissions.

  4. Pursuant to section 29(1) of the Civil and Administrative Tribunal Act 2013 (No 2) (NSW) (the CAT Act) the Tribunal has general jurisdiction and pursuant to subsection (2)

‘(2) The Tribunal also has the following jurisdiction in proceedings for the exercise of its general jurisdiction-

(a) the jurisdiction to make ancillary and interlocutory decisions of the Tribunal in the proceedings,

(b) the jurisdiction to exercise such other functions as are conferred or imposed on the Tribunal by or under this Act or enabling legislation in connection with the conduct or resolution of such proceedings ‘

  1. On the evidence of Mr Doomid the ANZ Bank Guarantee was provided in anticipation of an assignment of Lease being entered into between the Applicant and the Respondent or that there would be a new lease directly between the parties negotiated. There was no evidence to the contrary from the Respondent.

  2. In these circumstances the Tribunal pursuant to section 29(2) determines that there is sufficient nexus between the parties concerning a prospective retail lease to be entered into between the parties, that it has jurisdiction to hear this dispute under the Act.

  3. The Respondent then says it was entitled to draw down the ANZ Bank Guarantee as the ANZ Bank guarantee was the security provided in accordance with the terms of the Lease.

  4. The Tribunal has a number of difficulties with this proposition.

  5. Firstly Mr Chraif was never the lessee under the Lease, not having taken a formal and approved assignment from the registered lessee Mr Hijazi. It is hard to understand on what basis the Respondent dealt with Mr Chraif. Was it as agent for the lessee, but there is no evidence to establish this. No written agency provided in evidence. As Manager he may have had day to day control of the Business but Mr Hijazi was still the lessee.

  6. The wording of the ANZ Bank Guarantee is very clear, as in all Guarantee documents. It says

‘For Lush Hair Designs Pty Ltd ABN 65630883591 (The Customer) ANZ asks the Principal ( the Respondent) to accept this bank guarantee in connection with a contract or agreement between the Principal and Customer for Shop No T 8 Clemton Park Shopping Village.

In consideration of the Principal accepting this Undertaking and its terms, ANZ undertakes unconditionally to pay the Principal.. $21,000.’

  1. The ABN of the Customer is 65630883591 which does not correlate with the ABN of Mr Hijazi on the Lease as noted in paragraph 3 of these Reasons.

  2. Further, the ANZ Bank Guarantee states that the Guarantee is provided in connection with a contract or agreement between the Principal being the Respondent and the Customer being the Applicant for a lease of a retail shop. The ANZ asks the Principal to accept the Guarantee on that basis.

  3. The Respondent accepted the ANZ Bank Guarantee on that basis and subsequently called on ANZ to pay out the amount.

  4. However, having accepted the ANZ Bank Guarantee on the basis of there being a lease of a retail shop between the parties the Respondent cannot now produce any such lease. At best the evidence leads to the conclusion that there an anticipation by the Applicant that there may be an assignment of the existing Lease . The Respondent was unable to provide to the Tribunal any evidence regarding acceptance of the ANZ Bank Guarantee. Accordingly the Tribunal must rely on the wording in the document.

  5. The wording of the ANZ Bank Guarantee does not say that the Customer is providing the ANZ Guarantee to secure the obligations of the lessee of retail shop T8. If that were the wording then the Respondent would have been entitled to call on the Guarantee.

  6. However the wording is quite specific “in connection with a contract or agreement between the Principal and the Customer for shop T8” . No such contract or agreement came into existence.

  7. Accordingly the Respondent was not entitled to call on the ANZ Bank Guarantee and in so doing holds the funds paid to it by the ANZ Bank on a Constructive Trust for the Applicant.

  8. The Applicant is entitled to interest on the sum of $21,000 from the date of drawdown on 15 August 2019 until repaid at the prescribed rate in accordance with section 100 of the Civil Procedure Act2005 (NSW).

  9. I could not see a Mediation Certificate from the Registrar and it may well be the case that on transfer from the Local Court Mediation either was not considered or it was viewed that there was little prospect for resolution by mediation. Pursuant to section 68(1) of the Act I am satisfied that mediation would have been unlikely to resolve the dispute between the parties.

  10. Section 60 of the CAT Act creates the general rule that each party to proceedings must pay their own costs. Pursuant to subsection (2) the Tribunal may order costs “if satisfied that there are special circumstances warranting an award of costs”. Subsection (3)(a-g) sets out a non exclusive list of factors that may be considered in deciding whether there are special circumstances warranting an award of costs.

  11. Subsection 60(3)(g) states that the Tribunal may have regard to “any other matter that the Tribunal considers relevant”.

  12. In this regard the I consider that the action of the Respondent in first moving the Local Court to transfer the proceedings before that Court to this Tribunal on the basis that the dispute was a retail lease dispute, then to turn around and raise the question of jurisdiction in this Tribunal as warranting special circumstances for an award of costs.

Orders

  1. The Respondent is to pay the Applicant the sum of $21,000 within 7 days of these Orders together with interest from 15 August 2019 at the prescribed rate in accordance with Section 100 of the CivilProcedure Act 2005 (NSW).

  2. The Respondent is to pay the costs of the Applicant as agreed or as assessed.

                                                                  **********

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.


Registrar

Amendments

29 August 2023 - Formatting amendments.

Decision last updated: 29 August 2023

Actions
Download as PDF Download as Word Document
Cases Citing This Decision

0

Cases Cited

0

Statutory Material Cited

2