Mahmood v Christofi (No 2)

[2012] NSWADT 251

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation:

Mahmood v Christofi (No 2) [2012] NSWADT 251

Hearing dates:

9 December 2011 and 10 February 2012, written submissions 20 April 2012

Decision date:

30 November 2012

Jurisdiction:

Retail Leases Division

Before:

M Hole, Judicial Member

Decision:

1. Allow $1,081.69 to the applicant on sale of stock, this amount to be set off against rent owing by applicant.

2. The applicant breached a fundamental term of the lease being payment of rent.

3. The lessors provided sufficient opportunity for the applicant to remove his goods, fixtures and fittings from the premises.

4. The lessors are not responsible for the damages claimed by the applicant.

5. The applicant's business was interrupted by the activities of another lessee in the arcade for a period of two (2) weeks during October/November 2010 and an allowance for no rent to be payable for this period is to be made by the lessors against outstanding rent.

6. There is insufficient evidence to disclose responsibility for the removal of the forklift from the premises.

7. The actions taken by the lessors to secure the goods and equipment of the applicant were sufficient.

8. The lessors are not responsible for the loss of business damages claimed by the applicant. The applicant was aware as at 26 August 2010 (referred to in his facsimile of that date) of the proposals submitted to the Council which included construction of stairs in the arcade contrary to his evidence that he was not aware of this proposal until February 2011.

9. Each party to pay own costs.

Legislation Cited:

Retail Leases Act 1994 (Ss 34 and 72)

Category:

Principal judgment

Parties:

Abdullah Al Mahmood (Applicant)
George Christofi (First Respondent)
Elizabeth Christofi (Second Respondent)

Representation:

Counsel
J R Young (Applicant)
Mooney & Kennedy (Applicant)
D M Carson (Respondent)

File Number(s):

105210 and 115014

REasons for decision

1. On 9 February 2011 Abdullah Al Mahmood ("the applicant") filed an Application No 115014 seeking various orders concerning a lease between him and George and Elizabeth Christofi ("the lessors") dated 6 June 2009. Subsequently the application was amended by an Amended Application filed on 1 July 2011. The Amended Application sought orders pursuant to Sections 34 and 72 of the Retail Lease Act 1994 and compensation pursuant to the particulars of loss set out on pages 6 to 8 of the Amended Application.

1. The Particulars of Loss set out in the Amended Application are:

LIST OF ITEMS STOLEN FROM SUPA SAVE FRUIT SHOP

Item Description		Approx. value
1.	Various rice stock from front of the forklift;	$1800
2.	Two drawer shelves missing from the back of the counter containing all of the lessee's sales records, receipts, diaries and cash, till money and daily phone card sales;	$1572
3.	Overseas phone card stock (Optus, livera, lyca, Telstra and various phone cards) + ph card sale cash $736;	$10,536
4.	Various drinks from the shelves, fridge and stock;	$2000
5.	Cooking oil and bulk oil from the shelves and stock;	$850
6.	Various rice stock from shelves 25kg,20 kg, 10kg,5kg etc;	$800
7.	Wheat Flour Bulk 10kg bag count 24 - 30;	$240
8.	Fruit Juice box (2L X 6) from the shop stock;	$200
9.	Laptop X 3 (Dell Xps, inspiron, cell);	$2900
10.	Various stock from shelves and other stock;	$10,000
11.	Bulk items including 10kg bags of sugar, 25 kg bags of lentils, 25kg burgul crush wheat;	$5000
12.	Frozen items such as Basa fillets, Baramundi fillets, prawn, tilapia, seafood salad etc.	$4000
13.	BBQ items including throw away cups, plates, aluminium items and toiletries	$600
TOTAL STOCK STOLEN		$40,498 AUD

EQUIPMENT		Approx. Value
1.	Coolroom upstairs (including 3 glass doors and machine outside and inside);	$6,000
2.	Coolroom downstairs (including new machines inside and outside)	$14,000
3.	Three glass door freezers;	$4000
4.	Two (3.4 m each) big open fridges with curtain	$15,990
5.	Heavy duty mesh shelves in upstairs and downstairs storage (42 bays each containing 4 to 5 shelves and each bay costing $400)	$12,600
6.	Normal Shelves (mesh, light duty) in downstairs storage;	$2000
7.	16 channel DVR with 16 cctv night camera (installed 8 with wire);	$6000
8.	Nissan Gas Forklift (s/n-111203);	$9762
9.	4 Wooden shelves (specially made for fruit and vegetables), all over 3m width and 2m height and 1m depth;	$3500
10.	3-4 shelves Trolley X 2, other trolley for vegetables, customer trolley baskets;	$1500
11.	Equipment including 5 Channel CD Audio with 5 surrounding speakers.	$1000
TOTAL		$76,352
ADDITIONAL CLAIMS:
Business value		$58,000
Profit loss from Sept 2010 to end of Mar 2011 at $100 per day.		$21,200
Future loss of profit from April 2011, May 2011, June 2011 to present		$9000
Overpayment of rent		$18,000
Goods left in lessor's custody,		$25,000
Equipment in the lessor's custody		$78,000
TOTAL		$287,200.00

1. Application File No 105210 was filed on 20 December 2010. This File No 105210 subsequently proceeded together with File No 115014. An interim decision was given on File No 105210 on 23 December 2010 by Judicial Member R Fox. The interim decision made was:

"1. Lessor's threatened lockout stayed.

2. Lessee to pay $6873.20 on account of rent (without admission of liability) by 4.00pm on 24 December 2010

3. Lessee to pay rent $3436.60 on due date of 6 January 2011.

4. Further Directions on 20 January 2011 at 10.30am.

5. Note: Retail Tenancy Mediation to take place on 18 January 2011"

Legislation

1. The Retails Leases Act 1994 section 34:

"Lessee to be compensated for disturbance

34 Lessee to be compensated for disturbance

(1) A retail shop lease is taken to provide that if the lessor:

(a) inhibits access of the lessee to the shop in any substantial manner, or

(b) takes any action that would inhibit or alter, to a substantial extent, the flow of customers to the shop, or

(c) unreasonably takes any action that causes significant disruption of, or has a significant adverse effect on, trading of the lessee in the shop, or

(d) fails to take all reasonable steps to prevent or put a stop to anything that causes significant disruption of, or which has a significant adverse effect on, trading of the lessee in the shop and that is attributable to causes within the lessor's control, or

(e) fails to rectify any breakdown of plant or equipment under the lessor's care or maintenance, or

(f) in the case of a shop within a retail shopping centre, fails to adequately clean, maintain or repair the retail shopping centre (including common areas),

and the lessor does not rectify the matter as soon as reasonably practicable after being requested in writing by the lessee to do so, the lessor is liable to pay the lessee reasonable compensation for any loss or damage (other than nominal damage) suffered by the lessee as a consequence.

(2) In determining whether a lessor has acted unreasonably for the purposes of subsection (1) (c), due consideration is to be given to whether the lessor has acted in accordance with recognised shopping centre management practices.

(3) A retail shop lease may include a provision preventing or limiting a claim for compensation under the provisions implied by this section in respect of any particular disturbance if a written statement specifically drawing the attention of the lessee to details of the anticipated disturbance was given to the lessee before the lease was entered into, and the statement included the following:

(a) a specific description of the nature of the disturbance,

(b) a statement assessing the likelihood of the disturbance occurring, including an indication of the basis on which the assessment was reached,

(c) a statement of the timing, duration and effect of the disturbance, so far as they can be predicted.

(3A) A general statement to the effect that disturbances may occur during the term of the lease without setting out the matters referred to in subsection (3) is not a statement to which that subsection applies.

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

(a) as a reasonable response to an emergency situation, or

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

and section 72:

"Powers of Tribunal relating to retail tenancy claims

72 Powers of Tribunal relating to retail tenancy claims

(1) In proceedings for a retail tenancy claim lodged with the Tribunal under this Part, the Tribunal is empowered to make any one or more of the following orders that it considers appropriate:

(a) an order that a party to the proceedings pay money to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person,

(b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings,

(c) an order that a party to the proceedings:

(i) do any specified work or perform any specified service or any obligation arising under this Act or the terms of a lease, or

(ii) surrender possession of specified premises to another person, or

(iii) assign his or her or its rights under a lease to a specified person, or

(iv) do or perform, or refrain from doing or performing, any specified act, matter or thing,

(d) an order granting a party to the proceedings relief against forfeiture,

(e) an order, by consent of the parties, requiring the parties to the proceedings to rectify a lease,

(f) an order:

(i) declaring any provision made by a lease to be void for being inconsistent with this Act or the regulations, or

(ii) declaring that a lessor is not entitled to withhold consent to an assignment of the rights of a lessee, or

(iii) declaring the rights and liabilities of the parties under law, whether any consequential relief is or could be claimed or not, or

(iv) declaring that a party is or is not entitled to receive payment of the whole or a part of a security bond,

(g) such other order, in the nature of an interlocutory order of a kind referred to in paragraphs (a)-(f), as the Tribunal considers proper to be made in order to resolve or assist resolution of the dispute between the parties.

(2) The Tribunal may make such ancillary orders as it considers necessary for the purpose of enabling an order under this section to have full effect.

(3) The Tribunal may impose such conditions as it considers appropriate when making an order under this section.

(4) The Tribunal may make an interim order under this section pending final determination of a claim, if it appears to the Tribunal desirable to do so."

Sequence of Events

1. On 4 June 2009 the lessors entered into a lease with MD Nazrul Islam ("the lessee") for a term of three (3) years commencing on 6 June 2009 with provision for an option for a further three (3) years. The premises being described as "Shop No 4, 47 - 49 South Street, Granville". This shop is one six (6) in an arcade with a central area owned by the lessors. The lease is comprised of twenty five (25) pages and various clauses of the lease will be referred to. There is a "Lessor's Disclosure Statement" comprising nine (9) pages which has been signed by or on behalf of the lessors on 3 June 2009. The part of this statement described as "Lessee's Disclosure Statement" has been signed by the lessee on 4 June 2009. The Disclosure Statement discloses the lettable area of the shop as "388.5 square metres" and the gross lettable area of the shopping centre as 780.5m2. A sketch plan was annexed to the Disclosure Statement and a copy of that plan is annexed to this decision.

1. The lease provides, amongst other things, that:

At SCHEDULE, Item 3:

"Item 3:	The premises must be used only for:
(clause 4)	FRUIT MARKET"

At clause 1.2:

"...

"Premises" Means the premises described in item 2, including all fixtures, fittings, equipment and other goods of the Lessor within the premises.

..."

At SCHEDULE Item 2

"Item 2:	The Premises are:
(clause 1.2)	SHOP 4, 47 - 49 SOUTH STREET, GRANVILLE, NSW"

At clauses 10.1 and 10.2

"...

10.1 The Lessor must:

10.1.1 make good any structural defects in the premises except where a defect is cause by the Lessee or the way in which the Lessee uses the premises; and

10.1.2 (if the premises are part only of a building) maintain the roof and the external walls in a good and serviceable condition.

10.2 The Lessee must maintain the premises in their condition at the commencement of the lease and carry out any repairs that are necessary to maintain the premises in that condition. However, that obligation does not require the Lessee to make good or repair fair wear and tear or damage caused by fire, lightning, flood or tempest, or to do anything which the Lessor is required to do under clause 10.1.

..."

At clause 11.1

"...

11.1 The Lessee must not make or allow to be made any alterations or additions to the premises unless the Lessee first obtains the consent of the Lessor and the approval or consent of any relevant authority.

..."

At clause 17.1

"The Lessee must not transfer the lease without the prior consent of the Lessor."

At clause 18.2

"On the termination of the lease the lessee must remove from the premises all goods of the lessee which are not fixed to the premises."

At clause 22

"22 ESSENTIAL TERMS

22.1 Essential terms of the lease include:

22.1.1 the obligations of the Lessee to pay rent when due:

22.1.2 the obligations of the Lessee regarding outgoings:

22.1.3 the obligations of the Lessee regarding maintenance and repairs;

22.1.4 the obligations of the Lessee regarding insurances.

22.2 The acceptance by the Lessor of any late payment of rent will not be taken to be a waiver of the essentiality of the Lessee's obligation to pay rent when due.

22.3 If there is a breach by the Lessee of an essential term of the lease the Lessor may recover damages from the Lessee for losses over the entire period of the lease but the Lessor must take all reasonable steps to mitigate the losses". including endeavouring to lease the premises to a new Lessee.

22.4 The Lessor's rights to recover damages from the Lessee will not be affected if:

22.4.1 the Lessee abandons possession of the premises;

22.4.2 there is a surrender of the lease;

22.4.3 the Lessor accepts the repudiation of the lease by the Lessee; or 22.4.4 the Lessor terminates the lease by re-entering the premises or any part of them or by demanding possession of the premises."

At clause 23.1

"23. TERMINATION OF THE LEASE

23.1 The Lessor may terminate the lease by re-entering and taking possession of the premises or by demanding possession of the premises if;

23.1.1 the rent or other money payable under the lease is seven (7) days overdue for payment whether or not any demand for payment has been made;

23.1.2 The Lessee fails to comply with a notice from the Lessor under Section 129 of the Conveyancing Act 1919 regarding a breach of an obligation of the Lessee under the lease;

23.1.3 The Lessee fails to meet an obligation of the Lessee under the lease where a notice from the lessor is not required under Section 129 of the Conveyancing Act 1919; or

23.1.4 The Lessee repudiates the lease.

..."

1. The lessors agreed to rent: "starage (sic) No 1 and No 3" to Azzeldeen Omar ("Ace"). This is by way of a letter dated 9 November 2009 addressed to Mr A Omar from the lessors with the heading 'PREMISES: SHOP 1 & 2, 47 - 49 SOUTH STREET, GRANVILLE". The letter is signed by both the lessors and "Azzeldeen Omar".

1. There are three (3) storage areas, variously referred to as storage spaces or storage areas that make up the lower level of the area below the ground level of Shop 4. The middle storage area, known as No 2, incorporates a stairway to the part of Shop 4 above.

1. The agent for the lessors advised the lessors that the lessee was selling his business to the applicant. A copy of the front page of a contract dated 7 December 2009 disclosing a sale price of $60,000.00 plus stock estimated at $10,000.00 was provided.

1. On 19 January 2010, the solicitors acting for the lessors forwarded a letter to their managing agent enclosing various documents being:

"1. Executed copy of the lease between my clients and Mr Islam dated 4th June 2009;

2. Executed copy of the lessor's Disclosure Statement dated 3rd June 2009;

3. Deed of Covenant on Assignment of Lease in triplicate for signing on each copy by Mr Islam and Mr Mahmood; and

4. Tax Invoice for my costs relating to the Assignment of Lease."

The solicitor indicated that settlement of the proposed Sale of Business Agreement dated 7 December 2009 would require:

"1. Execution by both Mr Islam and Mr Mahmood of the 3 copies of the Deed of Covenant on Assignment of Lease;

2. The preparation of a Transfer of Lease in registrable form, signed by both Mr Islam and Mr Mahmood;

3. The stamping in the Office of State Revenue of both the Sale of Business Agreement and the Transfer of Lease.

4. The provision by Mr Mahmood of a security deposit of $3,033.33 for lodgment with the Department of Fair Trading;

5. The provision by Mr Mahmood of evidence of insurance cover for Public Liability in the sum of $10,000,000.00 and Plate Glass Insurance cover;

6. Confirmation from my clients that all rent and other monies payable under the lease are up to date; and

7. Payment of the Tax Invoice for my costs and fees."

1. The Lease was "transferred to" the applicant on 28 January 2010 following the execution of a Deed of Covenant on assignment of Lease between the applicant and the lessors on 27 January 2010.

1. There is no copy of the transfer of the lease of Sale of Business Agreement relating to the sale to the applicant by the lessee supplied to the Tribunal.

1. On or about early March 2010 an "Agreement" was documented between the applicant and the lessors and signed by all parties on 20 March 2010 as:

"Granville Arcade 47-49 South Street Granville

Shop 4 - Fruit Shop

Owners - George and Elizabeth Christofi

This is an agreement between George and Elizabeth Christofi and Mr A. Al Mahmood Tenant of Shop 4 - known as the Fruit Shop - also Tenant of Lock up garage or storeroom No. 2 which already has a cool room.

No. 1 garage will also be given to Mr A. Al Mahmood, on no account will this garage/storeroom be sub-leased to anyone except Mr A. Al Mahmood. It will be used only for storage. Once vacated by Mr A. Al Mahmood the garage/storeroom will be given back to George and Elizabeth Christofi."

The rental of storage space to Ace by letter dated 9 November 2009 was terminated following the agreement with the applicant dated '20.3.10'. From that date the applicant had possession of the ground floor area of Shop 4 and two (2) of the storage areas including the internal access between floors.

1. A letter dated 6 July 2010 was forwarded to "The Occupier. 47 - 49 South Street, Granville" from Parramatta City Council. This letter refers to the development application received by the Council from Mr L Tsekos. This letter included a copy of the plans required as annexures to the notification and invited the viewing of the documents accompanying the development application.

1. In July 2010 Ace commenced occupation of shops 1 and 2 having bought the businesses operated from those shops, with the approval of the lessors. The lessors permitted this Lessor of Shops 1 and 2 to alter the premises to join them together.

1. The applicant forwarded a facsimile to the lessors on 26-08-2010 which sets out various comments concerning the lease, the rent and ongoing difficulties of the applicant. This facsimile of two (2) pages included the following comments:

"When I took over the shop I had too many problems with parking, storage space. And I had been telling this matter to you (landlord) for several months at the beginning. You couldn't solve this problem for several months. You were able to give me back one of my storage spaces after three months.

The shop door has got structural problem.

The shop rent is too high in compare to any other shop in Granville south st(without those two storage space). This shop has no focus on the street. It doesn't get business because of its inside location and less focus. All of my focus got lost due to container, sports items, chicken shop items. Now the new owner is trying to put stairs in front of the shop."

1. A letter dated 6 November 2010 was delivered to the applicant by Mrs E Christofi setting out the amount of arrears of rent as at that date. This letter required that rentals and outgoings "be brought up to date with 21 days". The locks on the premises were changed on the evening of 28 November 2010 by Mrs E Christofi. On 29 November 2010 the applicant handed two cheques to Mrs E Christofi, one for $9,000.00 and one for $4,500.00. On receipt of these two cheques the shop was unlocked by Mrs E Christofi. The one for $4,500.00 was cashed, the one for $9,000.00 was dishonoured on presentation two (2) weeks later.

1. The applicant forwarded a letter dated 16 December 2010 to the lessors:

"I would like to state the following things for your consideration:

Reasons to stop the cheque dated on 13th Dec.2010 ( Submitted to RTU, Fairtrading,NSW Govt)

1) We didn't get any payment receipt for the cheque amount of $9000.

2) The final amount of $9000(inc Dec, 2010 rent ) to the outgoing owner E G Christofi was not calculated correctly.

3) We did sign the letter (after 3.5 months since my first day of trading) to give one of the storage spaces to other tenant in exchange of that the Landlord would help us to fix the floor of the shop ( structural problem).Landlord also gave us hope that he would help us to fix the structural problem of the main entrance of the shop so that we could put glass door. Because we had given one of our storage spaces to other tenant upon landlord's request he told us that he would consider our rent. But the landlord didn't keep any of his words. And also landlord should give us rent collected from other tenant for those 3.5 months for those two storage spaces (total of $650 x 3.5 or $2275). This amount is calculated up to the time we got one of the storage spaces back from other tenant. This should be deducted from the total outstanding amount.

4) We have sent you fax on 26th August,2010 (to the fax no : 0296516264) detailing all of our problems which were affecting our business badly. You didn't do anything to rectify our problem. You ignored the fax.

5) You gave us notice to pay the outstanding amount within 21 days. We responded to your letter before 21 days and sent you fax on 26th November 2010. We requested you to come and sort out our problems and finalize the payment issues. But you ignored the fax and instead you locked up our shop which caused losses to our business.

6) Our solicitor sent you a fax on 8th December,2010 detailing all the issues. He had given you 7 days to respond but you didn't respond. You ignored.

7) We had tried to communicate you before 13th Dec,2010. We tried to you send you the copy of the Fairtrading receipts of retail dispute application. But every time you tried to stop receiving the fax. Then I had to send messages to both of you on the phone no 0403 126 222 and 0430 511 040 at 11:10 pm on 12/12/2010.

8) This matter has been lodged at Retail Tenancy Unit Services, Technology and administration, Department of Fairtrading,NSW Govt. ( Ref No: 168307 )."

1. An agreement was made between the applicant and the lessors, following negotiations after the interim decision made on 23 December 2010, that:

"TERMS OF SETTLEMENT

PREMISES: SHOP 4, 47-49 SOUTH STREET, GRANVILLE

1) The Lessor and Lessee to enter into a lease on the same terms and conditions as the current lease to commence on 6th January 2011 terminating on 5th June 2012 with an option of three (3) years.

2) On sale of the business or expiry of the lease, the Lessor to have possession of storage space 1 without any payment to the Lessee.

3) On completion of the sale by the Lessors of the property to Leo Tsekos, the Lessors to allow the Lessee a credit of $1,050.00 with calculating rent and outgoings.

4) The above arrangements are in settlement of the claim by the Lessee as detailed in application to the Administrative Decisions Tribunal to the intent neither Lessor or Lessee will have any further rights against one another arising from the claim by the Lessee in these proceedings and the Lessee shall upon signing the "New Lease" discontinues these proceedings."

1. The lessors provided a draft lease to the applicant in early 2011 pursuant to the agreement dated 23 December 2010. This proposed lease was accompanied by a disclosure statement. The proposed lease as annexed to the affidavit of the applicant dated 4 March 2011 has been marked up to disclose:

(i) the change of dates and option periods reflecting clause 1 of the agreement dated 23.12.10;

(ii) the amendment to Clause 29 reflecting Clause 2 of the Agreement, and dated 23.12.10

The copy provided to the Tribunal has a notation adjacent to item 3 describing the use as "FRUIT MARKET and Mix (sic) business".

The disclosure statement shows the lettable area of shop 4 as "194.25m2". A plan was not attached to the proposed lease.

1. Caveat AG25884 was lodged on 27 January 2011 against the title for the premises claiming an interest by virtue of the "Deed of Covenant & Assignment of Lease dated 27 January 2010" between the lessors, the lessee and the applicant and by virtue of "Terms of Settlement dated 23 December 2010 between the lessors and the applicant. By virtue of the facts stated below:

"The caveator and the registered proprietors have entered into an agreement with respect to the lease referred to in the instruments listed in Annexure A. There are proceedings in the Retail Leases Division File No 105210 in the Administrative Decisions Tribunal which are unresolved."

1. A letter dated 17 December 2010 was delivered to the applicant by Mrs E Christofi on that day setting out:

"You started your business on my property on the 29 January 2010. I received one month bond money only. I received your first rental on the 29 March 2010. The second rental for April was paid on the 29 April 2010. The third rental for May again was not paid. Within the first four months as a new tenant you paid only two rentals.

February - no rent

March - paid,

April - paid,

May - no rent

You had received many outgoing accounts which also were not paid.

I had many conversations with you about all these arrears. You demanded the first month rental to be free because you wanted to spend money on shelving. I refused you then you started complaining that the rent was too high and also the outgoings.

We then had a dispute about the storage area. We both came to an agreement that I would allow you to keep one of the storage areas. We both signed an agreement which is at my solicitors.

The rental was still in arrears. Each time I would see you, you would give me your word that you would do your best to repay all the arrears. But once again you did not pay. Another month would pass there would be more outgoings accounts to pay. But once again I would still have to wait for my money. I have been very patient with you. You have been in arrears from the beginning of your term. I have waited for 11 months but all I hear from you is that you will do your best.

On the 29 November you gave me a postdated cheque for $9000.00. This cheque was dated 12.12.2010. Once it was banked I was then told that the cheque was stopped. Mr Mahmood I cannot wait any longer.

In my view you have breached your conditions to your lease:

You never showed me any evidence of insurance.

You did many alterations on my property with no written consent from me.

You placed pallets of fruit and vegetables in front of your shop. You have even made shelving with more fruit in front of my other tenants shop 5.

You have already damaged the floor by having very heavy floor shelving with heavy stock.

You have electrical wiring all over the walls which are dangerous and unattractive.

You also removed a roller door then cement rendered the wall and made a huge mess.

You have given me a postdated cheque for $9000 which you then put a stop to."

1. On 17 December 2010 a notice headed:

"TERMINATION OF LEASE

PREMISES: SHOP 4, 47-49 SOUTH STREET, GRANVILLE"

was served on the applicant by Mrs E Christofi the text being:

"1. On or about 29th November 2010 you offered to pay and we agreed to accept the sum of Nine Thousand Dollars ($9,000.00) on account of outstanding rent and outgoings in respect of the leasing of the above premises.

2. At the time, you gave us a cheque in the sum of Nine Thousand Dollars ($9,000.00) which at your request, was dated 13th December 2010.

3. This payment of Nine Thousand Dollars ($9,000.00) was accepted by us to cure default by you under the lease.

4. On 13th December 2010 we presented your cheque for payment. Your cheque was dishonoured and we subsequently were notified that you had stopped payment on the cheque.

5. You have made no other arrangement with us for the payment of this sum of Nine Thousand Dollars ($9,000.00).

6. In view of the breach by you of the terms and conditions of the lease concerning payment of rent and contribution to outgoings, we hereby give you notice of termination of lease effective forthwith. You must arrange with us for the removal of your stock and fixtures and fittings from the shop within seven (7) days of the date of this Notice."

A copy of clauses 22 and 23 of the lease were provided with the notice.

1. On 19 December 2010 the shop was locked by Mrs E Christofi. The applicant re-entered the shop on 20 December 2010. The applicant filed Application No 105210 on 20 December 2010 following which the interim decision by Judicial Member Fox was made on 23 December 2010 as referred to.

1. The applicant forwarded a facsimile to the lessors on 6 January 2011 stating:

"To

The Landlord

Shop 4, 47 "South st, Granville, NSW 2142

Dear George and Elizabeth,

I would like to know how far you are with the lease as we agreed on the following things after the Retail Tenancy Tribunal Administrative decision:

1) We agreed that none of the tenant would be able to use the common area of the Arcade for the business purpose (which would cause interruption within the tenants)

2) The new agreement will be made between yourselves (Current landlord) and myself (current tenant at Shop 4) before you do the settlement of the property with the new landlord (Leo Tsekos)

I would appreciate if you take the matter under your urgent consideration."

1. The solicitor acting for the lessors forwarded a letter dated 21 January 2011 to the applicant noting that:

"I have been instructed to draw the following matters to your attention, for compliance by you, arising out of the terms of the lease.

You are in arrears $2,426.55 comprising balance of rent and contribution towards outgoings. Payment of this amount is required within seven (7) days of the date of this letter.

All rental payments are to be paid on the due date.

Payment in respect of contribution to outgoings must be made within seven (7) days of the receipt by you of particulars of these outgoings and your proportionate contribution.

Provision within seven (7) days of Certificate of Currency in respect of Public Liability Cover for $10 million and separate Certificate of Currency in respect of Plate Glass Insurance covering the windows and other parts of the premises.

No alterations or additions may be made to the premises without the consent of the lessors and the approval or consent of any relevant authority. Your attention in this regard is drawn to the provisions of clause 11 of the lease.

As a result of recent work undertaken by you, electrical wiring is exposed and creates a danger and hazard. You must immediately employ the services of a licensed electrician to make safe the wiring to remove this hazard and danger.

My clients have not at any time, since your entering into possession, been provided with a copy of the Transfer of Lease of the premises from Mr Islam to yourself. You are requested to prepare and have executed Transfer of Lease in respect of the subject lease, duly signed by yourself and Mr Islam to regularize this situation.

I am instructed to stress that the above matters upon which my clients require compliance, involve separate issues from the proceedings in the Administrative Decisions Tribunal and in some instances, presently constitute breach of the conditions of the lease. In the event of your failing to comply with the several matters raised in this letter, my clients will exercise their rights pursuant to the lease."

1. On 28 January 2011 following mediation a certificate was issued that mediation between the applicant and the lessors had failed.

1. The applicant's brother died overseas on 25 March 2011. The applicant made immediate arrangements to join his parents overseas to be with them at this sad time. The applicant made arrangements with Dr Farouk, his cousin and business advisor, to manage the premises and for the applicant's wife to look after the shop.

1. The applicant on or about 29 March 2011 advised his wife and Dr Farouk by telephone to temporarily "close down" the shop until he returned to Sydney.

1. CCTV footage was presented to the Tribunal in respect of various periods between 28 March 2011 and 29 March 2011.

1. On 7 April 2011 the solicitors acting for the lessors forwarded a letter to the solicitors acting for the applicant advising:

"...

I refer to my letter to you of the 31st ultimo, in particular to annexure "K" to the Affidavit of Mrs Christofi.

I am instructed that earlier this week, my clients secured the shop premises. The only items in the premises at that time was your client's forklift and some non-perishable stock such as rice.

When my clients attended the premises yesterday, they discovered that there had been a forced entry to the premises and the forklift removed. The matter has been reported to the Police who advised that as the forklift is your client's separate property, if it has been stolen from my clients' premises, then he should report the matter to the Police personally.

My clients have been informed by a staff member of the service station in which your client has an interest, that he is returning to Australia later today. He should make contact with my clients to arrange the uplifting of the balance of the contents of the shop, with removal to take place no later than seven (7) days from the date of this letter.

I am instructed to stress, that my clients are in possession of the premises with the effective termination of the lease arising from your client's default in the payment of rent and outgoings. Any attempt by your client to gain entry to the premises, will be viewed as a trespass.

You are requested to convey the contents of this letter to your client to ensure that he is aware of my clients' instructions before he may consider any precipitate action in relation to forced entry of the shop premises.

..."

1. On 7 April 2011 the lessors reported an occurrence to the police Event No E43968411 in respect of damage to property. The report discloses that the lessors advised the police of a break in at the premises. This related to the removal of two bars from a metal sliding door at the entrance to the location. The removal of two padlocks and a chain blocking entrance to the door. There is a narrative of the allegations made by the lessors and a note showing that the victim (the lessors) wished to report the broken gate to police. The notes disclose that the premises do not have CCTV footage and that the victim was not sure what happened to the forklift and wanted the fact that it was no longer on the premises noted in the report to the police. It was noted that the victim could not report it as being stolen or missing as it is not their forklift and they are not sure what happened to it. The victim wished to make a report of the damage to their gate only. The lessors attended the police station on 14 April 2011 to provide further detail in respect of the report that they had made on 7 April 2011. A further recording was made on 14 April 2011 that the victim had attended the storage area of lot 4 47 South Street which is an area underneath the fruit shop. He indicated that he broke two padlocks with bolt cutters to gain entry to the rear storage area of the lot. He also indicated that this action was taken on the advice of his solicitor, the two padlocks were installed and owned by the applicant. The report further states:

"George CHRISTOFI walked into the store and attempted to turn on a light switch, but realised there was no electricity inside the store. George CHRISTOFI left the store because he intended to use a drill to install barricades in the premises and required electricity for the drill.

CHRISTOFI exited the premises and placed two of his own padlocks on the gates and secured the premises and left.

About 3.00pm on 4 April 2011 CHRISTOFI returned to 47 South Street and to the upper level, which is accessed via an arcade off 47 South Street. George placed tape over a cctv camera owned by ABDULLAH that is located outside the premises in the arcade. CHRISTOFI then placed timber across the door entrance and secured it with screws. He then walked outside the arcade and to the storage area entrance that he had attended on 1 April 2011. He entered the storage area and observed the electricity to be working. He then placed tape over 4 CCTV cameras owned by ABDULLAH. Those cameras are located inside the fruit store. CHRISTOFI did not touch the remaining 3 cameras in the store.

CHRISTOFI placed tape over the cameras so that ABDULLAH could not see the work that he was performing on the doors to barricade them.

Whilst in the store CHRISTOFI placed wood on the other side of the door that is accessed from the arcade. Leo TASKOS, a friend of CHRISTOFI, entered the store with CHRISTOFI and assisted him to secure the door. When the front door was secured they both left the store and left the tape over the cameras. CHRISTOFI observed the forklift to be inside the storage area at the time he left. When CHRISTOFI left the store he soldered the gate outside the storage area as outlined above. TASKOS and a man CHRISTOFI knows as "Ice" assisted him with the soldering."

A list of goods referred to as "Stolen Items" is included as part of the police report. A further narrative is given in the police report disclosing a chronology of events and the follow up of the police in respect of the initial event which concludes with a reference to the police attending on the "landlord" on 15 June 2011 with the statement that:

"It is difficult for police to determine how much stock was on the shelves before the tenant vacated the premises when compared to after the tenant reported items as being stolen."

This appears to be the final action taken by the police following investigation of the reporting of the initial complaint.

1. On 11 April 2011 the applicant, reported to the police, noted as Event No E44353240, that a WHITE RED NISSAN FORK LIFT was parked and secured at the stated location and that the vehicle may have been stolen by unknown means or method. The victim (the applicant) stated that he was out of the country at the time when he received a call that the forklift was missing and he waited until he was back in the country to make the report.

1. During the period 29 March 2011 to 15 April 2011 the applicant was locked out of the premises. Any re-entry required would be by arrangement with the lessors.

1. The premises were jointly inspected by the applicant and the respondents and a police officer on 15 April 2011 following the reported break-in and alleged theft.

1. The solicitor for the lessors forwarded a final letter to the solicitor for the applicant on 24 June 2011 as follows:

"...

I acknowledge receipt of your letters of the 17th & 21st instant, both of which were referred to my clients for their instructions, which are now to hand.

In relation to the letter of 17th June 2011, I am instructed to reply as follows.

Your client has had ample time within which to make arrangements for removal of the plant & equipment from the premises. In this regard, I refer to my letters to you of 12th April 2011, 3rd May 2011, 10th May 2011, 16th May 2011, 18th May 2011, 26th May 2011 and 9th June 2011. Apart from your client's visit to the premises on 4th June 2011 to take photographs of the plant & equipment, he has shown no interest in removing the plant & equipment from the premises. In addition to showing no interest in removing his property, your client also failed to respond to the invitation of my clients to attend the stocktake on 16th June.

On 17th June at approximately 3.00pm, Mr Christofi attended the nearby service station premises of your client. He was informed by Mina that your client was not at the service station. Mr Christofi then requested Mina to inform your client that the equipment was being loaded to take to the auction rooms. If he wanted any of the equipment, it could be delivered to the service station premises or to another nominated address. Mina indicated that he would contact Mr Mahmood to convey this message.

On 18th June at approximately 7.00am, Mr Christofi again attended the service station premises with a truck carrying your client's groceries and other items. At the time of his arrival at the premises, Mina was present but not your client. Mr Christofi handed a copy of the stocktaking report to Mina and the groceries referred to in the stocktake and the following items were unloaded and stored on the service station premises. In addition to the stock, these items were:

POS Scanner;

POS Printer;

Touch Screen Monitor;

Weight Machine;

Counter and other wooden shelves;

Two (2) EFTPOS machines;

Customer trolley baskets.

In the course of conversation, Mina said to Mr Christofi, "I rang him yesterday and he said he doesn't want anything".

Shortly afterwards, Mr Mahmood came to the service station premises. An argument ensued in the course of which Mr Mahmood said to Mr Christofi, "I don't want any of the groceries." Mr Christofi said, "Your things were taken to the auction yesterday. Whatever you want, you can go down any time to get whatever you want before the auction. Mr Mahmood replied, "I don't want anything. All I want to do is to make another claim." Mr Christofi then left the service station premises.

The following items have been delivered to Pickles Auctions, 5-11 Governor Macquarie Drive, Chipping Norton (Phone: [phone]) for auction on 30th June. I am instructed that your client is invited to contact Pickles Auctions and to take possession of any of the items prior to the auction.

Three glass door freezer;

Two (3.4m long) open fridges with curtain;

Heavy duty mesh shelves in upstairs & downstairs storage;

Normal shelves (mesh light duty) in downstairs storage;

Two x 3.4 shelves trolley.

There remains in the premises, viewed by the valuer as having no value, the following items:

Upstairs cool-room;

Downstairs cool-room;

Three (3) motors mounted on exterior of wall in laneway.

As to the validity of the termination of the lease, I remind you of the following:

1. Your client was significantly in arrears of rent and outgoings since January this year. On 2 occasions when appearing before Mrs Higgins, she cautioned your client that irrespective of the proceedings before the Tribunal, he was not relieved of his obligation to pay rent.

2. Since termination of the lease by my clients, your client has not sought to either tender the outstanding rent or seek any declaratory relief against the termination.

I now refer to your letter of the 21st instant, and note that I have yet to receive the amended Application.

I also note your comments in relation to the robbery. Contrary to the statements made in your letter, my observation from the bar table was that my instructions were that the CCTV recording of the shop premises during the relevant period, did not disclose unlawful entry into the shop premises or the removal of any of its contents.

..."

1. The solicitor acting for the applicant forwarded a letter dated 28 June 2011 to the solicitor acting for the lessors as follows:

"...

We acknowledge receipt of your letter of 24 June 2011.

For the record we are instructed to deny that our client had had ample time to make arrangements for the removal of the stock, plant and equipment from the premises.

We are instructed that the The Lessors have been obstructive and uncooperative. There were occasions when they would agree to give our client access only if he agreed to remove the stock.

As to the stocktake, our client had prior arrangements to undergo an interview for employment on that day, and was unable to arrange for someone else to attend, having regard to the short notice given.

Notwithstanding what is said about Mina being given a copy of the stocktake report, our client has not seen it and Mina appears to know nothing about it. Could you please supply a copy.

As to the stock generally, much of it was either past the use by date or was damaged and was in an unsalable (sic) condition. Our client had no premises from which the stock could be sold and otherwise had no facilities to deal with that stock.

Our client continues to receive enquiries with respect to the sale of the equipment from his advertisements on the internet. One prospective purchaser had inspected the items at the auction house but has not indicated one way or the other if he was interested.

Our client is of the view that that purchaser may attend the auction and purchase the items that he is interested in at a significantly lesser figure than if sold by private treaty.

As to the validity of the termination of the lease, our client continues to maintain that the lease was not validly terminated. This matter can be argued in the current proceedings before the Administrative Decisions Tribunal.

As to declaratory relief, our client takes the view that his business was irretrievably damaged as a result of the lessor's conduct, the break in, malicious damage and theft of stock and equipment, and could not be salvaged by any declaratory relief which the Tribunal may grant, and that his remedy now is pursuant to ss 34 and 72 of the Retail Leases Act 1994.

..."

1. There was correspondence between the parties concerning the use of the storage areas which were referred to as Storage Areas 1, 2 and 3.

Evidence

1. Evidence by way of affidavit was filed on behalf of the applicant, this included five (5) affidavits sworn by the applicant and one by Dr Farouk Iqbal. The applicant also gave oral evidence and was cross examined under oath.

1. Evidence by way of affidavit was filed on behalf of the respondents (lessors) including three (3) sworn by Mrs Elizabeth Christofi, two (2) sworn by Mr George Christofi and one (1) sworn by Mr David Hua Mo. Mr and Mrs Christofi and Mr Mo also gave oral evidence and were cross examined under oath.

1. The evidence of the applicant is that from the time that he purchased the business that he then built up the trade until the activities of Ace affected his business by the placing of building materials and materials concerning the chicken shop in the foyer area of the arcade (MH define arcade) and that as a result his business was affected. The applicant attested to having spent large sums of money on repairing the premises and some of those repairs were in relation to structural improvements which should have been undertaken by the lessor in accordance with the lease.

1. Evidence of the activities of the parties in relation to the transactions and events are as set out in the sequence of events referred to above.

1. The affidavits filed and the oral evidence filed on behalf of and given by each of the parties supported each of their versions of events.

1. Mr Mo contributed to the analysis of the CCTV information. In as much as he was able to he drew attention to the activities shown on the CCTV and the lengthy periods of inactivity. This information was helpful in terms of understanding the activities surrounding the various break-ins and re-entries into the shop and the inability to accurately define the activities undertaken during the periods displayed to the Tribunal. The CCTV information did not disclose accurately the removal of the applicant's goods and belongings, the activities in the shop during the periods of interest in respect of the removal of the goods and belongings or of the forklift.

1. The respondents' evidence given under oath impressed the Tribunal as to the hectic activity that occurred at various times during the period of the lease which was outside of their control. Whilst their memory of certain events was confused they did not appear to be lacking in credibility.

1. The applicant's evidence given under oath disclosed several matters that indicated his misunderstanding in terms of the lease. This included his misunderstanding of the use of the premises as a "fruit shop", the terms that were set out in the agreement of the 23 December 2010, the obligations of a lessee in relation to payment of rent, the obligations of a lessee in terms of maintaining opening hours. The applicant did not undertake a due diligence in relation to the lease prior to purchasing the business, this due diligence ought to have disclosed the discrepancy in the area leased, the lessee's ability to undertake structural repairs or other alterations to the premises, the potential in relation to the business and the interaction of the various tenancies in the group of shops. The applicant stated that he had only become aware of the proposed redevelopment of the site (including the comprehensive plans) in February 2011 although he refers to the information being sought by him from the council in respect to the redevelopment in his facsimile of 26 August 2010. The applicant had little information concerning the purchase of the business by him and referred to only having a single page of the contract, he noted that there may be other papers although he did not provide them.

1. The lessors arranged for and did remove goods from the premises on 17 June 2011 and delivered them to the premises owned or leased by the applicant being the service station at Cnr Blaxcell & William Streets, Granville.

1. The applicant provided various copies of affidavits to the Tribunal. Dr Farouk Iqbal provided an accountant's report dated 28 November 2011 prepared by Keshab Pty Limited. The signatory to that report is Mr Munzurul Khan. This report has been prepared on the basis of material provided to the accountant by the applicant. There is a note that capital improvements were incurred up to 30 September 2010. An indicative appraisal of the business for the period as at 31 March 2010 and as at 30 September 2010. The latter appraisal showed an increased adjusted annualised profit over that as shown for 31 March 2010. The report shows a summary of financial information for the quarters ended 31 March 2010, 30 June 2010, 30 September 2010, 31 December 2010, 31 March 2011. The net profit or loss proceeds for each of those quarters as $2,818.00, $12,637.00, $14,062.00, minus $6,748.00 and minus $10,534.00 respectively. There was a note to that report disclosing that the business operated by the applicant was trading under a corporate structure which included a substructure under the business of the premises and a second business entity being MSM Petroleum which according to the evidence was operated in separate premises. The report notes that the information provided was an indication only and not a proper valuation and has been provided on the basis of analysis of actual data provided by the applicant. Limited material was supplied to the accountant and the report does not disclose what material was in fact provided to the accountant.

1. This period between 24 April 2011 and 9 June 2011 discloses that various attempts were made between the parties to come to an arrangement to permit the applicant to remove his fixtures and fittings and any stock remaining. This period was initiated by a letter by the applicant's solicitor to the solicitor for the lessors reciting past hurts and requiring arrangements to be made for access to the premises on Thursday 28 April 2011 to undertake certain things. This letter also recites various other grievances in relation to the matter. On 28 April 2011 the applicant attended on the premises with Dr Farouk and the lessors, at that meeting the solicitor for the applicant alleges that his client was required to take an inventory of the stock and remove the equipment all on one day being that day. On 29 April 2011 the solicitor for the lessors responded to the solicitor for the applicant which included the requirement that the stock must be removed from the premises on the same day as the stocktake. On 3 May 2011 the solicitor for the lessors wrote to the solicitor for the applicant and drew attention to clause 18 of the lease in particular subclauses 18.2 and 18.3 and noted that his client would be allowed a further period of seven days to remove all the fixtures and goods from the premises. On 5 May 2011, not surprisingly, the solicitor for the applicant responded to the letter of the solicitor for the lessors noting that further claims would be made and that it was considered that the lessors were being unreasonable and placing unnecessary obstacles in their client's path of removing the stock. The letter concluded with:

"...

Our client now calls upon the landlords to do what is right and fair in giving access to the premises for the purposes stated herein.

..."

The solicitor for the lessors then forwarded a letter to the solicitor for the applicant dated 10 May 2011 noting that a further period of seven days would be permitted for the applicant to remove his fixtures and fittings. Further correspondence ensued resulting in a letter dated 26 May 2011 from the solicitor acting for the lessors to the solicitor acting for the applicant noting the continuing delay by the applicant in failing to remove his property from the premises. The solicitor acting for the lessors forwarded a further letter on 9 June 2011 to the solicitor acting for the applicant advising that the applicant had until 16 June 2011 to arrange and complete the removal of all the contents of the premises belonging to him. The stocktake took place on 16 June 2011 at the premises and the solicitor for the lessors forwarded a letter to the solicitor for the applicant inviting the applicant to attend.

Applicant's Submissions

1. It was submitted that the terms of settlement made between the parties on 23 December 2010, which was recorded by the solicitor for the lessors, would have included the ability of tenants to use the common area of the arcade for business purposes which would not interrupt the business of other tenants. It was submitted in respect of this that it was an implied term of the lease and would not have been required to be agreed as being a term outside the terms of the lease. That the exclusion of a specific term in respect of this requirement did not absolve the lessors to attend to their obligations under the terms of settlement or under the lease.

1. The submission was made on behalf of the applicant that the construction work undertaken by Ace would have interfered with the applicant's business and that the construction work was undertaken with the permission of the lessors and was severe.

1. A submission was made on behalf of the applicant that due to the sudden death of his brother it was necessary for him to leave Australia urgently and that he had made arrangements for his wife and his cousin to carry on the business and they were unable to do so and therefore the shop was temporarily closed on 29 March 2011. As the applicant had been in continuous occupation in accordance with the submissions since early 2010 and trading was undertaken on the Sunday then there could be no belief that he had abandoned the premises. Rather that the lessors wished to be rid of the applicant and to be able to permit Ace to carry out his development plans without the presence of the applicant.

1. The submission was made on the applicant's behalf that the four items of depriving the applicant of part of his lettable area, reneging on the agreement of 23 December 2010, the allowing of construction work impeding the business of the applicant and the lockout of the applicant during a short term absence from Australia destroyed the applicant's business.

1. The applicant's submissions recited the main grievances of the applicant related to:

(a) the storage space not being received;

(b) the construction work taking place in the arcade; and

(c) the structural issues concerning the floor and an external gate.

1. The applicant submitted that the business had been purchased at a purchase price of $58,000.00 plus stock evaluation and that the applicant had paid that amount for the business.

1. The applicant submitted that the terms of settlement dated 23 December 2010 did not accurately record the agreement as the applicant stated that it was agreed that none of the tenants would be able to use the common area of the arcade for business purposes which would cause interruption to other tenants.

1. The applicant submitted that his business had been disrupted as a result of construction work taking place in the arcade and that construction work was with the permission of the lessors.

1. The applicant submitted that the lessors were aware of the construction work being undertaken by Ace and that the construction work interfered with the business of the applicant.

1. The applicant submitted that when his brother died overseas he was upset and emotional and did not inform his solicitor or the lessors that he was proceeding away from the business. That the applicant made arrangements for his wife and his cousin to continue the business but they were unable to do so and the shop was temporarily closed on 29 March. That no bona fide belief could have been formed that the applicant had abandoned the premises as he had been in continuous occupation since early 2010. Rather that the lessors had issued a notice of termination to be rid of the applicant to enable Ace to complete his development plans without the impediment of the presence of the applicant.

1. The applicant submitted that the construction work had affected his takings which had been increasing up to the date of the commencement of the construction work. The submission was made that the construction work destroyed the value of the leased premises to the applicant and effectively killed his business.

1. The applicant submitted that the construction work effectively closed the arcade during February and March 2011 and that the applicant continued to carry on his business in circumstances of the greatest adversity.

1. The applicant submitted that as and from 30 March 2011 the lessors became bailees of the property of the applicant as he was excluded from the property. It was submitted that it is common ground that a forklift in the possession and custody of the applicant prior to his exclusion was removed from the premises.

1. The applicant submitted that references that were included in a letter at the time where he only referred to items in the shop premises being a forklift and some non perishable stock was incorrect and by a subsequent letter the instructions were corrected to say that these were not in the shop premises at all but in the storage space below the shop occupied by the applicant.

1. The applicant drew attention to the fact that Ace had not been called by the lessors to give evidence in relation to the securing of the premises and the finding of a gate open and the resecuring of the gate.

1. The applicant drew attention to the evidence given by one of the lessors in that he taped over three of the internal cameras in the shop and that this was done to prevent the applicant from accessing the premises. That the evidence of Mr Mo, the CCTV expert, was that the cameras would remain on and that the lessor did not know when he was turning off the security cameras was hardly credible.

1. The applicant submitted comprehensive submissions concerning the period between 4 April and 15 April and the CCTV footage.

1. The applicant submitted that both of the lessors' evidence lacked credibility and that they could not be considered to be witnesses of truth. That alternatively while the applicant presented as somewhat naïve that he would be accepted as a witness of truth. The applicant made considerable submissions relating to the damages sought including the loss of the business, a claim for profit loss supported by the accountant's report referred to previously in evidence. That an amount of $100.00 per day would be a suitable amount of damages.

1. The applicant submitted that he has had difficulty in proving the losses due to his business records which were allegedly removed from the premises after the lockout.

1. The applicant claims that the new lease submitted to him by the lessors was not in the same terms as the original lease and also as a result of the terms of settlement the total leased area was reduced in a manner in which there ought to be an allowance to him in respect of the reduced area.

1. The applicant submitted that he should be reimbursed in relation to the value of the forklift that was stolen, the loss of the phone cards from the premises after the lockout and claims for the rice stock and other items. The applicant also claims that the sum received by the lessors on a sale of some items that had been in the premises should be received by the applicant.

1. The applicant also submitted that he is entitled to claim damages pursuant to section 72(a) and 77(a) of the Retail Leases Act 1994.

1. It was submitted on behalf of the applicant that the applicant was entitled to costs in respect of the proceedings as the applicant had commenced the proceedings to deal with the situation of a lockout, which led to settlement terms in December 2010 which the applicant contends the lessors repudiated. Further that if there was any real suggestion that the applicant had not complied with the orders of the Tribunal then this would have been material which the lessors could have brought to the attention of the Tribunal at the relevant time.

Respondents' (lessors') Submissions

1. The respondents recognised the applicant as the lessee of the premises pursuant to the terms of the lease between themselves and Mr Islam and as varied by the document dated 20 March 2010.

1. The lessors submitted that the sequence of events as disclosed showed that the lessors had recognised the applicant as the lessee.

1. The lessors submitted that throughout the term of the tenancy of the premises the applicant had used the common area of the arcade for exhibiting his fruit and vegetables and had advertised by way of a hoarding at the entrance to the arcade. The lessors had not interfered with the applicant's ability to market his goods for sale and had not interfered with the ability of the applicant to carry on his business in accordance with the terms of the lease.

1. The submission was made that as soon as the lessors became aware of the error in the area leased to the applicant the lessors had taken steps to remedy the situation which had resulted in an agreement between the applicant and the lessors which resolved the anomaly.

1. The submission was made that the applicant entered into the lease in full knowledge of the placement of the shop at the rear of the arcade with limited focus on the street and the applicant was aware of the contents of the lease and had proceeded with the purchase of the business from the original lessee.

1. The lessors had made attempts throughout the period of the lease to accommodate the requirements of the applicant. The applicant was in arrears of rental from the very early stages of the lease and the lessors had listened to the complaints of the applicant in relation to the premises and had taken into account the various submissions to them by the applicant in respect of the condition of the premises when that was brought to their attention.

1. The submission was made on behalf of the lessors that their evidence given was credible and should be accepted by the Tribunal. That evidence referred to the works being undertaken in the arcade which had been cleared as and from 29 November 2010.

1. It was submitted on behalf of the lessors that the applicant was in arrears in respect of payment of rent and outgoings as at 30 March 2011 and that no further payments were made to the lessors in respect of rental after that date notwithstanding the orders made by the Tribunal on 23 December 2010. The submission was made that as at 30 March 2011 the lessors were entitled to look to their best interests as unpaid landlords in asserting their rights under the lease to take possession of the premises. The submission was made on behalf of the lessors that the applicant had paid too much for the business in December 2009/January 2010 by the applicant's own admission. That the information given by the applicant to his accountant for the period shown in the accountant's report was inaccurate or the applicant was misleading in his correspondence forwarded to the lessors that his trading was "negative" and that he could not pay his expenses as at 26 August 2010. Further that the applicant had made a poor business decision in purchasing the business and sought in return to turn that poor decision into a claim against the lessors.

1. It was submitted that the applicant ceased trading without notice to the lessors or to the respondents' own solicitors at the end of March 2011 and he was in arrears of rent at that point of time in the sum of $12,975.34.

1. It was submitted on behalf of the lessors that the lessors had attempted to secure the premises. The evidence given in relation to the taping of the CCTV cameras was explicable and credible on the basis that this was done as there was a concern that the applicant had broken into the premises previously after a lockout and that the applicant should be prevented from breaking in on a further occasion. The taping over was on the basis that the lessors believed that they were denying the applicant the possibility of viewing the CCTV to determine the method whereby the roller doors were being secured. At the time that the roller doors were secured the counter at the checkout was moved several times which disturbed material stored under and around the counter.

1. It was submitted that the state of the premises on 5 April 2011 was the same as on 4 April 2011 and that apart from the moving of the counter and disturbing the material stored under and around the counter as referred to there was no other recorded activity within the shop premises.

1. It was submitted that the applicant had reduced his claim from the original claim shown in the amended application of a theft of stock to the value of $40,498.00 to $20,000.00 by way of submission of the applicant. That as this claim for $20,000.00 includes the forklift and phone cards and as the lessors are not responsible for either of those losses there is in effect no claim by the applicant for loss of stock. It was submitted that the lessors were credible and that they may have been naïve in relation to the factual situation existing in the arcade at the time of the proposed building works.

1. It was submitted that the applicant had informed the lessors as early as February/March 2010 that he had paid too much for the business and that it was a matter of his own actions that he had lost the value of the business over an extended period of time and that he was in arrears of rent and outgoings as at 30 March 2011. Further that on the applicant's return to Australia he had not taken any steps to re-establish his tenancy nor did he make any attempt to offer to pay the arrears of rent and outgoings. Therefore the loss of the business is attributable to the action or inaction of the applicant.

1. It was submitted on behalf of the lessors that there was not a break in and theft of stock of the premises contrary to the submissions by the applicant to this effect.

1. It was submitted on behalf of the lessors that in view of the evidence submitted to the Tribunal and the abandonment of the claim for loss of stock and plant and equipment, fixtures and fittings, not having been notified to the lessors prior to the commencement of the hearing or during the course of the hearing then the applicant is not entitled to an order for costs in respect of the proceedings.

Reasoning

1. The applicant declared that he also operated another business on the premises as a PC and laptop technician with his brother. This was not an authorised use of the premises. The applicant referred to this in explaining occurrences on the CCTV footage.

1. The applicant stated that he paid Mr Nazrul Islam $58,000.00 to buy the business and that he paid one month's rent to him plus a further month on account of the bond. These amounts have not been verified by the production of a copy of the sale of business or a transfer of the lease.

1. The evidence supplied by way of a speculative amount of $100 a day is not supported by any evidence and is not supported by the accountant's report which has been prepared solely on the basis of some limited documentation provided to the accountant and by the applicant verbally.

1. The accountant's report does not provide sufficient information to be able to support the claim made by the applicant in respect of loss of the value of the business.

1. The applicant had from time to time placed sales bins in the common areas and the evidence supplied did not disclose serious interruption to the use of the arcade except for the two (2) weeks of October/November 2011.

1. Following the terms of settlement dated 23 December 2010 the applicant attempted to amend the terms of that agreement by the inclusion of further terms.

1. The applicant proceeded overseas on 25 March 2011 and left the management of the premises to his cousin, Dr Farouk, and the applicant's wife. Following a telephone conversation between the applicant and those managing the shop on or about 29 March 2011 the applicant advised them to close down the shop until he was able to return to Sydney.

1. From 24 April 2011 a series of letters flowed between the solicitors, including a letter dated 12 April 2011 from the solicitors for the lessors advised that (amongst other things):

"...

With the lease terminated, your client should now make prompt arrangements for removal of his fixtures and fittings, plant and equipment in the terms of the lease.

..."

The solicitors acting for the applicant responded to the letter of the lessor's solicitors by noting that:

"...

Our client does not acknowledge that the lease has been effectively terminated and will be continuing with the current procedures before the ADT.

..."

1. The evidence provided to the Tribunal by the applicant has not disclosed evidence sufficient to rely upon to disclose that the activity in the arcade or other activities which may or may not have been in the knowledge of the lessors.

1. The actions of the applicant in relation to "temporarily" closing the shop drew to an end a difficult situation for both the applicant and the lessors. From the time that the applicant took over the lease and commenced operation of the shop he had difficulty in maintaining regular payments of rent and this information does not equate to the information as shown in the accountant's report. The information supplied to the Tribunal by the applicant suggesting that he was building up the shop and taking action to increase the income of the shop does not support his difficulty in payment of the rent on time or taking any necessary action to ensure that the lessors' position was not severely affected by the non payment of rent and outgoings. The inability to produce the information concerning the purchase of the business and attending to the obligations of a lessee in respect of the purchase of a business and the transfer of business including payment of any relevant duties does not support the applicant's contention that he had attended to all his obligations as the incoming lessee.

1. Mr George Christofi, one of the lessors, gave evidence concerning the reasons for the CCTV cameras to be taped over. That reason being for the purposes of preventing any other persons having access to the CCTV at that time from discovering the manner in which he locked the premises was, although clumsy, explainable on the basis that he gave. The applicant had previously reopened the premises after he had been locked out and from the position of the lessors they did not believe that he would not re-enter the premises again.

1. The action taken by Mr George Christofi, one of the lessors, in securing the entrance by way of having metal bars soldered across the entrance was also understandable and was taken in an effort to ensure that the premises were not re-entered. The applicant's counsel noted that the person who assisted Mr George Christofi was not called in evidence.

1. Both parties made various attempts to resolve the situation concerning the fixtures and fittings and other belongings of the applicant during the period between 21 April 2011 and 17 May 2011. This followed the period between 28 March 2011 and 21 April 2011 which involved various actions concerning alleged break-ins to the premises, the theft of the forklift, the moving of records and other goods within the shop, the taping over of the CCTV and the various attempts made to secure the premises including the soldering of metal bars across the gate of the storage area and the subsequent removal of the welded metal bars and padlocks and the discovery of the missing forklift.

1. The following is a summary of the activity undertaken pursuant to the leasing of the premises by the applicant from the lessors:

3 June 2009	Disclosure Statement signed by the lessor
4 June 2009	Disclosure Statement signed by the lessee
6 June 2009	Lease entered into by Nazral Islam
6 June 2009	Lease dated
9 November 2009	Lease of No 1 and No 3 storage spaces to Ace
7 December 2009	Assignment of the business and lease of premises to the applicant
Early 2010	Draft lease forwarded by lessors to applicant
19 January 2010	Letter from lessors' solicitor to managing agent
27 January 2010	Deed of Covenant on Assignment signed by lessors
28 January 2010	Lease "transferred to" the applicant
20 March 2010	Rental of storage space 1 to Ace terminated
March 2010	Agreement to fix storage spaces between applicant and lessors
July 2010	Ace commenced operating shops 1 and 2 of the arcade
6 July 2010	Letter from Parramatta Council to occupier
26 August 2010	Applicant forwarded a facsimile to the lessors
6 November 2010	Letter from lessors' solicitor to applicant regarding rent and 21 day notice
28 November 2010	Locks changed on premises
29 November 2010	Applicant handed two cheques to lessors - one cashed and one postdated which subsequently bounced
16 December 2010	Applicant forwarded a fax to the lessors
17 December 2010	Letter from lessors to the applicant
17 December 2010	Notice of termination of lease given to the applicant
19 December 2010	The premises locked by the lessors. Police called, applicant allowed to continue trading
20 December 2010	The applicant re-entered the shop. The applicant broke a padlock to the premises to re-enter and the police were called
20 December 2010	Application No 105210 filed in the Tribunal
23 December 2010	Orders made by Tribunal in Application No 115014
23 December 2010	Agreement reached between parties and terms of settlement signed
6 January 2011	Letter from applicant forwarded to the lessors
21 January 2011	Letter forwarded by the lessors' solicitor to the applicant
27 January 2011	Caveat lodged by the applicant
28 January 2011	Mediation Certificate issued as mediation had failed
25 March 2011	Applicant's relative died and he proceeded overseas
27 March 2011	Applicant ceased trading
28 March 2011	The premises were locked by the lessors
27 & 29 March 2011	Persons enter the shop as shown on CCTV
7 April 2011	A break in was reported to the police by the lessors
11 April 2011	A report of the theft of the forklift was made to the police

1. Attempts made by both parties to allow/obtain a suitable and reasonable time for the applicant to remove his fixtures, fittings and stock from the premises.

21 April 2011	Letter from the solicitor acting for the applicant to the solicitor acting for the lessors
28 April 2011	Applicant attended at the premises with Dr Farouk and with the lessors
28 April 2011	The lessors required that an inventory and the removal of the fixtures and fittings take place on that day. The applicant wanted to take photographs of the items and then advertise them on the internet for sale with no timeframe
29 April 2011	Letter from the solicitor acting for the lessors to the solicitor acting for the applicant
3 May 2011	Letter from the solicitor acting for the lessors to the solicitor acting for the applicant. This letter drew attention to clauses 18.2 and 18.3 of the lease and allowed a further timeframe for removal of the fixtures and fittings that is until 10 May 2011
5 May 2011	Letter from the solicitor acting for the applicant to the solicitor acting for the lessors. This letter indicates that in the applicant's view it is unreasonable of the lessors to require that the items be removed on the same day
10 May 2011	Letter from the solicitor acting for the lessors to the solicitor acting for the applicant allowing a further 7 days
26 May 2011	Letter from the solicitors acting for the lessors to the solicitors acting for the applicant noting delay in removal of the goods.
9 June 2011	Letter from the solicitors acting for the lessors to the solicitors acting for the applicant noting that the applicant had until 16 June 2011 to arrange and complete removal of his contents.
16 June 2011	Stocktake of the goods on the premises undertaken by the lessors.

1. There was no information provided to the Tribunal disclosing the consideration paid by the applicant for the business other than the statements by the applicant. There was no information provided to the Tribunal as to any other arrangement between the applicant and the vendor to him by the lessee as to any other alternative arrangements that were to be made in respect of the payment of rent or bond money to the lessors.

1. The evidence provided to the Tribunal by the applicant has not disclosed evidence sufficient to rely upon to disclose that the activity in the arcade or other activities which may or may not have been in the knowledge of the lessors.

1. The evidence provided to the Tribunal in respect of the various headings of damage sought by the applicant discloses that:

(a) the area in the area given of the storage spaces 1, 2 and 3 deprived him of the space that he was entitled to under the lease. This error was not deliberate and as soon as the lessors became aware of the error they negotiated an agreement with the applicant which they believed had resolved the situation. The applicant would have discovered on due diligence prior to purchasing the business and taking up occupation of the premises what the true situation was and what was in fact leased to him for use. As it appears that he did not undertake due diligence and then as he agreed to an alternative arrangement which was reached between himself and the lessors and that agreement did not vary the rent therefore the applicant is not entitled to any allowance in relation to the error that was made in the area. The area was not a deliberate error of the lessors.

(b) the premises were securely locked by the lessors with the forklift inside the gate. The lessors made a valiant effort to secure the forklift by the welding of metal bars and the locking of the gate securely. When advised of the absence of the forklift and of the break-in the lessors made an immediate report to the police and a further report regarding the security at the rear of the premises. The efforts of the lessors to protect the premises and any belongings of the applicant of goods borrowed or leased from a third party were reasonable in the circumstances and therefore they do not have any liability to reimburse the applicant for those items. The documentary evidence provided as to the ownership of the forklift is inconclusive.

(c) the evidence provided to the Tribunal to the effect that the phone cards were on the premises is insufficient to make a finding that they were. The applicant had purchased the cards as invoices disclosed. The shop was operated in a haphazard manner by family members after the applicant proceeded overseas until the shop was closed permanently. The evidence is insufficient to allow a claim for the value of the phone cards.

(d) the claim for rice stock and missing equipment etc must be taken into account when considering the attempts of the lessors to deliver the goods and items to the applicant. The lessors made a series of extended time allowances to the applicant to remove his goods, fixtures and fittings from the premises. This claim can not succeed in the given circumstances.

(e) the minute dissection of the CCTV footage was a distraction from the overall activity undertaken pursuant to the lease between 6 December 2009 and 27 March 2011. The information as disclosed on the CCTV supported the activity of the involvement of the police and the futile attempts by the lessors to regain the premises after default by the applicant of a fundamental term of the lease being the payment of rent.

(f) the lessors achieved the amount of $1,081.69 on the sale of some stock. This amount must be setoff against the unpaid rent and outgoings.

1. The respondents recognised the applicant as the lessee of the premises pursuant to the terms of the lease, as varied by the agreement dated 20 March 2010.

1. Orders 2 and 3 of the interim decision of the Tribunal made on 23 December 2010 were not complied with.

1. The business of the applicant was interrupted for a period of two (2) weeks during the period of late October 2010 to mid November 2010. Notice of this was not given by the applicant to the lessors.

1. The applicant undertook unauthorised work on the premises over the period of the occupation of the premises by him.

1. The applicant ceased trading in the premises on 28 March 2011.

1. The respondents provided sufficient notice to the applicant in respect of the removal of his goods, equipment, records and stock from the premises prior to 16 June 2011.

1. The evidence provided by the applicant, the respondents and viewing of the CCTV does not indicate or prove who removed the Nissan Gas Forklift. The ownership of this forklift was not established by the applicant. The actions of the respondent taken to secure the premises, and consequently goods and equipment on the premises, were reasonable and adequate.

1. The showing of an incorrect area on the disclosure statement provided to the lessee (not the applicant) was not a deliberate error by the respondents and an agreement was entered into on 20 March 2010 by the applicant and the lessors which resolved this error to the satisfaction of both parties.

Orders

1. Allow $1,081.69 to the applicant on sale of stock, this amount to be set off against rent owing by applicant.

2. The applicant breached a fundamental term of the lease being payment of rent.

3. The lessors provided sufficient opportunity for the applicant to remove his goods, fixtures and fittings from the premises.

4. The lessors are not responsible for the damages claimed by the applicant.

5. The applicant's business was interrupted by the activities of another lessee in the arcade for a period of two (2) weeks during October/November 2010 and an allowance for no rent to be payable for this period is to be made by the lessors against outstanding rent.

6. There is insufficient evidence to disclose responsibility for the removal of the forklift from the premises.

7. The actions taken by the lessors to secure the goods and equipment of the applicant were sufficient.

8. The lessors are not responsible for the loss of business damages claimed by the applicant. The applicant was aware as at 26 August 2010 (referred to in his facsimile of that date) of the proposals submitted to the Council which included construction of stairs in the arcade contrary to his evidence that he was not aware of this proposal until February 2011.

9. Each party to pay own costs.

**********

Decision last updated: 30 November 2012