Mutlu v Cetinkaya
[2011] NSWADT 180
•28 July 2011
Administrative Decisions Tribunal
New South Wales
Case Title: Mutlu v Cetinkaya Medium Neutral Citation: [2011] NSWADT 180 Hearing Date(s): 14 June 2011 Decision Date: 28 July 2011 Jurisdiction: Retail Leases Division Before: R Fox, Judicial member
Decision: (1)Application 105001:-
(a)Dismissed for want of prosecution.
(b) Interim Order for possession vacated.
(c) Declare that retail lease arising out of Licence Agreement dated July 2009 for the occupation of shop premises in Boorowa Street, Young ended on 3 October 2010 when the Applicant Mutlu ceased occupation.
(d) No order for costs.
(2)In Application 115068:-
(a) Pursuant to s72(1)(a) Respondent Hasan Mutlu is to pay Applicant Sam Cetinkaya the sum of $9,298.88 by way of debt and damages.
(b)Pursuant to s72A(1) interest in the sum of $475.00.
(c)No order for costs.Catchwords: s3 - definition of retail lease, s16
Legislation Cited: Retail Leases Act 2004
Cases Cited: Minister for Immigration v Bardwaj (2002) HCA11
Texts Cited: Category: Principal judgment Parties: Hasan Mutlu (Applicant)
Sam Cetinkaya (Respondent)Representation - Counsel: - Solicitors: No appearance (Applicant)
L Schiavo (Respondent,agent)File number(s): 105001, 115068 Publication Restriction:
REASONS FOR DECISION
These two matters arose out of the occupancy by Hasan Mutlu of a shop at Young in Boorowa Street which was fitted out and used as a pizza and kebab shop. That use is one which falls within the Schedule of the Retail Leases Act and so the Tribunal has jurisdiction.
Matter number 105001 commenced on 5 July 2010 and was an application by Mutlu which sought orders to the effect that he had, by operation of s16 of the Retail Leases Act , s16, a 5 year lease. That section (as far as relevant) reads:-
"(1) The term for which a retail shop lease is entered into, together with any further term or terms provided for by any agreement or option for the acquisition by the lessee of a further term as an extension or renewal of the lease, must not be less than 5 years. An agreement or option is not taken into account if it was entered into or conferred after the lease was entered into.
(2) If a lease is entered into in contravention of this section, the validity of the lease is not thereby affected but the term of the lease is extended by such period as may be necessary to prevent the lease contravening this section.
Note: For example, if a lease is entered into for a term of 3 years, its term is extended by 2 years to 5 years. If a lease is entered into for a term of 2 years with an option for a further 1 year after that initial 2 years, the term of the lease is extended to 4 years (with the option for a further 1 year after that initial 4 years).
(3) This section does not apply to a lease if a lawyer, or a licensed conveyancer, not acting for the lessor certifies (before, or within 6 months after, the lease was entered into) in writing that:
(a) the lessee or prospective lessee requested the lawyer or conveyancer to give the certificate, and
(b) the lawyer or conveyancer has explained to the lessee or prospective lessee the effect of subsections (1) and (2) and that the giving of the certificate will result in this section not applying to the lease.
If the certificate is given within 6 months after the lease was entered into, then, without affecting the validity of the lease, subsection (2) ceases to apply to the lease and the extension of the term of the lease effected by that subsection accordingly ceases to be operative."
The evidence in that matter, by way of Mutlu's Affidavit of 29 December 2009 alleged that he had taken occupation pursuant to a document which described itself as a Licence Agreement and which seems to have been drawn without regard to the Retail Leases Act . It recited that Mutlu had agreed to purchase Cetinkaya's business on a "walk in walk out" basis for $20,000.00 and went on to say:-
"and also the Licensor has agreed to grant to the Licensee a Licence for 10 months for a licence fee of $700.00 per week including GST payable monthly in advance."
There was no certificate pursuant to s16(3).
The operative provision of the document (which was drawn as a deed) called for a monthly payment of $3,033.33, which was analysed, on a weekly basis, as $700.00 per week, a $150.00 portion of which was an instalment for the goodwill payment of $20,000.00, "remaining balance to represent the licence fee of $550.00 per week". This arrangement was to start on 16 July 2009 and was to continue until 20 May 2010 when the balance of the $20,000.00 was to be paid, and upon such payment Cetinkaya was to grant Mutlu a 10 year lease with a 10 year option at a commencing rental of $550.00 per week including GST, increased by 5% each and every year.
The lump sum due on 20 May 2010 was not paid, and no lease document was ever signed.
It is very clear that the writing which attempted to create the licence fell within s3 of the Retail Leases Act :-
""retail shop lease" or "lease" means any agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop:
(a) whether or not the right is a right of exclusive occupation, and
(b) whether the agreement is express or implied, and
(c) whether the agreement is oral or in writing, or partly oral and partly in writing.
Note: Sections 6, 6A and 84B limit the retail shop leases to which this Act applies."
Section 6A excludes leases for a term of less than 6 months. The right of occupancy in question was for 10 months.
It seems that Mutlu was not prompt in his payments and so Cetinkaya locked him out on 25-28 December 2009 and that lead to the Application. Of course Mutlu also sought Urgent Interim Orders and these were granted on 13 January 2010, allowing Mutlu re-entry on a payment regime which resulted in a weekly occupation fee of $550.00 being paid during and after March of 2010.
Mutlu was represented by Mr Carmody, solicitor of Young, who appeared by telephone, Cetinkaya represented himself by telephone.
After some preliminaries, the matter came to be heard on 16 September 2010 when Mr Carmody appeared in person in Sydney, and Cetinkaya did not. Mr Carmody applied for orders which were made on an ex parte basis, imposing a 5 year lease.
It later transpired that Cetinkaya had assumed that he could appear by telephone, and had instructed an ACT solicitor to do that, and was waiting in the office of that solicitor for a telephone call from the Tribunal, so that the solicitor could appear. All of this came out when Cetinkaya was made aware of the ex parte orders which had been made. He then applied for those orders to be vacated and, pursuant to Minister for Immigration v Bardwaj (2002) HCA11 that order was made on 11 November 2010. That left in effect the Interim Order for occupation at a weekly rental of $550.00 including GST.
Mr Carmody filed a Notice of Ceasing to Act in early February 2011.
The matter continued on a path of directions to 7 April 2011, when it was set down for hearing on 15 June 2011.
Cetinkaya had been represented by O'Connor Harris, a firm of Canberra solicitors. These solicitors wrote to the Tribunal on 17 May 2011 indicating that they no longer acted, and enclosed a "Notice of Representation by Legal Practitioner or Agent" by which Cetinkaya appointed Lucia Schiavo of Lyneham in the ACT to represent him as agent.
At about the same time as her appointment, Ms Schiavo filed the Application numbered 11568 seeking the payment by Mutlu of arrears of the licence fee in the amount of $10,093.17, which, together with interest, brought the claim up to $12,025.34.
It appears that Ms Schiavo forwarded a sealed copy of the Application for Original Decision to Sayan & Associates Solicitors who had, by Naci Rizaoglu, appeared for Mutlu at directions on 7 April 2011. That firm responded on 25 May 2011 to indicate that it did not act for Mutlu.
Ms Schiavo then approached the Tribunal for an address for Mutlu, and the Tribunal disclosed the address in Lidcombe which had been given by Mr Carmody in his Notice of Ceasing to Act.
Two things happened thereafter, Ms Schiavo forwarded a copy of the Application to that address, and received no response, and the Tribunal forwarded a letter to that address in the following terms:-
"Kindly confirm in writing by 13 June 2011 that you are ready to proceed to hearing listed on Wednesday 15 June 2011 at 10am at Level 15, 111 Elizabeth Street, Sydney NSW.
If you have any further enquiries please contact us on 9223 4677."
Nothing was heard at the Registry in response to that letter, and Mutlu did not appear at the hearing on 15 June 2011. The only parties in Court were Cetinkaya and Ms Schiavo.
Ms Schiavo applied to have Mutlu's Application (105001) struck out and sought to pursue her own Application (115068).
That course presented her with several difficulties because the "evidence" which she proposed consisted of a schedule of payments made by Mutlu, and some evidence of the payment of those funds into the Cetinkaya bank account. She sought to simply tender these documents as evidence without the benefit of an Affidavit. She did not suggest that Mutlu was aware of any of this "evidence".
I was content to allow that irregularity to be resolved by sworn oral evidence given by Cetinkaya, and I also accepted Ms Schiavo's sworn evidence in relation to her attempts to locate and serve Mutlu.
Her evidence was that she had spoken to a Mr Hakki Sayan at Sayan and Associates, who had indicated that the person in his office who acted for Mutlu was called "Naci", who no longer worked at the firm, and who had "taken Mutlu with him". I further accept that she was able to contact Naci by his mobile telephone, that he indicated that Mutlu was a personal friend, that he was not acting for him anymore, and that he did not have an address or mobile telephone for him.
All things considered, especially in view of the letter written by the Tribunal on 6 June 2010 I am satisfied on the balance of probabilities that Mutlu was aware of the hearing date, and elected not to attend. On that basis it is appropriate that I dismiss application number 105001 for want of prosecution.
On the same basis, in view of the fact that Ms Schiavo established by her oral evidence that she had forwarded the Application (115068) now before me to the same address, I am satisfied that it is appropriate to proceed with that matter ex parte .
Of course the evidence as presented to me only indicated that Mutlu would be aware of the claim of rental of $550.00 per week, and the claim that there were arrears amounting to $10,093.17 and the claim for interest on top of that. It made no reference to the payment for goodwill.
The full terms of the Application were:-
"Ground 1
Particulars 1.1
On or about 15 July 2009 Hasan Mutlu the Applicant entered into a licence agreement with the respondent Sam Cetinkaya.
Ground 2
Particulars 1.2
As per the licence agreement, the applicant was to have paid a licence fee amount per week of $550.00.
Ground 3
Particulars 1.3
On or about October 2010 the application abandoned the premises.
Ground 4
Particulars 1.4
At the time of abandoning the premises the applicant was in arrears of the licence fee amount of $10,093.17.
Ground 5
Particular 1.5
The respondent claims an amount of $12,025.34 including all interest on rental arrears at 10% per annum on total figure as per page 3 of Licence Agreement."
The oral evidence given by Cetinkaya, as supported by the bank statement, and the schedule of payments made available as evidence, satisfied me that Mutlu had paid $31,534.45.
That evidence also satisfied me that Mutlu abandoned the premises on 3 October 2010. This was after a telephone call by Mutlu to Cetinkaya to the effect that he was moving out.
The evidence also satisfied me that a new tenant, a Mehmet Talu had taken occupation on 24 November 2010, thereby "closing" the period of damages which flowed from Mutlu's untimely termination of occupation pursuant to his (statutory) 5 year lease.
Although, in the schedule of payments which was in evidence, there was a reference to the $20,000.00 which should have been paid for goodwill, that did not in any way feature in the Application now under consideration. I make no comment as to whether I have jurisdiction to consider the obligation to pay that particular amount, other than to observe that it was not mentioned in the Application, and so it could not, on any basis, be said that Mutlu was aware that this claim would be before me. Plainly the application is for "arrears of the licence fee amount of $10,093.17" together with a claim for interest at 10% set forth in the Licence Agreement.
As an aside, in the absence of any evidence about the intent of the parties, I have nothing to show whether the agreement sought to pass title to the equipment to Mutlu, or whether the equipment was part of the leased property. If the former, then I take some comfort in reaching my conclusion that I cannot make any order in relation to the claim for payment for goodwill "on a walk in - walk out basis" because Cetinkaya's evidence was that Mutlu left the premises in much the same condition, with much the same equipment, when he left, by comparison with what was in the shop when he entered it. If it was the latter, then that raises the possibility of it being the kind of payment which is proscribed by s14 as key money.
The Licence Agreement, in clauses 4, 6 and 7 indicates that there is to be a 10% late payment penalty. However clause 4 refers that penalty to a delay in payment of the "full purchase price of the business goodwill namely $20,000.00" which takes that to 20 May 2010; clause 6 refers to interest payable on that same sum after 20 May 2010 and clause 7 takes the matter somewhat further:- "the licensees also agree that should there be any delay in payment of the Licence fee or the rent under the Lease, then they will pay interest at the rate of 10% per annum upon any money owing to the licensor or lessor".
This latter clause, it seems to me does raise an entitlement to interest because it refers to a delay in payment of the "Licence fee", and as I have indicated earlier in these reasons, that is, in fact, the rent due pursuant to the lease imposed pursuant to s16.
I was given no schedule of calculation and in any event, would not be prepared to award interest at any rate higher than the District Court rate (see s72A(1) of the Retail Leases Act ), which is presently 8.75%.
On any view of the matter, by 24 November 2010 (when the loss period closed), an amount of $9,298.88 was outstanding as rental arrears, and consequently the appropriate order for the payment of interest appears to me to be for a period of 7 months which, in round figures, I calculate out to be approximately $475.00, and I am prepared to make an order in that regard.
When pressed, Ms Schiavo indicated that Cetinkaya's true purpose was to clarify the situation in relation to the right of occupancy, the last order of this Tribunal having been to the effect that Mutlu was entitled to occupy until further order of this Tribunal, on payment of the weekly sum of $550.00 as an occupation fee. I have absolutely no doubt that it is appropriate to hold that Mutlu has abandoned the premises and so will make an order pursuant to s72(1)(f)(iii) to that effect.
Ms Schiavo, rightly in my view, did not seek costs in respect of either matter.
Order that:-
Application 105001:-
Dismissed for want of prosecution.
(b) Interim Order for possession vacated.
(c) Declare that retail lease arising out of Licence Agreement dated July 2009 for the occupation of shop premises in Boorowa Street, Young ended on 3 October 2010 when the Applicant Mutlu ceased occupation.
(d) No order for costs.
In Application 115068:-
(a) Pursuant to s72(1)(a) Respondent Hasan Mutlu is to pay Applicant Sam Cetinkaya the sum of $9,298.88 by way of debt and damages.
Pursuant to s72A(1) interest in the sum of $475.00.
No order for costs.
I hereby certify that this is a true and accurate record of the reasons for decision of the Administrative Decisions Tribunal.
Registrar
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