Online It Services v Goldberg Enterprises Pty Ltd
[2010] NSWADT 213
•26 August 2010
Set aside by Appeal:
CITATION: Online IT Services v Goldberg Enterprises Pty Ltd [2010] NSWADT 213 DIVISION: Retail Leases Division PARTIES: Applicant:
Respondent:
Online IT Services Pty Ltd
Goldberg Enterprises Pty LtdFILE NUMBER: 085135 HEARING DATES: 26 May 2009
17 July 2009SUBMISSIONS CLOSED: 27 July 2009
DATE OF DECISION:
26 August 2010BEFORE: Olsson E, SC - Deputy President; Griffiths G - Non-Judicial Member ; Ward R - Non-Judicial Member LEGISLATION CITED: Retail Leases Act 1994 REPRESENTATION: Applicant Representative:
Respondent Representative:
Mr Ephron director of Online IT Pty Ltd
Mr W Washington of counselORDERS: i) The Respondent is to pay to the Applicant the sum of $15,227.24 plus interest at the prescribed rate from 1 October 2008.
ii) In addition to order (i) the Respondent is to release the bond of $1,906.66 to the Applicant.
iii) There will be no order for costs in these proceedings unless a party files and serves an application for costs, with supporting submissions, within 14 days. In such event, the opposing party or parties must file and serve submissions in response within a further 14 days. The question of costs will then be determined ‘on the papers’, pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.
REASONS FOR DECISION
Background
1 Online IT Services Pty Ltd commenced proceedings by an Application for an urgent Interim Order on 8 July 2008. The urgent relief related to the continued supply of electricity to the subject premises and for access for the Applicant to remove its goods from the premises. The urgent Application was accompanied by Particulars of Claim of the same date. The interim orders sought were dealt with by an earlier (and differently constituted) Tribunal.
2 The Applicant filed a further document entitled “Particulars of Claim” on 1 October 2008. It was in substantially the same terms as the earlier Particulars that had been filed on 8 July and it was on that later Application that the Applicant moved.
3 The Applicant (“Online”) sought a declaration that the Respondent wrongfully re-entered premises known as Shop 2, 481 Old South Head Road, Rose Bay on or about 1 July 2008 and sought orders for an amount of damages to be awarded for the loss suffered as a result of that [unlawful] re-entry.
4 Online also sought an order for a monetary amount being the equivalent of four (4) days rent paid by it in relation to a period in July 2008 in which it had been denied possession and an order for the return of the security bond. These two amounts were quantified as $271.24 and $1906.66 respectively.
5 Online also sought a money order for the sum of $1,600.00 being the cost of placement and removal of an air conditioning unit in the premises.
6 The Respondent filed a Response on 7 November 2008. It admitted that it re-entered the premises on or about 1 July 2008 but contended that it was lawful to do so. It said that the fixed term lease had expired but that Online had continued in occupation on a month-to-month basis, terminable at will and on one month’s notice by either party. It said that a Termination Notice had been served on Online on 28 May 2008 and that it was required to vacate the premises by 28 June 2008.
7 It follows that the Respondent contended that the re-entry was lawful and that no loss was occasioned to the Applicant for which the Respondent was liable.
8 In the alternative, the Respondent said that the Applicant was the architect of its own loss or had failed to mitigate its loss.
9 Specifically, the Respondent denied that the Applicant was excluded from the premises in the period of the four days in July for which refund of rent was sought and that therefore the rent was properly charged and paid; that the security bond ought not be released because of damage occasioned to the premises for which the Applicant was liable; the Applicant was not entitled to the costs associated with an air conditioning unit.
10 The lease was for a term of less than five years and both parties specifically acknowledged in Clause 18 of the lease that they have obtained a lawyer’s/conveyancer’s certificate as provided for in s.16(3) of the Retail Leases Act 1994 and waived their rights to a minimum five year term.
Parties’ evidence
11 It was common ground that at all relevant times, the Respondent was the owner of the subject premises, being a shop 2 and garage at 481 Old South Head Road, Rose Bay.
12 The Applicant was the proprietor of a business which provided sales and service for computers and related technology.
13 On or about 27 September 2002 the parties had executed a retail lease in respect of the premises. The terms of the lease were not in contention; the lease itself was tendered and became Exhibit A.
14 Relevantly, the lease provided that the rent would be $1906.66 per month, that the term of the lease would be 1 (one) year and that there was a holding over provision pursuant to which the lessee could continue in possession from month to month at the same rent or rent which the parties agreed. There were some special conditions to the lease which included a right for the tenant to exercise an option of a further 2 year term.
15 Mr Ephron, the director of the Applicant, gave evidence on its behalf. He said, in an affidavit sworn on 14 March 2008 (Exhibit B), that at the time of negotiating the terms of the lease with Mr Robert Carrabs, the representative of the managing agent for the premises, he had sought (in writing) an initial lease period of one year with a two year option thereafter and (inter alia) permission to install air conditioning. These requests were included in an email (the title of which was “Offer”) from the Applicant to Mr Carrabs dated 24 September 2002. It formed annexure A to his affidavit.
16 On 25 September 2002, he received a reply (annexure B to the affidavit) that was a fax from the Ray White Real Estate Bondi Junction (per Mr Carrabs). Although it did not specifically refer to air conditioning, it said that permission was given for the lessee to do works “Full office fit out as per your letter of offer dated 24th September 2002. No permission [is granted] to install a security roll up door at front.”
17 On 27 September 2002 a lease was signed for the premises for the fixed period to expire on 30 October 2003. After 30 October 2003, the Applicant was entitled to continue in possession on a month-to-month basis and Mr Ephron said that the month-by-month tenancy continued from November 2003 up until the time he was locked out of the premises in July 2008.
18 The tenancy had continued without apparent incident until April 2008 when the Respondent sought removal of the air conditioning unit. The letter, which requested the removal of the unit, was dated 29 April 2008 and formed Annexure D to Mr Ephron’s affidavit. In essence, it explained that the owner was desirous of registering the building as a strata title building and the survey had revealed that the air conditioning unit, which projected from the external wall of the premises, in fact encroached on the boundary. The letter gave him from 29 April to 7 May (ie a week) to have it removed.
19 Mr Ephron said in reply that the air conditioner had been in place since 2002 when he took over the premises, that he had replaced it (in the same position), that he had never received a complaint about its position from the Respondent or his neighbour and since its removal was for the benefit of the Respondent, it ought to pay for the relocation costs.
20 Negotiations reached stalemate within weeks and on 20 May, Mr Carrabs wrote to Mr Ephron stating that the air conditioning had to be removed at his [Mr Ephron’s] expense, that it could be re-located on the rear wall and that Mr Ephron was obliged to make good the area from which it had been removed. Once again, he was given 7 days in which to move the air conditioning unit and make good the surrounding area, failing which the Respondent threatened that it would terminate the lease.
21 Mr Ephron replied by email dated 21 May to the effect that the position of the air conditioning unit had been the same for the “last ten years at least” and that when he took possession of the premises, the air conditioner was in poor condition and he merely replaced it. He did not remove the unit within 7 days of 20 May and by letter of 28 May, the Respondent by its agent, purported to terminate the lease and required vacant possession by 28 June 2008.
22 The evidence of whether or not an air conditioning unit was in situ when the premises were leased from Mr Goldberg and Mr Carrabs was unsatisfactory, neither being able to recall with any precision the condition of the premises.
23 Mr Ephron said that he telephoned Mr Carrabs on several occasions during 20 to 27 May and discussed with him the possibility that the cost of moving the air conditioner might be shared but this was not acceptable to the landlord. He said that he obtained a quote (from Stallion Air Conditioning) for moving the air conditioner and the quote included a detail of the exact relocation of the piping and equipment. He said that this quote was forwarded to the Respondent on 21 May 2008 by email but did not receive a reply. Mr Ephron inferred from the absence of response that the detail of the new position was acceptable. Mr Carrabs was not able to recall with certainty whether he saw that quotation or not.
24 The next event occurred on 28 May 2008 when Mr Ephron received a Termination Notice which required vacant possession by 28 June 2008. It is important to note at this point that since the tenancy had operated on a month by month basis since the end of 2003, it was open to either party to issue such a notice. This letter, which was annexure G to the Affidavit of Mr Ephron (Exhibit B) did not refer to the air conditioner and relied on clause 31 (a) of the lease.
25 Clause 31(a) provided:
“Upon the expiry of the lease term or where the lease has become a periodic lease from month to month, either party may terminate it by giving one (1) month’s written notice to the other party.”
26 However, there were further discussions about the removal of the air conditioning unit and Mr Ephron agreed to move it at his own cost. The Respondent confirmed by email of 29 May 2008 that if the air conditioner were removed it would withdraw the Termination Notice. The letter was in these terms:
“We refer to the Termination Notice dated 28 May 2008.
In order for the landlord to withdraw the termination notice, the air-conditioner, which is an encroachment on the boundary line, is to be removed and the wall repaired at your own cost. This must include all of the piping and electrical cords connected to the air conditioner.
This needs to be completed by 5.00pm on Tuesday 3 June 2008 without exception. Failure to do so will result in the landlord proceeding with the determination notice.”
27 The Applicant arranged for the air conditioning unit to be moved by John Axe Services Pty Ltd on 3 June. The unit was moved in accordance with the plan submitted with the earlier quote for removal. A representative of the managing agent, Ms Whelan, inspected the works.
28 Matters might have ended there except that on 5 June, the Respondent by its agent wrote to the Applicant and said that in order for the termination notice to be rescinded the Applicant would have to address the following matters:
i) Remove the piping and cabling that remained along the side of the building as it was still an encroachment and that they would have to be run inside the shop through to the back common wall area,
ii) The wall where the unit had been removed had to be repaired by a licensed repairer.
iii) In addition, the letter required that the satellite dish, which had been installedon top of the front awning, had tobe removed and any damage repaired. It was said that the satellite dish had beeninstalled without written permission and if the lessee wished to leave it in situ, he was obliged to pay $20 per week for it.
iv) The letter continued that the corridor at the rear door of the shop did not form part of the lease agreement and therefore under no circumstances were any items including computers or parts to be stored in the corridor.
v) In addition, no items were to be stored in the electricity meter room.
29 By letter dated 11 June, the Respondent via its agent wrote to Mr Ephron and reiterated that should the items listed in the letter of 5 June not be adhered to in full, the termination notice would remain in effect and he would have to vacate the premises by 28 June 2008.
30 Mr Ephron’s evidence was that he had continued to attempt to negotiate the removal of the air conditioning unit and that he had acted on the letter of 29 May and had arranged for the unit to be moved by John Axe Services Pty Ltd, after which Ms Whelan from Ray White inspected the premises and he was given to believe that the termination notice of the 29 May was withdrawn. This occurred before the 5 June letter was received.
31 Thus the owners demand on 5 June that the cabling and therefore the unit be moved again was, according to the Applicant, both unreasonable and unnecessary.
32 With respect to the other terms, Mr Ephron said that the satellite dish had been installed by Foxtel with the consent of the Respondent and in any event, the dish was large and in an obvious position. The Respondent must have known it was there and either participated in the process of its installation or at least acquiesced in its installation.
33 After receipt of the letter of 5 June Mr Ephron said he spoke at length with Mr Carrabs as they discussed the work. Mr Carrabs said the owner was a “crazy man” and that if he (Mr Ephron) did not move the unit again from the rear wall, he would not renew the lease.
34 By letter of 13 June the landlord reiterated that full compliance with the terms of the 5 June letter were required or the termination of the lease would proceed.
35 Reluctantly, Mr Ephron moved the air conditioning unit and cabling again by 19 June. The satellite dish remained for the time being whilst negotiations were undertaken and with respect to the material in the corridor, some boxes and other material were removed. In short, by 19 June Mr Ephron believed he had complied with the terms of the 5 June letter.
36 On 25 June 2008 the Respondent again wrote and said the satellite dish had to be removed. Mr Ephron’s evidence was that the dish was on the awning, which was not part of the demised premises and that Mr Carrabs had consented to its installation in 2006 and that no objection had been taken to it between that time and the present. The letter of 5 June, which had been the first notification of an issue concerning the dish, had offered to allow it to remain upon payment of $20 per week, which Mr Ephron had accepted.
37 On Friday 27 June at 5.23pm the Respondent sent a letter by fax which was not received until the afternoon of Saturday 28 June saying that the repair to the wall where the air conditioner had been installed was inadequate and required repair by 5.00pm that day failing which the termination would proceed. Significantly it also offered that if the work were done by the specified time, the landlord would consider a new lease agreement.
38 The original lease provided that the lessee was not to make any alterations or additions to the premises (inter alia) including the erection of any sign or antenna without the written consent of the landlord (Clause 12 of the lease).
39 On 30 June Mr Ephron sent a letter confirming the removal (for the second time) of the air conditioner and confirming that the other issues had been dealt with, and requesting a new lease. No reply was received.
40 On 1 July 2008, the landlord re-entered the premises and changed the locks. Rent had been paid up to an including 4 July.
41 The lease specifically provided (Clause 31(h)) that upon termination or expiry of the lease the tenant may remove their own fixtures and shall remove their signs provided that any damage or defacement occasioned to any party of the premises in the course of such removal shall be remedied by the tenant immediately or if they fail to do so, by the landlord at the tenant’s expense.
42 The effect of Clause 31(h) is that the Applicant was obliged to make good any damage to the premises upon its vacation.
43 The Applicant said that he had suffered financial loss as a result of the lock out and the confusion to his customers regarding his business. He relied on some business records which showed a reduction in trade during the period that he vacated the subject premises and secured new premises.
44 Mr Ephron was cross-examined at length. In general many of his answers were argumentative and evasive in places. He was not an impressive witness. However, he said that this was the first lease he had entered into in Australia, and he had assumed (wrongly) that although he was in a holding over arrangement, he did not realize that the lease could be determinable at the will of either party on one month’s notice. The Tribunal is prepared to accept that although ignorance of one’s own contract is no excuse in law, it does explain much of Mr Ephron’s behaviour and seen in that light, renders his conduct more reasonable than might otherwise have seemed to be the case.
45 Mr Goldberg gave evidence, as did Mr Carrabs. Mr Goldberg said that the termination notice of 28 May 2008 was validly given in accordance with the holding over provision of the lease.
46 He said that there were negotiations regarding repair and relocation of certain fixtures and alterations to the premises which were to be completed by 28 June, that they were not, and the landlord took possession on 1 July 2008.
47 He said that on 1 July the Applicant was given the opportunity to obtain all of his possessions and the Applicant did so and although he was granted access for a further 7 days, he did not avail himself of it. He was given further offers of one month’ s access to relocate the business but this offer was rejected. For this reason, Mr Goldberg said, the Applicant was the cause of his own loss, if in fact he suffered a loss.
48 In cross-examination by Mr Ephron, Mr Goldberg was asked in detail about the quote from Stallion Air Conditioning which had been forwarded to him by the Applicant. The significance of that quotation was this: the drawing that accompanied it showed the air conditioning unit being moved to the rear of the premises and on the side wall. Mr Ephron arranged for the unit to be moved in accordance with that drawing but in later correspondence, the Respondent required it to be moved again to the rear of the premises but at the back of the shop rather than the side wall.
49 Having had the opportunity of reviewing the extensive correspondence regarding the placement of the air conditioning unit and hearing both Mr Goldberg and Mr Ephron in the witness box, the Tribunal prefers the evidence of the Mr Ephron. Mr Goldberg was vague and in places evasive about the instructions that he gave regarding the placement of the air conditioning unit; he said at one point he gave instructions to his agent Ms Whelan, but she was not called to give evidence.
50 Moreover, Mr Goldberg or his agent had not apparently noticed the computers and boxes which were allegedly blocking the fire access and car spaces and corridors in the whole of the period of 6 years in which the Applicant had occupied the premises yet they became critical in the correspondence which surrounded the end of the lease.
51 Mr Carrabs gave evidence. He said that he did not recall any conversations about the Stallion Air Conditioning quote and he did not recall ever telling Mr Ephron that a new lease might be negotiated. It is unnecessary to decide whether or not he did in fact utter the words, because the correspondence makes it quite clear, especially the letters of 5 June and 27 June that a new lease might have been considered. It is that part of the dealings between the parties which invokes notions of unconscionability.
52 He said, somewhat surprisingly, that he did not have a policy for carrying out inspections of premises although this seems hardly credible, particularly in the case of a tenant who had occupied premises for 6 years.
53 Whilst neither of the primary protagonists painted themselves in their best light either in their negotiations with each other or in the witness box, the Tribunal is charged with making a decision based on the lease, and based on whether or not unconscionable conduct attended the parties’ relationship.
Issues
54 There is no doubt that the lease in the present case was determinable at the will of either party on one month’s notice. Mr Ephron may not have fully appreciated the import of that term of the lease but that does not change the fact of it.
55 The Respondent issued a notice of intention to terminate the lease on 28 May 2008, giving the Applicant one month to move out. Had there been no further correspondence, the matter would probably have ended there. The tenant of course had the obligation to make the premises good and if that meant removing an air conditioning unit that it had installed and which encroached on the neighbouring property, so be it.
56 What is different about this case is that during the period of notification of the end of the tenancy, the Respondent landlord effectively held out inducements to the tenant to do more and more work with the vague representation that a new lease might be considered.
57 It might be thought that the Respondent was exhorting the Applicant to do work which he was legally obliged to do together with some work which he may or may not have been obliged to do, with the inducement that a new lease might be offered. It is certainly true that the tenant was obliged to do certain things such as making good damage caused by removal of tenant’s fixtures but the landlord, on the correspondence, seems to have kept raising the bar and doing so with the implied inducement of the possibility of a new lease. That brings in an element of unconscionability.
58 Section 62B of the Retail Leases Act provides as follows:
(2) A lessee must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable.(1) A lessor must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable.
- (3) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessor has contravened subsection (1) in connection with a retail shop lease, the Tribunal may have regard to:
- (a) the relative strengths of the bargaining positions of the lessor and the lessee, and
(b) whether, as a result of conduct engaged in by the lessor, the lessee was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the lessor, and
(c) whether the lessee was able to understand any documents relating to the lease, and
(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessee or a person acting on behalf of the lessee by the lessor or a person acting on behalf of the lessor in relation to the lease, and
(e) the amount for which, and the circumstances under which, the lessee could have acquired an identical or equivalent lease from a person other than the lessor, and
(f) the extent to which the lessor’s conduct towards the lessee was consistent with the lessor’s conduct in similar transactions between the lessor and other like lessees, and
(g) the requirements of any applicable industry code, and
(h) the requirements of any other industry code, if the lessee acted on the reasonable belief that the lessor would comply with that code, and
(i) the extent to which the lessor unreasonably failed to disclose to the lessee:
- (i) any intended conduct of the lessor that might affect the interests of the lessee, and
(ii) any risks to the lessee arising from the lessor’s intended conduct (being risks that the lessor should have foreseen would not be apparent to the lessee), and
(k) the extent to which the lessor and the lessee acted in good faith.
- (4) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessee has contravened subsection (2) in connection with a retail shop lease, the Tribunal may have regard to:
- (a) the relative strengths of the bargaining positions of the lessee and the lessor, and
(b) whether, as a result of conduct engaged in by the lessee, the lessor was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the lessee, and
(c) whether the lessor was able to understand any documents relating to the lease, and
(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessor or a person acting on behalf of the lessor by the lessee or a person acting on behalf of the lessee in relation to the lease, and
(e) the amount for which, and the circumstances under which, the lessor could have granted an identical or equivalent lease to a person other than the lessee, and
(f) the extent to which the lessee’s conduct towards the lessor was consistent with the lessee’s conduct in similar transactions between the lessee and other like lessors, and
(g) the requirements of any applicable industry code, and
(h) the requirements of any other industry code, if the lessor acted on the reasonable belief that the lessee would comply with that code, and
(i) the extent to which the lessee unreasonably failed to disclose to the lessor:
- (i) any intended conduct of the lessee that might affect the interests of the lessor, and
(ii) any risks to the lessor arising from the lessee’s intended conduct (being risks that the lessee should have foreseen would not be apparent to the lessor), and
(k) the extent to which the lessee and the lessor acted in good faith.
(6) A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with a retail shop lease by reason only that the first-mentioned person fails to renew the lease or issue a new lease.
(7) For the purpose of determining whether a lessor has contravened subsection (1) or whether a lessee has contravened subsection (2):
- (a) the Tribunal must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention, and
(b) the Tribunal may have regard to circumstances existing before the commencement of this section but not to conduct engaged in before that commencement.
(9) If the matter of such loss or damage arises in connection with a matter the subject of proceedings in the Tribunal, the Tribunal may proceed to decide it, and in so doing may award such sum as it thinks fit.
(10) In this section:
"lessee" or "former lessee" includes a person who is a guarantor or covenantor under a lease
Decision
59 The issue that confronts the Tribunal is this: the Respondent was entitled to determine the lease on one month’s notice. The Applicant had the same right.
60 The Respondent sought to do so by letter dated 28 May 2008 and had it left the time to run under that notice, the Applicant would have been required to vacate the premises and the tenancy would have been at an end. The Applicant would have been required to make good the premises before it left or the Respondent would have been entitled to carry out that work and charge it to the Applicant’s account or bond.
61 However the Respondent entered into what can only be described as a series of negotiations which appeared to have the intent of inducing the Applicant to carry out works which it may or may not have otherwise been lawfully required to do on the understanding, either implicit or explicit, that the lease would be renewed rather than terminated.
62 The Tribunal accepts the evidence of the correspondence as compelling:
- i) By letter dated 29 April 2008 the landlord noted that the air conditioning unit encroached on the boundary and require that it was to be moved by 7 May
ii) Negotiations had ensued between Mr Ephron and Mr Carrabs on the basis that permission had been given at the time of the original lease for an air conditioning unit to be installed and there was some evidence that there was an existing unit in the same or similar location
iii) The landlord required the removal of the unit because it intended to turn the building into strata title units
iv) If the air conditioner that was installed by the Applicant merely replaced an existing unit, arguably at least the cost of removal of it should have been borne by the Respondent. Whilst this was being negotiated, the landlord forwarded another letter on 20 May which required the unit to be removed within 7 days. Termination of the lease was threatened if this did not occur.
v) By letter dated 28 May, the landlord provided an official notice to vacate by 28 June. This was immediately followed by a letter which said that in order for the landlord to withdraw the termination notice, the air conditioner and all piping and electrical cords had to be removed in addition and by 3 June. The clear and unequivocal inference in this letter is that if the air conditioner and associated works were removed by 3 June, the lease termination notice would be withdrawn and the lease would continue on the month to month basis. It is not difficult to see that the effect and timing of this correspondence put considerable financial and commercial pressure on the Applicant.
vi) The Applicant said that he provided Mr Carrabs with a copy of the Stallion Air Conditioning quote which attached a plan showing removal of the unit to the rear side wall of the premises. Both Mr Carrabs and Mr Goldberg were equivocal as to whether they saw that plan but Mr Carrabs at least must have seen the work when it was carried out on 3 June.
vii) Ms Whelan, agent for the Respondent, inspected the work. She did not give evidence. The Applicant assumed that the work was sufficient to meet the Respondent’s needs and that he had complied with the terms of the Respondent’s demands.
viii) On 5 June, the Applicant was advised that the work was not satisfactory and that the air conditioning unit had to be moved again, and that other work was also required. The clear import of this letter was that if this work was carried out, a new lease would be considered.
ix) The Tribunal accepts that although the Applicant was unhappy about the need to carry out the work as requested, he arranged for it to be done. He gave evidence and the Tribunal saw photographs of, the works as executed. The repair work to the wall appears to be adequate given two significant features: the wall faces a narrow corridor between two buildings which is not accessible by the public and is not clearly visible except to a person standing in that corridor; secondly, the general condition of the surface of the wall is poor and the repair work does not strike the eye as being peculiarly out of character. The building is not a new building and does not have a newly rendered external wall.
x) The satellite dish is a matter of some concern to the Tribunal since the landlord offered to permit the dish to remain at the cost of $20 per week; the Applicant accepted that offer but the Respondent re-agitated the issue of the placement of the dish in its correspondence of and was one of the grounds upon which it relied to terminate the lease.
63 In short, the view of the Tribunal is that although the Respondent was entitled to terminate the lease on one month’s notice, it was not entitled to require the Applicant to do work which probably went further than repair work which it was obliged to do, on the implied or express representation that a new lease would be provided.
64 The Respondent was in a much stronger bargaining position than the Applicant: indeed, the Applicant had no bargaining position since the tenancy was determinable at will.
65 The Respondent acted in a manner which put the Applicant under some duress and in a manner which had many hallmarks of bad faith: in essence the Respondent either expressly or impliedly represented to the Applicant that if he (the Applicant) did certain works, he would have a new lease, when on one view at least, the Respondent had no such intention.
66 The Respondent argued that the letter of 5 June constituted a fresh offer to the tenant, which the tenant did not accept. If that is so, it tends to negate the effect of the letter of 28 May which notified the tenant of the termination of the lease. The negotiations which ensued after 28 May were plainly made on the basis that the termination of the lease was open to negotiation. To my mind, it is unconscionable that the Respondent, whilst those negotiations and actions of the tenant were underway, enter the premises purportedly in reliance on the letter of 28 May.
67 The Tribunal finds that the entry into the premises on 1 July 2008 to be wrongful and the Respondent should pay to the Applicant the costs associated with the wrongful lock out.
68 The Applicant had paid rent up until 4 July 2008 and is entitled to an order for that amount plus interest. The rent claimed was $271.24.
69 Had the lease been terminated by one month’s notice by the Respondent, the Applicant would have incurred some cost in making good the premises. Although the matter is not free of doubt, the Tribunal is prepared to allow that the tenant was responsible for removing the air conditioning unit and repairing the wall; however it should not have had to move the unit twice and thus the Tribunal is prepared to allow to the Applicant the sum of $1,600.00 being the amount of the invoice of John Axe Services Pty Ltd.
70 After re-entry by the Respondent, the Tribunal accepts that the Applicant had some on-going expenses such as a subcontractor who was entitled to be paid for the week starting 1 July. Mr Ephron’s evidence was that that sum was $650.00 and the Tribunal allows it.
71 The cost of re-location on an emergency basis was, the Tribunal accepts, likely to be more expensive than if the re-location had been planned. The Applicant sought the cost of a taxi truck and utility hire, being $156.00 and $550.00 respectively and the Tribunal grants those amounts.
72 The Applicant had lodged a bond pursuant to the lease. Since the Applicant did most if not all of the work of making good the premises and was not otherwise in breach or in arrears of the lease, the bond should be released to the Applicant. The sum of the bond is $1,906.66 (one month’s rent).
73 The Applicant also claimed for loss of business revenue and consequent loss of profit. Mr Ephron produced sales figures which revealed that his monthly sales had dipped significantly for the month of July 2008. Had the lease been terminated in the ordinary course, some disruption to sales would have been expected and therefore a drop in sales would also have been expected. However the Tribunal accepts that the lock out from the premises and the notice which accompanied the same is likely to have had some deleterious effect on the business. The average sales for the three months prior to re-entry were in the order of $51,000.00. The actual sales for July were $15,816.00 and for August, $21,235.00.
74 The evidence of loss pertaining to the lock out as distinct from the disruption to business which would be expected by a re-location was unsatisfactory but the Tribunal is required to do the best it can with the evidence available. Taking into account the figures presented by the Applicant, the Tribunal allows the sum of $12,000.00 representing one quarter of one month’s sales as compensation for the period of lock out. That figure is, of course, a gross sales figure.
75 Finally, the Applicant gave evidence of the legal costs he incurred in obtaining re-entry into the premises. Those costs are not a matter for damages but for costs.
76 Accordingly, the Tribunal makes a declaration that the re-entry into premises on 1 July 2008 by the Respondent was unlawful and makes the following orders:
i) The Respondent is to pay to the Applicant the sum of $15,227.24 plus interest at the prescribed rate from 1 October 2008 (the date the particulars of the application were filed in the Tribunal).
iii) There will be no order for costs in these proceedings unless a party files and serves an application for costs, with supporting submissions, within 14 days. In such event, the opposing party or parties must file and serve submissions in response within a further 14 days. The question of costs will then be determined ‘on the papers’, pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.ii) In addition to order (i) the Respondent is to release the bond of $1,906.66 to the Applicant.
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