Perri v Mirrorcity Pty Ltd; Mirrorcity Pty Ltd v Perri

[2022] NSWCATCD 102

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Perri v Mirrorcity Pty Ltd; Mirrorcity Pty Ltd v Perri [2022] NSWCATCD 102

Hearing dates:

24 June 2022

Date of orders:

05 July 2022

Decision date:

05 July 2022

Jurisdiction:

Consumer and Commercial Division

Before:

G Blake AM SC, Senior Member

Decision:

(1)   Proceedings COM 22/05928 are dismissed.

(2)   Proceedings COM 22/10651 are dismissed.

Catchwords:

LEASES AND TENANCIES — Retail leases — Retail shop lease — where lessee claimed lessor breached covenant of repair by water ingress

LEASES AND TENANCIES — Retail leases — Retail shop lease — where lessee claimed lessor waived a rent instalment

LEASES AND TENANCIES — Retail leases — Retail shop lease — where lessor claimed lessee was liable to make good at the end of the lease

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)

Retail Leases Act 1994 (NSW)

Cases Cited:

Ajaimi v Giswick Pty Ltd [2022] VSC 131

Martins Camera Corner Pty Ltd v Hotel Mayfair Ltd [1976] 2 NSWLR 15

Texts Cited:

Nil

Category:

Principal judgment

Parties:

COM 22/05928:
Guiseppe Perri (Applicant)
Mirrorcity Pty Ltd (Respondent)

COM 22/10651:
Mirrorcity Pty Ltd (Applicant)
Guiseppe Perri (Respondent)

Representation:

B Stankovic (Agent) (Guiseppe Perri)
J Shaikh (Director) (Mirrorcity Pty Ltd)

File Number(s):

COM 22/05928; COM 22/10651

Publication restriction:

Nil

REASONS FOR DECISION

Overview

1. These two proceedings, which were heard together, involve disputes arising out of a retail shop lease of premises at Stanmore (the premises) entered into between the landlord, Guiseppe Perri (Mr Perri), and the tenant, Mirrorcity Pty Ltd (Mirrorcity), in which each party seeks relief against the other under the Retail Leases Act 1994 (NSW) (RL Act).

2. I have decided that both proceedings should be dismissed.

The factual background

3. The factual background of the two proceedings is not in dispute.

4. The premises are located on the ground floor of a building.

5. On or about 1 August 2018, Mr Perri as the lessor leased the premises to Mirrorcity as the lessee for the term of three years commencing on 1 August 2018 and ending on 31 July 2021 (the lease). From August 2018, Mirrorcity conducted a retail business of the display and sale of home décor and furniture at the premises.

6. At all relevant times the directors of Mirrorcity have been Mr Danish Shaikh (Mr D Shaikh) and Mr Jazib Shaikh (Mr J Shaikh).

7. At all relevant times Ms Georgia Hyde (Ms Hyde) of Novak Properties acted as Mr Perri’s agent in respect of the lease.

8. On 31 March 2021, the parties agreed to the termination of the lease and Mirrorcity vacated the premises.

9. Disputes have arisen between the parties as whether each of them breached the lease.

The history of the two proceedings

10. On 9 February 2022, Mr Perri commenced proceedings COM 22/05928 against Mirrorcity (the COM 22/05928 proceedings) by filing a retail leases application (the Perri application) and accompanying documents in which he:

1. sought a money order of $3,032.00 inclusive of GST;

2. relevantly set out the following reasons for seeking those orders:

“During the Lessee's tenancy, the Lessee had installed carpet, signage, mirror hanging cables and a mezzanine at the back of the shop.

…

The landlord REQUIRED MIRROR CITY TO:

- Pay for the carpet removal = $1,500.00 inc GST

- Remove the mezzanine at the back of the shop $1,232.00 inc GST

- Remove all Mirror City signage

- Remove all mirror hanging cables = $300 inc GST - quote from Hire a Hubby Manly”

11. On 9 March 2022, Mirrorcity commenced proceedings COM 22/10651 against Mr Perri (the COM 22/10651 proceedings) by filing a retail leases application (the Mirrorcity application) and accompanying documents in which it:

1. sought a refund of the rent for February 2021 of $3,804.99, an order that it not pay $3,032.00 to Mr Perri, and orders that Mr Perri pay it $21,802.00, $11,082.50 in respect of the security bond and $10,784.00 as compensation for loss or damage;

2. set out the following reasons for seeking those orders:

“reasons for asking for orders

15 Aug 2018 - At the time of signing the contract we confirmed if the premises are subject to flood. Agent confirmed it never had floods in the past. p.7& 8

28 Jan 2021 - We informed the agent that property is FLOODED and our carpet and products are damaged. No action was taken for urgent repair. Sent 4x followup emails numerous calls.

30 Jan 2021 - Shop was flooded for 2 days and finally they sent a carpet cleaner who dried the carpet as a temporary solution. Water was still leaking inside from multiple points. The fix was pending the owner's decision. We informed the agent that the shop was closed to the public. p.9

2 Feb 2021 - Owner responded that temporary roof covering (Tarp) is removed because of demolition next door and nothing can be done until they finish. I.e. months. Temporary tarp was put in as the result of previous flooding and the owner needed to replace it with permanent fix. However, the owner continuously ignored leaving the property and tenant vulnerable. p.10

2 Feb 2021 - Mirrorcity requested a lease break as per agreement because there was no solution available as per advice from owner. This was rejected by the agent. However, they confirmed Feb rent free but Mirrorcity paid by mistake p.10 & 11

13 Feb 2021 - Shocking day - The shop was flooded worse than before. This completely damaged our Carpet, Mezzanine floor, products causing significant sale loss. Agent could not fix the issue this time again.

17 Feb 2021 - Finally the agent allowed us to break the lease. However, it was already too late. Owner knew from day one that they should have fixed this issue before the commencement of the lease. Yet the owner negligently delayed and unfairly held us tied with the lease while our assets were soaking in the flood water. This left us with significant damage and loss in business.

Response to Lessor's Claims

Carpet Tiles: Damaged by Lessor's negligence. Photo:p16

Mezzanine Floor: Damaged by Lessor's negligence Photo:p17. Recycler agreed to take it away free of cost but couldn't do it due to electric hazard.p12 Acknowledged by agent. p13

Railings and Hanging cables: These were there before we moved in. Agents photo: p14 &15

Counter-Claims

Claims due to breach of clause 9.5 by Lessor.

Carpet Tiles $3675 (Remaining life 7.5/10 years) invoice:p.2 Photo:p16

Mezzanine floor $2970 (Brand New) invoice:p.1 Photo:p.17

Cost of Relocation

New Carpet Tiles $5505 (Not part of the claim) p. 5 & 6

Sign Boards $2255 p3

Movers$1848p4

Loss of Revenue & Product damages $21802

Refund of February Rent under clause 8.7(c) $3804.99 p18

100% refund of Bond”

12. On 18 March 2022, the Tribunal made procedural directions for the filing of evidence (the 18 March 2022 orders) including:

“9.   All evidence from a party's witness(es) in support of that party(ies) must be in the form of a statement, statutory declaration, affidavit or expert report as appropriate.”

13. On 5 April 2022, the Tribunal made further procedural directions for the filing of evidence.

The hearing

14. On 24 June 2022, the hearing took place by telephone. Ms B Stankovic, a real estate agent, appeared for Mr Perri. Mr J Shaikh appeared for Mirrorcity.

15. Mr Perri relied on the documents filed in the Registry on 29 April 2022 which were admitted into evidence and marked as exhibit A1 (the Perri documents).

16. Mirrorcity relied on the following documents which were admitted into evidence:

1. the documents accompanying the Mirrorcity application which were marked as exhibit R1 (the Mirrorcity documents);

2. the email of Ms Hyde sent on 14 April 2022 at 10.28 am to the Tribunal and Mirrorcity which was marked as exhibit R2.

17. I refused to admit into evidence for Mirrorcity the document entitled “Additional Document for COM 22/10651” which was marked as MFI1 as I was not satisfied that it had been served on Mr Perri.

18. I also refused to admit into evidence for Mr Perri the documents accompanying the Perri application which were marked as MFI2 as I was not satisfied that they had been served on Mirrorcity.

19. There was no oral evidence.

20. Mr Perri and Mirrorcity each made oral submissions.

21. At the conclusion of the hearing, I reserved my decision.

The issues

22. The following issues arise for determination:

1. whether the Tribunal has jurisdiction to hear and determine the two proceedings;

2. whether Mirrorcity breached the lease and if so what loss if any was suffered by Mr Perri;

3. whether Mr Perri breached the lease and if so what loss if any was suffered by Mirrorcity.

23. Before considering these issues it is convenient to set out the applicable statutory provisions.

The applicable statutory provisions

RL Act

24. Part 1 (ss 1-8) contains provisions dealing with preliminary matters. Section 3 contains definitions, and relevantly includes definitions of “retail shop”, which was inserted by the Retail Leases Amendment Act 2005 (NSW), and “retail shop lease”:

3 Definitions

(1) In this Act—

…

retail shop means premises that—

(a) are used, or proposed to be used, wholly or predominantly for the carrying on of one or more of the businesses prescribed for the purposes of this paragraph (whether or not in a retail shopping centre), or

…

retail shop lease or lease means any agreement under which a person grants 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, …

…

25. Part 4 (ss 33-38) contains provisions dealing with alterations and other interferences with a retail shop. Section 36 deals with damaged premises, and relevantly provides:

36 Damaged premises

(1) A retail shop lease is taken to provide for the following if the shop or the building of which the shop forms part is damaged—

(a) The lessee is not liable to pay rent, or any amount payable to the lessor in respect of outgoings or other charges, that is attributable to any period during which the shop cannot be used under the lease or is inaccessible due to that damage.

…

26. Part 8 is headed “Dispute Resolution”. Division 1 (which is comprised by s 63) is headed “Preliminary”. Section 63 contains the following definitions:

party or former party to a retail shop lease or former retail shop lease includes a person who is a guarantor or covenantor under a lease or former lease.

retail tenancy dispute means any dispute concerning the liabilities or obligations (including any obligation to pay money) of a party or former party to a retail shop lease or former lease …

27. Division 3 (ss 70-76A) is headed “Determination of claims by Civil and Administrative Tribunal”. Section 70 contains definitions including:

retail tenancy claim means any of the following:

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

(i) a claim for payment of money (whether or not stated to be by way of debt, damages, restitution or refund),

(ii) a claim for relief from payment of a specified sum of money,

…

28. Section 71 deals with the lodging of retail tenancy claims with the Tribunal and relevantly provides that a party to a retail shop lease may lodge a retail tenancy claim in respect of the lease with the Tribunal for determination of the claim not more than 3 years after the liability or obligation that is the subject of the claim arose.

29. Section 72 deals with the powers of the Tribunal relating to retail tenancy claims, and relevantly provides:

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, …

…

30. Schedule 1 is headed “Retail shop businesses”, and relevantly specifies:

Schedule 1 Retail shop businesses

…

Furniture shops

…

Household fixtures and fittings shops

…

NCAT Act

31. Part 3 (ss 28-34) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) contains provisions dealing with the jurisdiction of the Tribunal. Section 28 deals with the jurisdiction of the Tribunal generally, and relevantly provides:

28 Jurisdiction of Tribunal generally

(1) The Tribunal has such jurisdiction and functions as may be conferred or imposed on it by or under this Act or any other legislation.

(2) In particular, the jurisdiction of the Tribunal consists of the following kinds of jurisdiction—

(a) the general jurisdiction of the Tribunal,

…

32. Section 29 deals with the general jurisdiction of the Tribunal, and relevantly provides:

29 General jurisdiction

(1) The Tribunal has general jurisdiction over a matter if—

(a) legislation (other than this Act or the procedural rules) enables the Tribunal to make decisions or exercise other functions, whether on application or of its own motion, of a kind specified by the legislation in respect of that matter, and

(b) the matter does not otherwise fall within the administrative review jurisdiction, appeal jurisdiction or enforcement jurisdiction of the Tribunal.

…

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

…

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

33. Schedule 4 contains provisions dealing with the Consumer and Commercial Division of the Tribunal (the CC Division). Clause 3 deals with the functions allocated to the CC Division, and relevantly provides:

3 Functions allocated to Division

(1) The functions of the Tribunal in relation to the following legislation are allocated to the Division—

…

Retail Leases Act 1994

…

Whether the Tribunal has jurisdiction to determine the two proceedings

34. There was no dispute between the parties that they had been parties to a retail shop lease within the RL Act. Having regard to the definitions of retail shop and retail shop lease in s 3, former party in s 63, of the RL Act, and list of retail shop businesses in Sch 1 of the RL Act as including furniture shops and household fixtures and fittings shops, I am satisfied that the parties were former parties to a former retail shop lease within the RL Act.

35. I am satisfied that each the COM 22/05928 proceedings and the COM 22/10651 proceedings is a retail tenancy claim with s 70 of the RL Act. The relief claimed the COM 22/05928 proceedings is within para (a)(i) of the definition of retail tenancy claim. The relief claimed the COM 22/10651 proceedings is within paras (a)(i) and (ii) of the definition of retail tenancy claim. I am satisfied that each the COM 22/05928 proceedings and the COM 22/10651 proceedings were lodged within 3 years after the liability or obligation that is the subject of the retail tenancy claim arose as required by s 71 of the RL Act.

36. I am satisfied that the Tribunal has jurisdiction to determine the two proceedings pursuant to ss 28(1) and (2)(a) and 29(1)(a) of the NCAT Act as s 72(1) when read with paras (a)(i) and (ii) of the definition of retail tenancy claim in s 70 of the RL Act enables the Tribunal to make decisions in relation to each of the two proceedings. It follows that the functions of the Tribunal in relation to the RL Act have been allocated to the CC Division pursuant to Sch 4 cl 3(1) of the NCAT Act.

Whether Mirrorcity breached the lease and if so what loss if any was suffered by Mr Perri

Introduction

37. Before considering this issue it is convenient to summarise the evidence and submissions of the parties.

The evidence of the parties

The evidence of Mr Perri

38. The Perri documents include:

1. the lease which relevantly contains the following terms:

“…

6.   USE

6.1.   Tenant's Use of the Premises

…

(k)   The Tenant will not without the Landlord's prior consent put either on the outside of the Premises or on anywhere visible from the outside of the Premises any sign, advertisement or notice. Before the expiry or earlier termination of this Lease, the Tenant will remove any such sign, advertisement or notice and make good to the Landlord's satisfaction any damage.

…

7.   CONDITION AND REPAIRS

7.1.   Keeping and Delivering Up in Repair

(a)   The Tenant will at all times keep the Premises and any of the Landlord's Equipment in the Premises in good repair and condition having regard to the condition of the Premises and of the Landlord's Equipment at the earlier of the Commencing Date or the date that the Tenant first occupied the Premises.

…

12.   TENANT'S DEFAULT AND END OF LEASE

…

12.3.   Delivering Up In Good Repair

(a)   Unless the Landlord notifies the Tenant in writing before the expiry or earlier termination of this Lease that the Tenant is not required to comply with any of its obligations under this clause 12.3(a), at the expiry or earlier termination of this Lease the Tenant will give vacant possession of the Premises to the Landlord with the Premises in the state of repair required under this Lease including, but not limited to, the following:

(i)   the Premises being painted and treated as required under clause Error! Reference s ource not found.;

(ii)   the Premises being in the state of repair required under clause 7.1;

(iii)   the Tenant's Goods being removed from the Premises as required under clause 12.2;

(iv)   the carpet in the Premises being replaced with carpet of no lesser quality than the carpet in the Premises when the Tenant first occupied the Premises;

(v)   any fitting out in the Premises carried out by, for or at the cost of the Landlord on behalf of or at the request of the Tenant being removed from the Premises and any consequential damage made good;

(vi)   the Premises Services being returned to the configuration they were in before the Tenant first occupied the Premises;

(vii)   all cables, wires, ducting and pipes installed by or on behalf of the Tenant being removed from the Premises and terminated at the source;

(viii)   any part of the Premises structure in which holes have been made by or on behalf of the Tenant being made good; and

…

16   DEFINITIONS AND INTERPRETATION

16.1.   Definitions

Unless otherwise provided in this Lease, the following words have the following meanings:

…

(jj)   Premises Services means any services and facilities provided or installed by or for the Landlord in the Premises or for the benefit of the Premises in any false floor of the Premises or in any ceiling cavity or structural walls adjoining the Premises including but, not limited to, air-conditioning thermostats, ducts and outlets, fire sprinkler heads and piping, security and fire alarm equipment, lighting, central electrical switching arrangements, emergency lighting and exit signs;

…”

2. tax invoice no 00007744 dated 5 May 2021 of Absolute Flooring Extra for $1,500.00 inclusive of GST recording the delivery address as the premises and the description of work as “Take up and disposal of existing carpet” (the carpet invoice);

3. tax invoice no 1-01852 dated 26 July 2021 of Horizon Painting and Maintenance Pty Ltd (Horizon) for $1,320.00 inclusive of GST recoding the address as the premises and the description of work as “To Strip, remove, and tip Mezzanine level” (the mezzanine invoice);

4. tax invoice no 1-0185 dated 26 July 2021 of Horizon for $330.00 inclusive of GST recoding the address as the premises and the description of work as “To remove the wall hangers and take away” (the wall hangers invoice);

5. an unsigned document containing comments on the allegations in the Mirrorcity application (the unsigned document) and nine appendices.

The evidence of Mirrorcity

39. The evidence of Mirrorcity included two coloured photographs depicting the wall and ceiling of the premises with the caption on the first photograph “Hangers photo already Attached by sent by Novac 14/04/21 email”.

The submissions of the parties

The submissions of Mr Perri

40. Mr Perri submitted that he was entitled to recover $3,032.00 inclusive of GST, being the total of the carpet invoice, the mezzanine invoice and the wall hangers invoice, by reason of the failure of Mirrorcity to make good the premises at the end of the lease. He did not identify the term or terms of the lease pursuant to which Mirrorcity had an obligation to make good the premises at the end of the lease.

The submissions of Mirrorcity

41. Mirrorcity submitted that it had no responsibility to remove the carpet, the mezzanine floor and the wall hangers at the end of the lease.

Conclusion

42. Notwithstanding that Mr Perri has claimed $3,032.00 inclusive of GST, the correct amount is $3,150.00 inclusive of GST, being the total of the carpet invoice, the mezzanine invoice and the wall hangers invoice.

43. I am not satisfied that Mr Perri established that Mirrorcity had installed the carpet, the mezzanine floor and the wall hangers after the commencement of the lease. He did not adduce any evidence that complied with order 9 of the 18 March 2022 orders. In particular, he did not adduce any evidence as to the condition of the premises at the commencement of the lease such as an ingoing condition report.

44. A more fundamental problem to Mr Perri’s claim is that the lease does not contain any general obligation for Mirrorcity to make good the premises at the end of the lease. The make good obligation in cl 6(k) of the lease is limited to a sign, advertisement or notice. The obligation to keep and deliver up the premises in good repair in cl 7.1(a) of the lease requires consideration of the condition of the premises at the commencement of the lease, but does not require the removal of any additions made by the tenant. None of the obligations of the tenant to give vacant possession of the premises in cl 12.3(a) of the lease including cl 12.3(a)(vi) when read with the definition of “Premises Services” in cl 16.1 are applicable to the removal of the carpet, the mezzanine floor and the wall hangers at the end of the lease.

45. It follows that the COM 22/05928 proceedings should be dismissed.

Whether Mr Perri breached the lease and if so what loss if any was suffered by Mirrorcity

Introduction

46. Before considering this issue, it is convenient to summarise the evidence and submissions of the parties.

The evidence of the parties

The evidence of Mirrorcity

47. The Mirrorcity documents include:

1. the lease which relevantly contains the following terms:

“…

8.   INSURANCE AND DAMAGE

…

8.7.   Termination and Abatement on Damage

…

(c)   If the Premises are damaged so that the Premises are inaccessible or unable to be used, no Rent or Outgoings will be payable by the Tenant until the Premises are made accessible or useable.

(d)   If the Premises are damaged and are still useable but the use of the Premises is diminished due to damage, the Rent and the Outgoings will abate according to the extent of the diminished use until the use of the Premises is no longer diminished.

…

9.   ACCESS

…

9.5.   Landlord's Repair Obligation

The Landlord agrees to use reasonable endeavours to ensure that the structure of the Premises is kept in good repair having regard to its condition at the earlier of the Commencing Date or the date that the Tenant first occupied the Premises except for:

(a)   fair wear and tear;

(b)   anything that the Tenant is required to do under this Lease; and

(c)   damage from any cause beyond the Landlord's reasonable control.

…

11.   LANDLORD'S OBLIGATIONS

11.1   Quiet Enjoyment

Unless provided to the contrary in this Lease, so long as the Tenant pays the Rent and the other moneys payable under this Lease when due and performs the Tenant's obligations under this Lease, the Tenant can occupy the Premises without interruption or disturbance from the Landlord.

…”

2. on 29 January 2021 at 3.08 pm Mr D Shaikh sent an email to Ms Hyde which relevantly provides:

“…

Any update on the following flood issue? It is getting worse and has damaged our items already.

Can you please follow up as an urgent?”

3. on 30 January 2021 at 9.04 am Ms Hyde sent an email to Mr D Shaikh (the 30 January 2021 email) which provides:

“So sorry to hear this, I don't work Fridays so let me follow up with my team to find out what's going on so we can have this fixed urgently.

Please leave this with me and I will provide you with art update shortly.”

4. subsequent to the 30 January 2021 email at an unspecified date and time, Mr D Shaikh sent an email to Ms Hyde which provides:

“The carpet guy cleaned the carpet. He left the fan to dry the floor. Our shop is closed today for business as the shop is upside down at the moment.

The demolition man came and inspected the water leakage. Please update me once you speak to him.

I am waiting to hear from you today about how we resolve this issue.”

5. on 2 February 2021 at 9.27 am Ms Hyde sent an email to Mr J Shaikh (the 2 February 2021 at 9.27 am email) which provides:

“I have not disregarded anything. I understand that this is a stressful and frustrating issue for you but I have done anything but disregard it,

Raff (the landlord) has confirmed to me the below:

"Hi Georgia

I moved my appointments around today so I could get to Stanmore

After inspecting both our property and the neighbouring property the water is coming in from that side as they have the roof off and we are lower than their property

Also they are commencing to remove there boundary wall and the associated flashings and I'm sure this will cause more problems

I suggest we ask the builders next door if there is anyway of lining the wall as they demo the wall

The only thing we can do on our side it to cut the Gyprock wall out a metre high and

Water proof out side which may not be to effective or wait to see once there complete demo what can be done

(There levels after demo with be lower than ours)"

May you please liaise with Raff now as he has now inspected the premises and is aware of all outstanding issues.”

6. on 2 February 2021 at 5.00 pm Mr D Shaikh sent an email to Ms Hyde (the 2 February 2021 at 5.00 pm email) which provides:

“As per phone conversation with you and Ralph (The Owner), We have concluded following

Ralph will organise the fan and buy a vacuum to dry the Carpet. He is not happy to continuously pay for a rented vacuum as it will cost him more than a new vacuum.

(We will need the floor dried up all the time for OH&S. So we will keep rented vacuum at owner cost until he organises one for us)

He will discuss with the builder and get back to us asap for a solution (It already took about a week to resolve it)

Owner of premises and yourself acknowledged that we are unable to trade in this situation until the leak is fixed.

MirrorCity can start looking for alternative potential property in the meantime and Owner is ok to dissolve the lease contract before time if and when requested by MirrorCity.

Please reply back to me with confirmation for the above after discussing with Ralph. If there is any other suggestion feel free to contact me.”

7. on 3 February 2021 at 3.21 pm Ms Hyde sent an email to Messrs J and D Shaikh (the 3 February 2021 email) which provides:

“We cannot acknowledge or accept any of the below.

The landlord confirmed that he visited you yesterday evening and he provided you with an update.

I just spoke to Raff on the phone and he confirmed that he would like to offer you 1 month's rent free for the month of February. Please note if this offer is accepted by yourselves then you are expected to purchase/hire all fans vacuums etc at your own cost.

The landlord also confirmed that he has a fan that he is happy to loan to you. He said he can get it to you by the end of the week (most likely Saturday morning).”

8. a bank transaction record for the payment of rent of $3,805.79 by Mirrorcity on 31 January 2021 (the 31 January 2021 bank record);

9. tax invoice no 0396 dated 18 March 2021 of Sam Transport Group for $1,848.00 inclusive of GST recording the description of work as “17/03 Removals 6h” and “1/2h return fee (call out fee)” (the removal invoice);

10. tax invoice no A1395 dated 16 March 2021 of Entered LED Signs for $2,255.00 inclusive of GST recording the description of work as “Supply, decal and install ACP sign panels for awning” and “Re-install under awning light box and supply hanging rods” (the signs invoice);

11. quote no 15770 dated 4 March 2021 of Perry Properties Pty Ltd for $5,505.50 inclusive of GST for the supply and installation of carpet tiles (the carpet tiles quote).

The evidence of Mr Perri

48. The Perri documents include:

1. the 3 February 2021 email;

2. on 4 February 2021 at 9.00 am Ms Hyde sent an email to Mr D Shaikh (the 4 February 2021 email) which provides:

“Please read my below email.

This is what is on offer. Let me know if you want to accept the landlord's offer of 1 month's rent free (providing you pay for your own drying equipment).

The landlord is definitely not dismissing this issue and is trying to sort this out; again this is not a simple quick fix so please try to understand.

As per the builder/contractors advice; the solution is to wait until property number 52 has been demolished so they can get access to the wall to fix it properly (as there is only a small cavity between buildings 50 and 52). The contractor next door confirmed that the demolition will take 3-4 weeks. There is no temporary fix, it's all or nothing. The owner has discussed this with the DC Earthworks (contractors next door) and under their recommendation we have to wait until the building is completely demolished.”

The submissions of the parties

The submissions of Mirrorcity

49. Mirrorcity made the following submissions:

1. there was an agreement that the rent for February 2021 of $3,804.99 would be waived and that it was entitled to a refund of this rent;

2. Mr Perri breached cll 8.7 and 9.5 of the lease by reason of the water ingress which resulted in loss and damage.

The submissions of Mr Perri

50. Mr Perri submitted that he was not liable to refund the rent for February 2021 of $3,804.99, and for any loss or damage arising from water ingress to the premises.

Conclusion

51. I am satisfied on the basis of the 31 January 2021 bank record that Mirrorcity paid the rent instalment of $3,804.99 for February 2021.

52. I am not satisfied that there was an agreement between Mr Perri and Mirrorcity that the rent for February 2021 would be waived. Each of the 3 February 2021 email and the 4 February 2021 email contain an offer of Mr Perri to waive the rent for February 2021. The offer in the 4 February 2021 email was subject to the condition that Mirrorcity pays for its own drying equipment. There is no evidence that Mirrorcity accepted either offer, and paid for its own drying equipment.

53. I am also not satisfied that the premises were unable to be used during February 2021 and accordingly that there was an abatement of rent pursuant to s 36 of the RL Act and cl 8.7(c) or cl 8.7(d) of the lease. None of the 2 February 2021 email at 9.27 am, and the 2 February 2021 at 5.00 pm email, the 3 February 2021 email and the 4 February 2021 email indicated that the premises were unable to be used due to water ingress.

54. As Mirrorcity has not discharged its onus of proof, I am not satisfied that has established an entitlement to a refund of the rent for February 2021 of $3,804.99.

55. I am satisfied that there was water ingress to the premises in or about late January and early February 2021.

56. I am not satisfied that Mr Perri breached cl 9.5 of the lease. Mirrorcity did not adduce any evidence that complied with order 9 of the 18 March 2022 orders. In particular, Mirrorcity did not adduce any evidence from an expert witness that the water ingress to the premises arose from a failure by Mr Perri to use reasonable endeavours to ensure that the structure of the premises had been kept in good repair. On the contrary, the 2 February 2021 at 9.27 am email indicates that the water ingress arose from the demolition of the adjoining premises.

57. While Mirrorcity did not submit that Mr Perri breached cl 11.1 of the lease, it is an established principle that the covenant for quiet enjoyment entitled the lessee not merely to possession but to the enjoyment of the premises and that there would be a breach of this covenant if the lessee’s ordinary and lawful enjoyment of the premises was substantially interfered with by the negligent acts or omissions of the lessor: Martins Camera Corner Pty Ltd v Hotel Mayfair Ltd [1976] 2 NSWLR 15 at 23; Ajaimi v Giswick Pty Ltd [2022] VSC 131 at [146]-[147].

58. I am satisfied that Mirrorcity has not established a breach of cl 11.1 of the lease for the same reasons as in the case of cl 9.5.

59. If my finding that Mr Perri had not breached one or both of cll 9.5 and 11.1 of the lease is later found to be wrong, then I would not have found that Mirrorcity established it had suffered any loss or damage. There was no evidence of any loss of revenue and product damage. I accept the evidence of Mirrorcity that it incurred costs in relocating from the premises as set out in the removal invoice and the signs invoice. There is no evidence that Mirrorcity accepted the carpet tiles quote. I would not have been satisfied its relocation had arisen from the breach of the lease by Mr Perri. The termination of the lease arose from the agreement of the parties and not its termination by Mirrorcity pursuant to its terms or under the general law.

60. It follows that the COM 22/10651 proceedings should be dismissed.

Orders

61. I make the following orders:

1. the COM 22/05928 proceedings are dismissed;

2. the COM 22/10651 proceedings are dismissed.

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

Registrar

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

Registrar

Decision last updated: 26 August 2022