Roufas v Dreha t/as Sneaker Genius

[2022] NSWCATCD 215

Civil and Administrative Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:

Roufas v Dreha t/as Sneaker Genius [2022] NSWCATCD 215

Hearing dates:

09 November 2022

Date of orders:

10 November 2022 [amended 29 November 2022]

Decision date:

10 November 2022

Jurisdiction:

Consumer and Commercial Division

Before:

G Blake AM SC, Senior Member

Decision:

Pursuant to Section 63 of the Civil and Administrative Tribunal Act 2013 (NSW) the decision made 10 November 2022 is amended as follows:

(1)   The respondent is to pay the applicant $26,631.03 immediately.

(2)   The respondent is to surrender possession of the premises at 83 Canterbury Road, Canterbury NSW 2193 to the applicant by 17 November 2022.

(3) Rental Bonds is directed to pay Bond Number R029619-1 to the applicant’s agent Leon Roussakis of Ray White Canterbury.

Catchwords:

LEASES AND TENANCIES — Retail leases — Rent and outgoings — failure by lessee to pay rent – remedies available to lessor

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW), ss 28, 29, Sch 4, cl 3

Civil and Administrative Tribunal Rules 2014 (NSW), rr 13, 35

Retail Leases Act 1994 (NSW), ss 3, 16I, 63, 70, 71, 72, Sch 1

Category:

Principal judgment

Parties:

Anthony Roufas (Applicant)
Joshua Dreha (Respondent)

Representation:

Solicitors:
J Djundja (Applicant)

File Number(s):

COM 22/31669

Publication restriction:

Nil

REASONS FOR DECISION

Overview

1. These proceedings involve a dispute arising out of a retail shop lease of the premises at 83 Canterbury Road, Canterbury NSW 2193 (the premises) between the lessor, Anthony Roufas (Mr Roufas), and the lessee, Joshua Dreha (Mr Dreha), who carries on business under the name Sneaker Genius, in which Mr Roufas seeks relief against Mr Dreha under the Retail Leases Act 1994 (NSW) (RL Act).

2. I have decided that Mr Dreha should pay Mr Roufas $26,631.03 and surrender possession of the premises to Mr Roufas by 17 November 2022.

The factual background

3. On 3 June 2021, Mr Roufas as the lessor leased the premises to Mr Dreha as the lessee for the term of one year and 6 months commencing on 7 June 2021 and ending on 6 January 2023 (the lease) at a rent of $2,860.00 per month inclusive of GST with Mr Dreha providing a security bond in the amount of $5,720.00 (the bond). From the commencement of the lease, Mr Dreha has conducted a retail business of selling shoes at the premises.

4. At all material times, Leon Roussakis (Mr Roussakis), who is a licenced real estate agent and the principal of Ray White Canterbury, has been the managing agent for the premises for Mr Roufas.

5. Mr Roufas claims Mr Dreha is in breach of the obligation to pay rent under the lease.

The history of the proceedings

6. On 8 July 2022, Mr Roufas as the applicant commenced proceedings COM 22/31669 against Mr Dreha as the respondent by filing a retail leases application in section 4A of which he relevantly seeks relief under the RL Act.

7. On 12 August 2022, the Tribunal made procedural directions for the filing of evidence by the parties (the 12 August 2022 orders).

8. On 25 August 2022, a Team Leader sent a notice of hearing to Mr Dreha by post at his address as recorded on the lease (the 25 August 2022 notice).

9. On 26 August 2022, Mr Roufas filed and served a bundle of documents (the Roufas documents) which comprised:

1. the affidavit of Mr Roussakis sworn on 26 August 2022 (the Roussakis affidavit);

2. the affidavit of Paul Barakat (Mr Barakat) sworn on 26 August 2022 (the Barakat affidavit).

10. Mr Dreha has not filed any documents.

The hearing

11. On 9 November 2022, the hearing took place. Mr R Djundja, a solicitor, appeared for Mr Roufas. There was no appearance by or on behalf of Mr Dreha.

12. Mr Roufas relied on the following documents which were admitted into evidence:

1. the letter dated 26 August 2022 of Jordan Djundja (JD), Mr Roufas’ lawyers, to Mr Dreha at the address of the premises and at his address as recorded on the lease containing an Australia Post sticker with a QR code adjacent to the second address which recorded that they enclosed the Roufas documents (marked as Exhibit A1);

2. the letter dated 26 August 2022 of JD to Mr Dreha at the address of the premises and at his address as recorded on the lease containing an Australia Post sticker with a QR code adjacent to the first address which recorded that they enclosed the Roufas documents (marked as Exhibit A2);

3. the email of Mr Djundja sent on 26 August 2022 to Mr Dreha at two email addresses attaching the letter dated 26 August 2022 of JD to Mr Dreha at the address of the premises and at his address as recorded on the lease and the Roufas documents (marked as Exhibit A3);

4. the Roussakis affidavit (marked as Exhibit A4);

5. the Barakat affidavit (marked as Exhibit A5);

6. the document headed “Tribunal Report” in respect of the premises of Ray White Canterbury dated 9 November 2022 (marked as Exhibit A6).

13. Mr Roussakis gave oral evidence.

14. Mr Djundja made oral submissions.

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

The issues

16. The following issues arise for decision:

1. whether the Tribunal has jurisdiction to determine the proceedings;

2. whether the proceedings should be heard in the absence of Mr Dreha;

3. whether Mr Roufas is entitled to relief under RL Act against Mr Dreha.

Whether the Tribunal has jurisdiction to determine the proceedings

Introduction

17. Before considering this issue, it is appropriate to set out the applicable statutory provisions.

The applicable statutory provisions

RL Act

18. Part 1 (ss 1-8) contains provisions dealing with preliminary matters. Section 3 contains definitions, and relevantly includes definitions of “retail shop” 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—

…

19. 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 …

20. 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),

…

(iv) a claim for the surrender of possession of specified premises,

…

21. 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.

22. 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,

…

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

…

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

…

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

Schedule 1 Retail shop businesses

…

Shoe shops

…

NCAT Act

24. 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,

…

25. 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.

…

26. 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

…

Consideration

27. Having regard to the definitions of “retail shop” and “retail shop lease” in s 3, and “party” in s 63, of the RL Act, and the list of retail shop businesses in Sch 1 of the RL Act as including shoe shops, I am satisfied that Messrs Roufas and Dreha are parties to a retail shop lease within the RL Act.

28. I am satisfied that the proceedings are a “retail tenancy claim” within s 70 of the RL Act. The relief claimed in the proceedings is within paras (a)(i) and (a)(iv) of the definition of retail tenancy claim. I am satisfied that the proceedings were lodged within three 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.

29. I am satisfied that the Tribunal has jurisdiction to determine the 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 (a)(iv) of the definition of “retail tenancy claim” in s 70 of the RL Act enables the Tribunal to make decisions in relation to the 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 the proceedings should be heard in the absence of Mr Dreha

30. I am satisfied that the Registry served the 25 August 2022 notice on Mr Dreha by posting it to his last known residential address.

31. I am satisfied that JD served the Roufas documents on Mr Dreha as required by the 12 August 2022 orders. Exhibit A1 and Exhibit A2 establish that these documents were served on Mr Dreha in a manner authorised by r 13(2) of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules).

32. As the condition in r 35(2)(a) of the NCAT Rules has been satisfied by the service of the 25 August 2022 notice on Mr Dreha, and the Roufas documents have been served on Mr Dreha, I have decided to exercise the discretion under this rule to proceed with the hearing in the absence of Mr Dreha.

Whether Mr Roufas is entitled to relief under RL Act against Mr Dreha

Introduction

33. Before considering this issue, it is appropriate to set out the claims of Mr Roufas, and to summarise his evidence and submissions.

The claims of Mr Roufas

34. In section 4A when read with of Annexure A of the retail leases application Mr Roufas relevantly states that he wants the following orders:

“ …

3.   The Respondent pay to the Applicant rental arrears in the sum of $19,520.00 as at the dates of this Application less the security bond.

4.   For the purposes of Order 3 herein, the Applicant be entitled to drawdown on the security bond to apply towards the rental arrears and any other monies payable by the Respondent to the Applicant pursuant to the terms of the Lease, such as costs to make good.

5.   That within 7 days from the date of these orders herein, the Respondent is to vacate the leased premises.”

35. In section 4B when read with of Annexure A of the retail leases application Mr Roufas states the following reasons for asking for the orders in section 4A:

“1.   On 3 June 2021 the Applicant as lessor, and the Respondent, as lessee, executed a Retail Lease with the following material terms:

a.   Term - 1 year and 6 months.

b.   Rent - $2,860 per month (inclusive of GST).

2.   Respondent ceased paying rent on 20 July 2021.

3.   Upon ceasing to pay rent pursuant to the Lease, the Respondent failed to provide the Applicant with a certified accounting of his alleged decline in turnover as required pursuant to the Retail and Other Commercial Leases (COVID-19) Regulation 2020).

4.   Despite the Respondent's failure to adhere to the terms of Lease, or, in lieu thereof, produce a certified accounting of his decline in turnover, the Applicant agreed to:

a.   Give the Respondent a rental waiver from July 2021 to December 2021 (inclusive), being a total waiver of $6,500.00 on the basis that the Respondent immediately pay the outstanding rent arrears of $6160.00

5.   The Respondent failed to pay the rent arrears pursuant to the above agreement.

6.   On or about 28 January 2022, the Applicant filed an Application for mediation with the NSW Small Business Commissioner.

7.   On 22 March 2022 the Applicant and the Respondent attended upon mediation with the NSW Small Business Commissioner via telephone.

8.   At mediation, the parties reached the following agreement:

a.   Lessor agrees to give the Lessee a 45% waiver of his rent for the period 8 July 2021 to 8 March 2022. That will mean that the rent for each of those months will be calculated at $1,573.00 per month.

b.   Lessor accepts that the Lessee has paid $4,500.00 towards rent for the period 8 July 2021 to 8 March 2022.

c.   Taking into account payments made, that leaves a balance of rental arrears to 8 March 2022 in the sum of $9,650.00.

d.   The Lessee agrees that he is obliged to pay the full rent from 8 March 2022 onwards.

e.   Taking the balance of arrears owing plus full rent payments from 8 March 2022 onwards leaves a current balance outstanding of $12,517.00 to 8 April 2022.

f.   The Lessee agrees to pay the Lessor the sum of $6,000.00 within 14 days of 22 March 2022.

g.   The Lessee agrees to pay the Lessor the balance of $6,517.00 within 35 days of 22 March 2022.

h.   Once those two payments are made means that the Lessee will have paid out all outstanding rent up to 8 April 2022.

i.   The Lessee agrees that within 14 days from 22 March 2022, he will provide the Lessor (or the Lessor's agent) with a letter from a qualified accountant that sets out the downturn in his turnover to enable the Lessor to seek land tax relief from Revenue NSW.

j.   The Lessee agrees that he must pay rent at the full monthly rate of $2,860.00 from 8 April 2022 until expiry of the lease.

k.   In all other respects, the parties affirm the lease.

I.   These terms are to be confidential and the parties intend to be bound by them.

9.   Despite the terms of the abovementioned agreement, the Respondent failed to comply with same.

10.   On 13 May 2022, the Applicant caused a Notice of Termination and to Quit to be sent to the Respondent, the Notice was in the following terms:

a.   As the Respondent had failed to comply in all respects with the terms agreed to at mediation on 22 March 2022 by the Respondent's failure to:

i.   Make payment of $6,517.00 on or by 26 April 2022;

ii.   Make rental payments of $2,860 per month from 8 April 2022; and

iii.   Provide letter to Lessor from Lessee's accountant confirming downturn in turnover from 5 April 2022;

The Lessee is in breach of the Lease which was thereby terminated with immediate effect. The Lessor demanded immediate possession and that the Lessee vacate the premises on or before 25 May 2022.

11.   The Respondent failed to vacate the premises by 28 May 2022 in accordance with the Notice.

12.   On 13 May 2022, the Respondent confirmed receipt of the Notice via email.

13.   The Respondent remains in possession of the leased premises.

14.   The Respondent is currently in rental arrears in the sum of $19,520.00.

15.   The Applicant seeks Orders as set out in Annexure A to this Application.”

The evidence of Mr Roufas

The lease

36. The lease (which is an annexure to the Roussakis affidavit) relevantly provides:

“ …

THE TENANT AGREES

Rent

9.   To pay the rent promptly and in advance and in the maimer that the Landlord may direct from time to time.

…

Termination

32.   …

b   The Landlord shall have the right to re-enter the Premises peacefully or to continue the lease as e periodic lease from week to week;

i   where the Tenant has failed to pay rent for a period in excess of fourteen (14) days, whether formally demanded or not;

…”

The Roussakis affidavit

37. In the Roussakis affidavit Mr Roussakis has given evidence supporting the allegations in section 4B when read with of Annexure A of the retail leases application by annexing the specified documents.

The oral evidence of Mr Roussakis

38. In his oral evidence Mr Roussakis gave the following evidence:

1. the arrears of rent as at 9 November 2022 is $26,537.00;

2. the daily accrual of rent is $94.03.

The Barakat affidavit

39. In the Barakat affidavit Mr Barakat, who is a licensed builder, gave evidence as to inspections of the premises he carried out the following occasions:

1. on 27 April 2022, in the presence of Messrs Roufas and Dreha;

2. on 25 May 2022, in the presence of Messrs Roussakis and Dreha.

The submissions of Mr Roufas

40. In his oral submissions Mr Djundja submitted that Mr Roufas was seeking orders 3 to 5 in section 4A when read with of Annexure A of the retail leases application, and that the evidence of Mr Roufas supports the making of those orders.

Consideration

41. I accept that the evidence of Mr Roufas is reliable.

42. I am satisfied on the basis of the evidence of Mr Roufas that:

1. Mr Dreha has breached cl 9 of the lease and that $26,631.03 is the total arrears of rent as at 10 November 2022;

2. Mr Roufas pursuant to cl 32bi of the lease has the right to re-enter the premises because Mr Dreha has failed to pay rent foe a period in excess of 14 days.

43. I am further satisfied that Mr Roufas is entitled to the following orders:

1. an order pursuant to s 72(1)(a) of the RL Act that Mr Dreha should pay him $26,631.03;

2. an order pursuant to s 72(1)(c)(ii) of the RL Act that Mr Dreha should surrender possession of the premises to him by 17 November 2022.

44. I note that pursuant to s 16I(1)(a) of the RL Act that Mr Roufas will be entitled to payment of the security deposit and any accrued interest on satisfaction of the conditions for payment. On Mr Roufas receiving the security deposit and any accrued interest the outstanding balance of the arrears of rent will reduce by that amount.

Orders

45. I make the following orders:

1. the respondent is to pay the applicant $26,631.03 immediately;

2. the respondent is to surrender possession of the premises at 83 Canterbury Road, Canterbury NSW 2193 to the applicant by 17 November 2022.

3. Rental Bonds is directed to pay Bond Number R029619-1 to the applicant’s agent Leon Roussakis of Ray White Canterbury.

**********

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

Registrar

Amendments

30 August 2023 - Formatting amendments.

Decision last updated: 30 August 2023