Sabri v Selby

[2004] NSWADT 252

CITATION:	Sabri v Selby [2004] NSWADT 252
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Anwaya Sabri RESPONDENT Stephen Selby
FILE NUMBER:	035155
HEARING DATES:	26/05/2004 & 28/06/2004
SUBMISSIONS CLOSED:	06/28/2004
DATE OF DECISION:	11/04/2004
BEFORE:	Higgins S - Judicial Member
APPLICATION:	Claim for declaration of rights, obligations and liabilities under a lease - Claim for relief against forfeiture - Claim for relief from payment of money - Costs
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Conveyancing Act 1919 Retail Leases Act 1994
CASES CITED:	Cicinave v Jasco Pty Ltd (1989) 5 BPR 11,139 Hace Corporation Pty Ltd v F Hannan Pty Ltd (1995) 7BPR 97554 Hayes v Gunbola Pty Ltd (1986) 4 BPR 9247 Hyman v Rose [1912] AC 623 Pioneer Quarries (Sydney) Pty Ltd v Permanent Trustee Co of NSW Ltd (1970) 2 BPR 9562 Steiper v Deviot Pty Ltd (1977) 2 BPR 9602 Tutita Pty Ltd v Ryleaco Pty Ltd (1989) 4 BPR 9635
REPRESENTATION:	APPLICANT M Lui, solicitor RESPONDENT J Horowitz, barrister
ORDERS:	1. Mr Sabri is granted relief against forfeiture; 2. The term of the lease is extended to 20 March 2006 with an option to renew for one year.

1 On 9 January 2004, the applicant lessee, Mr Sabri, filed an application with the Tribunal seeking orders in respect of a dispute that had arisen between himself and the landlord, Mr Selby, in respect of the lease of the premises at 119A Weir Street, Fairfield NSW (“the premises”). Mr Selby’s agent, Mr Ron Akbulut of Combined Real Estate, had locked Mr Sabri out of the premises on 9 December 2003. The basis of the lock out was Mr Sabri’s failure to pay rent in accordance with the terms of the lease, and his failure to comply with a Termination Notice that had been issued on 17 November 2003. Mr Sabri contended that he was not in arrears in his rent and that he had not received a copy of the Termination Notice. In his application of 9 January 2004, Mr Sabri also sought compensation for delays by Mr Selby’s agent in repairing a hole in the wall of the premises following a break in on or about 15 November 2003.

2 The basis on which Mr Sabri contended that he did not owe any rent was because the lease provided for two months rent free period, which Mr Sabri alleged had not been accounted for and because he had not been able to use the premises following a break-in on the evening of 14 November 2003. Access had been gained to the premises from the neighbouring vacant massage parlour and leaving a large hole in the adjoining wall between the premises and the massage parlour.

3 Mr Sabri subsequently amended his application, and at the hearing Mr Sabri sought declarations and orders to the following effect:

(a) a declaration that the termination of the lease by Mr Selby’s agent was invalid;

(b) in the event the Tribunal were to find that the termination of the lease was valid, relief against forfeiture;

(c) a declaration that the term of the lease be extended to 4 years with an option to renew for a further period of one year in accordance with s.16 of the Retail Leases Act 1994;

(d) an order granting relief from payment of rent either partially or completely from 21 November 2003 until 14 December 2003 when the hole in the wall was repaired;

(e) in the event the Tribunal determines that the lease was invalidly terminated and forfeited a declaration that Mr Sabri is not liable for rent for the period 9 December 2003 to 16 January 2004.

4 Mr Sabri and Mr Selby had entered into a “Commercial Lease” in respect of the premises on 21 March 2002 (“the lease”). The term of the lease was stated to be one year, with a one year option commencing on 21 March 2002 and ending on 20 March 2003. It was conceded by Mr Horowitz, who appeared on behalf of Mr Selby, that if Mr Sabri is successful in his application, the term of the lease is governed by s.16 of the Retail Leases Act 1994 (i.e. minimum term of 4 years, with an option to renew for 1 year).

5 The lease also provided that the premises would only be used as a “café”. The rent payable under the lease was $1,000.00 per month commencing on 21 May 2002. Under the terms of the lease, Mr Sabri agreed to pay the rent promptly and in advance (cl.9 of the lease). Cl.30 of the lease provided the following in respect of the landlord’s right to terminate the lease:

“cl.30(a) …

b) the landlord shall have the right to re-enter the premises peacefully or to continue the lease as a periodic lease from week to week:-

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

…

c) if the landlord intends to exercise his right to re-enter, he shall serve the tenant with a written notice stating the reason and demanding immediate possession”.

6 The primary matters in issue in this application are as follows:

(a) As at 17 November 2003, was Mr Sabri in arrears in rent for a period in excess of 14 days?

(b) Was the Notice of Termination dated 17 November 2003 a valid Notice and was it served on Mr Sabri?

(c) Was the conduct of Mr Akbulut and Mr Lam such that Mr Selby’s right to forfeit the lease was waived?

(d) If the lease was validly terminated, do the circumstances of this application warrant the Tribunal to exercise its discretion to grant Mr Sabri relief against forfeiture?

(e) If relief against forfeiture is granted, is Mr Sabri entitled to an order to the effect that he is not liable for the rent during the period he was locked out?

7 Mr Sabri relied on an affidavit sworn by him on 12 February 2004 and statements of customers at Mr Sabri’s café. The customer statements were all in exactly the same form and each deponent said that he went to Mr Sabri’s café “at least five times a week” from a particular month in 2002 to “8 November 2003” and that “each time I went there I found the premises were used solely as a coffee lounge and nothing else”.

8 Each statement was signed on the same date, namely 10 February 2004. The customer statements were made by Dalal David (taxi driver), David Moshi, Alfred Babana (owner of a flooring company), Nabil Peters (owner of a tobacconist company) and John Daniel. Of these, Mr Dalal David and Mr David Moshi were called to give additional oral evidence and were made available for cross-examination.

9 Mr Sabri also gave additional oral evidence and was cross-examined. In his affidavit, Mr Sabri said that:

(a) at all times he had used the premises wholly as a café;

(b) he operated the business from 4.00pm to 12.00 midnight every Monday to Saturday evening. He said that he was not in arrears in rent and that the rent records of Combined Real Estate were inaccurate as they had not given him credit for two months free rental as provided for in the lease. In support of his statement he annexed the receipts that he had received from Combined Real Estate following payments that he had made;

(c) on 14 November 2003, on discovering the hole in the wall, Mr Sabri spoke to either Robert, Mr Akbulut or Mr Lam of Combined Real Estate and advised them of the break in and said:

“The landlord must repair the hole in three days because it is now not safe or proper for me to operate my business. Once the hole is repaired, I shall have one week to operate my business and then I shall pay the rent on 21st November. If the hole is not repaired I cannot operate the business and cannot pay the rent”.
In response, he was told that they would put in an application to the insurance company and have the hole repaired within three days. Mr Sabri also told them that he would have to stop paying the rent if the hole was not fixed within three days. Annexed to Mr Sabri’s statement were photos of the hole in the wall;

(d) between 14 November 2003 and 8 December 2003 he did not operate his café because:

“I believed it was not safe for me and my customers to be in the premises when the hole was there, especially during the night time. I believed that to operate the business with a big hole on the wall would destroy the good image of the business and would push away customers as the ambience necessary for people to enjoy a cafe was gone. I also believed that I would be breaking the law by continuing to operate the business”.
(e) on 18 November 2003, he attended the offices of Combined Real Estate and asked when the wall was going to be repaired. He was advised that it would be repaired as soon as the insurance company approved payment for the work;

(f) on 9 December 2003, when he went to the premises, he found that he had been locked out. He went to the offices of combined Real Estate and requested that he be given access to the premises so that he could have the hole repaired. He was refused access.

10 During cross-examination Mr Sabri acknowledged that he understood that he was obliged to pay rent in advance. He said that he had never been told by Mr Selby’s agent (in this case, Mr Lam) that his rent was late and he denied receiving any correspondence about outstanding rent or letters advising him that Mr Selby would terminate the lease if the outstanding rent was not paid.

11 In respect of the café, Mr Sabri acknowledged that there was no sign advertising the café. However, he said it was open to all members of the public. He also acknowledged that there was a steel grate to the entrance of the café. This door had been installed by the previous tenants and Mr Sabri acknowledged that it was sometimes locked while the café was open. He said that he locked it when he was in the premises alone without any customers. He said that his café had 4 tables and 25 chairs in it. He did not serve any hot food, only sandwiches and drinks. The drinks included instant coffee and Lebanese coffee. There were no menus, and he charged between $2.00 and $2.50 for drinks and $4.00 for sandwiches. He did not employ any staff and served the customers himself.

12 He denied that he sold alcohol to his customers and denied that when he spoke to Mr Akbulut, after the break in, that he did not want the police called as there had been alcohol on the premises, which had been stolen during the break-in. He denied that he had spoken to a Mr Torrese in respect of repairing the hole in the wall, and that he had agreed to let Mr Torrese in to do the repair work, but had failed to show up.

13 He said that he did not specifically count the number of customers he had each night, sometimes there were 5 and sometimes there were 10. He said that he did not have any record of how much money was earned or what he expended on the business. He had no cash register and he did not keep any accounts, nor did he prepare a quarterly Business Activity Statement or file a tax return. He denied that he received a letter, dated 9 July 2003, from Mr Akbulut advising him that Mr Selby would terminate the lease if Mr Sabri continued to ignore the need to obtain the necessary development approval from Fairfield City Council to operate the premises as a café. However, he agreed that development approval was obtained in October 2003. In this regard, he said that when he entered into the lease he had made an application to the Council and that he gave it to Mr Selby’s agents who refused to sign it despite several requests. However, he did not provide any documentation to support this contention.

14 Mr Sabri also said that he was a welder by trade and had operated a take-away food business for about 10-15 years in the same block of buildings as the premises. He also acknowledged that prior to operating the take-away food business, he had leased the premises that are the subject of this application as an amusement machine parlour.

15 Mr David in his oral evidence said that he had been a taxi driver for 18-19 years. He said that he attended the premises every Monday to Thursday evening while his son was at karate. He said that he had never seen anyone play cards, dominos or any other form of gambling, and he had not seen any alcohol consumed on the premises. During cross-examination, he said that he started going to the premises about 18 months previously. He had known Mr Sabri for 10 years and when he attends the premises, there are usually 4-6 people there. He said that they are a community of Assyrian people who get together and drink coffee and talk. He said that he usually drinks coffee and pays $2.50 for it. He also said, on being shown his signed statement that Mr Sabri came to him one day and asked if he could say the words that were typed on the statement. He signed the statement on the basis that he agreed with that which had been written.

16 Mr Moshi, in his oral evidence, said that he was a television technician, he had lived in the Fairfield area for 12 years, and that he usually went to the premises after 6.00pm in the evening, 2-3 times a week. He went there to meet friends, to watch television and to have coffee and food. He also said that he had not seen anyone play cards or seen anyone being served with alcohol. During cross-examination, Mr Moshi described the premises as a “community club”. He generally knew everyone who was there. They were all members of the Assyrian community and spoke Assyrian while at the café. He had known Mr Sabri for many years, and they were good friends. He also acknowledged that Mr Sabri told him, prior to giving his evidence, that he would be asked questions about gambling at the premises. He also agreed that Mr Sabri had provided him with a pre-prepared statement and had asked him to sign it. He said that he had not seen any gambling at the premises or seen customers play cards or roulette. Nor had he seen alcohol being served. However, he acknowledged that he played cards, but not at the premises.

Respondent’s case

17 The Respondent, Mr Selby, relied on affidavits sworn by Ron Akbulut (17 March 2004), Anthony Lam (17 March 2004), Alex Selby – the son of Mr Selby, the landlord (16 March 2004)(Alex Selby was responsible for managing the affairs of his father pursuant to a power of attorney), Edward Vesely - Solicitor (17 March 2004) and Kirstie Jane Milton – Licensed Commercial Sub-Agent (2 June 2004). In addition to this, Mr Selby tendered into evidence a Notice of Determination of Development from Fairfield City Council, dated 21 October 2003, in respect of the approval of the use of the premises as a café.

18 Mr Alex Selby, Mr Akbulut, Mr Lam and Ms Milton were all called to give additional oral evidence and were cross-examined.

19 In his affidavit, Mr Akbulut, the Property Manager of Combined Real Estate who was responsible for the management of the premises from the time the lease agreement was entered into, said that from mid-2002 until the end of 2003, Mr Sabri had been late in paying his rent almost every month. During this period, he regularly met Mr Sabri to discuss the outstanding rent, and while Mr Sabri responded in an abusive way, he usually responded by paying that which was outstanding. During this time, he also sent letters to Mr Sabri requesting payment of outstanding rent. These letters, copies of which were annexed to his affidavit, were dated 20 August 2002, 30 September 2002, 18 October 2002, 20 December 2002, 13 August 2003 and 17 October 2003. Each of these letters requested payment of rent for the previous month.

20 Mr Akbulut also said that he visited the premises twice in 2003 while the café was opened for business and while Mr Sabri was there. The first occasion was in January 2003 and the second occasion was in July 2003. He said that on both occasions he had entered the premises to talk to Mr Sabri about overdue rent, and while he was in the premises he observed people sitting around felt covered tables playing cards. He said that:

“The players were using casino-style chips to bet with. I also observed people playing backgammon. On one of the tables I observed a felt table covering which had numbers printed on it. Similar to a roulette table. I did not observe a roulette wheel, however. I observed the players drinking alcohol. I remember seeing Mr Sabri pour a customer a drink from a bottle of Johnny Walker”.

21 Annexed to Mr Akbulut’s affidavit was a copy of the Tenant Ledger Report of Combined Real Estate for the premises. Also annexed to the affidavit was the termination notice, dated 9 July 2003, sent by Mr Akbulut to Mr Sabri in respect of Mr Sabri’s failure to obtain Council’s approval for the premises to be operated as a café.

22 In respect of the break-in into the premises, Mr Akbulut said that on or about 15 November 2003 he received a telephone call from Mr Sabri. He said that Mr Sabri advised him that the premises had been broken into, that they had been broken into through the wall and that a few things and some cash had been taken. Mr Akbulut asked Mr Sabri if he had made a police report to which Mr Sabri responded:

“I don’t want to make a police report because alcohol got stolen”.

23 Mr Akbulut informed Mr Sabri that a police report was needed for insurance purposes and as Mr Sabri refused to make the report, Mr Akbulut subsequently did so.

24 Mr Akbulut then said that on or about 17 November 2003 he prepared two letters addressed to Mr Sabri. Copies of these letters were annexed to his affidavit. One letter was headed “Rent in Arrears” and stated, so far as is relevant, the following:

“I am writing to advise you that you are constantly in arrears. At present you are $1,000 in arrears from 21 October 2003 to date.

According to your lease, Section 9 states that the rent must be paid on or before the due date. The rent from 21 October 2003 – 21 November 2003 is payable immediately. Thereafter accordance to your lease.

You have 14 days to rectify your outstanding arrears. Failing to do so is a breach of lease and I as the landlord’s agent will be forced to terminate your lease agreement which includes changing of all locks in the premises”.

25 The other letter was headed “Termination of Lease Agreement” (“Notice of Termination”) and stated as follows:

“I am writing this letter to advise you that you are constantly in arrears. You have been requested to pay your rent on or before the due date. However, you have failed to do so.

Condition 9 of your lease states, that as the tenant, you are to pay your rent promptly and in advance.

As you have been ignoring the request to pay your rent on time, I have no choice but to terminate your lease. Therefore, you are requested to provide vacant possession on or before Monday 8 December 2003.

In the event you do not provide vacant possession, the landlord’s agent will have the right to re-enter the premises, in which this will include the changing of locks to the premises.”

26 Mr Akbulut then said that he personally went to the premises and hand delivered the letters to Mr Sabri. He said Mr Sabri read the letters and then said:

“Piss off. Get out of here”.

27 Shortly after this Mr Sabri again telephoned Mr Akbulut and informed him that he was not paying the rent until the wall was repaired. Mr Akbulut said that he informed Mr Sabri that he could not stop paying the rent and that he was getting the hole fixed as quickly as he could. In response, Mr Sabri said that he could not operate his business while there was a hole in the wall, to which Mr Akbulut responded that he should cover the hole up with a board or a picture. Mr Akbulut received a quote to do the repair work on 24 November 2003. On 1 December 2003, after he had obtained authorisation from the Strata Management company of the building in which the premises were located, Mr Akbulut instructed a Mr Torrese to undertake the repair work in consultation with Mr Sabri. He was subsequently advised by Mr Torrese that he had been unable to get access to the premises as Mr Sabri had failed to turn up on the times arranged. Mr Akbulut then said that on 6 December 2003 he met Mr Sabri in Fairfield and they had a conversation where Mr Akbulut informed him that if he did not pay the outstanding rent he would be evicted. In response Mr Sabri said that he did not have to pay rent until the wall had been repaired, and that he wanted a letter stating that he was not responsible for the period that the premises were damaged. Mr Akbulut replied by stating that the rent that was owed was due before the break-in had occurred, and there was no excuse for the payment of late rent. He also said:

“Either pay the rent or I’m definitely locking you out this time”.

28 Mr Akbulut and Mr Sabri were then involved in an altercation.

29 Mr Akbulut said that on 9 December 2003, he arranged for a locksmith to change the locks on the premises, as Mr Sabri had failed to pay the rent for the months of October and November.

30 After the locks were changed, Mr Akbulut arranged for the hole in the wall to be repaired. This was completed on 14 December 2003. At the time the repair work was commenced, Mr Akbulut saw a red partition that had been placed over the hole in the wall.

31 In his oral evidence, Mr Akbulut said that on 17 November 2003, when he passed the two letters that he had prepared to Mr Sabri, he also explained to Mr Sabri what they were about.

32 During cross-examination, Mr Akbulut acknowledged that he had not raised with Mr Selby the gambling and the serving of alcohol that he had seen in January and July 2003. He responded by saying that because he had raised it with Mr Sabri personally he assumed that it would not happen again. He also said that the letters that he prepared and gave to Mr Sabri on 17 November 2003 were standard form letters and it was the standard practice of Combined Real Estate to issue both letters at the same time, and that the Termination Notice was subject to the payment of the outstanding rent. Mr Akbulut acknowledged that had Mr Sabri paid the outstanding rent as requested, he would not have been locked out on 9 December 2003.

33 In his affidavit, Mr Lam said that from mid-2002 until December 2003 he talked to Mr Sabri approximately once every two weeks. He said that these conversations were usually about Mr Sabri’s late payment of rent, or they involved Mr Sabri complaining about the premises. He went on to say that he visited the premises three times during 2003. He believes that this may have been in February, April and October 2003, and while he did not go into the premises, he stood at the doorway and was able to observe what the people were doing inside. He said that he observed people playing cards and dominos using casino-style chips while they played. He noticed many of the players were smoking and he observed some of them drinking alcohol, scotch in particular. He again went to the premises on 17 February 2004 at approximately 8.00pm or 9.00pm and was able to observe from the doorway about 12 people seated around tables playing dominos and cards. He also said that, on 15 January 2004, when he and Mr Akbulut visited the premises he saw tables that were similar to those that he had seen previously in February, April and October 2003. It should be noted that Mr Sabri did not dispute that these tables were in the premises, however he contended that they were tables belonging to the previous tenants and were not tables used by him.

34 In his affidavit Mr Lam also made reference to conversations he had with Mr Sabri in respect of the November 2003 break-in. He said that while Mr Sabri indicated that he would not pay rent unless the hole in the wall was fixed, he had informed Mr Sabri that he was required to continue to pay the rent no matter what. He also said that he said that he told Mr Sabri that if he did not pay the rent, that he had instructions from the landlord to lock him out of the premises.

35 In his oral evidence, Mr Lam said that he had been the principal of Combined Real Estate for about three years. During cross-examination he said that he became aware of instructions from the landlord to terminate the lease by the end of November or the beginning of December 2003.

36 Mr Selby in his affidavit said that he had visited the premises on 14 February 2004. Annexed to his affidavit were copies of photographs of the premises taken by him at about 1.30pm that day. This included a photograph of the steel grate which is in fact located at the top of the stairs that lead to the entrance of the premises. The position of the grate is such that if it is closed, one cannot access or fully see into the premises.

37 Mr Selby also said that when he visited the premises on this date, the steel grate was closed but Mr Sabri, who was inside the premises, opened the steel grate from inside.

38 Ms Milton, in her affidavit and in her oral evidence, gave evidence about what she observed on the evenings of 20 and 22 May 2004 when she went to the premises. The essence of her evidence was that the premises were closed on both occasions. She also said that she had a conversation with a male employee at the tobacconist across the road from the premises. This employee told her that there was a “middle eastern café where people drink coffee and play cards” at the premises.

39 Mr Vesely in his affidavit gave evidence of a Notice of Breach of Covenant that he served on Mr Sabri by Registered Mail and also served a copy to Mr Sabri’s lawyers. Attached to his affidavit was a copy of the Notice, dated 25 February 2004, and which stated the following:

“To Anwaya Sabri:

Re: 119A Ware Street, Fairfield NSW

With reference to the lease of the abovementioned premises, dated the 21st day of March 2002, from Stephen Selby to Anwaya Sabri, and the covenant by the lessee therein contained, that the premises shall be used only as a café, and the breach by you of that covenant, I hereby give you notice and require you to remedy that breach by ceasing to use the premises as a gambling hall and to henceforth use the premises only as a café”.

40 The parties made detailed written and oral submissions.

(a) Applicant’s submissions

41 Mr Lui, on behalf of Mr Sabri, submitted that there had been no termination and forfeiture of the lease. In this regard, his first contention was that there was no evidence that Mr Selby had authorised his agent, Mr Akbulut or any other person at Combined Real Estate, to terminate the lease and issue the notices that were sent on 17 November 2003. Second, he contended that the Notice of Termination of 17 November 2003 did not comply with cl.30(c) of the lease, as it did not demand “immediate” possession. Third, it was contended that the evidence of Mr Sabri that he did not receive these notices should be accepted as receipt of such a notice was inconsistent with the content of the conversations that Mr Sabri had with Mr Akbulut and Mr Lam after that date. These conversations being to the effect that Mr Sabri would be evicted if he did not pay is rent. In the event it is accepted that Mr Sabri received the Notice of Termination, Mr Lui contended that the conduct of Mr Akbulut and Mr Lam after 17 November 2003 was a clear indication that as at 17 November 2003, there was no intention to terminate the lease or alternatively their conduct amounted to a waiver. Finally, it was contended that there was no termination and forfeiture of the lease if it had not been done equivocally.

42 In respect of the claim for relief against forfeiture, Mr Lui contended that relief should be granted as the outstanding rent had been paid in full and there had been no further breach in respect of the payment of rent. Accordingly, Mr Selby had not suffered any unrepairable damage, however, there would be substantial loss to Mr Sabri in that he would lose his business and the money he had spent on the fit out of the premises. The cost of such fit out, he stated in his submissions, was more than $30,000. However, I have rejected this statement as there was no evidence before the Tribunal in this regard.

43 In respect of the Notice for Breach of Covenant of Use, Mr Lui contended that the Notice did not comply with the requirements of s.129 of the Conveyancing Act 1919. Furthermore, he contended that the evidence did not support Mr Selby’s contention that gambling was taking place at the premises. He pointed out that while people may play cards, they can do so for entertainment, which is not a gambling activity. In this case there was no evidence of any exchange of money or anything of value, which would support a finding that customers at the premises were betting and consciously risking money.

44 The final submission by Mr Lui was that if the Tribunal found that the lease had been validly terminated and forfeited, then Mr Sabri should not be held liable for the rent for the period from 9 December 2003 until 16 January 2004. This is the period during which Mr Sabri was locked out of the premises by reason of the 9 December 2003 lock out, and the date on which the Tribunal granted Mr Sabri an interim order enabling him to re-enter the premises pending the determination of these proceedings.

(b) Respondent’s submissions

45 Mr Horowitz, on behalf of Mr Selby, submitted that the evidence demonstrated that the lease had been validly terminated by the letters of 17 November 2003. The basis of the termination was the outstanding rent. In particular he pointed out that the monthly rent had been paid late since May 2003, and as at the date of the lockout (i.e. 9 December 2003), the rent for the month of October had been outstanding for 49 days and the rent for November was outstanding for 18 days. He contended that the evidence showed that the Notice of Termination had been issued in accordance cl.30(b)(1) and (c) of the lease. The only issue he submitted was the question of whether Mr Sabri was served with these Notices. In this regard, it was submitted that Mr Sabri’s evidence should not be accepted and that the evidence of Mr Akbulut should be accepted. This submission was based on various inconsistencies in Mr Sabri’s evidence that were identified by Mr Horowitz.

46 In respect of Mr Sabri’s application for relief against forfeiture, Mr Horowitz contended that Mr Sabri’s conduct was such that he had “flagrant and contemptuous disregard” for his obligations under the lease. It was also contended that Mr Sabri did not come to the Tribunal with clean hands, and is therefore not entitled to be granted equitable relief.

47 In this regard, Mr Horowitz argued that the evidence showed that Mr Sabri had a history of late payment of rent. Furthermore, the evidence of Mr Sabri and his witnesses was such that the Tribunal could not make a finding that Mr Sabri was using the premises solely as a café. In particular, he pointed to the evidence of Mr Sabri that the café attracted a limited number of customers. The café provided very limited food and drink, there were no menus and Mr Sabri kept no record of the income or costs of the business. Furthermore, the evidence of Mr David and Mr Moshi was to the effect that the premises were being used as a “club” for the Assyrian community in the area, which meant that the premises were not open to the public at large, which Mr Horowitz contended, was an essential feature of a café.

48 The main thrust of Mr Horowitz’s submissions was that the evidence pointed to Mr Sabri allowing the premises to be used for illegal activities such as gambling and the selling of alcohol. In this regard, Mr Horowitz contended that the Tribunal should accept the evidence of Mr Akbulut and Mr Lam, and reject the denials made by Mr Sabri and his witnesses. He also relied on the Notice of Breach that had been issued and served by Mr Vesely, on behalf of Mr Selby, on 25 February 2004, alleging a breach of the use of the premises and demanding that Mr Sabri remedy the breach by ceasing to use the premises as a gambling hall.

Reasons and Decision

49 As many of the matters in dispute are factual, it is necessary to make findings as to the credit of the witnesses in this application. In this regard, I found Mr Sabri to be very evasive, obtuse and inconsistent in his evidence. His evidence was largely self-serving and I was left with the overwhelming impression that he was far from frank. On the other hand, I found Mr Lam and Mr Akbulut to give their evidence truthfully and frankly. These premises were not the only premises managed by them, and where they could not remember events they readily acknowledged this. Their evidence was also supported by documentary material.

50 Accordingly, where Mr Sabri’s evidence conflicted with that of Mr Akbulut or Mr Lam, I have preferred the evidence of Mr Akbulut and Mr Lam.

51 I also found that Mr David and Mr Moshi were not fully independent and gave their evidence in a way that they believed would assist Mr Sabri in his application.

(a) Arrears in Rent

52 The first matter in issue is purely factual and from the material before the Tribunal I find that as at 17 November 2003, Mr Sabri was 27 days late in paying the rent that was due and payable on 21 October 2003. In this regard, I accept the tenant ledger report that was annexed to the affidavit of Mr Akbulut. I note that this record is consistent with the receipts that were attached to the statement of Mr Sabri.

53 Accordingly, I find that as at 17 November 2003, Mr Sabri had failed to pay rent for a period in excess of fourteen days, enabling Mr Selby to exercise his right of re-entry into the premises pursuant to cl.30(b)(i) of the lease.

(b) Notice of Termination

54 Under cl. 30(c) of the lease, Mr Selby was required to serve on Mr Sabri written notice of his intention to exercise his right of re-entry and in that notice to state the “reason and demanding immediate possession” (c.f. s.129(8) of the Conveyancing Act 1919 which does not require notice in circumstances where the breach relates to the non-payment of rent). The lease did not prescribe how such a notice was to be served, but it was not disputed that personal service would suffice.

55 In my opinion, the letter of 17 November 2003 headed “Termination Notice” complied with the requirements of cl.30(c) of the lease. The fact that the letter did not, in terms of that clause, demand “immediate possession” does not render the Notice invalid or ineffective. The purpose of a Notice of this kind is to advise the lessee of the lessor’s intention to terminate the lease, prior to the agreed expiry date, and the reasons for such a termination. The Notice is also intended to give the lessee an opportunity to remedy the breach before the lease is terminated. Accordingly, “immediate possession” in cl.30(c) of the lease must be interpreted in such a way that it gives the lessee a reasonable time within which to remedy the breach. A notice, which gives the lessee 14 days within which to remedy the breach, in my opinion, would satisfy the requirement of “immediate possession”.

56 The fact that Mr Akbulut prepared an additional letter on 17 November 2003 requesting payment of arrears does not, in my view, alter the effect of the contents of the Termination Notice. The contents of this Notice was unequivocal and I accept the evidence of Mr Akbulut and Mr Lam that they reinforced the terms of the Notice in conversations with Mr Sabri. I also note that the time within which payment of the arrears was requested corresponded with the date on which Mr Sabri was requested to give vacant possession under the Termination Notice.

57 Mr Lui’s contention that Mr Akbulut had no authority from Mr Selby to terminate the lease is not, in my opinion, supported by the evidence. There was no dispute that Combined Real Estate had been appointed to act as Mr Selby’s agent in respect of the lease. Nor was there any evidence that this appointment was qualified in any way. Accordingly, Mr Akbulut as an employee of Combined Real Estate and the agent responsible for the day to day management of the property had authority to act on behalf of Mr Selby in respect of any of the matters the landlord was authorised to carry out under the lease. This included giving a Notice of Termination in accordance with cl.30(c) of the lease.

58 This leaves the question of whether Mr Sabri was served with the Termination Notice. Mr Sabri denies he had been personally served with the Notice and Mr Akbulut said he had personally handed the Termination Notice and the letter concerning arrears in rent to Mr Sabri, on 17 November 2003. He also said that he explained the contents of these letters. For the reasons already stated, I accept the evidence of Mr Akbulut in this regard.

59 On the basis of the reasons stated above, I find that the Termination Notice dated 17 November 2003 complied with the requirements of cl.30(c) of the lease and that Mr Sabri was personally served with this Notice.

(c) Waiver

60 In my opinion, there is no evidence to support a finding that the conduct of Mr Akbulut and Mr Lam amounted to a waiver of Mr Selby’s right to forfeit the lease. The Notice of Termination was unequivocal and as I have already mentioned the evidence of Mr Akbulut and Mr Lam, which I accept, is that they at all times informed Mr Sabri that the lease would be terminated on the basis of his failure to pay the rent on time. Mr Sabri makes reference to a conversation he had with a person called “Rob” from Combined Real Estate at the time of the premises were broken into. This conversation is contrary to the evidence given by Mr Akbulut and Mr Lam and in the absence of Mr Sabri calling “Rob” to give evidence that verifies Mr Sabri’s account of what was said, I have rejected evidence of this conversation.

(d) Relief against forfeiture

61 The Tribunal’s power, under s. 72(1)(d) of the Retail Leases Act 1994, to grant relief against forfeiture is similar to that exercised by courts in equity. It is a discretionary power that must be exercised having regard to each particular set of circumstances (see Hyman v Rose [1912] AC 623 at 631). However, some general principles have been established, particularly in relation to a forfeiture for non payment of rent. These were summarised by McLelland CJ in Hace Corporation Pty Ltd v F Hannan Pty Ltd (1995) 7BPR 97554 at 14,329 as follows:

“The general principals on which a application for relief against forfeiture is dealt with may be briefly stated as follows. The court treats a power to forfeit a lease for non-payment of rent as a security for the rent and, generally speaking, on payment of any outstanding rent the court will grant relief against any such forfeiture on such conditions as it may consider appropriate in the particular circumstances, which will usually involve payment of the lessor’s costs and expenses. Although relief against forfeiture for non-payment of rent should not be relieved against, where all arrears of rent have been paid and where no interests of third parties have intervened, is a very heavy burden and normally involves demonstrating that by reason of the conduct of the lessee or for some other reason, the grant of relief against the forfeiture would be inequitable (see generally Pioneer Quarries (Sydney) Pty Ltd v Permanent Trustee Co of NSW Ltd (1970) 2 BPR 9562, Steiper v Deviot Pty Ltd (1977) 2 BPR 9602, Tutita Pty Ltd v Ryleaco Pty Ltd (1989) 4 BPR 9635, Hayes v Gunbola Pty Ltd (1986) 4 BPR 9247 and Cicinave v Jasco Pty Ltd (1989) 5 BPR 11,139).

62 This does not however, mean that the lessee is entitled to relief against forfeiture as of right where all outstanding rent has been paid (see Pioneer Quarries (Sydney) Pty Ltd v Permanent Trustee Co of NSW Ltd (1970) 2 BPR 97145 at 9571).

63 In determining whether to grant the relief sought, the Tribunal is able to have regard to any breach of covenant, which may have been committed by the lessee. However, with the exception of a breach of the covenant to pay rent, the Tribunal can only have regard to those breaches that are the subject of a notice served under s. 129 of the Conveyancing Act 1919 (see Tutita Pty Ltd v Ryleaco Pty Ltd (1989) 4 BPR 97311 at 9638 and Pioneer Quarries supra at 9576). Subsequent breaches of the covenant to pay rent and any other breach that is the subject of a s. 129 notice can also be taken into account (Tutita supra).

64 In this case, the factual matters that are relevant to this issue are as follows:

(i) since June 2003, the lease having commenced on 21 March 2002, Mr Sabri was late in paying his rent and each month payment of rent became later and later;

(ii) Mr Sabri paid all outstanding rent on or about 16 January 2004 and it would appear that he has continued to pay his rent when it has fallen due and payable;

(iii) Mr Sabri’s failure to obtain development approval from Council for the premises to be used as a café until mid-2003;

(iv) Mr Sabri’s alleged illegal use of the premises; and

(v) Mr Sabri’s evidence before the Tribunal.

65 On the basis of the abovementioned principles, the payment of the outstanding rent and the continued payment of rent when it was due and payable are strong grounds on which to grant Mr Sabri relief against forfeiture as it places Mr Selby in the same position he was in prior to 17 November 2004. While there is evidence of a history of late payments of rent, in my opinion, Mr Akbulut’s contention that this history dates back to mid 2002 is not supported by the documentary evidence. I accept the evidence of Mr Akbulut that notices of rental arrears were served on Mr Sabri in August, September, October and December 2002 and again in August and October 2003. However, it would appear that during 2002, Mr Selby’s agents, incorrectly calculated what rent was outstanding because they had failed to give Mr Sabri credit for the agreed two months free rental. One month credit had been given but the second free month was not credited until January 2003.

66 However, Mr Horowitz, on behalf of Mr Selby has pointed to other factors, which he submits are grounds on which relief should not be granted.

67 In respect of the failure to obtain the necessary development approval, I note that under clause 10 of the lease Mr Sabri undertook to obtain, at his own expense, all necessary consents that were required from the Council or any other authority to carry on his business as a café. That approval was ultimately obtained on 21 October 2003, 19 months after the commencement of the lease. This breach was the subject of a termination notice dated 9 July 2003. The validity of this notice was not disputed. What was in dispute was whether Mr Sabri had received the notice and whether the delay was the fault of Mr Sabri or Mr Selby’s agent, Combined Real Estate. For the reasons already stated I do not accept the evidence of Mr Sabri in this regard. The responsibility clearly rested on him to lodge the development application and he did not adduce any evidence to support his assertion that he had given documents to Mr Selby’s agents to sign and they had failed to do so. In fact he was unable to state when he gave these documents to Mr Selby’s agent and when he asked for them to be signed. On the other hand I accept the evidence of Mr Akbulut that the delay was that of Mr Sabri and that the notice was sent to Mr Sabri in the ordinary way.

68 In respect of the alleged illegal use of the premises, this is the subject of a notice, dated 25 February 2004, pursuant to s. 129 of the Conveyancing Act 1919. There is no dispute that this notice was served. What was in dispute was whether the notice complied with the requisite prescribed form as set out in Schedule 6 of the Act (see s. 129(9)). In my opinion, the notice of 25 February 2004 complies with this form.

69 Although the notice was issued after Mr Sabri lodged his application it has not been argued that the Tribunal, if it finds the notice to be in the proper form, is prevented from considering this alleged breach for the purpose of Mr Sabri’s application for relief against forfeiture. What was in dispute was the allegation that Mr Sabri had used the premises for an illegal purpose, namely as a gambling hall. The notice does not make mention of selling alcohol illegally. Accordingly, I have not considered this particular allegation any further.

70 For the reasons set out below, I am not satisfied that the evidence supports a finding that Mr Sabri has used the premises for an illegal purpose.

71 The term “gamble” is defined in the concise Oxford Dictionary to mean the following:

“Play games of chance for money, esp for high stakes”

72 The Unlawful Gambling Act 1998 prohibits unlawful gambling and the operation of unlawful gambling premises. The term “gambling” is defined in s.4 to include “gaming, betting or wagering”. The term “gambling premises” is also defined in s.4 to mean, inter alia, “premises used for playing or taking part in an unlawful game”. The term “unlawful game” is defined in s.5 to include “any game with cards or other gaming equipment from which a person receives a percentage or share of the amount wagered”.

73 In this respect, while I accept the evidence of Mr Akbulut and Mr Lam that they saw customers in the premises playing cards and what appeared to be roulette, and that they saw chips being used, this in my opinion is not sufficient to establish that they were in fact using the premises for unlawful gambling. There is no evidence of money or any other property of value being exchanged in respect of these games. Mr Akbulut said that he mentioned his concerns to Mr Sabri, however prior to February 2004, he did not consider what he had seen was sufficient to issue a notice of a breach of the use of the premises. Neither did Mr Lam consider what he had seen as being a breach that warranted a notice to be issued. Again, Mr Lam does not state that he saw money or other property being exchanged.

74 The fact that cards were played at the premises or that the customers to the premises are primarily members of the Assyrian community is, in my opinion, not inconsistent with the premises being used as a café. There is no question that Mr Sabri’s café is unusual, but the evidence is that he serves coffee, tea and sandwiches at the premises. There is no evidence that members of the public are excluded from the café. The grate, which is before the entrance to the café was installed prior to Mr Sabri taking up occupation of the premises and his explanation of why it is sometimes closed is understandable.

75 This leaves Mr Sabri’s evidence before the Tribunal. As I have already stated, I found Mr Sabri was not a forthright witness, and I do not accept his denials that his customers did not play cards or other games at the café. However, I have also understood his denials as being in the context of the allegation of gambling. As I am not satisfied that the evidence establishes that gambling was taking place in the premises, I can not find that Mr Sabri has lied on oath.

76 In addition to this I find that Mr Sabri’s evidence demonstrates that his cafe business is not sufficiently profitable to meet the rental that is due under the lease. This, of course, does not prevent him from paying rent from other funds that he has access to. Although Mr Horowitz submitted that the only inference that could be drawn from such evidence was that Mr Sabri was funding his business through the alleged unlawful activity, in my opinion, this is not the only inference that can be drawn. However, the existence of access to other funds were not explored with Mr Sabri.

77 I find Mr Sabri’s evidence of having no records of expenses and income relating to his business as being a matter of concern, particularly given Mr Sabri’s long history in business. This failure and his failure to account to the Australian Taxation Office, is in my opinion indicative of Mr Sabri’s attitude towards meeting his responsibilities in respect of his business and his obligations under the lease. However, the question is whether this evidence when considered against the fact that for the last nine months he has paid his rent on time and there is no evidence of any further breaches of a covenant under the lease, is sufficient to refuse his application for relief against forfeiture. In my opinion, on balance, Mr Sabri’s past conduct is not sufficiently serious to refuse him relief against forfeiture on this occasion.

Relief from payment of rent

78 As mentioned above, Mr Sabri has also sought an order seeking relief from payment of rent during the period that the hole in the wall was not repaired (21 November to 14 December 2003). In my opinion, Mr Selby’s agents acted as quickly as they could and any delay in having the hole repaired was due to Mr Sabri’s conduct. He was clearly unco-operative. Furthermore, it would appear that he was able to cover the hole and continue to trade had he wished to.

79 Accordingly, I find that there is no basis on which to make the order sought.

Costs

80 Mr Selby has sought orders for costs pursuant to s.131 of the Conveyancing Act 1919. This section reflects the law as stated in Hace Corporation (see paragraph 61 above). However, s. 77A of the Retail Leases Act 1994 expressly provides that the Tribunal’s powers to award costs is governed by s. 88 of the Administrative Decisions Tribunal Act 1997. That section provides that the Tribunal may award costs “only if it is satisfied that there are special circumstances warranting an award of costs.”

81 In my opinion, this application does not give rise to any special circumstances warranting an award of costs to either party. However, the Tribunal may take a different attitude if Mr Sabri makes any future applications for relief against forfeiture as a result of a breach of a covenant of the lease.

Orders:

(1) Mr Sabri be granted relief against forfeiture.

(2) The term of the lease is extended to 20 March 2006 with an option to renew for one year.