Sarker and anor v World Best Holdings Limited and anor (No 4)
[2008] NSWADT 75
•12 March 2008
CITATION: Sarker and anor v World Best Holdings Limited and anor [2008] NSWADT 75 DIVISION: Retail Leases Division PARTIES: APPLICANT/CROSS RESPONDENT
RESPONDENT/CROSS APPLICANT
Abdul Sarker
World Best Holdings LimitedFILE NUMBER: 045136, 045137 HEARING DATES: 2- 5 October 2007 SUBMISSIONS CLOSED: 5 October 2007
DATE OF DECISION:
12 March 2008BEFORE: Chesterman M - ADCJ (Deputy President); Fairweather R - (Advisory) Non Judicial Member ; Harrison B - (Advisory) Non Judicial Member CATCHWORDS: Claim for declaration of rights, obligations and liabilities under a lease - Claim for payment of money - Unconscionability MATTER FOR DECISION: Principal matter LEGISLATION CITED: Administrative Decisions Tribunal Act 1997
Conveyancing Act 1919
Retail Leases Act 1994CASES CITED: Aspromonte Pty Ltd v Zagari [1999] NSWSC 831
Attorney General of New South Wales v World Best Holdings Ltd & Ors [2005] NSWCA 26
CAC Pty Ltd v Diamond Hill International Pty Ltd (1996) Butterworths Property Reports 14
754
Campbell v Payne and Fitzgerald (1953) 53 SR (NSW) 537
CCC Films Ltd v Impact Quadrant Films Ltd [1985] 1 QB 33
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64
Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1
Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623
Legione v Hateley (1983) 152 CLR 406Marshall v Council of the Shire of Snowy River (1994) BPR 14
447
Ogle v Comboyouro Investments Pty Ltd (1977) 135 CLR 444
Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd (2006) 230 ALR 56
[2006] FCAFC 40
Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Robinson v Harman (1848) 1 Ex 850
154 ER 363
Sarker v World Best Holdings Ltd (No 2) [2004] NSWADT 15
Sarker v World Best Holdings Ltd
World Best Holdings Ltd v Sarker (No 3) [2004] NSWADT 119
Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359
Shevill v Builders Licensing Board (1982) 149 CLR 620
Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105 at 132
World Best Holdings Ltd v Abul Sarker & Ors [2004] NSWSC 1164
Worsfold v de Goede [2002] NSWADT 273REPRESENTATION: APPLICANT/CROSS RESPONDENT
RESPONDENT/CROSS APPLICANT
M Ashhurst SC, barrister
R Angyal SC, barristerORDERS: 1. The Tribunal declares as follows:(a) that the Respondent/Cross Applicant’s notices
dated 25 July 2003 and 14 November 2003 respectively
purporting to terminate the lease between the parties commencing on 1 July 2003
were invalid(b) that on 27 July 2003 Respondent/Cross Applicant re-entered the leased premises in breach of section 129 of the Conveyancing Act 1919(c) that on 25 July 2003 and by its subsequent conduct the Respondent/Cross Applicant repudiated the lease
2. The Respondent/Cross Applicant is to pay to the Applicant/Cross Respondent the sum of $72
223.79 as damages (exclusive of interest) for breach of the lease and for unconscionable conduct
3. The application by the Respondent/Cross Applicant is dismissed
4. The Applicant/Cross Respondent’s claims for interest on damages
costs and interest on costs are to be resolved in accordance with the directions at paragraph [278] of these reasons.
REASONS FOR DECISION
Procedural history
1 This decision by the Tribunal relates to the second substantive hearing of proceedings under the Retail Leases Act 1994 (‘the RL Act’) that commenced in 2003. The proceedings comprise (a) a summons first taken out in the Supreme Court but transferred soon afterwards to the Tribunal (initially, as file 035087) under section 75 of this Act and (b) a cross application lodged in the Tribunal (initially, as file 035100).
2 The Applicant/Cross Respondent is Mr Abul Sarker. The Respondent/Cross Applicant is World Best Holdings Ltd (‘World Best’). They were represented at the hearing by Mr Ashhurst SC and Mr Angyal SC respectively.
3 Before the matter came on for its first substantive hearing, an interlocutory hearing in the Supreme Court and four interlocutory hearings in the Tribunal took place. Relevant features of each of these hearings and the decisions reached in them are outlined below.
4 The first substantive hearing of the case took place in the Tribunal on 5, 6 and 7 April 2004. On 25 June 2004, the Tribunal delivered its decision (Sarker v World Best Holdings Ltd; World Best Holdings Ltd v Sarker (No 3) [2004] NSWADT 119). It made an award of damages to Mr Sarker.
5 An appeal to the Supreme Court by World Best was allowed on 3 December 2004 (World Best Holdings Ltd v Abul Sarker & Ors [2004] NSWSC 1164), on grounds that are not relevant for present purposes. The Court set aside the Tribunal’s decision and ordered that the matter be remitted to the Tribunal to be heard and determined again.
6 On 11 August 2005, the Court of Appeal dismissed an appeal against this decision of the Supreme Court (Attorney General of New South Wales v World Best Holdings Ltd & Ors [2005] NSWCA 26).
7 Subsequently, an application to the Tribunal by World Best for removal of the proceedings to the Supreme Court under section 76A of the RL Act was dismissed. World Best unsuccessfully challenged this decision in the Supreme Court and in the Court of Appeal.
8 Because the claims made in this case include allegations of unconscionable conduct, the Tribunal is constituted in accordance with Clauses 1 and 4 of Part 3B of Schedule 2 of the Administrative Decisions Tribunal Act 1997 (‘the ADT Act’). It is constituted by a Deputy President who is a member of the Retail Leases Division, assisted by two other appropriately qualified members acting in an advisory capacity only.
Outline of evidence
9 During September 1997 World Best purchased Minto Mall Shopping Centre (‘the Mall’), a retail shopping centre comprising 75 shops.
10 Early in June 2002, World Best, through its agent KMPB Group Pty Ltd (‘KMPB’), commenced negotiations with Mr Khorshed Alam for a lease of Shop 50A in the Mall to Dhaka Corporation Pty Ltd (‘Dhaka’), a company owned by Mr Alam.
11 These negotiations were conducted by Ms Tracy Helen James, who has been at all material times the secretary of World Best. During 2002 and 2003, she was also the general manager of KMPB and the centre manager of the Mall. Her principal office was in the CBD and she also had an office at the Mall. In 2003, she had been involved in shopping centre management, though not continuously, over a period of about 12 years.
12 On 17 June 2002, Dhaka took occupation of Shop 50A in order to commence fit-out. Its lease of the shop commenced on 1 August 2002 and had a term of five years, with a three-year option of renewal. The permitted use set out in the disclosure statement and in the lease itself was as follows:
13 Special condition 5 of the disclosure statement stated: ‘The Lessor agrees that no other Indian grocery and Halal Meat Shop will be allowed to operate in the shopping mall during this lease term’. The corresponding clause in the lease itself was special condition 4, which was as follows:
The premises shall be for the retail sale of Indian grocery and spices, Islander, Fijian specialty foods and spices, Halal meat and poultry, Indian Garments, Asia vegetables, pre-cooked Indian foods, phone cards and rental Indian videos (no other language, Indian only).
14 Dhaka commenced business in Shop 50A, trading as India Imports. According to Ms James, she was aware at all times during the ensuing dealings with the Applicant/Cross Respondent in these proceedings, Mr Abul Sarker, that the lease to Dhaka contained this exclusivity clause.
“We agree that if You are not in default under this Lease You will be the exclusive retailers of Indian groceries and Halal meats during the term of this Lease and any renewal thereof”.
15 Mr Sarker is an Australian of Bangladeshi origins. He has degrees in science and information technology. Before he commenced negotiations with World Best, he had worked in the telecommunications industry, as part owner of a restaurant, as a taxi driver and as a part-time coach of school pupils in English, chemistry and mathematics.
16 Most of the relevant dealings between Mr Sarker and World Best occurred during 2003. Unless otherwise indicated, this is the year of any date given in the ensuing account of the evidence.
17 During the first half of April, Mr Sarker filled out an application form for a lease of Shop 48B in the Mall (hereafter, ‘the Premises’). This shop is situated in the same row of shops as Shop 50A, with three shops between them.
18 In his application, Mr Sarker specified the type of business that he wished to operate as ‘Indian outfit, jewellery and cosmetics’. He gave the following description of the products in which he wished to trade:
19 In mid-April, Mr Sarker and Ms James held one or more discussions, about which they gave conflicting evidence.
Imported Indian dresses, jewellery cosmetics and some other herber ( sic ) food, the store will also be use ( sic ) for displaying various Bangladeshi products for customers and relevant retailers like product promotion.
20 Mr Sarker’s version in one of his affidavits was as follows. He rang Ms James at her principal office and said words to the following effect: ‘I’ve changed my mind. I would like to open a grocery store instead of an Indian jewellery and garment store.’ He added that he would also like to stock some Indian garments during the Punja Festival and the Eid Festival, as there were many Indian and Bangladeshi people who lived near the Mall. Ms James replied that she did not know whether it would be suitable to have a store selling both groceries and garments, but that after thinking about it she would let him have her response. A day or two later, she left a message for him to call her, but he was too busy driving a taxi to return her call.
21 According to Ms James, Mr Sarker rang her at her principal office and said that he had changed his mind and would now like to open an Indian grocery store similar to ‘the shop opposite the post office’ (which was Shop 50A). She said that, to the best of her recollection, this shop had an exclusive rights clause, so he could not open another Indian grocery in the Mall. He said that this was unfair and that because many Indian people lived in the Minto area there should be at least two Indian grocery shops. He said he would ask the lessees of Shop 50A to agree to his opening a shop of this nature. She said that she doubted whether they would do this. She said also that she would check whether the lease of Shop 50A did have an exclusive rights clause and would let him know the next day. A day or two later, she rang him and told him that there was a clause of this type in the lease. He said that this was disappointing and that he would consider whether to revert to his original proposal of an Indian fashion and jewellery shop.
22 On or about 15 May, Ms James rang Mr Sarker and asked whether he would be interested in renting a shop at a nearby centre, the Miller Shopping Centre, which World Best also owned. He claimed that during this telephone call she said that World Best had not yet decided about leasing the Premises because it had attracted a number of other applications from potential tenants. She testified, but he denied, that she told him that no tenant in the Miller Centre had an exclusive right to sell Indian groceries.
23 Mr Sarker, together with his wife, inspected the Miller Centre on 17 May. They then met Ms James there, as arranged. He told her that he did not like the centre or its location.
24 According to his version of their conversation, he said also that the presence of many Bangladeshi residents near the Mall would be good for the business that he wished to conduct there. Her reply was that she could not confirm anything because there were plenty of applicants who were interested in the Mall.
25 According to her version, she again mentioned the exclusive rights clause in Dhaka’s lease. At this point, Mr Sarker, having conversed with his wife in what Ms James took to be an Indian language, indicated that he might be interested in opening an Asian grocery shop at the Mall, in which he would not sell Indian groceries.
26 On 19 May, Mr Sarker rang Ms James at her principal office.
27 He testified that, in response to a question from him about the Premises, she said that World Best had agreed to his opening an Asian grocery store in them. She went on to say that a lease would be prepared and that he would be contacted again to arrange a time for him to execute it.
28 According to her evidence, she told him that she had checked again the lease of Shop 50A at the Mall and that he could open an Asian grocery shop in the Premises, so long as he agreed to sell Chinese, Japanese, Korean and other Asian groceries but not Indian groceries. He agreed to this, so she said that a lease offer would be sent to him shortly.
29 On 28 May, Mr Sarker met with Ms James at her principal office. Again, there was conflicting evidence as to what occurred.
30 Mr Sarker stated that he attended with a friend, Mr Kamrul Alam. (Mr Kamrul Alam did not give evidence in these proceedings.) At about 10.30 am or 11.00 am, when the meeting commenced, Ms James handed him a letter dated 28 May from KMPB, containing an offer of a lease of the Premises (‘the lease offer’) and a Lessor’s Disclosure Statement. To the best of his recollection, she also gave him a copy of a document called the Minto Mall Shopping Centre Tenancy Fitout Guide (‘the Fit-out Guide’). She said that there were still more applicants who wished to rent the Premises, and that if he wanted to accept the offer, he would have to deposit one month’s rent and sign the letter of offer by 2.30 pm. that day. She added that he could have a fit-out period of four weeks and the first ten weeks at a discounted rent of 50 percent. Having decided to accept the lease offer, he signed the letter and returned it to Ms James’ office by 2.30 pm. He also paid a rent deposit of $4,042.50. Ms James told him that a lease would be sent out to him.
31 According to Ms James, there was a discussion regarding the permitted use for the shop, in which words to the following effect were said:
32 Ms James stated in her affidavit that ‘her office then prepared’ the lease offer and the Disclosure Statement and she handed them to Mr Sarker.
James: In the disclosure statement, we will put in a special condition, which provides that you can only sell groceries for Chinese, Japanese, Korean and Malaysian ( sic ), but not Indian groceries.
Sarker: You don’t need to put all that in. I will keep the Indian grocery shop owner happy. I would not like to upset him as he comes from the same country as I do. I guarantee you that I will not sell any Indian groceries. You should believe me because I’ve been in business for many, many years. As I’m only going to sell Asian groceries as we have discussed, I also want an exclusive right to do so in the Centre, which should be put in the lease.
James: That will be all right.
33 In cross-examination, Ms James gave a different account of the circumstances relating to the lease offer. She said that in the first version prepared in her office the provision relating to the permitted use contained words expressly indicating that Mr Sarker would not be permitted to sell Indian groceries or Halal meats. But because this wording would, she thought, be unduly long and complex, and because Mr Sarker asked her to ‘trust him’ and promised that he would abide by a restriction of this nature, it was omitted from a second version of the lease offer. This was the version ultimately given to Mr Sarker.
34 The lease offer specified ‘Asian Grocery Shop’ as the permitted use and included the following clause as Special Condition 7:
35 The Disclosure Statement defined the permitted use simply as ‘Asian Grocery’ and included the same Special Condition 7.
“The lessee will get the exclusive right for the Asian Grocery Shop in the Center during the lease term and the option term”.
36 In cross-examination, Ms James agreed with the proposition, put to her by Mr Ashhurst, that the purpose of a disclosure statement was to set out all the terms of the agreement for lease that a lessor and a lessee had reached. She said, however, that on this occasion she had not included any provision excluding Indian groceries or Halal meats from the range of goods to be sold by Mr Sarker. Her reasons were that, as she put it, ‘in Australia, sometimes a verbal agreement is acceptable’ and that he had said: ‘Look, you can trust me. We don’t need to have that in writing.’
37 The Disclosure Statement also provided as follows: (a) it set out the lease period as three years from 1 July 2003, with a three-year option of renewal; (b) it fixed the rent for the first year at $42,000 plus GST, with annual increases of 5 percent; (c) it required that a bank guarantee in the sum of $12,127.50 be furnished ‘prior to the Lease Commencement Date’, which it specified as 1 July 2003; (d) it stated that ‘The Lessee agrees that the fit-out cost must be not less than $40,000’; (e) it provided for half rent for ten weeks from the rent commencement date and a four-week fit out period from the hand-over date; (f) it specified a hand-over date of 3 June 2003; and (g) it set out core trading hours for each day of the week.
38 Under the heading ‘Lessor’s requirements as to quality and standards of fittings in shop’, the Disclosure Statement stated: ‘As set out in the Tenancy Fitout Guide (if any) and in any event to be of a premium quality.’ In Special Condition 4, it provided:
39 In addition to a number of specific requirements, which are outlined below, the Fit-out Guide stated as follows on page 4: ‘On completion of your plans and receipt of lessor approvals it may be necessary for you to submit to ( sic ) the Council for approval.’ On page 8, it stated: ‘Vinyl tiles or sheet vinyl flooring will not be allowed without written permission of the tenant co-ordinator.’ It also stated: ‘Please note that all fixtures and fittings are to be self supported and such fixtures shall not be fixed to the lessor walls.’ A section of the Guide, commencing on page 10, set out requirements governing the ‘preliminary design submission’.
“In compliance with the Minto Mall Tenancy Fit-out Guide, the lessee agrees to design and fit out the tenancy (shop signage and shop interiors) to a high quality, which should be outstanding both in visual appearance and as the show place of the Lessee’s merchandise”.
40 Mr Sarker testified that on or about 30 May, Ms James told him that he could collect a copy of a draft of his lease from the management office at the Mall. He said that he did so. In addition, in a conversation with Ms James, he obtained her consent to changing the phrase ‘Asian grocery’ in the Disclosure Statement to ‘Asian Supermarket’.
41 Mr Sarker said that he then visited his solicitor, Mr Gary Ling, in order to receive advice on the terms of the Disclosure Statement. Mr Ling explained the importance of this Statement to him and read it through. Mr Ling also made the alteration, in handwriting, to which Ms James had consented. Having signed each page of the Statement, Mr Sarker delivered it to the management office at the Mall, on a date, which he variously gave as 30 May and 1 June.
42 Ms James denied having ever given approval to changing the phrase ‘Asian grocery’ in the Disclosure Statement to ‘Asian Supermarket’. She said that World Best would never have agreed to such a description for a business such as Mr Sarker proposed, since there were a number of larger supermarket stores, such as Coles, K-Mart and Aldi, in the Mall.
43 On 3 June, Mr Sarker obtained access to the Premises for the purposes of fit-out.
44 On 3 or 4 June, Mr Badrul Alam, who is a brother of Mr Khorshed Alam, telephoned Ms James. According to his written statement, he told her that a shop opening ‘next door to’ Dhaka’s shop would be selling Indian groceries. Her reply was to the effect that the products sold would be Asian groceries, which would comprise ‘continental groceries’ from other parts of Asia, such as China and Malaysia, but not Indian groceries. She said also that the shop-owner could well do business in ‘continental groceries’ even though he came from ‘your country’. Mr Badrul Alam then referred to his brother’s exclusive right to sell Indian groceries and Halal meats. Towards the end of the conversation, Ms James suggested that on account of coming from the same country, ‘you people’ could ‘sort out this for yourselves’. He said to her that he would send her a letter. Mr Badrul Alam was not required for cross-examination.
45 On 4 June, Mr Khorshed Alam wrote a letter on Dhaka’s behalf addressed to Ms James at World Best. It was in the following terms:
46 In a reply dated 6 June, Ms James wrote as follows:
Dear Helen
This has come to my knowledge that there will be another shop opening at my next door under the name ASIAN GROCERIES. Reference to the phone discussion between you and my brother - you have mentioned that they will be selling Chinese, Japanese, Korean groceries. If they stick to those product lines - I do not see any problem. But if the organizers are from my same country - I am very much concerned that once they start operating - they might start stocking Indian Groceries as well.
According to the terms and conditions on page 25 under special conditions – it is clearly stipulated “I will be the exclusive retailers of Indian groceries and Halal Meat” In the detail product list which were agreed mutually include Indian Video Cassettes, Indian sweets, Indian first foods, Indian clothes etc. I request you to provide your new tenant clear guide lines regarding which product lines he would be able to stock and avoid stocking all those items we are permitted to sell.
After a year of operation when my business has started to reach break even – any similar business with similar products line next door will ruin my business prospect. In that event World Best Holdings Limited will be liable for my loss.
Will be awaiting your formal reply to this letter.
47 In cross-examination, it was pointed out to Ms James that this letter did not refer to the existence of any oral agreement between her and Mr Sarker to the effect that he would not sell Indian groceries or Halal meats. Her response was that she believed she told Mr Khorshed Alam about this agreement in a telephone conversation with him. But no such conversation was mentioned in her affidavits.
1. As stated in the lease, you are the exclusive retailer of Indian grocery, while the new shop is an Asian groceries ( sic ) …
2. As an Indian grocery retailer, you are permitted to sell mainly Indian products. The Asian Grocery Shop is allowed to sell Asian products, which may include Chinese, Japanese, Korean …
3. Whether the new Asian grocery operator is from the same country as you generally has nothing to do with permitted use of the premises under the lease. So long as he sells Asian products other than African, European … products, it is unreasonable for us to intervene if the products fall within the category of Asian grocery.
4. However we would convey your concern to the Asian grocery operator and it is our hope that based in good faith you and he should endeavour to minimize business conflicts if any and achieve mutual benefits.
5. The owner of the shopping centre is not and will not be liable for any of your business loss.
48 Between 9 and 16 June, Mr Sarker made what he said was a business trip to Bangladesh to make contact with suppliers. He also visited his mother, who was in poor health. He stated that the total cost of this trip was $7,500. But he agreed in cross-examination that the only document put into evidence to provide substantiation for his expenses was a receipt dated 8 June from a travel agent, Twin Wings Air Travel, for $1,510.
49 Ms Melissa Timmins, who was the assistant centre manager for the Mall, testified that around the middle of June, she asked Mr Sarker to let her know when he would be commencing to trade, as she wanted to organise advertising for his ‘grand opening’. She said that he agreed to do so.
50 On 16 June, L W Williams & Associates, solicitors for World Best in relation to the lease to Mr Sarker, sent a formal lease document (‘the Lease’) to him. The covering letter required that it be executed and returned, together with cheques in payment of various costs, a certificate of currency for the required insurance policy and a ‘Security Bond/Bank Guarantee in the sum of $12,127.50’.
51 The terms and conditions regarding the period of the lease and the identity of the Premises were in substance the same as in the Disclosure Statement. The commencing date was 1 July 2003. The lessee’s obligation to pay rent was set out in clause 6.1. The permitted use (item 13 of the reference schedule) was stated to be ‘Asian grocery store’.
52 Under clause 13, the lessee was required to provide a bank guarantee on or before the commencing date. The amount of the guarantee was specified in item 17 of the reference schedule to be $12,127.50.
53 Clause 18.1 stipulated that the lessee must use the Premises only for the permitted use.
54 Clause 18.2 required the lessee to trade ‘properly and efficiently’, unless prohibited by law, during the core trading hours specified in the Disclosure Statement.
55 Clause 20.1 stipulated that the lessee must not carry out works to the premises without World Best’s approval. Clause 20.2(a) to (d) required that all such works be carried out ‘by contractors approved by’ the lessor, ‘in a proper and professional manner’, in accordance with ‘plans, specifications and schedule of finishes required and approved by’ the lessor, and ‘in accordance with all laws and the requirements of authorities’. Clause 20.2(e) obliged the lessee to observe the provisions of the ‘Tenancy Fit-Out Manual’, which was required to be ‘read in conjunction with’ clause 20.
56 Clause 24.1 and 24.2 provided as follows:
57 Clause 32.4, under the heading ‘Waiver and variation’, stated: ‘A provision of or a right under this lease may not be waived or varied except in writing signed by whoever is to be bound.’
24 Default
Essential terms
24.1 Each of Your obligations to pay money and Your obligations under clauses 13, 14, 16, 18, 20 (except under clauses 20.3 and 20.5) and 21 are essential terms of this lease. Other obligations under this lease may also be essential terms.
Our right to end this lease
24.2 We may end this lease by giving You notice or by re-entry if You:
(a) repudiate Your obligations under this lease
(b) do not comply with an essential term of this lease; or
(c) do not comply with an obligation under this lease (which is not an essential term) and, in Our reasonable opinion:
(i) the obligation can be remedied, but You do not remedy it within a reasonable time after We give You notice to remedy it;
(ii) the non-compliance cannot be remedied or compensated for; or
(iii) the non-compliance cannot be remedied but We can be compensated and You do not pay Us compensation for the breach within a reasonable time after We give You notice to pay it.
58 Clause 33.1, under the heading ‘Special conditions’, stated:
59 Clause 33.5 stated:
“You agree to fit out the premises in accordance with the Minto Mall Tenancy Fit-Out Guide and that You will use premium materials and qualified tradespersons to ensure that the design and appearance of the fit-out will be of the highest standard and at a cost of not less than $40,000.00.”
60 On 27 June, Mr Sarker deposited $15,000 into an account in his name at the Commonwealth Bank, Ingleburn and requested the Bank to issue a bank guarantee for the amount of $12,127.50. He testified that he was told that there would be a delay in providing this, as it would be issued from the Bank’s branch at Liverpool. He was told that Mr Sharma, an employee at that branch, would be attending to it.
“Notwithstanding any other provisions to the contrary herein we will not permit any other tenant to operate an Asian Grocery Shop within the Centre without Your prior consent during Your occupancy of the Premises”.
61 On or about 27 June, Mr Sarker executed the Lease at Mr Ling’s office.
62 On 30 June, World Best received from Campbelltown City Lawyers, acting on instructions from Dhaka, a letter dated 25 June, containing the following passages:
63 In her affidavit, Ms James said nothing to indicate that she, or anyone acting under her instructions, either advised Mr Sarker of these concerns expressed by Dhaka and by its solicitors or asked him to provide an inventory of the items that he proposed to sell. In cross-examination, however, she said that on instructions from her a member of her staff – she mentioned Ms Melissa Timmins (who gave evidence) and Mr Bill Liu (who did not) – might have told Mr Sarker of the contents of Mr Khorshed Alam’s letter of 4 June.
“With respect, we see it as commercially improbable for 2 parties with opposing commercial interest to be expected to simply negotiate away their respective rights to trade various inventories against their own interests.
Accordingly, we request that you immediately notify the incumbent lessee of our client’s concerns and request that you provide our firm with a list of inventory items that they propose to sell …
Please advise us within 3 days that you intend to proceed in this manner. Alternatively, we shall take our client’s instructions to proceed to have this matter mediated before the Retail Leases Tribunal”.
64 On 30 June, Mr Sarker registered a business name and arranged for electricity to be connected to the Premises.
65 On 1 July, Mr Sarker delivered to Mr Ling three cheques and a certificate of currency for the insurance, to be sent by Mr Ling to World Best’s solicitor (Mr Yee, of L W Williams & Associates). According to an affidavit sworn by Mr Ling, Mr Sarker told him that he had been unable to procure the bank guarantee required by World Best and that he was waiting on his bank to process the application for a guarantee that he had submitted. Mr Ling was not required for cross-examination.
66 Mr Ling stated in his affidavit that on 1 July he told Mr Yee on the telephone that he was about to send the Lease, the certificate of currency and the cheques. In addition, he said: ‘We are still waiting on the bank guarantee. As soon as I get that I will get it across to you.’ Mr Yee replied ‘That will be fine’. Mr Yee did not give evidence.
67 On 1 July, Mr Ling sent the promised documents to Mr Yee. In the Lease, the permitted use had been amended in handwriting from ‘Asian grocery store’ to ‘Asian Supermarket’. In a covering letter, Mr Ling said: ‘The Bank Guarantee is being processed by the Bank and we will forward it to you as soon as it is received.’ He also asked for the registered Lease to be forwarded to his office after completion. The letter and these documents arrived at Mr Yee’s office three days later.
68 Mr Sarker said in an affidavit that following his request to the Commonwealth Bank for a guarantee on 27 June, he contacted Mr Sharma ‘at least three times’ and asked, without success, that it be issued. He did not mention, however, that according to a statement of this account that was tendered by World Best, the balance in the account fell on 17 July from $13,180.05 to $7,699.25, well below the amount of $12,127.50 required for the guarantee. In cross-examination, he disclosed that the withdrawals giving rise to this deficiency of funds were made for the purposes of various commercial transactions that were unrelated to the business that he was preparing to conduct at the Premises.
69 Eventually, in circumstances outlined below, Mr Sarker sought to substitute for the guarantee a bank cheque for $12,127.50, dated 28 July and provided by Westpac Bank, Kogarah.
70 During July, Mr Sarker continued fit-out operations in the Premises. The nature and the quality of the fit-out that he installed are matters of dispute in this case.
71 Mr Sarker alleged in an affidavit that by 31 July he had paid about $32,000 to tradespeople in connection with the fit-out and that the total amount ultimately paid out by him was $38,495.32. He alleged also that the value of ‘non-professional labour’ that he and his wife carried out was of the order of $13,750. Annexed to the affidavit were invoices purporting to substantiate his claim of having incurred expenses totalling $38,495.32. Mr Sarker was not cross-examined with regard to these figures.
72 World Best maintained, however, that his expenditure on the matters dealt with in the Fit-out Guide could not have been more than $10,000. In support of this assertion, it relied on five reports prepared for it by Mr Albert Philpott, who is a licensed builder and real estate agent. Mr Philpott inspected the Premises initially on 1 August, then on a subsequent date between (it would seem) 19 September and 23 November. He was not required for cross-examination, but the transcript of his cross-examination at the hearing in April 2004 was admitted into evidence.
73 The significant opinions expressed by Mr Philpott in these reports were as follows. First, he was highly critical of the quality of much of the fit-out. He said, for instance, that the walls, which had been painted, had not been properly prepared for painting and that the sign for the shop was of very poor quality. Secondly, he stated, giving details, that in his opinion a large proportion of the invoices annexed to Mr Sarker’s affidavit did not relate to fit-out expenses at all. He estimated that by 1 August the amount spent was likely to have been around $8,000 and that by the time of the second inspection this amount had increased to about $14,000. Thirdly, he pointed out that at his first inspection, he found that the floor was covered partly by ceramic tiles and partly by vinyl sheets, which had been poorly laid. He considered that it was uneven and unsafe. At his second inspection, he found that ceramic tiles had been laid over the whole floor, but again that they were poorly laid.
74 During his cross-examination at the earlier hearing, it was put to Mr Philpott that he had unwarrantably interpreted the concept of fit-out in the Fit-out Guide as confined to capital works, with the result that he had significantly under-estimated the amount of expenditure relating to fit-out that Mr Sarker had actually outlaid. Mr Philpott’s answers did not contain any material response to this criticism.
75 In cross-examination at the recent hearing, Mr Sarker admitted that he had laid vinyl flooring without obtaining permission to do so from World Best or KMPB. He said that he had overlooked the requirement to obtain permission contained in the Fit-out Guide.
76 Photographs taken by Mr Philpott showed that some shelves that Mr Sarker had erected in the Premises were fastened to the wall. In cross-examination, Mr Sarker claimed that this was not the case, and also that he was not aware that the Fit-out Guide prohibited this.
77 Mr Sarker did not dispute that he completed his fit-out and, indeed, commenced trading without having submitted any plans of his proposed fit-out for approval by World Best and without having applied to Campbelltown City Council for development approval. In relation to the latter requirement, he said that he did not realise that he needed Council approval, as this was the first occasion on which he had tried to set up a retail shop in Australia and he had no knowledge of the procedures.
78 Between 17 and 24 July, Mr Sarker purchased stock, which included a range of ingredients used in Indian cuisine and also Halal meats.
79 According to Mr Sarker, he advised Ms James around the middle of July that the fit-out was proceeding more slowly than he expected. He said that her reply was that if he needed more time that would present no problems for her. Ms James denied this.
80 Mr Sarker also said that Ms James visited the Premises on 19 or 20 July and commented that it looked ‘very good’ and ‘very bright’. Ms James denied this.
81 On 16 July, Campbelltown City Lawyers said in a letter to Ms James that they had had no reply to their letter of 25 June, or to two telephone calls made since then, and that they would have the matter listed for mediation if no reply had been provided by 18 July.
82 On 18 July, Ms James, in her capacity as General Manager of KMPB, faxed a letter to Campbelltown City Lawyers. It reaffirmed KMPB’s intention that Dhaka should have exclusive rights under clause 5 of the special conditions in its disclosure statement to sell Indian groceries and Halal meats in the Mall. It continued as follows:
83 In a reply sent by fax on 23 July to Ms James at her principal office at World Best, Campbelltown City Lawyers stated that they believed it ‘necessary and also within your rights to demand a list of proposed inventory items’ from Mr Sarker and that if this were not done within seven days they would institute proceedings against both World Best and Mr Sarker.
“The new shop which is going to open soon is an "Asian Grocery" shop which trades in Asian products. It is common knowledge that the definition of an Indian Grocery Shop and an Asian Grocery Shop is different. Clause 5 of the special conditions in the disclosure statement does not prejudice your client’s rights if the owner allows a shop like an Asian grocery other than another Indian grocery shop to trade in the centre.
We will again express your client’s concern to the Asian grocery shop tenant in relation to the items he is going to sell, but we are not entitled to require him to provide us a list of inventory items if they are within the permitted use of the premises”.
84 On 23 July, Mr Sarker commenced trading from the Premises under the name ‘Asian Supermarket’.
85 Ms Timmins testified that on this same day she visited the Premises. In cross-examination, she said that she had been aware between 3 June and 23 July that Mr Sarker had been given keys to the Premises for the purpose of installing fit-out, but that she did not know whether installation was taking place. She also claimed in cross-examination, though not in her affidavit, that during this period she had tried unsuccessfully to gain access to the Premises by knocking on the door, and that she had been unable to contact Mr Sarker by telephone. She acknowledged however that around the middle of June, as mentioned above, she did see him at her office in order to discuss advertising.
86 Later on 23 July, Ms Timmins, in the course of a telephone conversation with Ms James, advised her that Mr Sarker had commenced trading. She also told Ms James that all the products and groceries being displayed appeared to be Indian and that the signage, which looked very poor, had prompted complaints from other tenants in the Mall.
87 According to Ms Timmins, during further conversations with Mr Sarker on 23 and 24 July, she asked Mr Sarker for a product list, but he said that he did not have to give her one and that he was entitled to sell Indian products as well as any other kind of Asian grocery. Ms Timmins also said in cross-examination (though not in her affidavit) that on 23 July she asked Mr Sarker for a fit-out plan, having not previously made this request to him.
88 Mr Sarker testified that at about this time he showed invoices for his stock to Ms Timmins, who said ‘That's fine.’
89 In cross-examination, but not in any of her affidavits, Ms James alleged that at some stage between 23 and 25 July she asked Mr Liu to advise Mr Sarker that she was not satisfied with the quality of the fit-out in the Premises. She said further that Mr Liu reported back to her that he had raised this matter with Mr Sarker, but that Mr Sarker had refused to comply with the Fit-Out Guide.
90 On 24 July, Ms James instructed Mr Philip Biber, solicitor, to act in this matter on World Best’s behalf.
91 On 25 July, Mr Sarker and his wife deposited in a bank account in their names at the National Australia Bank the net proceeds, totalling $48,869.94, of a loan that they had obtained from Sydney Home Loans. The documents that they had submitted to Sydney Home Loans stated that this was intended to constitute a refinancing of their home loan. Evidence given by Mr Sarker in cross-examination was, however, to the effect that he actually wished to use this money in order to finance his business at the Mall.
92 Also on 25 July (which was a Friday), Ms Timmins delivered to Mr Sarker a formal letter from Mr Biber bearing that date (‘the first termination notice’). She did this towards the end of the afternoon.
93 In its penultimate paragraph, this letter, referring to clause 24.2 of the Lease, gave notice that the Lease was ‘hereby terminated’ and required removal of all Mr Sarker’s stock by 4.00 pm on Sunday 27 July.
94 Earlier, the letter stated that while Mr Sarker had executed the Lease, World Best had not done so. It indicated however that by virtue of section 8 of the RL Act, it seemed that the lease was deemed to have existed from the time when Mr Sarker took possession.
95 The letter also listed the grounds allegedly justifying the termination of the Lease by World Best. These were prefaced by the following statement:
96 The letter then listed provisions within the Disclosure Statement, the Fit-out Guide and the Lease that Mr Sarker had allegedly breached. In summary, the alleged breaches were of the following obligations: to obtain prior approval for the works done to the Premises; to install fit-out of the required standard; to spend at least $40,000 on fit-out (the letter alleged that the expense incurred ‘would not even be one-tenth of that amount); not to lay vinyl flooring without obtaining permission; and to obtain the required bank guarantee before the commencing date. On the basis of these alleged breaches the letter asserted:
“My client has a number of serious concerns, many of which have been previously expressed to you, regarding your tenancy which are also detailed below”.
97 In a letter to Campbelltown City Lawyers also dated 25 July, Mr Biber referred to the previous correspondence concerning Dhaka’s exclusivity clause and stated:
“You have repudiated your obligations under the Lease, in particular in relation to compliance with the Tenancy Fit-Out Guide, the quality of the fit-out, the amount to be expended and provision of the Bank Guarantee”.
98 On 27 July, Ms Timmins, with the support of two security guards employed by World Best, changed the locks of Shop 48B after Mr Sarker and some customers had left it. Ms Timmins also took some photographs of the shop.
“I am instructed to advise that this particular matter is now a 'non issue'. I have been instructed today to serve a notice of termination of the lease to Mr Sarker … Mr Sarker has been requested to remove his stock no later than Sunday 27 July 2003 …”.
99 Mr Sarker testified that during the period between 23 July, when he commenced trading, and 27 July, when he was evicted from the Premises, his estimated daily net profit was $107.14. He claimed that if he had been permitted to trade without interruption, this figure would have increased by the end of 2003 by ‘at least 35 percent’.
100 On 28 and 29 July, staff employed by World Best and supervised by Ms Timmins removed all of Mr Sarker's non-perishable stock and stored it in a vacant shop nearby. They left some perishable stock in freezers inside the Premises.
101 On 28 July, Mr Ling told Mr Biber on the telephone that he had in his possession a bank cheque for the guarantee amount of $12,127.50.
102 On 29 July, a number of faxed letters passed between Mr Biber and Mr Ling, and subsequently between Mr Biber and Kemp Strang Lawyers (‘Kemp Strang’), whom Mr Sarker had instructed to act for him. The relevant parts of this correspondence are as follows:
103 On 31 July, a summons taken out by Mr Sarker against World Best was heard in the Supreme Court. Upon Mr Sarker giving the usual undertaking as to damages, Windeyer J made the following orders:
1. Mr Ling referred to his letter of 1 July 2003 to L W Williams & Associates (see [67] above), adding that this firm had raised no objection to the delay in providing the guarantee and that no further mention had been made of this matter until Mr Biber’s letter of 25 July to Mr Sarker. He confirmed his telephone advice to Mr Biber that a bank cheque for the guarantee amount was available for immediate payment to World Best. He also said that prior to sending the first termination notice World Best had raised no objection to the fit-out being installed by Mr Sarker. He asserted that the termination of the Lease by World Best was unlawful and that if possession of the Premises and Mr Sarker’s stock had not been restored by 1 p.m. on that day, he had instruction to sue for recovery of possession and for damages.
2. In a reply to Mr Ling, Mr Biber asserted that provision of the bank guarantee was an essential term of the Lease, which Mr Sarker had breached, and that ‘the fact that you now hold a bank cheque in favour of my client is of little assistance now that the lease has come to an end’. Mr Biber also reiterated World Best’s claim that Mr Sarker had failed to comply with the Fit-Out Guide, adding that ‘the amount expended on the fit-out evinces a clear intention by your client that he never intended to be bound by his fit-out obligations’. He suggested that Mr Sarker should arrange for removal of the stock, to which World Best made no claim.
3. In two separate letters to Mr Ling, headed ‘without prejudice’, Mr Biber enclosed a disclosure statement for a proposed new lease to Mr Sarker for a three-year term commencing on 11 August 2003. He indicated that the new lease would not be granted unless World Best received from Mr Sarker both the bank cheque for $12,127.50, constituting a security deposit in lieu of a bank guarantee, and a detailed fit-out plan involving expenditure of at least $40,000. The new disclosure statement stated the permitted use as: ‘Asian Grocery Store (but see Special Condition 4 on page 2)’. This condition was in the following terms:
Notwithstanding the “Permitted Use” described on page 1 of this Disclosure Statement, the Lessee will agree with the Lessor that the Permitted Use will be described in the Lease in the following terms:
4. In a letter to Mr Biber, Kemp Strang repeated the statements made by Mr Ling about the bank guarantee, the fit-out and the unlawfulness of the first termination notice. They indicated that Mr Sarker had instructed them to approach the Duty Judge at the Supreme Court for a declaration that the Lease was wrongfully terminated (or, in the alternative, relief against forfeiture), damages and costs.
“Asian Grocery Shop, but expressly excluding the sale of Indian groceries and Halal Meats during the term of the lease and any renewal of it.”
5. In his reply, Mr Biber repeated the assertions on these matters that he had previously communicated to Mr Ling, adding that since Mr Sarker had engaged in conduct amounting to a ‘total repudiation’ of the Lease, World Best was under no obligation to give him prior notice of termination.
104 His Honour also ordered that the proceedings be transferred to the Tribunal and that costs in the proceedings in the Court be costs in the proceedings before the Tribunal.
1. The Defendant return to the Plaintiff the section of premises Shop 48B at Minto Shopping Centre at Minto at 9.00 pm. on 31 July 2003.
2. That the Defendant be restrained from interfering with the Plaintiff's possession of the said premises.
105 The orders sought in Mr Sarker’s summons, as amended subsequently, constitute the relief now claimed by him in these proceedings in the Tribunal. They are set out below in their amended form.
106 An event also occurring on 31 July was that the Council wrote to Mr Sarker at his home address, advising him as follows: (a) that it had been informed that he had commenced a supermarket business, including the sale of food, in the Premises without obtaining its approval; (b) that he was required to submit a development application within seven days; and (c) that he must not resume trading until he had obtained Council approval. An application form was enclosed.
107 In a letter dated 1 August (which was a Friday) to Mr Biber, Kemp Strang stated that possession had not been restored in accordance with Order 1 made by the Supreme Court and that Mr Sarker would include the consequent loss of one day’s trading in his claim for damages against World Best.
108 In a letter dated 4 August denying Kemp Strang’s allegation of non-compliance with the Supreme Court’s order, Mr Biber contended that there had been no order for the return of Mr Sarker’s stock. He added: ‘If your client had required an order along these lines in the Court, he should have sought one.’
109 On 4 August, Kemp Strang delivered the bank cheque for the guarantee amount to Mr Biber. It was provided by Westpac Bank, Kogarah, not by the Commonwealth Bank. During cross-examination, Mr Sarker agreed that he had been compelled to borrow money in the period during late July in order to make this payment possible.
110 In his letter of 4 August to Kemp Strang, Mr Biber indicated that World Best would accept this payment on a ‘without prejudice’ basis and would invest it. In a reply dated 7 August, Kemp Strang agreed to this course of action.
111 Ms Timmins gave evidence that more than once between 30 July and 1 August, she tried to make arrangements with Mr Sarker for the return of his stock, but that he said that he would not take it back until his solicitor had approved its return. She said that all the removed stock was returned to the Premises by the evening of 1 August.
112 On 4 August, Mr Sarker signed a form prepared by World Best stating that he had received new keys to the Premises and that ‘all stock’ had been returned. At the foot of the form, he wrote ‘I didn’t check any stock.’ His affidavit evidence, however, included a statement that about 20 percent of his stock had either been damaged or was missing. His estimate of the value of this damaged or missing stock was $5,000.
113 On 8 August, Mr Sarker, having completed the Council’s form of application for development approval, submitted it to ‘The Manager, Minto Mall’ for World Best’s consent, as owner of the Premises. The accompanying plan indicated among other things that he intended to have the floor tiled.
114 In a letter to Kemp Strang dated 12 August, Mr Biber stated that World Best refused to consent to this application. The reasons that he gave included alleged defects in the application and alleged misrepresentations made by Mr Sarker to the Supreme Court regarding the fit-out that had already been installed. Mr Biber also stated that ‘the lessor’s hands are tied in that the lease is at an end having been validly terminated by notice dated 25 July 2003’.
115 In a letter faxed to Mr Biber on 14 August, Kemp Strang stated that unless World Best granted its consent and signed the application form by 4.00 pm on that day, Mr Sarker would seek an order that it do so from the Tribunal.
116 On 15 August, Mr Sarker applied to the Tribunal for an urgent interim order to this effect.
117 On 21 August, the Tribunal granted this application, on the ground that this order would preserve the status quo while the full dispute between the parties was properly determined.
118 On 25 August, following the filing of an appeal by World Best against this decision, the Appeal Panel held that no stay of the Tribunal’s order should be granted. On the same day, World Best withdrew its appeal and signed the form, which Mr Sarker subsequently lodged with the Council.
119 On 28 August, the parties attended mediation at the Retail Tenancy Unit. This was unsuccessful. Consequently, on 8 September the Registrar of Retail Tenancy Disputes certified to the Tribunal that mediation had failed.
120 On 5 September, World Best filed in the Tribunal a cross application claiming (a) a declaration that the Lease had been validly terminated by the letter of 25 July 2003; (b) in the alternative, an order rectifying the Lease so as to exclude from the permitted use the sale of Indian groceries and Halal meats; and (c) a declaration of unconscionable conduct on Mr Sarker’s part, constituted by his having sold Indian groceries and Halal meat from the Premises in breach of an agreement not to do so.
121 The orders sought in this cross application, as amended subsequently, constitute the relief now claimed by World Best in these proceedings. They are set out in their amended form below.
122 On 19 September, the Council approved Mr Sarker’s development application subject to a number of conditions. One of these was that a freestanding hand-basin serviced with hot and cold water be installed in the Premises.
123 In a letter to Mr Sarker dated 23 September, however, Ms James stated that access to any part of the Mall other than the Premises would be denied to any plumber engaged by Mr Sarker for the purpose of installing the hand-basin. The reason that she gave was that World Best had not yet approved Mr Sarker’s fit-out plans. In a letter bearing the same date to Kemp Strang, Mr Biber confirmed that this was his client’s stance on the matter.
124 There followed a period of further acrimonious correspondence between the parties’ solicitors, in which a number of matters were raised, including World Best’s continued refusal to grant access to a plumber.
125 On 15 October Mr Sarker applied to the Tribunal for an urgent interim order that access be granted. At a hearing on 24 October, the Tribunal made a consent order to this effect. Access was subsequently granted.
126 In a letter dated 28 October to Kemp Strang, Mr Biber advised that he had been instructed to apply to the Tribunal for an urgent interim order restraining the sale of Indian groceries and Halal meats by Mr Sarker. He referred to this matter as ‘very much a live issue before the Tribunal’.
127 In a letter to Mr Sarker dated 7 November, the Council conveyed its approval of trading from the Premises in ‘Asian groceries’, provided that all food sold was packaged.
128 Mr Sarker then recommenced trading. According to his evidence, however, most of his stock had either passed or was about to pass its expiry date. His estimate of the value of this stock was $15,000. He stated that because his shop had been closed for nearly four months his financial resources were very limited, he found it very difficult to purchase stock and he was compelled to borrow money in order to pay the rent due under the Lease.
129 On 13 November, World Best applied to the Tribunal for an urgent interim order restraining Mr Sarker from selling Indian groceries and Halal meats. The application alleged that the sale of these products was not within the agreed permitted use, and also that World Best had not approved the fit-out that Mr Sarker had installed.
130 On 14 November, Mr Biber delivered to Mr Sarker a second notice purporting to terminate the Lease (‘the second termination notice’). The grounds of termination set out in the notice were: (a) failure to pay three monthly instalments of rent on the due dates, as required by clause 6.1; (b) failure to obtain World Best’s approval to the fit-out; (c) failure to comply with the specific obligations regarding the quality of the fit-out contained in clauses 20.2 and 33.1; and (d) ‘trading in Indian Groceries, contrary to the permitted use’. The notice asserted that these breaches of the terms of the lease amounted to a repudiation of essential obligations, entitling World Best to terminate the Lease under clause 24.2 ‘without prejudice to any prior termination rights’.
131 On 15 November, Mr Biber wrote to the Council, alleging that Mr Sarker had not satisfied a number of conditions to which development approval had been made subject and had not obtained World Best’s approval for the fit-out. He requested that the Council conduct an inspection of the Premises. The Council did this on 5 November. In a letter to Mr Biber dated 26 November, it stated that since no fresh food or produce was being sold, Mr Sarker had sufficiently complied with its conditions of approval. It added that it was ‘unable to take any action’ relating to the lease agreement between World Best and Mr Sarker.
132 On 28 November, the Tribunal heard World Best’s application for an order restraining Mr Sarker from selling Indian groceries and Halal meats. In an ex tempore decision, it rejected the application. Its grounds included a finding that World Best:
133 The Tribunal considered also that it would be unfair to subject Mr Sarker’s ‘embryonic business’ to further hardship, in addition to the already ‘significant hardship’ to which he had been subject during the previous progress of the dispute, as to do so might even cause the business to fail.
has not sufficiently shown a significant likelihood that the version that it puts forward based on affidavit evidence of a conversation by its manager would be accepted in the forthcoming trial of the matter …
134 On 8 December, Mr Sarker made a payment of $4,042.50 to World Best, with the consequence that, according to World Best’s records, he had fulfilled his rent obligations under the Lease up to the end of the first week of January 2004. World Best characterised this payment, along with a number of earlier payments of the same amount, as being on account of ‘occupation fees’.
135 The hearing of Mr Sarker’s claim (i.e. the proceedings transferred from the Supreme Court) and of World Best’ cross claim was set down for 19 January 2004. The Tribunal agreed, however, that because the evidence was not yet in a sufficient state of preparation the hearing should be confined to argument on a legal issue relating to the validity of the two termination notices that World Best had served on Mr Sarker.
136 On 28 January 2004, the Tribunal delivered its decision (Sarker v World Best Holdings Ltd(No 2) [2004] NSWADT 15). It held that the termination notices, being purportedly based on conduct by Mr Sarker constituting repudiation of the agreement for lease under general principles of contract law, were not necessarily invalid on the ground that no prior notice as required by section 129(1) of the Conveyancing Act 1919 had been served on him. This decision is considered further below.
137 On 22 or 28 January 2004 (the precise date is not clear from the evidence), Mr Sarker ceased to trade at the Premises.
138 On 12 February 2004, World Best served on Mr Sarker a notice under section 129 of the Conveyancing Act 1919. The notice alleged that on 20 specified days between 19 January and 10 February 2004 he had failed to open his shop, thereby breaching the obligation in clause 18.2 of the Lease to trade during core trading hours as defined in the Disclosure Statement. It required him to ‘remedy that breach by complying with the core trading hours’.
139 In a letter dated 24 February 2004 to Mr Biber, Kemp Strang claimed that Mr Sarker’s inability to trade (which was not denied) was the direct result of conduct on the part of World Best. The letter set out six instances of such conduct: (1) serving the first termination notice without first complying with section 129 of the Conveyancing Act 1919; (2) wrongfully locking Mr Sarker out of the Premises on 27 July 2003; (3) refusing to consent to his development application; (4) refusing to allow either Mr Sarker or a ‘relevant tradesperson’ to have access to the common property of the Mall in order to fulfil an outstanding condition of the development application (i.e., installing a hand-basin); (5) filing an application for an urgent interim order restraining Mr Sarker from selling ‘Indian groceries and cigarettes’ (sic); and (6) serving the second termination notice ‘dated 25 July 2003’ (sic).
140 The letter then stated:
141 Having removed his stock, Mr Sarker handed the keys to the Premises to an employee of World Best on 1 or 2 March 2004.
“The above conduct has constituted a repudiation of the Lease, the very existence of which, whilst argued as non-existent in the proceedings, was recognised by your client in its notice of breach of covenant dated 12 February 2004. As a consequence of the foregoing, we have been instructed by our client to accept your client’s repudiation of the Lease and to give you notice that the Lease is hereby terminated”.
142 In a letter dated 2 March 2004 to Kemp Strang, Mr Biber contested the claim by Kemp Strang that World Best by its conduct had repudiated the Lease.
143 On 5, 6 and 7 April 2004, the first substantive hearing of these proceedings took place in the Tribunal. The subsequent procedural history of this case is outlined, so far as relevant, at the commencement of this judgment.
144 Following Mr Sarker’s departure from the Premises on 1 or 2 March 2004, they remained unoccupied until 28 April 2004. Between that date and 26 July 2004, they were leased to a short-term tenant at a monthly rent of $2,824.41 plus GST. They were then unoccupied until 22 March 2005. Between that date and 30 June 2006, which was the date of expiry of the Lease, they were leased to Boss Fashion International Pty Ltd for a monthly rent of $3,333.33 plus GST.
Orders sought by the parties
145 In a document headed ‘Second Further Amended Summons’, filed in the Tribunal on 27 September 2007, Mr Sarker claimed orders to the following effect: (1) a declaration that World Best’s notices purporting to terminate the Lease were invalid; (2) a declaration that World Best had re-entered the Premises in breach of section 129 of the Conveyancing Act 1919; (3) a declaration that World Best had repudiated the Lease; (4) an award of damages for the losses suffered in consequence of the repudiation; (5) alternatively, relief from forfeiture; (6) further or in the alternative, ‘an order’ that World Best ‘engaged in unconscionable conduct’; (7) interest on damages; (8) costs; (9) interest on costs; (10) such further order or orders as the Tribunal should deem appropriate.
146 In a document headed ‘Further Amended Application for Original Decision’, also filed on 27 September 2007, World Best claimed orders to the following effect: (1) a declaration that Mr Sarker had repudiated the Lease and that World Best was entitled to accept his conduct as a repudiation and to terminate the Lease by its notice dated 25 July 2003; (2) a declaration that Mr Sarker had failed to act in good faith within the meaning of section 62B(4)(k) of the RL Act; (3) an award of damages to World Best, to be quantified at the hearing; (4) further or in the alternative, an award of damages pursuant to the usual undertaking as to damages given by Mr Sarker to the Supreme Court on 31 July 2003; (5) interest on damages; (6) costs; (7) interest on costs; (8) such further order or orders as the Tribunal should deem appropriate.
Assessment of the witnesses
147 As will have become apparent, the two key witnesses in this case were Mr Sarker and Ms James. Regrettably, neither of them was a satisfactory witness.
148 Mr Sarker’s replies to questions in cross-examination were characterised by frequent assertions that he could not remember what he was being asked to remember. On account of the lapse of time (more than four years) between most of the key events and the recent hearing, it is entirely probable that his recollection of some of these events had faded. But it was noteworthy that his claims of failure of memory were most commonly made in response to questions to which a truthful answer might have raised difficulties for his case. He prevaricated, for instance, when confronted with photographs showing that, in breach of the Fit-out Guide, some of the shelving that he had installed was fixed to a wall of the Premises. He also claimed not to remember important matters relating to the shortfall between the funds available to him during June and July 2003 and the amount needed to support the bank guarantee required under the Lease (see [68], [109] above).
149 Notably on this last topic – the lack of sufficient funds to support the required guarantee – Mr Sarker’s affidavit evidence omitted important matters, with the consequence that a misleading impression was created. On this particular topic, this evidence implied that the reason why the Commonwealth Bank did not furnish the guarantee was that it was unduly slow in dealing with his application. It failed to mention that as from 17 July 2003 his account with the Bank did not have a sufficient credit balance and that he had not organised an overdraft facility.
150 The Tribunal is also not impressed with Mr Sarker’s attempt to substantiate his claim of having spent more than $32,000 on fit-out before 1 August 2003 by annexing copies of invoices. It is inclined to the view, expressed by Mr Philpott (who was not required for cross-examination) that some of these invoices did not relate to the task of fitting out the Premises. But an important point to be noted here is that Mr Sarker was not cross-examined in relation to these invoices.
151 In the Tribunal’s opinion, however, the testimony of Ms James was defective to an even greater degree than that of Mr Sarker. She too claimed that she could not remember important events due to the passing of several years. Like Mr Sarker, she could legitimately justify failures of recollection on this ground. But unlike Mr Sarker, she gave evidence on a number of crucial matters that suffered from two defects of cardinal importance.
152 In the first place, her evidence on these matters included assertions by her that were so manifestly improbable that the Tribunal is bound to disbelieve them. The two instances of prime importance are her assertions (see [31 – 36] above) that (a) she treated an alleged verbal promise by Mr Sarker at their meeting on 28 May to refrain from selling Indian groceries or Halal meats as sufficient to protect World Best’s interests, even though all other important aspects of the proposed lease between them were spelt out in the lease offer and the Disclosure Statement that she gave to him at that meeting, and (b) that she actually caused a term restraining him from selling these products to be deleted from a version of the lease offer that had been prepared before the meeting, on the alleged grounds that (i) its wording was unduly long and complex, (ii) Mr Sarker asked her to ‘trust him’ and (iii) she believed that ‘in Australia, sometimes a verbal agreement is acceptable’.
153 Secondly, Ms James’ answers to questions in cross-examination included allegations that formed no part of her affidavit evidence. Taking into account the fact that she swore no less than five affidavits, during the period between 11 November 2003 and 2 October 2007, the Tribunal is bound to conclude that, as Mr Ashhurst submitted, she sought in cross-examination to remedy deficiencies in World Best’s case by claiming to remember events that she had previously not mentioned. The Tribunal cannot attach any credibility to these claims.
154 One significant instance of this was an allegation made by her during cross-examination that has just been outlined. This was that she caused a term restraining Mr Sarker from selling Indian groceries or Halal meats to be deleted from an earlier version of the lease offer that had been prepared before the meeting on 28 May 2003. Another was her allegation during cross-examination that she believed (see [47]) that at some point after receiving Mr Khorshed Alam’s letter of 4 June she told him in a telephone conversation of Mr Sarker’s promise not to sell these products. A third instance was her alleged belief (see [63]) that she might have instructed Ms Timmins or Mr Liu to notify Mr Sarker of the concerns that Dhaka had expressed about the products that Mr Sarker proposed to sell and to require him to provide an inventory of these products. A fourth was her allegation (see [89]) that after Ms Timmins had told her on 23 July 2003 that Mr Sarker’s fit-out was unsatisfactory, she was told by Mr Liu (whom she had instructed to raise the matter with Mr Sarker) that Mr Sarker had refused to comply with the Fit-Out Guide.
155 After taking into account these and other features of the evidence given by Mr Sarker and Ms James, the Tribunal’s conclusion is that on the relatively few matters on which their evidence is in direct conflict, the evidence of Mr Sarker should be preferred.
156 The only other witness to be cross-examined was Ms Timmins. Her evidence appeared to be generally reliable, subject to the comment that in cross-examination she revealed certain matters that were not mentioned in her written evidence (see [85], [87] above).
The Tribunal’s findings on contested factual matters
157 Taking into account the foregoing observations on the quality of the testimony given in this case, the Tribunal makes the following findings on four significant factual matters that in varying degrees were the subject of dispute.
158 First and most importantly, it finds that Mr Sarker did not give any verbal promise to Ms James to refrain from selling Indian groceries or Halal meats when the two of them met on 28 May 2003. This finding follows in part from the Tribunal’s conclusion that on contested matters Mr Sarker’s evidence (despite its clear shortcomings) should be preferred to that of Ms James. But the Tribunal also considers it highly improbable (as already pointed out) that Ms James, who had in 2003 some 12 years’ prior experience in shopping centre management, would have taken the positive step of removing this important restriction on Mr Sarker’s activities from the first version of the lease offer, thereby permitting it to remain solely at the level of a verbal promise, when she was well aware (according to her own evidence) that Dhaka had an exclusive right to sell these products in the Mall.
159 The Tribunal notes in addition that Ms James, in her conversation with Mr Badrul Alam on 3 or 4 June 2003 and in her letters to Mr Khorshed Alam and to Campbelltown City Lawyers, did not ever claim that Mr Sarker had expressly agreed not to sell Indian groceries or Halal meats. Instead, she relied chiefly on the distinctly dubious proposition that the phrase ‘Asian groceries’, as commonly understood, did not include Indian groceries.
160 Furthermore, the Tribunal attaches significance to the fact that in her conversation with Mr Badrul Alam and in her letter dated 6 June 2003 to Mr Khorshed Alam, Ms James implicitly acknowledged that there was or might be a conflict between the agreement that she had concluded with Mr Sarker and the exclusive right that been granted to Dhaka. In the conversation, she said to Mr Badrul Alam that ‘you people can sort out this yourselves as he is from the same country as yourselves’. Her letter to Mr Khorshed Alam included the phrase ‘it is our hope that based in good faith you and he should endeavour to minimize business conflicts if any …’ If she had received an express undertaking from Mr Sarker not to sell Indian groceries or Halal meats, she would not, in the Tribunal’s opinion, have felt impelled to suggest that the two tenants might at some stage have to ‘sort the matter out’ between themselves.
161 Finally in this connection, even though Ms Timmins reported to Ms James on 23 July 2003 that Mr Sarker’s stock included Indian groceries, neither of them told him that this was in breach of an agreement that he had made and, moreover, the first termination notice, served two days later, did not mention any such agreement. This omission is significant because the notice listed several other alleged breaches of the Lease as grounds for the purported termination. If Ms James, who gave instructions for the writing of this letter, had believed at that time that a binding agreement to this effect had been concluded, the strong likelihood is that she would have instructed Mr Biber to include in the letter an allegation to this effect, together with an allegation that the agreement had been broken. Both these allegations were in fact made in the cross application filed by World Best in the Tribunal on 5 September 2003.
162 The second finding that the Tribunal makes is that, despite suggestions to the contrary by Ms James (see [63] above]), no-one on World Best’s behalf communicated to Mr Sarker during June or July 2003 the concerns that Dhaka had expressed about his intention to sell Indian groceries.
163 Thirdly, the Tribunal finds that at no stage before 25 July 2003 did Mr Sarker receive any indication from Ms James, Ms Timmins, Mr Liu or any other employee of World Best or KMPB that his fit-out did not comply with the requirements of the Lease and the Fit-Out Guide.
164 Fourth and finally, the Tribunal finds that, in the light of the observations contained in Mr Philpott’s reports, it is unlikely that Mr Sarker spent as much as he claimed (some $32,000) on fit-out before 1 August 2003, or that he spent a further $6,000-odd thereafter. But the Tribunal is also not inclined to accept the estimate by Mr Philpott that by 1 August the amount spent was likely to have been no more than $8,000, or that by the time of the second inspection this amount had increased to no more than $14,000. The Tribunal’s principal reason for leaving these matters somewhat at large is that neither the cross-examination of Mr Sarker at the recent hearing nor that of Mr Philpott at the earlier hearing addressed these issues to any significant extent.
165 The Tribunal does consider, however, that Mr Philpott’s criticisms of the quality of the workmanship displayed in the fit-out should be accepted. They were not contested in any expert evidence tendered on Mr Sarker’s behalf.
The validity of the two termination notices
166 Although the Lease was never signed by World Best, it was conceded in the first termination notice that a lease did exist between the parties by virtue of section 8 of the RL Act. This proposition was not questioned at the hearing. Section 8 states as follows in subsection (1): ‘For the purposes of this Act, a retail shop lease is considered to have been entered into when a person enters into possession of the retail shop as lessee under the lease or begins to pay rent as lessee under the lease (whichever happens first).’ At the time when the notice was served, Mr Sarker had entered into possession of the Premises pursuant to the terms of the Lease.
167 Among the contested legal issues to be resolved in this case, it is convenient to discuss first the validity of the two termination notices.
168 The relevant legal principles. The principal ground on which Mr Ashhurst argued that these notice were invalid was that World Best failed before serving them to comply with the requirements of section 129(1) of the Conveyancing Act 1919. This subsection provides as follows:
169 Subsection (8) provides that the section ‘does not affect the law relating to re-entry or forfeiture or relief in case of non-payment of rent’. Subsection (10) provides that the section ‘shall have effect notwithstanding any stipulation to the contrary’.
A right of re-entry or forfeiture under any proviso or stipulation in a lease, for a breach of any covenant, condition, or agreement (express or implied) in the lease, shall not be enforceable by action or otherwise unless and until the lessor serves on the lessee a notice:
and the lessee fails within a reasonable time thereafter to remedy the breach, if it is capable of remedy, and where compensation in money is required to pay reasonable compensation to the satisfaction of the lessor for the breach.
(a) specifying the particular breach complained of, and
(b) if the breach is capable of remedy, requiring the lessee to remedy the breach, and
(c) in case the lessor claims compensation in money for the breach, requiring the lessee to pay the same,
170 Mr Angyal conceded that the requirements of subsection (1) had not been satisfied in relation to either of the termination notices. But he relied on the fact that the breaches alleged in the termination notices were all of covenants identified in clause 24.1 of the Lease as ‘essential terms’. In the first termination notice, the terms allegedly breached were the lessee’s covenants (a) to provide a bank guarantee on or before the commencing date (clause 13), (b) to obtain approval before carrying out works in the Premises (clause 20.1) and (c) to comply with a number of requirements of the Lease and the Fit- Out Guide in relation to fit-out (clause 20.2). In the second termination notice, the terms allegedly breached were again the covenants in clauses 20.1 and 20.2, together with the covenants to pay rent (clause 6) and to trade in accordance with the permitted use (clause 18).
171 At an earlier Tribunal hearing within these proceedings on 19 and 20 January 2004, Mr Ashhurst, representing Mr Sarker, contended that in consequence of World Best’s failures to comply with section 129(1), both of the termination notices must be held to have been invalid as a matter of law. But in a judgment delivered on 28 January 2004 (Sarker v World Best Holdings Ltd (No 2) [2004] NSW ADT 15), the Tribunal rejected this contention.
172 In so doing, the Tribunal relied principally on a passage that it cited (at [30]) from the judgment of Meagher JA (with whom Kirby P and Powell JA agreed) in Marshall v Council of the Shire of Snowy River (1994) Butterworths Property Reports 14,447 at 14,457. This passage is as follows:
173 At [55 – 59], the Tribunal held that, although both of the termination notices referred to breaches by Mr Sarker of a number of terms described in clause 24.1 of the Lease as ‘essential terms’ and relied on World Best’s contractual right as lessor to terminate the Lease under clause 24.2(b) for breach of any ‘essential term’, this did not preclude World Best from claiming that Mr Sarker’s conduct also amounted to repudiation of the Lease and for that reason conferred on World Best an entitlement to terminate it.
“An examination of the decision of the High Court of Australia in The Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17, particularly per Deane J at 55, demonstrates that, a lease being a contract, when one party to it repudiates it or commits a fundamental breach or a breach of one of its essential terms, the other party may “accept” the repudiation or breach and terminate the lease. In such a case, the lessor, presuming him (as in the present case) to be the innocent party, will have two rights: first, a contractual right to terminate the lease by re-entry for breach of covenant (in this case contained in clause 4 of the lease), and secondly on the application of ordinary principles of contract law to terminate for breach. If he relies on the former right, he must comply with section 129 of the Conveyancing Act 1919 before re-entering; if, as here, he relies on the latter right, section 129 becomes an irrelevance”.
174 At [60 – 64], the Tribunal stated:
60 Fourth and finally, the Notices, in so far as they purported to effect termination on this ground of repudiatory conduct, cannot be held invalid on account of the Respondent’s failure to comply with section 129(1) of the Conveyancing Act 1919. This follows from the concluding words of Meagher JA’s statement of principle, quoted above at [30], in Marshall v Council of the Shire of Snowy River (1994) Butterworths Property Reports 14,447 at 14,457, although in some earlier authorities, the opposing view is to be found (see eg Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105 at 132, 144; Butt, P, ‘The contractualisation of leases: a further step?’ (1996) 70 ALJ 97 at 100).
61 It follows from this line of reasoning that there is no basis on which either of the two Notices of Termination, as a matter of law, can be held invalid.
205 Mr Ashhurst argued, however, that World Best was estopped from relying on the strict terms of the Lease regarding the date by which the guarantee was to be provided. The reasons, he said, were (a) that on 1 July 2003 Mr Yee told Mr Ling on the telephone that there would be no objection to the guarantee being provided later than that date and (b) between 1 July and 25 July, the date of the first termination notice, no-one on World Best’s behalf communicated to Mr Ling or Mr Sarker any revised deadline for provision of the guarantee.
206 Mr Ashhurst relied in this connection on principles of estoppel laid down by the High Court in Legione v Hateley (1983) 152 CLR 406 at 422-423, 440. He argued that the necessary ingredients for an estoppel against World Best were clearly present. Its solicitor had represented to Mr Sarker’s solicitor that it did not insist on strict compliance with the requirement to furnish a bank guarantee on or before the commencement date. Mr Sarker had acted in reliance on that representation, in circumstances where it would be inequitable or unconscionable for World Best to enforce its rights in a manner inconsistent with it.
207 Mr Angyal argued that Mr Sarker had deliberately misled both his own solicitor, Mr Ling, and the solicitor for World Best, Mr Yee, in suggesting that the only reason for delay on the Commonwealth Bank’s part in providing the guarantee was that its officers were slow in preparing the necessary documentation. The true reasons for the delay were, in Mr Angyal’s submission, that Mr Sarker’s account with the Bank did not contain enough money to support the guarantee and that no overdraft facility had been negotiated. It was clear, he maintained, that no estoppel could be founded on a deliberate misrepresentation such as Mr Sarker had made.
208 Mr Angyal submitted also that by virtue of the ‘no waiver clause’ in the Lease (clause 32.4 – see [57] above) Mr Yee’s statement on the telephone to Mr Ling that the guarantee could be provided after the due date could not create an estoppel binding World Best.
209 In response, Mr Ashhurst contended that a person of Mr Sarker’s background and experience should not be assumed to have known what a bank would require, in terms of evidence of financial resources, before issuing a guarantee. With regard to the ‘no waiver clause’, Mr Ashhurst relied on a passage in the judgment of Finn and Sundberg JJ in the Full Federal Court in Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd (2006) 230 ALR 56; [2006] FCAFC 40 at [107 – 115]. In this passage, their Honours held that a ‘no waiver clause’, requiring as in clause 32.4 of the Lease that the waiver of any right should be in writing, does not apply to a claim based on estoppel.
210 With regard to the claim of estoppel against World Best and the proposition that the ‘no waiver clause’ not does bar such a claim, the Tribunal accepts Mr Ashhurst’s submissions. It would, in the Tribunal’s opinion, be clearly inequitable for World Best to insist that Mr Sarker should have complied with the strict terms of the Lease when the uncontradicted evidence of Mr Sarker’s solicitor was that Mr Yee, on World Best’ s behalf, had consented to provision of the guarantee at a later date.
211 As to Mr Sarker’s failure to disclose to Mr Ling the reasons why the Commonwealth Bank did not furnish a guarantee, the Tribunal considers it important that on the day (1 July 2003) when Mr Sarker told Mr Ling that the guarantee was not yet to hand and Mr Ling obtained Mr Yee’s consent to furnishing it later than the Lease required, Mr Sarker’s account at the Commonwealth Bank was in credit to an amount of just under $15,000. It was not until 17 July that this amount fell below the figure of $12,127.50 required for the guarantee.
212 The Tribunal accordingly does not accept Mr Angyal’s submission that Mr Sarker’s explanation for the failure to provide a guarantee on 1 July, given by him on that day to Mr Ling and relayed soon after to Mr Yee, was deliberately false. Mr Sarker may be open to criticism for having delayed too long in applying for a guarantee (he did not do so until 27 June), for failing to keep a sufficient sum in the account after 16 July and for not notifying Mr Ling of the state of the account after that date. But it is not correct to say, as Mr Angyal maintained, that Mr Yee’s granting of permission for Mr Sarker to provide the guarantee later than the Lease stipulated was induced by a deliberately false representation on Mr Sarker’s part.
213 It follows from this reasoning that World Best was not entitled to rely on Mr Sarker’s failure to provide a guarantee before 1 July 2003 when claiming in the first termination notice that it was entitled to terminate the Lease.
214 In the light of this review of the extent to which Mr Sarker breached the nine obligations on which Mr Angyal relied, the Tribunal considers that his conduct did not, according to the tests for common law repudiation outlined above, amount to repudiation of the Lease. The breaches that he committed all stemmed from his failure to fit out the Premises in a timely manner and in accordance with the requirements spelt out in the Lease and the Fit-Out Guide. Those breaches were of varying severity. Clearly, he failed to take his obligations in this connection seriously enough. But despite the opening words of the termination notice, they were not breaches of which World Best had previously complained. It cannot be said that in committing them he evinced ‘an intention no longer to be bound by the contract’, or that he intended ‘to fulfil the contract only in a manner substantially inconsistent with his obligations’.
215 For these reasons, the Tribunal concludes that the first termination notice was invalid by virtue of World Best’s failure to comply with section 129(1) of the Conveyancing Act 1919.
216 The second termination notice. As summarised above at [130], the grounds of termination stated in the second notice, which was served on 14 November 2003, were Mr Sarker’s breaches of the following obligations: (1) failure to pay three monthly instalments of rent on the due dates, as required by clause 6.1; (2) failure to obtain World Best’s approval to the fit-out; (3) failure to comply with the specific obligations regarding the quality of the fit-out contained in clauses 20.2 and 33.1; and (4) ‘trading in Indian Groceries, contrary to the permitted use’.
217 Mr Angyal did not, in his submissions, claim that any other breach by Mr Sarker could be relied on by World Best in maintaining that Mr Sarker’s conduct amounted to repudiation of the Lease.
218 As to the first alleged breach, it may be noted that, since it related to the lessee’s obligation to pay rent, section 129(1) of the Conveyancing Act 1919 did not apply to it (see section 129(8)). But the allegation in the second termination notice that Mr Sarker was in arrears of rent was disputed at the time by his solicitor and was not the subject of any supporting evidence at the hearing. It must therefore be left out of account.
219 The Tribunal does not accept Mr Angyal’s submission as to the fourth alleged breach. Its reason is that it has rejected the claim by World Best that Mr Sarker orally agreed not to sell Indian groceries.
220 With regard to Mr Sarker’s breaches of the second and third obligations, the Tribunal considers that the case for characterising them as constitute repudiatory conduct is stronger than under the first termination notice. The reason is that they involved failure by him to comply with his fit-out obligations, despite the clear indications in the first notice that World Best treated compliance as important, over an additional period of nearly five months.
221 In dealing with this issue, Mr Ashhurst advanced the following argument. First, because the first termination notice was invalid in point of law, the serving of it constituted a repudiation of the Lease. This was a proposition that Mr Angyal did not contest. Secondly, although Mr Sarker did not at this stage accept the repudiation and terminate the lease, the repudiation, coupled with World Best’s continued insistence that the Lease was at an end, freed him from his obligations under the Lease, such as the obligation to incur further expenditure in fitting out the Premises.
222 Mr Ashhurst formulated this proposition as follows in his written outline of submissions: ‘[World Best] can hardly claim that Mr Sarker was demonstrating a consistent refusal to comply with the fit-out guide whilst it was at the same time stating (through its lawyers) that there was no point because the lease was already terminated.’ In support of this reasoning, Mr Ashhurst cited the judgment of Dixon J in Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235 at 246.
223 The Tribunal agrees with this submission, which Mr Angyal did not expressly oppose.
224 For these reasons, the Tribunal concludes that the second termination notice was invalid.
The consequences of repudiation of the Lease by World Best
225 Whether Mr Sarker was entitled to accept the repudiation. As just mentioned, Mr Angyal conceded that, if the Tribunal held that the first termination notice was invalid, it would follow that World Best, by serving it, had itself repudiated the Lease. In view of authorities cited by Mr Ashhurst, notably the judgment of Gibbs, Mason and Jacobs JJ in Ogle v Comboyouro Investments Pty Ltd (1977) 135 CLR 444 at 453, the Tribunal considers that this concession was properly made.
226 Mr Angyal argued however that Mr Sarker, by instituting Supreme Court proceedings for recovery of possession of the Premises and obtaining interim orders on 31 July 2003, elected to affirm the Lease. Furthermore, although he vacated them on 2 March 2004, he took no steps to have these orders discharged. They were in fact formally discharged by the Tribunal during the recent hearing, pursuant to an application made by Mr Angyal, which Mr Ashhurst opposed. In addition, in the Further Amended Summons filed by Mr Sarker in the Tribunal on 27 September 2007, one of the orders sought was relief against forfeiture.
227 In Mr Angyal’s submission, on account of this conduct by Mr Sarker and those representing him, he must be held to have affirmed the Lease and to have lost any entitlement to treat it as repudiated. This followed from the principle that when a party to a contract repudiated it, the innocent party was obliged to elect between two mutually exclusive courses of action.
228 The consequences of Mr Sarker’s affirmation of the Lease, according to Mr Angyal, were twofold. First, he remained liable for rent until 22 March 2005, the date on which World Best granted a lease of the Premises to Boss Fashion Pty Ltd (see [144] above). Secondly, the only damages for which World Best could be liable to him would be his lost profits during the limited number of days that he did not have possession of them by virtue of the purported termination of the Lease.
229 In support of this line of argument, Mr Angyal relied on the following statement of principle from Spencer Bower and Turner, The Law Relating to Estoppel by Representation (3rd edition, 1977), page 313, cited with approval by Deane, Toohey, Gaudron and McHugh JJ in Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 at 41:
230 In this judgment, however, at 41-43, and in Ogle v Comboyouro Investments Pty Ltd (1977) 135 CLR 444 at 459- 462 (on which Mr Ashhurst relied), it was also made clear in the High Court that following repudiatory conduct by a contracting party an ‘innocent’ party who initially indicates an intention not to treat the contract as repudiated is not necessarily debarred from subsequently doing so. If the repudiating party has not, in the meantime, ‘withdrawn’ the conduct constituting repudiation and is not prejudiced by the initial choice of the innocent party to affirm the contract, the subsequent decision by the latter party to treat the contract as repudiated and to sue for damages may be valid and effective, even if one of the steps taken earlier by it was to commence proceedings for specific performance.
“It is of the essence of election that the party electing shall be ‘confronted’ with two mutually exclusive courses of action between which he must, in fairness to the other party, make his choice”.
231 Mr Ashhurst submitted also that the serving of the first termination notice on 25 July 2003 and the re-entry two days later were not the only acts committed by World Best that constituted repudiation. He argued that subsequent conduct manifested its continuing intention to treat the Lease as terminated.
232 In particulars filed on 3 October 2007, the principal examples given of this conduct, all occurring during 2003, were as follows:
233 The Tribunal’s view on these matters is as follows. The evidence shows that Mr Sarker endeavoured, after being restored to possession on or about 1 August 2003, to put his business on a sound footing. The steps that he took included conducting further fit-out operations and obtaining development approval for his business. During the period (until 1 or 2 March 2004) when he remained in possession, he paid the rent or ‘occupation fee’ due under the Lease (so far as the evidence shows). But throughout this period, World Best took the further steps listed in the particulars, thereby substantially hindering his efforts, and more than once indicated that, as far as it was concerned, he should cease to occupy the Premises.
(a) Offering on 29 July to restore Mr Sarker’s possession of the Premises, but only if he agreed not to sell Indian groceries and Halal meats.
(b) Refusing on 1 August to return the stock removed on 28 July.
(c) Refusing on 12 August to consent to Mr Sarker’s development application.
(d) Indicating in a letter (written by Mr Biber) on 23 September that if Mr Sarker wished to continue with his fit-out, he would do so ‘at his own risk’.
(e) Refusing on 30 September [there was also a refusal on 23 September] to permit a plumber engaged by Mr Sarker to have access to the common property of the Mall.
(f) Indicating in a letter (written by Mr Biber) on 30 September that (i) Mr Sarker was not permitted to trade because there was a ‘live issue’ as to the terms of the permitted use and (ii) that World Best would not entertain any application from him regarding fit-out.
(g) Serving the second termination notice on 14 November, in circumstances where (i) the notice was based on incorrect calculations of rent paid; (ii) World Best did not comply with section 129 of the Conveyancing Act 1919; and (iii) the notice falsely alleged that Mr Sarker had orally agreed not to sell Indian groceries.
234 World Best accordingly continued to engage in conduct amounting to repudiation of the Lease. It did the opposite of ‘withdrawing’ its initial repudiatory conduct. There is no evidence suggesting that it was unfairly prejudiced by Mr Sarker’s efforts to re-establish and sustain his business. The fact that the interim orders made by the Supreme Court on 31 July 2003 remained undischarged until very recently did not, as Mr Angyal effectively acknowledged, prevent World Best from treating the Premises as abandoned as from early March 2004 and seeking a new tenant for them. It in fact secured a three-month tenancy commencing as early as 28 April 2004.
235 For these reasons, applying what it understands to be the principles laid down in the two High Court cases cited to it, the Tribunal concludes that Mr Sarker’s conduct manifesting an intention to treat the Lease as remaining on foot following its repudiation by World Best on 25 July 2003 did not prevent him from subsequently accepting both this repudiation and the subsequent conduct of World Best constituting repudiation. This he did by means of the letter of 24 February 2004 sent by his solicitors, Kemp Strang, to Mr Biber.
236 Approach to assessing damages. There was dispute as to the principles to be applied in assessing any damages payable by World Best to Mr Sarker if it were held that World Best had repudiated the contract and Mr Sarker, being entitled to do so, had accepted the repudiation.
237 Mr Angyal’s line of argument was as follows. Mr Sarker should in this event recover damages to compensate him for losses suffered as the natural and probable consequence of World Best’s breaches of the lease. The award of damages should, so far as possible, put him in the position in which he would have been if World Best had fulfilled, not breached, its obligations as lessor.
238 In support of this proposition, Mr Angyal cited a passage in the judgment of Mason, Wilson and Dawson JJ in Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 11-12. This passage includes the following sentence:
239 In Mr Angyal’s submission, the only loss that Mr Sarker suffered was the profit that he would have made from his business on the days on which, but for World Best’s wrongful conduct in purporting to terminate the Lease, he would have been able to trade from the Premises. The days in question were (a) 28, 29, 30 and 31 July 2003, constituting the period between World Best’s re-entry pursuant to the first termination notice and its restoration of possession to Mr Sarker pursuant to the Supreme Court’s orders) and (b) the subsequent days on which conduct by World Best delayed the granting of development approval to Mr Sarker.
“In contract, damages are awarded with the object of placing the plaintiff in the position in which he would have been had the contract been performed – he is entitled to damages for the loss of bargain (expectation loss) and damage suffered, including expenditure incurred, in reliance on the contract (reliance loss)”.
240 In the latter context, Mr Angyal appeared to be referring to the two periods (see [114 – 118], [122 – 125] above) when World Best refused, until ordered in each instance by the Tribunal, to sign Mr Sarker’s application for development approval (12 to 25 August 2003) and to permit a plumber engaged by him to gain access to any part of the Mall other than the Premises (23 September to 24 October 2003). Since clause 18 of the Lease, read in conjunction with the definition of core trading hours in the Disclosure Statement, required him to open his business every day of the week, the number of days on which he lost profits during these two periods amounted to 46. To this must be added the four days on which he lost profits in consequence of being evicted.
241 Mr Angyal pointed out that, according to Mr Sarker’s own evidence, his daily profit between the opening of his business on 23 July 2003 and his eviction on 27 July was only $107.14. According to the Tribunal’s calculations, the total award to him, assessed according to this approach, would therefore be this amount multiplied by 50, that is, the relatively small sum of $5,357.00.
242 Mr Ashhurst disputed these propositions, contending that a different approach to assessment was applicable where repudiation by one party caused a contract to be terminated before it could be ascertained whether the contract would have been profitable for the innocent party. The present case, he said, fell within this category because the very limited profits obtained by Mr Sarker between the time when he commenced trading and his eviction four days later gave no reliable indication of how profitable the business would have been if it had continued unhindered. In these circumstances, Mr Ashhurst submitted, the innocent party was entitled to recover the expenses that he had incurred in connection with the contract. He cited two cases in support of this proposition.
243 In the earlier of these cases, CCC Films Ltd v Impact Quadrant Films Ltd [1985] 1 QB 33, the plaintiff paid a licence fee to the defendant for the right to ‘exploit, distribute and exhibit’ three movies in various countries. The defendant did not supply the requisite tape recordings of the movies. In an action for damages, the plaintiff did not tender any evidence relating to the amount of profit that it would have made if the tape recordings had been delivered. Hutchison J held in the Queens Bench Division that in such a case a plaintiff who could not prove the amount of its lost profits could frame an ‘alternative claim’ for the amount expended in reliance on the contract being performed, and would succeed in this claim unless the defendant, on whom the onus lay, established that the profits that the plaintiff would have made would have been insufficient to enable it to re-coup this expenditure.
244 In the later case, Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, the High Court discussed this and a number of related questions concerning the assessment of damages for breach of contract. In four of the five judgments delivered (see Mason CJ and Dawson J at 85-86, Brennan J at 105, Deane J at 126, Toohey J at 142-143, Gaudron J at 155-156) the approach adopted in the CCC Films case received general approval. Toohey and Gaudron JJ preferred, however, to speak in terms of an ‘assumption’ that the profits that the plaintiff would have obtained would have been sufficient to enable it to recoup its expenditure, rather than of a shifting of onus to the defendant. Mason and Dawson JJ did not accept that a plaintiff in this situation was faced with some sort of ‘election’.
245 It is sufficient for present purposes to quote the following statement of principle from the judgment of Mason CJ and Dawson J at 86:
246 In the Tribunal’s opinion, this passage sufficiently establishes the correctness of Mr Ashhurst’s argument. It notes that, in the passage from Gates v City Mutual Life Assurance on which Mr Angyal relied, the High Court spoke of awarding compensation for ‘damage suffered, including expenditure incurred, in reliance on the contract (reliance loss)’ in addition to lost profits. The Tribunal also accepts Mr Ashhurst’s submission that the profits obtained by Mr Sarker during the first few days after commencement of his business provide inadequate guidance as to how profitable his business would have been if it had allowed to proceed unhindered.
“It should be observed that, in a case where it is not possible to predict what position a plaintiff would have been in had the contract been fully performed … it is not possible as a matter of strict logic to assess damages in accordance with the principle in Robinson v Harman . [This is the principle, stated by Parke B, that ‘where a party sustains a loss by reason of a breach of contract, he is, as far as money can do it, to be placed in the same situation with respect to damages as if the contract had been performed’: see (1848) 1 Ex 850 at 855; 154 ER 363 at 365.] But the law considers the just result in such a case is to allow a plaintiff to recover such expenditure as is reasonably incurred in reliance on the defendant’s promise. In this case, the law assumes that a plaintiff would have at least recovered his or her expenditure had the contract been fully performed. It will still be open to a defendant, however, to argue that, notwithstanding it is impossible to assess what profits, if any, the plaintiff would have made had the contract been fully performed, the expenditure claimed by a plaintiff would nevertheless not have been recovered … In essence, such an argument is to the effect that, far from being impossible to predict what the result of the contract would have been, if fully performed, it is possible to demonstrate that performance of the contract would not even have resulted in the recovery by the plaintiff of reasonable expenses incurred.
247 In these circumstances, the failure of World Best to tender any evidence showing that Mr Sarker, if permitted to maintain his tenancy for the agreed period, would have failed to recoup the expenditure reasonably incurred by him in connection with the Lease, has the consequence that Mr Sarker is entitled to claim this expenditure as damages for breach of contract.
248 The question of what amount of damages should in fact be awarded is dealt with below.
Mr Sarker’s unconscionable conduct claim
249 Whether World Best engaged in unconscionable conduct. According to amended particulars filed on 3 October 2007, Mr Sarker alleged that the following conduct by World Best during 2003 was unconscionable conduct within the meaning of section 62B(3) of the RL Act:
250 Mr Ashhurst submitted that this conduct fell within two sub-paragraphs, (i) and (k), of the description of unconscionable conduct in section 62B(3). For the purposes of these proceedings, the relevant parts of section 62B are as follows:
1. During May and June, deliberately entering into the agreement for lease with full knowledge that the exclusive use granted to Mr Sarker was in conflict with the exclusive use already granted to Dhaka.
2. Serving the first termination notice on 25 July and evicting Mr Sarker from the Premises two days later, in circumstances where (a) he was given no opportunity to rectify alleged breaches; (b) he had been encouraged to believe that he was not in breach; (c) World Best had a practice within the Mall of not monitoring the fit-out requirements which it claimed to have been breached by him; (d) World Best did not comply with section 129 of the Conveyancing Act 1919; (e) the fit-out was not yet complete; (f) the agreement between the parties’ solicitors regarding the bank guarantee was broken; (g) the termination notice falsely alleged that the alleged grounds of termination had previously been raised with Mr Sarker; (h) World Best was pursuing the improper purpose of attempting to insert into the Disclosure Statement a term precluding Mr Sarker from selling Indian groceries.
3. Claiming on 4 August that the Supreme Court’s orders of 31 July did not require World Best to return Mr Sarker’s stock.
4. Refusing on 12 August to consent to Mr Sarker’s development application, thereby compelling him to apply to the Tribunal for an order that consent be granted.
5. Appealing on 22 August against this order despite having no new evidence and in circumstances where World Best must have known that the appeal had no prospect of success.
6. Refusing [in a letter written by Ms James] on 23 September to permit a plumber engaged by Mr Sarker to have access to the common property of the Mall, thereby compelling Mr Sarker to apply to the Tribunal for an order that access be granted.
7. Serving the second termination notice on 14 November, in circumstances where (a) the notice was based on incorrect calculations of rent paid; (b) due to World Best’s actions, Mr Sarker had been unable to trade for three months; (c) World Best did not comply with section 129 of the Conveyancing Act 1919; (d) the termination notice falsely alleged that Mr Sarker had orally agreed not to sell Indian groceries.
8. Applying on 28 November for an urgent interim order restraining Mr Sarker from selling Indian groceries, relying on a false allegation that Mr Sarker had orally agreed not to do this.
251 Mr Ashhurst referred also to the Tribunal’s decision in Worsfold v de Goede [2002] NSWADT 273. At paragraph [23], in the course of setting out the grounds for a finding of unconscionable conduct against a lessor, the Tribunal stated that he had ‘compounded the situation’ by serving a notice of eviction on the lessee where there was ‘no reasonable justification’ for so doing.
(1) A lessor must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable.
(2) A lessee must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable.
(3) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessor has contravened subsection (1) in connection with a retail shop lease, the Tribunal may have regard to: …
(i) the extent to which the lessor unreasonably failed to disclose to the lessee:
(k) the extent to which the lessor and the lessee acted in good faith … .
(i) any intended conduct of the lessor that might affect the interests of the lessee, and
(ii) any risks to the lessee arising from the lessor’s intended conduct (being risks that the lessor should have foreseen would not be apparent to the lessee), and …
(4) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessee has contravened subsection (2) in connection with a retail shop lease, the Tribunal may have regard to: …
(k) the extent to which the lessee and the lessor acted in good faith.
(5) A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with a retail shop lease by reason only that the first-mentioned person institutes legal proceedings in relation to that lease or refers to arbitration a dispute or claim in relation to that lease.
252 Mr Angyal submitted that if the first termination notice was valid and effective, the only matter on which Mr Sarker could rely was that particularised in paragraph 1. The reason, he said, was that after the notice was served no lease governed by the RL Act subsisted. This submission fails because, as indicated above, the Tribunal has concluded that this termination notice was invalid.
253 Mr Angyal argued also that the remaining actions summarised in the particulars were all taken in reliance on legal advice. World Best believed in good faith that it was justified in acting in this way.
254 In the Tribunal’s opinion, the evidence in the proceedings provides support for all except two of the factual matters summarised in the particulars. The two matters not substantiated are those in paragraph 1 and sub-paragraph 2(c).
255 The basis for this conclusion regarding paragraph 1 is that, despite an apparent acknowledgment in the testimony of Ms James that she knew all along of the direct conflict between the exclusivity clauses in Dhaka’s lease and in the documentation being prepared for the proposed lease to Mr Sarker, there is a real possibility that Ms James felt impelled to say this in order to support her claim that Mr Sarker, having been told about Dhaka’s lease, orally agreed not to sell Indian groceries or Halal meats. The contemporaneous documentary evidence suggests that in reality Ms James may have forgotten about the clause in Dhaka’s lease when conducting negotiations with Mr Sarker and may have believed, as she later asserted in correspondence with those representing Dhaka, that ‘Asian groceries’ and ‘Indian groceries’ were mutually exclusive categories of product.
256 As to sub-paragraph 2(c), it is sufficient to say that an objection by Mr Angyal to the admission of evidence purporting to substantiate it was upheld by the Tribunal.
257 The Tribunal considers, however, that even if these matters are left out of account, the remaining matters outlined in the particulars provide an ample basis for a finding of unconscionable conduct. World Best employed a wide range of tactics to put pressure on Mr Sarker either to abandon the Premises or to accept a restriction on his activities – that is, a prohibition on selling Indian groceries – to which, according to a key finding of the Tribunal, he had not agreed in the course of negotiations with World Best and which could not fairly be imposed on him after he had entered into possession and commenced trading.
258 In view of this finding, Mr Angyal’s submission that World Best was simply taking steps that it believed on legal advice to be warranted cannot apply to the matters alleged in sub-paragraphs 2(h), 7(d) and paragraph 8. A number of other steps taken by World Best – specifically, those described in sub-paragraphs 2(a), (b), (f) and (g), paragraph (6) and sub-paragraph 7(a) – were not, on the face of it, prompted by legal advice furnished to World Best.
259 In the Tribunal’s judgment, the conduct of World Best outlined in the particulars filed by Mr Sarker, leaving aside the matters alleged in paragraph 1 and sub-paragraph 2(c), amounts to unconscionable conduct under section 62B(1) of the RL Act. As Mr Ashhurst argued, it involved both unreasonable failure to disclose to Mr Sarker (notably in the days preceding the first termination notice) its intended conduct that might affect his interests and a failure to act in good faith (notably in putting the form of pressure on Mr Sarker that the penultimate paragraph describes). These are types of conduct to which sub-paragraphs (i) and (k) of section 62B(3) respectively require the Tribunal to have regard.
260 It should be added that in reaching this conclusion the Tribunal has taken due account of the terms of section 62B(5). This is not a case in which the relevant conduct of the lessor was confined simply to instituting (or, for that matter, defending) legal proceedings in relation to the lease.
261 Approach to assessing damages. Under section 72AA of the RL Act, the Tribunal is empowered in proceedings for unconscionable conduct, to make orders for the payment of money, whether by way of debt, damages or restitution, or for money to be refunded.
262 Mr Ashhurst submitted that any damages awarded under this provision should be assessed on principles similar to those governing tort claims. The damages should be designed to place the injured party in the position in which he or she would have been but for the offending conduct. He described the approach to be adopted as ‘restitutionary’. Mr Angyal did not dispute these general propositions.
263 It follows, in the Tribunal’s opinion, that there is no material difference, in the present case, between the damages to be awarded to Mr Sarker by virtue of World Best’s repudiation of the Lease and the damages flowing from its conduct that the Tribunal has held to be unconscionable. This ruling receives support from a dictum of Mason CJ and Dawson J in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 85-86. This dictum, which immediately precedes the passage quoted above at [245], is as follows:
The amount of damages to be awarded
“An award of damages for expenditure reasonably incurred under a contract in which no net profit would have been realized, while placing the plaintiff in the position he or she would have been in had the contract been fully performed, also restores the plaintiff to the position he or she would have been in had the contract not been entered into. In this particular situation it will be noted that there is a coincidence, but no more than a coincidence, between the measure of damages recoverable both in contract and in tort”.
264 Mr Ashhurst handed up a schedule of the expenses that Mr Sarker claimed to have incurred on account of having entered into the Lease. He submitted that the damages due to Mr Sarker, both on account of World Best’s repudiation of the Lease and on account of its unconscionable conduct, should be such as to reimburse him for these expenses, together with interest.
265 Taking account of observations made by Mr Angyal, the Tribunal considers that it should disallow, wholly or in part, the expenses claimed under two headings contained in the schedule.
266 The first and most significant of these is an amount ($32,650.37) claimed with respect to fit-out. Earlier in these reasons, the Tribunal expressed doubt as to whether all the items of expenditure listed in this context in Mr Sarker’s affidavit genuinely did relate to fit-out. More importantly, it has found, relying on Mr Philpott’s reports, that the fit-out as a whole was not of sufficient quality to satisfy the requirements of the Lease and the Fit-Out Guide.
267 For these reasons, the claimed expenditure on fit-out does not, in the Tribunal’s opinion, meet the requirement, stated in Commonwealth v Amann Aviation, that damages awarded for ‘reliance losses’ must be for expenditure that was incurred ‘reasonably’. It was not reasonable for Mr Sarker to spend money on fit-out of lesser quality than he was obliged to install.
268 The second item that the Tribunal would question is an amount of $7,500 claimed for the expenses of Mr Sarker’s business trip to Bangladesh during June 2003 (see [48] above). As Mr Angyal pointed out, the only invoice put into evidence was for the sum of $1,510. Since an objection to the amount claimed was specifically made (together with an objection on the ground that Mr Sarker admitted that while in Bangladesh he visited his mother, who was sick), the Tribunal considers it appropriate to allow only $1,510 under this head.
269 With these adjustments, the Tribunal accepts the amounts set out in the schedule. They include a significant amount for trading losses, which inevitably were enhanced by the delay between Mr Sarker’s regaining possession of the Premises on 1 August 2003 and reopening his shop on 7 November 2003. This delay was attributable to a significant degree to his failing before 8 August to apply for development approval. But in the Tribunal’s opinion, it was nonetheless reasonable for Mr Sarker to endeavour to re-establish the business once he had obtained approval.
270 The adjusted figures, excluding interest, are as follows:
Security deposit 12,127.50 Stamp duty 480.00 Registration fee 62.00 Lessor’s legal fees 1,317.00 Insurance 1,510.42 Lessee’s legal fees 990.00 Registration of business name 122.00 Rent (five payments of $4,042.50) 20,212.50 Trading stock (purchases $46,882; sales $16,287.40) 30,535.00 Trip to Bangladesh 1,510.00 Costs of refinancing home loan 760.86 Application for development approval 240.00 Telephone and fuel 2,356.51 TOTAL $72,223.79 The claims brought by World Best
271 World Best claimed that Mr Sarker repudiated the Lease by abandoning the Premises early in March 2004. But the Tribunal’s conclusions regarding the opposing claim of repudiation on the part of World Best itself are sufficient to rule out its accepting the claim made by World Best.
272 World Best also maintained that Mr Sarker had engaged in unconscionable conduct by failing to act in good faith within the meaning of section 62B(4)(k) of the RL Act. In this connection, Mr Angyal relied chiefly on Mr Sarker’s failure to disclose the true reasons why the Commonwealth Bank did not provide the guarantee required under the Lease. He also referred to Mr Sarker’s action in instructing Mr Ling to alter the permitted use in the Disclosure Statement from ‘Asian grocery’ to ‘Asian Supermarket’ and in making a similar alteration to the terms of the Lease.
273 For reasons already given (see [211 – 212] above), the Tribunal does not accept the submission that the former aspect of Mr Sarker’s conduct materially misled his own solicitor (Mr Ling) or the solicitor then acting for World Best (Mr Yee). It attaches little importance to the changing of the permitted use in the Disclosure Statement and the Lease.
274 The Tribunal accordingly dismisses the claims contained in World Best’s cross application.
The Tribunal’s orders
275 The Tribunal declares as follows: (a) that World Best’s notices, dated 25 July 2003 and 14 November 2003 respectively, purporting to terminate the Lease were invalid; (b) that on 27 July 2003 World Best re-entered the Premises in breach of section 129 of the Conveyancing Act 1919; (3) that on 25 July 2003 and by its subsequent conduct World Best had repudiated the Lease.
276 The Tribunal orders that World Best is to pay to Mr Sarker the sum of $72,223.79 as damages (exclusive of interest) for breach of the Lease and for unconscionable conduct.
277 The Tribunal dismisses World Best’s application for declarations and for damages.
278 Mr Sarker’s claims for interest on damages, costs and interest on costs are to be resolved in accordance with the following directions. Any application by him for interest and/or costs must be filed and served, with supporting submissions, within 28 days of the date of this decision. World Best must file and serve its submissions within a further 28 days. Any submissions in reply by Mr Sarker must be filed and served within a further 7 days. Unless reasons are advanced for a hearing to be conducted, the matter will be resolved ‘on the papers’, pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.
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