Scopo's Pty Ltd v Stocklands Property Management Pty Ltd

[2003] NSWADT 194

CITATION:	Scopo's Pty Ltd v Stocklands Property Management Pty Ltd [2003] NSWADT 194
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Scopo's Pty Ltd RESPONDENT Stocklands Property Management Pty Ltd
FILE NUMBER:	035043
HEARING DATES:	18/07/2003
SUBMISSIONS CLOSED:	07/18/2003
DATE OF DECISION:	08/20/2003
BEFORE:	Montgomery S - Judicial Member
APPLICATION:	Claim for assignment of rights under a lease/ declaration lessor not entitled to withhold consent to an assignment of rights
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Retail Leases Act 1994
CASES CITED:	Zaoud -v- Musico & anor [2000] NSWADT 107 Nam & anor -v- Commonwealth Funds Management Limited & anor [2002] NSWADT 80 Nissim & anor -v- Marino [2001] NSWADT 191
REPRESENTATION:	APPLICANT S Scevola, agent RESPONDENT M Allars, barrister
ORDERS:	1. I declare that the Respondent was entitled to withhold consent to the proposed assignment of the lease by the Applicant.; 2. The remainder of the Applicant’s application is dismissed.

REASONS FOR DECISION

The Application

1. The Applicant, Scopo's Pty Ltd, is the lessee of shop F54, Stocklands Mall, Wetherill Park ("the shop") pursuant to a lease entered on 24 October 2001("the Lease"). The Respondent, Stocklands Property Management Pty Ltd, is the lessor of the shop. The Applicant seeks a declaration that the Respondent is not entitled to withhold consent to the assignment of the Applicant's lease on to proposed assignees Ramina Youkhana and Adrina Youkhana (“the Youkhanas”). The Applicant also claims damages in respect of the period in which consent was withheld.

2. For reasons that will become apparent I do not need to deal with the issue of damages.

Background

3. The parties entered the Lease on 24 October 2001. The lease term is stated to be for a term of five years from 1 January 2002 to 31 December 2006. It is common ground that the lease is governed by the Retail Leases Act 1994 (“the Act”).

4. Clause 13 of the lease provides for assignment of the Lease in the following terms:

13 ASSIGNMENTS SUBLEASES AND MORTGAGES

13.1 Assignment/Sub-Lease

The Lessee shall not assign the Lease or sub-lease the Demised Premises without the prior consent in writing of the Lessor. Such consent shall not be arbitrarily or unreasonably refused or withheld if:

(a) the Lessee not being in default under the covenants and agreements on the Lessee's part herein contained proposes to assign or sub-lease to an assignee or sub-lessee who proves to the satisfaction of the Lessor that such proposed assignee or sub-lessee is a respectable, responsible, solvent, fit and proper person capable of adequately carrying on the business in the Demised Premises whilst performing and observing the terms and conditions of this Lease; and

(b) the Lessee pays to the Lessor or its agent or manager nominated by the Lessor from time to time all reasonable and proper costs, charges and expenses incurred by the Lessor of and incidental to any enquiries which may be made by or on behalf of the Lessor as to the respectability, responsibility, solvency, fitness and suitability of any proposed assignee or sub-lessee;

(c) the proposed assignee by deed covenants with the Lessor to observe and perform the terms, covenants, conditions and restrictions herein contained including the obligation to indemnify the Lessor such deed to be prepared and stamped by the Lessors solicitors at the cost and expense of the Lessee and to be in such form as the Lessor's solicitors may reasonably require;

(d) notwithstanding anything contained in the preceding sub-covenants of this clause where the proposed assignee is a company the Lessor may as a condition of its consent to such assignment require that the covenants on the part of the assignee in the deed referred to in clause 13,1(c) of this clause be guaranteed by the directors and/or principal shareholders of such company such guarantee to be in such form as the Lessors solicitors may reasonably require;

(e) the assignor shall be responsible for the payment of the outgoings rent to the end of the then current calendar month. This responsibility shall not prejudice the right of the Lessor to recover the same from the assignee if the outgoings rent has not been paid by the assignor. Notwithstanding anything contained in clause 3.4(d) the assignor shall not be entitled to any refund from the Lessor. The assignor should recover any refund from the assignee if applicable as referred to in clause 3.4(d);

(f) for the purposes of calculating the percentage rent in the event of an assignment at any fine other than at the end of a Lease Year, the Lease Year will be divided into broken periods attributable in the case of the broken period prior to the assignment to the assignor and in the case of the broken period after the assignment to the assignee. The assignor shall provide an audited Certificate of Gross Receipts as provided in clause 3.3(b) hereof for the relevant broken period. Any percentage rent calculated in accordance with clause 3.3 for the relevant broken period shall forthwith become due and payable by the assignor to the Lessor. The assignee shall become liable for any percentage rent relevant to the broken period following the assignment at the conclusion of the then current Lease Year or upon any subsequent assignment prior to the conclusion of the then current Lease Year as the case may be.

5. Sections 39 and 41 of the Act provide:
39 Grounds on which consent to assignment can be withheld

(1) The lessor is entitled to withhold consent to the assignment of a retail shop lease in any of the following circumstances (and is not entitled to withhold that consent in any other circumstances):

(a) if the proposed assignee proposes to change the use to which the shop is put,

(b) if the proposed assignee has financial resources or retailing skills that are inferior to those of the proposed assignor,

(c) if the lessee has not complied with section 41 (Procedure for obtaining consent to assignment),

(d) the circumstances set out in section 80E.

(2) This section does not preclude any right of the lessor to require payment of a reasonable sum in respect of any legal or other expenses incurred in connection with the consent, so long as the lessor has substantiated those expenses to the lessee at the request of the lessee.

41 Procedure for obtaining consent to assignment

A retail shop lease is taken to include the following provisions:

(a) A request for the lessor’s consent to an assignment of the lease must be made in writing and the lessee must provide the lessor with such information as the lessor may reasonably require concerning the financial standing and business experience of the proposed assignee. The lessee may provide the lessor with a copy of a statement in writing that contains the information that is contained in or required to complete the form set out in Schedule 2A that has been provided to the proposed assignee. The statement may be provided if the assignment is in connection with the lease of a retail shop that will continue to be an ongoing business. The layout of the statement need not comply with that of the form set out in Schedule 2A.

(b) Before requesting the consent of the lessor to a proposed assignment of the lease, the lessee must furnish the proposed assignee with a copy of any disclosure statement given to the lessee in respect of the lease, together with details of any changes that have occurred in respect of the information contained in that disclosure statement since it was given to the lessee (being changes of which the lessee is aware or could reasonably be expected to be aware). The lessee may provide the proposed assignee with a copy of a statement in writing that contains the information that is contained in or required to complete the form set out in Schedule 2A. The statement may be provided if the assignment is in connection with the lease of a retail shop that will continue to be an ongoing business. The layout of the statement need not comply with that of the form set out in Schedule 2A.

(c) For the purpose of enabling the lessee to comply with paragraph (b), the lessee is entitled to request the lessor to provide the lessee with a copy of the disclosure statement concerned and, if the lessor is unable or unwilling to comply with such a request within 14 days after it is made, paragraph (b) does not apply to the lessee.

(d) The lessor must deal expeditiously with a request for consent and is taken to have consented to the assignment if the lessee has complied with paragraphs (a) and (b) and the lessor has not within 42 days after the request was made given notice in writing to the lessee either consenting or withholding consent.

6. This Tribunal has considered the effect of these provisions in various matters. The views expressed are summarised by Judicial Member Fox in Nissim & anor -v- Marino [2001] NSWADT 191 where he stated:
40 It has been held previously in this Division ( Zaoud v Musico & anor [2000] NSW ADT 58 ) that in relation to retail shop leases, the effect of Sections 39 and 42 reversed the previous law. By specifically limiting to three the grounds upon which consent may be refused, section 39 creates a positive right of assignment. The words used in Section 39(1):
"the lessor is entitled to withhold consent to the assignment of a retail shop lease in any of the following circumstances (and is not entitled to withhold that consent in any other circumstances)"
seem to me to admit of no other interpretation. This is underscored by section 42 which does not include “assignment” in the list of things which may be refused in the Lessor's absolute discretion.
41 The legislative intent is quite clear and all of the learning referred to in Yared v Spier (1979 2 NSWLR 291) to confirm that there is no right to a claim for damages flowing from an unreasonable withholding of consent, is irrelevant in circumstances such as these, save that the Section 43 retention of the rights given by section 133 B of the Conveyancing Act may give the wronged proposed assignor, as an alternative, the right to assign despite the absence of consent. But the obvious disadvantage is (and there are judicial observations recognising) that an assignee may well be rightly reluctant to enter into a long-term relationship with a landlord in such inauspicious circumstances. If the proposed assignee does not accept such an assignment, then the remedy of the Lessee of a retail shop is in monetary damages.
7. In my view this is a correct statement of the law. The issue for determination by the Tribunal is whether, in the circumstances of this particular case, the Applicant had complied with the obligation in section 41(a) of the Act to "provide the lessor with such information as the lessor may reasonably require concerning the financial standing and business experience of the proposed assignee"; whether the proposed assignee proposes to change the use to which the shop is put; or whether " the proposed assignee has financial resources or retailing skills that are inferior to those of the proposed assignor".

8. Clause 5.1 of the lease provides that the Applicant shall not use the shop for any purpose other than as set out in Item 9 of the Reference Schedule without the Respondent’s prior written consent. Item 9 of the Reference Schedule provides that the permissible use of the shop is the “retail sale of takeaway Italian cuisine in accordance with the following menu". This provision is followed by a menu covering a wide variety of items of Italian cuisine.

9. The evidence shows that the shop is currently used for the carrying on of a business consistent with the provisions of Item 9 of the Lease.

The Applicant’s case

10. Ms Leonora Scopelliti provided an affidavit and gave oral evidence in support of the Applicant’s case. Ms Scopelliti is a shareholder in the Applicant and is the principal operator of the Applicant’s business on a daily basis. Ms Scopelliti and her husband Stefano established that business in December 2001. They have found it difficult to manage both the affairs of the business and the demands of a young family and decided to sell the business.

11. Ms Jennifer and Mr John Youkhanas (“Jennifer and John”) were keen to purchase the business and made the Applicant an offer in that regard. The Respondent’s Centre Manager, Mr Rick Cooper, subsequently indicated that Jennifer and John were not satisfactory as assignees because they lacked adequate retailing experience.

12. The Applicant advertised the business for sale. Another application was made to assign the lease to Mr James Georges and Mr George Makandasis from Melbourne who wished to operate the premises as a Fast Food Health Shop. The Respondent subsequently indicated that Mr Georges and Mr Makandasis were not satisfactory as assignees on the grounds of change of use and lack of retail experience.

13. Between mid October 2002 and March 2003 the Applicant received a number of expressions of interest in relation to the business and made applications to the Respondent in an attempt to obtain consent to the assignment of the Lease. The Respondent subsequently indicated that, with the exception of a Mr Michael Italiano, none of the interested parties were satisfactory as assignees. The Applicant was unhappy with the offer it received from Mr Italiano and the offer did not result in an agreement to sell the business.

14. Following the intervention of Mr Salvatore Scevola, a Retail Tenancy Consultant, Mr Cooper agreed to accept a second application from the Youkhanas. Mr Scevola completed a second application on behalf of the Youkhanas. This application was forwarded to the Respondent by letter dated 17 April 2003 and was accompanied by a bank guarantee form in the amount of $12,000, a series of references provided on behalf of the Youkhanas along with other documents relating to the assets and liabilities schedule of the Youkhanas’ application. The application is made in the names of the Youkhanas. No details are provided in relation to any guarantors. While on its face the application suggests that the assets and liabilities referred to are those of the Youkhanas, several of the items identified are also referred to in the earlier application brought by Jennifer and John, the Youkhanas’ parents. There is nothing to evidence to suggest whether or not those items are the Youkhanas’ personal assets.

15. On May 5 2003, the Respondent advised Mr Scevola that the Respondent considered that the Youkhanas were not satisfactory as assignees because they lacked adequate retailing experience and adequate financial resources.

16. The Applicant asserts that the Youkhanas’ financial resources and retailing skills are not inferior to those of the Applicant. The Applicant further asserts that the Respondent has unreasonably or arbitrarily withheld consent to the assignment of the Lease to the Youkhanas and other prospective assignees.

17. Ms Scopelliti’s evidence is that prior to entering the Lease, she and her husband had operated a pizzeria business in Penrith for about two and a half years. She had no previous retail experience prior to the Penrith business. Ms Scopelliti’s father-in-law and husband undertook most of the food preparation works in the Penrith business, in a ratio of about 85% to 15%. Ms Scopelliti’s involvement in the Penrith business was mostly limited to office work. She did the accounts in relation to outgoings, expenses, tax returns etc. Ms Scopelliti conceded that in the course of running the Penrith business her husband had developed knowledge of the preparation of Italian cuisine.

18. Ms Scopelliti’s evidence is that the Lease is secured by a bank guarantee in the amount of $12,000. She said that all the food for the business is prepared from pre-prepared ingredients. She said that the skills needed for the preparation of the food in the business could be obtained by observation. She said that her 13-year-old daughter is able to prepare the sauces used. Ms Scopelliti said that the book keeping tasks are not difficult. It is more difficult than home account keeping but becomes routine.

19. Each of Rena Youkhana (“Rena”), Ramina Youkhana (“Ramina”) and Adrina Youkhana (“Ramina”) provided affidavits and gave oral evidence in which they outlined their experience and their intentions as proposed assignees of the lease.

20. Rena stated that she has tertiary qualifications in Commerce and is employed as a senior portfolio accountant. Through her employment she has gained practical knowledge of accounting, risk and compliance, tax, client interaction, business development and marketing, training of new employees and computer literacy in accounting software packages. She also has experience in handling customers, employees and banking transactions. The Youkhanas propose that Rena would manage the operational activities of the business. These functions would include setting achievable targets in revenue, profit, expenditure and cash flow as well as setting up systems to ensure that the business operates efficiently. Rena has prepared business plans in relation to the Youkhanas’ proposed business.

21. Rena stated that in February 2002 Mr Cooper advised that it would be in the Youkhanas’ best interests to change the cuisine and operate a franchise. As a result she contacted two franchise firms - Oporto Chicken and Pizza Hut, both of whom advised her that it would not be in their interest to open their franchises in Stocklands Mall, Wetherill Park.

22. Adrina stated that she is currently employed at Franklins, Wetherill Park. She has been employed there for a period of ten months and her duties include opening and closing the delicatessen, preparing and displaying the merchandise, serving in the shop and occasionally ordering of stock. She also frequently fills vacancies at the cash registers serving customers and handling money.

23. Adrina said she has been working for the Applicant for five hours per week for the previous five weeks. In that time she has learned to do the food orders and observed the food preparation. She asserts that she has grasped the basics of the business in the time she has worked there.

24. Attached to Adrina’s affidavit is a reference from Mr Michael Kovas of 5 Star Supermarket, Missenden Rd. Camperdown. Adrina stated that she undertook voluntary work with Mr Kovas to learn the skills required to work in the retail sector and that she found the work to be most helpful in this regard. She asserted that she and Ramina “have both the know-how and financial backing to carry on the business.”

25. Ramina stated that she is employed in the customer service department of Froggy Internet located at Liverpool. She has worked there for a period of two years and is responsible for such duties as customer service, debt collecting and accounts enquiries.

26. Attached to Ramina’s affidavit is a reference from Mr Roy Ciccone from Ciccone's Piazza Restaurant at Wollstonecraft. Between July 2002 and February 2003 Ramina worked at Ciccone's two nights a week between 6-9 p.m. as well as some weekends. Ramina stated that she undertook this employment for the purpose of learning and understanding the cooking of Italian cuisine. She said that she found it to be most helpful in gaining experience in not only cooking but also dealing with patrons in the restaurant.

27. Ramina also attached a reference from Ms Julie Raso of Bellissimo Wood Fire Pizza and Pasta. Ramina said that she worked at Bellissimo's on a casual basis two days per week and from time to time I would work a full day on her rostered day off.

28. Ramina asserts that she understands every aspect of running the business and that she is fortunate to have the backup and support of Rena. She also has the constant support of her mother, who has volunteered to work in the business on a daily basis free of charge to Ramina and Adrina.

29. Mr Scevola, on behalf of the Applicant, referred to the decision of Nam & anor -v- Commonwealth Funds Management Limited & anor [2002] NSWADT 80 in which the Tribunal’s President and Member Griffiths stated:

“92 Retail leases law also has a public policy setting, though no doubt not seen by many as being as significant as the place occupied by environmental protection laws. The relationship between retail shop tenants and lessors is no longer a matter of private contract. The Act introduces binding, minimum standards.”
30. Mr Scevola submitted that the Tribunal should conclude that the Respondent did not assess the application for consent to the assignment with consistency and regard for the Applicant.

31. He also referred to the decision of Judicial Member Donald in Zaoud -v- Musico & anor [2000] NSWADT 58 as authority for the principal that a lessor is obligated to a lessee with respect to assignment and has an obligation to do so reasonably and expeditiously if the business is to be maintained as an ongoing concern. He submitted that the Respondent’s refusal to consent to the assignment sought is tantamount to obstruction of the Applicant’s rights in breach of section 39 of the Act. The Tribunal should not condone that sort of conduct.

32. He argued that section 39 of the Act refers to retail experience, not owner operator experience. He submitted that the Youkhanas have sufficient retail experience. In addition to the retail experience, Rena has superior financial acumen and fully understands the obligations that go with an assignment. The evidence shows that this is not a frivolous application. The Youkhanas are keen, aware and hopeful and between them they can discharge their obligations with due diligence.

The Respondent’s case

33. Mr Aaron Barnes, Retail Leasing Executive with the Respondent provided an affidavit with respect to the Respondent’s decision to refuse consent to the assignment. Mr Barnes also gave oral evidence before the Tribunal and was subjected to cross-examination. He said that he reviewed the Applicant’s application for assignment of Lease and determined that the Youkhanas did not satisfy the Respondent’s requirements.

34. Mr Barnes outlined the standard guidelines that the Respondent follows in assessing an application for an assignment in the following terms:

“The landlord has the following standard guidelines when approaching a question of whether or not a proposed assignment should be consented to, those guidelines are not exhaustive but provide assistance in the determination of any application:

a. The landlord reviews the existing tenant’s use, retail experience, financial circumstances and trading performance;

b. The landlord then considers the incoming assignees proposed use to determine whether it is in accordance with the existing use;

c. A review of the incoming assignees retail experience is undertaken including various reference checks together with an examination of any resume or other reference material provided to the landlord and assessed against the existing lessees retail experience;

d. Any financial material supplied by the incoming assignee is reviewed and assessed against the existing lessees financial position;

e. If a business proposal or business plan is provided to the landlord then that proposal or plan is taken into consideration and assessed to determine whether the proposed venture conforms with the existing tenancy and demonstrates a level of business acumen not less than that of the existing lessee”.

35. Mr Barnes stated that at the time the Applicant approached the Respondent with a desire to lease the shop, the Applicant advised that it had previously owned and operated an Italian restaurant in Penrith for a number of years. In consideration of the Applicant entering into a lease with the Respondent the Respondent provided a fit out contribution a sum of $22.000 to the Applicant.

36. Mr Barnes referred to the application for assignment of the Lease made by Jennifer and John on 27 April 2002. He stated that the Respondent formed the opinion that Jennifer and John did not have retailing experience and financial resources commensurate with the Applicant. Consequently no consent to the assignment was given. Mr Barnes stated that when he reviewed the Youkhanas’ application he noted that Jennifer and John intended to stand as guarantors to any assignment. He also concluded that the Youkhanas had obtained limited experience in retail. This experience was referred to in the references provided and he substantiated the extent of the experience by discussions with the referees.

37. Mr Barnes formed the view that Adriana's unpaid work experience with Five Star Supermarket for a period of approximately three months is not the same as owning and operating an Italian cuisine food business and is certainly not commensurate with the retail experience of the Applicant. The Youkhanas’ application made no reference to Adriana's experience as an employee of Franklins in Wetherill Park and accordingly that experience was not taken into consideration.

38. Mr Barnes stated that when he spoke with Mr Roy Ciccone the signatory on the letter of reference for Ramina from Ciccone's Piazza, Mr Ciccone was unable to provide a more detailed reference. Mr Barnes stated that Mr Dominic Ciccone advised that he was the son of Mr Roy Ciccone and confirmed Ramina had been employed as a general multi purpose employee with approximately 30 to 40 hours per week. Her duties included assisting in the reporting of stock levels to her manager with no dealing with the financials or the banking. She assisted the full time chef in back of house duties but had no exposure to business legalities.

39. Mr Barnes stated that he contacted Ms Julie Rasa the signatory to the letter of reference from Bellissimo Woodfired Pizza & Pasta. Ms Rasa advised that Ramina was a volunteering employee who worked approximately three nights per week. Some of the duties undertaken by Ramina were ordering and purchasing and some banking and financial chores with the owners assistance. Mrs Rasa advised that Ramina had only spent a few nights with assisting the chef and had a brief day-to-day exposure to related business tasks.

40. Mr Barnes also stated that he identified the financial information that the Youkhanas provided as being remarkably similar to that of the application made by Jennifer and John. Specifically he noted that the principal asset was a property owned by Jennifer and John. The furniture and household items were similar in value and not substantiated. The motor vehicles included a Holden Astra which appeared on both applications. The bank savings were similar and liabilities were virtually identical. He said that supporting documentation also included a one page exert from the bank account of Ramina which had a carried forward balance of around $40,000.00. He formed the opinion that that balance was remarkably similar to the balance that appeared in the statement provided by John Youkhana in relation to Jennifer and John’s application.

41. Mr Barnes formed the opinion that the Youkhanas’ application did not have sufficient financial information and failed to demonstrate that the Youkhanas had financial circumstances commensurate with that of the Applicant.

42. Mr Barnes rejects the assertion that the Respondent’s decision not to provide consent to the assignment was unreasonable and arbitrary. He said that the Respondent considered the Youkhanas’ application and concluded that their experience was minimal compared to the experience of the Applicant and was not experience that was sufficiently grounded in the permitted use. He further stated that, whilst the Respondent viewed the financial resources identified by the Youkhanas as being suspect and not a proper reflection of their true financial position, the Respondent non-the-less viewed it as being otherwise minimal compared to that of the Applicant.

43. Ms Allars, Counsel for the Respondent, argued that the question of whether a proposed assignee has financial resources or retailing skills that are inferior to those of the proposed assignor is a question of fact. She submitted that the financial resources of the Applicant met the Respondent’s requirements. In particular, Mr Stefano Scopelleti and Ms Leonara Scopelleti, the principals of the Applicant, had operated a successful Italian restaurant in Penrith for a number of years and were prepared to be personal guarantors under the lease. In contrast, she argued, the Youkhanas have inferior financial resources. The certificate of title offered does not show who are the present owners. The Youkhanas provided no evidence that the furniture and household items valued at $71,338 are different from the furniture and household items which Jennifer and John had claimed to own in their application. In both applications these items were claimed to be located at the same address. The Holden Astra 2001 valued at $26,000 appears to be the same vehicle which Jennifer and John claimed to own and valued at $26,000 in their application.

44. With respect to the banking documentation to which the Youkhanas referred, Ms Allars submitted that the statement of account in the names of "Miss R Youkhana & Miss R Youkhana" is for a period of only six months, shows no debits or credits other than bank transaction fees and interest on the account, and is a statement for the identical account for which Jennifer and John previously submitted earlier statements showing a balance of $5.30 on 18 April 2002, followed by a credit entry of $30,927.00 on 19 April 2002. Ms Allars further submitted that the bank guarantee form contains no further details and is not signed by the named Applicants or by the bank. Neither the Applicant nor the Youkhanas provided evidence that the bank was prepared to enter into the guarantee for the amount of $12,000, or that the form had been submitted for approval.

45. Ms Allars argued that on its face, the Youkhanas’ financial position was not one which inspired confidence that they would be in a position to meet a base rental of $42,610 per annum. She submitted that his matter should be contrasted with the circumstances of the parties in the matter of Zaoud -v- Musico & anor [2000] NSWADT 107 where the lessor conceded that it had received adequate information concerning the financial standing and reputation of the proposed assignees so as to permit consent to be given. In the present case no such concession has ever been given. Ms Allars further submitted that the financial information provided in Zaoud was very different in its quality from what has been provided by the Youkhanas. In Zaoud commercial references in other fields of small business endeavour, with similar turnover, were provided. Those references indicated the proposed assignee had good standing in running the relevant retail business. In contrast the Youkhanas references do not indicate standing and experience in running a small business. Other financial materials provided by the proposed assignee in Zaoud showed a capacity to meet her loan repayments. The Youkhanas’ statements simply show a sum of $39,000 lying idle in a bank account for a period of six months, of which apparently $30,000 was credited to the account shortly before the period for which the statement was provided. In Zaoud rate notices provided evidence that the proposed assignees owned two properties and their land values. The certificate of title provided by the Youkhanas does not indicate who is the present proprietor of the property at which the Youkhanas reside.

46. Ms Allars argued that the Youkhanas have minimal experience in the retail food industry. They have worked for short periods as volunteers, or as part-time or casual staff, in positions that fall short of the retailing skills relevant to the Lease. While it is proposed that Rena will be managing the operational activities of the business, her skills do not compensate for the minimal skills of the Youkhanas because she is not the applicant for the assignment, she has other full time employment, which no doubt would limit the contribution she could make, her business experience is only "theoretical"; and she has no retailing experience other than as a volunteer at her parents-in-law's hairdressing salons.

47. Similarly, the proposed assistance from Jennifer and John does not compensate for the minimal retailing skills of the Youkhanas because Jennifer and John are not the proposed assignees. It is the retailing skills of the Youkhanas, not their immediate family, which are in issue when consent is sought. Jennifer and John have indicated experience at "Caltex Service Station, Bonnyrig" but gave no further evidence of their experience gained since April 2002.

48. Ms Allars argued that the decision in Nissim & anor -v- Marino does not set out any new principles as to the proper interpretation of section 39(1)(b) of the Act but the finding that the proposed assignee had the necessary retailing skills was a conclusion based purely on the evidence in that case.

49. In summary Ms Allars argued that the Youkhanas have financial resources and retailing skills that are minimal. They are not adequate to enable them to operate the business. They are inferior to those of the Applicant within s 39(l)(a) of the Act. She also submitted that while the Youkhanas indicated a preparedness to meet the Italian menu, they did not indicate as to how they would compensate for their lack of experience in this area. Given the complete lack of experience of the Youkhanas in operating an Italian cuisine retail business, or preparing a full range of Italian foods, the assignment would as a practical matter inevitably result in a change in use of the shop.

50. In terms of s 39(1)(a) of the Act, the Respondent may refuse to consent to the assignment if the proposed assignee proposes to change the use to which the shop is put, without any requirement that the consent not be unreasonably refused. Since Youkhanas effectively propose to change the use to which the shop is put, the Respondent is entitled to withhold consent, pursuant to s 39(1)(a) of the Act.

51. Ms Allars also referred to a lessee's duty to provide a lessor with information reasonably required pursuant to section 41(a) of the Act and submitted that there is no evidence that the Applicant provided the Respondent with information of the kind set out in Schedule 2A to the Act. She also submitted that there is no evidence that the Applicant has provided the Youkhanas with the Respondent's disclosure statement in respect of the Lease together with details of any changes, or as to whether the Applicant has advised the Youkhanas of any outstanding notices, in respect of the Lease, or from authorities, or of any encumbrances on the shop or its fixtures and fittings, or of any rent concessions or other benefits conferred by the Respondent during the lease. Further, the Applicant has not provided the Respondent with information as to whether it has advised the Youkhanas of its sales figures and trading performance for the period the Lease has been in operation.

52. Ms Allars argued that this was the kind of information that the Respondent sought from the Applicant or the Youkhanas. Since the Applicant is in breach of section 41(a), the Respondent is entitled to refuse consent pursuant to section 39(1)(c) of the Act.

Findings

53. The Application before the Tribunal relates to the proposed assignment of the Lease to the Youkhanas. In my view, the Respondent’s conduct in relation to other proposed assignees has no bearing on whether the Respondent was entitled to withhold consent to that assignment.

54. As I have indicated above, the issue is largely governed by section 39(1) of the Act. It is a question of fact whether the Youkhanas propose to change the use to which the shop is put. I do not accept Ms Allars submission that the Youkhanas’ lack of experience would inevitably result in a change in use of the shop if the assignment were granted. I find as a fact that the Youkhanas do not intend to change the use to which the shop is put and I therefore do not accept that this was a valid reason for refusing consent to the assignment.

55. It is also a question of fact whether the Youkhanas have financial resources or retailing skills that are inferior to those of the Applicant. The evidence shows that the Applicant’s principals had at least two and a half years experience in a pizzeria business in Penrith prior to entering the Lease. Since that time they have gained further experience as a result of their operation of the business in the shop. The Act provides no guidance as to whether the Applicant’s retailing skills at the time of entering the Lease or at the time of a proposed assignment are the relevant skills for the purposes of section 39(1)(b) of the Act. Similarly, there is no guidance as to the relevant time for consideration of the Applicant’s financial resources. In my view, the relevant experience and financial resources are those that the Applicant possessed at the time it entered into the Lease. The Respondent undertook an assessment of those skills and resources at the time of entering the Lease and was satisfied that the Applicant met its requirements. It would now be unreasonable to insist that a proposed assignee possess greater skills or resources than were required of the Applicant at that time.

56. In any event, I am not satisfied that the evidence establishes that the Youkhanas have retailing skills that are comparable to those of the Applicant at the time the Lease was entered. The Applicant had conducted the Penrith business for two and a half years. Ms Scopelliti had undertaken office work in the previous business and was responsible for the accounts in relation to outgoings, expenses, tax returns etc. Mr Scopelliti had played an active role in the food preparation works in the Penrith business and in the course of running the Penrith business he had developed knowledge of the preparation of Italian cuisine. In contrast, the Youkhanas’ retailing experience is very limited and in my view is not comparable to that of the Applicant. They have worked for short periods as volunteers, or as part-time or casual staff, in positions that fall short of the retailing skills relevant to the Lease. I agree with the Respondent’s assessment and find as a fact that the Youkhanas’ retailing skills are inferior to those of the Applicant. It follows that the Respondent was justified in refusing its consent to the assignment of the Lease to the Youkhanas. I note that I may have reached a different view had Rena, Jennifer and John been included as applicants for assignment of the Lease. Given that Rena is not an applicant, she is merely an advisor whose skills are available to the Youkhanas. Similarly, it is not obvious on the evidence that the skills of Jennifer and John are available to the Youkhanas other than as advisors.

57. I also find the evidence of the Youkhanas’ financial resources very unsatisfactory. In my opinion, insufficient information was given to the Respondent to allow it to undertake a reasonable assessment of those resources. Section 41(a) of the Act provides that lessee must provide the lessor with such information as the lessor may reasonably require concerning the financial standing of the proposed assignee. It is not obvious on the evidence that the assets of Jennifer and John are available to the Youkhanas. If insufficient information is provided to allow a reasonable assessment of that issue, it is reasonable for the Respondent to refuse to consent to the assignment.

58. On the evidence before me I am satisfied that for the purposes of section 39(1)(b) of the Act the Youkhanas’ financial resources that are inferior to those of the Applicant. It follows that the Respondent was also justified in refusing its consent to the assignment of the Lease to the Youkhanas on that basis.

59. Given these findings it is unnecessary for me to consider the issue of damages raised by the Applicant. The appropriate order is that the application be dismissed. I make no findings in relation to any issue between the parties with respect to any request by the Applicant for consent to any proposed assignment of the Lease to any other proposed assignee.

Orders

1. I declare that the Respondent was entitled to withhold consent to the proposed assignment of the lease by the Applicant.

2. The remainder of the Applicant’s application is dismissed.