Gani v Maiolo

[2012] NSWSC 1417

Supreme Court of NSW|2012-11-15|Before: Hall J

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Source facts

Court

Supreme Court of NSW

Decision date

2012-11-15

Before

Hall J

Catchwords

whether same had been abandoned, (ii) liability for cost of a new awning
whether lessors liable, (iii) whether bond forfeited - Appeal Panel affirmed Tribunal's decision - no error on part of the Tribunal or Appeal Panel on a question of law.

Source

Original judgment source is linked above.

Catchwords

whether same had been abandoned, (ii) liability for cost of a new awningwhether lessors liable, (iii) whether bond forfeited - Appeal Panel affirmed Tribunal's decision - no error on part of the Tribunal or Appeal Panel on a question of law.

Judgment (26 paragraphs)

[1]

Judgment 1These proceedings were commenced in this Court by summons commencing an appeal filed on 10 July 2012. The plaintiff sought to appeal both the decision of the Administrative Decisions Tribunal New South Wales made on 14 September 2011 (Judicial Member, D Bluth, Gani v Maiolo [2011] NSWADT 219) and the decision of the Appeal Panel - Internal of the Tribunal made on 5 March 2012 (M Chesterman, Deputy President, K Rickards, Judicial Member and J Butlin, Non-judicial Member, Gani v Maiolo [2012] NSWADTAP 10). The plaintiff purported to appeal without leave against the decision the Appeal Panel - Internal in relation to costs (M Chesterman, Gani v Maiolo [2012] NSWADTAP 21). 2Although the summons sought to appeal the decision of the Judicial Member made on 14 September 2011, as well as the decision of the Appeal Panel, the written Outline of Submissions of the Plaintiff restricted the appeal to "... the orders of Appeal Panel of Administrative Decision Tribunal made on 30 January 2012..." at [1]. 3The proceedings are by way of appeal under the Administrative Decisions Tribunal Act 1997 ("the ADT Act"). Section 119 of that Act provides for an appeal from a decision of an Appeal Panel of the Tribunal to this Court "on a question of law." That is an important limitation. These proceedings, in other words, are not a general appeal or a review of the Appeal Panel's decision.

[2]

[9]

(1) The Tribunal Decision 26The reasons for decision of the Judicial Member identified the specific issues raised by the parties (paragraphs [11] and [13]). The first issue considered by the Tribunal was identified as the "commencement date" of the registered lease. It was noted that the evidence of the parties on that issue was "polarised": Decision at [15]. The second critical issue concerned liability for the cost of an awning replacement: Decision at [16]. The defendant lessors contended that the plaintiff was liable for the cost. The plaintiff argued that it was a "landlord fixture" for which the lessors were responsible. 27The Judicial Member set out the documentary evidence and the "Applicant's Position" and the "Respondent's Position" at [22]-[31]. 28In relation to the issue concerning the commencement date of the lease, the Tribunal concluded that the works that needed to be undertaken by the defendants in relation to the premises were not substantial. It was determined that they were far less intrusive than had been alleged by the plaintiff who had asserted that the rectification work prevented him from taking exclusive possession. The Judicial Member referred to the evidence on that issue and to "significant inconsistencies" in the evidence of the plaintiff on the subject of work done on the premises: at [34]. 29The Judicial Member concluded that, in light of the evidence, including the evidence adduced during the cross-examination of both parties, there had in fact been no agreement to alter the commencement date of the lease. Whilst the reasons did not disclose the Tribunal's precise basis for that conclusion, the evidence strongly supported it (as to which, see the discussion below). 30The Judicial Member also made a finding that there had not been a loan by the plaintiff to the defendants in the amount of $4,500 to be used to fund the cost of the new awning. That finding was not supported by specific reasons and to that extent the finding was deficient. The issue, however, was considered by the Appeal Panel as discussed below.

[18]

Consideration of the rent provisions 47The commencement date for the lease was specified as 13 April 2010. 48Annexure "A" to the Lease included a "Summary" in respect of the plaintiff's liability for rent payable under paragraph 1. The first monthly payment, according to the lease, was due on 13 May 2010, instead of 1 May 2010 which date had been deleted. The change in date was not initialled by the plaintiff, as noted by the Tribunal. That paragraph continues: "If this is not the commencement day it is because a set up period of rent free period from the commencement date to that day has been allowed by the lessor." (Emphasis added) 49In cl (4) of Annexure A, provision is made in relation to the rent, in part, as follows: "For the first One (1) year period of the term hereof the Lessee will pay to the Lessor ... a rent at the rate specified in summary (c) per annum such rent to be paid in advance by regular and consecutive monthly payments specified in summary (c) each on the first day of each month during the term except the first and last payments which, if necessary, will be proportionate, the first being payable on the day of commencement of the term ..." (Emphasis added) 50It had been the plaintiff's claim before the Tribunal that the rent-free period had been deferred by agreement from 13 May to 7 June 2010. That, of course, if supported by the evidence, would have postponed liability under the lease to make advance monthly payments of rent. The Tribunal, however, rejected that claim. 51The Tribunal noted that it was the plaintiff's contention that there had been no default by him as the date for the commencement of the lease had been altered from 13 May to 7 June 2010, (extending the rent-free start-up period). The Tribunal observed that there was no documentary evidence to support an alteration in the commencement date of the lease from 13 May 2010. In that respect, the Tribunal made a finding that there was no evidence of any express variation to the agreement between the parties to that effect and that there was no evidence from which such an agreement could be implied. Further there was no basis to invoke the doctrine of promissory estoppel as there had been no promise and no unambiguous conduct upon which an estoppel could be found. 52The Tribunal noted that the evidence revealed that there had been three demands made by the defendants for payment of rent. It observed that if the plaintiff had in fact believed that there had been an agreement altering the date for the payment of rent then it would be expected that he would have raised that with the defendants well before his solicitor wrote a letter on his behalf after the lock-out occurred. The evidence, however, established that he did not assert in response to the letters of demand that there had been any alteration. 53It was common ground that the plaintiff obtained keys to the premises on 13 April 2010. However, it was argued for him that he did not genuinely "enter into possession" in the sense of undisturbed possession of the Premises until 7 May 2010. 54It was contended before the Tribunal that the reason for this was that the lessors had not complied with their fit-out obligations, which included the rendering of a grease trap fit for use, until 6 May 2010. The plaintiff asserted that this particular task, as well as others, fell within the description "lessor's fit-out obligations" within the meaning of (1)(b) and (2)(a) of s 17 despite the absence of a provision to this effect in the lease. 55The basis upon which it was argued that these matters were "lessor's fit-out obligations" was that at the time the Lease was executed the parties had orally agreed that the lessor would rectify those aspects of the premises that were considered to be unsatisfactory. 56The Appeal Panel stated that it was not persuaded by the argument and set out a number of reasons at [43] to [50] for its decision on that issue. 57Counsel appearing for the plaintiff before the Appeal Panel developed a submission based on the provisions of s 17 of the Retail Leases Act 1994. The argument may be shortly stated. It was submitted that cl 1(c) of the lease, although stating that the first monthly payment was due on 13 May 2010, was premised upon that being the commencement date of the lease. 58The Appeal Panel dealt with the argument at [39] to [47] of its Reasons for Decision, ultimately dismissing the argument. Counsel for the plaintiff had relied upon the provisions of s 17(2)(a) which, in effect, stated that the lessee was not liable to pay rent in respect of any period before the lessor had substantially completed the lessor's fit out obligations. The argument was that Mr Gani's liability to pay rent could not have arisen earlier than 13 May 2010: Reasons at [40]. 59The argument had been that although the keys to the premises were given to the plaintiff on 13 April 2010 he did not "genuinely" enter into possession, that is undisturbed possession, as the defendants had not complied with the lessor's fit out obligations until 6 June 2010. The Appeal Panel stated its reasons for not accepting the argument commencing at [42]. The first ground for dismissing it was that the lease stipulated the commencement date as 13 May 2010 and the liability to pay rent was not expressed to be dependent upon the date upon which the lessee entered possession of the shop. 60The Appeal Panel, in relation to s 17(1)(b), stated that whilst the defendants (in particular Mr Maiolo) had promised to remedy certain defects on the premises, he did not undertake to remedy them before the lessee entered possession and that it was clear that the parties had intended that the lessor would perform them after the date on which Mr Gani obtained the key (13 April 2010). 61The Tribunal additionally accepted the submissions put on behalf of the plaintiff that the Tribunal's findings (at [36]) indicated that the works undertaken by the lessor were not substantial and were far less intrusive than Mr Gani had alleged. The submission was that most of the tasks had been completed by 13 April 2010, although this date was not detailed in the Reasons of the Tribunal. 62The Appeal Panel concluded that the plaintiff had not been denied possession of the premises in any practical sense at any time after 13 April 2010.

[20]

Consideration: issues concerning the lease 68It has not been established in the proceedings that the Tribunal or the Appeal Panel failed to properly consider the issue of the commencement date of the lease. Nor do I consider that there is any basis for the plaintiff's submission that the Tribunal misconstrued the terms of the lease. In my opinion, the submissions as to error in these respects amount to no more than unsupported assertions. 69The Tribunal recognised that the fundamental issue for its determination in relation to the right of the lessors to terminate the lease concerned the terms of the lease that specified the obligation to make advance monthly payments. That issue, the Tribunal recognised, turned upon the commencement date of the lease. 70In relation to this issue, the plaintiff's submissions do not establish error in the Tribunal or the Appeal Panel involving a question of law. A consideration of the decision of the Tribunal in light of the evidence, indicates that the decision by it made on the issue concerning arrears of rent was clearly correct. 71The Tribunal recognised, at [43] of its decision of 14 September 2011, that there was no contemporaneous or objective evidence to establish the plaintiff's contention that the commencement date of the lease has been altered by agreement from 13 May to 7 June 2010. The Tribunal, in fact, recognised, at [44], that the evidence was very much against the plaintiff's contention that there had been agreement to vary the commencement date of the lease. There was in fact evidence that supported the fact that the plaintiff himself acted on the basis that the commencement date was 13 May 2010. Ms Tibbey's submissions drew attention to specific documents which made that plain. 72In this respect reference was made to the affidavit of Mr Muriniti, solicitor for the defendants, sworn on 7 November 2012. This affidavit contained Annexure A to the Application for Original Decision, signed by Mr Gani and filed with the Tribunal on 9 September 2010. 73In that document (signed by the plaintiff) it was stated that the lease for the restaurant was for the period 13 April 2010 to 14 April 2015 and that rent had been paid to 12 July 2010, it being noted "Business slow" (See full statement below). Ms Tibbey further submitted that the first commencement of the lease stated as 13 April 2010 was a critical fact rather than any other date as later asserted. It was submitted that it was open to the Tribunal to reject the contention made on behalf of the applicant that there had been an oral agreement to vary the commencement date to 7 June 2010, an assertion that had been denied by the defendants. 74In the abovementioned Application for Original Decision made by the plaintiff, under the heading "Grounds for Application (including Particulars)" the plaintiff wrote against the entry "Particulars 1.1" the following: "Lease for Indian restaurant 13/4/2010 - to 14/4/2015. Rent $7800 inc GST pm rent paid to 12/7/2010. Business slow." 75Against the entry "Particulars 2.1" the plaintiff wrote: "I will pay the rent if relief given and I return to the property to conduct business." 76The Application was signed by the plaintiff on 8 September 2010. 77In the document, Application for Urgent Interim Order, also filed on 9 September 2010, the plaintiff wrote: "... the Lease commenced on 13/4/2010. Business is very slow and requires time to develop, able to resume rental payments ..." That Application was also dated 8 September 2010. 78The defendant relied upon both Annexures A and B to the Applications made on 9 September 2010 for support of the contention that had been made by the defendants that the rent-free period was a period commencing 13 April 2010 until 12 May 2010 and that the payments under the lease were due as and from 13 May 2010: Defendants' Written Submissions at [22]. 79It was further submitted on behalf of the defendants that the first time that it was suggested that there had been an oral agreement for the lease to commence on a later date was that contained in the affidavit of 18 November 2010. The plaintiff in that affidavit at [6] stated that shortly after 7 May 2010 he asked Mr Maiolo to amend the first rent payment under the lease from 13 May 2010 to 7 June 2010 so that he could take full advantage of a 1-month rent-free period from 7 May 2010 to 6 June 2010. In that paragraph he asserted that Mr Maiolo agreed to this but said that it was not necessary to amend the date as the lease agreement allowed the landlord to change the date and he trusted him. 80The defendants further relied upon the fact that the letter from the plaintiff's solicitor dated 5 August 2010 did not include any assertion that there had been an oral agreement to vary the date of the commencement of the lease. 81The assertion that, as at 27 July 2010 when the lessors wrote demanding payment of rent, the rent was not 14 days overdue is an assertion made upon the premise the Tribunal ought to have accepted the plaintiff's account that there had been an agreement to defer the commencement date of the lease. It is clear from what I have earlier stated that the assertion in these written submissions at [91] cannot be accepted. 82Once the Tribunal determined (in my opinion correctly) that the lease commenced on 13 May 2010, there was no basis for the plaintiff's contention that the defendants were not entitled to terminate the lease on the basis that the rental payments were in arrears. In other words, the evidence established a proper basis, having regard to the terms of the lease, for a contractual right in the defendants as lessors to terminate the lease. 83Before leaving this issue, there is one matter to which I should make particular reference. In his oral submissions Mr Kumar accepted that the principal issue before the Tribunal was the issue of the lease commencement date: T 15 November 2012 at p 5. At p 6 of the transcript, Mr Kumar is reported as stating: "... but there are a couple of issues arising from that. As your Honour was earlier exploring, the issue of the construction of cl 11(a). Even if your Honour were to find that the clock started to tick on 13 April and there was one month rent-free period up to 13 May and then the two months - I think it's common ground that two months worth of rent was paid. So, that took it up to 13 July. On my friend's version that takes us up to 13 July. A letter was issued on 27th, being a notice [27 July]." 84Mr Kumar continued: "Then the lease was determined on 3 August. In the plaintiff's submission, on a true construction of cl 11(a) that should not have occurred.": T at p6. 85Ms Tibbey, at p 7 of the transcript of 15 November 2012, stated that cl 11(a) was not argued either at first instance or on appeal. Mr Kumar drew attention to the fact that in the Notice of Appeal reference was made to "denied 14 days' notice according to the terms of the lease." However, it became apparent that although the issue was raised in the Notice of Appeal it was not one that was pursued or argued either before the Tribunal or the Appeal Panel. 86If it had been relied upon as an issue in the proceedings below I do not consider that the issue would have had any significant or decisive effect on the outcome of the proceedings in relation to the issue of the plaintiff's failure to make advance payments of rent. 87The following matters would have arisen had the issue in relation to cl 11(a) been raised below. As the "Summary of Payments" set out in [7] above indicates, the plaintiff failed to pay the monthly payments on the due dates for payment, namely, 13 May 2010 (not paid until 2 June 2010) and 14 June 2010 (not paid until 13 July 2010). No payment at all was made in respect of the month of July 2010. 88The notice of default by letter dated 24 June 2010 (Annexure "H" to Mr Muriniti's affidavit sworn 15 October 2012) noted that rent due on 14 June 2010 had not been paid and a demand for payment was made. The plaintiff was in "default" under cl 11(a) of the lease in respect of June. No payment was made by the plaintiff within 14 days of the letter of 24 June 2010. Payment of the June rent was not made until 13 July 2010. The condition stipulated for termination of the lease under cl 11(a) had, in other words, been fulfilled by 8 July 2010 (14 days after notice of 24 June 2010). The defendants were entitled to rely upon the default by the plaintiff to make payment, the letter of 24 June 2010 and the plaintiff's failure to pay within 14 days of 24 June 2010. 89The plaintiff's failure to comply with the lease provisions which governed his rent obligations continued in July 2010 for which no payment of rent was paid or proffered. 90However, the fact remains that the issue was not argued before the Tribunal. It is not open to the plaintiff to now raise it as a matter that establishes "a question of law" for the purposes of the present proceedings. 91I should add that the decision of the Appeal Panel reveals that very close attention was given by it to the question of default in payment of rent. Factual matters relevant to that issue were set out in the decision at [5] to [24]. No error has been demonstrated in relation to any of the matters to which the Appeal Panel there referred nor to any conclusions expressed by it in relation to those matters. 92The Appeal Panel proceeded to examine in close detail the question of what it termed "deferment of the rent-free period" at [35] to [38] and in relation to the issue raised under s 17 of the Retail Leases Act at [39] to [49]. The Panel concluded that the Tribunal's findings in respect of the rent-free period and the plaintiff's liability under the lease to pay rent was: "... entirely correct in law and in accordance with the evidence". At [50]. 93The assertion in the submissions for the plaintiff at [89] that the Tribunal had "misapprehended the payment of $7800 paid in cash ...", in my opinion, has no foundation whatsoever. There is, with respect, no basis for the assertion that "the Tribunal had not properly set out its findings of facts on this issue": Plaintiff's Written Submissions dated 26 October 2012 at [90]. 94In the present proceedings, attention was directed by counsel on behalf of the defendants to the fact that the first receipt that was issued related to the cash payment made of $7800 (which on the defendants' case was late as it had been due on 13 May 2010 but payments not made until 2 June 2010). That receipt, it was emphasised, specified the period of rent as commencing on 13 May 2010. The plaintiff did not, before the lockout occurred on 3 August 2010, assert that the receipt wrongly recorded the commencement date as 13 May 2010. As the Summary in [7] above indicates, the rent due on 14 June 2010 was not paid until 13 July 2010. The next monthly payment due on 14 July 2010 was not paid.

[21]

(a) Return of chattels 95In relation to the issues raised regarding Ground 3, to the effect that the Tribunal ought to have found in favour of the plaintiff's claim and made orders in his favour ordering the return of chattels and refund of bond monies, the plaintiff failed to establish that there was any question of law in respect of those matters arose and failed to establish any error in the Tribunal's determination of those issues. 96In relation to Grounds 5 and 7, the claim for the value of chattels, as was observed in the written submission for the defendants at [34] there was no claim made in the original application filed on 9 September 2010 for stock and equipment and no orders were sought in relation to the same. However, the Tribunal gave leave for the issue to be dealt with on its merits but found against the plaintiff on the issue. Again, it has not been demonstrated that the Tribunal's findings and conclusions involved or were affected by an error of law. 97On the issue of "abandonment" it was contended that the defendants had not raised the issue in the pleadings. I accept, however, the submission made on behalf of the defendants that that issue was raised in response to the claim made by the plaintiff. Arrangements had been made for the plaintiff's lawyers to attend two appointments at the premises. Mr Maiolo's evidence was that they did not attend. The evidence given by Mr Maiolo was that the failure to attend, as had been arranged, effectively led to an abandonment of the property and the defendants proceeded to organise the clean up of the premises and then advertise them for rent. 98The Appeal Panel dealt with this issue at [59] to [74]. It noted that the total of the amounts paid in respect of the goods as referred to in Mr Gani's affidavit sworn on 14 February 2011 was $38,505. The Tribunal accepted the submission made by Ms Tibbey to the effect that the evidence relied upon was totally inadequate to establish the value of the goods which the plaintiff alleged he had left in the premises. The Appeal Panel expressed the opinion that: "...the Tribunal should have dealt with this claim by Mr Gani, even if only briefly. There were sufficient references to it in the opening addresses, the evidence and the submissions filed on Mr Gani's behalf. Its omission to do so was an error of law, warranting a grant of leave by us." At [70]. 99The Appeal Panel however went on to state that having regard to the material that was before the Panel: "... this claim must be dismissed. Our principal reason is that, as Ms Tibbey argued, the evidence adduced by Mr Gani as to both the nature and [most importantly] the value of the goods left in the Premises falls well short of what was required. A list of broadly described categories of goods, without any indication of the numbers of items in a number of the categories or of the age or other defining characteristics of any of the goods, is clearly inadequate. So too are a series of bald assertions as to the value of the items in each of the 27 categories.": At [71]. 100In relation to the goods which the plaintiff said he had left on the premises, there was an insufficiency of evidence in so far as the plaintiff failed to adduce evidence to establish the value of the goods, he, of course, having the onus of proof on that issue. 101These findings and conclusions were certainly open on the evidence before the Appeal Panel. Further it was not demonstrated that any error was made in any factual finding in relation to this aspect, let alone an error of law. I do not consider that the plaintiff has established a valid ground of appeal in respect of the claim for the value of the goods left on the premises.

[22]

(b) Bond forfeiture 102The defendants' entitlement as lessors to the bond was set out in the lease. A breach of a covenant was said to entitle the Lessor "... to call upon the guarantee for or utilise such amount towards the cost of rectifying any breach otherwise the amount less any necessary expenditure shall be refunded to the Lessee at the end of the Lease and any guarantee released ...". 103The only issue raised in the written submissions for the plaintiff on this issue was that the forfeiture of bond money: "... does not provide any evidence of the losses suffered by the Lessors. The Tribunal has not addressed whether the losses are just and reasonable.": At [124]. 104It was further contended that the Tribunal's decision did not "... address any issue of quantum ..." and that the defendants had asserted that the monies had been accounted as lost rent and restoration of the premises but they did not provide sufficient evidence of the claim: At [125]. 105Finally it was submitted that in all the circumstances the lessors had obtained a benefit and were unjustly enriched: At [126]. 106The Tribunal made a finding that the Bond of $25,000 should be forfeited. 107In the written submission for the defendants there were several matters identified at [39] which provided a basis for the forfeiture of the Bond. These included: (1) If the rent was not paid up to date in accordance with the lease provisions. The amount of rent due was calculated and set out in the submissions as at 3 August 2010 (a period of 21 days) as $5,283.87 plus interest as per the lease at 9%. (2) The circumstances for forfeiture of the Bond had arisen. (3) The premises were left in a dirty condition which required cleaning and replacement of carpets and other matters set out in subparagraph (c) of the submissions. (4) The premises had to be relet. The oral evidence indicated that a tenant only entered into occupation on 12 April 2011. Accordingly, the premises were vacant for the period 3 August 2010 to 12 April 2011. (5) There was a failure to pay the amount due under the equipment contract, ie $6,750 due on 11 May 2010. (6) That Mr Maiolo had to pay $2,300 towards payment of an awning replacement, there being a basis for disputing the need for the awning to be replaced although it had been required by the plaintiff. 108I do not consider that the plaintiff established any material error let alone an error of law in respect of the forfeiture of bond issue.

Gani v Maiolo

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Judgment (26 paragraphs)

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