Johnson v D & S Australia Pty Ltd

The Applicants' case as pleaded in the Statement of Claim

1. By their Statement of Claim, the applicants alleged: 1. The applicants and the respondent came to an agreement on about 30 July 2018 that the applicants would lease the premises for the purposes of operating a brothel from the premises. 2. In around March 2019 the applicants and the respondent reached an agreement that the respondent would lease the premises to the applicants and execute a retail shop lease with a commencement date of 13 March 2019. 3. On 16 April 2019 the applicants and the respondent executed a retail shop lease in respect of the premises, which was registered on 5 July 2019. The lease provided that the applicants would not be required to pay rent for the months commencing 31 May 2019 and 30 June 2019. 4. The lease included terms: Clause 7: Conditions and Repairs: The lessor must: 7.1.1: Maintain in a state of good condition and serviceable repair the roof, the ceiling, the external walls and external doors and associated door jambs, and the floors of the property and must fix structural defects; 7.2.1: Maintain the property in a structurally sound condition; and 7.1.3: Maintain essential services (being gas, electricity, water and sewage). 1. Item 24 of the schedule to the lease (Item 24) provided: Maintenance Notwithstanding any other provision of this lease the Lessor will contribute $5,000 towards the cost of servicing the air-conditioning system, electrical installations and cleaning of the premises and thereafter the Lessee will maintain in good working order the air-conditioning system, automatic door closing/opening system, plumbing and electrical installations and cleaning of premises at the cost to the Lessee. The Lessee will be responsible for the replacement of the air-conditioning system if the Lessee desires to replace the air-conditioning system. 1. The applicants delivered a bank guarantee in the amount of $25,300 on 31 May 2019 in accordance with Item 19 in Clause 16 of the lease.
2. Under the heading "Breach of Contractual Terms and Repudiation" the applicants alleged: 1. The respondent failed to provide the leased premises on the commencement date of 31 May 2019. 2. The respondent failed to maintain the roof and ceiling in good condition and serviceable repair and failed to maintain the property in structurally sound condition or to maintain the essential services with respect to the air-conditioning system in breach of clause 7. The applicants alleged in this regard that: "(i) From around 2018 to 15 November 2019, the roof of the Leased Premises was damaged and/or had holes, and water was leaking through to the ceiling below. The ceiling was damaged and required repair and painting. (ii) From around 2018 to 15 November 2019, the air-conditioning system, including the fan motor, compressor and thermostat, that were under the First Respondent's care and maintenance, were not working and functioning properly. (iii) From around 2019 to 15 November 2019, the air-conditioning system was not cleaned, nor serviced by the Lessor in a manner in which air-conditioning system could work and function properly. (iv) From around 2018 to 15 November 2019, the First Respondent did not take all reasonable steps to rectify the ongoing issues, including servicing and repairing the air-conditioning system, repairing damage to roof and ceilings, and preventing water leaks into the Leased Premises. (v) From around 2018 to 15 November 2019, the Applicant wrote to the Respondent on various occasions raising concerns about the air-conditioning system, as well as the condition of the roof and ceiling, water leaks and damage to the Leased Premises. (vi) In or around June 2019, the ceiling collapsed and rainwater poured in causing damage to the flooring (installed by the Applicants) and the Applicants' furniture. (vii) On or around 23 July 2019, the Applicants organised and obtained a quotation from an air-conditioning technician to repair and service the air-conditioning system and forward this quotation to the Respondent to approve. (viii)On or around 13 August 2019, the [Respondent's property manager] by email advised the Applicants that the Respondent did not want to contribute funding for repairs to the air-conditioning system. (ix) On or around 4 September 2019, the [Respondent's property manager] by email advised the Applicants that the Respondent approved this quotation. (x) In or around November 2019, the repairs to the air-conditioning system, roof and ceiling were commenced and finished on 15 November 2019." 1. The respondent breached Item 24 by failing to contribute $5,000 to the servicing of the air-conditioning system. 2. The breaches of the lease resulted in the applicants suffering loss, which the applicants assessed in various amounts calculated on the basis that the applicants would have achieved an average daily net income from trading of $1,126.75 and that the applicants had been wrongfully deprived of that income over periods ranging between 168 days and 473 days, to the date of termination, and a further loss of opportunity from the date of termination to the end of the lease. 3. The applicants also alleged they had incurred costs of $65,573.44 in establishing their business and fitting out the premises.
3. Under the heading "Variation of Contractual Terms" the applicants alleged: 1. On 4 September 2019 the parties agreed to vary the express terms of the lease: (i) to change the commencement date to 15 November 2019, (ii) that the rent-free period would be two months commencing 15 November 2019 and 15 December 2019. 1. That the variation was made orally and in writing and also implied by the parties' conduct: in the respondent completing repairs and servicing the air-conditioning system, repairs to roof and repair and painting of the ceiling, and the applicants commencing trading and operating their business from the leased premises from 16 November 2019. 2. On 27 February 2020 the respondent sought payment of rent from the applicants for the periods 26 December 2019 to 25 January 2020, 26 January 2020 to 25 February 2020 and 26 February 2020 to 25 March 2020, together with monthly outgoings at the rate of $1,500 plus GST for 26 January 2020 to 25 February 2020 and 26 February 2020 to 25 March 2020. 3. The demands for the payment of rent were a breach of the provisions of the lease granting the applicants a rent-free period. 4. The applicants alleged loss and damage assessed as identified above.
4. Under the heading "Wrongful termination of Registered Lease" the applicants alleged: 1. The respondent wrongfully terminated the lease on 27 February 2020 or wrongfully entered and took possession of the premises on 2 March 2020. 2. The respondent's managing agent emailed the applicants a copy of a letter dated 25 February 2020 which referred to a notice of breach of covenant by failing to pay rent dated 28 January 2020 and required the applicants to remove all fixtures and fittings by 2 March 2020. 3. The applicants denied knowledge of the contents of the notice of breach, which they alleged had not been left at the leased premises or served in any other way permitted under s 170 of the Conveyancing Act 1919 (NSW). The lease provided that notices would be sufficiently served upon the applicants if left at the leased premises or served in any other way permitted by s 170 of the Conveyancing Act. 4. The applicants asserted that they had noted an email from Lang Noonan Legal (the respondent's solicitors) dated 28 January 2020 in the "junk folder" of their email account and had not been able to retrieve its contents. 5. In any event, the rent was not overdue by 14 days on 28 January 2020 and as of 28 January 2020 the applicants had not committed any act of default under the lease. 6. The respondent had failed to serve a notice complying with s 129(1) of the Conveyancing Act upon the applicants - in that the respondent's letter dated 25 February 2020 did not comply with s 129 of the Conveyancing Act and the applicants had not received the notice of breach dated 28 January 2020.
5. Under the heading "Misleading or Deceptive Conduct" the applicants alleged: 1. The respondent's property manager made representations: (i) That the leased premises had working and functioning air-conditioning; (ii) That the air-conditioning and fan motor were working and functioning; (iii) That the applicants would be given proper working and functioning air-conditioning at the commencement of the proposed retail shop lease; 1. Those representations were misleading and deceptive in that the leased premises did not have working or functioning air-conditioning and the applicants were not provided with proper working and functioning air-conditioning at the commencement date of the registered lease. 2. The applicants relied upon the representations in agreeing to enter into the registered lease and, had they known the representations were not true, would not have entered into the lease and would not have expended effort, skill and financial resources including seeking and being granted development approval to establish their business at the leased premises and to fit out the leased premises. 3. The applicants claimed the sum of $61,524.44 pursuant to s 62E of the RLA and/or s 236 of the Australian Consumer Law being the amounts incurred by the applicants in fitting out the leased premises which would not have been incurred but for the misleading and deceptive conduct of the respondent's property agent.
6. Under the heading "Unconscionable Conduct" the applicants alleged: 1. The respondent engaged in unconscionable conduct by making the representations set out above and making further representations that the respondent would enter into a new variation of the lease with a commencement date of 15 November 2019. 2. The respondent failed to act in good faith by imposing an obligation on the applicants that they would be responsible for maintaining the air-conditioning system during the course of the lease in circumstances where the respondent had actual knowledge that the air-conditioning system was not working and functioning properly at the time the parties commenced negotiations. 3. The respondent's unconscionable conduct caused the applicants' loss identified in respect of the allegations of breach of contract.
7. Under the heading "Breaches of the Retail Leases Act" and sub-heading "Lessor's failure to pay compensation for disturbance" the applicants alleged: 1. The respondent failed to take all reasonable steps to prevent the ongoing issues with the roof, water leaks and water damage to the ceiling which had a significant adverse effect on the applicants' trading in the premises and was attributable to causes within the respondent's control. 2. The respondent failed to rectify ongoing issues of roof leaks and water damage to the ceiling as soon as reasonably practicable after being requested in writing by the applicants and the respondent failed to rectify the break-down of the air-conditioning system that was under its care or maintenance or to rectify the break-down of the air-conditioning as soon as reasonably practicable after being requested in writing by the applicants. 3. The applicants sought reasonable compensation for loss and damage suffered by the applicants which the applicants alleged was that pleaded in relation to the allegations of breach of contract.
8. Under the sub-headings "Lessor's failure to provide the Tenant's Guide to the Lessee", "Lessor's failure to provide Lessor's disclosure Statement to the Lessee" and Lessor's failure to provide an executed copy of the Lease to the Lessee" the applicants alleged that the respondent failed to provide a copy of the tenant's guide in breach of s 9(1)(b) of the RLA, failed to provide a disclosure statement in breach of s 11(1) of the RLA, and failed to provide an executed copy of the lease in breach of s 15(1)(1) of the RLA. It is not clear from the pleading what remedies the applicants sought in relation to the alleged breaches of s 9(1)(b), 11(1) and 15(1) of the RLA.

The Respondent's case

1. The respondent filed Points of Defence dated 18 June 2020. Those Points of Defence generally assert that the lease was terminated on 2 March 2020 when the respondent took possession of the premises for non-payment of rent, deny that any repairs were required to be undertaken, deny that the lease commencement date could be changed, deny that the respondent is indebted to the applicants in the amount claimed or at all, and deny that the respondent engaged in misleading and deceptive conduct or was in breach of any contract. The respondent further denied that the lease was subject to the provisions of the RLA.
2. The respondent provided particulars of its defence which set out the respondent's version of events and it is convenient to set those particulars out in full: (1) The respondent advertised premises known as XXX for lease in about 2017. (2) The Applicants offered to lease the premises from the Respondent for use as a brothel. (3) The terms of the Applicants' offer were contained in a document titled "Head of Agreement 13 June 2017". The document was not signed by the Applicants or the Respondent. The terms contained in the document were not accepted by the Respondent. Following further negotiations, further "Heads of Agreement" were sent by the Applicants. These were not accepted by the Respondent. The terms of the lease were given to the Applicant on or about 9 August 2017. (4) In negotiating terms of the proposed lease, the Respondent agreed that it would have serviced and repaired (if required) the air-conditioning system in the premises and would contribute up to $5,000 for that work, electrical installation and cleaning of the premises. (5) The premises had been vacant for about five years and the air-conditioner had not been used or tested during that time. (6) The lease of the premises was prepared and submitted to the Applicants. The lease contained a provision which reflected the Respondent's agreement referred to in Point 4 above. (7) The said provision also provided that the lessee "will maintain in good working order the air-conditioning system and that the lessee will be responsible for the replacement of the air-conditioning system". (8) Pursuant to its undertaking regarding the air-conditioning system, the Respondent retained City to Surf Air Pty Ltd to inspect and carry out a service to the air-conditioning system in January 2019. At that time City to Surf Air Pty Ltd reported the system to be in working order. (9) The Applicants were given access to the premises to carry out their desired works in February 2019, prior to the lease being signed. (10) The Applicants repeatedly deferred the commencement date of the lease as development approval had not been obtained. (11) After the Applicants were given access to the premises they repeatedly found fault with the air-conditioning system. Further repairs were effected in a timely manner. (12) The premises also suffered some water damage from a roof leak and broken hot water system. These issues were attended to in a timely manner. (13) The Applicants eventually signed the lease on 16 April 2019. (14) The lease provided for a rent free period of two (2) months being May and June, 2019. (15) The Applicants sought and were granted further extensions of the rent free period. (16) Without admitting responsibility for doing so, the Respondent agreed to pay for a replacement air-conditioning system. (17) The Respondent did not agree to defer the commencement date of the lease or extend the rent free period. (18) The Applicants advised the Respondent that they would commence trading on 18 October 2019 and sought to amend the commencement date of the lease and rent free period. (19) Without making any admissions, the Respondent agreed to no rent being paid for five (5) weeks from the 18 November 2019. It did not agree to amend the commencement date. (20) The Applicants were in occupation of the premises since before the 24 October and at the time and no further amendments or delays were sought. (21) The first payment of rent was due to be paid on 26 December 2019. (22) The rent was not paid. (23) No rent was paid in January 2020. (24) The Applicants were served with a Notice of Breach of Covenant on 24 January 2020. (25) The Applicants did not comply with the Notice and rent was not paid. (26) The lease (clause 12.2.2) provides that the Lessor can enter and retake possession of the property if the rent or any other money due under the lease is fourteen (14) days overdue for payment. (27) The Respondent entered and retook possession of the property on 2 March 2020. (28) The Applicants has not since that date paid any rent.

The conduct of the hearing

1. It is appropriate to record a number of matters concerning the hearing, which took place on 3 August 2020.
2. The hearing took place remotely by telephone conference in accordance with guidelines put in place by the Tribunal by reason of the Covid-19 pandemic.
3. The applicants were both connected to the conference call on separate lines, although apparently in the same location. Ms Kang had requested an interpreter and Ms Qi was joined to the conference call.
4. Mr T Morahan of Counsel appeared for the respondents. His solicitor, Mr Noonan, and the respondent's property manager, Ms McDonald, were joined to the conference call on one line. It appeared they were all in the one location.
5. Although at times Mr Johnson complained of difficulty hearing, he appeared to be following the proceedings.
6. Despite directions from the Tribunal for the exchange of evidence and submissions, both parties complained that they had not received certain material filed by the other side. Mr Johnson initially asserted that he had not received the entirety of the bundle filed by the respondents.
7. It subsequently appeared that Mr Johnson had received the documents by email although there appeared to be some discrepancy between the tab numbers on the hard copy filed with the Tribunal and the identification of the PDF files provided to Mr Johnson.
8. Mr Johnson maintained that a particular page in one part of the bundle was not included in the file sent to him. As this page was the second page of an affidavit of Mr Ellis, the licensee of the respondent's property manager, that absence was potentially significant. The content of the affidavit was relatively short, constituting one sentence. Ultimately, Mr Johnson acknowledged that he was not prejudiced by the manner in which that affidavit had been provided and Mr Ellis was briefly cross-examined by Mr Johnson.
9. The progress of the hearing was substantially delayed by Mr Johnson's approach. He was combative and tended to personal abuse, both of the Tribunal and of the respondent's representatives and agents. On a number of occasions Mr Johnson was warned that if he persisted in his interruption and abuse, the hearing would proceed without his involvement.
10. At one point Mr Johnson's refusal to accept the Tribunal's rulings led to cross-examination of Ms McDonald being terminated.
11. After Mr Johnson indicated he had further topics to address and would not persist with the conduct which had led to cross-examination being terminated, he was permitted to continue with his cross-examination. Ultimately the Tribunal did require Mr Johnson to conclude his cross-examination at 4.15 pm as it was necessary to conclude the evidence and he had been given a number of warnings that the Tribunal intended that the evidence be concluded on that day. Although Mr Johnson indicated that he wished to ask further questions of Ms McDonald, he did not indicate that there was any topic or area of cross-examination that he had not been able to address.
12. Much of Mr Johnson's cross-examination of Ms McDonald involved Mr Johnson asking Ms McDonald to identify when an event had occurred and, when Ms McDonald's evidence as to when an event had first occurred was shown to be incorrect by reference to contemporaneous documents, asking directly "Why did you tell the Tribunal a lie?"
13. Mr Morahan objected to questions of that nature and the Tribunal explained to Mr Johnson that the question incorporated the assumption that Ms McDonald had told a lie and that unless he had obtained a concession from Ms McDonald that she had told lies, questions of the nature of those put by Mr Johnson were neither appropriate nor fair to the witness.
14. Mr Johnson nevertheless repeated this line of questioning on a number of occasions.
15. As noted, Mr Ellis had provided a very brief affidavit. That affidavit stated that he had attended the premises on 28 October 2019 and had observed that the applicants' business was operating on that occasion. Mr Johnson asserted that he had not received a copy of that affidavit and, even after the manner in which he had been provided with a copy of the respondent's bundle was clarified for him and he had identified the section of the bundle which should have included the affidavit, he insisted that the critical page of the affidavit was not present.
16. In the hard copy of the bundle filed in the Tribunal, the affidavit was included in a section headed "Emails etc etc" and its existence was not otherwise flagged in any index or other cross-reference within the bundle.
17. In those circumstances it may have been appropriate to refuse the respondent leave to rely upon the affidavit, however Mr Johnson accepted that he was not prejudiced by not having previously seen the affidavit and, as noted above, undertook cross-examination of Mr Ellis.
18. Mr Johnson had filed with the Tribunal and served upon the respondent two affidavits that he had sworn. Included with his affidavit sworn 25 May 2020 were a number of documents. Mr Johnson had also filed with the Tribunal a bundle of submissions which included a number of further documents not attached to his affidavit. Mr Morahan informed the Tribunal that that document had not been served upon the respondent.
19. As Mr Johnson wished to rely upon a number of documents in that bundle, both in support of his evidence given during cross-examination by Mr Morahan and in his own cross-examination of Ms McDonald, it was necessary to make arrangements during an adjournment of the proceedings for Mr Johnson to provide copies electronically to Mr Morahan's instructing solicitor.
20. Both by reason of the difficulty in identifying documents within a bundle of submissions that was neither numbered or indexed and by reason of the need to provide a copy of those documents to Mr Morahan, much time was wasted in the course of the hearing.
21. A further substantial waste of time occurred at the commencement of the hearing when Mr Morahan sought to rely upon submissions (only served the day before the hearing and which had not reached the Tribunal file), to the effect that the premises were not a retail shop and that the agreement between the applicants and the respondent was not a retail lease.
22. Mr Johnson submitted strongly that that issue had already been resolved by the Tribunal.
23. Mr Johnson's conduct during the hour or more that it took the Tribunal to resolve that issue, by reference to the file and in dialogue with Mr Morahan, was substantially responsible for the fact that that resolution of the issue (in the applicants' favour) took so long. Mr Johnson would not permit Mr Morahan to address the Tribunal. He engaged in shouting and abuse, shouting repeatedly "this has been resolved, you can't do this" and words to similar effect.
24. In the Tribunal's estimation the issue would have been resolved within 15 minutes if Mr Johnson had remained quiet and allowed Mr Morahan to address the Tribunal.
25. Contrary to Mr Morahan's apparent understanding, the question of jurisdiction had been fixed for a separate hearing in November 2019, when the Tribunal determined that the premises fell within the second part of the definition of retail shop, in that it was used for the carrying on of a business in a retail shopping centre. The Tribunal determined that the premises were within a retail shopping centre as that term is defined in s 3 of the RLA. Mr Morahan sought to rely upon evidence which cast doubt upon the proposition that the premises were part of a retail shopping centre, pointing out that, although the building in which the premises were situated contained five retail shops on the ground level, the premises the subject of the proceedings were on the first level and accessed by a separate entrance clearly not associated with any of the retail shops on the ground floor.
26. It did not appear that evidence to that effect had been put to the Tribunal in November 2019 and, although Mr Morahan suggested that the respondent had been denied procedural fairness in the course of that hearing, I concluded that that was not a matter the Tribunal hearing the balance of the proceedings could entertain.
27. I concluded that the issue of whether the premises were a retail shop had been determined in the applicants' favour and that no challenge to that conclusion could be made in the Tribunal at first instance.
28. Mr Morahan then sought an adjournment to enable the respondent to lodge an appeal. I declined that application, both because the matter was fixed for hearing on the balance of the application and no previous notice had been given, and because it was not clear there was any order against which the respondent might appeal, as no formal orders concerning the question of jurisdiction had been made by the Tribunal in November 2019.
29. The evidence received by the Tribunal at the hearing comprised:

• Two affidavits from Mr Johnson dated 25 May 2020 and 30 May 2020
• A bundle of documents headed "Applicants Submissions" filed on 24 July 2020
• A folder of documents filed by the Respondent on 22 June 2020 which included affidavits of Tracy McDonald and John Ellis dated 22 June 2020.

1. In the course of the hearing Mr Morahan cross-examined Mr Johnson and Mr Johnson cross-examined Ms McDonald and Mr Ellis. As the taking of oral evidence occupied the balance of the day and Mr Morahan had not seen the applicants' submissions before the hearing, the parties were given the opportunity to file further written submissions. The respondent filed a document headed "Respondent's Closing Submissions" dated 17 August 2020. The applicants filed very lengthy submissions including further documents which had not been included in the bundles of documents tendered in evidence in the course of the hearing.

The Applicants' evidence

1. The applicants relied upon two affidavits filed by Mr Johnson together with additional documents attached to the written submissions.
2. Mr Johnson's evidence was largely set out in his affidavit of 25 May 2020. In that affidavit Mr Johnson asserted that he and Ms Kang had first entered into negotiations with the respondent in relation to leasing the premises for the purposes of operating a brothel in 2017. Mr Johnson stated that he had predominantly communicated directly with Ms Tracy McDonald of Raine & Horne City Living, Pyrmont, the respondent's property manager. He had on some occasions communicated with Mr John Ellis, a director of Raine & Horne City Living, Prymont.
3. Mr Johnson asserted that in the course of early negotiations with Ms McDonald he had stated words to the effect: "It is fundamental that the [Leased] Premises come with air-conditioning. Our use of the [Leased] Premises is contingent on having good air-conditioning and we will only proceed with the lease if proper, working air-conditioning is provided at the commencement of the lease because of the use of the [Leased] Premises as a brothel. We always have to provide a comfortable room climate to all customers and girls [employees]. Air-conditioning is critical to the business' successful operation. The air-conditioning must be in perfect working order, with good air flow and that the whole air-conditioning system, compressor and thermostat are fully serviced and inspected by a professional prior to the lease commencing. This is not negotiable - no lease will commence until this is done and working to our [Lena and I] satisfaction. Both parties will be legally bound by these agreements at all times of the negotiations."
4. Mr Johnson asserted that Ms McDonald had responded in words to the effect: "The [Leased] Premises has working and functioning air-conditioning. The air-conditioner and its fan motor are working and functioning. The air-conditioner is okay. The air-conditioner is fine. I agree. You will have proper working and functioning air-conditioning at the commencement of the lease."
5. Mr Johnson also asserted that a conversation took place in relation to "existing damage in the leased premises" in which Mr Johnson said: "The all water leak damage needs to be repaired before the lease commences. The roof needs to be repaired. The ceilings need to be repaired and painted." and Ms McDonald responded: "I agree. These issues will be attended to before the commencement of the lease."
6. Mr Johnson asserted that the parties had agreed that "before the lease commenced" the respondent would provide a proper working and functioning air-conditioning system and that the fan motor, compressor and thermostat would be fully working and serviced and inspected by a qualified air-conditioning technician and that the respondent would undertake any required rectification or building work including attending to the water leak damage coming through the roof, repair the roof, and repair and paint the ceiling.
7. Mr Johnson did not identify the source of this agreement, other than the asserted conversations set out above.
8. Mr Johnson asserted that in agreeing to enter into a lease in relation to the premises, the applicants had relied upon Ms McDonald's representations that the respondent would provide proper working and functioning air-conditioning at the commencement of the lease and that the respondent would undertake the required building rectification works, including attending to water leak damage coming through the roof.
9. Mr Johnson asserted that the parties entered into three Heads of Agreement in relation to the entry into a lease in relation to the premises on 30 May 2017, 13 June 2017 and 30 July 2017. Mr Johnson asserted that the Heads of Agreement involved that the applicants would obtain development consent to operating a brothel on the premises and then execute a formal lease with the respondent.
10. Mr Johnson annexed to his affidavit of 30 May 2017, what he described as the Heads of Agreement. Those documents were titled "Heads of Agreement 13 June 2017" and "Heads of Agreement 30 July 2018". Both appear to be the content of emails forwarded by Mr Johnson to Ms McDonald.
11. Mr Johnson explained that the premises had previously operated as a brothel but that business had been closed for five years before the applicants sought to utilise the premises for that purpose and a new development application was required to be submitted to the City of Sydney Council. Mr Johnson stated that, relying upon Ms McDonald's representations, he undertook the steps necessary to prepare and lodge a development application on 7 February 2018, seeking approval to use the premises as a brothel.
12. Mr Johnson also asserted that the applicants entered into the lease with the respondent in reliance on Ms McDonald's representations as set out above. Mr Johnson asserted that he spent $7,500 in preparing and lodging the development application and that he received the consent to operate a brothel containing six rooms at the premises on or about 10 July 2018.
13. Mr Johnson stated that the parties initially agreed the lease was to commence on 13 March 2019 but that it did not do so due to the respondent's failure to provide functioning air-conditioning and complete the building rectification work. The parties agreed to vary the terms of the lease and for the lease to commence on 31 May 2019.
14. Mr Johnson asserted that the lease did not commence by 31 May 2019 "due to the lessor's continued failure to provide proper working and functioning air-conditioning and to complete the building rectification work."
15. Mr Johnson acknowledged that on 16 April 2019 the applicants and the respondent had executed the lease in relation to the premises, Mr Johnson consistently referred to the lease as a "retail shop lease". I have not repeated Mr Johnson's characterisation, which is, as I have noted above, not relevantly in issue having been determined against the respondent in November 2019.
16. Mr Johnson asserted that neither the respondent nor Ms McDonald had provided a copy of the lease to the applicants in the course of negotiations for the registered lease and that the respondent had never provided a tenant's guide to the applicants and had never provided a disclosure statement to the applicants. Mr Johnson also asserted that the applicants had only obtained a copy of the registered lease after engaging a solicitor shortly before swearing his affidavit.
17. Mr Johnson asserted that there were what he described as "ongoing issues" in relation to the premises, including issues with the air-conditioning and building rectification. Mr Johnson asserted that the ongoing issues caused "delay to the commencement of the lease and in the operating of the applicants' business". Mr Johnson made a generic assertion that the air-conditioning system and its parts, including the fan motor, compressor and thermostat, did not work and function properly and had not been cleaned or serviced by a qualified air-conditioning technician. It is not clear at which point or points in time Mr Johnson suggested that was the case.
18. Mr Johnson stated that on 23 July 2019 he engaged an air-conditioning technician to inspect the air-conditioning and provide a report. Mr Johnson also asserted, without specifying a time frame, that the roof and ceiling of the premises were not maintained in good condition and that the lessor did not undertake serviceable repairs. Mr Johnson asserted that the roof had holes or was damaged which caused rain water to come through the ceiling. Mr Johnson also asserted that the ceiling became worse due to heavy rain and collapsed causing damage to furniture and the flooring which the applicants had newly installed.
19. Mr Johnson set out his version of the history of correspondence with Ms McDonald in relation to air-conditioning and roof repairs. Mr Johnson asserted that an air-conditioning technician had attended the premises in February 2019 and spent about eight hours working. Mr Johnson asserted that he had observed that the technician did not check the fan motor in the ceiling and did not service or clean the air-conditioning filters. Mr Johnson asserted that the air-conditioning was not working or functioning in February 2019.
20. Mr Johnson stated that the applicants had commenced fitting out the premises in about March 2019 and the fit out was completed in April 2019. The premises were at that time ready for occupation and utilisation in the applicants' business. However Mr Johnson asserted the applicants were not able to do so because of the ongoing issues regarding water leaks and air-conditioning.
21. Mr Johnson asserted that in May 2019 Ms McDonald had promised that the air-conditioning, roof and ceiling would be repaired. Mr Johnson asserted that that did not occur.
22. Mr Johnson asserted that in June 2019 the ceiling collapsed. Mr Johnson attached to his affidavit a number of emails he sent to Ms McDonald on 7 June 2019 referring to the water leakage. In one email Mr Johnson stated that "we need to extend the start date time to take this delay into account by two weeks … Lease to be adjusted to reflect new start date to this damage not being repaired properly".
23. On 12 June 2019 Mr Johnson sent an email to Ms McDonald: "To confirm verbal confirmation with what was agreed to by all parties, yourself, John and me, this morning at your office that an extra 3 weeks for a new commencement date of the lease, the new start date will be Tuesday, 25 June 2019. Further we need the roof damage repaired, all water leaks everywhere repaired, reliable hot water and the air-conditioning working properly as agreed."
24. Mr Johnson also attached to his affidavit emails dated 17 June 2019 and 28 June 2019, on each occasion referring to water leaks and unfinished repairs.
25. On 3 July 2019 Ms McDonald emailed the applicants referring to a meeting of that day and stating that she expected the roof and ceiling to be finalised within the week and stating "re the lease - I have spoken to the solicitor and he tells me that he can't change the lease date, however will write a letter stating that rent will not be payable until all works have been completed which I think is a great result".
26. On 8 July 2019 Ms McDonald emailed the applicants stating the roof repairs had been completed, and attaching invoices from an air-conditioning contractor detailing what work had been completed to that date and indicating that the contractor would attend the next day to replace the control panel and "re-service the complete air-con system".
27. On 9 July 2019 Mr Johnson sent an email to Ms McDonald stating that he had lost confidence in the air-conditioning contractor. Mr Johnson asserted that the technician had attended the premises on 16 July and that on 17 July 2019 the air-conditioning was still not working or functioning.
28. Mr Johnson asserted that on 23 July 2017 he organised a different air-conditioning contractor to attend to inspect the air-conditioning and provide a report. Mr Johnson attached to his affidavit a report from Charley Refrigeration and Air-Conditioning which set out a number of problems with the air-conditioning system and stated: "The system is around 20 years of age, the indoor fan motor and compressor might can't last for a long time. The 2 outdoor fans have been replaced already."
29. The technician quoted a cost of $2,960 plus GST for servicing the air-conditioning and suggested a whole unit replacement at around $13,000 plus GST.
30. On 13 August 2019 Ms McDonald emailed Mr Johnson referring to Item 24 in the lease which provided that the applicants were responsible for the maintenance of the air-conditioning system. The email stated that the respondent had extended the lease start date by three weeks, starting on 21 June 2019, so that rent would be due and payable from 22 August 2019. Ms McDonald stated "the owner has indicated that you are welcome to put in the air-con yourselves and take it with you when you leave if this is what you want".
31. On 22 August 2019 Ms McDonald forwarded two emails to Mr Johnson, one stating that the owner had agreed to the quote by Charley Refrigeration and Air Conditioning to "replace the fan motor and do everything else he suggested in the quote" at a cost of $2,960 plus GST. Ms McDonald also stated "I have been instructed by our solicitor to get an independent quote for the air-con".
32. Mr Johnson asserted that, by a further email which Mr Johnson asserted he received on 27 August 2019, Ms McDonald confirmed that Mr Johnson was happy for her to assign Charley Refrigeration and Air-Conditioning to replace the fan motor as per his quote immediately. The email continued "then all ceilings will be repaired, please confirm this asap so that tenancy can begin."
33. On 4 September 2019 Ms McDonald sent the applicants an email: "I have had notification from the owners as follows: (1) DNS will pay for the $13,000 + GST air-conditioner replacement (not repair) which was quoted by Charley Refrigeration and Air-Conditioning on 23 July 2019 (2) The tenant has to start paying rent once the air-conditioner was replaced and in working condition I have asked the roofer to go back and see whether water is coming in. All ceilings will be repaired. Please confirm you will accept the upper offer close of business today."
34. I note that on 10 September 2019 the parties attended a directions hearing before a Senior Member of the Tribunal. On that date the Tribunal noted: "that the parties have agreed to the following: By consent The respondent shall by 7 October 2019 perform all necessary works as per the quote set out by Charley's Refrigeration and Air con. The work shall include any necessary repair to ensure air-flow to every room. All necessary incidental repairs to the ceiling following air-conditioning work. The ceiling on the second bedroom and the water leak shall be repaired and painted by an appropriately licensed contractor. The window grill in the kitchen be replaced. The two months rent-free period shall commence on a date when all repairs have been completed on a day to be agreed by the parties."
35. The agreement noted by the Tribunal on 10 September 2019 was not referred to by Mr Johnson in his affidavit. The orders made on that date were one of the additional documents included in the bundle of "Applicants submissions".
36. On 12 September 2019 Ms McDonald emailed the applicants stating that Charley Refrigeration and Air-Conditioning no longer wished to do the job and that he had stated that: "although he would replace the whole air-con unit he can't guarantee that optimum air flow will be achieved". Ms McDonald indicated she was waiting on instructions from the owners.
37. Mr Johnson acknowledged in his affidavit that on 15 November 2019 the air-conditioning repairs were completed and the air-conditioning was working and functioning properly. Mr Johnson asserted that the applicants' business commenced trading at the premises from 16 November 2019.
38. Mr Johnson asserted that the applicants and the respondent through Ms McDonald reached a further agreement that the commencement date of the lease would be changed to 15 November 2019, that rent would be payable on a monthly basis from the commencement date subject to a rent-free period of 2 months so that the first month's rental payment was not due until 15 January 2020, and that the parties would formalise the terms of this variation.
39. Mr Johnson did not in his affidavit provide any detail or explanation as to how this agreement was allegedly entered into.
40. Mr Johnson asserted that on 12 February 2020 the applicants attended a National Australia Bank branch and sought to use the "self-service internet banking Ipad" with the help of a staff member to pay the monthly rent. Mr Johnson annexed to his affidavit a photograph of a computer screen showing "Bill payment details" "created 12 February 2020" and "amount $10,000". The screen bears a note at the bottom: "Payment Approval This payment requires approval from one of the following account members: Matthew Playford Note: this payment will not be processed until it has been approved by one of the above account members."
41. Mr Johnson did not provide any information concerning the identity of Mr Playford or his relationship to the applicants or their business.
42. Mr Johnson asserted that on 27 February 2020 Ms McDonald had forwarded an email stating that no payment had been received. Mr Johnson stated that on 27 February 2020 he attended the Potts Point branch of the National Australia Bank and made enquiries about the payment that he had sought to make on 12 February 2020 and had been informed that the funds had not been paid.
43. Mr Johnson asserted that on 27 February 2020 he again sought to use the "self-service internet banking Ipad" with the help of a staff member to pay $10,000 to the respondent. Mr Johnson attached to his affidavit another photograph of a computer screen showing the words "Payment receipt" and indicating a payment of $10,000 on 27 February 2020. The document on the screen also includes the words "payment pending" and records under the heading "Approvers" the name "Matthew William Playford".
44. Mr Johnson also attached to his affidavit a text message forwarded to Ms McDonald which stated: "We did the transaction from the NAB bank at Potts Point today and the last time in February. The bank said it must be your system. You should have BSB and account number system to. You must look at your end to. We have sent payment twice now."
45. Ms McDonald responded: "That is still not a receipt you sent through".
46. Mr Johnson asserted that he had queried with the bank teller the fact that the screen said "pending" and had been told "The payment may take a few days to come to the agent or the BPAY numbers could be wrong".
47. On 27 February 2020 Mr Johnson received a further email from Ms McDonald stating "this is not a receipt, it clearly says pending and someone by the name of Matthew Playford needs to authorise that. $10,000 is not the required amount, I have attached the invoice to be paid by Monday or the locks will be changed".
48. Mr Johnson stated that the email attached a tenant invoice for rent in the amount of $33,000 inclusive of GST and outgoings in the amount of $4,500 inclusive of GST and a bill for fire alarm activation in the amount of $1,776.
49. On 12 February 2020 Mr Johnson forwarded to Ms McDonald an email asserting that the start date for the lease was 15 November 2019 and that there would be no outgoings payable "until NCAT make a ruling with regards to what outgoings are payable under the Retail Leases Act NSW". Mr Johnson asserted that the applicants had not paid any outgoings because the respondent had not provided a Lessor's Disclosure Statement.
50. Mr Johnson gave evidence that on 2 March 2020 the respondent excluded the applicants from the premises, that from that date they ceased operating the business from the premises and that in the week commencing 9 March 2020 the applicants removed all the furniture and fittings they had installed at the premises.
51. Mr Johnson stated that on 27 February 2020 he had also received an email from Ms McDonald which stated that the applicants were to remove their fixtures and fittings immediately "as the locks will be changed on Monday due to non-payment of rent". Although that email was marked "without prejudice" it cannot be described as an attempt at settlement and is clearly not without prejudice. The email attached a letter from Lang Noonan Legal, the respondent's solicitors, which stated: "We refer to the notice of breach of covenant served on you on 28 January 2020. You have failed to comply with the notice in that you have not paid the rent due to the lessor. In the circumstances the lessor is entitled to terminate the lease and take possession of the premises. You are put on notice that you must remove all of your fixtures and fittings from the premises by 9 am, Monday 2 March next after which time you will be denied access to the premises."
52. Mr Johnson asserted that the applicants had not been served with any notice of breach of covenant dated 28 January 2020, as the respondent failed either to leave a notice at the leased premises or to serve a notice in any manner provided by s 170 of the Conveyancing Act.
53. Mr Johnson asserted that he had spoken to Ms McDonald about the notice and was advised that the notice had been emailed to his email address. Mr Johnson asserted that he then checked his emails "junk folder" and found that an email from Lang Noonan Legal had been received into the junk folder. Mr Johnson asserted that he could not retrieve the attachment to that email.
54. Mr Johnson attached to his affidavit a screen shot of his emails junk folder listing an email from XXX headed "Re lease from D & S Australia", sent on 28 January 2020. The content of the email was "Letter attached: Lang Noonan Legal".
55. Mr Johnson included in his affidavit a statement of what he asserted were the revenue and trading results of the applicants' business for the period from 16 November 2019 to 29 February 2020. That evidence consisted of a table in which Mr Johnson set out for each day in that period a number of figures including: the number of jobs, total revenue received, and the amount paid as "girls wages". Mr Johnson did not provide bank statements, bank records, any contemporaneous records maintained in the course of the business, or any other supporting documentation. Mr Johnson asserted that, during the period 16 November 2019 to 29 February 2020, the business had generated an average net income of $1,126.76 per day of trading.
56. Mr Johnson also sought to give evidence of the costs incurred by the applicants in establishing the business. Mr Johnson provided some receipts in respect of those expenses. The expenses claimed amounted to $18,415.67 in respect of the lodgement of the development application, website design, set up and internet advertising, shop brochures, price signs and business cards, and $47,157.77 in respect of fitting out the premises with fixtures and furniture. The tax invoices and receipts attached to Mr Johnson's affidavit disclosed the expenditure of $10,040.67 on website design and internet advertising, $6,569.77 on items at IKEA and massage tables and bedframes (I note in this regard that Mr Johnson did not disclose what had happened with the furniture removed from the premises and whether it had been usefully deployed elsewhere), and expenditure of $165 on Charley Refrigeration and Air-Conditioning.
57. The amounts that Mr Johnson asserted that the applicants had expended on fitting out the premises and establishing the business were not otherwise supported by any form of invoice.
58. Mr Johnson was cross-examined on his evidence. His conduct during cross-examination was combative. However Mr Johnson did concede a number of propositions.
59. Mr Johnson acknowledged that the air-conditioning system had been replaced by 2 October 2019 at the respondent's cost but asserted that the applicants were not required to pay rent from that date because "the work was not completed". Mr Morahan put to Mr Johnson that he had been inventing issues to avoid paying rent.
60. Mr Johnson denied receiving an email from the landlord or Ms McDonald to say the rent-free period would be 5 weeks.
61. Mr Johnson ultimately conceded that the applicants had in fact opened for business on 21 October 2019 and had traded for a couple of days but that on 23 October 2019 "a corbel fell from the roof and damaged the air-conditioning".
62. Mr Johnson also stated "I take responsibility for the non-payment of the $10,000" which he asserted he had attempted to pay in February. He asserted that he had tried to pay three times.
63. Mr Johnson conceded that he had been contacted by Ms McDonald a number of times in relation to the non-payment of the rent and, when it was suggested that he did not make any proper arrangements to pay the rent, he stated that that was because it was not due under the Retail Leases Act.
64. Mr Johnson also acknowledged that the applicants held bank receipts for money banked and credit card statements for customers who had paid by credit card. Mr Johnson asserted that Ms Kang kept the accounting records.
65. Mr Johnson also acknowledged that the business would have been shut down by reason of the Covid 19 pandemic in March 2020, even if the applicants had not been locked out of the premises.

The Respondent's evidence

1. Ms McDonald affirmed an affidavit dated 22 June 2020. Ms McDonald agreed that in the course of negotiations prior to entering into the lease Mr Johnson had raised in conversation the availability of air-conditioning. According to Ms McDonald, Mr Johnson stated "You'll have to service the air-conditioner for the lease start. In our business comfortable room climate is important" and Ms McDonald responded "As the air-con hasn't been used for some years I will have it serviced. You will be responsible for the ongoing maintenance of the system."
2. Ms McDonald denied saying that the premises had working and functioning air-conditioning. She stated that she had not tested the air-conditioning prior to the meeting with Mr Johnson in the premises. Ms McDonald stated that although Mr Johnson had forwarded documents described as Heads of Agreement, no Heads of Agreement were at any time signed by the respondent.
3. Ms McDonald annexed to her affidavit a letter dated 15 August 2019 from Lang Noonan Legal to the applicants, which attached a copy of the lease.
4. Ms McDonald acknowledged that the premises suffered some water damage due to a water leak and a malfunction of the hot water system. Ms McDonald asserted that those issues were "attended to and fixed at the earliest time which could be arranged".
5. Ms McDonald asserted that in accordance with the respondent's agreement to service the air-conditioning system, she contracted with City to Surf Air to undertake that work. That firm undertook an inspection in early December 2018. Ms McDonald annexed a copy of an email from City to Surf Air quoting for that servicing and her response dated 3 December 2018 instructing City to Surf Air to carry out the work.
6. Ms McDonald also attached a copy of a tax invoice dated 21 January 2019 from City to Surf Air for servicing of the air-conditioner including installation of two condenser fan motors, commissioning and testing. Ms McDonald stated that the applicants had taken possession of the premises for the purpose of renovating them after the air-conditioning had been serviced in January 2019.
7. Ms McDonald asserted that on three occasions while the applicants were undertaking those works Mr Johnson had complained that the air-conditioning was defective. Ms McDonald attached to her affidavit tax invoices dated 21 June 2019 and 12 July 2019 for further servicing of the air-conditioner by City to Surf Air.
8. Ms McDonald stated that after Mr Johnson further complained, Lang Noonan Legal had communicated to the applicants, by letter dated 5 September 2019, the respondent's agreement to pay for Charley Refrigeration and Air-Conditioning to supply and install a new air-conditioner at the landlord's cost. The letter confirmed that "The rent will commence no later than 5 days after the air-conditioner installer confirms that the air-conditioning is in working order". In the letter Lang Noonan Legal asserted that under the terms of the lease the landlord was not responsible for the maintenance or replacement of the air-conditioner apart from the provisions of Item 24 and stated "Accordingly any delay in your commencing to occupy the premises is not due to any default or breach on the part of the landlord, the premises were accepted by you in the then condition and state of repair."
9. The letter concluded "The landlord's agreement to replace the air-conditioner is a bonus for you".
10. On 2 October 2019 Lang Noonan Legal wrote to the applicants again stating that the air-conditioning unit had been replaced and was operational and that "The repairs to the ceiling are being completed and the premises will be available for occupation on 3 October next, you must now comply with the terms of the lease".
11. Ms McDonald annexed to her affidavit a copy of an invoice from Dual Tech Air-Conditioning Pty Ltd for the amount of $12,760 for the de-commissioning and removal of the existing air-conditioning system and the supply and installation of a further ducted air-conditioning system.
12. On 16 October 2019 Ms Michelle Daoud, a property manager with Raine & Horne City Living, Pyrmont, emailed the applicants "I can confirm that all repairs have been done. I have attached photos for your reference. Please let me know when you will begin trading". Mr Johnson responded "Thank you. We will attend the premises today and have a look. We will then have the premises cleaned. We will commence trading this coming Thursday 24 October 2019. Can we meet you on the premises this Monday at 11 am?"
13. Ms McDonald asserted that Mr Johnson had not inspected the premises prior to that date.
14. Ms McDonald attached to her affidavit a further letter to the applicants from Lang Noonan Legal dated 25 November 2019: "We are instructed that you have sought from the lessor a further two month extension of time for non-payment of rent. The lessor cannot agree to this. You were granted an initial rent-free period of two months from the commencement date. You used that time to fit out and renovate the premises. Water damage and air-conditioning issues delayed you fully operating your business. As the lease provides that you will be responsible for the cost of replacing the air-conditioning system the lessor has been extremely generous and accommodating to meet this expense. Although it is under no obligation to do so, the lessor will grant you a rent-free period of 5 weeks from 20 November. The rent must be paid no later than 5 weeks and be paid punctually from that time."
15. Ms McDonald annexed to her affidavit a letter from Lang Noonan Legal addressed to the applicants at the premises enclosing by way of service a notice of breach of covenant, by the failure to pay rent. The letter was dated 28 January 2020. The notice of breach of covenant required the applicants to remedy the breach by paying the outstanding amount of $11,000 inclusive of GST to Raine & Horne City Living by no later than 15 February 2020.
16. Ms McDonald asserted that that letter and notice of breach of covenant had been served by both post and email.
17. Ms McDonald stated that after the notice was served, Mr Johnson had contacted her and said that the rent of $10,000 had been paid. Ms McDonald noted that the rent payable was $11,000.
18. Ms McDonald also attached to her affidavit a copy of the letter from Lang Noonan Legal to the applicants dated 25 February 2020 notifying them that the lease would be terminated from 2 March 2020.
19. Ms McDonald stated that she attended the premises on 2 March 2020. Mr Johnson was at the premises "with his suitcase" and left. Ms McDonald stated that no rent had been paid either before or after the date of termination.
20. In cross-examination by Mr Johnson, Ms McDonald stated that the provision in the Retail Leases Act requiring the provision of a disclosure statement had not been complied with because she did not consider that the lease was a retail lease.
21. Ms McDonald denied making any misleading statements in relation to the availability of air-conditioning.
22. In the course of cross-examination Mr Johnson put to Ms McDonald that it had taken the respondent three years to fix the roof. Ms McDonald stated that there were stains on the ceiling of the premises but there had been no leaks in 2017 and then a hot water service had burst while the renovations were being carried out. Ms McDonald stated that to the best of her knowledge all repairs to the roof had been completed before the commencement of the lease. Ms McDonald denied that she had said that she had forgotten to call the roofer.
23. Ms McDonald also gave evidence that the rent-free period of 5 weeks from 20 November 2019, referred to in the letter from Lang Noonan Legal of 25 November 2019, had been calculated on the basis that the applicants had already been occupying the premises for 3 weeks at that time.
24. As noted above, the respondent also read an affidavit from Mr Ellis, the principal of Raine & Horne City Living, Pyrmont. Mr Ellis stated that he had entered the premises on 28 October 2019 and "can without a doubt confirm that they were trading as a massage parlour/brothel".
25. In cross-examination, Mr Johnson put to Mr Ellis that the applicants had not been carrying on business on 28 October 2019 but had been conducting interviews with potential staff. Mr Ellis stated that he had seen a customer taken into a room and a sign indicating that the premises were open for business.

Consideration

1. Before considering the applicants' claims for relief it is appropriate to make findings of fact in relation to the contentious issues.
2. As I have noted above Mr Johnson's approach to the hearing was aggressive and obstructive. He was reluctant to accept that anything that he said might not be correct. His affidavit was repetitive and imprecise, except when setting out a very precise account of the conversation in which he claimed Ms McDonald made representations concerning the air-conditioning. Mr Johnson had a tendency to place a strained interpretation on documents in a manner which supported his version of events, for example, asserting that the emails headed "Heads of Agreement" in fact constituted Heads of Agreement regardless that the respondent had not signified acceptance of the terms set out.
3. I find Mr Johnson's evidence concerning his supposed attempts at paying the sum of $10,000 in respect of rent in February 2020 particularly damaging to his credit. It is quite clear from the photographs of computer screens which Mr Johnson attached to his affidavit that the payments recorded on those screens would not be processed until approved by Mr Playford. The assertion by Mr Johnson that a bank staff member explained the words "Payment Pending" as meaning that the payment might take time to go through or that the BPAY details might be incorrect was manifestly implausible.
4. Mr Johnson failed to explain why the applicants had not paid the rent in mid-January, when it was due, even on his own version of events, or why he was only making a payment of $10,000 when the rent was $11,000 per month with GST included. Mr Johnson's explanation in cross-examination that he had not paid rent because it was not due under the Retail Leases Act was inconsistent with his written evidence and suggests Mr Johnson was prepared to invent excuses to suit his case.
5. I find Mr Johnson to be an unreliable witness and I do not accept his evidence unless it is against the applicants' interest or corroborated by contemporaneous documents.
6. I accept Ms McDonald was a witness of truth. Under cross-examination by Mr Johnson on some occasions she mis-remembered the precise dates when events had occurred. I am not persuaded that that was the result of anything other than a failure of memory. I accept that Ms McDonald was attempting to give evidence honestly.
7. I also accept Mr Ellis as a witness of truth.
8. I accept that the applicants did have difficulties with the air-conditioning system in the premises. However I do not accept that the air-conditioning system never worked. The contemporaneous records rather indicate that the original air-conditioning system broke down on a number of occasions. The invoice from City to Surf Air dated 21 January 2019 indicates that the air-conditioning had been serviced at that time and was functioning.
9. It is apparent that the air-conditioning system was old and was ultimately replaced in September 2019 at the respondent's cost. I note that the respondent was not obliged to do so under the terms of the lease.
10. I also find that there was an incident in June 2019 when the roof was damaged but I do not find that the respondent did not attend to repairs with due diligence. I am not persuaded that there was a continuing problem with the roof. Even if I were prepared to accept Mr Johnson as a reliable witness, his evidence concerning the alleged issues with water penetration is too vague and imprecise to establish to my satisfaction that the roof leaked more frequently than Ms McDonald described.
11. It does not appear to be disputed that the applicants were given occupation of the premises before the commencement of the lease in order to undertake renovations. It does not appear that the applicants had surrendered possession of the premises at any time thereafter and, accordingly, I find that the applicants were in occupation of the premises from the commencement of the lease on 31 May 2019.
12. I find that, by reason of the difficulties arising by reason of the leaking roof and the air-conditioner, of which the applicants complained, the landlord, although not required to, agreed at the hearing in the Tribunal on 10 September 2019 to allow the applicants two months rent free from the date when the air conditioner was replaced and the premises were repaired and ready for occupation.
13. I find that the premises were fully repaired and ready for occupation on 3 October 2019, as communicated to the applicants by the respondent's solicitors on 2 October 2019.
14. I find that the rent-free period which the respondent had agreed to allow might have commenced on 3 October 2019 but that, as communicated in its solicitor's letter of 25 November 2019, the respondent subsequently agreed to extend the rent-free period until 5 weeks after 20 November 2019, that is effectively two months from 25 October 2019. Regardless that there might be some question whether such a unilateral concession constituted a variation of the contract, the respondent does not seek to resile from that undertaking.
15. Although, as Ms McDonald conceded, the air-conditioner sustained damage on or about 23 October 2019, when a corbel fell onto the external unit, I find that whatever repairs were necessary were carried out expeditiously at that time and that the premises were again available for use by 28 October 2019, if not before.
16. I do not find that there was any agreement that the applicants would be given a 2 month rent-free period from 16 November 2019. I note that, even on Mr Johnson's own evidence, the applicants had commenced utilising the premises for the purposes of their business on about 21 October 2019. I accept Mr Ellis' evidence that the applicants were operating their business from the premises on 28 October 2019. Even on Mr Johnson's case, as put to Mr Ellis in cross-examination, the applicants were occupying the premises and using them for the purposes of their business, that is conducting interviews with potential employees on 28 October 2019.
17. I find that the notice of breach of covenant was served upon the applicants by delivery by post to the premises. Delivery by post addressed to the "last known … business address" of a party is sufficient service pursuant to s 170(1)(b) of the Conveyancing Act. I am not persuaded that the notice did not come to the attention of the applicants, however, for reasons outlined below, it is not strictly necessary to reach a conclusion in that regard.
18. It is clear that Mr Johnson was aware that he was expected to make rental payments and he failed to do so even when he had explicit warning that the lease would be terminated if the rent was not paid. I do not accept that the failure to make the payments was a consequence of any fault on the part of the bank. It is apparent from the documents produced by Mr Johnson that Mr Playford, whoever he was, was required to approve any payments and it does not appear that he did so. Mr Johnson did not seek to explain who Mr Playford was or why he had not approved the payments.
19. I do not accept that the applicants have established that the business was profitable or that they sustained any loss through not being able to operate the business for any period of time, whether before or after the termination of the lease. The applicants failed to provide to the Tribunal any primary records to establish the profitability of the business. Mr Johnson conceded in cross-examination that records of the cash takings and credit card receipts existed. I do not consider Mr Johnson's bare assertions as to the profitability of the business to be reliable or sufficient to establish either that the business was profitable or the measure of its profitability.
20. Furthermore, I find that, if the applicants had not been excluded from the premises, they would in any event have been required to close the business from late March 2020 by reason of the Covid 19 pandemic.
21. I do not accept that Ms McDonald made any representations concerning the availability of air-conditioning beyond a statement that the air-conditioning would be serviced before the commencement of the lease. I find that that representation was fulfilled as the air-conditioning was serviced in January 2019.
22. I am not persuaded that the respondent engaged in unconscionable conduct towards the applicants. The applicants' Statement of Claim alleged unconscionable conduct: 1. By making the representations concerning the air-conditioning which the applicants also relied upon as misleading and deceptive conduct; 2. By representing that the respondent would enter into a new variation of the lease with a commencement date of 15 November 2019; and 3. By failing to act in good faith by imposing an obligation on the applicants that they would be responsible for maintaining the air-conditioning system in circumstances where the respondent knew that the air-conditioning system was not working and functioning properly.
23. It is not necessary to extend an already lengthy decision by canvassing the authorities concerning the meaning of "unconscionable" in the RLA or in the Australian Consumer Law. There was not, in my view, any conduct of the respondent which could be described as unfair or against conscience.
24. I have already found that the respondent did not make the representations concerning the air-conditioning which the applicants alleged.
25. I have also found that the respondent did not agree to vary the lease so that it commenced on 15 November 2015 or to grant a two month rent-free period from 15 November 2019.
26. I do not accept that the respondent ever represented that it would agree to vary the commencement date of the lease or extend the rent-free period for two months from 15 November 2019.
27. The contemporaneous correspondence is inconsistent with any such representation. The respondent agreed on 10 September 2019 to grant a two month rent-free period from the time the premises were repaired and the air-conditioner replaced. That agreement was fulfilled.
28. I accept Ms McDonald's evidence that she was not aware of the state of the air-conditioning system at the time the parties commenced negotiations concerning the lease.
29. I also accept Ms McDonald's evidence that, in response to Mr Johnson stating that the respondent would have to service the air-conditioner before the lease commenced as a comfortable room climate was important for the applicants' business, she had agreed to have the air-conditioner serviced and informed Mr Johnson that the applicants would be responsible for the ongoing maintenance of the system.
30. I do not find that the terms of Item 24 were unfair to the applicants. The applicants agreed to the inclusion of that provision in the lease. The applicants have not identified any imbalance in bargaining power between the parties or any undue pressure or unfair tactics on the part of the respondent.
31. The applicants entered into negotiations for a lease of the premises. There is no evidence before the Tribunal to suggest the negotiations were conducted other than at arms-length between commercially sophisticated parties. Mr Johnson was clearly not someone who would allow his will to be overborne.
32. In light of those findings, I will consider each of the prayers for relief set out in the applicants' Statement of Claim:

(1) An Order pursuant to s 72(1)(e) of the RLA that the Commencement Date at Item G.2 be rectified and recorded as "15 November 2019", and that the Rent Free Period at Item 25 be rectified and recorded as "two free months commencing 15 November 2019 and 15 December 2019" of Registered Lease No. AP208330S, to give effect the parties' agreement.

1. Section 72(1)(e) of the RLA provides: (1) In proceedings for a retail tenancy claim lodged with the Tribunal under this Part, the Tribunal is empowered to make any one or more of the following orders that it considers appropriate - … (e) an order (as permitted by section 72AB) requiring the rectification of the lease or the lessor's disclosure statement,
2. Section 72AB provides: 72AB Power of Tribunal to order rectification of lease or disclosure statement In proceedings for a retail tenancy claim lodged with the Tribunal under this Part, the Tribunal is not to make an order requiring the rectification of the lease or the lessor's disclosure statement or deeming a disclosure statement to have been given (as provided by section 72 (1) (e) or (e1)) unless - (a) the order is made with the consent of the parties, or (b) the Tribunal is satisfied that the order is necessary to correct an error or omission, or (c) the Tribunal is satisfied that the order is necessary to give effect to the intention of the parties when the lease was entered into, or (d) the Tribunal is satisfied that the order is necessary to give effect to the actual disclosure of information between the parties.
3. The Tribunal only has jurisdiction to rectify a lease in the circumstances set out in s 72AB. None of the sub-paragraphs of s 72AB are satisfied in this case. The intention of the parties at the date the lease was entered into in relation to the commencement date of the lease and the commencement of the rent-free periods is accurately reflected in the lease executed on 16 April 2019, that is that the lease would commence on 31 May 2019 and that the rent-free periods would commence on 31 May 2019 and 30 June 2019. There is no basis to rectify the lease in this case.
4. In any event, I do not accept there was any agreement between the parties that the lease would commence on 15 November 2019 or that the applicants would have two months rent-free from 15 November 2019. The agreement of the parties was recorded by the Tribunal on 10 September 2019, that is relevantly the "two months rent-free period shall commence on a date when all repairs have been completed on a date to be agreed by the parties".
5. I accept on the evidence that all repairs had been completed by 2 October 2019 and the applicants commenced operating from the premises on or about 21 October 2019.
6. The email from the respondent's solicitors dated 25 November 2019, by which the applicants were notified that the respondent would grant the applicants a rent-free period of 5 weeks from 20 November 2019 reflected the fact that the applicants had occupied the premises from late October 2019, that is at least three weeks prior to 20 November 2019. There was no further agreement by which any rent-free period was granted for two months after 15 November 2019.

(2) Alternatively, a Declaration that the Commencement Date at Item G.2 of Registered Lease No. AP208330S is 15 November 2015 [sic], and that the Rent Free Period at Item 25 of Registered Lease No. AP208330S is two free months commencing 15 November 2019 and 15 December 2019.

1. For the reasons set out in relation to Order 1 above, the applicants are not entitled to an order in terms of Order 2.
2. The commencement date of the lease was 31 May 2019 and, for the reasons set out above, the applicants had no entitlement to a rent-free period of two months commencing 15 November 2019.

(3) Alternatively, an Order vacating Registered Lease No. AP208330S.

1. The applicants' submissions did not identify the basis on which the applicants sought an order "vacating" the registered lease. Presumably an order vacating the lease would involve setting it aside and releasing the parties from their obligations. Such an order would release the applicants from any obligations in relation to the payment of rent. It is not otherwise apparent how such an order would assist the applicants' case.
2. The applicants have not identified any jurisdiction in the Tribunal to make an order "vacating" the lease. Section 11(2) of the RLA provides that a lessee who is not given a disclosure statement as required by s 11(1) may terminate the lease within six months after the lease is entered into. Section 8 of the RLA provides that a lease is entered into when the lessee enters into possession or begins to pay rent but that, where both parties execute a lease before the lessee enters into possession or begins to pay rent under the lease, "the lease is considered to have been entered into as soon as both parties have executed the lease". Both parties executed the lease on 16 April 2019. Therefore, the applicants' right to terminate the lease by reason of the respondent's failure to give the applicants a disclosure statement expired on 16 October 2019 at the latest. There is no other basis upon which the applicants might be entitled to an order setting aside or terminating the lease and the applicants' application for such an order must be refused.

(4) An Order pursuant to s 72(1)(f)(i) of the RLA and/or s 243 of the Australian Consumer Law that Item 14 and Clause 5 in relation to Outgoings, and Item 24 in relation Maintenance of Registered Lease No. AP208330S be declared void.

1. Item 14 of the schedule to the lease provided that outgoings were $19,800 including GST, payable by monthly instalments of $1,650 on the first day of each month, which amount will be increased by 3% on the yearly anniversary of commencement of the lease.
2. Clause 5.1.2 required the applicants to pay to the respondent "the share stated in Item 14A in the schedule of those outgoings stated in Item 14B in the schedule". It was the clear intention of the lease that, rather than paying a share of the total outgoings for the building, the applicants would pay the amount fixed by Item 14.
3. Item 24 related to the maintenance of the air-conditioning system and other installations.
4. Section 243 of the Australian Consumer Law (ACL) sets out the kinds of orders that may be made where a person has suffered or is likely to suffer loss or damage because of conduct that was engaged in in contravention of a provision of Chapters 2, 3 or 4 of the ACL. It follows from my conclusions above, that the applicants have failed to prove their allegations of misleading and deceptive conduct and unconscionable conduct on the part of the respondent, that the applicants' allegations of contravention by the respondent of the ACL by misleading and deceptive conduct (contrary to s 18 or s 30(1)(g) of the ACL) and unconscionable conduct (contrary to ss 20 or 21 of the ACL) have not been established.
5. Regardless of whether the Tribunal would have jurisdiction to make orders pursuant to s 243 of the ACL in relation to a retail lease (which it is not necessary to determine), the Tribunal could not make orders pursuant to s 243 of the ACL in this case as there has been no contravention by the respondent of any provision of Chapters 2, 3 or 4 of the ACL.
6. Section 72(1)(f)(i) of the RLA empowers the Tribunal to make an order: (i) declaring any provision made by a lease to be void for being inconsistent with this Act or the regulations, or
7. The applicants' submissions did not identify any respect in which Item 14 or Clause 5.1.2 of the lease or Item 24 were inconsistent with the RLA.
8. For the reasons set out below, by reason of s 12A of the RLA, the applicants were not liable to pay any amount to the respondent in respect of outgoings because the outgoings were not disclosed in any disclosure statement.
9. In my view that does not render the provisions in the lease, which required the applicants as lessees to pay an amount in respect of outgoings, inconsistent with the Act or regulations. Accordingly it is not appropriate to make an order declaring those provisions void.

(5) An Order pursuant to s 72(1)(b) of the RLA that no money is due by the Applicants to the Respondent under Registered Lease No. AP208330S under:

(c) Item 27 in relation Lessee's contribution to water and gas usage; and

(d) No payment of rent under Item 13 and Clause 5 until 15 January 2020.

1. Section 72(1)(b) of the RLA empowers the Tribunal to make: (b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings.
2. Section 12A(1) of the RLA provides: 12A Lessee not required to pay undisclosed outgoings (1) The lessee under a retail shop lease is not liable to pay any amount to the lessor in respect of any outgoings unless the liability to pay the amount was disclosed in the lessor's disclosure statement for the lease.
3. Ms McDonald conceded that the respondent had not provided a disclosure statement to the applicants prior to entry into the lease. It is apparent that she had not done so because she did not consider that the lease was a retail lease falling under the Act.
4. The Tribunal has determined that the lease is a retail lease within the meaning of the RLA and therefore the failure of the respondent's agent to provide a disclosure statement prior to entry into the lease has the consequence that the applicants are not liable to pay any amount to the respondent in respect of outgoings.
5. The invoices issued by the respondent to the applicants included claims in respect of outgoings for $4,950, being three months outgoings.
6. Item 27 of the schedule to the lease stated: "The lessee acknowledges that the provision of water and gas to the premises is not separately metered. The lessee will pay as the lessee's contribution to water and gas usage the amount of any increase in those charges over the amounts of those charged for the 12 months immediately prior to the commencement date of the lease".
7. The respondent has not made any claim upon the applicants for payment for water and gas usage.
8. It is appropriate to make an order pursuant to s 72(1)(b) that the sum of $4,950 is not due or owing by the applicants to the respondent in respect of outgoings and I will make such an order. It is not necessary or appropriate to make any order in respect of amounts for water and gas which have not been claimed by the respondent.
9. As I have determined, the parties reached an agreement that the applicants would have a two month rent-free period commencing from the date on which all repairs were completed. As I have determined that that date was 2 October 2019, the two month rent-free period would have expired on 2 December 2019.
10. As the respondent subsequently agreed to a five week rent-free period commencing 20 November 2019, and only issued invoices for the payment of rent commencing from 26 December 2019, that is 36 days or 5 weeks and 1 day after 20 November 2019, it cannot be said on any basis that the respondent has demanded rent from the applicants to which it was not entitled.
11. It follows that it would not be appropriate to make an order pursuant to s 72(1)(b) in relation to any claims by the respondent in respect of rent.
12. Item 24 set out above relates to the maintenance of the air-conditioning system and other services. It imposes the obligation to maintain the air-conditioning system and other services upon the applicants. There is no basis in the provisions of clause 24 upon which the applicants might be liable to make any payments to the respondent. No demand has been made by the respondent for any payment in respect of Item 24. Accordingly, it would not be appropriate to make any order pursuant to s 72(1)(b) of the RLA in respect of Item 24 of the lease.

(6) Compensation for disturbance under s 34 of the RLA.

1. Section 34 of the RLA provides: 34 Lessee to be compensated for disturbance (1) A retail shop lease is taken to provide that if the lessor: (a) inhibits access of the lessee to the shop in any substantial manner, or (b) takes any action that would inhibit or alter, to a substantial extent, the flow of customers to the shop, or (c) unreasonably takes any action that causes significant disruption of, or has a significant adverse effect on, trading of the lessee in the shop, or (d) fails to take all reasonable steps to prevent or put a stop to anything that causes significant disruption of, or which has a significant adverse effect on, trading of the lessee in the shop and that is attributable to causes within the lessor's control, or (e) fails to rectify any breakdown of plant or equipment under the lessor's care or maintenance, or (f) in the case of a shop within a retail shopping centre, fails to adequately clean, maintain or repair the retail shopping centre (including common areas), and the lessor does not rectify the matter as soon as reasonably practicable after being requested in writing by the lessee to do so, the lessor is liable to pay the lessee reasonable compensation for any loss or damage (other than nominal damage) suffered by the lessee as a consequence.
2. There is some inconsistency in the applicants' case in respect of this claim for relief. If, as I apprehend, the applicants seek compensation in respect of the disruption to their business that occurred by reason of the problems with the air-conditioning system during the period from April through to September 2019, or the problems with the leaking roof (whether during June 2019, or over any longer period prior to early October 2019), the applicants fail to acknowledge that they were not paying, and had not been asked to pay, rent during that period. Although, in strict legal analysis, the lease commenced in accordance with its terms on 31 May 2019, the applicants at all times maintained the position that they would not acknowledge the commencement of the lease until the air-conditioning and roof were repaired and the premises were fully ready for occupation.
3. Even if the applicants' position is ignored and the lease is taken to have commenced from 31 May 2019, the applicants have failed to adduce any evidence to establish when they would have commenced operating their business if the air-conditioning and roof issues had been rectified earlier. It is notable that, even when they were notified that the premises were ready for occupation in early October 2019, the applicants did not even attempt an inspection of the premises until after 18 October 2019.
4. Moreover, the evidence before the Tribunal also did not establish that the respondent had failed to take all reasonable steps to prevent or put a stop to anything which caused significant disruption of the trading of the applicants in the premises, or that any such disruption was attributable to causes within the respondent's control within the meaning of s 34(1)(d).
5. The evidence of Ms McDonald, which I accept, was that the landlord moved as quickly as it could to arrange the repair of the roof after the applicants complained that it was leaking in June 2019.
6. It is also clear that, by reason of Item 24, the air-conditioning was not within the respondent's control or under the respondent's care or maintenance within the meaning of sub-paragraph 34(1)(e).
7. Item 24 clearly placed the onus of ensuring that the air-conditioning was functioning upon the applicants. The only obligation upon the respondent as lessor was to contribute $5,000 to the servicing of the air-conditioning. The evidence discloses that the respondent spent considerably more than $5,000 attending to the air-conditioning. The fact that the applicants proceeded on the basis that they expected the respondent to arrange servicing of the air-conditioning does not alter the legal position under the lease that the onus of arranging servicing of the air-conditioning lay upon the applicants.
8. In respect of the damage to the air-conditioner caused by the corbel which fell on 23 October 2019, I am satisfied on the evidence that the respondent attended to the rectification of that issue as soon as reasonably practicable.
9. The applicants have also failed to establish any loss or damage suffered in consequence of any issues with the air-conditioning, the leaking roof or the damage to the air-conditioning caused by the falling corbel.
10. As I have found above, the applicants did not adduce evidence sufficient to establish on the balance of probabilities that they sustained any loss through being unable to trade either during the period from 31 May 2019 to 3 October 2019 or during the period from 23 October 2019 until the damage to the air-conditioning was rectified. If a party fails to prove the measure of their damages, they cannot recover more than nominal damages. (See Baak v Concrete Services Group Pty Ltd [2016] NSWCATAP 42 at [77]-[97] and cases there cited).

(7) Damages pursuant to s 62E of the RLA in relation to alleged misleading or deceptive conduct in contravention of s 62D of the RLA.

1. Section 62D and 62E of the RLA provide: 62D Misleading or deceptive conduct in connection with retail leases A party to a retail shop lease must not, in connection with the lease, engage in conduct that it is misleading or deceptive to another party to the lease or that it is likely to mislead or deceive another party to the lease. 62E Right to compensation A party or former party to a retail shop lease who suffers loss or damage by reason of misleading or deceptive conduct of another party may recover the amount of the loss or damage by lodging a claim against the other party under section 71.
2. As I have found above, the applicants have not established that the respondent engaged in misleading and deceptive conduct. It follows that the applicants have not established any entitlement to compensation pursuant to s 62E of the RLA.
3. I also find that, in any event, the applicants have not established on the balance of probabilities that they have sustained any loss by reason of the matters which they alleged constituted misleading and deceptive conduct.

(8) Further or alternatively, damages pursuant to s 236 of the Australian Consumer Law in relation to alleged misleading or deceptive conduct in contravention of 18 and/or s 30(1)(g) of the Australian Consumer Law.

1. I have found that the respondent did not engage in the misleading and deceptive conduct which the applicants have alleged. I find the applicants have not established any contravention of s 18 or s 30(1)(g) of the ACL and accordingly I find that the applicants have not established any entitlement to damages pursuant to s 236 of the ACL.

(9) An Order pursuant to s 72(AA)(1) of the RLA, that the Respondent pay money to the Applicants, whether by way of debt, damages or restitution, or refund any money paid by the Applicants.

1. Section 72(AA)(1) of the RLA provides: 72AA Powers of Tribunal relating to unconscionable conduct claims (1) In proceedings for an unconscionable conduct claim lodged with the Tribunal under this Part, the Tribunal is empowered to make any one or more of the following orders that it considers appropriate: (a) an order that a party to the proceedings pay money to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person, (b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings.
2. As I have found that the respondent did not engage in unconscionable conduct towards the applicants, the Tribunal has no jurisdiction to make any order pursuant to s 72(AA) of the RLA.
3. To the extent the applicants seek payment of damages I am not persuaded the applicants have established that they suffered any loss by reason of any conduct on the part of the respondent. To the extent that the applicants seek a refund of money paid, the evidence does not establish that the applicants have paid any money to the respondent. Accordingly, there is no basis upon which the respondent could be ordered to pay any money to the applicants, even had unconscionable conduct on the part of the respondent been established.

(10) An Order pursuant to s 72(1)(f)(iv) of the RLA, declaring that the Applicants ("the Lessee") are entitled to receive payment of the whole of Bank Guarantee paid pursuant to Item 19 and Clause 16 of Registered Lease No. AP208330S.

1. Section 72(1)(f)(iv) of the RLA empowers the Tribunal to make an order: (iv) declaring that a party is or is not entitled to receive payment of the whole or a part of a security bond.
2. Regardless that, on my findings above, the respondent may have been entitled to the payment of rent from early December 2019, the respondent did not seek the payment of rent from the applicants in respect of any period prior to 26 December 2019. The rent payable by the applicants to the respondent was $11,000 per month inclusive of GST. By the time the respondent terminated the lease and excluded the applicants from the premises on 2 March 2020, rent in the amount of $33,000 payable by the applicants to the respondent had fallen due.
3. The applicants have paid no moneys to the respondent. The bank guarantee provided by the applicants pursuant to the lease was, as pleaded by the applicants in the Statement of Claim, in the amount of $25,300.
4. Clause 16.3 of the lease provides "The lessor is entitled to claim under the guarantee an amount equal to any moneys due but unpaid by the lessee to the lessor under this lease".
5. The moneys due to the respondent by the applicants under the lease clearly exceed the amount of the bank guarantee. In light of my findings above, there is no basis upon which the applicants can resist the respondent calling upon the bank guarantee.
6. In my view the terms of s 72(1)(f)(iv) of the RLA would permit the Tribunal to make an order declaring that the respondent is entitled to receive payment of the whole of the bank guarantee, notwithstanding that the respondent has not lodged any cross-claim. However the respondent has not asked for such an order and has not made any submission in support of such an order. Accordingly I do not consider it appropriate to make such an order.

(11) Damages for breach of contract and repudiation by the Lessor.

1. I have addressed above the applicants' claims in respect of the air-conditioning and rectification of the roof. For the reasons set out above I find that the respondent did not breach the lease either in relation to the servicing or replacement of the air-conditioning or in relation to the rectification of the leaking roof.
2. It remains to address the applicants' allegation that the respondent's termination of the lease was unlawful and a breach of the lease.
3. The applicants' submissions proceed on the basis that it was necessary for the respondent to serve a notice pursuant to s 129 of the Conveyancing Act before the respondent was entitled to exercise a right of re-entry and terminate the lease.
4. Section 129 of the Conveyancing Act relevantly provides: 129 Restrictions on and relief against forfeiture of lease (1) 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 - (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, 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. (2) Where a lessor is proceeding by action or otherwise to enforce such a right of re-entry or forfeiture, or has re-entered without action the lessee may personally bring a suit and apply to the Court for relief; and the Court, having regard to the proceedings and conduct of the parties under the foregoing provisions of this section, and to all the other circumstances, may grant or refuse relief, as it thinks fit; and in case of relief may grant the same on such terms (if any) as to costs, expenses, damages, compensation, penalty or otherwise, including the granting of an injunction to restrain any like breach in the future, as the Court in the circumstances of each case thinks fit. … (8) This section shall not affect the law relating to re-entry or forfeiture or relief in case of non-payment of rent. (9) The notice mentioned in this section shall be in the form set out in the Sixth Schedule or to a similar effect. (10) This section applies to leases made either before or after the commencement of this Act, and shall have effect notwithstanding any stipulation to the contrary.
5. Clause 12 of the lease provided: Clause 12 FORFEITURE AND END OF LEASE When does the lease end? 12.1 This lease ends - 12.1.1 on the date stated in item 3 in the schedule; or 12.1.2 if the lessor lawfully enters and takes possession of any part of the property; or 12.1.3 if the lessor lawfully demands possession of the property. 12.2 The lessor can enter and take possession of the property or demand possession of the property if - 12.2.1 the lessee has repudiated this lease; or 12.2.2 rent or any other money due under this lease is 14 days overdue for payment; or 12.2.3 the lessee has failed to comply with a lessor's notice under section 129 of the Conveyancing Act 1919; or 12.2.4 the lessee has not complied with any term of this lease where a lessor's notice is not required under section 129 of the Conveyancing Act 1919 and the lessor has given at least 14 days written notice of the lessor's intention to end this lease. [Emphasis added]
6. As I have determined above, as at 2 March 2020 the rent due under the lease was well over 14 days overdue for payment. Even on the applicants' version of events, the applicants were due to pay $11,000 rent on 15 January 2020. Regardless that Mr Johnson gave evidence of having attempted to make payment of $10,000 on 13 February 2020, the applicants did not make that payment on that date or at any time thereafter, before the respondent re-took possession of the premises on 2 March 2020.
7. By virtue of clause 12.2.2 of the lease the respondent was entitled to enter and take possession of the property if rent was 14 days overdue for payment.
8. Section 129(8) of the Conveyancing Act makes it clear that the notice provisions imposed under s 129 do not apply in relation to the re-entry by a landlord for non-payment of rent. See Gan v Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd [2017] NSWSC 1322 per Walton J at [79]. The applicants' submissions relying upon the absence of notice were misdirected and misguided.
9. In any event, as I have found above, I am satisfied on the balance of probabilities that the respondent did serve, in accordance with the provisions of s 170 of the Conveyancing Act, that is by posting a copy to the applicants' business address, a notice of breach specifying the non-payment of rent and stating that, if the rent was not paid the respondent would re-enter the premises and terminate the lease.
10. Thus, even if the requirements of s 129(1) of the Conveyancing Act had been applicable, the respondent complied with those requirements.
11. Accordingly the applicants have not established any entitlement to damages for breach or repudiation of the lease by the respondent. The respondent exercised its rights in accordance with the lease.
12. I also note that the applicants have failed to prove any loss arising by reason of the termination of the lease. In that regard I particularly note that, as Mr Johnson conceded, if the lease had not been terminated, the applicants' business would have been shut down by reason of the Covid 19 pandemic in the middle of March 2020.
13. It is not necessary to address the final three prayers for relief.
14. The applicants have succeeded in one element of their application, that is in relation to their liability for outgoings. The application will otherwise be dismissed.
15. I will give the parties an opportunity to make submissions concerning the costs of the proceedings.
16. My orders are: 1. Declare pursuant to Section 72(1)(b) of the Retail Leases Act 1994 (NSW) that the sum of $4,950 claimed by the respondent in respect of outgoings under the lease between the parties, registered number AP208330S, is not owing by the applicants to the respondent. 2. The application is otherwise dismissed. 3. If either party seeks an order in respect of the costs of the proceedings they should file within 14 days of the delivery of these reasons a statement of the orders sought in respect of costs and submissions (which are not to exceed five pages) in support of those orders. 4. If either party files submissions in accordance with order (3) the other party may file submissions in response (which are not to exceed five pages) within a further 14 days. 5. Submissions strictly in reply to any submissions filed in accordance with order (4) (which are not to exceed three pages) may be filed within a further 14 days. 6. Any submissions filed pursuant to orders (3) or (4) should address the question whether the question of costs can be dealt with on the papers and without a hearing.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 September 2021