Kim v Kim

REasons for decision 1There are 2 applications before the Tribunal. 2In the earlier application 105200 filed on 24 December 2010 Kwang Sun Kim (hereafter for convenience 'the Applicant') sought relief against Young Pil Kim, Kyung Suk Kim and Paul Mercedes Kim ('the Respondents') and in the later application 115109 filed on 4 August 2011, the Respondents sought relief against the Applicant. 3There was an objection to the Tribunal's jurisdiction raised in respect of the earlier application which I decided on the papers. In effect, in the reasons published on 4 May 2011 I concluded that there was prima facie evidence that amusement and entertainment services were provided in the relevant premises and that accordingly such premises were capable of being the subject of a retail shop lease or lease for the purposes of the Retail Leases Act 1994 ('the Act'). 4It was not disputed that by lease registered AF527342E ('the lease') the Respondents leased to the Applicant premises being part of level 2, 41 Beecroft Road, Epping ('the premises') for a term of 3 years commencing 8 October 2009. It contained two options for renewal each for a further term of 3 years. 5The 3-page document which constituted the lease incorporated the provisions set out in annexures A, B and C. Annexures A and B contained various terms and conditions. Annexure C constituted a plan of the premises. The only use permitted by the lease was 'Karaoke', an activity which I described in my reasons published on 4 May last year.. Other provisions relevant to this case include from Annexure "A": CLAUSE 19 ALTERATION AND RESTORATION OF PREMISES The Lessee shall not carry out any alterations or additions to the premises without the consent of the Lessor. The Lessee shall be responsible for and bear the cost of making any necessary applications to the local council or other statutory authorities in relation to any alterations or additions. The Lessee shall at the cost of the Lessee carry out any alterations, additions, removals or rectifications required by the council or any other statutory authority as a result of any work carried out by the Lessee. The Lessee agrees that on removal of any of the tenant's fixtures the Lessee shall reinstate the property to the condition of the premises prior to the Lessees occupation of the premises. The Lessee agrees that should it fail to restore the premises as agreed then the Lessor shall be entitled to claim the cost of such restoration from the Lessee and interest on any moneys due at the rate of three (3) percent per annum above the prevailing overdraft rate for amounts exceeding $100,000.00 charged by the National Australia Bank until payment of the amount due. ............................................... Clause 35 Operating Times The Lessee will only operate the premises for the hours permitted in the liquor licence and the Development Approval and will not open the Karaoke lounge before 8.00 pm on any night that the Karaoke lounge is open. The Lessee acknowledges and agrees that he will abide by the terms of the liquor licence and the operating times stipulated in the Development Approval. The Lessee further acknowledges that the currently applicable operating times as stipulated in the Development Approval are temporary and that a further application will need to be made for an extension of those operating times and the Lessee agrees to make such application and to do all things required in relation to the application and bear all costs and expenses in connection with the Application. The Lessee acknowledges and agrees that in the event that the Karaoke lounge is no longer able to operate as a result of the actions of the Lessee, his servants or agents the Lessee will immediately forfeit to the Lessor the amount of the security deposit. Clause 36 Licence of Business and Use of Equipment and Fittings The Lessee shall be entitled to operate the Lessor's business on the premises and to use the Lessor's fittings and fixtures located in the premises under licence provided that the Lessee shall be responsible for any damage to those fittings and fixtures occurring during the term of the lease of the premises and he shall be responsible for all repairs and maintenance of the fittings and fixtures required to keep them in good and operational order. The fixtures and fittings are as follows:- 1.Furniture: tables, chairs and banquet seats; 2.Kitchen fittings and drink equipment; 3.Karaoke Sound System including: a)KY Karaoke Machine; b)Amplifier; c)Speakers; d) Wireless Microphone and Unit; e)Wire Microphone; f)Transformer; 4. TV Monitors. Clause 37 Transfer of Liquor Licence The Lessor agrees that subject to the terms of this lease as more fully set out below and during the currency of the lease the Lessor will allow the Lessee to operate the Karaoke lounge business under licence and agrees to transfer the liquor licence to the Lessee. The Lessee subject to the following terms will indemnify the Lessor in respect of any liability, penalty or other loss resulting from a breach of the terms of the licence by the Lessee during the period prior to transfer of the licence. The Lessee agrees that in the event that the licence is revoked or terminated as a result of breaches of the terms of licensed (sic) by the Lessee his servants or agents that the Lessee will forfeit the security deposit as agreed compensation for the loss of the licence. The Lessee agrees that on expiry or earlier termination of the lease to do all things and make all necessary applications as provided hereunder to effect a transfer of licence to the Lessor. Interpretation (a)"Licence" means the on-premises licence for a karaoke venue licence number LIQO624015681 attached to the Premises. (b)"Licensed karaoke venue" means' the land and buildings as identified and approved by the Authority and premises trading as a karaoke venue and any other ancillary or permitted activity, trade or business that can lawfully be conducted at such premises. (c)"Licensee" means the holder of the Licence. (d)"Liquor Acts" means the Liquor Act 2007, the Casino Liquor and Gaming Control Authority Act 2007 and any Regulations to or amendments of those Acts or Regulations, as applicable and any replacement legislation or regulations. (e)"Premises" has the same meaning as licensed karaoke venue. LICENCE (1) Licensee The Lessee must appoint a Licensee and make any other appointments in respect of the Premises required by the Liquor Act or the terms of the Licence. The Lessee warrants that any Licensee so appointed is qualified to hold the Licence and that it is not aware of any matter or thing which may cause the Authority to refuse the appointment of the Licensee as the holder of the Licence. (2) Licence to be maintained The Lessee must not do or omit to do or permit or suffer any other person to do or omit to do, anything which: (a) is a ground for, or renders, the Licence to be, or liable to be, cancelled, suspended, restricted, or removed from the Premises or the Licensee; or (b) transfer the legal or beneficial ownership in the Licence away from the Lessor. (3) Lessee's obligations The Lessee must: (a) at its own cost, do anything necessary within its control to keep the Licence current; (b) not, without the prior written consent of the Lessor: (i) transfer; or (ii) part with possession of; or (iii) in any way encumber the Licence; or (iv) change the use of the Premises; or (v) without the consent of the Lessor vary the terms and conditions of the Licence or endorsed on the Licence; or (vi) extend or reduce the licensed area of the Premises, (c) produce the Licence on demand for inspection on the Premises by the Lessor or any person authorised by the Lessor: (d) the Lessee must itself and also cause the Licensee to comply with their respective obligations under the Liquor Acts, and under this Lease. (4) Statements The Lessee must promptly forward to the Lessor a copy of any statement, declaration and any other information furnished to, or received from, the Authority, a court or public authority including any documents prepared and lodged as required under the Liquor Act. (5) Attorney Upon Default by Lessee (a) The Lessee while ever he is in default of any of his obligations contained in this Lease irrevocably appoints the Lessor, its nominee and substitute as his attorney to act and to: (i) execute and sign any application for the transfer or surrender of the Licence; (ii) appear or make submissions to the Authority or proper court; (iii) use all reasonable endeavours to obtain and/or maintain the necessary Licence; (iv) pay all fees for the Licence to the Authority on behalf of the Lessee; (v) take up and receive the Licence for the lessee or any other person entitled to it; (vi) sign, seal, execute, make and do any application, notice, return, declaration, form, act, deed, matter or thing which is or may be (or which the Attorney deems is or may be) necessary for obtaining, preserving, renewing or transferring any licence (including the Licence) in respect of carrying on the business of a licensed karaoke venue or any subsidiary trade and business at the Premises, the due performance of the covenants and conditions (express or implied) in the Lease or appointing a substitute for any purpose in this clause and removing him; (vii) appoint a solicitor to appear before the Authority or any other public authority or in any court for the Lessee or Licensee and request, apply for, consent or submit to (in the Lessee's or Licensee's name) any transfer of the Licence or any negative or mandatory interim injunction or appointment of a receiver in an ejectment action brought by the Lessor for the purpose of protecting the Licence or any part of the trade or business of the Premises or any other application to the Authority, or any other public authority or court, which is necessary or expedient in the reasonable opinion of the Lessor. (b) Any appointment made under paragraph (a) above is joint and several. (c) A statutory declaration by the Lessor or of any officer of the Lessor authorised by the Lessor for that purpose, is sufficient proof that the Lessee is in default of the Lessee's covenants for the purposes of paragraph (a) above. (d) The Lessee, if required by the Lessor, must ratify and confirm anything the attorney does as attorney and for the Lessee or the Licensee, under this clause or if required by the Lessor cause the Licensee to do so. (e) The Lessor may register this power of attorney wherever necessary and may do anything in the Lessor's reasonable opinion necessary to give validity and effect to this power of attorney and provided he is not negligent and acts without mala fides is not responsible for any loss in respect of the exercise of any of the Lessor's powers. (6) Delivery of Licence The Lessee, if the Lease is terminated or expires, must deliver the original Licence and if not already done so the documents referred to in (4) above to the Lessor or the Lessor's nominee on or before the expiry or earlier termination of the Lease. (7) Trading (a) The Lessee must: (i) exercise and carry on (or procure the exercise and carrying on of) the trade and business of a licensed karaoke venue and any subsidiary trade and business on the Premises in a commercial and business like manner, and in a way which, to the best ability of the Lessee and Licensee, preserves, maintains and develops the attaching goodwill; (ii) keep the Premises open and used (or cause them to be kept open and used) for the trade and business of a licensed karaoke venue and any subsidiary trade and business during the hours and for the purposes, which are customary or permitted in respect of the Licence; (iii) manage and conduct the trade and business of a licensed karaoke venue and any subsidiary trade and business (or cause them to be managed or conducted) in a quiet, orderly and business-like manner; (iv) do (or procure the doing of) anything which is necessary to keep the Premises licensed and carry on the trade and business of a licensed karaoke venue and any subsidiary trade and business. (b) The Lessee expressly authorised the Lessor to obtain from the Authority (as and when the Lessor thinks fit) any information the Lessor requires including, without limitation: (i) particulars and copies of all applications, statements, returns or assessments of the Licence, (ii) details of any past or present offences, charges, infringements, complaints, disturbance complaints, closure orders, late hour entry declarations or any other directions, orders or findings made or issued by the Authority, a court or any other public authority, against the Licensee or the Premises. (8) Transfer of Licence The Lessee, at least 21 days prior to the expiry or termination of the Lease and at the request of the Lessor, must: (a) sign and deliver (or cause to be signed and delivered) to the Lessor any applications for transfer and any other forms the Authority or the Lessor requires for transferring to the Lessor or nominee of the Lessor (in the manner the Lessor thinks fit) the Licence and any other licences, approvals, authorities, consents, permits or endorsements thereon held for the trade and business of the Premises as a licensed karaoke venue or any subsidiary trade and business including, but not limited to, the sale and supply of liquor, and the holding of public entertainment in respect of permits or endorsements thereon to enable that trade and business as a licensed karaoke venue to be carried on; and (b) in addition to the Lessee's obligations referred to in (a) above, generally do, cause or permit to be done everything necessary to enable the Lessor or its nominee to obtain a transfer of all and any existing licences, approvals, authorities, consents or endorsements thereon for the trade and business of the Premises as a licensed karaoke venue. (9) Proceedings Against the Licensee (a) The Lessee must defend any proceedings instituted against the Lessee or Licensee in respect of a breach any (sic) law, including the Liquor Act and the applicable Planning and Local Government laws that, on the balance of probabilities, is likely to cause the Licence, approval, authority, consent, permit or endorsement thereon or which has or is utilised as part of the licensed karaoke venue, liable to be cancelled, surrendered, suspended, restricted, revoked or removed from the Licence or the Premises. (b) The Lessor, may appear or be represented at those proceedings and employ and retain solicitors and counsel for that purpose. (c) The Lessee must indemnify the Lessor (on demand) for any damages, expense, loss or liability the Lessor suffers or incurs in respect of those proceedings. Any amount in clause 10(c) not paid within fourteen (14) of the Lessor's demand carries interest at the rate applicable in respect of arrears of rental. (10) NO CHARGE The Lessee must not without the prior written consent of the Lessor give any bill of sale, charge or other security over the Licence. (11) STANDARDS The Lessee must: (a) keep the Premises properly furnished and otherwise up to the standard required by any public authority (including the Authority); and (b) fulfil and perform all the requirements of any public authority (including the Authority) in respect of the Licence. (12) OWNER OF LICENCE (a) The Lessor acknowledges and confirms that: (i) the Lessee is entitled to the use of the Licence during the Lease but is not the legal or beneficial owner of the Licence; and (ii) the Lessor as the legal and beneficial owner of the Licence has a financial interest in the Licence. (b) The Licensee holds the Licence on behalf of the Lessor. (c) The Lessee acknowledges that neither the Lessee nor the Licensee has any estate or interest in the Licence other than as set out in the Lease. (13) INDEMNITY (a) The Lessee shall indemnify and keep indemnified the Lessor against any claim or suits arising from the operation of the Licence and the performance of this Lease and any obligations made by the Lessee and/or the Licensee to any party in connection with the performance of this lease (including but not limited to any penalty, fine or order resulting from any prosecution, summons or complaint proceedings relating to any breach of the Local Government or Planning laws of New South Wales, the Liquor Acts or any loss or damage suffered from the removal of the Licence from the Premises). (b) Nothing contained in this Lease shall constitute a partnership, employer and employee relationship, joint venture or association of any kind between the Lessor of the one part and any combination of the Lessee and the Licensee of the other part nor is the Lessor liable for the debts or liabilities incurred by the Lessee or Licensee. ................................... Provisions of Annexure "B" relevant to the case include: 7.1 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; 7.1.2 maintain the property in a structurally sound condition; and 7.1.3 maintain essential services. 7.2 The lessee must otherwise maintain the property in its condition at the commencement date and promptly do repairs needed to keep it in that condition but the lessee does not have to - 7.2.1 alter or improve the property; or 7.2.2 fix structural defects; or 7.2.1 repair fair wear and tear. 8.1 The lessee must keep current an insurance policy covering: 8.1.1 liability to the public in an amount not less than the amount stated in item 18 in the schedule (for each accident or event); and 8.1.2 damage or destruction from any cause to all plate glass in the windows and other portions of the property and must produce to the lessor, upon request the policy and the receipt for the last premium. 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. 12.3 When this lease ends, unless the lessee becomes a lessee of the property under a new lease the lessee must - 12.3.1 return the property to the lessor in the state and condition that this lease requires the lessee to keep it in; and 12.3.2 have removed any goods and anything that the lessee fixed to the property and have made good any damage caused by the removal. Anything not removed becomes the property of the lessor who can keep it or remove and dispose of it and charge to the lessee the cost of removal, making good and disposal. ............................................. CLAUSE 17 SECURITY DEPOSIT 17.1 If an amount or a number of months appears in item 20 in the schedule, clauses 17.2 to 17.6 apply. 17.2 On or before the commencement date of this lease the lessee will deliver the security deposit to the lessor. 17.3 The lessor is entitled to deduct from the security deposit an amount equal to any monies due but unpaid by the lessee to the lessor under this lease. 17.4 Where the property is a retail shop, the security deposit will be held in accordance with Section 16C of the Retail Leases Act 1994. The lessee will not make an application to the Director General seeking the return of the security deposit (or so much of it as is then held by the Director General) until the later of: 17.4.1 the terminating date of this lease; 17.4.2 the expiry date of any holding over under this lease; and 17.4.3 the date that the lessee has no further obligations under this lease or at law. 17.5 Where the property is other than a retail shop the security deposit (or so much of it as is then held by the lessor) will be returned to the lessee on the later of the dates as specified in clause 17.4. 17.6 The lessee agrees to vary the amount of the security deposit immediately upon each rent review so that it represents the equivalent of the number of months referred to in the schedule. 6In his affidavit sworn 23 December 2010, the Applicant set out the basis of his claim in the following paragraphs: "2. From I (sic) ran a business known as Park & Kim Enterprises which was a Karaoke Bar from premises situated at Level 2 41 Beecroft road Epping. 3. During the course of m (sic) running the above business I always made a profit and paid my rent, I had paid my rent to the end of November 2010. 4. I was locked out of my business on 23 November 2010 - (rejected) - they have advertised the premises in a Korean Newspaper for a rent in excess of what I was paying, a copy of this advertisement is attached and marked "B" 5. On 23 November 2010, when I was locked out of 41 Beecroft Road. I requested to be let back into the premises but the landlord refused to let me back into the business. 6. I was forced to apply to the Tribunal on 9 December 2010 just to be allowed to get my personal belongings from the premises. 7. I do not want to return to the premises on a fulltime basis because I am fearful the landlord will make it impossible to run a karaoke bar from these premises, he as (sic) for months said things like "your business is too noisey" or you can't operate this business from these premises". 8. (Rejected). 9. I have not had my security bond of $46,800 returned to me even though I am entitled to it, I request an order for its return. 10. In relation to relocating my business this is very hard because you need premises with a liquor licence, council approval and a fit out, there are just not that many suitable premises in the Epping area . 11. I anticipate I will have to pay a higher rent at any new premises in the Epping area and suffer ongoing losses. 7The Respondents' rather more fleshed out version of events is set out in the affidavit of Young Pil Kim sworn 4 August 2011 which in part reads as follows: 1.With my wife Kyung Suk KIM and our son Paul Mercedes Kim, I (collectively "we", "our") own premises located at 41 Beecroft Road in Epping, NSW, which is a 3-storey building. The Ground floor is Beschico cafe, which we own and operate. We also own the first floor, which we presently operate as a karaoke lounge and is referred to herein as "Level 1". 2. We own the second floor, which also operates as a licenced karaoke bar and is referred to herein as "Premises". 3. On or about 14 February 2007, we obtained approval for use of the Premises as a licenced karaoke lounge allowing operating hours to 12.30 am Sunday night/Monday morning - Thursday night/Friday morning, and 2.30am on Fri night/Sat morning and Sat night/Sunday morning (DA/761/2006). 4. We obtained a Liquor Licence , number LIQ0624015681 5. From about that time, we operated a licenced karaoke bar known as "iLounge" from the Premises. 6. On about 2 May 2007, we obtained an approved amendment of the DA, extending operating hours to 230 am on Fridays and Saturdays (until 2012), with a trial period up to 2.30am on other days for 12 months (DA/761/2006/A). 7. On about 14 May 2008, we obtained a further approval of the DA, extending the "trial" operating hours to 2.30 am for each night for a further 36 months (until 14 May 2011) (DA/761/2008B). Introduction of the Respondent 8. In or about July 2009, Mr. Kwang Sun KIM ("the Respondent") attended the Beschico cafe and introduced himself to me. He asked me whether I would be interested in leasing out the Premises to him. 9. In or about September 2009, the Responded again asked me about leasing the Premises. 10. On about 2 October 2009, the Respondent met with me and told me that: 10.1. he wanted to lease Level 1 and intended to spend $150,000 fitting it out as a karaoke bar; 10.2. he wanted temporary use of the Premises until Level 1 was ready and a formal lease could be entered into with respect to Level 1. 11.1 I instructed my solicitor Mr. Greg Allen to draft a Deed of Agreement, which was sent to the Respondent. Attached hereto and marked with the letter "E" is a copy of that draft Deed of Agreement. 12. On 6 October 2009, the Respondent told me that he needed to use of the Premises urgently, as his staff from his former karaoke business would quit if he did not start business somewhere immediately. 13. On 7 October 2009, the Respondent attended the cafe and again told me that he needed to open immediately so as to keep his partner and staff. Respondent commences possession of Premises 14. On 8 October 2009, the Respondent took possession of the Premises under a Commercial Lease for three months and commenced trading as a karaoke bar. Our fixtures and fittings all remained in the Premises for the Respondent's use under licence from us on condition that the Respondent maintain, repair and replace such fixtures and fittings as necessary. 15. By 4 November 2009, the Respondent had failed or refused to sign the Deed of Agreement. The Respondent was already operating his business from the Premises in breach of the Licence (including operating beyond the permitted operating hours). 16. After meeting with the Respondent and our lawyers, we allowed the Respondent to continue to operate his business from the Premises on the basis that a formal lease would be entered into. 17. On about 16 November 2009, the Lease was executed by the parties with a commencement date of 8 October 2009. 8The affidavit annexed 4 letters from Norris Allen, the solicitors for the Respondents to the Applicant and his associates. "Mr K Kim Lot2, 41 Beecroft Road Epping NSW 13 August 2010 Dear Mr Kim We refer to your lease of the above premises and have been requested by the landlord to address the following matters:-