Lee v YOUth OK Pty Ltd [2022] NSWSC 1356

Supreme Court New South Wales

Medium Neutral Citation: Lee v YOUth OK Pty Ltd [2022] NSWSC 1356 Hearing dates: 21, 22 & 23 February, 17 March, 27 April and 20 May 2022. Date of orders: 17 October 2022 Decision date: 17 October 2022 Jurisdiction: Equity Before: Slattery J Decision: Declaration made that the lease was validly terminated for breach on 16 July 2020. Judgment for rent, mesne profits and damages to be entered on 2 November 2022. Directions made for the ascertainment of damages and the calculation of interest. Cross-Claim dismissed. Defendants/cross-claimants ordered to pay the plaintiff's/cross-defendant's costs of the proceedings. The question of indemnity costs are reserved. Catchwords: LEASES AND TENANCIES – termination – grounds for – two parcels of land demised by the plaintiff to the first defendant – obligations of the first defendant under the lease guaranteed by the second defendant – plaintiff sues for possession of the property, for arrears of rental to the date of termination, and for damages either under the terms of the lease or at common law – first defendant gives possession of the property to the plaintiff during the proceedings – first defendant claims that rent is not payable under the lease because the property did not comply with certain notices to demolish structures on the property that had been issued by the local council under the Environmental Planning and Assessment Act 1979 (EPA Act) – whether the terms of the lease allow for non-payment of rent by the tenant upon breach of the lease – whether non-payment of rent was the breach of an essential term of the lease – calculation of damages under the lease for the period after the tenants vacated the property – whether the Retail Leases Act 1994 applies to the lease – to the lease come within the operation of the Retail and Other Commercial Leases (COVID-19) Regulation 2020. MISLEADING AND DECEPTIVE CONDUCT – misrepresentation – negligent – pre-contractual misrepresentation – defendants/cross-claimants allege that either by the plaintiff/cross-defendant making positive statements as to local council approvals, or by the non-disclosure of a non-approved structure on the property, that the plaintiff/cross-defendant engaged in misleading and deceptive conduct, inducing the first defendant/cross-claimant to lease the property – whether the cross-defendant engaged in misleading or deceptive conduct – whether the cross-claimants were induced by the cross-defendant's misleading or deceptive conduct to lease the property – if misleading and deceptive conduct were established, whether the cross-claimants have suffered loss or damage. CONTRACTS – termination – frustration – self-induced frustration – whether the latent non-compliance of leasehold property with notices issued under the EPA Act constitutes frustration of the contract represented by the lease – whether the doctrine of frustration applies to leases – whether the cross-defendant ought to have known the property was non-compliant – whether intervention by the local council causing building works to cease but not otherwise prevent the use of the property, amounts to frustration of the contract represented by the lease. RESTITUTION — expenditure by tenant on the fit out of the premises – tenant claims landlord unjustly enriched at the expense of the tenant by the tenant's expenditure on the fit out – whether a claim in restitution available to the tenant or whether it is covered by the contract represented by the lease – whether a clause in the lease allowing the landlord to take ownership of anything not removed from the premises by the tenant, displaces any right of the tenant to restitution for expenditure on fit out of the premises. Legislation Cited: Civil Procedure Act 2005 Conveyancing (General) Regulation 2018, Schedule 5 Environmental Planning and Assessment Act 1979 Real Property Act 1900 Retail Leases Act 1994, Part 7A, ss 3, 70, 71, 75, 76A, 87, 88, Schedule 1, 3 Retail and Other Commercial Leases (COVID-19) Regulation 2020, rr 3,4,5, 6, 7 Retail and Other Commercial Leases (COVID-19) Regulation 2021 Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth), rr 7, 8 Cases Cited: Ashington Holdings Pty Ltd v Wipema Services Pty Ltd (No. 2) (1998) NSWSC 414 Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 Firth v Halloran [1926] HCA 24 Mann v Paterson Constructions Pty Ltd [2019] HCA 32 Nobarani v Mariconte (2018) 265 CLR 236 Progressive Mailing House Pty Ltd v TabaIi Pty Ltd [1985] HCA 14 Smith Bros Trade & Transport Terminal Pty Ltd v Pacific Power [1998] NSWCA 212 Sumpter v Hedges [1898] 1 QB 673 Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 29 Texts Cited: K Mason and J W Carter, Restitution Law in Australia (1995, LexisNexis) at 528, 531 Category: Principal judgment Parties: Plaintiff: Annie Lee First Defendant: YOUth OK Pty Ltd ACN 634 484 674 Second Defendant: David Charles Hawkins Representation: Counsel: Plaintiff: D. Smallbone; A. Smyth