BBL International Pty Ltd v Tsiakos & Kolovos [2023] NSWCATCD 22

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: BBL International Pty Ltd v Tsiakos & Kolovos [2023] NSWCATCD 22 Hearing dates: 10 January 2023 Date of orders: 22 February 2023 Decision date: 22 February 2023 Jurisdiction: Consumer and Commercial Division Before: D Goldstein, Senior Member Decision: Jim Tsiakos & John Kolovos must pay BBL International Pty Ltd the sum of $51,333.34 immediately. Catchwords: RETAIL LEASE – Damaged Property – Section 36.1 of the Retail Leases Act Legislation Cited: Retail Leases Act 1994 Retail Leases Regulation 2022 Cases Cited: Honings Bakery Pty Ltd v Cerialis Pty Ltd [2014] NSWCATCD 87 Texts Cited: None cited Category: Principal judgment Parties: BBL International Pty Ltd: applicant Jim Tsiakos & John Kolovos: respondents Representation: The parties were self-represented. File Number(s): COM 22/41524 Publication restriction: Nil

REASONS FOR DECISION 1. This application was commenced on 14 September 2022. The applicant claims $68,833.34. The applicant is a lessee and the respondents are the lessors. 2. There is no dispute that the Retail Leases Act 1994 confers jurisdiction on the Tribunal to hear and determine this dispute. 3. These proceedings were heard on 10 January 2023. The lessee's documents were marked as exhibit A. The lessor's documents were marked as exhibit B. I have also had regard to the documents filed with the application by the lessee. 4. The parties entered into a lease for five years which commenced on 2 February 2022. The premises leased were 79 Planthurst Road Carlton. The permitted use was floor covering sales (carpet, timber, vinyl). 5. These proceedings arise as a result of prolonged wet weather in Sydney in 2022 which caused water ingress into the leased premises. There is no dispute that the premises were affected by water ingress in the Sydney wide inclement weather. 6. The lessee's claim is made up as follows: * $38,500.00 in connection with a bond converted by the lessors; * An order that it is not obliged to pay $12,833.34 being 1 months rent; * $1,600.00 being an amount paid to a plumber to check roof and walls for leaks; * $5,665.00 for carpet replacement; and * $16,500.00 paid to build a new display room. 1. The lease allowed the lessee a rent free period of 3 months as from 2 February to 1 May 2023. The lessor states and I accept that there was a second rent free period from 2 May to 15 July 2022. 2. The lease required the lessee to provide a bank guarantee in the sum of $38,500.00 in accordance with clause 16. 3. Clause 21 of the lease stated that the lessor did not warrant that the property would remain fit or suitable or adequate for the purposes for which it was leased and all warranties implied by law as to the fitness, suitability and adequacy of the property were negated. 4. Clause 28.1 of the lease deleted clause 7.1 of an of Annexure B. That clause obliged the lessor to maintain the premises in a state of good condition and serviceable repair, in a structurally sound condition and to maintain essential services. 5. Clause 28.2 of the lease stated that the premises were taken in an 'AS IS' condition and the lessee acknowledged and agreed that the lessor had no liability or obligation to remodel, improve, repair, refurbish or alter the premises and that condition was factored into the rent. 6. Clause 8.2 of the lease and section 36.1 of the Retail Leases Act both stated in substantially the same terms: 'A retail shop lease is taken to provide for the following if the shop or the building of which the shop forms part is damaged— (a) The lessee is not liable to pay rent, or any amount payable to the lessor in respect of outgoings or other charges, that is attributable to any period during which the shop cannot be used under the lease or is inaccessible due to that damage. (b) If the shop is still useable under the lease but its useability is diminished due to the damage, the lessee's liability for rent and any amount in respect of outgoings attributable to any period during which useability is diminished is reduced in proportion to the reduction in useability caused by the damage. (c) If the lessor notifies the lessee in writing that the lessor considers that the damage is such as to make its repair impracticable or undesirable, the lessor or the lessee may terminate the lease by giving not less than 7 days notice in writing to the other and no compensation is payable in respect of that termination. (d) If the lessor fails to repair the damage within a reasonable time after the lessee requests the lessor in writing to do so, the lessee may terminate the lease by giving not less than 7 days notice in writing of termination to the lessor. (e) Paragraphs (a)–(d) do not affect any right of the lessor to recover damages from the lessee in respect of any damage or destruction to which those paragraphs apply.' 1. The evidence is that there was water ingress into the leased premises because the besser block walls of the premises were not filled with concrete and became saturated, allowing the water ingress the lessee complained of. A letter dated 24 June 2022 from SPC plumbing Services which is at page 28 of exhibit A explains the position succinctly. It states that the roof sheets, box gutter and flashing were in good condition, but that all walls internally were soaked with water. However the block work (of which the walls were constructed) had no concrete in them and during rain the water would soak through them externally to internally. 2. I find the lessee's rights as regards payment of rent in this situation are contained in clause 8.2 of the lease and section 36.1 of the Retail Leases Act which are in substantially the same terms. Clause 8.2.4 of the lease gives the lessee a right to terminate in the circumstances referred to in that sub-clause. 3. The lessee submitted a number of photographs showing leaking into the rented premises. These photographs are referred to in a chronology which is in exhibit A and by reference to the chronology the date of the photo's may be ascertained. 4. On 6 July 2022 the lessee through its solicitor gave notice to the lessors through their solicitor under clause 8.2.4 of the lease which was in identical terms to s36.1(d) of the Retail Leases Act. The solicitor's letter referred to the property being damaged from water leakage and specifically requested the lessors to repair the damage by waterproofing the walls so that the property could be used within 14 days. The letter put the lessors on notice that if the damage was not repaired within 14 days the lessee would terminate the lease in accordance with clause 8.2 of the lease. 5. The 14 day period in the letter expired on 20 July 2022. 6. On 19 July the lessor's agent sent a letter to the lessee claiming rent of $14,723.84 stating that rent was due on the 1st of July and was overdue.