Raine -v- Marshall [2001] NSWADT 143

CITATION: Raine -v- Marshall [2001] NSWADT 143 DIVISION: Retail Leases Division APPLICANT PARTIES: Maxwell Raine RESPONDENT Timothy Marshall FILE NUMBER: 015013 HEARING DATES: 09/07/01 SUBMISSIONS CLOSED: 07/09/2001 DATE OF DECISION: 08/29/2001

BEFORE: Fox R - Judicial Member APPLICATION: Claim for surrender of possession of premises MATTER FOR DECISION: Principal matter LEGISLATION CITED : Retail Leases Act 1994 CASES CITED: Prudential Assurance v Health Minders Pty Limited, APPLICANT REPRESENTATION: W MacCallum, solicitor RESPONDENT In person ORDERS: 1.Applicant entitled to possession of retail part of the premises on and from 9 October 2001; 2. Leave for further hearing to establish occupation fee for retail part; 3. No order for costs, no special circumstances.

1 In these proceedings Mr Walter MacCallum solicitor appeared for the Applicant lessor and the Respondent lessee appeared for himself. The Applicant lessor sought (after being granted access for the purpose of repairs on an urgent basis by this Tribunal in February of this year) an order for possession of retail premises at 76 The Esplanade, Terrigal, being premises which the Respondent lessee occupies partly as a take-away/café and (it transpires) partly as residence. The Applicant lessor alleged that the lease expired on 15 November of last year and, so after the expiry of the Termination Notice on 16 January of this year, was entitled to possession. The Applicant further sought an order for the payment of the cost of repairs to the building and an order for the payment of some rent arrears, being the difference between the rent actually paid by the Respondent lessee after the expiry of the Termination Notice, and the amount dictated by clause 14.4 of the lease. 2 The Respondent's cross action was that he had exercised his option and so was entitled to further occupy the premises for a period of 5 years, and that the repairs to the building were matters of a structural kind, and were not his responsibility. 3 It became clear early in the hearing that the premises consisted of a 40 or 50 year-old building, built as a shop with residence over with a backyard area accessible from a rear lane. The structure at one stage, appears to have been length-wise divided, so that there is now beside the Respondent's takeaway, a separate lock-up coffee shop which faces The Esplanade. The Respondent's take-away also faces The Esplanade, but has several rear rooms which run the width of the land, around the back of, and "enclosing" the coffee shop. Also, at rear is the stairway which gives access to the residence, and which, prior to the installation of a security roller door which apparently runs the width of the rear yard of the building, gave separate and independent access to the residence. 4 The Applicant conceded that Section 79 limits my jurisdiction, in these proceedings, to the downstairs shop area, and not the whole of the area let by the lease. 5 The Affidavit of Mr Pitstock, the Applicant's managing agent, and Mr Aitken, the solicitor for the Applicant, placed in issue two distinct matters- the exercise of an option of renewal and the internal wall, the cause of its collapse, and the cost of its replacement with a supporting "I" beam, apparently to prevent the risk of the collapse of the ageing concrete slab which forms the ceiling of the shops and is the floor of the residence above. The Respondent's Affidavit addressed both of these matters. 6 I heard oral evidence from Mr Pitstock and the Respondent. 7 I am satisfied that the deterioration of the internal wall was the result of continued water ingress, and was not the result of actual, physical interference by the Respondent as the Applicant's evidence suggested. I make these observations because the state of the wall, its collapse, and the need for repairs, took up a substantial part of the evidence even though, in the end, it was not relevant to the orders made. 8 The first issue which had to be resolved was whether or not the Respondent had effectively exercised the option. 9 The lease was for a period of five years, commencing on 16 November 1995 and ending on 15 November in the year 2000, with an option to renew for a period of five years. The relevant part of the lease states: "if the lessee shall desire to take a new lease of the demised premises for a further term or terms as specified in item 5 of the reference schedule from the expiration hereof and prior to such expiration gives the lessor not less than 3 month's notice in writing thereof…" 10 It is clear from the evidence that the question of continuation of the occupancy was not discussed between the Respondent and Mr Pitstock, even though he monthly called to collect the rent. Instead it was the subject of correspondence between Conditsis & Associates, Solicitors for the Respondent, and Aitken McLachlan & Thorpe, Solicitors for the Applicant. 11 The first of these letters was from Conditsis & Associates, dated 23 February 2000, and its text, omitting formal part was as follows: "We are instructed to approach you at this time noting that the terminating date for the current lease is 16 November 2000. Although there is a five-year option on the lease, our client would like to renegotiate a new lease on the following terms: 1. A term of five years with an option for a further five years; 2. An option to purchase the premises within the initial term of the lease, that being the first five years. 12 Could you please obtain your client's instructions with regard to the above and let us know as soon as possible so that we can organise any renegotiation prior to the current lease expiring in November 2000". 13 The response of 14 March opened: "We refer to your letter dated 23 February and advise that our client does not wish to agree to your client's requests in that letter". The letter then went on to raise issues in relation to the structural situation following from the collapse of the internal wall. Conditsis & Associates replied on 31 March addressing the issues of the collapse but raised nothing in relation to the continuation of the lease. There was further correspondence of 17 April, again relating to the damage, to which Conditsis replied on 8 June, again making detailed responses to the structural situation, its need for repair, and the question of who would bear the cost. It went on to say: "Notwithstanding all of the above, our client would like for this matter to be resolved amicably between the parties. As your client will no doubt be aware, the current lease to the property expires on 16 November 2000 and our client has requested a renewal of that lease. Our client would like to not only resolve the issues of the damage to the property, but also the issues relating to a new lease as soon as possible. He in no way acknowledges any fault or any liability in respect of the damage to the premises. However, having regard to the cost of litigation he would prefer not to go down that course. Could you please advise whether or not your client would be willing to discuss with our client firstly the arrangements for the repair of the premises and secondly the renewal of the lease and attempt to avoid costly litigation for both sides".