CITATION: Chung -v- Nichibi International Pty Limited & ors [2002] NSWADT 72 DIVISION: Retail Leases Division APPLICANT Peter Kong Yin Chung PARTIES: RESPONDENTS Nichibi International Pty Limited David Wei Shao Takashi Sato FILE NUMBER: 015108 HEARING DATES: 04/12/2001 SUBMISSIONS CLOSED: 12/04/2001 DATE OF DECISION: 05/06/2002 BEFORE: Fox R - Judicial Member APPLICATION: Claim for payment of money - Costs - Interest MATTER FOR DECISION: Principal matter LEGISLATION CITED : Retail Leases Act 1994 CASES CITED: APPLICANT REPRESENTATION: M Hodges, solicitor RESPONDENTS No Appearance ORDERS: 1. The Respondent is to pay the Applicant (pursuant to Section 72 (i) (a) by way of debt, the sum of $53,521.36; 2. Pursuant to Section 72 A (I) interest at the rate of 9.5% on the sum of $5,230.68 for 28 days and on the amount of $11,955.84 plus $5,230.68, ($17186.52) making the total interest $833.38 up to the date hereof; 3. Interest continues at 9.5% per annum ($4.473 dollars per day) from and including 11 April until a final Order is made in matter number: 015078; 4. Enforcement of these orders is stayed. ; (i) until such time as matter number 015078 is the subject of a final Order, and; (ii) The Applicant lodges with the registry evidence of payment of stamp duty by way of a duly stamped counterpart of the Lease.; 5. Application against Takashi Sato dismissed, no order for costs. 1 In these proceedings Mark Hodges Solicitor appeared for the Lessor Applicant, and the Lessee Respondent did not appear. He was, I am satisfied, aware of these proceedings and I proceeded ex parte. The present application is related to Application Number: 015078, which is an application made by the same Lessee as Applicant, against the same Lessor as Respondent, arising out of the same retail shop tenancy, being "Strata Title shop identified as the lower ground floor, 359- 361 Pitt St,) being used by the Lessee as a Karaoke Restaurant". In the present application, the Lessor seeks: - 1. Recovery of outstanding rent ($56,089.86 up to 11 November 2001) 2. Rent at $5,666.70 per month plus 5% from 11 November 2001 onwards 3. Interest 4. The difference (if any) between the rent the Respondent would have paid, and that paid by such tenant as is found up to 10 November 2004. 5. The costs of finding another tenant. 6. Legal costs 2 The evidence before me consisted of the Lease, unregistered and unstamped, bearing the common seal of the Defendant company, and on each page the signature of it's two Directors, un-witnessed, the witnessed signature of one of the Guarantors, Wei Shao and the un-witnessed signature of the other Guarantor. The method of signature rendered the lease un-registerable, and the evidence of the applicant was that, because the Lessee took occupation on 11 November 1999, when he found that the document was not in registerable form, he asked the Lessee to re-execute, and held off the payment of stamp duty which the Lessee had paid to him, and which the Applicant Lessor had retained, until the execution was effected. 3 It seems appropriate to assume that the failure to pay the duty was innocent, and I have attempted to address that in my orders. 4 Apart from the signing irregularity, the document seems to me to be in order to at least bind the guarantor, Wei Shao, who is a Director of the Lessee Company, to the document. 5 The Company is also bound. There was in evidence in this regard a letter from Thomas Chang and Co, Solicitors for the Lessee, signed by Olivia Cheng, who is apparently the same person as the witness to Wei Shao, as Guarantor. In this regard I note the same (Wei Shao) signature appeared un-witnessed as lessee on every page of the Lease, the Company Seal being on every page of the Lease as well, and in this regard Olivia Cheng observes "please note that due to one of the Directors is overseas and will sign the Lease documents once he returns from Japan". It is noted that Takashi Sato appears to have signed the bottom of every page of the Lease produced to me other than the page headed "attestation by Guarantors" upon which the signature of Wei Shao appears, as witnessed by Olivia Cheng, from which, on the balance of probability, I find that Takashi Sato signed later as Director. 6 I am not satisfied that Takashi Sato is liable as Guarantor as there is nothing to indicate on the face of the document that it is his or her deed and there is no other evidence of consideration on the face of the document. 7 The application against Takashi Sato is dismissed. 8 I note that there has been no formal mediation between the Applicant Lessor and Wei Shao (either representing the company, or in his personal capacity) but I am satisfied that it is appropriate for the matter to proceed because I have seen both of these people in several directions hearings in the related matter, and it seems to me to be very clear that a mediation is very unlikely to resolve the dispute. 9 The evidence established that the Lessee fell into arrears, and by Notice to Quit dated 15 January 2001, the Applicant Lessor terminated the tenancy as and from 7 July 2001. Subsequent to that, on 16 July 2001, the Lessor and the Lessee and Wei Shao entered into an agreement which was clearly executed by Wei Shao purporting to bind the company Nichibi International Pty Limited, and just as clearly signed by Wei Shao in his personal capacity. His signature was not witnessed, and I doubt that it had effect as a deed, but it seems to me that it would be unjust not to hold Wei Shao bound by it because he did, on the face of the document, gain by entering into it, and so there was some kind of consideration. The operative clause in this regard is the recital E "on 11 July 2001 the tenant proposed to the landlord for another arrangement for a new lease and debt agreement (proposal 3) to repay this debt." 10 The agreement was, in fact, an agreement to agree on a further lease and in that regard it must be regarded as frustrated, because the parties did not, in the end, agree. However I am quite satisfied, that on the one hand, it acknowledges that $36,334.84 is payable by both the Company and Wei Shao being the rent outstanding up to 30 June 2001, and on the other hand, effects termination of the lease on 7 July 2001. In view of the fact that no other agreement of any kind was entered into, and in view of the fact that Wei Shao, and the company continued to occupy, I am satisfied that there was, in fact, a holding over in terms of the Lease document, which was in evidence before me, and that the compliance with the terms and conditions of that "holding over" were guaranteed by Wei Shao. 11 The Company remained in occupation under the "holding over " from 7 July 2001 until 27 July 2001 when this Tribunal made orders, at the request of Wei Shao, which set the terms of the Occupancy by reference to the Lease, seeking to hold the matter is status quo. 12 It follows that pursuant to the holding over provisions there is liability at the rent rate of $68,000.00 per annum for the period of 1 July 2001 to 28 July 2001. The Company is bound, and so is Wei Shao, bound as Guarantor. 13 After 20 July 2001 the payments made were pursuant to this Tribunal's orders. 14 These were that the Respondent Lessee must pay $3,500.00 on the 11 and 25 of each month, and if such payment were not made, then the Tribunal's stay would automatically lapse, because the Lease had been previously validly terminated pursuant to the general law flowing from a failure to pay rent for more than 14 days, the tenancy would be at an end. I am satisfied that the Tribunal's order lapsed when the Respondent Lessee failed to pay $3,500.00 on 11 October, although the acceptance by the Lessee on 12 October of $1,800.00 on a pro-rata basis took the matter to some time during the 19 October and that is when the occupancy came to an end. Other difficulties arose between the parties and the Lessee did not actually vacate the premises until 2 December. From 12 November 2001, the Applicant Lessor kept the premises locked against the tenant, (and quite properly because of the arrears). 15 It seems to me that the lockout is in fact the equivalent of a Notice by the Lessor, in the terms of the holding over, and consequently the liability of the tenant for rent ceases one month after the 12 November lock out, and that is the means that the rent liability ended on 12 December, 2001. 16 The application for interest is well founded, but only from 30 June onwards. Prior to that the debt is simply governed by the agreement which the parties have reached, and there certainly was no provision for interest in that. It follows that there is interest payable in respect to the arrears between 1 July and 28 July, and from 19 October to 12 December 2001. 17 The calculations are as follows: Agreed amount outstanding up to 30 June $36,334.84 Rent 1 July to 28 July $ 5,230.68 Interest thereon up to 10 April $ 363.50 Rent from 19 October to 12 December $11,955.84 Interest thereon up to 10 April $ 469.88 Total Payable calculated 10 April $54,354.74 18 I note that there is an application for costs, but in view of all the circumstance of the matter, and especially in view of the further order which I am about to make in this matter, I do not believe that there is any special circumstance, and there will be no order for costs. 19 I also observe that the companion matter is still on foot, and because that amounts to a cross-claim, it would be inequitable for me to allow these present proceedings, although concluded, to be the subject of any enforcement proceedings until such time as the cross-claim has been resolved. 20 My orders then are as follows: 1. The Respondent is to pay the Applicant (pursuant to Section 72 (i) (a) by way of debt, the sum of $53,521.36. 2. Pursuant to Section 72 A (i) interest at the rate of 9.5% on the sum of $5,230.68 for 28 days and on the amount of $11,955.84 plus $5,230.68, ($17186.52) making the total interest $834.38 up to the date hereof. 3. Interest continues at 9.5% per annum ($4.473 dollars per day) from and including 11th April until a final Order is made in matter number: 015078. 4. Enforcement of these orders is stayed (i) until such time as matter number 015078 is the subject of a final Order, and (ii) The Applicant lodges with the registry evidence of payment of stamp duty by way of a duly stamped counterpart of the Lease. 5. Application against Takashi Sato dismissed, no order for costs. 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.