CITATION: Gunaretnam v Mason [2004] NSWADT 266 DIVISION: Retail Leases Division FIRST APPLICANT Manonmany Gunaretnam FIRST RESPONDENT PARTIES: Barry Mason SECOND APPLICANT Barry Mason SECOND RESPONDENT Manonmany Gunaretnam FILE NUMBER: 045069; 045094 HEARING DATES: 15/07/2004 SUBMISSIONS CLOSED: 09/23/2004 DATE OF DECISION: 11/19/2004 BEFORE: Higgins S - Judicial Member APPLICATION: Claim for payment of money - Claim for relief from payment of money MATTER FOR DECISION: Principal matter Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Conveyancing Act 1919 Retail Leases Act 1994 CASES CITED: Mangus Pty Limited & Anor v Charles Donovan Pty Limited (In Liq) & Anor [1989] VR 84 Progressive Mailing House Pty Limited v Tabali Pty Limited (1985) 157 CLR 17 at 47 & 55 FIRST APPLICANT In person SECOND APPLICANT REPRESENTATION: J Bear, as agent FIRST RESPONDENT J Bear, as agent SECOND RESPONDENT In person ORDERS: 1. Mrs Gunaretnam's application is dismissed; 2. Mr Mason's application is dismissed; 3. No order as to costs. REASONS FOR DECISION Background 1 On 7 June 2004, Mr Gunaretnam, as agent for his wife, filed an application with the Tribunal pursuant to the Retail Leases Act 1994 claiming: (a) relief from payment of $2,220.00 outstanding rent as demanded by the Lessor's agent, Ray White Real Estate, as he contended that this amount was not outstanding. (b) $100-$150 per day compensation, following the lock out from his premises from 13 April 2004. (c) orders for the return of the videos and other goods that were in the shop. (d) compensation for the shutter doors that he had fixed to the shop at a cost of $1,974.00. 2 The matter was heard on 15 July 2004, and by that stage the landlord had returned all the goods belonging to Mr and Mrs Gunaretnam that were in the premises. 3 After the hearing of Mr Gunaretnam's application on 24 August 2004, the landlord, Barry Mason, through his agent Mr Bear of Ray White Real Estate, made an application by way of cross-claim seeking an order that Mrs Gunaretnam pay an amount of $7,010.30 to the landlord. This was calculated on the basis of $1,305 in costs incurred by Ray White in respect of Mrs Gunaretnam's application, and a sum of $5,734.30 for outstanding rent for the period 23 April 2004 to 11 July 2004. When this matter came before the Tribunal on 23 September 2004, the parties agreed, subject to the Applicant being given an opportunity to file and serve any submissions in respect of Mr Mason's application for costs, and the Respondent's reply thereto, the Tribunal was to deal with this application on the papers, together with Mrs Gunaretnam's application. The Lease 4 On 12 December 2003, Mr Mason, as landlord, entered into two retail leases with Mrs Gunaretnam (as Lessee). One lease related to the premises known as 'Shop 2, 9-11 Hassel Street, Westmead' ("Shop 2"). The other lease related to the premises known as 'Shop 3, 9-11 Hassel Street, Westmead' ("Shop 3"). ("the 2003 leases") 5 Each lease provided that the premises were to be used only as 'retail shops'. Shop 2 was used as a supermarket and traded under the name 'Saravanas Supermarket'. Shop 3 was a video store. 6 Each lease provided that the rent was to be $600 (exclusive of GST) per fortnight, commencing on 12 December 2003 and payable in advance by the tenant on the Friday of every fortnight to the landlord/agent. 7 Each lease also provided for the deposit of a bond/security for the sum of $1,200. 8 The term of the lease in respect of Shop 2 was for a period of 1 year commencing on 12 December 2003 and ending on 11 December 2004. 9 The term of the lease in respect of Shop 3 was 3 years commencing on 12 December 2003 and ending on 11 December 2006. 10 On 19 February 2004, Mrs Gunaretnam, with the consent of the Lessor, sub-let Shop 2. 11 The parties have at all times contended that the lease for Shop 3 is the only lease that is in dispute. This I have understood to mean that the dispute relates to Mrs Gunaretnam's lock out from Shop 3, but it does not relate to rent for Shop 2 prior to it being sub-let. Mrs Gunaretnam's Claim 12 As mentioned above, the leases for Shop 2 and Shop 3 were entered into on 12 December 2003. Each lease contained a termination clause (cl.31) to the following effect: "The Landlord shall have the right to re-enter the premises peacefully or to continue the lease as a periodic lease from week to week: (i) where the Tenant has failed to pay rent for a period in excess of fourteen (14) days, whether formally demanded or not. 13 As mentioned above, on 16 April 2004, Mrs Gunaretnam was locked out of Shop 3 by Ray White Real Estate. 14 The evidence before the Tribunal is that prior to 19 February 2004 when Shop 2 was sub-let any rental payment that was made by Mr or Mrs Gunaretnam was always made in respect of both shops. That is, no payment was specifically allocated to one or the other shop. This is also the way Ray White Real Estate accounted for the rent in their records. That is, they only retained one tenant ledger report for Shop 2 and Shop 3 during the time Mrs Gunaretnam was the tenant. 15 As the tender ledger report of Ray White Real Estate is difficult to understand as to what amount of rent was outstanding at a particular point of time I have calculated the amount of rent that was due and payable for both shops from the commencement of the lease until 16 April 2004, was as follows: - 10 weeks (12 December 2003 to 20 February 2004) for both shops at $660 per week = $6,600. - 8 weeks (20 February 2004 – 16 April 2004) for Shop 3 only at $330 per week = $2,640. Total = $9,240.00 (inclusive of GST) for both shops 16 According to the tenant ledger report of Ray White Real Estate, during this period, they received the following amounts from Mr Gunaretnam on the following dates: Date Amount 28/12/03 $1,320.00 05/01/04 $ 660.00 22/01/04 $1,980.00 29/01/04 $ 660.00 19/02/04 $ 330.00 19/02/04 $ 330.00 27/02/04 $ 660.00 27/02/04 $ 660.00 16/03/04 $ 450.00 17 The abovementioned payments totalled $7,050, giving rise to a shortfall in rent of $2,090 in respect of Shop 2 and Shop 3. 18 The tenant ledger report also records that, on 23 April 2004, a sum of $1,200 was credited to the Mrs Gunaretnam's rent account, leaving a shortfall of $890 in respect of Shop 2 and Shop 3. This payment was the bond that had been paid by Mrs Gunaretnam. 19 Mr Gunaretnam in his evidence stated that he made the following payments, on the following days and in the following ways: Date Amount Bank 11/12/03 $1,200.00 National Bank, personal cheque 30/12/03 $1,320.00 National Bank, personal cheque 05/01/04 $ 660.00 Cash payment 08/01/04 $ 660.00 IMB Bank, personal cheque 23/01/04 $1,980.00 IMB Bank, personal cheque 29/01/04 $ 660.00 Cheque payment 19/02/04 $ 660.00 Money order 27/02/04 $ 660.00 Cash payment 16/03/04 $ 450.00 Cash payment 20 If Mr Gunaretnam's payments are accepted, they total $8,250, which is a shortfall of $990.00. This shortfall would be covered by the bond payment, with some money left over. 21 In support of his claim, Mr Gunaretnam produced to the Tribunal a copy of the December 2003 National Bank statement for the account in the name of Saravanas Supermarket ("the National Bank statement") and a copy of the January 2004 IMB bank statement for an account in the same name ("the IMB bank statement"). 22 The evidence suggests that Mrs Gunaretnam had leased both shops prior to 12 December 2003 and that the 2003 leases were renewals of previous leases in respect of these premises. Even if this is correct, there is no evidence before the Tribunal that rent was outstanding in respect of the previous leases. 23 The first payment, which coincides with the commencement of the 2003 leases, and which was relied on by Mr Gunaretnam, is a payment of $1,200.00 on 11 December 2003. The National Bank statement supports this payment being made and Ray White Real Estate has not denied that it was made and received by them. However, this payment is not recorded on the Ray White Real Estate tenant ledger report. As Mr Gunaretnam's evidence is that this payment was made in respect of rent and this has not been contested by Ray White Real Estate, I find that this payment was made in respect of rent under the 2003 leases. 24 There is no dispute in respect of the payment of 30 December 2003, 23 January 2004, 29 January 2004, 19 February 2004 and 16 March 2004. What is in dispute is whether a payment was made on 5 and 8 January 2004. Ray White Real Estate contended that they only received one payment of $660.00 on 5 January 2004 and that this payment was made by cheque. This is supported by the tenant ledger report of Ray White Real Estate. The IMB bank statement, records a cheque for this sum being withdrawn from that account on 8 January 2004. This is not inconsistent with the record in the tenant ledger report as the debit on the account from which a cheque is drawn can take several days. 25 However, Mr Gunaretnam contends that he also made a payment of $660 in cash. There is no record of such a payment in the tenant ledger report of Ray White Real Estate, and Mr Gunaretnam provided no evidence, which supported his contention. Indeed, Mr Gunaretnam's evidence in this regard was equivocal. Accordingly, I find that Mr Gunaretnam only made one payment of $660 in early January 2004 and that this was made by cheque. 26 Mr Bear, of Ray White Real Estate, also contended two payments of $660.00 recorded on the tenant ledger as being made on 27 February 2004 should be disregarded as these payments had in fact not been paid. He explained that on this day Mr Gunaretnam had given Ray White Real Estate a cheque for $1,320.00, drawn on the Saravanas Supermarket IMB bank account and this was recorded in the tenant ledger report as being the payment of two lots of $660.00. That cheque was subsequently dishonoured and a reversal of these entries had not been made to the tenant ledger report. In support of his contention, Mr Bear produced into evidence a copy of the dishonoured cheque. 27 Mr Gunaretnam contended that he paid a sum of $660.00, in cash, on 27 February 2004. Again, Mr Gunaretnam was unable to produce any evidence which supported this claim and the material produced by Mr Bear suggests that the only payment made by Mr Gunaretnam on this day was the presentation by him of a cheque for $1,320.00. For these reasons I find that no payments were made on 27 February 2004 in respect of Shop 3. 28 I also find that from the commencement of both leases and up to 16 April 2004, Mr Gunaretnam paid $5,370, which left a shortfall in rent of $3,510.00 in respect of Shop 2 and Shop 3. When the bond amount is deducted from this amount, it leaves $2,310.00 as rent that is outstanding in respect of both shops and for which Mrs Gunaretnam is liable. Accordingly, there is no basis on which to grant Mrs Gunaretnam relief from payment of the amount demanded by Ray White Real Estate on behalf of Mr Mason. That payment being no more than $2,310.00. 29 Mrs Gunaretnam's claim for compensation following the lock out from the premises must also fail as there can be no question that the termination of the lease was in accordance with cl.31(i) of the lease. The evidence is that as at 13 April 2004, Mrs Gunaretnam was more than 14 days in arrears in her rent. There had been no payment of rent on 27 February 2004 and the only other payment that had been received since 19 February 2004 was $450.00 on 16 March 2004. I also note that notice of the lock out was not required under the lease (see also s.129(8) Conveyancing Act 1919). 30 Mrs Gunaretnam's claim for compensation for the shutter doors that had been fixed to Shop 3 must also fail. On the evidence before the Tribunal, I am satisfied that while Mr Gunaretnam considered that these shutters could be of ongoing benefit to Mr Mason, he primarily had them installed for his own purposes and was not requested by Mr Mason to have them installed. Indeed, he did not seek approval from Mr Mason or Ray White Real Estate before he had them installed. Mr Mason's Claim 31 Mr Bear, as agent for Mr Mason, stated in the application lodged with the Tribunal that the reasons for making the application were as follows: "The tenant has vacated the premises by mutual agreement. There are outstanding monies for rent, being $5,704.30…" 32 In support of this claim, Mr Bear filed a tenant status report for Shop 3, which states that Mrs Gunaretnam vacated the premises on 11 July 2004 and outstanding rent was calculated up until that date. I have assumed that this includes that which was outstanding at the time of the lock out on 16 April 2004, minus the bond money, which had been credited to the rent account. 33 Mr Bear's contention that the premises were voluntarily vacated on 11 July 2004 is contrary to that which had previously been presented to the Tribunal. That evidence was that the lease for Shop 3 was terminated on 16 April 2004 by Mr Bear locking Mr and Mrs Gunaretnam out. He subsequently gave Mr Gunaretnam access to the shop so that he could remove his belongings. At no time was he given access to the shop so that he and his wife could continue trade. Accordingly, there is no evidence of a voluntary vacation of the premises by Mrs Gunaretnam. At most, Mrs Gunaretnam's conduct would have amounted to agreeing not to pursue a claim for relief against forfeiture. However, no such claim had been made. 34 On termination of the lease, Mr Mason was entitled to seek payment of any rent that remained outstanding at the date of termination. He was also entitled to seek damages for breach of lease (Progressive Mailing House Pty Limited v Tabali Pty Limited (1985) 157 CLR 17 at 47 & 55; Mangus Pty Limited & Anor v Charles Donovan Pty Limited (In Liq) & Anor [1989] VR 84). This included damages for loss of the bargain to receive rent for the whole term of the lease. Such a claim is subject to the duty to mitigate that loss, which does not apply where a lease remains on foot. 35 In this case, Mr Mason has not provided the Tribunal with evidence of his loss of the covenant by Mrs Gunaretnam to pay her rent (see Progressive Mailing House (supra at page 32). In particular, there is no evidence of what steps were taken by Mr Mason or his agent to re-let those premises after 13 April 2004 or whether they were in fact re-let, and the rent they were re-let for. 36 Accordingly, Mr Mason cannot succeed in his claim. Costs 37 Mr Mason has sought the costs of his agent to represent him before the Tribunal. 38 Section 77A of the Retail Leases Act 1994 provides that the Tribunal may award costs under s.88 of the Administrative Decisions Tribunal Act 1997 for proceedings such as these. 39 Section 88 of the Administrative Decisions Tribunal Act 1997 provides that the Tribunal is given power to award costs. However, that power can only be exercised where the Tribunal is satisfied that there are "special circumstances" warranting the award of costs. 40 In this case, it has not been contended that there are "special circumstances". Nor is there any evidence of such. The parties endeavoured to mediate their dispute and when it could not be resolved by mediation, Mrs Gunaretnam was entitled to have a hearing on her claim as the records of Ray White Real Estate were not altogether clear. Part of this lack of clarity was also due to the fact that payments were made with cheques that were subsequently dishonoured. Furthermore, it was not until many months later than Mr Mason made his application. Orders 41 For the reasons set out above, the Tribunal orders: (a) Mrs Gunaretnam's application is dismissed. (b) Mr Mason's application is dismissed. (c) No order as to 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. 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