Capsanis v Omoso Holdings Pty Ltd [2007] NSWADTAP 75

Appeal Panel - Internal

CITATION: Capsanis v Omoso Holdings Pty Ltd [2007] NSWADTAP 75

APPLICANT PARTIES: Peter John Capsanis RESPONDENT Omoso Holdings Pty Ltd

FILE NUMBER: 079039

HEARING DATES: 12 September 2007

SUBMISSIONS CLOSED: 12 September 2007

DATE OF DECISION: 21 December 2007

BEFORE: O'Connor K - DCJ (President); Rickards K - Judicial Member; Griffiths G - Non Judicial Member

CATCHWORDS: Retail leases - Appeal by lessor - Calculation by Tribunal of amount due to lessor on termination - Waiver of part rent - No error - Non-inclusion of lessor's costs of preparation of lease - No error - No opportunity given by Tribunal to lessor to apply for costs of proceedings - procedural fairness - No error - appeal dismissed

MATTER FOR DECISION: Principal matter

FILE NUMBER UNDER APPEAL: 065120

DATE OF DECISION UNDER APPEAL: 06/13/2007

Retail Leases Act 1994 LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Legal Profession Act 2004

In person REPRESENTATION: L Byrne of counsel

ORDERS: Appeal dismissed.

REASONS FOR DECISION 1 This is an appeal against an order by the Retail Leases Division of the Tribunal made under s 72 of the Retail Leases Act 1994 (the Act). In response to proceedings brought by the former lessee, Omoso Holdings Pty Ltd (the respondent), the Tribunal ordered the former lessor, John Peter Capsanis (the appellant), to pay to the respondent $2,580.58 by way of damages. There was no order as to costs. 2 On termination of a lease, the respondent had paid no rent, and had not paid an amount for the lessor's legal costs which was the subject of an obligation under the lease. The appellant drew down the security bond, and applied it to these alleged defaults. In the proceedings before the Tribunal the respondent contested this action, its primary assertion being that there was no default as the lease had been vitiated. Accordingly, the respondent sought orders for the return of the money withheld and for its costs in taking action. 3 The Tribunal found that there was an enforceable lease. However, responding to a plea in the alternative, the Tribunal found that the appellant had waived rent for a two month period. It also found that the appellant had not pressed the claim for legal costs. Its order is for the amount equal to the rent due in the period of waiver. 4 The appellant, a practising solicitor, has listed eight points of appeal under the heading 'errors of law' in the notice of appeal, and there is an application for leave to be granted under s 113(2)(b) of the Administrative Decisions Tribunal Act 1997 (ADT Act) to extend to the merits, with six points in support. Background 5 The premises the subject of the lease is the ground and first floor of a terrace house at 178 Liverpool Street, Darlinghurst. At some stage in its history the ground floor was converted into shop-style premises. It has an old style shop front appearance. There are full length windows framed in timber angled to meet a central doorway entrance. The first floor has an enclosed balcony and a residential lay-out. Apart from the shop entrance, there is also a side entrance that accessed the shop and the upstairs area. 6 The appellant has owned the property as to a half share since 1985, and acquired full ownership around 2004. According to the appellant, the premises had been used in the recent past as a shop and natural therapies centre upstairs and downstairs, though the upstairs was residential in lay-out. He had used the shop for his legal practice, and when the residential part did not have a tenant he had also used it in that way. 7 The respondent company is a family company. Its sole director is Mr Pappadimitriou (Mr P). In June 2004 Mr P was looking for a property in the inner city where his daughter could carry on business as a beautician. The estate agent, Commercial City Property, Potts Point, had advertised the property. One of the respondent's claims is that the respondent was induced to enter into lease a false or misleading representation. The content of the representation was an issue. The Tribunal found that the property had been described as a 'commercial property' or a 'commercial terrace'. 8 The appellant agreed to lease the premises, and there is a memorandum containing the heads of agreement. It states: 'The lease is to commence on signing of the lease subject to council approval'. It also has a clause: 'Legal costs: Paid for by the lessee, capped at $750 plus stamp duty, registration fees & reasonable disbursements'. A deposit of one month's rent was given to the agent, and a bank guarantee was also given covering 3 months' rent, $7,075.58. (The respondent recovered the one month's rent from the agent after the lease broke down, but that occurred, the appellant says, without his authority.) 9 The appellant's evidence is that in the period July to September 2004 he raised with Mr P the importance of getting Council approval to the proposed use before entering into the lease. In a letter dated 14 September 2004 the respondent's solicitor asked for the lease to be made conditional upon Council's consent issuing within 6-8 weeks. There was no written reply from the appellant. At about the same time the respondent was in the process of finalising an application to the Council. Mr P's other daughter, an architect (Stacey P), prepared plans which showed the way the ground floor and the first storey of the building was to be used for the beauty salon and naturopathy business. The application sought a 'Change of use to new beauty salon/day spa. No external works. New internal plasterboard partitioning.' As to the existing use of the site it said: 'Ground floor retail, first floor residential'. 10 The application had yet to be submitted, when the parties proceeded on 8 October 2004 to execute a formal Lease for premises described as 'shop and unit 1' at 178 Liverpool Street. The permitted use under the Lease was 'beauty salon and/or naturopathy centre'. The term was five years with an option to renew for five years. The rent was fixed, initially, at $33,580, made up of equal monthly instalments of $1,408.33 for the first six months, followed by equal monthly instalments of $2,816.66 for the remaining six months. In line with the earlier agreement, the security deposit was fixed at the equivalent of three months' rent (cl 21.8). 11 As to planning consent, the Lease provided: 'Part 23 – Lease Conditional on Planning Consent 23.1 The parties agree that this lease is subject to and conditional upon the lessee obtaining planning approval in accordance with the Development Application lodged with the City of Sydney ('planning consent'). 23.2 Where planning consent is not granted, the lessee shall be at liberty to terminate the lease by giving the lessor one (1) months' [sic] notice in writing to this effect. 23.3 During the period from the commencement of this lease to the date of expiry of the lessee's notice in accordance with clause 23.2, the lessee shall be obliged to pay the agreed monthly rental.'