CITATION: Daverich Pty Limited v Oxford Square Investments Pty Limited [2005] NSWADT 54 DIVISION: Retail Leases Division APPLICANT PARTIES: Daverich Pty Limited RESPONDENT Oxford Square Investments Pty Limited FILE NUMBER: 045049 HEARING DATES: 16/11/2004 SUBMISSIONS CLOSED: 11/16/2004 DATE OF DECISION: 03/14/2005 BEFORE: Boyce P - Judicial Member APPLICATION: Claim for payment of money MATTER FOR DECISION: Principal matter LEGISLATION CITED : Retail Leases Act 1994 Aras -v- Victoria Avenue Nominees Limited [2003] NSW ADT 50 CASES CITED: Barsoum -v- Glebe Administration Board [2002] NSW ADT 19 Khao Thai Pty Limited -v- Coles Myer Properties Holdings Limited [2001] NSW ADT 83 APPLICANT REPRESENTATION: M Sahade, barrister RESPONDENT M Ashhurst, barrister ORDERS: 1. The Respondent pay to the Applicant the sum of $109,112.10 by way of compensation together with interest at the rate of 9% from 16 November 2004 until the date of payment. This amount to be paid within 21 days of these orders. ; 2. Each party has 28 days in which to file and serve an application for costs together with supporting submissions. Any submissions in response must be filed and served within a further 28 days. Unless an application is made for a hearing, the matter of costs will be decided on the papers. If no application is filed, there will be no order for costs. REASONS FOR DECISION BACKGROUND 1 Badiha Zeidan and Noel Zeidan are Directors of Daverich Pty Limited the Applicant in these proceedings. Daverich Pty Limited owns and operates a café called the "Galleon Café" from premises known as Shop 16, 17, 18, 19 and 20A Oxford Square Arcade at 55-73 Oxford Street, Darlinghurst. The business has been operated by Daverich since March 1987 from premises of which the current premises still form part. In the building above the Galleon Café, Ansett Australia Limited ("Ansett") occupied one floor and the Oxford Koala Hotel ("the Hotel") occupied 12 floors. 2 The whole of the building is owned by Oxford Square Investments Pty Limited ("OSI") the Respondent in these proceedings. 3 Ansett had administrators appointed in about September 2001. Ansett vacated their premises in about November 2001 and the floor of the building that had previously been occupied by Ansett became vacant. 4 The Hotel ceased trading and occupying its twelve floors of the building in around September 2002 and those floors vacant and were not re-let by OSI. 5 The floors of the building previously occupied by Oxford Koala Hotel are being redeveloped by OSI in an agreement with Multiplex for the redevelopment of the Hotel for residential use as strata apartments. It is expected that the redevelopment of the Hotel as residential apartments will be completed in early 2005. 6 When the Oxford Koala Hotel ceased operating and its twelve floors were not re-leased and redevelopment commenced hording were erected around Oxford Square Arcade and demolition and construction work commenced on the floors of the former Hotel which Daverich say had an adverse impact on the conduct of their business. 7 On 22 September 2002 OSI leased Shop 6 in the Oxford Square Arcade to Sweet Sherry Pty Limited as a gourmet delicatessen. Daverich claims that the lease of those premises by OSI is in breach of Clause 3(7) and 3(8) of its lease with OSI and claims damages. 8 Daverich says that in Clause 3(7) of its lease with OSI that OSI covenants with it that no other Lessee of premises in the Oxford Square Arcade will be permitted to conduct a restaurant or take-away food outlet. Daverich also says that in Clause 3(8) that the OSI covenants with Daverich that no other tenant in the Oxford Square Arcade shall be permitted to conduct businesses in competition with Daverich's permitted use. 9 Daverich abandoned any claim for damages exceeding $300,000.00. ISSUES 10 Daverich claims that OSI has breached the implied provisions of its lease with OSI pursuant to Section 34 of the Retail Leases Act 1994 because it has vacant floors and is redeveloping the floors of its building. This has disrupted the flow of customers to its business and its quiet enjoyment of premises has been disturbed by demolition and reconstruction. 11 Additionally, Daverich claims that OSI is in breach of its lease with Daverich because it permitted premises to be let in the retail arcade of Oxford Square Arcade contrary to Clause 3(8) of its lease with OSI. DISTURBANCE 12 The relevant parts of Section 34 of the Retail Leases Act 1994 provide that a:- "(i) A retail shop lease is taken to provide that if the Lessor: (a) inhibits access of the Lessee to the shop in any substantial matter or (b) takes any action that would inhibit or alter, to a substantially extent, the flow of customers to the shop, or (c) unreasonably takes any action that causes significant disruption of, or has a significant adverse affect on, the trading of the Lessee in the shop, or (d) fails to take all reasonable steps to prevent or put a stop to anything that causes significant disruption of, or which has a significant adverse effect on, trading as a lessee in the shop and that is attributed to causes within the Lessor's control, or....... and the Lessor does not rectify the matter as soon as reasonably practicable after being requested in writing by the Lessee to do so, the Lessor is liable to pay the Lessee reasonable compensation for any loss or damage (other than nominal damage) suffered by the Lessee as a consequence....." 13 Daverich claims that the majority of its customers consisted of Ansett staff and Hotel employees and patrons. Daverich's evidence is that there were approximately 360 staff employed by Ansett many of whom attended Daverich's business for breakfast, lunch, their evening meal as well as snacks and coffee. Daverich also says that there was a steady flow of customers from the Hotel patrons and staff especially during mealtime of breakfast, lunch and dinner. 14 Philip Birnbaum, a director of OSI's evidence is that he contacted Ansett's former operation director who advised him the staff occupying Ansett's floor consisted of 250 staff per week day time shift, 30 staff per week day night shift, 70 staff per weekend day time shift and 30 staff per weekend night shift. I accept this evidence in preference to the Applicant's estimate of Ansett staff members. 15 When Ansett ceased to trade and vacated the premises in about November 2001 and the Hotel ceased to trade in about September 2002 the trading conditions of the business changed to that which existed before the closure of the Ansett and Hotel business. 16 Mr Birnbaum gave evidence that from April 2002 until about July 2002 OSI took steps to locate another tenant for the floor of the building previously occupied by Ansett. 17 In about September 2002 until June 2004 the floor previously occupied by Ansett was leased to Multiplex Constructions (NSW) Pty Limited ("Multiplex") so that Multiplex could use the floor as its site offices in connection with its redevelopment of levels 3 to 14 of the building under the joint venture agreement it has with OSI for development of those levels of the building for residential use for strata apartments. 18 After Multiplex vacated the floor, previously occupied by Ansett, in June 2004 a program of refurbishment of that level was undertaken by OSI and OSI is currently actively seeking a new tenant for that floor. OSI's evidence is that occupation will be available to a new tenant from February 2005. 19 Until 31 August 2002 levels 3 to 14 of the building had been operating as the Hotel. In April 2000 OSI terminated the lease for the Hotel because the tenant was in breach of that lease. Immediately upon termination of the lease of the Hotel a wholly owned subsidiary of OSI commenced to operate the Hotel. 20 While operating the Hotel business, OSI attempted to renegotiate a lease of the Hotel with a new tenant. In doing so it engaged specialist hotel consultants who recommended the creation of sample rooms to demonstrate to a potential tenant the standard to which the Hotel could be refurbished for the new tenant. OSI carried out this work. In March 2001 OSI entered into a lease for the Hotel floors with a tenant for a term of 24 years and 10 months. As a result of breaches by the new tenant OSI terminated the lease in April 2001. 21 Consultants engaged by OSI recommended that OSI redevelop the floors previously occupied by the Hotel for residential use as strata apartments. In about August 2002 the Hotel ceased to trade because of the redevelopment. 22 OSI's evidence is that Hotel occupancy rate ranged between approximately 40% and 50% with the maximum number of guests staying in the Hotel on any night being approximately 200. OSI's further evidence is that the Hotel operated as a bed and breakfast hotel, with breakfast being provided by the Hotel. 23 Mr Birnbaum gave further evidence that since April 2003 there had been a significant number of builders and tradesman and other people working at the property in connection with the redevelopment of the Hotel by Multiplex. From his observations he says that the number of people working on the site range between 50 and 300. 24 OSI says that the redevelopment of the Hotel for residential use as strata apartments did not commence in substance until about 1 June 2003. On 11 March 2003 OSI notified Daverich that works were about to commence in respect of the redevelopment proposals. That letter refers to previous advice being given to the Daverich on 30 April 2002, 3 June 2002 to 13 September 2002 and 4 December 2002. The letter specifies that the following works to the whole of the building including Oxford Square Centre will be carried out as follows:- "A. Repairs, alterations, refurbishment, demolition, extension, renovations and upgrades to parts of the building; B. Change to layout of any premises, elevators and lift wells or pathways in our around the building; C. Construction of new car parking areas; D. Varying size of Common Areas including vehicular driveways and ramps; E. Temporary closure of all or part of the car parking areas in the building; F. Temporary limitations of access to Common Areas for workman and machinery to erect or de-construct hoardings and scaffolding; G. The carry out of specific work to lot 3 in the building (the previous Oxford Koala Motor Inn)." 25 Mrs Zeidan's evidence in her Affidavit of 2 July 2004 (Exhibit A1) of hoardings being in place around the outside of Oxford Square arcade in May and June 2004. Photographs taken by Mr Zeidan show that as well as the hoardings there is scaffolding and barriers controlling pedestrian traffic around the entrances to the arcade. At paragraph 30 of her Affidavit Mrs Zeidan gave evidence that the noise associated with construction including use of jack hammering was at times unbearable. Mrs Zeidan says that during the course of construction this has had an adverse impact on the flow of customers to the business. Clause 11(1) of Daverich's lease reserve to OSI the right to extend or add to the building provided that if OSI does then it is to cause as little inconvenience and interruption to the Lessee as it reasonably can consistent with the effective and economical carry out of the extension or additions. The Clause also permits OSI to erect hoardings and scaffoldings to carry out its work. 26 Mr. Ashhurst submitted that the Daverich's case is a failure by OSI to lease its own building. 27 In order to obtain the benefit of Section 34(1) the Lessee must:- 1. First give notice to the Lessor requiring the Lessor to rectify the problem complained of; and 2. The Lessor must fail to comply with the notice within a reasonable time. 28 The failure of the Lessee to have served such a notice, or a legally affective notice, is a total bar to the award of compensation to the Lessee: (Barsoum -v- Glebe Administration Board [2002] NSW ADT 19). 29 Mr. Ashhurst contends that Daverich's Solicitor's letter of 19 June 2002 was not a notice under Section 31(1) as there was no request for rectification. Mr Sahade urged the Tribunal to accept the reference in that letter to a difficult retail environment as a sufficient reference to being a request to rectify the problem created by the vacancy of the floors in the building. I find that this letter is not a notice for the purpose of Section 34(1). 30 Mr Ashhurst referred to Daverich's letter of 7 February 2003 as not a notice. It contained a request that no construction work be carried out during operating hours of the tenant's business. Mr. Ashhurst contended that as the Lessee had not pleaded the effect of construction work on the business then the Applicant could not rely on this letter as a Notice under the Section. 31 The Applicant pleaded in its particulars to the claim for damages for breach of the implied terms of Section 34(1):- "(b) failure to lease the premises formerly occupied by the Oxford Koala Hotel and carry out demolition and construction works, about January 2003." 32 Mr. Sahade argued that the letter of 7 February 2003 was in the form of a notice. He referred the Tribunal to the second last sentence of the first paragraph in which he stated, "the work is also affecting our client's trading" he also refers to the last sentence of the letter where the Applicant sought an undertaking where no construction work would be carried out during opening hours of Daverich's business. 33 OSI's response to the letter of 7 February 2003 by its letter dated 28 February 2003 denied any jack hammering taking place and that only some hand held mallet hammering was carried out on the car park level below the Applicant's premises and that the work had been completed. 34 I find that the Applicant's letter of 7 March 2003 was a notice for the purpose of Section 34(1) and that the Respondent's letter of 28 February 2003 shows that the Respondent complied with the Notice within a reasonable time. 35 Mr Ashhurst next refers to Daverich's Solicitor's letter of 29 June 2003 as containing no request for the Lessor to rectify any problem with the Applicant's tenancy nor is it request to desist from an activity. 36 Mr Sahade submits that the reference in the letter to Clause 11(1) of the Lease imposing an obligation on OSI to cause as little inconvenience and interruption to the Lessee as it reasonably can consistent with the effective and economical carrying out of the extension or additions to the building if it undertakes alterations, extensions or additions to the building it may erect hoarding scaffolding and use equipment and plant for such purposes provided that the Lessor. In paragraph 4 of the letter of 29 June 2003 states that compensation will be payable by the Lessor under the Retail Leases Act 1994 in relation to the building works being carried out which is causing a significant adverse impact on the Tenant's business. 37 I find that the letter of 29 June 2003 is not a notice for the purposes of Section 34(1) as it does not identify a specific problem that requires rectification. 38 Mr Ashhurst submitted that the letter from Daverich's Solicitor dated 17 November 2003 in the statement that the Landlord was in breach of the Retail Leases Act 1994 and that the Landlord is liable to compensation under Section 34 of the Act is not a request as required under the notice provisions of the Section. 39 Mr. Ashhurst refers the Tribunal to paragraph 3 of the second page of that letter which states:- "since the date of our last letter to you, we have been instructed that there has been constant jack hammering on Saturdays between the hours of 9:00 a.m. to 2:00 p.m. opposite the kitchen of our client's premises which has disturbed our client's customers, employees and their quite enjoyment of the premises generally". 40 Mr. Sahade submits that this is a request by OSI to rectify the problem. 41 I find that Daverich's Solicitors request in the letter of 17 November 2003 is a Notice as required by Section 34(1). 42 In OSI's Solicitor's letter of 10 December 2003 OSI denied any breach of the lease or any obligation by OSI. This letter states: "(i) the demolition works for the building (but not the centre) commenced in substance on 1 June 2003 these demolition works are near completion. (ii) The building works to the building (but not the centre) will commence in January 2004. (iii) Our client is doing works in the arcades an on shopfronts. These works will be completed by 31 March 2004. (iv) Our client reiterates the comment in our 24 September 2003 letter that as the building works to the building (but not the centre) proceed, the builder estimates that the number of people on site will exceed 300 many of whom will possibly be customers of your client company." 43 The letter of 10 December 2003 does not indicate that OSI is prepared to comply with the Notice give by Daverich in its letter of 17 November 2003 and presents Daverich with a statement of OSI's position without any acknowledgment of the Daverich's position. 44 The final letter that Mr Ashhurst takes the Tribunal to is the letter of 16 April 2004 from Daverich's Solicitor to OSI's Solicitors. Mr Ashhurst concedes that if any letters were to be notices pursuant to Section 34(1) it would be this letter. This letter was sent after these proceedings had commenced but before the unsuccessful mediation which took place on 23 April 2004. This letter states:- "Our client complained in writing to your client as early as February 2003 and requested that your client cease its destructive action immediately. Since that time, no satisfactory response has been received and the situation has worsened"; and "Our client once again complains and requests that the Lessor rectify these matters forthwith". 45 This notice is in relation to the closure of the Ansett floor and the failure by the Lessor to relet the premises. The effect on Daverich's business is that they claim that this has significantly inhibited the flow of customers to our client's café business. 46 Mr Ashhurst submitted that if sub-paragraph (d) were to capture the failure of OSI to lease the floors then there was no obligation on OSI to act positively to let the floors and the Lessor could not be penalised for seeking to change the use of the Hotel floors for the best possible usage. The evidence shows that the Ansett floor was being refurbished for re-letting. 47 The decision to re-let premises to a new tenant is a commercial decision and not a matter of legal obligation. 48 Mr. Sahade contended that the letter of 16 April 2004 was a valid Notice under Section 34(1) even though the problem complained of in paragraph 3 refers to the closure of the floors as inhibiting the flow of customers to Daverich's business. Paragraph 2 refers to disruptive actions but does not specify what those disruptive actions are. The letter refers to a letter of early February 2003 (which is presumably the letter of 7 February 2003 sent in relation to the jack hammering directly above the café which I have already found was remedied). 49 In a letter from Daverich's Solicitors to OSI's Solicitors dated 4 March 2004 the problem of the noise of jack hammering was identified and a request was made that the "every form of construction that creates noise which penetrates our client's place of business during business hours" cease. In a response to that letter from the Project Manager, Tuscan Corporation, there is denial that the Applicant had written and requested works be carried out of hours. Tuscan Corporation denied that it or the contractor, Multiplex, had any such request. 50 I am satisfied that the continued vacancy of the Ansett floor and the Hotel during the process of redevelopment are not matters that to which Section 34(1)(d) should apply. 51 I find that the affect of the noise and vibration created by the demolition and construction works carried out by OSI did significantly disrupt and had a significant adverse affect of the trading of the Lessee and were attributable to causes within the Lessor's control. 52 I am satisfied that OSI had actual notice of the disruption to Daverich's business from the date of 17 November 2003 and OSI failed to rectify the problem complained of within a reasonable time. It was unable to rectify the problem because of the progress of the demolition works being carried out and the construction work around Daverich's premises. 53 Pursuant to an order of Judicial Member Fox on 27 May 2004 in these proceedings the Applicant was requested to file and serve full particulars of claim. The Applicant particularised each claim by letter from the Applicant's Solicitor to the Respondent's Solicitor of 15 June 2004 as follows:- "The claimant claims: (i) Damages for breach of the terms implied into the lease by Section 34(1)of the Retail Leases Act (NSW) particulars: a. failure to lease the floor premises formerly occupied by Ansett upon that tenant vacating the premises in or around September 2001; b. failure to lease the premises formerly occupied by Oxford Koala and carry out demolition construction works from about January 2003; c. the matters referred to above substantially inhibited or alter the customer flow to the business and had a significant adverse effect on the trading of the Lessee. (ii) Damages for breach of Clause 3(7) of the Lease. Particulars:- "In breach of Clause 3(7) of the lease, the Lessor permitted a competitive take-away food business which had a significant adverse effect on the trading of the Lessee" 54 In order to make a claim under Section 34(1) of the Retail Leases Act 1994 the Lessee must, firstly, give notice to the Lessor requiring the Lessor to rectify the problem complained of and, secondly the Lessor fails to comply with the notice within a reasonable time. 55 Mr Sahade referred the Tribunal to Aras -v- Victoria Avenue Nominees Limited [2003] NSW ADT 50 (12 March 2003) at paragraphs 41 and 44. In that matter a letter from the Lessee's Solicitor to a representative of the Lessor sought suggestions from the Lessor as to any assistance which will assist the Applicant in the remaining 15 months of the lease. The Tribunal found that the letter did not specifically address the "action" perceived by Section 34(1)(d), it did however appear to recognise the Lessee's lease. The Tribunal found that the letter satisfied the requirement that the Lessee request in writing that the Lessor rectify the matter. 56 Mr Sahade also referred the Tribunal to Barsoum -v- Glebe Administration Board [2002] NSW ADT AP28 (21 August 2002) at paragraph 33 where the Appeal Panel supported the Tribunal's finding that a brief document which had a short hand written note on it "noise and construction dust affecting sales!" did not amount to a notice for the purpose of Section 34. Mr Sahade further urged that these decisions supported his argument that with the correspondence flowing between Daverich and OSI, OSI could not deny that it had notice of the objections that the Lessee had raised. In any case, it could not change its position as it had already contracted with Multiplex to change the use of the building from a hotel to residential strata units. 57 Mr Sahade submitted that OSI was stopped from denying the validity of the notice given by the correspondence because it had already undertaken major refurbishment and was contractually obliged with Multiplex for the redevelopment of the site. In support of his argument Mr Sahade relied on the decision Foran -v- White. 58 Mr Ashhurst submitted that in the event of the Tribunal finding that the requirement for Notice has been complied with by Daverich under Section 34 then in any case the provision of Section 34(1) a., b. & c. do not apply, that d. might possibly encompass the Lessor's failure to release the floors, but it does not impose a positive act on the Lessor to do so and that e. & f. are not pleaded. 59 Mr Ashhurst submitted that the raising of Foran -v- White is not a matter that should be taken into account as the matter had nothing to do with the repudiation, anticipated breach or estoppel. There had been no allegations that the lease contract was at an end. I agree with Mr Ashhurst's submission. 60 In order for Daverich to be successful in its claim under Section 34 if OSI does not rectify the matter as reasonably practicable after being requested in writing by Daverich to do so then Daverich is entitled to be compensated. PERMITTING COMPETING USE 61 Clause 3(7) of the lease is a covenant that no other lessee in the Oxford Square Arcade shall be permitted by the lessor to conduct, amongst other things, a restaurant or takeaway food outlet. This covenant is qualified by sub-paragraph (a) which preserves the permitted use for some businesses as at 1 September 1994; and, at sub-paragraph(b) "restaurants and takeaway food outlet retailing vegetarian, Asian, Indian, pizza (and in the case of a pizza food outlet other ancillary items to such products and Italian-style food products), Mexican or Lebanese foods (or a combination of any such foods)". 62 In paragraph 3(8) of the lease OSI further covenants with Daverich that no other lessee shall be permitted to conduct businesses including any one or more of the following uses:- "a. sandwich bar; b. milk bar; c. coffee lounge providing tables and seating for customers; d. restaurants with licence to sell liquor, wine or beer; or e. restaurant or takeaway food outlets (accept those particulars whereof appear in sub-clauses 3(7) (a) and (b))." 63 Until September 2002 a beautician occupied premises in the arcade. The beautician closed. 64 Prior to September 2002 Mrs Zeidan was approached by Mr Leon Fink, a Director of OSI. Mr Fink discussed with Mrs Zeidan OSI's intention to lease the vacant shop in the arcade to a delicatessen. The delicatessen proposed to sell pasta sauces, homemade pasta, yogurts, soups and salads. Mrs Zeidan objected to the proposal on the basis that it would breach the covenant in Daverich's lease and that trading conditions were difficult enough at that time. 65 A few days after the initial meeting between Mrs Zeidan and Mr Fink there was a further meeting between Mr Fink, Mrs Zeidan and Ms Sheree Swanson (who was the principal of the company proposing to lease the premises from OSI to conduct a delicatessen). At that meeting the items proposed to be sold by the delicatessen including homemade pasta sauces and pastas from Pasterbility and some homemade soups, fruit salads and salads, curries, casseroles and some goat pies and tarts were discussed. Mrs Zeidan was asked by Mr Fink to sign an acknowledgment that Ms Swanson would be permitted to sell the products through the proposed delicatessen. Mrs Zeidan did not sign the consent. 66 About a week later a further meeting was held with Mr Fink, Mrs Zeidan, Miss Swanson and Mrs Zeidan's Solicitor. The meeting did not result in Mrs Zeidan giving consent to the proposed delicatessen. 67 The lease entered into between OSI and Sweet Sherry Pty Limited dated 18 September 2002 and commencing on 22 September 2002 for a term of 3 years omits the use of the premises of Shop 6 Oxford Square as a gourmet delicatessen. In addition it limits as follows:- "A. Sell or permit to be sold the following items as part of a business carried on by it on the premises; - any beverages other than imported bottled mineral water - sliced bread, rolls, croissants; - sandwiches ie. bread with fillings; - focchachias with fillings; - turkish bread with fillings; - soup; - bakery items: muffins, cakes, slices, cup cakes, danish; - waffles; - pies; -quiches; - yogurts served with fruit salad or breakfast dishes. B. Permit the consumption of any food or beverages on the premises; C. Sell heated food or beverages from the premises or provide the customers a facility to heat food or beverages in the premises." 68 In Mrs Zeidan's Affidavit of 2 July 2004 two photographs are exhibited listing the products sold by the business conducted from the delicatessen displayed on an "A" framed advertising board outside the delicatessen as follows: "Darlinghurst Deli and Fresh Foods Your local food provedore Open to 8pm Soup is back Homemade delicious all $6.00 Pasta gluten wheat free Sauces homemade Ready to heat and serve!!! Pastries, curries Casseroles and more All made by the deli" 69 On 4 June 2002 Daverich's Solicitor wrote to OSI advising OSI that the proposed Darlinghurst Gourmet Deli and Fine Foods would breach the covenants in Daverich's lease. 70 In Mr Birnbaum's Affidavit of 28 August 2004 (Exhibit R6) at paragraph 39 he gave evidence that OSI had recently become aware that the items sold by Sweet Sherry included soup and that OSI notified Sweet Sherry constituted a breach by Sweet Sherry of its lease and to cease selling soup immediately. 71 The photographic evidence indicates that at the time Mrs Zeidan's Affidavit of 2 July 2004 Sweet Sherry was selling soup. Mr Sahade urged the Tribunal to find that the landlord permitted the delicatessen to continue to trade and that in addition to the soup that was being sold in breach of its lease it also sold takeaway. Mr Sahade said that takeaway should be defined in its ordinary sense in that food was taken away from the premises to be consumed at a later date. 72 The provision in the delicatessen's lease prohibited the sale of heated foods or beverages or to provide a facility for customers to heat food or beverages. 73 Mr Ashhurst directed the Tribunal to the statement by Mr Birnbaum in his evidence that following OSI's contact with Sweet Sherry about the sale of soup it was his understanding that the sale of soup had been discontinued. Mr Ashhurst referred the Tribunal to Khao Thai Pty Limited -v- Coles Myer Properties Holdings Limited [2001] NSW ADT 83(21 May 2001). Mr Ashhurst distinguished this case from the present. Coles Myer were found to have agreed to not authorise or permit another food court business style as a Thai/Malaysian food operator to operate from the food court. The Tribunal illustrated where the point is that a number of Thai or Malaysian items means a business becomes a food "operator". It used an example of the sale by a pie shop of a "Thai Pie" as a single item would not constitute that person being Thai/Malaysian food operator. 74 I am asked to make a finding on whether another business selling soup and the ingredients of food that could be combined and heated off site constitutes a takeaway food outlet. 75 I find that the delicatessen is not a takeaway food shop and that on becoming aware that the delicatessen sold a takeaway food item OSI acted to stop any contravention of its covenant with Daverich. 76 For these reasons Daverich's claim that OSI permitted a breach of its covenant with Daverich permitting a competitive business in contravention of Clauses 3(7) and (8) must fail. DAMAGES 77 Daverich is entitled to compensation for disturbance pursuant to Section 34(1). 78 I have found in the examination of the letters from Daverich's Solicitors to OSI that the letter of 17 November 2003 is a notice pursuant to Section 34(1). OSI took no action to rectify the matters complained of and the demolition and construction works continued up until at least the date of hearing. 79 In his Affidavit of 22 July 2004 James Smiles, Chartered Accountant, provided evidence that the loss incurred by Daverich for the period 1 July 2003 to 30 June 2004 was $58,979.10. In addition Mr Smiles provided evidence that the taxable profit for the business for the year ended 30 June 2001 was $50,133.00. Mr Smiles indicates that if this profit is added to the loss then in his opinion that is the amount of the loss that could be attributed to the year 1 July 2003 to 30 June 2004. This total of $109,112.10 represents a daily loss of $298.94. 80 By coincidence it was exactly a year from the date of the notice of 17 November 2003 until the date of hearing of 16 November 2004. Mr Smiles was not cross-examined in relation to the figures and I accept them as representing a formula for calculating the damages suffered by Daverich. 81 Accordingly, I find that OSI is liable to pay Daverich reasonable compensation of $298.94 per day for 365 days totalling $109,112.10. 82 I order that interest be paid pursuant to Section 72A of the Retail Leases Act 1994 on the amount of damages at the relevant statutory rate which I note is 9% from 16 November 2004 until the date of payment of compensation pursuant to these orders. 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.