CITATION: Amri Australia Pty Ltd v Siderides and anor [2006] NSWADT 226 DIVISION: Retail Leases Division APPLICANT PARTIES: Amri Australia Pty Ltd RESPONDENT Achilles Siderides and Vicky Siderides FILE NUMBER: 055171 HEARING DATES: On the papers SUBMISSIONS CLOSED: 04/20/2006 DATE OF DECISION: 08/01/2006 BEFORE: Higgins S - Judicial Member CATCHWORDS: Claim for payment of money MATTER FOR DECISION: Principal matter LEGISLATION CITED : Retail Leases Act 1994 Retail Leases Amendment Act 2005 APPLICANT R Gouder, solicitor REPRESENTATION: RESPONDENT No appearance ORDERS: The applicant's application is dismissed REASONS FOR DECISION Background 1 This is an application by Amri Australia Pty Ltd ("the applicant") seeking an order from the Tribunal for the repayment of bond money that it paid to Achilles Siderides and Vicky Siderides pursuant to a Lease of premises known as Shop 25, 157 Airds Road, Leumeah. 2 The applicant, who has at all times been represented by the firm of solicitors, Messrs L.W. Williams & Associates, filed its claim on 20 December 2005 and the matter has been before the Tribunal at directions hearings on four occasions between 2 February and 20 April 2006. There has been no appearance on behalf of the respondents. The applicant has requested that the Tribunal deal with its application on the papers. 3 I am satisfied that the respondents have been served with the applicant's application and the evidence on which the applicant relies: see letter from J. Kekatos Lawyers (the solicitor for the respondents) to Messrs L.W. Williams & Associates dated 2 February 2006 and the letter from Messrs L.W. Williams & Associates to J Kekatos Lawyers dated 20 April 2006. Notwithstanding this, since 20 April 2006 the respondents have not entered an appearance or sought to participate in the determination of this application. 4 Accordingly, the Tribunal has determined this matter on the material that has been filed by the applicant, on whom the onus rests to establish its claim. 5 The material filed includes a certificate, dated 23 August 2005, from the Registrar of the Retail Tenancy Disputes, which states that mediation had failed between the parties. The evidence 6 The factual background to this application is set out in a Statutory Declaration of Roseland Ho declared on 9 March 2006. Roseland Ho states that she is the sole director of the applicant. This is supported by an extract of the records of the applicant from the Australian Securities and Investments Commission. Roseland Ho goes on to state that by a Memorandum of Lease the respondents leased to the applicant premises, owned by the respondents and known as Shop 25, 15 Airds Road, Leumeah ("the premises"). A copy of that Memorandum of Lease was not filed. However, an executed Deed of Assignment of Lease, dated 13 October 2003, was filed ("2003 Deed of Assignment"). That Deed was between the respondents as lessor of the premises, the then lessee of the premises, the applicant as transferee of the lease and Roseland Ho and another person as guarantor. Accordingly, it would appear that the applicant became the lessee of the premises in October 2003, pursuant to the 2003 Deed of Assignment. 7 Clause 8 of that 2003 Deed of Assignment provided the following: 8. The Transferee shall pay to the Lessor(s) the sum equivalent to three (3) months rental from the date of commencement of the Deed and which said sum shall be held by the Lessor(s) as a Bond and which shall be refunded to the Transferee at the expiration of the term of the Lease and on vacation of the Premises herby demised to the Transferee PROVIDED THAT the Lessor shall be entitled to deduct from the said sum or apply the same towards the satisfaction of any amount that may be payable to the Lessor provided that if such amount is payable as a result of a breach of any terms conditions or covenants of the Lease then such deduction shall not be deemed to waive the breach. 8 In her Statutory Declaration Roseland Ho stated that the applicant used the premises to conduct its business known as "Al's Gourmet Café". She then went on to state that on signing the Memorandum of Lease the applicant paid to the respondents a security bond for the sum of $10,010.00. I have assumed this payment was made pursuant to clause 8 of the abovementioned 2003 Deed of Assignment. 9 Roseland Ho then states that on 16 April 2004 the applicant contracted to sell its business to another party ("the purchasers of the business"). That contract was completed on 21 May 2004 when the respondents agreed to the assignment of the Lease to the purchasers of the business. Attached to the Statutory Declaration was a copy of an executed Agreement, dated 21 May 2004, between the respondent, the applicant as lessee and the purchasers of the business as transferees ("2004 Agreement"). Clause 8 of that 2004 Agreement was in similar terms to clause 8 of the abovementioned 2003 Deed of Assignment, however, it expressly included an amount of $10,010.00 as being the equivalent of three (3) months rent. 10 Also attached to the Statutory Declaration of Roseland Ho was a letter, dated 10 May 2005, from J. Kekatos Lawyers to Messrs L.W. Williams & Associates concerning the leased premises in which it the following was stated: "… we are instructed that our client shall return the bonded moneys to your client within fourteen (14) days from today's date." 11 In addition to the Statutory Declaration the applicant tendered into evidence the following documents: (a) A letter, dated 11 May 2004, from J. Kekatos Lawyers to Williams & Assoc. concerning the premises – that letter contained the following statement: "We note that our client currently holds a three (3) months rental cash bond i.e. $10,010.00 and is seeking that the bond moneys be adjusted between incoming and outgoing parties at settlement." The letter, however, also makes reference to outstanding rental payments by the applicant. (b) A letter, dated 21 May 2004, from J. Kekatos Lawyers to Messrs D.T. Dao & Co, solicitors, concerning the leased premises – from the contents of the letter it would appear that Messrs D.T. Dao & Co, solicitors, were acting on behalf of the purchasers of the business. In that letter J. Kekatos Lawyers state the following: "We confirm that we have appointed your office as our unpaid agent and that you undertake on our behalf to collect and forward to our office by way of post of Document Exchange the following documents and bank cheque: 1. … 2. 'A and V Siderides' Bank cheque in the amount of $10,009.98 (being bond moneys payable). 3. …" (c) A letter, dated 18 May 2005, from J. Kekatos Lawyers to Williams & Associates concerning the leased premises – in this letter J. Kekatos Lawyers state: "… we advise that our client is awaiting settlement of a property on 9 June 2005 in which he shall be receiving moneys. We are instructed that he shall forward a cheque from those proceeds in your client's favour. …" 12 The applicant also filed a chronology, which stated that the Lease of the premises was entered into in 2001 and that the term of the Lease was from 29 September 2001 to 28 September 2006. The chronology also stated that on 4 March 2005, almost 10 months after the 2004 Agreement, the applicant's solicitor wrote to the respondents' solicitor demanding the return of its security deposit within 14 days. Relevant legislation 13 In 2005, a comprehensive scheme in respect to security bonds was inserted into the Retail Leases Act 1994: see Retail Leases Amendment Act 2005 – schedule 1 of which inserted a new Part 2A into the Act – that Part commencing 1 January 2006). It is the applicant's contention that its claim comes within s.16E(3) of the newly inserted Part 2A of the Retail Leases Act 1994. That sub-section provides as follows: 16E Provisions in leases relating to security bonds (1) ... (2) ... (3) If, but for this Part, a lessor or lessee would have a claim against a security bond under the terms and conditions of a lease for an amount that can not be recovered under any other provision of those terms and conditions: (a) the lessor may recover from the lessee as a debt an amount equivalent to the amount of the claim that the lessor would have had against that security bond, and (b) the lessee may recover from the lessor as a debt an amount equivalent to the amount of the claim that the lessee would have had against that security bond. 14 It is necessary to provide some explanation of the newly inserted scheme in order to understand the effect of s.16E(3). 15 The term "security bond" is defined in s.16A of Division 1 of Part 2A. It is broadly defined and includes any security bond paid before or after the commencement of Part 2A. 16 Division 2 of Part 2A makes provision for security bonds to be paid to the "Director-General", which is defined in s.3 of the Retail Leases Act 1994 to mean the Director-General of the Department of State and Regional Development. S.16C relates to security bonds that a lessor receives after the commencement of Part 2A and s.16D relates to security bonds that a lessor is holding at the time of the commencement of Part 2A. In both cases the lessor is required to deposit the security deposit received or held to the Director-General within a specified period of time: see ss.16C(2) and 16D(2). In the case of a security bond that is held by a lessor at the commencement of Part 2A, s.16D(7) provides that the lessor is required to deposit the security bond with the Director-General "despite the terms of a lease, any rule of law or the provisions of any other Act". 17 Division 3 of Part 2A makes provision for the payment out of security bonds that are deposited with the Director-General. S.16G provides that applications for payment are to be made to the Director-General and that they can be made jointly by the lessor and lessee or by the lessee or lessor alone. Where an application is made by the lessor or lessee alone, the Director-General is required to notify the other party and that party is given 14 days within to notify the Director-General that he/she has commenced proceedings in respect to the bond money. If no notification is given then the Director-General is required to pay the amount claimed: see s.16H. Even if notification is given, where proceedings are subsequently discontinued the Director-General is required to pay the amount claimed. Consideration 18 On the basis of the material before the Tribunal, I am satisfied that the $10,010.00 paid by the applicant in October 2003 pursuant to clause 8 of the Deed of Assignment of Lease is a "security bond" coming within the terms of the definition of that term in s.16A of the Retail Leases Act 1994. I am also satisfied that the applicant has not been repaid this amount and the inference to be drawn from the material is that the respondent has at no time deposited this amount with the Director-General, which arguably they should have done after 1 January 2006. If that is correct then the applicant is unable to make a claim for payment of that security bond under s.16H. 19 However, I agree with the applicant that its claim remains a claim under s.16E(b) of Part 2A of the Retail Leases Act 1994. That is, it is to be regarded as a claim under clause 8 of the 2003 Deed of Assignment or pursuant to a subsequent agreement between the parties. 20 Under that clause 8 of the 2003 Deed of Assignment there are three preconditions to the applicant being entitled to a refund of the security bond. These are: (a) the term of the Lease had expired; (b) the applicant has vacated the premises; and (c) the respondents have not sought any entitlement to deduct an amount that is payable to the lessor as a result of a breach of the lease. 21 On the material before the Tribunal I am satisfied that the applicant vacated the premises in or about May 2004 and that the respondents have not sought any entitlement to deduct an amount from the bond. However, on the material before the Tribunal the Lease does not end until 28 September 2006. Accordingly, the applicant cannot, at this time, succeed on the basis of cl.8 of the 2003 Deed of Assignment. 22 The subsequent 2004 Agreement is of no assistance to the applicant. While clause 8 of that Agreement provided that the purchasers of the business were to pay a security bond to the respondents, there was no provision in that Agreement that upon the payment of that sum the applicant would be refunded the security bond it had paid. 23 The applicant also relies on the correspondence between its solicitors and those of the respondents as evidencing a subsequent agreement by the respondents to refund the applicant the security bond that it had paid once it had received the payment of the security bond from the purchasers of the business pursuant to the 2004 Agreement. In this regard, the letter of 10 May 2005 from the respondents' solicitor J Kekatos, which stated that the respondent would return the applicant's bond money within 14 days of that letter, could evidence such an agreement. However, the Tribunal notes that it was a letter that was expressly written "without prejudice". That is, it was written in the context of settling the dispute between the parties and without any admission as to the respondents' being liable to return the security bond paid by the applicant. 24 Eight days later, the respondents' solicitor again wrote to the applicant's solicitor. This letter referred to the 10 May 2005 letter and was not expressed as having been written "without prejudice". In my opinion, this does not alter the context in which the letter of 10 May 2005 was written. Accordingly, the applicant has failed to satisfy the Tribunal that subsequent to the 2003 Deed of Assignment there was an agreement between the applicant and the respondent in regard to the refund of the applicant's security bond. 25 For the reasons set out above the applicant's application is dismissed. 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.