Sydney Supermarkets Pty Limited v Xu and anor [2008] NSWADT 131

CITATION: Sydney Supermarkets Pty Limited v Xu and anor [2008] NSWADT 131

DIVISION: Retail Leases Division

APPLICANT Sydney Supermarkets Pty Limited PARTIES: RESPONDENT Chuan Min Xu

FILE NUMBER: 075058

HEARING DATES: 20 November 2007, 28 November 2007

SUBMISSIONS CLOSED: 28 November 2007

DATE OF DECISION: 5 May 2008

BEFORE: Chesterman M - ADCJ (Deputy President); Harrison B - (Advisory) Non Judicial Member

CATCHWORDS: Claim for payment of money - damages - unconscionability

MATTER FOR DECISION: Principal matter

Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Retail Leases Act 1994 Retail Leases Amendment Act 2004 Retail Leases Amendment Act 2005

CASES CITED: Wanice Pty Ltd v Bocove Pty Ltd [2003] NSWADTAP 24

APPLICANT A Gruzman, barrister REPRESENTATION: RESPONDENT J Hassett, solicitor

ORDERS: 1. The Tribunal determines that the Applicant was legally obliged under the Lease between the parties in these proceedings to pay to the Respondents the outgoings identified in Item 14 of Annexure A of the Lease with respect to the period from 23 June 2004 to 31 October 2005 2. The Tribunal gives the directions set out in paragraph [121] of these reasons.

REASONS FOR DECISION Introduction 1 The principal question required to be determined in this case was whether the Applicant, which was the lessee of retail shop premises under a lease ('the Lease') governed by the Retail Leases Act 1994 ('the Act'), acted so as to terminate the Lease effectively under section 11(2) of the Act, on the ground that the Respondent lessors had failed to furnish a disclosure statement as required by section 11(1). 2 Questions also arose to whether a specific payment received by the Respondents was properly attributable to rent due under the lease and whether the Respondents were entitled to claim from the Applicant the amount of costs paid by them to their solicitors for the preparation of leases to subsequent tenants. 3 In its Application to the Tribunal, filed on 10 April 2007, the Applicant alleged that the Respondents had charged 'excessive rent', amounting to $34,242.87, under the Lease, and had withdrawn, 'without due cause or excuse', the amount of $40,287.50 under a bank guarantee that had been issued to them on behalf of the Applicant. The Application claimed reimbursement of the overpayments of rent, a refund of the amount withdrawn under the guarantee, damages for wrongful withdrawal under the guarantee, interest and costs. 4 The Application also alleged unconscionable conduct by the Respondents. Accordingly, the Tribunal is constituted in these proceedings in accordance with Clauses 1 and 4 of Part 3B of Schedule 2 of the Administrative Decisions Tribunal Act 1997. It is constituted by a Deputy President who is a member of the Retail Leases Division, assisted by one appropriately qualified member (Non Judicial Member Harrison), acting in an advisory capacity only. 5 On the first day of the hearing, 20 November 2007, a second advisory member (Non Judicial Member Fairweather) was also present. But he was not available to assist on the second scheduled day, 28 November 2007. The Tribunal proceeded in his absence, being authorised to do so by sub-paragraph (a) of Clause 4 of Schedule 2, Part 3B. It drew the parties' attention to this provision. Outline of evidence 6 The granting of the Lease. The premises to which the Lease related ('the Premises') were Unit 25 (together with Car Space 41) and Unit 26 (together with Car Space 40) in 25/26A Lime Street, Sydney. These two shops were owned under strata title. 7 In a transaction completed on 22 June 2004, the then owner of the Premises, King Street Wharf Supermarket Pty Ltd ('KSWS'), sold them to the Respondents, who are husband and wife. 8 At that time, KSWS and the Applicant occupied the Premises under a joint agreement, carrying on businesses of, inter alia, a supermarket and liquor sales. 9 Dr Fawzy Soliman was a director of both KSWS and the Applicant. He was also the only witness to testify on behalf of the Applicant. Two affidavits signed by him were admitted. 10 Before the sale was completed, it was indicated in correspondence between the solicitors for KSWS and the solicitors for the Respondents that the sums of $367.60 for water rates and $10,000 for strata levies were payable in respect of the Premises. In his second affidavit, Dr Soliman said with respect to the latter amount that he understood it to relate to a period of some 18 months since KSWS had acquired the Premises from their previous owner. In his oral evidence, however, Dr Soliman said that KSWS had only become the owner of the property 'at the last moment'. 11 The Lease, which was prepared by the Respondents' solicitors, commenced on 23 June 2004. It was executed by the Applicant and the Respondents two days later. It was for a term of five years, with an option to renew for a further five years. The monthly rent for the first year was $13, 429.16 (including GST), with a provision for annual increases calculated by reference to the Consumer Price Index. The permitted use was stated to be 'Supermarket and off-licence retails'. 12 The Lease also provided, in Item 14 of the Schedule (Annexure A), that the Applicant, as lessee, should pay 100 percent of the outgoings within eight listed categories. These categories included land tax, strata levies, council rates and water rates. 13 Under Item 19 of the Schedule, the Applicant was required to cause an irrevocable bank guarantee in the sum of $40,287.50 to be issued in the Respondents' favour. Under Item 19.2, the Respondents were entitled to call on the guarantee in the event of any default in the payment of rent or outgoings for a period of not less than 14 days. The Applicant obtained the required guarantee, dated 21 June 2004, from the National Australia Bank. 14 Item 20.1 of the Schedule provided that 'on the Transfer or assignment of the whole or part of the premises' it was 'a condition precedent of the Landlord's consent that the Landlord be provided with a copy of the Sale Contract'. Items 20.3 and 20.4 imposed further obligations on the Applicant in this situation. 15 Annexure B to the Lease also contained standard provisions to the following effect: a) That the amounts payable by the Applicant to the Respondents should include the stipulated share of the outgoings listed in the Schedule (clause 5.1.2). b) That the amounts payable by the Applicant to the Respondents should include, in the event of any 'default' by the Applicant, the Respondents' 'reasonable legal costs relating to the default' (clause 5.1.8). c) That the Applicant was not permitted to transfer the Lease without the Respondents' consent (clause 10.1), though this consent could not be withheld if certain conditions set out in clauses 10.2 – 10.6 (including the giving of written notice and the provision of certain information) were satisfied. d) That the Applicant was not permitted to sublet or to 'part with possession of the whole or any part of' the Premises without the Respondents' consent (clause 10.7). 16 In her affidavit, the Second Respondent admitted that no disclosure statement was given to the Applicant at or before the time of execution of the Lease. Neither she nor the First Respondent sought in their oral testimony to withdraw this admission. 17 On the second day of the hearing, however, Mr Hassett, who appeared for the Respondents in these proceedings, tendered a document, which he claimed to be a lessor's disclosure statement relating to the Lease. He informed the Tribunal that the solicitor then acting for the Respondents had only recently discovered it and made it available to him. But the Tribunal upheld an objection by Mr Gruzman, counsel for the Applicant, to the admission of this document into evidence. Its grounds for so ruling were (a) that taking into account the lack of formal evidence as to the provenance of the document and the omission of certain matters from the document (notably, the name of the lessee), it was not satisfied as to its authenticity, and (b) the prejudice that would be occasioned to the Applicant if the document were admitted at such a late stage of the proceedings. 18 After execution of the Lease, the Respondents' solicitors arranged for it to be stamped and registered. Registration occurred on 22 July 2004. According to Dr Soliman, he requested the Respondents several times to send him a copy of the Lease, but he did not receive one until 13 September 2004. 19 The Applicant's claim that it was not bound to pay outgoings. By a letter dated 5 July 2004 to the Applicant, Sydney Advance Realty Pty Ltd ('SAR') advised the Applicant that it had been appointed as agent to manage the Premises. It also requested payment of $6,619 on account of strata levies. This letter was signed by Mr Dennis Zhou as 'licensee-in-charge' of SAR. 20 In his first affidavit, Dr Soliman said that soon after receiving this letter he told Mr Zhou, in a telephone conversation, that the Applicant was not liable to pay these outgoings because he believed that all the outgoings had been paid on the settlement of the sale of the Premises to the Respondents. Mr Zhou replied that these outgoings related to a later period, July to September 2004. Dr Soliman then said that the Applicant had not yet received any copy of the disclosure statement that should, according to the Act, have been annexed to the Lease. Mr Zhou replied that he would 'check with' the Respondents about the disclosure statement and would ensure that the Applicant received copies of both the Lease and the disclosure statement, but that the Lease required the Applicant to pay the outgoings specified in it. 21 Dr Soliman also said in his first affidavit that, after having received a copy of the registered Lease from SAR, he rang Mr Zhou and pointed out that no disclosure statement was annexed to it. Mr Zhou's response was to say that he would talk to the First Respondent about this matter, but that in the meantime the Applicant should pay the invoices for strata levies and water rates that had previously been sent, because it was necessary to 'make the Landlord happy'. Dr Soliman said that he would 'do this in good faith' so long as Mr Zhou was prepared to 'sort this matter' out. 22 These accounts of conversations with Mr Zhou were not challenged in the cross-examination of Dr Soliman. But in the cross-examination of Mr Zhou, whose affidavit tendered by the Respondents related entirely to other matters, he was not asked to confirm or deny this part of Dr Soliman's evidence. 23 In both of his affidavits and in cross-examination, Dr Soliman maintained that on or soon after 10 November 2004, he sent to the Respondents, at their home address, a letter bearing this date. Attached to each of the two affidavits was a document that he claimed to be a copy of this letter. It was put to him in cross-examination that he did not in fact send this letter. In their affidavits and in cross-examination, both Respondents denied having received it. 24 Under a heading referring to the Lease and its registered number, the text of the alleged letter commenced with a reference to 'the lack of any Disclosure Statement'. It then adverted, in points numbered 1 and 2, to the Act's requirements that any amounts recoverable as outgoings should have been disclosed in a disclosure statement and that this statement should have been agreed to and signed by both parties and attached to the Lease. 25 The text of the letter concluded as follows: 3. Since there is no Disclosure Statement attached with the Lease that was signed and agreed to before the commencement of the Lease on 23rd of June 2004, then: a. you cannot recover any outgoings from Sydney Supermarkets Pty Limited, and b. Sydney Supermarkets is entitled to terminate the Lease. Accordingly, Sydney Supermarkets Pty Limited has decided to sell the business and terminate the Lease. Sydney Supermarkets Pty Limited has listed the business for sale with a number of Business brokers. I shall notify you once we have a buyer meanwhile we will continue paying the rent until the business is sold. 26 Neither of the copies of this alleged letter that were annexed to Dr Soliman's two affidavits was on letterhead. Each of them bore a signature by him 'on behalf of' the Applicant. It was apparent, as he admitted in cross-examination, that the signatures on the two copies differed from each other. His explanation for this was that he had printed out from his computer a copy of the letter to be sent to his solicitors to be annexed to his first affidavit (which was dated 24 August 2007), but had not kept a copy for himself. He therefore had to print out a second copy for annexation to his second affidavit (which was dated 16 November 2007). Not surprisingly, his signatures on these two copies were not identical. 27 The payments made by or on behalf of the Applicant. Most of the evidence on this matter took the form of a printout derived from the Applicant's ledger maintained by SAR ('the ledger printout'). 28 Between 15 and 23 September 2004, following the receipt of two letters from SAR dated 10 September enclosing copies of invoices for strata levies and water rates, the Applicant sent four cheques in payment of the required amounts. These payments were made in addition to the Applicant's payments of the monthly rent ($13,429.16) due on the 23 rd day of June, July, August and September. Dr Soliman said in cross-examination (though this was not mentioned in his affidavits) that these payments of strata levies and water rates were made through fear of eviction under the terms of the Lease. 29 On or about 28 October 2004, following the receipt of a letter from SAR dated 22 October enclosing copies of invoices for council rates, the Applicant paid the required amounts. On the previous day, it had paid the instalment of rent that had fallen due on 23 October. 30 The Applicant's attitude to paying outgoings as well as rent seemed to remain the same following its alleged sending of the letter of 10 November 2004. 31 According to the ledger printout, the Applicant paid each of the rent instalments falling due during the months of November 2004 to April 2005 inclusive. The delay in paying was, at most, slightly over a fortnight. With respect, however, to the instalment of rent due on 23 May, amounts of $5,429.16 and $7,627.11 (amounting together to only $13,056.27) were paid on 31 May and 6 June respectively. With respect to the instalments due on 23 June, 23 July, 23 August and 23 September 2005, somewhat irregular payments were made as follows: $10,353.75 on 5 July, $3,076.16 on 9 July, $3,075.41 on 29 July, $10,353.75 on 6 August, $10,353.75 on 29 August, $3,075.41 on 9 September, $10,353.75 on 26 September and $3,075.41 on 30 September. 32 In addition, on each of two dates, 16 February and 24 February 2005, following the receipt of a letter from SAR dated 7 February enclosing copies of invoices for strata levies totalling nearly $14,000, the Applicant made a payment of $1,500. Furthermore, the ledger printout showed payments received by SAR as follows: $4,627.12 on 21 March 2005, $1,500 on 23 May and again on 24 May, two payments of $2,000 each on 5 June, two payments of $750 each on 13 June, $1,000 on 13 July and $1,000 on 27 July. 33 In a letter to SAR dated 9 September 2005, written on the letterhead of the Applicant, Dr Soliman listed all the payments referred to in the preceding paragraph and described them all as 'amounts paid by us for outgoings'. 34 A copy of this letter was included in a bundle of copied documents sent by Dr Soliman to the Legal Services Commissioner on 28 October 2005 in circumstances outlined below (see [64]). This material was tendered at the hearing by the Respondents. 35 The bundle also included copies of receipts issued to the Applicant by SAR for some of the payments listed in the letter of 9 September 2005 to SAR. They contained notifications that each of the payments was for 'strata levy' or for 'outgoings'. 36 In the letter of 9 September 2005, Dr Soliman also alleged that on 29 August 2005 a company called Kings Wharf Supermarket Pty Ltd ('KWS') had paid a further sum of $12,581.89 on account of outgoings 'on our behalf'. He sought confirmation from SAR that it had received this last payment, together with the payment of $10,353.75 for rent made on the same day (see [31] above). 37 The bundle of documents sent by Dr Soliman to the Legal Services Commissioner included also a copy of a letter dated 18 October 2005, which was written on the letterhead of a firm called 'Property Business' and signed 'Bernadette Rayner'. It stated: TO WHOM IT MAY CONCERN RE: Sydney Supermarket – King Street Wharf We confirm we received two cheques from Kings Wharf Supermarket as being payment for the following: Outgoings: $12,521.89 Rent: $10,535.75 This was received on the 29th August 2005 and they were handed over to Mr Dennis Zhou of Sydney Advanced Realty Pty Ltd. Should you require any further information please do not hesitate to contact our office. 38 As already indicated (see [31]), the ledger printout recorded a payment of $10,535.75 on 29 August 2005. It did not, however, record any payment of $12,521.89, either on this date or on any other date. 39 The sales of the Applicant's businesses. By a contract dated 22 February 2005, the Applicant agreed to sell its supermarket business in the Premises to KWS for $200,000. In the contract of sale, the space headed 'Lease particulars' was left blank. Elsewhere, it was stated that the sale was subject to the grant of a sublease. Annexed to the contract was a copy of the Lease. 40 This sale was not completed until late in 2005. But Mr Wasfei Suleiman, a director of KWS, testified that soon after the contract for sale was signed, KWS took over from the Applicant the conduct of the supermarket business and the occupation of a substantial proportion of the Premises (75 percent of the space in Shop 25 and all of Shop 26). It also started paying to SAR the instalments of rent due under the Lease. Mr Suleiman did not communicate with the Respondents. He assumed that these changes in the occupation of the Premises and the payments of rent had been agreed between the Applicant and the Respondents. 41 In his first affidavit and in cross-examination, Dr Soliman maintained that on or soon after 1 March 2005, he sent to the Respondents, at their home address, a letter bearing this date. Attached to the affidavit was a document that he claimed to be a copy of this letter. It was put to him in cross-examination that he did not in fact send this letter. In their affidavits and in cross-examination, both Respondents denied having received it. 42 The text of the alleged letter was as follows: As discussed, Sydney Supermarket Pty Limited is proposing to sell the Grocery part of the business (Shop 26 and 75 percent of Shop 25) to Kings Wharf Supermarket Pty Limited. As agreed I am sending with this letter a copy of: 1. Proposed Lease for Shop 26 and 75 percent of Shop 25 for the name Kings Wharf Supermarket Pty Ltd. 2. Proposed Lease amended lease of Shop 25 only for the current name Sydney Supermarket Pty Ltd. Please note that under the new leases, the rent you will collect from both leases would be exactly the same as the current lease. Please note that Kings Wharf Supermarket Pty Ltd would like the lease period to be extended to further 5 years. We can meet to discuss. 43 The copy of this alleged letter that was annexed to Dr Soliman's first affidavit was not on letterhead. It bore a signature by him as director of the Applicant. 44 In his second affidavit and in cross-examination, Dr Soliman maintained that on 22 May 2005, he met the Respondents at a coffee shop. At this meeting, he told them of the sale of the supermarket business to KWS and asked for their consent to the transfer of the Lease to this company. When the First Respondent asked whether the rent had been paid, Dr Soliman said that he believed that it had been. He then gave to the First Respondent two cheques for $1,500 each, saying that they were part payment of the rent for the two shops in the Premises. This statement contradicted his claim in his letter of 9 September 2005 (see [32 – 33] above) that these two payments of $1,500 were for outgoings. 45 Dr Soliman said also that on 10 June 2005 he met the First Respondent at the same coffee shop. He indicated that he urgently needed the Respondent's consent to the transfer of the Lease, since if it was not granted he would lose the sale. The First Respondent said however that according to Mr Zhou the Applicant was 'behind with the rent'. 46 According to Dr Soliman, on 13 June 2005 he rang the First Respondent twice to enquire about the transfer of the Lease. 47 The Respondents agreed with Dr Soliman's account of two meetings at a coffee shop. But they said that at the first meeting Dr Soliman had simply advised them that the Applicant, being in difficulties with the rent, had been receiving help from another company and might want to sublease part of the Premises. On being asked by him whether they would consent to a sublease, they had replied that after the Applicant had paid the rental arrears and outgoings, he could talk to Mr Zhou about this matter. They agreed that Dr Soliman gave them two cheques for $1,500 at that meeting. According to the Respondents, at the second meeting Dr Soliman did not mention any sale of the business and they only discussed the payment of rent and outgoings. 48 On 28 July 2005, SAR's bank, Westpac, advised SAR that a cheque from KWS for $10,353.75 had not been met on presentation. In cross-examination, it was put to the Second Respondent that SAR must have told her about this, and that therefore she would have known that KWS, not the Applicant, was paying the rent. She replied that SAR had not mentioned this matter to her. 49 In their affidavits, both the First and the Second Respondent stated that it was in August 2005 that they first heard about the sale of the business to KWS. In cross-examination, they initially claimed that they did not receive notification until October or November. But when reminded of what they had said in their affidavits, they agreed that August 2005 was the correct date. The Second Respondent sought to qualify this by saying that in August she heard only that the Applicant was 'going to sell' the business. 50 Annexed to the Second Respondent's affidavit, however, was a copy of a letter to SAR, dated 5 September 2005 from ANB Lawyers, who acted for KWS. After referring to a telephone conversation on 29 August, the letter advised that 'our client purchased the business operated on the premises' from the Applicant. It requested the grant of a new lease for 'the supermarket premises only … and not the adjoining Alcohol "bottle shop"'. It pointed out that the terms of the requested lease would differ from those of the Lease to the Applicant and that the proposed new lease was 'likely to require' a surrender of the Lease. In her affidavit, the Second Respondent referred to this letter and the preceding conversation on 29 August as constituting the circumstances in which she found out about the sale of the business. 51 On 8 September 2005, SAR faxed to ANB Lawyers, a short memorandum stating that 'the total outgoings including strata levy, council and water rates overdue' in respect of 'Retail Shops 25 and 26 Kings Street Wharf" were 'around $35,000'. 52 Dr Soliman's letter of 9 September 2005, described above at [33], was prompted by the sending of this fax. As already indicated, Dr Soliman asserted in this letter that the Applicant and KWS had made a number of payments on account of outgoings. He also expressed surprise at the fact that SAR had chosen to send the fax to ANB Lawyers (who had forwarded it on to him), rather than to him or to any of the other directors of the Applicant (namely, his wife and his two sons). 53 By a letter dated 19 September 2005, the Applicant advised the Respondents that it intended to sell 'its Liquor part of the business situated at 9 Erskine Street (25 percent of Shop 25) to a company called RNV Cellars Pty Ltd ('RNV'). The letter went on to say that RNV's solicitors would contact the Respondents or their lawyers soon to arrange for the issuing of a lease. In his affidavit, the First Respondent denied having received this letter. But in cross-examination, he said that he had received it. 54 By a contract dated 6 October 2005, the Applicant agreed to sell its liquor business in the Premises to RNV for a price of $150,000. In the contract of sale, the space headed 'Lease particulars' was left blank. Elsewhere, it was stated that the sale was subject to the grant of a new lease. 55 During October 2005, the solicitors for KWS and RNV corresponded with Hassett Dixon, who acted for the Respondents, regarding the proposed new leases of the Premises to these two companies ('the new leases'). In preparation for the grant of these leases, the Applicant executed a formal surrender of the Lease on 10 October. This was delivered to Hassett Dixon when the new leases were settled on 1 November 2005. They provided for five-year terms, commencing on the date of settlement, and for renewal options for a further five years. Under the lease to KWS, the monthly rent payable was $9,638.40 plus GST, making a total of $10,602.24. 56 The payment of rent on 27 October 2005. On the ledger printout, the final item was a payment of $10,353.75 made on 27 October 2005. The printout stated that this was referable to the rent due for the period from 23 September 2005 to 22 October 2005. 57 Mr Zhou testified, however, that the computerised system recording rent payments had allocated this payment to the wrong period, and that it should in fact have been treated as a payment under the lease that was being granted to KWS. He explained that because the rent due on 23 May 2005 had not been paid in full (see [31] above), the system had made erroneous allocations with respect to all the payments made from 6 June 2005 onwards. When the rent payments since May 2005 were considered seriatim, it was apparent, he said, that if the minor deficiency in the payment for the May rent was ignored, all of the rent required under the Lease to be paid by the Applicant up to 22 October 2005 had in fact been paid. 58 Mr Zhou indicated further that the payment made by KWS on 27 October 2005 had been attributed to the Applicant's account because at that time he had not been notified of the forthcoming grant of a lease to KWS. He pointed out also that the next rent payment made by KWS, which was on 2 December 2005, was in the sum of $10,850.73. The total of these two payments - $21,204.48 – amounted to two months' rental payable under the new lease by KWS, which provided, as indicated above at [55], for a monthly payment of $10,602.24 including GST. 59 In his affidavit, Mr Suleiman stated that his intention in forwarding this amount of $10,353.75 to SAR on 27 October 2005 was to pay the first instalment of rent due under the new lease. In making the payment, he had failed to take account of the fact that a slightly larger amount of monthly rent was due under the new lease than had been payable under the Lease to the Applicant. 60 Although the new leases commenced on 1 November 2005, Dr Soliman received on 25 and 28 November 2005 three SMS messages from SAR requiring payment of rent due under the Lease on 23 October 2005. 61 The Respondents' resort to the guarantee. In a fax dated 16 September 2005, SAR advised Hassett Dixon that 'the total outgoing and rent arrears' under the Lease were $35,926.82. A copy of this fax was among the documents subsequently sent by Dr Soliman to the Legal Services Commissioner (see [64] below). 62 In a letter dated 13 October 2005 to the National Australia Bank ('the NAB'), Hassett Dixon requested on the Respondents' behalf that the amount of $36,507.82 be paid under the Applicant's guarantee into the Respondents' bank account. On 17 October 2005, the NAB notified the Applicant that it had complied with this request. 63 In letters dated 17 October 2005 to the solicitors acting for KWS and RNV, Hassett Dixon enclosed bills for professional costs, amounting in each case to $1,520.00, in preparing the new leases. Both these companies indicated, however, that they were not liable for these costs. 64 On 28 October 2005, Dr Soliman sent to the Legal Services Commissioner a complaint against Mr Jonathan Hassett, a member of the firm of Hassett Dixon. It alleged that the withdrawal of funds was unlawful. In the complaint, he referred to the payments of outgoings listed in his letter of 9 September 2005 to SAR and the bundle of documents annexed to the complaint included the copies of documents relating to these payments (see above at [33 – 37]). He did not refer in the complaint to his alleged letter of 10 November 2004 to the Respondents (see [23 – 25] above), or maintain that the Lease had been terminated. 65 In a letter dated 31 October 2005 to the Applicant, Hassett Dixon set out a bill of costs, amounting to $556.25, for their work in calling on the guarantee and stated, referring to clause 5.1.8 of Annexure B to the Lease (see [15] above), that the Applicant was liable to pay this amount. 66 In a further letter dated 1 November 2005 to the Applicant, Hassett Dixon advised that their costs in creating the new leases of the Premises amounted to $3,041.00 (the total of the two amounts previously claimed from KWS and RNV). Referring again to clause 5.1.8 of the Lease, they stated that the Applicant was liable to pay this amount and that if it was not paid they would be 'forced to consider calling on the remainder of the bank guarantee'. 67 By a letter dated 8 November 2005, Hassett Dixon requested the NAB to pay the balance of $3,779.85 remaining under the guarantee into the Respondents' account. This payment was made. 68 On 15 December 2005, Hassett Dixon sent to the Respondent an invoice for their final costs, amounting to $2,985.00, in completing, stamping and registering the new leases. The Tribunal's conclusions on matters raised by this evidence 69 The general nature of the evidence. The documentary evidence relating to these events was both incomplete and confusing on a number of matters, making it difficult for the Tribunal to determine precisely what occurred. 70 In addition, Dr Soliman was an unsatisfactory witness. His answers to questions in cross-examination were at times evasive. On three matters of significance, noted in the foregoing outline (see [10], [28], [44]), his oral testimony contradicted what he had said in his affidavits. Moreover, on one issue of prime importance in this case, his conduct over a significant period of time during 2005 was entirely at odds with a claim made in his written and oral evidence. This contradiction is explored in the next section of these reasons. 71 The Respondents, generally speaking, appeared to be credible witnesses. There was, however, one issue – namely, the time at which they first became aware of the sale of the Applicant's supermarket business to KWS – on which their oral testimony contradicted their affidavits. On a further issue – whether or not the Applicant's letter of 19 September 2005, advising of the sale to RNV, reached them – the oral testimony of the First Respondent contradicted his affidavit. 72 In the ensuing sections of these reasons, a number of specific issues requiring analysis and resolution are discussed. 73 The question whether the Applicant, by virtue of terminating the Lease or for any other reason, was not obliged to pay outgoings. The Applicant's claim to have terminated the Lease, advanced both by Mr Gruzman on its behalf and in the affidavits of Dr Soliman, was based on section 11(2) of the Act. So far as relevant, section 11 states: 11 Lessee to be given disclosure statement (1) At least 7 days before a retail shop lease is entered into, the lessee must be given a disclosure statement for the lease … (2) If a lessee was not given a disclosure statement as required by sub-section (1) or if the disclosure statement that was given to the lessee was incomplete or contained information that at the time it was given was materially false or misleading, the lessee may terminate the lease by notice in writing to the lessor at any time within 6 months after the lease was entered into, unless sub-section (3) prevents termination. (3) The lessee cannot terminate the lease under this section on the ground that the disclosure statement is incomplete or contains information that is materially false or misleading if: (a) the lessor has acted honestly and reasonably and ought reasonably to be excused for the failure concerned, and (b) the lessee is in substantially as good a position as the lessee would have been if the failure had not occurred. (4) … (5) The termination of a lease under this section does not affect any right, privilege, obligation or liability acquired, accrued or incurred under the lease in respect of any period before its termination. (6) … 74 As already indicated, the Respondents admitted in their affidavits that no disclosure statement was provided. The late tender on their behalf of a document purporting to be a disclosure statement was rejected by the Tribunal (see [17]). 75 The question whether the Applicant terminated the Lease pursuant to section 11(2) depends initially on whether the alleged letter of 10 November 2004 was in fact sent. This was the only communication within the period of six months after the date of commencement of the Lease (23 June 2004) that could have had this effect. 76 The evidence relating to this letter is outlined above at [23 – 26]. In the Tribunal's opinion, the fact that two documents which purported to be file copies of it but bore different signatures by Dr Soliman, considered in conjunction with the Tribunal's concerns regarding his testimony, are sufficient to cast some doubt on the authenticity of these copies. But the more fundamental problem facing this part of the Applicant's case is that a series of statements made by Dr Soliman during the ensuing twelve months, both in writing and (according to him) in conversations with the Respondents or with Mr Zhou, directly contradicted the Applicant's claim to have terminated the Lease through sending this letter and therefore to be under no obligation to pay outgoings. 77 During this period of twelve months, from November 2004 to October 2005, Dr Soliman, far from maintaining the claim that the Lease had been terminated, requested at least four times, according to his own evidence, that the Respondents should grant consent their consent to the transfer of the Lease to KWS. The evidence relating to these requests is outlined above at [42] and [44 – 46]. 78 Similarly, far from maintaining the position that the Applicant, by virtue of terminating the Lease by the alleged letter of 10 November 2004, was no longer obliged to pay outgoings, Dr Soliman expressly indicated in the letter of 9 September 2005 to SAR (see [32 – 36] that the payments listed in the letter were made on account of outgoings. It is noteworthy that this letter was not tendered by the Applicant, but by the Respondents. 79 In addition, Dr Soliman did not claim that the Lease had been terminated or that the Applicant was no longer liable to pay outgoings in two other contexts where one might have expected such claims to have been advanced. One was when receipts from SAR designated as being for outgoings (see [35]) came to him. The other was in formulating his complaint to the Legal Services Commissioner regarding Mr Hassett's conduct, where in fact he included instead a copy of his letter of 9 September 2005 (see [64]). 80 A further indication that Dr Soliman did not regard the Lease as terminated after 10 November 2004 is provided by the fact that a copy of it was annexed to the contract of sale of the supermarket business to KWS (see [39] above). Dr Soliman executed this contract on behalf of the Applicant. 81 The Tribunal is bound to conclude, having taken careful account of these matters, that on the balance of probabilities the alleged letter of 10 November 2004, even if it was at some stage composed by Dr Soliman, was never sent to the Respondents. 82 There is, in the Tribunal's opinion, a further separate reason for rejecting the Applicant's claim to have been no longer bound to pay outgoings by virtue of having terminated the Lease. 83 The Applicant's argument was that the alleged letter of 10 November 2004 substituted for the terminated Lease a tenancy by way of holding over, under which it was bound to pay rent but not outgoings. But in the Tribunal's opinion the terms of any holding over were by no means settled by the text of the letter. As the evidence clearly shows, the Applicant subsequently paid amounts additional to rent, and explicitly claimed – notably in its letter dated 9 September 2005 to SAR – that they were payments of outgoings. The Tribunal considers that the implied terms of any holding over agreement would therefore have included a term that the Applicant, as had been the case under the Lease, was bound to pay outgoings. 84 In this connection, the Tribunal rejects an argument by Mr Gruzman that the Respondents accepted payments of rent after 10 November 2004 'without qualification' and therefore must have agreed that under the holding over arrangement that followed the termination of the Lease the Applicant was not required to pay outgoings. In the Tribunal's opinion, nothing in the evidence supports the drawing of this inference. SAR, the Respondents' agent, continued to remind the Applicant about its obligation to pay outgoings in the same manner as it had done before 10 November 2004. 85 In his oral evidence (though not, as has been pointed out, in his affidavits), Dr Soliman claimed that these payments were made out of fear of eviction and therefore should not be regarded as evidencing an agreement on the Applicant's part to continue paying the outgoings. There was, however, no evidence at all that the Applicant was put under pressure such as would deter it even from raising the argument that, by virtue of having terminated the Lease, it should not be liable any longer to pay outgoings. According to Dr Soliman's own accounts of conversations with the Respondents and with Mr Zhou, they went no further than a landlord and a landlord's agent might be expected to go in insisting that a tenant should pay rent and outgoings as they fell due. 86 Mr Hassett advanced a further argument, to the effect that the alleged letter went no further than evincing an intention at some future time to terminate the Lease. The Tribunal is not convinced by this argument. But in the present circumstances it need not express a final opinion about its validity. 87 Mr Gruzman submitted that because the contracts of sale of the different parts of the Applicant's business to KWS and RNV did not refer at the appropriate points to the Lease (see [39] and [54]), it must be inferred that the Lease had ceased to exist. 88 The Tribunal rejects this submission. The Respondents were not parties to these contracts. Nothing said or omitted in them indicates in any way what was the nature of their legal relationship with the Applicant so far as the Premises were concerned. Furthermore, a copy of the Lease was in fact annexed to the contract of sale to KWS. 89 In his written submissions, Mr Gruzman also referred in passing to the obligations of lessors under sections 27 and 28 of the Act to provide estimates of outgoings and outgoings statements. It would seem from the evidence that the Respondents did not comply with these provisions. But this did not of itself give grounds for the Applicant to claim that it was no longer bound to pay them: see Wanice Pty Ltd v Bocove Pty Ltd [2003] NSWADTAP 24. 90 Mr Gruzman referred also to section 28A. But this provision was inserted into the Act by the Retail Leases Amendment Act 2005 and did not become operative until 1 January 2006. 91 A further submission by Mr Gruzman was that if the Respondents, prior to execution of the Lease, had disclosed to the Applicant the amount of the outgoings, the Applicant would not have entered into the Lease. But there was no evidence at all to support this submission. Because of Dr Soliman's position as a director of the prior owner (KSWS), the inference to be drawn is instead that he knew, or at least was well placed to ascertain, what the amount of outgoings was likely to be under the Lease. 92 It should be added that, although the Applicant initially claimed in these proceedings that by virtue of the Lease being terminated it was not liable for any amount of outgoings whatsoever, Mr Gruzman conceded at the commencement of the hearing that the alleged termination pursuant to the letter of 10 November 2004 did not entitle the Applicant to claim reimbursement for outgoings for which it had already become liable. In view of the terms of section 11(5) of the Act, this is clearly correct. 93 For the foregoing reasons, the Tribunal upholds the Respondents' contentions that the Lease was not terminated and the Applicant was obliged to pay all the outgoings stipulated in it. 94 Whether there was any assignment of the Lease to KWS. In the course of his evidence, Dr Soliman maintained on occasions that he had notified the Respondents of the sale of the supermarket business to KWS and that therefore an assignment of the Lease – at least so far as it related to space within the Premises where this business was conducted – had occurred, to which the Respondents must be deemed to have consented under section 41 of the Act. 95 The Tribunal's view of this matter is, however, that far from complying with the requirements of section 41(d) and of the Lease with regard to assignment, the Applicant's conduct in selling the supermarket business and permitting KWS to operate it without giving notice of these matters to the Respondents was in breach of the prohibition, in clause 10.7 of Annexure B to the Lease, against parting with possession of any part of the Premises without the Respondents' consent. 96 Whether the payment made on 27 October 2005 was related to the Lease. The Tribunal accepts the evidence given on this matter by Mr Zhou and Mr Suleiman. Their explanation of why the payment was credited in the ledger printout to rent due under the Lease (see [57 – 59] above) is a reasonable one. If it were thought that the issue should be resolved in accordance with the principles governing appropriation of payments, it would be KWS and/or the Respondents, as the paying party and the creditor respectively, that would have the authority to determine how the payment should be appropriated. 97 The Tribunal takes into account the fact, referred to above at [60], that on 22 and 28 November 2005 Dr Soliman received SMS messages from SAR requiring payment of rent allegedly due under the Lease on 22 October 2005. According to the ledger printout, these demands should not have been sent. But if KWS's payment on 27 October 2005 was properly attributable to the lease about to be granted to it, there was indeed rent due from the Applicant under the Lease – at least for the period from 23 to 31 October 2005 – at the time when these messages were sent. 98 For these reasons, contrary to the Applicant's contention and to what appears on the ledger printout, the Tribunal holds that the payment of $10,353.75 made on 27 October 2005 by KWS constituted an initial payment of rent by this company under the new lease granted to it as from 1 November 2005. 99 Whether the Respondents were entitled to demand payment from the Applicant of the professional costs charged by Hassett Dixon for preparing the new leases. As argued by Mr Hassett, the basis for this claim by the Respondents was that these costs were incurred because of a 'default' on the part of the Applicant. In breach of clause 10.7 of Annexure B to the Lease (see [95] above), it had permitted KWS to occupy part of the Premises without obtaining the Respondents' consent. Eventually the Respondents had been left (as indeed the Second Respondent claimed in her affidavit) with no alternative but to grant the new leases. Following the insertion, by the Retail Leases Amendment Act 2004, of a provision into the Act (section 14) prohibiting a lessor from recovering lease preparation expenses from a lessor, the Respondents could not recover these costs from KWS or RNV. Accordingly, it was entitled to claim them from the Applicant under clause 5.1.8 of Annexure B to the Lease (see [15] above). 100 Mr Hassett also submitted that the Tribunal should conclude from its examination of Hassett Dixon's files relating to the new leases (which were admitted into evidence) that the amounts of costs charged by Hassett Dixon were reasonable. 101 Mr Gruzman's submissions did not address these issues. 102 The Tribunal agrees with the argument put forward by Mr Hassett. The Applicant's permitting of KWS to occupy part of the Premises without obtaining the Respondents' consent constituted a 'default' under the Lease because it was in clear breach of clause 10.7 of Annexure B. This conduct, in conjunction with the later sale of the liquor business to RNV, put the Respondents in a position where they were compelled, less than 18 months after the commencement of the Lease, to instruct solicitors to prepare the new leases. If the Applicant had not taken these steps, the Respondents could reasonably have expected that they would not be confronted with lease preparation costs until, at the earliest, the expiry date (23 June 2009) stated in the Lease. 103 For these reasons, the costs charged by Hassett Dixon, the amount of which the Tribunal believes to be 'reasonable', are recoverable from the Applicant as 'reasonable legal costs relating to' its 'default' under the Lease. The question whether the aggregate amount that has been received by the Respondents is excessive 104 The amounts payable by the Applicant. In her affidavit, the Second Respondent set out as follows the amounts claimed to have been owing under the Lease: (a) Rent: $220,493.87 to 31 October 2005 (b) Land Tax: $2,286.77 to 31 December 2005 (c) Strata Levies: $52,731.93 to 31 December 2005 (d) Council Rates: $4,953.33 to 31 December 2005 (e) Water Rates: $1,090.60 to 31 December 2005 (f) Allow refund for (b) – (e) for period 1 November to 31 December 2005: ($6,674.18) (g) Solicitors' Fees: $6,582.25 TOTAL: $281, 464.57 105 Invoices and other material annexed or exhibited to the affidavit provided substantiation for these figures. 106 In her affidavit, the Second Respondent made two specific points relating to the claim for rent: (i) that on account of an increase of 2.4 percent in the Consumer Price Index, the monthly rent due under the Lease increased from $13,429.16 to $13,832.05 on 23 June 2005, though this increase was not reflected in the payments shown on the ledger printout; and (ii) that it included the rent for the nine-day period between 23 and 31 October 2005, calculated at $4,015.87. 107 In relation to the second of these matters, the Tribunal agrees that the Applicant was obliged to pay rent up to the time (1 November 2005) when the new leases commenced. Although Dr Soliman executed the surrender of lease on 10 October 2005, before the instalment payable on 23 October fell due, this document was not delivered to the Respondents until the day of settlement of the new leases (see [55] above). 108 The Applicant did not dispute any of these amounts, except the amount claimed for strata levies. In a summary sheet annexed to the Second Respondent's affidavit, it was indicated that the levies attributable to the Premises fell within three categories: administration fund, sinking fund and 'other'. Dr Soliman maintained that the amounts shown in the third category, totalling a little more than $4,000, were not payable by the Applicant. But he gave no reason why this category was distinguishable from the other two. 109 The Tribunal does not accept this contention. It accordingly accepts the Respondents' claim that the total amount due to them was $281,464.57. 110 The amounts actually paid by or on behalf of the Applicant. In advancing arguments on this question, both parties treated the ledger printout as recording accurately – except with regard to the payment on 27 October 2005 – the amounts paid to the Respondents by or on behalf of the Applicant. 111 According to the printout, the total of all these amounts was $250,720.99. The Tribunal has found, however, that the amount of the payment on 27 October 2005, $10,353.75, must be deducted from this total. 112 This leaves a figure of $240,367.24. By drawing down on the bank guarantee, the Respondents received a further sum of $40,567.15, increasing the total amount received by them to $280,934.39. This is less than the total amount of $281, 464.57 that the Tribunal has held to have been payable by the Applicant. The amount by which it falls short is $530.18. 113 On the basis of these calculations, the Respondents' case is that it is entitled to retain all the moneys that it has received, both in payments made by or on behalf of the Applicant and through calling on the guarantee. 114 But for one important consideration, the Tribunal would agree. This consideration is as follows. Within evidence that the Respondents themselves tendered, there are two documents providing grounds for believing that a significant payment made by KWS on behalf of the Applicant was not recorded on the ledger printout and accordingly was not taken into account in reaching the figure of $240,367.24 for the payments made by or on behalf of the Applicant. 115 The alleged payment that does not appear on the ledger printout is a payment of $12,581.89, made on 29 August 2005. The documents referring to it are the Applicant's letter of 9 September 2005 to SAR and the letter dated 18 October signed by Bernadette Rayner of the firm Property Business, stating that it had been received and forwarded to SAR (see [35 –37]). 116 Unfortunately, no mention was made of this payment in the evidence or submissions dealing with the question whether the total amount received by the Respondents does or does not exceed the amount to which they were entitled. In the present context, the amount allegedly paid is too large to be ignored. If it was in fact paid, the Applicant would be entitled to approximately $12,000 (to which interest might be added) by way of reimbursement from the Respondents. If it was not paid, the Applicant's claim would be subject to dismissal. 117 In these circumstances, the Tribunal considers that it is appropriate to record in the present judgment its determination in the Respondents' favour on what has been the principal issue of dispute in these proceedings: namely, whether the Applicant was obliged under the Lease to pay the outgoings identified in it throughout the period from 23 June 2004 (the date of commencement) to 31 October 2005 (the date when the Applicant's surrender of it became operative). 118 The parties should however be invited to file further evidence and/or submissions, limited solely to the questions that have just been identified. These are whether the alleged payment of $12,581.89 on 29 August 2005 was in fact made on the Applicant's behalf to the Respondents and should be taken into account to the credit of the Applicant. 119 In order not to prolong these proceedings still further, the parties should at the same time be invited to file evidence and/or submissions on the separate questions of interest (which would be relevant only if the Applicant was held entitled to some reimbursement) and costs. The Tribunal's orders 120 The Tribunal determines that the Applicant was legally obliged under the Lease between the parties in these proceedings to pay to the Respondents the outgoings identified in Item 14 of Annexure A of the Lease with respect to the period from 23 June 2004 to 31 October 2005. 121 The Tribunal directs as follows: (a) Within 21 days of the date of this decision, the Respondents are to file and serve evidence and/or submissions relating to the following questions still requiring determination in these proceedings: (1) whether a payment of $12,581.89 alleged to have been made on or about 29 August 2005 on behalf of the Applicant to the Respondents' agent was in fact made and should be taken into account to the credit of the Applicant; (2) interest to be awarded to the Applicant (in the event that the preceding question is determined in the affirmative); and (3) entitlement to costs under section 88 of the Administrative Decisions Tribunal Act 1997. (b) Within a further 21 days, the Applicant is to file and serve evidence and/or submissions on these three questions. (c) Within a further 14 days, the Respondents are to file and serve any evidence and/or submissions in reply. (d) The submissions on the third of these questions (costs) should deal with both of the alternative contingencies raised by the first question: namely, (i) a finding by the Tribunal that the alleged payment of $12,581.89 was made and should be taken into account to the credit of the Applicant; and (ii) a finding that no such payment should be taken into account in this way. (e) The parties have liberty to apply for any extension of these deadlines or for clarification of these directions. (f) The Tribunal will determine the questions raised in these directions 'on the papers', under section 76 of the Administrative Decisions Tribunal Act 1997, unless it considers, having taken into account any submissions made on this issue by the parties, that a further hearing is required.