CITATION: Simonek Pty Ltd v Moon [2008] NSWADT 128 DIVISION: Retail Leases Division APPLICANT Simonek Pty Ltd PARTIES: RESPONDENT Hee Kyung Moon FILE NUMBER: 075188 HEARING DATES: 3 April 2008, 22 April 2008 SUBMISSIONS CLOSED: 22 April 2008 DATE OF DECISION: 1 May 2008 BEFORE: Fox R - Judicial Member CATCHWORDS: Arrears of rent - forfeiture of bond and interest in costs MATTER FOR DECISION: Principal matter LEGISLATION CITED : Administrative Decisions Tribunal 1997 Retail Leases Act 1994 CASES CITED: Cripps & Anor v G & M Dawson Pty Limited [2006] NSWCA 81 APPLICANT A Stack, solicitor REPRESENTATION: RESPONDENT In person 1. Pursuant to section 72(a)(1) of the Retail Leases Act 1994 Respondent Lessee to pay to Applicant Lessor: a. The sum of $49,392.71 by way of debt and ORDERS: b. In the sum of $2,305.00 by way of interes 2. Pursuant to section 72(f)(4) of the Retail Leases Act 1994 the Applicant Lessor entitled to receive security bond in the sum of $9,056.67 3. Pursuant to section 72(f)(3) of the Retail Leases Act 1994, the Respondent Lessee liable to pay to the Applicant Lessor the sum of $141.40 for each and every day after 23 April 2008 during which the Respondent Lessees goods remain within the premises being Shop 2, (Cnr) 38-40 George Street, Parramatta 4. Pursuant to section 88 of the Administrative Decisions Tribunal Act 1997 Respondent Lessee to pay to Applicant Lessor costs of preparing for and attending at hearing and 3 April 2008, on a party/party basis. REASONS FOR DECISION 1 These reasons resolve the issue of rent arrears (and interest claimed in respect of those arrears), pursuant to my Decision of 6 February 2008. In that decision I gave my reasons for my view that the Lessor was entitled to possession because of the Lessee's persistent failure to pay rent, but adjourned the matter to 21 February 2008 to allow the Lessor to bring evidence of the rent outstanding, and to allow the Lessee to make an application for relief against forfeiture. The Lessee did not make that application, and so, on 21 February 2008 I ordered that the Lessor was entitled to possession on and from 4pm 28 February 2008, but adjourned the issue of the amount outstanding to 3 April 2008, to allow the Lessor to propose proper evidence of the arrears. On 3 April 2008 it became clear that the Lessee (who had by that time lodged a Notice of Appeal in respect of my possession order), was not ready to proceed with the rent issue, because he did not have his interpreter with him. I adjourned the issue to 22 April 2008 so the Lessee could make arrangements for his interpreter to attend, and also to allow him more time to consider the Lessor's Agent's (Mr Laing) affidavit setting out the rent arrears claimed sworn 20 March 2008, and filed 25 March 2008. 2 The Lessee, M/s Moon, has always been represented in the Tribunal by her husband, Mr Han. On 22 April 2008 he attended with James Shin, being the informal interpreter who I had previously given leave to assist. Mr Stack solicitor appeared for the Lessor. 3 Mr Stack's evidence consisted of the Agent's Affidavit. Mr Han offered nothing further, other than to observe that the rent had not been paid after 1st February 2007 because he had not been given a copy of the Lease. 4 Mr Laing's Affidavit sought to clarify the matter arising out of my previous observations about a breach of section 14 of the Retail Leases Act 1994, and I am satisfied that no claim was made for lease preparation fees. The amounts paid by Lessee are as follows: $13,919.54 some time before 15 November 2006 $4,290.00 on 8 January 2007 $4,290.02 on 1 February 2007 5 The first payment was paid by the Lessee, probably in three separate cheques, to Laing & Simmons Parramatta), and was said to represent bond, rent and stamp duty. The rent including GST was $4,290.00 per month and the stamp duty was $572.85. That leaves $9,056.67 as bond, instead of $8,580.00 being the amount which it would have been as two months' commencing rent including GST. 6 In my earlier decision I held the rent-free period to run from 1 December 2005, and rejected the contention that such concession was conditional on the Lessee fully complying with all of the terms of the lease throughout the whole term. I adhere to my view in relation to the unenforceability of the "claw-back" provision, but in view of the analysis of the documents which appears later in these reasons, am now satisfied that the lease commencement date was 1 November 2006, and that the rental holiday was for the month of November. Mr Laing's Affidavit took November into account as rent free in calculating the rent outstanding up to 4 July 2007, that being the date of expiry of the Termination Notice. I agree with his figure. The rent including GST was payable from 1 December 2006 at $4,290.00 per month. This means that seven payments should have been made, totalling $30,030.00. As I have indicated above, the lessee had in fact paid three actual rent payments, making a total of $12,870.00. The outstanding balance is $17,160.00 as claimed. 7 The claim for occupation fee for the period after 4 July 2007 included an increase of $238.33 per month from 1 December 2007 onward. This was justified by reference to the Disclosure Statement, as well as special condition 50 in the Lease. However a detailed examination of the various documents said to embody the lease, raises a very muddled situation indeed. 8 It is appropriate to indicate that the documents to which I now refer are all copies annexed to submissions of the Lessee dated 3 January 2008, and filed 21 January 2008. 9 It was clear right from the start that the Lessee had signed two documents purporting to be the Lease, one dated 18 October 2006, and another dated 26 October 2006, the date of which was altered to 30 October 2006. Both were for 3 years commencing 1 December 2006, and each had a section 16 Certificate signed by Keith Kwon, Solicitor on 19 and 30 October 2006 respectively. There appear to be three different sets of special condition pages for these two documents, only some of which were signed and dated by the Lessee. 10 The Lessee had also signed her part of the Disclosure Statement (which she dated) on 18 October 2006. There is no indication when the Disclosure Statement served. Reference to section 11 of the Retail Leases Act 1994 may explain why the agent required the later Lease document to be signed. 11 The Disclosure Statement showed the lease start date as 1 November 2006, for a 3 year period and showed the rent including GST to be $51,480.00 for the first year, $54,340.00 for the second year, and $57,200.00 for the third year. There were handwritten additions (signed and dated by the Lessee) stating, amongst other things, the rental holiday and clawback condition, and calling for the bond as equivalent of two months' gross average annual rent including GST. 12 Both Leases showed the term to be three years, and the rent including GST to be $4,290.00 per month, and were identical in their printed provisions and deletions. However the earlier Lease showed the first rental payment to be due 1 November 2006, whilst the second showed it to be due 1 December 2006. I am satisfied that the first Lease had two handwritten special condition pages (both signed and dated by the Lessee), containing special conditions numbered 43 to 51. Special condition 45 was the rent holiday provision, and 49 was the bond requirement. Both accorded with the text of the Disclosure Statement. Both Leases had included the printed condition 37c, which called for a rent adjustment by the amount and on the dates shown in the special conditions. Although this agreed with the Disclosure Statement, there was no mention of rent increases in the hand written special conditions annexed to the first Lease. 13 The first Lease was only signed by the Lessee, the Lessor apparently did not do so. 14 The second Lease, as signed by the Lessee on 26 October 2006, had a typed page of special conditions, also numbered 43 to 51. (As typed, the conditions were numbered 4.3, 4.4 etc, but these had been hand altered to 43, 44 etc, and all ten alterations had been initialled by the Lessee). The words were almost identical with the earlier hand written version, except for 50, which in the earlier version called for the Lessee to be Hee Kyung Moon (who is in fact the actual Lessee), but in the later typed version this had been struck out. The later version also had the Lessee's signature at bottom, and had been dated (by her) 26 October 2006. 15 There is yet another printed special condition page, bearing much the same text, numbered 43 to 50, and signed and dated by the Lessee on 20 October 2006. However, this version showed special condition 50 as an almost identical repetition of 49, calling for the bond. This had been struck out by hand, and had a note beside it "replace with rent reviews". The deletion and note were not initialled by the Lessee. 16 The 26 October 2006 Lease was not signed by the Lessor. 17 The 26 October 2006 version of the Lease which had been redated to 30 October 2006 was signed by both Lessee and Lessor in the printed section, and had the hand renumbered typed special condition page as signed by the Lessee, with her dating of it clearly overwritten to change the date from 26 to 30. This special condition page was not signed on behalf of the Lessor. However there is another typed special condition page, with typed numbers 43, 44 etc, with a new special condition 50 calling for the rent adjustments as shown in the Disclosure Statement. This page bears the seal of the Lessor, but not the signature of the Lessee. 18 I am not satisfied on the balance of probabilities, that the Lease, as signed by the Lessee contained the rent increase provision, nor am I satisfied that it has been shown that the Lessee entered the premises intending to be bound by the "last" version of special condition 50. On the evidence before me, the Lease was for a period of three years, commencing on 1 November 2006 at a fixed rental of $4,290.00 per month for the whole term. 19 It follows that the occupation fee claimed by the Lessor can only be at the rate of $4,290.00 per month, or $141.04 per day. Calculating that figure from the date of termination, to the date of these reasons brings up a figure of $41,289.38 as the occupation fee. It follows that the total of rent and occupation fee is $58,449.38 ($17,160.00 plus $41,289.38). Making allowance for the bond, the balance payable by the Lessee to the Lessor is $49,392.71. 20 I was not told whether the bond was paid to the Director General in compliance with section 16C of the Act. For the sake of completeness I will order the release of those funds just in case they were properly so held. 21 I note that the evidence establishes that the Lessee has still not removed her goods from the premises, and so it is appropriate that I order that the lessee continues to be liable at the rate of $141.04 per day for each day of occupation after 23 April 2008. 22 The Lessor seeks interest pursuant to Section 72A. I have already observed that the Lessee appears to have traded from the premises until 28 February 2008, and cannot see why I should not exercise my discretion in favour of the Lessor. The Lessor claimed 10 percent, but I think an estimate of the bank overdraft rate over the period is more appropriate, as more closely reflecting the damage suffered by the Lessor. I propose to allow interest at 8 percent, but of course to properly reflect the Lessor's loss, that figure must be halved to reflect a true average over the whole period, and to avoid falling foul of the prohibition on interest upon interest. I calculate this figure to be $2,305.00. 23 The Lessor sought an order for costs, and that seems appropriate only in respect of the 3 April 2008 hearing, when the Lessor was ready to proceed, and the hearing could have been held, despite the Lessee's confusion about the commencing time. The special circumstance is identified as "manner of conducting hearing"; it would be seriously unfair for the Lessor to have the burden of the costs of preparing for and appearing on that day (see Cripps & Anor v G & M Dawson Pty Limited [2006] NSWCA 81). However those costs exclude the cost of drawing and engrossing the affidavit of Mr Laing, because that evidence was not specific to the delay, and falls within the "no costs" regime of the legislation. Orders 1. Pursuant to section 72(a)(1) of the Retail Leases Act 1994 Respondent Lessee to pay to Applicant Lessor: a. The sum of $49,392.71 by way of debt and b. In the sum of $2,305.00 by way of interest 2. Pursuant to section 72(f)(4) of the Retail Leases Act 1994 the Applicant Lessor entitled to receive security bond in the sum of $9,056.67 3. Pursuant to section 72(f)(3) of the Retail Leases Act 1994, the Respondent Lessee liable to pay to the Applicant Lessor the sum of $141.40 for each and every day after 23 April 2008 during which the Respondent Lessees goods remain within the premises being Shop 2, (Cnr) 38-40 George Street, Parramatta 4. Pursuant to section 88 of the Administrative Decisions Tribunal Act 1997 Respondent Lessee to pay to Applicant Lessor costs of preparing for and attending at hearing and 3 April 2008, on a party/party basis. 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.