CITATION: Subway Realty Pty Ltd v The Investment #1 Pty Ltd [2010] NSWADT 123 This decision has been amended. Please see the end of the decision for a list of the amendments. DIVISION: Retail Leases Division APPLICANT Subway Realty Pty Limited Durlabh Singh Balvir Pawar The Investment #1 Pty Limited PARTIES: RESPONDENT The Investment #1 Pty Limited Subway Realty Pty Limited Durlabh Singh Balvir Pawar FILE NUMBER: 095223 and 105023 HEARING DATES: 12 April 2010 SUBMISSIONS CLOSED: 12 April 2010 DATE OF DECISION: 26 May 2010 BEFORE: Fox R - Judicial Member CATCHWORDS: Exercise of option, rent arrears, interest and costs Retail Leases Act 1994 LEGISLATION CITED : Conveyancing Act 1919 Administrative Decision Tribunal Act 1997 APPLICANT Mr Kumar (Subway) REPRESENTATION: RESPONDENT Mr Hewitt (Investment Co.) 1. In 95223, claim by Second and Third Applicants dismissed 2. In 105023, grant leave to discontinue against Second and Third Respondents ORDERS: 3. In 95223, pursuant to s72(1)(f)(iii) of the Retail Leases Act declare that option of renewal in Lease dated 27 September 2005 registered no AB934976, for premises known as ground floor, 92 Liverpool Street, Sydney validly exercised to effect a five year term commencing 1 May 2010 4. In 105023, pursuant to s72(1)(a) of the Retail Leases Act Order Respondent to pay Applicant $2,483.46 as debt for rent arrears, together with $697.43 as debt for interest on arrears pursuant to clause 5.1.5 of Annexure B to the Lease 5. Pursuant to s88 of the Administrative Decisions Tribunal Act in 95223, Respondent to pay costs of First Applicant, no order for costs in respect of Second and Third Applicants and in 105023, Applicant to pay costs of First Respondent, no order for costs in respect of Second and Third Applicants. REASONS FOR DECISION 1 These two matters arise out of the occupancy of the ground floor of 92 Liverpool Street, Sydney. The Applicant in number 105023, The Investment #1 Pty Limited (which is the Respondent in 095223) owns the building and the First Respondent in 105023, Subway Realty Pty Limited is the Lessee. Subway is a multi-national franchisor for the sale of bread roll based food (for both onsite consumption and for takeaway). Its' national practice is to sublet its 'leased premises to its' franchisee operators. The sublessees of the shop in question are Durlabh Singh and Balvir Pawar. They are the Second and Third Respondents in number 105023 and Second and Third Applicants in 095223. 2 For obvious ease of reference I will refer to the parties as "the Investment Corp", "Subway", and "Singh and Pawar". The Claims 3 Investment Corp in 105023 sought the recovery of rent arrears which had started some six or seven months after the Lease began in 2005 as a result of a miscalculation by Investment Corp and its agents. It also claimed interest on those arrears, pursuant to a provision of the Lease. In 095223, Subway (and its sublessees Singh and Pawar) sought a declaration that it had validly exercised the first of two options of renewal, each for terms of 5 years. 4 Further, I will regard Investment Corp as the Applicant, because it transpired that the greatest contest was in relation to the claim for rent arrears, which first arose late in 2005, long before Singh and Pawar became sublessees. 5 Mr Hewitt of Counsel appeared for the Investment Corp and Mr Kumar of Counsel appeared for Subway and Singh and Pawar. Standing of Singh and Pawar 6 The first issue which needs to be resolved (for both matters) is the status of Singh and Pawar. As sublessees and actual operators of the business, the issues at hand are of obvious vital importance to them. However, Mr Hewitt proposed that they had no standing because I had at hand a dispute between only the Lessor and Lessee arising out of the Lease. The involvement of Singh and Pawar, as sublessees, was said to arise out of the terms of the sublease which was alleged to amount to a complete indemnity given by Singh and Pawar to Subway, for all payments made by Subway. Similarly, Subway was obliged to exercise the option, at the request of Singh and Pawar. All of this is in a context where all parties acknowledge the lawful existence of the sublease, the actual consent to it by the Investment Corp as Head Lessor, and the fact that the rent was collected direct from them by the Investment Corp for the whole duration of the Singh and Pawar occupancy, without the intervention of either rental managing agent, or Subway. 7 Mr Hewitt sought, in effect, a verdict in favour of Investment Corp against Singh and Pawar in 095223, and offered to discontinue against them in 105023. In response, Mr Kumar simply referred to the actual involvement of these two parties. I did not rule on this aspect at the time because the "barring" of Singh and Pawar would not affect the status of Mr Pawar as witness, it being clear that he was to be the only person who would give oral evidence on Subway's behalf. 8 Having considered all of the evidence, I am satisfied that Mr Hewitt's proposition is correct. Neither Singh nor Pawar have standing in the matter before me. This follows from the definitions in s3 of the Retail Leases Act 1994:- ""party" means the lessor or the lessee under a retail shop lease". That definition is not relevantly limited or enlarged by the further definition in s63(1):- ""party" or "former party" to a retail shop lease or former retail shop lease includes a person who is a guarantor or covenantor under a lease or former lease." 9 The Act (s3) defines "lessor" to include "sublessor" and "lessee" to include "sublessee", and although the definition of "retail shop lease" avoids the use of the word "sublease", it still refers to an agreement between a person who grants to another person. Thus it is not open to a sublessor to claim that the Act does not apply to his or her agreement with a sublessee, but that does not translate beyond the direct relationship between two identified parties. The Act does not in any section equate "lease" with "sublease" and I was not directed to any other law or decision which might have that effect. Singh and Pawar are simply not parties to the Lease and so are not parties in the retail tenancy dispute before me. It should be noted that s63(1) defines Retail Tenancy Dispute:- ""retail tenancy dispute" means any dispute concerning the liabilities or obligations (including any obligation to pay money) of a party or former party to a retail shop lease or former lease, being liabilities or obligations which arose under the lease or former lease or which arose in connection with the use or occupation of the retail shop to which the lease or former lease relates, and (without limiting the generality of the foregoing) includes a dispute about a security bond, but does not include a dispute of the kind referred to in section 19 (1) (b) or 31 (1) (b) as to the rent payable under a retail shop lease (where the rent is to be current market rent for the shop)." and so I have no jurisdiction (other than for procedural matters) to make any orders against Singh and Pawar under s72. They simply are not parties to the retail tenancy dispute. 10 I digress to observe that the situation might have been different had a requirement of the consent to the sublease been that the sublessee covenanted to stand in the shoes of the head lessee, thus creating a direct contractual obligation between them and so creating for Singh and Pawar the status of covenantor to Investment Corp as lessor. However that was not proposed before me, presumably because Singh and Pawar were not required to adopt the obligations created by Annexure C to the Lease as a condition of consent to their assignment of the sublease. 11 The evidence of Mr Pawar established that he and his partner had purchased the goodwill of the business, and became the assignees of the sublease on 30 January 2007. It was (not surprisingly) his position that liability for any rent arrears prior to that time should be sheeted home to the former sublessee. He pointed to the fact that Ms Chong, as solicitor on behalf of Investment Corp, had required all rental to be up to date and properly paid in advance as at the changeover date (probably as a condition to consenting to the assignment of the sublease). The only claim at that time was for a month's rental (miscalculated in accordance with the error prevailing at that time) and of course no mention was made of the subsequently discovered arrears. This, it was argued was a representation that all rental instalments had been paid. 12 The question of such liability where an assignment is interposed is a very interesting and difficult one indeed, but it does not on proper analysis arise before me and was, in the end, not argued. The dispute before me arose from the Lease between Investment Corp and Subway and as between those parties there was no assignment, although, of course, there was a consent to an assignment of the sublease. Any issue of the obligation of Singh and Pawar to repay to Subway that which Subway may be liable to pay to Investment Corp arises between those parties, and does not arise as between Subway and Investment Corp. 13 I further digress to observe that there would appear to have been no obstruction to Singh and Pawar taking action against Subway in respect of the sublease in relation to matters arising out of the same dispute. Had that been done, there would have been three distinct matters arising out of the same fact situation, and all of them could have been heard together. 14 I grant Mr Hewitt leave to discontinue against Singh and Pawar in matter number 105023, and dismiss the applications by Singh and Pawar in matter number 095223. In view of the obvious "mutuality" of this aspect, no order for costs is indicated in this regard, and I make none. The Evidence 15 Investment Corp's evidence before me consisted of the Affidavit of Sri Susanty dated 11 March 2010. Ms Susanty is a Director of Investment Corp, and was cross examined. On behalf of Subway I had three Affidavits of Balvir Pawar dated 21 December 2009, 11 March 2010 and 19 March 2010. He, too, was cross examined. There were references to the Affidavit of a Mr Stevenson, the Leasing Manager of Subway, but that was not read. The terms of the Lease 16 The Lease in issue was an annexure to the Affidavit of Sri Susanty. It was for a term of 5 years commencing 1 May 2005, and ending 30 April 2010, with two options of renewal, each for periods of 5 years. It was registered with LPMA under number AB934976, and had annexed to it Annexure A containing the particulars which flesh out the provisions of Annexure B, being the "standard" Law Society approved form, it also had Schedule 1, a recitation of the rent and as Schedule 2, a substantial number of operative provisions specifically referring to the letting and as Annexure C, guarantee provisions which appear to make the sublessee the guarantor of the lessee. Schedule 1 set a rental of $111,000.00 per year (exclusive of GST) by monthly instalments in advance of $9,250.00. There were to be yearly reviews of rent – simple increases of 4% and full reviews to market at the commencement of each option term. There was to be a "rent holiday" for the "first calendar month of the initial Lease commencing on 1 May 2005". 17 The permitted use is "sandwich and salad restaurant/takeaway", a use which falls entirely within the schedule to the Retail Leases Act. 18 I note that covenant 32 of Schedule 2 under the heading of "Personal Guarantee" states:- "It is a condition of this Lease that the licencee/franchisee of Subway Systems (Australia) Pty Limited conducting business from the premises will guarantee the performance of the Lessee's obligations hereunder and such guarantee will contain such covenants and conditions as are reasonably required by the Lessor". This guarantee was effected by Annexure C, which was signed by the then subtenant, but never adopted by Singh and Pawar. 19 Schedule 2 also contained a provision 9 headed "Notification":- "The Lessor and Lessee acknowledge that it is extremely important that rent be paid in a timely manner as required by this Lease. Since the Lessee may sublet the premises to a licencee/franchisee of Subway Systems Pty Limited and the licencee/franchisee may pay rent directly to the Lessor, the Lessee does not receive rental income and will not know if rent has not been paid. Since the parties recognise that time is of the essence in this matter, the Lessor agrees to give written notice to the Lessee within 21 days of any default committed under this Lease by a sublessee or assignee of the Lease. Any notice which is to be given to the Lessee as required by this Lease shall be sent to the premises and to the Lessee's registered address as follows: Subway Realty Pty Limited Citilink Business Centre 153 Campbell Street BOWEN HILLS QLD 4006" This quite unusual provision is critical to the resolution of several parts of the dispute. The Option 20 The option was created by clause 4 of the standard Law Society document. That provides that a Notice of Exercise must be given no earlier than 6 months before the expiry of the term, and no later than 3 months before the expiry of the term. 21 It was conceded that Subway's letter of 13 August 2009 was a valid notice of exercise of option. However this letter arose in the midst of correspondence orchestrating the rental arrears payment dispute which, as indicated earlier in these reasons, was a separate issue before me. It was alleged that there were arrears of perhaps $14,000.00 or $16,000.00, together with a substantial liability for interest. The dispute was unresolved as at 13 August 2009 (and in fact is unresolved to this day). The response to the notice of exercise were letters by Chong and Associates on behalf of the Investment Corp dated 21 August 2009 and 26 August 2009. The part of that correspondence relevant to this aspect of the matter in the letter of 21 August 2009 was:- "…. We have consulted Counsel who has advised that proceedings be brought claiming outstanding rent plus interest plus legal costs and expenses in the matter. Our client denies the validity of the purported exercise of option to renew the Lease, and we are instructed to provide you with an updated schedule of outstanding rent plus interest and outstanding to date…." 22 There was a reply by Subway of 24 August 2009, making an offer of part payment of the alleged arrears in full settlement, and that evinced the response of 26 August 2009:- "We refer to your letter of 24 August 2009. We instruct that the landlord is not agreeable to the contents of your letter. The landlord refers to our letter to you of 21 August 2009, and demands immediate payment of outstanding rental arrears of $21,026.78 referred to in the schedule attached our said letter, plus payment of legal costs incurred in the matter. The tenant is in breach of the Lease, and the landlord will not consider any further discussions until the essential breach of the Lease is rectified immediately." The effect of s133E (Conveyancing Act 1919) 23 Section 133E of the Conveyancing Act appears not to have been in the contemplation of the parties at the time of this correspondence. 24 At the hearing Mr Hewitt argued firstly that I had no jurisdiction to consider the application of s133E because s133F provides that the Court has certain powers in that regard, and the reference to "Court" in that section is, clearly, to the Supreme Court and does not extend to the Tribunal. That proposition seems to me to not need further consideration, simply because s72(1)(f)(iii) of the Retail Leases Act gives me power to make an order:- "Declaring the rights and liabilities of parties under law, whether any consequential relief is or could be claimed or not." Whatever restrictions there may be upon the jurisdiction of the Tribunal, it cannot simply disregard the plain strictures of law, especially when they impact on retail shop Leases. 25 It will be recalled that s133E of the Conveyancing Act requires:- "(1) This section applies to a lease that contains: (a) an option exercisable by the lessee, and (b) provision by which the lessee's entitlement to the option is made to depend on performance by the lessee of any specified obligation, whether such performance is required before, or after, or before and after, the giving of any notice by which the option is exercised. (2) Despite any provision of the kind referred to in subsection (1) (b), no breach by the lessee of any relevant obligation precludes the lessee's entitlement to the option unless: (a) the prescribed notice has been served on the lessee in respect of the breach , and (b) the lessee's rights are extinguished in relation to the notice. (3) In subsection (2): "breach" of an obligation includes, where the obligation requires any thing to be done, any neglect or failure to do the thing concerned. "obligation" includes any agreement, covenant, condition or stipulation by which the lessee is required to do or refrain from doing any thing. "prescribed notice" means a notice in writing: (a) specifying the lessee's breach of the relevant obligation and served on the lessee: (i) within 14 days after the giving of a notice by which the option is exercised, if the breach occurred before the giving of that notice, or (ii) within 14 days after the breach, if the breach occurred after the giving of that notice, and (b) states that, subject to any order of the court under section 133F, the lessor proposes to treat the breach as precluding the lessee from entitlement to the option." 26 Mr Hewitt argued that the correspondence to which I have referred amounts to a prescribed notice. I disagree. Although it does state "the tenant is in breach of the Lease" and desires immediate rectification of that breach, it makes no other reference which might in any way be conceived as adverting to the requirements prescribed by s133E. In any event, it is clearly headed "without prejudice" and that, of itself, is completely fatal to any suggestion that it might suffice as a prescribed notice. 27 The letter of 21 August 2009, being on an open basis, had greater potential of perhaps performing the role of a prescribed notice. It clearly enough refers to the claim for the payment of the arrears, and annexed a schedule which identified that sum with some purported accuracy and does specifically deny validity of the purported exercise. I have always been of the view (and I was referred to no law or decision to the contrary) that in order for a notice to fall within the requirements of s133E, it should make specific reference to that section. The letter of 21 August 2009 does not, and that I am satisfied is fatal to any suggestion that the letter is a prescribed notice. 28 Even if I am wrong in this conclusion of law, whatever else the letter does, it does not have the appropriate tenor to give a period of one month, to allow the remediation of the breach or approach the Court for an Order and so fails to identify one of the essential elements of such a notice. 29 In this context it seems worthwhile to observe that whilst s129 of the Conveyancing Act specifically does not apply to a breach of the covenant for payment of rent (see s129(8)), s133E is not so limited. 30 It follows that I am satisfied that Subway's letter of 13 August 2009 was a valid exercise of the option, and of course that means that there is presently on foot as between Subway and the Investment Corp an agreement for a further term of 5 years commencing on the first day of May 2010. The Rental Arrears 31 The Affidavit of Sri Susanty also established that the present Lease arose as a result of negotiations after the previous Lease had expired. That previous letting had been managed by Drake Property Pty Limited, but that agent was dismissed in August 2006, some year and a half after the present Lease commenced, and Investment Corp took over management direct. The rent payable in the last year of the previous Lease had been $8,266.17 per month. A rent holiday of one month had been negotiated as part of the present regime, waiving the payment due 1 May 2005. However, a scheme appears to have been applied to allow the payment of $8,266.17 per month to continue for some months to achieve the same "discount". Payments for May to October were at $8,266.17 each and the November payment was $9,822.40. The December payment was $10,175.00, the full monthly instalment which had been agreed as the commencing rental for the new Lease. From commencement up to (and including) 1 November 2005, the total rent amount called for by the Lease was $61,050.00, but the amount actually paid, including the November payment, was $59,419.42, a shortfall of $1,630.58. That shortfall continued to be carried forward until 1 May 2006, when the first 4% increase under the current Lease fell due. The requirement for payment of the increase (and the arrears) apparently went unnoticed, and for the next year (1 May 2006 to 30 April 2007) the monthly rent instalments paid were $10,175.00 despite the liability for that year being $10,582.00 per month. The oversight was also not noted when Investment Corp took over its' own management in August 2006. On 1 May 2007 the 4% increase was applied, but it was applied to the incorrect lower "starting" amount, and so was $10,582.00 per month instead of the correctly calculated figure of $11,005.28 per month. The same error occurred in May 2008 and continued until March 2009. 32 It was clear that Investment Corp had, prior to March 2009, simply demanded and received the incorrect lower monthly amounts. 33 In February 2009 the shortfall was calculated to total $14,154.00, and payment of that amount was demanded in M/s Chong's letter of 6 March 2009. However by the end of March 2009 or mid April, it was recalculated to $16,637.26. The latter figure was conceded to be the correct calculation, and the cause of the miscalculation which lead to the claim for $14,154.00 was never explained to me. 34 Subway's Reply argued that the demand of 6 March 2009 (as corrected by the later demand) initiated the liability for the payment of the arrears, and that there was no liability before that demand. Although in a more conventional lease it may well be accepted that liability for rent (and arrears) arises without specific demand, in this instance the terms of the covenant in the Schedule 2 clause headed "Notification" obliges the Lessor to give notice of a rent default. It follows that the submission in Subway's Reply is correct. It had no actual obligation to make good the arrears until it received the 6 March 2009 letter. The covenant shifted the burden of responsibility for assessment of ongoing collections to the Lessor, and so delayed the obligation to pay until it was notified. This point is also important in relation to the question of liability for interest, which is dealt with later in these reasons. 35 I think it beyond doubt that that which is found to be properly due as between Investment Corp and Subway is payable. Failure to demand the proper amount does not amount to a waiver, and can only be argued to be an estoppel if loss flows from the representation said to be relied on. There is no representation as between Investment Corp and Subway, and I fail to see how an obligation to pay an amount which transpires to be properly required to be paid pursuant to an agreement between two parties can be said to be a loss suffered by one party as a result of the conduct of the other. 36 In the 21 December 2009 Affidavit of Mr Pawar there was a reference to an estoppel document raised by Aequitas, Attorney the solicitors who represented the outgoing Assignor of the sublease. That is a document which sought to calculate out the rent due as at the date of the assignment and sought to raise some other representations in relation to the Lease. It might have had some effect had it been not left entirely blank and, apart from that, bereft of signature of any parties. 37 I trust it to be clear from the above that, in my view, Subway is liable to the Investment Corp for the conceded amount of arrears of $16,637.00. However my order will be for payment by Subway to Investment Corp of the amount of $2,483.46 (being the difference between $16,637.46 and the $14,154.00 already held in Ms Chong's trust account on behalf of Investment Corp) as a debt. The Claim for Interest 38 The question which vexed the most was the claim for interest on the arrears. These actually commenced with the November 2005 shortfall and substantially ended with the payment of $14,154.00 early June 2009 into the Chong Trust Account. Investment Corp seeks to exercise its rights under section 5.1.5 of the Lease to claim interest on arrears and that is alleged to total $6,053.04 up to 28 February 2010. That amount appears to be calculated at the rate of 12% authorised by the Lease. To put this claim in context, it is necessary to consider s72A of the Retail Leases Act. This provides:- "(1) When the Tribunal orders on a retail tenancy claim or an unconscionable conduct claim that a person pay money to another person, the Tribunal may order that there is to be included, in the amount ordered to be paid, interest at a specified rate on the whole or any part of that amount for the whole or any part of the period between when the cause of action arose and when the order takes effect. (2) If the whole or part of an amount claimed under a retail tenancy claim or an unconscionable conduct claim is paid during proceedings in the Tribunal on the claim, prior to or without an order for payment being made in respect of the claim, the Tribunal may order that interest be paid at a specified rate on the whole or any part of the money paid for the whole or any part of the period between when the cause of action arose and the date of the payment. (3) The rate of interest specified by the Tribunal under this section must not exceed the rate at which interest is payable on a judgment debt of the District Court. (4) This section does not: (a) authorise the giving of interest on interest, or (b) apply in relation to any debt on which interest is payable as of right whether by virtue of any agreement or otherwise, or (c) affect the damages recoverable for the dishonour of a bill of exchange." 39 The limit imposed by s72A(3) is excluded in the present matter by s72A(4)(b); the payment of interest sought to be enforced is one which arises not by the exercise of my discretion but by virtue of an agreement, being clause 5.1.5 of Annexure B to the Lease. 40 As indicated earlier in these reasons the rental amount short paid as at November 2005 was $1,630.58 and thereafter there was a cascade of mounting debt as a result of the rolling error of $407.00 per month. This meant that each monthly payment was another $407.00 "short", that amounts to $4,884.00 per year, and eventually compounded to the figure of $16,637.46 now sought. Obviously, the shortfall became static as at 2 April 2009, when, the error having been discovered, the correct monthly amount was demanded and tendered. 41 The period of potential interest liability is from 1 November 2005 to 30 April 2009, a period of 3 years and 6 months. The Schedule of Interest in the Affidavit of Sri Susanty correctly calculates the interest at 12%, but claimed it for 4 years and 6 months, a year more than the actual elapsed period. Be that as it may, the calculation of the actual amount does not arise, because I am satisfied that no liability arose at all for this period. The breach by Investment Corp of the "notification" covenant in clause 9 of Schedule 2 meant there was no obligation to pay the rental arrears until demand. There can be no liability for interest when the payment upon which the interest is claimed was not "overdue for 14 days" (to quote cl 5.1.5 of Annexure B). It follows that the liability for interest arose not as at November 2005, but as at (for practical purposes) 1 April 2009 – being approximately 14 days after the corrected demand of $16,637.26. 42 However that is not the end of the matter because of the June 2009 payment of $14,154.00 by Singh and Pawar (on behalf of Subway) to M/s Chong and held in her trust account. This amount was paid pursuant to an email from Aimee Loinig on behalf of Subway:- "Dear Audrey Thank you for getting back to me so quickly. I have sent the wiring instructions to our accounting department for processing. Please understand that Subway Realty Pty Limited (SRPL) is tendering the money to your trust account in good faith to the demand for payment made by your client. The payment is being tendered by SRPL under protest until the sit down, as suggested by you in the below email, occurs with a representative from SRPL's Queensland's office. Additionally, once the back rent amounts are ascertained, tenant would need an estoppel letter from Landlord stating that all arrearages are satisfied and that rent is current….." 43 I struggled to understand the nuance of some of this original language but do not believe that it demonstrates a formal escrow. It seems to me to have been a payment without admission of liability, and not a payment paid as a rejectable offer of full and final settlement. In this regard it should be noted that the letter from Subway dated 10 September 2009, although without prejudice, is further confirmation of the unconditional nature of the payment. Its' words are:- "I am instructed that Subway Realty Pty Limited rejects the Landlord's claim for interest and other costs beyond our payment of $14,154.60, being the amount of rent arrears originally claimed." 44 There was an earlier letter from Subway (after the June 2009 payment) dated 24 August 2009 (which was also without prejudice) containing the words:- "In order to resolve this matter our franchisee Mr Balvir Pawar has requested I write to you and offer the sum of $10,000.00 (to be deducted from the funds held in your trust account) as an ex gratia payment in full and final satisfaction of the Landlord's claim." 45 Although these words may bring up a hint that the funds were held either in escrow, or by Ms Chong as stakeholder on behalf of both Investment Corp and Subway until the offer of settlement which it proposes is accepted, I think it is just that, a mere hint, and in any event the letter of 10 September 2009 removes any doubt. 46 I am satisfied that, as claimed by Mr Kumar for Subway, from June 2009 onward the amount of $14,154.00 was held in Ms Chong's trust account solely on Investment Corp's behalf, and so the question of interest for that amount does not arise. That means that the issue of interest liability for arrears since June 2009 is limited to the amount which might be payable in respect of the actual arrears of $2,483.46, which, at 12% for the relevant period (July 2009 to end April 2010) amounts to $248.30. Of course, added to this, would need to be interest on the whole amount of $16,637.46 at 12%, for the months of April, May and June 2009 which I calculate to be $449.13. It follows that the amount of interest actually payable up to end April 2010 is $697.43, an amount much less than the amount of $6,053.00 up to end April 2009 claimed in the Affidavit or even the later claim of $5,886.70 up to end January 2010 made in the Application. Costs 47 In relation to the matter of costs, it seems to me that Investment Corp adopted an entirely untenable position in relation to the exercise of the option in the face of the very clear requirements of s133E of the Conveyancing Act. In addition to that, in relation to the arrears, and interest, it claimed an amount of $16,637.46, a very substantial amount ($14,154.00) of which had, in truth, already been paid to it, and, on top of that, its claim for interest was based on a very obvious initial miscalculation (not as to the rate of interest, but as to the period of liability) and then compounded by failing to take its' own breach of covenant into account. That being the case, it seems to me that this is an instance where, in both matters, it is fair, pursuant to s88 of the Administrative Decision Tribunal Act 1997, to direct that Investment Corp pay the costs of Subway. 22/06/2010 - Typographical errors - Paragraph(s) Paragraph 7, substitute affect for effect, Paragraph 9 add 'sub' to lease, Paragraph 9 substitute The for 'it', Paragraph 44 delete words 'and so' so it reads 'after the June 2009 payment', Paragraph 47 amend s113E to s133E Conveyancing Act. 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