Lostumbo Investments Pty Ltd and anor v Ottavio Galletta and ors. [2007] NSWIRComm 41

Industrial Court of New South Wales

CITATION: Lostumbo Investments Pty Ltd and anor v Ottavio Galletta and ors. [2007] NSWIRComm 41

APPLICANTS: Lostumbo Investments Pty Ltd and anor PARTIES: RESPONDENTS: Ottavio Galletta and ors

FILE NUMBER(S): IRC 2787 of 2004

CORAM: Haylen J

CATCHWORDS: Unfair contract - Industrial Relations Act 1996 - s 106 - lease of business and premises to conduct cafe/bar - representations as to takings - representations accurate regarding takings immediately prior to commencement of lease but not reflective of profitability of business - deed of guarantee making applicant liable should takings fall below specified average figure over four week period at conclusion of lease - guarantee in sum of $150,000 - downturn in business after 6 months of 3 year lease - applicant commences proceedings under s 106 claiming rent of $5000 for business and premises excessive - claim that $150,000 guarantee unfair - guarantee exercised by respondents due to fall in takings - expert evidence as to takings of business before, during and after lease and value of business and premises - evidence fails to demonstrate rent unfair or excessive such as to warrant intervention of Court - different consideration applied to deed of guarantee - respondents aware of lower takings than those specified in deed - respondents' case put forward on basis that no one could generate returns for this type of business over term of lease especially because of seasonal factors and competition - deed of guarantee nevertheless served to guarantee pre-lease takings for respondents three years later - no relevant loss suffered by respondents - business performs well below represented takings including when respondents return to possession of business - deed of guarantee unfair - deed voided ab initio