Fathullah v Varma [2012] NSWADT 237

Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Fathullah v Varma [2012] NSWADT 237 Hearing dates: 5 October 2012 Decision date: 15 November 2012 Jurisdiction: Retail Leases Division Before: K Rickards, Judicial Member Decision: The Respondents are to pay to the Applicant the sum of $9,656.38. There will be no order made in relation to costs unless the Applicant files and serve written submissions as to costs within 14 days of the date of these orders. If the Applicant files and serves written submissions as to costs within this period, the Respondents are to file and serve any written submissions in reply within a further period of 14 days, following which a decision will be made in relation to the costs of these proceedings based upon the papers filed, in accordance with the provisions of section 76 of the Administrative Decisions Tribunal Act 1997. Catchwords: Failure of Consideration; Compensation Legislation Cited: Retail Leases Act 1994; Administrative Decisions Tribunal Act 1997 Category: Principal judgment Parties: Nihad Fathullah (Applicant) Arun Deo Varma (First Respondent) Kamlesh Deo Varma (Second Respondent) Aronseh Deo Varma (Third Respondent) Representation: H Soltan (Applicant, agent) Mr Varma (Respondent in person,agent) File Number(s): 125118

REASONS FOR DECISION

Background 1The Respondents were the owners of retail shop premises located at 241 Northumberland Street, Liverpool NSW ("the Premises"). 2The Applicant became aware that the Premises were available for lease. On 6 August 2011 he paid the sum of $3,700 into the trust account of the Respondents' agents PRD Nationwide Cabramatta. This payment is slightly less than the equivalent of the monthly rent figure apparently agreed between the parties. 3The parties then engaged solicitors to act in relation to the proposed lease of the Premises. The legal firm Rams Family Lawyers acted on behalf of the Respondents and on 23 August 2011 forwarded disclosure documents, a retail tenancy guide and a drafted lease to the agents PRD Nationwide Cabramatta. The Lessor's Disclosure Statement prepared on behalf of the Respondents relevantly indicated that: the estimated hand over date for the Premises under the lease was to be 28 September 2011; the Premises were to be used as a mixed business and grocery store; the term of the lease was to be for a period of 3 years; the annual rent was to be $45,000 plus GST, and; there would be an initial three week rent free period. 4This Disclosure Statement disclosed that there were ongoing legal proceedings relevant to the Premises and that the Respondents had a "challenge to mortgagee's default enforcement judgment in the Supreme Court". 5The Supreme Court proceedings were again later referred to in a letter dated 26 October 2011 from the Respondents' solicitor to the Applicant's then solicitor Dr Mohammad Rashed. This letter also enclosed the Disclosure Statement signed by the Applicant, and set out that the Respondents required an executed lease agreement, an insurance certificate of currency for the Premises, a bank cheque for 3 months' rent, and a cheque for registration fees, but stated: "The Lease is conditional upon successful outcome of lessors' action in the Supreme Court to set aside Mortgagee (sic) default judgment with regard to the property subject of the Lease." 6Despite the Respondents' submission made during the hearing that the Respondents' stated requirements were not met by the Applicant because no suitable security for rent was provided, it should be here noted that the Tribunal is satisfied from the evidence that a Bank Guarantee dated 2 December 2011 in the sum of $12,375 was obtained by the Applicant in favour of the Respondents and that, in accordance with section 16B of the Retail Leases Act 1994 this form of security was valid and appropriate. 7The Applicant executed the lease and then moved into possession of the Premises on or about 19 November 2011; this was after he had been given a key by the Respondents' agent and after he had paid the agent a further sum of $7,500. 8On 22 November 2011, the Respondent Mr Arun Varma sent an email to the Respondents' agent PRD Nationwide in the following terms: "Dear Effie, The tenants (sic) has moved in. Do you have the Deposit and the Bank Guarantee in order. Tenant says that he has paid you 2 plus 1 months rent. Can you please deposit 2 months rent into our nominated account by today. Regards, Sam" 9It appears from the agents' account records that payment of rent was later forwarded by the agent to the Respondents and that the agents also then applied part of the funds paid by the Applicant toward payment of the agent's "letting fee" and other expenses. 10In order to prepare for trading, the Applicant purchased a counter, shelving and a hot food bar, and then set about having these items installed. Towards the end of the first week of the rent free period of occupation, there was heavy rain; this caused the ceiling of the toilet inside the Premises to partially collapse, which in turn allowed water to penetrate into the Premises. 11The Tribunal accepts the Applicant's evidence that on 29 November 2011 a post envelope addressed to the Respondents was delivered to him at the Premises whilst he was undertaking the fit out work, that he passed it onto one of the Respondent Mr Arun Varma's sons (who are the other Respondents), that this person then opened the envelope in the Applicant's and said certain things which led the Applicant to understand that he needed to speak to Mr Arun Varma about the Premises and that there had been some form of communication of an adverse nature from the Respondents' mortgagee. 12The Tribunal also accepts that, on the following day, a conversation took place between the Respondent Mr Arun Varma and the Applicant during which Mr Varma asked the Applicant to cease using the Premises or undertaking any activities within it, because the Respondents needed to have their insurance company repair the damage which had been caused by the storm; following this conversation, the Applicant returned the original set of keys to Mr Arun Varma (who is also referred to in various communications and affidavits as "Sam"). 13The legal proceedings referred to within the Disclosure Statement and also within the letter from Rams Family Lawyers to the Applicant did not conclude favourably for the Respondents. The Applicant continued to unsuccessfully enquire as to progress with the repairs which he had been told needed to be undertaken through the Respondents' insurer so that he could go back into the Premises until 24 January 2012 when he went to enter the Premises using a copy key only to discover that the locks had been changed. At about this time, he learnt that these locks had been changed by the Sheriff as a result of action taken by the Respondents' mortgagee. 14The Applicant was eventually able to recover a sum of $2,950 from the agent PRD Nationwide from the funds which he had deposited. Although not volunteered within the affidavit material filed upon his behalf in these proceedings, he conceded during the course of giving evidence that he was also able to later recover the hot food bar, counter and shelving from the mortgagee. 15In his original Application, the Applicant sought an order for payment of the sum of $8,250 being the remainder of the rent which he had paid to the agent and which had not been refunded to him. Later, after the Applicant came to be assisted in these proceedings by Mr Haney Soltan, an Amended Application was filed which included additional claims of $7,500 for lost fixtures and fittings, $760 for the cost of mediation and $21,450 for the loss of 33 weeks' wages. 16The Respondents did not file any actual Cross Application. Rather, within a letter sent by Mr Arun Varma to the Tribunal enclosing various evidentiary documents, the Respondents made a claim for "balance of rental payments due in an amount of $11,250, and a further amount for interest". The Respondents then further enlarged their claim within a document entitled "Amended Application for original decision" which set out claims for "liquidated and unliquidated damages for the sum of $13,800" and "compensation for the sum of $300,000" together with an "Order to restrain Applicant (Nihad) from entering and causing any future disruptions to our principle (sic) place of business and residence". 17Despite the irregular manner in which the Respondents brought the above claims, the Applicant through both his interpreter and Mr Soltan agreed to have these claims heard and determined at the hearing.