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. The Hearing 18Hearing of these proceedings took place at Sydney on 5 October 2012. The Applicant has a poor understanding of the English language; however, he had sworn affidavit material with the assistance of an interpreter and translator, which was filed and then admitted into evidence during the hearing. The Applicant was assisted in preparation for the hearing by Mr Haney Soltan who had also obtained leave to appear for and with the Applicant at a previous Directions Hearing. 19No steps were taken by the Applicant or upon his behalf to arrange for an accredited interpreter to attend to assist him at the hearing. This should have been done. Ultimately, the Tribunal was prepared to accept the assistance of the Applicant's friend Mr Hakim Fatah. The Tribunal accepts that Mr Fatah did his best to honestly assist in interpreting questions and answers for the Applicant during the course of the hearing. 20Mr Soltan presumed that either he or his trading company had the right to represent the Applicant during the hearing. Mr Soltan claimed that leave to represent the Applicant in the proceedings had previously been granted by Member Montgomery during a directions hearing. No record of such leave having been granted appears upon the Tribunal file. Mr Soltan described himself on the Amended Application which he had filed on behalf of the Applicant as a "Professional Agent"; however, when asked about this, he indicated that he did not possess any formal qualifications. 21The Tribunal was, in the above circumstances, also somewhat concerned as to the business name "The Retail Leases Doctor" which was stated to be the legal entity purportedly appearing for the Applicant in the proceedings. At the commencement of the hearing, Mr Soltan stated that this was a registered business name belonging to him but that he did not at that time have any registration certificate in his possession. Mr Soltan undertook to provide this certificate to the Tribunal at a later time. A certificate was then later supplied to the Tribunal; however, this certificate indicated that the business name "The Retail Leases Doctor" was only registered on 9 October 2012, some days after the hearing. The Tribunal remains concerned that it appears to have been given misleading material and information, and that an entity which did not legally exist and which did not have any professional status was put forward to be a professional entity retained to represent the Applicant in these proceedings. 22At the hearing, evidence was given by the Applicant and by Mr Arun Varma. The material which had been filed on behalf of each of the parties was also admitted. Oral submissions were made by both parties, and the hearing time allocated for this matter was extended through the luncheon break so as to permit the matter to be concluded. 23Following oral submissions, Mr Soltan sought permission to file further written submissions at a later time. This application was rejected because it was considered there was nothing further to be added to what had already been said and admitted into evidence on behalf of each of the parties. 24Notwithstanding the above ruling, at the time of subsequently providing the business name certificate which is referred to above, Mr Soltan took it upon himself to file and serve written submissions and to invite the Respondent to do the same. The Respondent, whist expressing some uncertainty as to whether or not this was an appropriate step for the Applicant to take or whether the Respondent should now be providing anything further, proceeded to provide some further written arguments to the Tribunal. Neither of these further written submissions added anything to the evidence provided or to the oral submissions made during the course of the hearing and they should not have been forwarded to the Tribunal. 25It was indicated to the parties at the end of the hearing that an opportunity would be given to later make written submissions as to costs. This is reflected within the orders below. Findings and Decision 26The claims for payment made by the Respondents, as contained within their "Amended Application for original decision", are nebulous. These claims are also not supported by any cogent evidence. 27The Respondents claim an entitlement to payment of rent from the Applicant in circumstances where at no time was exclusive possession or quiet use and enjoyment of the Premises given to the Applicant. The Respondents say that the reason why the Applicant was unable to return to the Premises was due to his breach of the lease agreement in not providing an insurance certificate and a security deposit, but this alleged reason was never communicated to the Applicant; it is also contradicted by the fact that the Applicant was allowed into possession of the Premises in order to effect installation of fittings during a three week rent holiday period but subsequently was asked to leave the Premises to permit repairs to take place and was unable to again re-enter due to locks being changed by the Respondents' mortgagee. 28The Respondents' claim that it was the Applicant's failures which caused the Premises to be taken by their mortgagee is fanciful. There is simply no evidence to support such an assertion. Further, it is quite clear from the very documents which were provided by the Respondents to the Tribunal that the Respondents' bank had taken legal proceedings against them for previous alleged default and that it was likely to seek to take possession of the Premises some time shortly after the Applicant had entered into the subject lease agreement. 29It is clear from the evidence that the Applicant executed the lease documents which were provided to him on behalf of the Respondents, and that these executed documents were provided to the Respondents' agent who then allowed the Applicant into possession of the Premises pursuant to the terms of the lease agreement between the parties in order to undertake the agreed fit out work. 30The Applicant was only able to recover a sum of $2,950 from the Respondents' agent, out of the total amount of $11,200 which he had paid previously. Due to the Respondents' mortgagee taking possession of the Premises, preceded by the Respondents' request that the Applicant vacate the Premises during the rent free period, the Applicant simply did not obtain any consideration for the rent payments made by him. Accordingly, the sum of $8,250 is properly due and payable by the Respondents to the Applicant. 31The Applicant seeks payment of a sum of $7,500 in respect of fixtures and fittings. Of this amount, a sum of $600 is said to refer to "sundry items" in respect of which no satisfactory evidence of has been provided to establish the nature or cost of such items. This component of the claim cannot therefore be allowed. 32The balance amount of $6,900 relating to fixtures and fittings is for the claimed costs of a counter, hot food bar and shelves. A receipt from Petra Equipment in the sum of $400 being the cost of the hot food bar was placed into evidence, as was a hand written piece of paper which seems to be dated 22 February 2012 from someone called "Yacine.a" which refers to sale which took place at Liverpool of "46 bays with 6 shelves" for a total amount of $3,500. In relation to the counter, a receipt dated 3 February 2012 from a person "Raj" indicating that on that date there was a cash payment of $3,000 made by "Nehad", was put into evidence. These post dated and somewhat vague receipts are clearly an unsatisfactory basis for establishing any loss suffered by the Applicant. What further complicates this component of the claim is that, during giving evidence at the hearing, the Applicant conceded that he been able to successfully recover these items from the mortgagee. There was no further evidence as to what the Applicant had done with these items or whether these items had subsequently been sold or otherwise utilised by him. In these circumstances, there is simply insufficient evidence to establish the extent of any loss suffered by the Applicant in relation to the fixtures or fittings which were installed at the Premises. 33The Applicant also claims a loss of wages at $650 per week for a period of 33 weeks from the beginning of November 2011 until the end of May 2012. He claims that when he left his job with MRM Supermarket in order to begin setting up his new business at the Premises, he was earning $650 per week. Within his affidavit evidence, the Applicant says that, in relation to this part of his claim: "This experience has left me traumatised emotionally and financially and I could not resume my normal life for another 4 months". 34In support of this claim for loss of wages, the Applicant also relies upon a letter dated 13 September 2012 from a person by the name of Mahmoud Kahdir who describes himself as the general manager and proprietor of MRM Supermarket. The letter states that the Applicant had worked for Mr Kahdir for one year prior to 31 October 2011 and had "earned a weekly wage of $650". Mr Kahdir further states in his letter that "I'm happy to give evidence to that effect in any court"; however, Mr Kahdir did not attend to give evidence during the hearing. This absence is not of itself fatal to the Applicant's claim for loss of earnings, but may have addressed the problems outlined below. 35The claim for loss of earnings is quite unsatisfactory. There is no apparent reason why payslips or banking records, a group certificate or a tax return have not been provided to the Tribunal to support the amount claimed. It is also unclear whether the "weekly wage of $650" is a gross figure or a net figure. The evidence given by the Applicant does not satisfactorily explain why he did not return to MRM Supermarket or to any other type of employment at least by late January 2012 when it was abundantly clear that he had been denied access to the Premises. Within his affidavit as recited above, the Applicant says that he was unable to return to employment because he was "traumatised emotionally and financially"; a quite different reason for the Applicant not returning to work was put forward upon his behalf by Mr Soltan, who submitted that the reason why the Applicant did not return to employment until June 2012 was because his legal position in relation to the Premises and the lease was unclear. 36The Tribunal is not satisfied on the balance of probabilities that the Applicant has lost the amount claimed nor can the amount of any loss of income be determined with any satisfactory precision. Further, the Applicant has failed to show that he has mitigated any loss of income. Accordingly, the claim for loss of income is not allowed. 37The Applicant incurred an expense of $760 for the mediation fee and this should be included within the amount ordered to be paid by the Respondents. 38Interest is allowed at the appropriate statutory rates as follows: 19.11.11 to 31.12.11 - 42 days @ 8.75% - $83.07 01.10.12 to 30.06.12 - 183 days @ 8.25% - $341.24 01.07.12 to 08.11.12 - 131 days @ 7.5% - $222.07 Total $646.38 39Accordingly, the total sum of $9,656.38 is ordered to be paid by the Respondents to the Applicant. Orders (1)The Respondents are to pay to the Applicant the sum of $9,656.38. (2)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. ********** 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. Decision last updated: 15 November 2012