Hardcore Gym Pty Ltd v Police Citizens Youth Club Ltd [2014] NSWCATCD 249

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Hardcore Gym Pty Ltd v Police Citizens Youth Club Ltd [2014] NSWCATCD 249 Hearing dates: 25 November 2014 Decision date: 30 December 2014 Jurisdiction: Consumer and Commercial Division Before: D Bluth, Senior Member Decision: Whether the Activity Licence is a retail lease is a triable issue. The Application for Original Decision is to be listed for directions not before 24 January 2015. Catchwords: Jurisdiction whether premises as gym/fitness is a retail shop lease Section 78 of the Retail Leases Act 1974 Legislation Cited: Retail Leases Act 1994 Cases Cited: Car City Minchinbury Pty Ltd v Lifestyle Vehicles Pty Limited [2008] NSWADT 176

Lauven Pty Limited v Venus Adult Shops Pty Limited (2006) NSWADT 359

Moweno v Stratis [2002] NSWSC 1151

Thompson v Easterbrook (1951) 83 CLR 467

Wood & Anor v Bergman (2003) NSWADT 82 Category: Principal judgment Parties: Hardcore Gym Pty Ltd (applicant) Police Citizens Youth Club Ltd (respondent) Representation: Solicitors: One Legal Group (applicant) Thomson Geer (respondent) File Number(s): COM 14/53869 and 14/53870 Publication restriction: Nil

Reasons for Decision 1. In this matter the applicant Hardcore Gym Pty Ltd applied for relief seeking an order that pending the hearing of the issues the respondent, the Police Citizens Youth Clubs NSW Ltd (PCYC) be restrained from taking any measures to retake possession of the top floor area, PCYC Rockdale, 9 Ador Avenue, Rockdale (the premises). 2. This application was first listed before me on 11 November 2014 and I listed the application for hearing on 25 November 2014 on a preliminary question as to whether there is a triable issue regarding jurisdiction. 3. The applicant operates a gymnasium and occupies the premises under an Activity Licence dated 1 January 2014 for a period of 12 months (Activity Licence). Mr Darren Black, CEO of the PCYC wrote to the applicant on 20 August 2014 indicating that the PCYC would not be renewing the Activity Licence which meant that the applicant had to cease operating on 31 December 2014. Reasons for the non-renewal were provided in the letter. Mr Black also said in the last sentence of the letter 'I'd like to thank you for being a part of our Club for the last 17 years and wish you the best for the future'. 4. The applicant's lawyers, One Legal Group wrote to Mr Black on 5 September 2014 asserting that the Activity Licence was regulated by the Retail Leases, 1974 (RL Act) and consequently as there was no certificate provided under s16(2) of the RL Act, the occupancy by the applicant does not expire until 31 December 2018. The certificate under s16(2) is a waiver of a 5 year term. 5. The PCYC rejected this contention on the basis that the occupancy of the premises did not come under the provisions of the Act. This was communicated to the applicant and consequently the applicant filed with this Tribunal an application for Original Decision. The question whether there was a triable issue on the jurisdiction of the Tribunal came before the Tribunal on 25 November 2014. Mr M Ayache of One Legal Group represented the applicant, Mr Robert Lawson of Thomson Geer represented PCYC. 6. As noted earlier the occupancy of the premises by the applicant was pursuant to an Activity Licence. The area the subject of the Activity Licence is noted as 'Gym upstairs, one internal and one external storage areas'. The Tribunal was advised by the parties that the total area of the premises was less than 1,000 square metres. The permitted use stated in the Activity Licence is 'Gym/Fitness'. There were also special conditions attached to the Activity Licence requiring all attendees at the gym to become members of the PCYC. 7. Mr Hicham Hammoud, a Director of the applicant gave evidence. He said that he had established a gym at the premises in 1998 and incorporated a company Hardcore Gym Pty Limited on 12 February 2012. He and his brother, Ali Hammoud are directors and shareholders of the company. The Activity Licence had been renewed annually from 1998 originally in his name and then in the name of the applicant in 2013 and again in 2014. He said that he had never received any breach notice from PCYC and had never had a valid complaint about his occupancy made. The first time that an issue had arisen about the occupancy was in the letter from Mr Black of 24 August 2014. 8. Mr Hammoud was asked about the setting up of the business and advised that over a period of time the retail sales in the gym had grown. Mr Ayache showed Mr Hammoud a number of photos of the gym taken recently by an employee of One Legal and Mr Hammoud described the photos. The first photo showed entry to the building where gym members would pass the front desk for the PCYC on the ground floor and then climb the stairs to the first floor to enter the gym. There were then produced a number of photos showing a counter and a retail outlet selling clothes, caps, sporting apparel, bags, accessories some showing the logo of Hardcore, weight training equipment, vitamins, supplements, drinks and refreshments. The photos were tendered. 9. Mr Hammoud was then shown a letter addressed to him from Ayache Accountants & Advisors dated 18 November 2014 (Accountant's Letter) reporting on the sales mix as percentages of the turnover. In 2013 membership represented 30.60% and in 2014 33.31% of the total revenue. In 2013 clothing and merchandise and drinks and supplements (being the retail component of the business) was 51.73% and in 2014 66.69%. In 2013 equipment sales was noted at 17.67% but for some reason, not explained, no equipment sales took place in 2014. An analysis of transactions by volume shows in 2013 the retail component in volume was 86.36% and in 2014 89.28%. The Accountant's Letter was tendered. The conclusion was that From the two matrices above, it is evident that Hardcore Gym Pty Limited's revenue is derived principally from the sale of clothing, merchandise, drinks and supplements. 10. Mr Lawson also tendered photos. These were taken from the website of the applicant. There were 53 photos in total. Under the heading 'Hardcore Gym Facility' only six of the 53 photos showed elements of any retail activity, the balance of 47 photos showed the gym facilities spread out in the premises.