Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Criniti v The Organisers Pty Ltd t/as Five Dock Internet Cafe [2015] NSWCATCD 87 Hearing dates: 13 July 2015 Decision date: 17 July 2015 Jurisdiction: Consumer and Commercial Division Before: S Westgarth, Deputy President Decision: 1. Orders 3 and 4 made by the Tribunal on 2 June 2015 in proceedings COM 15/14576 are set aside. 2. The lessor must commence an application in the Tribunal against the lessee within fourteen days of the date of this order for the purposes of seeking whatever orders the lessor wishes to seek against the lessee and such application shall be accompanied by the appropriate certificate concerning mediation. The application will be accompanied by all evidence, statements and other material which the lessor wishes to rely upon in support of its application. 3. At the time of filing the application referred to above the lessor will serve a copy of the application and supporting evidence, material and statements upon the lessee. Within fourteen days of the receipt of the lessor's application, evidence and statements the lessee will file and serve it's evidence, statements and any other material upon which the lessee wishes to rely in defence of the lessor's application. 4. The proceedings will then be listed after 15 August 2015 for hearing. 5. If these orders cannot be or are not complied with either party may request the Tribunal to list the proceedings for further directions. Legislation Cited: Retail Leases Act 1994 Civil and Administrative Tribunal Regulation 2013 Category: Principal judgment Parties: Nicolas, Kathy, Francesco, Nicola and Maria Criniti (applicants) The Organiser Pty Ltd t/as Five Dock Internet Café (respondent) Representation: Applicants: Miss D. Alpha, managing agent Respondent: Ms C. Bellavia File Number(s): COM 15/37683 Publication restriction: Nil reasons FOR DECISION 1. The applicants are the lessors of premises at [**] Great North Road, Five Dock and the respondent was the lessee of those premises pursuant to a lease for one year commencing 1 January 2015. The lease is a retail lease and the Tribunal has jurisdiction to determine the dispute between the parties by reason of the provisions of the Retail Leases Act 1994 (NSW) (the Retails Leases Act). 2. The current application before the Tribunal is made under Regulation 9 (see the Civil and Administrative Tribunal Regulation 2013) and is an application from the lessor to set aside some orders of the Tribunal made on 2 June 2015. The particular orders which the applicants seek to have set aside are orders 3 and 4. Order 3 was an order that the security deposit is to be refunded to the lessee and order 4 was an order that the lessor was to reimburse the lessee the sum of $1,397.00 "paid for the upgrading of the switchboard and testing of GPOs". The lessor has not yet complied with those orders. 3. The basis for the current application to set aside orders 3 and 4 is that the lessor was not represented at the hearing on 2 June 2015. 4. The lessors agent, Ms Alpha who is an employee of the managing agent in respect of the property (a company called Settscap Property Pty t/as RL Time Realty, Five Dock), submitted that neither she nor anyone else at Time Realty were aware of the hearing of the proceedings at 9:15am on 2 June 2015. They were, however, aware of related proceedings at 9:45am on the same day. Ms Alpha said she arrived at the hearing prior to 9:45am but the proceedings had already been dealt with. 5. At this point it is necessary to provide some background to the dispute. 6. These reasons arise out of a hearing on 13 July 2015 at which Ms Alpha gave sworn evidence on behalf of the lessor and Ms Bellavia gave sworn evidence on behalf of the lessee. Background 1. Proceedings COM 15/14446 were commenced by the lessee and Ms Bellavia for interim orders essentially to enable them to have access to the premises having allegedly been locked out of the premises in March 2015. Proceedings COM 15/14576 were proceedings also commenced by the lessee and Ms Bellavia seeking permanent orders for the lease to remain on foot and not forfeited. On 31 March 2015 the Tribunal made an order granting to the lessee relief against forfeiture subject to the lessee paying any arrears then presently owing and paying rent due and payable on 1 April 2015 and thereafter in accordance with the terms of the lease. Directions were also made for the proceedings to be adjourned. 2. Both proceedings came before the Tribunal on 2 June 2015 but were not listed at the same time. The application for interim relief was listed at 9:15am and the related proceedings were listed at 9:45am. 3. It appears that the Tribunal made orders in respect of both proceedings before the representative of the lessor was present. One order was that the lease be terminated on and from 31 March 2015. No further order is sought in respect of that order. An order was also made for the lessors to given access to the lessee for the purpose of removing equipment. The Tribunal understands that that order was not complied with but no orders are currently sought in respect of access. The third and fourth orders made on 2 June 2015 are described above. The application to set aside 1. Ms Alpha tendered the following documents: 1. a copy of the exclusive management agency agreement by which Settscap Property Pty Ltd was appointed to manage the property by the lessors. That was marked Exhibit A. 2. invoices issues by Settscap Property Pty Ltd to the lessee. That bundle of invoices became Exhibit B. 3. a copy rental ledger printed off on 1 June 2015. That became Exhibit C. 1. Prior to the hearing the Tribunal had received some emails from the parties. These were shown to the parties at the hearing but neither party sought to rely upon them at the hearing. 2. Ms Alpha gave evidence that she was instructed to appear at the Tribunal hearing on 2 June 2015 but only had notice of the hearing commencing at 9:45am, and not the hearing commencing at 9:15am. As a consequence by the time she arrived the orders had been made. 3. Ms Alpha said that order four made on 2 June 2015 was disputed. That order required the sum of $1,397.00 to be paid by lessor to the lessee being an amount paid by the lessee to upgrade the electricity switchboard. Ms Alpha said that the lessee chose to upgrade the switchboard but it was a term of the lease that such expenditure is payable by the lessee. She relied upon clause 9 of the lease (see page 8 of the lease) the terms of which state, in part, as follows: "The lessee shall at his own expensive fit out the property with equipment fittings and fixtures necessary for the conduct of the lessee's business". 1. In respect of order 4 (being the order requiring the lessor to pay the security deposit of $7,169.64 to the lessee) Ms Alpha submitted that the lessee had only paid the sum of $6,500.00. That was the amount of the deposit which was still currently held by the office of the Small Business Commissioner. 2. In addition, Ms Alpha submitted that a sum of money was due in respect of outstanding rent and outgoings. Her evidence was that the monthly rent was $2,172.62 plus GST making a total of $2,389.88 inclusive of GST but exclusive of outgoings. Her evidence was as at 31 March 2015 outgoings totalling $1,659.60 were unpaid as well as rent. The lessor also proposed to claim expenses occurred in obtaining the services of a locksmith and loss of rent until such time as a fresh lessee is obtained. Ms Alpha stated that the rent for April, May and June was unpaid. 3. The amount of the claim for future rent cannot be determined until such time as a fresh lessee is obtained. 4. Ms Bellavia gave sworn evidence. She stated that she received both notices of the hearings on 2 June 2015 and attended the Tribunal. 5. Ms Bellavia stated that the amount of the security deposit that she had paid namely $6,500.00 was an agreed amount and was not an amount falling short of her obligations under the lease. 6. Ms Bellavia stated that she understood the agreement was she would pay $2,598.00 per month inclusive of water and electricity. She said that had been agreed with a representative of the lessor in a conversation at which her accountant was present. She asserted that as at 31 March 2015 rent had been paid in full and that the lessor had locked the lessee out of the premises from 16 March 2015 unlawfully. 7. Ms Bellavia submitted that prior to the commencement of the lease in November or December last year she raised with a representative of Time Realty the fact that the switchboard needed upgrading. She had been informed by someone from Ausgrid that the switchboard was dangerous and faulty. She then spent the money to put the switchboard in safe and workable condition, and then subsequently paid the invoice of the electrician herself. She then deducted the amount paid from rent. Her submission is that the lessor unlawfully locked the lessee out on 16 March 2015 and that the lease was terminated at the lessors request from 31 March 2015. She submits that she has no liability for rent after that date. Decision 1. I accept the evidence of Ms Alpha that neither she nor anyone else at the Time Realty were aware of the hearing at 9:15am on 2 June 2015. Accordingly, in my view orders 3 and 4 must be set aside because the lessor has not been given a reasonable opportunity to be heard. In addition, I find that the lessor had a case which was not adequately put by reason of Ms Alpha's absence at the hearing. That case is described in the following paragraphs. 2. It is common to both parties that the amount of the security bond actually paid was $6,500.00 and therefore order 3 (which refers to a security deposit of $7,169.64) is an order that cannot stand and must be either set aside or varied. 3. I also find that there is a dispute between the parties as to the amounts which may be due and owing between them. On the one hand, the lessor states that there is an amount of outstanding rent as at 31 March 2015 as well as outstanding rent after that date. The position of the lessee is that nothing is owing to the lessor. 4. It is not fair to either party, nor appropriate to make final findings in relation to these contested issues without giving both parties an opportunity to file and exchange evidence which is in support of their individual positions. There seems to be disagreement as to what was agreed in relation to the switchboard as well as disagreement as to the amount of rent and outgoings which were to be paid. The only way in which these matters can be fairly dealt with and judged by the Tribunal is to make orders for the exchange of evidence prior to hearing the dispute. Mediation 1. Section 68 of the Retail Leases Act provides that a retail tenancy dispute may not be the subject of proceedings before any Court or Tribunal until the Registrar has certified in writing that mediation has failed to resolve the dispute. The Registrar must certify that mediation has failed to resolve a retail tenancy dispute if the Registrar is satisfied that any one or more of the parties to the dispute or matter has refused to take part in or has withdrawn from mediation of the dispute or matter. This section does not apply where there is an order sought in the nature of an injunction. This explains why the application for an interim order sought by the lessee could be dealt with by the Tribunal without the need for prior mediation. 2. However, before these proceedings can continue it will be necessary for a certificate to be issued with respect to mediation. An order to this effect has been incorporated into the orders made below. Orders 1. Having regard to the above reasons the following orders are made: 1. Orders 3 and 4 made by the Tribunal on 2 June 2015 in proceedings COM 15/14576 are set aside. 2. The lessor must commence an application in the Tribunal against the lessee within fourteen days of the date of this order for the purposes of seeking whatever orders the lessor wishes to seek against the lessee and such application shall be accompanied by the appropriate certificate concerning mediation. The application will be accompanied by all evidence, statements and other material which the lessor wishes to rely upon in support of its application. 3. At the time of filing the application referred to above the lessor will serve a copy of the application and supporting evidence, material and statements upon the lessee. 4. Within fourteen days of the receipt of the lessor's application, evidence and statements the lessee will file and serve it's evidence, statements and any other material upon which the lessee wishes to rely in defence of the lessor's application. 5. The proceedings will then be listed after 15 August 2015 for hearing. 6. If these orders cannot be or are not complied with either party may request the Tribunal to list the proceedings for further directions. S Westgarth Deputy President Civil and Administrative Tribunal of New South Wales 17 July 2015 I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 04 September 2015