Cihan v City Tabaconist Pty Ltd & Gebara [2016] NSWCATCD 26

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Cihan v City Tabaconist Pty Ltd & Gebara [2016] NSWCATCD 26 Hearing dates: On the papers Decision date: 08 April 2016 Jurisdiction: Consumer and Commercial Division Before: D Bluth, Senior Member Decision: 1. The first respondent shall pay 50% of the costs of the applicant of and incidental to the proceedings including the submissions on costs as agreed and failing agreement within 28 days of the date of this order as assessed under Part 4.3, Div 7 of the Legal Profession Uniform Law Application Act 2014 (NSW). 2. The costs agreed or assessed under Order 1 of these orders shall be payable within 14 days of agreement or assessment. Catchwords: Costs, whether there are special circumstances under s60 of the Civil and Administrative Tribunal Act 2013, Rule 38(3) of the Civil and Administrative Tribunal Rules 2014 Legislation Cited: Civil and Administrative Tribunal Act 2013 Civil and Administrative Tribunal Rules 2014 Category: Costs Parties: Mehmet Cihan (applicant) City Tobaconist Pty Ltd (first respondent) Mohamed Gebara (second respondent) Representation: Counsel: P Folino-Gallo (applicant) Solicitors: Andresakis Lawyers (applicant) Agent: Retail Leases Doctor (first respondent) File Number(s): COM 15/09537 Publication restriction: Nil

reasons for decision

History of the Matter 1. The dispute between the parties involved a lessor seeking damages from a tenant and guarantor for abandonment of retail premises. The tenant asserted in its defence that it had accepted an offer from the lessor to be released from the lease and consequently the premises was mutually abandoned. Alternatively, the tenant had argued that if mutual abandonment was not accepted, then the lessor had failed to mitigate its loss by refusing an offer from an alternate tenant that would have left the lessor in the same position as if the lease had continued in full force and effect and consequently there would have been no loss. 2. The applicant is the lessor, Mr Mehmet Cihan, and the first respondent, City Tobacconist Pty Limited, is the tenant (City), in relation to premises at Bondi Beach (the Lease). The performance of City under the Lease was guaranteed by the second respondent, Mr Mohamed Gebara, who was a director of City. 3. On 16 December 2015, the Tribunal made the following orders: '(1) that the first and second respondents jointly and severally pay the applicant the sum of $25,549.40 within 14 days of publication of the reasons; (2) that the first and second respondents jointly and severally pay the applicant interest from 1 February 2014 at the rate of 15% per annum pursuant to clause 5.1.5 of the Lease totalling $5,775.80 and accruing at the daily rate of $10.09 from 25 August 2015 within 14 days of publication of the reasons; (3) costs were reserved but if either party wished to make submissions on costs it could do so within 28 days of publication of these reasons.' 1. In relation to the dispute between the parties regarding abandonment and whether the Lease was surrendered the Tribunal made the following findings in its reasons for decision at paragraphs 36 and 37: '36. On the facts as I have found, there was no offer made and no reasonable understanding of the conversation of 11 September 2011 contained in an offer to be accepted, nor even if the conversation between Mr Cihan (son of the applicant) and City's manager contained in an offer to accept the surrender of lease without compensation. Mr Cihan was not authorised to make such an offer nor be seen to have a sense of authority to make such an offer. No question of estoppel arises as, even if City correctly assumed that Mr Mehmet Cihan would mutually accept an abandonment of the lease, which it was not entitled to do, there is no evidence to indicate what detriment would flow to City from making that assumption. The only detriment that flows is a liability for damages which existed as a consequence of the abandonment of premises in any event. City did nothing to alter its course of conduct in vacating the premises. 37. In these circumstances, the abandonment of the premises by City on or about 1 March 2012 constituted a fundamental breach of the lease for which it is liable to Mr Mehmet Cihan in damages.' 1. The Tribunal then examined the obligation of the applicant as lessor to mitigate its loss consequent upon the fundamental breach of the Lease by the respondents. The applicant claimed the balance of the term of the Lease namely nine and one-half months. The Tribunal found that clause 12.6 of the Lease created a contractual obligation on the applicant to do every reasonable thing to mitigate its loss. 2. The Tribunal held at paragraph 55 the following: '55. In the absence of evidence, the Tribunal must come to a view as to what damages Mr Mehmet Cihan is entitled to. It cannot be nil and it cannot be the whole 9½ months. As the Tribunal has found in previous decisions such as in Blandimo, Yan Gu and Perpetual v Gelato, about four months, subject to any evidence, is a reasonable time to locate a new tenant. Accordingly, I find four months' rent plus a proportional amount of outgoings as the loss suffered by Mr Mehmet Cihan for breach of the Lease by City.'