Gu v Gold Valley Investments Pty Limited & ors [2005] NSWADT 169 (2 August 2005)

Last Updated: 2 August 2005

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL RETAIL LEASES DIVISION

CITATION: Gu v Gold Valley Investments Pty Limited & ors [2005] NSWADT 169


PARTIES: 045073
APPLICANT
Zhi Yun Gu
FIRST RESPONDENT
Lamonthe Pty Limited
SECOND RESPONDENT
Derisi Pty Limited
THIRD RESPONDENT
Gold Valley Investments Pty Limited

045118
APPLICANT
Gold Valley Investments Pty Limited
RESPONDENT
Zhi Yun Gu




FILE NUMBERS: 045073, 045118

HEARING DATES: 30/03/2005, 31/03/2005

SUBMISSIONS CLOSED: 31/03/2005



DECISION DATE: 02/08/2005

BEFORE: Boyce P - Judicial Member





LEGISLATION CITED: Administrative Decisions Tribunal Act 1997
Retail Leases Act 1994

CASES CITED: Wu v Hawsher & Anor [2002] NSWADT 54

APPLICATION: Claim for declaration of rights, obligations and liabilities under a lease
Claim for payment of money

MATTER FOR DECISION: Principal matter


APPLICANT REPRESENTATIVE: 045073 - APPLICANT
045118 - RESPONDENT
R Johnston, barrister


RESPONDENT REPRESENTATIVE: 045073 - RESPONDENT
045118 - APPLICANT
M Ellicott, barrister

ORDERS: 1. Application 045073 by Zhi Yun Gu against Gold Valley Investments Pty Limited is dismissed
2. Application 045118 by GVI Investments Pty Limited against Zhi Yun Gu, Zhi Yun Gu is ordered to pay to GVI Investments Pty Limited: (a) the sum of $45,611.57 by way of damages; and (b) Interest on $29,552.86 of the GVI’s damages pursuant to Section 72A of the Retail Leases Act at the rate of 9% from 1 July 2004 until the date of payment
3. Damages and interest in Order 2 to be paid within 21 days of these orders
4. Each party is invited to file written submissions in relation to the issue of costs in Application 045073 within 28 days of the date of these reasons.


Reasons for Decision:

REASONS FOR DECISION

1 Zhi Yun Gu was the Lessee of retail shop premises at Shops 16 and 16A Miller Community Shopping Centre, Miller ("Miller Centre").

2 Lamonthe Pty Ltd ("Lamonthe") and Derisi Pty Ltd ("Derisi") were the Lessors of the retail shop premises.

3 Mr Gu’s lease commenced on 20 June 2001 for a term of 5 years and with a terminating date on 19 June 2006. The rent for year one of the term was $50,000.00 per annum with provision to increase the rent annually by 5%, called the Base Rent. Also, the Lease provided for the tenant to pay his share of outgoings for the Miller Centre being 1.97% of the whole outgoings and a marketing levy of 5% of the Base Rent.

4 Gold Valley Investments Pty Ltd ("GVI") purchased the Miller Centre from Lamonthe and Derisi in about January 2003.

5 Mr Gu is the sole director of Kool Discounts Pty Limited ("KD"). KD operated its business from the retail shop premises.

6 Mr Gu gave notice in writing dated 31 May 2004 to GVI terminating his lease one month after service of the notice.

7 Mr Gu returned the keys to the retail shop premises to a representative of GVI’s manager on 30 June 2004.

8 Mr Gu commenced proceedings 045073 by application to the Tribunal filed 17 June 2004 against Lamonthe, the First Respondent, Derisi, the Second Respondent and GVI, the Third Respondent.

9 In his application Mr Gu sought orders against the Respondents for damages, interest, such other orders as the Tribunal considers appropriate and costs. His grounds for his application:

"i. allegations of unconscionable conduct by the original Lessor, (First and Second Respondents) in particular allegations that he was induced to enter into a lease on the representation that another lessee would be at the Miller Centre for seven years.

ii. that the premises were unsafe and unsuitable for the purpose of the Lease, in particular not providing suitable air conditioning and water leaks from the roof."

10 GVI filed a cross application against Mr Gu on 6 October 2004 and those proceedings are numbered 45118 by the Tribunal.

11 Lamonthe and Derisi filed a cross application Tribunal File 045120 against Mr Gu and those proceedings are numbered 45120 by the Tribunal.

12 For the sake of clarity in this decision I will refer to the parties by abbreviation or names given in the opening paragraphs rather than as Applicants, Respondents, Cross Applicant and Cross Respondent.

13 The parties in proceedings 045073 have attended mediation firstly, Mr Gu and GVI, then subsequently Mr Gu and Lamonthe and Derisi. Both mediations failed to resolve the issues between the parties. The parties have not attended mediation in respect of the Retail Tenancy claims in proceedings 45118 nor 45120. I am satisfied that further mediation was unlikely to resolve the disputes or matter and was prepared to hear the matters.

14 During the first day of hearing, 30 March 2005, proceedings 045120 and 045073 were settled as between Mr Gu, Lamonthe and Derisi.

15 Mr Gu then sought leave to amend his claim against GVI which was opposed by GVI. After hearing argument by both parties I ordered that Mr Gu be granted leave to amend his claim, but reserved any decision as to GVI being entitled to costs.

16 As a result Mr Gu’s application in 045073 became:-

i. a declaration pursuant to Section 72(i)(F)(iii) of the Retail Leases Act that the Applicant validly terminated the Lease dated 20 June 2001 registered number 8153908 of premises known as Shop 16 and 16A Miller Community Shopping Centre, Cartwright Avenue, Miller between the Applicants predecessors in title Lamonthe Pty Ltd and Derisi Pty Ltd as Lessor and the Respondent Gold Valley Investments Pty Ltd.

ii. a declaration that the Applicant is not liable to pay damages or compensation to the Respondent and specified as $45,611.57, Gold Valley Investments Pty Ltd.

ii(sic) the Respondent pay the Applicant costs of those proceedings.

17 It was appropriate to hear both proceedings 045073 and the cross application 045118 together.

TERMINATION BY TENANT

18 Mr Gu seeks a declaration pursuant to Section 72(1)(f)(iii) of the Retail Leases Act 1994 that he validly terminated his Lease of 20 June 2001.

19 GVI says that Mr Gu abandoned the premises on or about 1 July 2005 and that GVI had no alternative but to accept Mr Gu’s repudiation of the Lease. As a consequence GVI gave notice of its termination of the Lease on 5 July 2004.

20 In the consent orders in 045073 Mr Gu undertook to the Tribunal not to continue or pursue any claim for a sum of money or otherwise against GVI in respect of the period 20 June 2001 to 20 December 2002 arising out of the issues in those proceedings.

21 Mr Gu’s evidence is that he had caused his Manager, Juli Yan to complain to GVI’s Shopping Centre Manager, Helen James, about faulty air conditioning servicing the shop premises and roof leaking problems. Mr Gu’s evidence is that he complained at least on 3 March 2003, 20 October 2003 and 23 October 2003. He subsequently caused a letter to be written on 26 November 2003 to GVI’s Manager saying "I am writing again regarding our roof and air conditioning, it is still having problems and you haven’t fixed it yet. On the night of the 21st our roof leaked again while it was raining and damaged our goods. Our air conditioner is still not operating well. This is our last letter that we are going to write to ask you to fix the above problems. If you still haven’t fixed the problems after one week, I will take action...." The letter did not specify what action Mr Gu would take if the roof leak and air-conditioning were not repaired.

22 GVI in its evidence provides job sheets from its building maintenance contractors, West Hill Pacific Pty Ltd showing the dates of attendances to attend to check air conditioning for Kool Discount shop on 10, 12, 13, 19, 20 & 28 February 2003 and the work carried out. The same contractor attended the Miller Centre from 23 February 2003 through to 23 June 2003 in response to requests about rook leaks generally.

23 The relevant parts of the Lease provide:-

"16.7 (1) Tenant’s Risk

(a) All property in the Premises will be at the Tenant’s sole risk.

(b) The Landlord will not be liable for any Claim by the Tenant, the Tenant’s Employees or any person which may arise from:

(i) any fault in the construction or state of repair of the Centre;

(ii) any defect in the Services or the Landlord’s Fixtures; or

(iii) the flow, overflow, leakage or condensation of any water, gas, oil or other fluid from or in any part of the Centre;

or from any other cause except as a result of the negligence of the Landlord, its employees, contractors, invitees or agents."

"17.3 The Landlord will use reasonable endeavours to ensure that the Services are operational and functional during the time contained in the Rules."

The definition of the word "Services" includes air conditioning.

"17.4 The Tenant will have no Claim against the Landlord or be entitled to terminate this Lease solely because:

(i) the Services fail to operate, ....."

24 Mr Gu’s application is for relief under Section 36 of the Retail Leases Act 1994:-

"Section 36 Damaged Premises

(1) A retail shop lease is taken to provide for the following if the shop or the building of which the shop forms part is damaged:

(a) The lessee is not liable to pay rent, or any amount payable to the lessor in respect of outgoings or other charges, that is attributable to any period during which the shop cannot be used under the lease or is inaccessible due to that damage.

(b) If the shop is still useable under the lease but its useability is diminished due to the damage, the lessee’s liability for rent and any amount in respect of outgoings attributable to any period during which useability is diminished is reduced in proportion to the reduction in useability caused by the damage.

(c) If the lessor notifies the lessee in writing that the lessor considers that the damage is such as to make its repair impracticable or undesirable, the lessor or the lessee may terminate the lease by giving not less than 7 days notice in writing to the other and no compensation is payable in respect of that termination.

(d) If the lessor fails to repair the damage within a reasonable time after the lessee requests the lessor in writing to do so, the lessee may terminate the lease by giving not less than 7 days notice in writing of termination to the lessor.

(e) Paragraphs (a)-(d) do not effect any right of the lessor to recover damages from the lessee in respect of any damage or destruction to which those paragraphs apply.

(2) A retail shop lease must not contain any provision the effect of which is to limit any liability of a party to the lease to pay compensation to another party to the lease in respect of damage to the shop or the building of which the shop forms part.

(3) Nothing in this section prevents the parties to a lease from terminating the lease by agreement if the shop or the building of which it forms part is damaged or destroyed.

25 Section 36 of the Retail Leases Act 1994 relates to a shop or building of which the shop forms part is damaged. I am urged by Mr Johnston for Mr Gu, that Mr Gu had a long term persistent problem with roof leaks and air conditioning and that despite the job sheets put in evidence by GVI they do not show a pattern of service and attention to the complaints by Mr Gu. In relation to the roofing the job sheets make no reference to Mr Gu’s shop and are no more than service calls to patch up leaks in the roof of the whole of the building in which Shop 16 and 16A are only part.

26 Mr Jackson submits that the effect of water entry to Mr Gu’s premises from the leaks complained of, is that the useability of the premises is diminished to a substantial degree.

27 As to the problems with the air conditioning, again Mr Jackson urges the Tribunal to accept that GVI’s maintenance contractor was not qualified to service air conditioning and did no more than attend the premises and offer a salutary unqualified repair without acknowledging or dealing with a greater problem. When GVI was asked to attend to air conditioning and leaks, Mr Jackson submits there was no response, just silence. There was an adverse effect to the tenant and customers causing significant and long term damages to the premises.

28 Mr Ellicott for GVI submitted that the jobs sheets of GVI’s maintenance contractor in evidence show that despite the problems being experienced by some of its tenants including Mr Gu, that GVI was actively attempting to identify the cause of any air conditioning problems and leaks in response to complaints by those tenants. Mr Ellicott urges the Tribunal to accept that GVI was endeavouring to repair the building defects even though it was not able to achieve a successful result. Indeed the landlord’s efforts appeared to identify that the air conditioning and roof needed to be updated in order to resolve the problems once and for all.

29 Mr Ellicott further submits that a deficiency of the air conditioning system as it relates to Mr Gu’s shop premises and the water leaks are not grounds for termination and urged that, on the evidence before the Tribunal of Mr Gu’s "rapid and protracted" decline in business, Mr Gu contrived to put himself in a position to terminate the lease. A letter caused to be written by Mr Gu to the landlord’s manager in evidence at Exhibit R1 Tab 5 refers to "rapid and protracted" decline in business. When cross examined Mr Gu admitted that he had the letter written for him and that this may have exaggerated or overstated the position of his business.

30 In response to GVI’s notice of termination for arrears of rent dated 21 May 2003 (Exhibit R1 tab 8) Mr Gu wrote a letter dated 29 May 2003 to GVI’s Centre Manager seeking an extension of the tenancy for a further 6 month period. In that letter there was no mention of the air conditioning and water problems. (Exhibit R1 tab 9). Mr Ellicott submits that this is an indication of Mr Gu’s intention to seek an exit from the lease on a contrived basis.

31 On Mr Gu’s evidence the business was suffering a decline. Mr Ellicott submits that he wished to use the idea of the water leakage and the air conditioning problems as a reason to buttress a right to terminate the lease which Mr Ellicott submits did not exist.

32 In his submissions, Mr Johnston, submits that the landlord’s argument in relation to Mr Gu seeking a commercial advantage over the landlord in order to manipulate a set of circumstances in which he could terminate the lease is incorrect. Mr Johnston submits that despite the evidence of job sheets of GVI’s building maintenance contractor, the work carried out was no more than the work of a handyman with no expertise in roofing in particular and all that was done was to apply silicone sealer. Mr Johnston submits that each time Mr Gu complained about the air conditioning and water leaks, he was met with total inaction by GVI.

33 Mr Johnston submits that the evidence of Mr Gu’s letters to GVI’s managing agent are consistent with the ongoing problems Mr Gu faced in his tenancy with the ingress of water from the leaking roof and the difficulty experienced with the air conditioning. GVI was on notice that Mr Gu would terminate the lease if nothing was done about the disruption caused by the water leaks and the air conditioning.

APPLICATION OF THE LAW

34 Section 36(1)(b) of the Retail Leases Act 1994 provides that if a shop is still useable and that use is diminished due to the damage to the premises then the lessee’s liability for rent and outgoings for the diminished period of useability is reduced in proportion to the reduction in useability caused by the damage. Section 36(1)(d) stipulate that failure by the lessor to repair the damage within a reasonable time after the lessee requests the lessor in writing to do so entitles the lessee to terminate the lease by giving not less than 7 days notice in writing of termination to the lessor.

35 In Wu v Hawsher & Anor [2002] NSW ADT 54 Judicial Member Mr S Montgomery commented at paragraph 42:-

"42 There is dearth of authority relating to the application of Section 36 of the Act. I note the respondent’s submission that there is no requirement for reasonableness in the application of Section 36(1)(c) of the Act whereas such a requirement applies to Section 34 and 35 of the Act. However, if this is correct, such an approach would permit a lessor to terminate a lease in circumstances where it was quite unreasonable to do so and at considerable detriment to the lessee. It is conceivable that a lessor who was at default, where such default was not due to circumstances beyond its control, could take advantage of an insignificance event to terminate a lease. Such an approach could contravene the well established principle of law that no one should profit from their own wrong doing. I do not accept that this is a correct approach."

36 In seeking to rely on Section 36 of the Retail Leases Act 1994, Mr Gu says that the air-conditioning faults and the roof leaks amount to damage of the retail shop premises. GVI submit that to establish that the retail shop premises have been damaged, then it must be established that the physical damage is of such an extent that the useability of the premises is diminished effecting the ability of the tenant to utilise the shop for the purposes for which it was leased. Clause 16.7 of the Lease excludes the Landlord’s liability for any defect in the services (being the air-conditioning) or any damage from leakage of any water, unless the cause has been as a result of the negligence of the Landlord. Clause 17.4 excludes a claim by the Tenant against the Landlord, or entitlement to terminate the Lease, if the services (air-conditioning) fail to operate.

37 In order for Mr Gu to have the benefit of Section 36 of the Retail Leases Act 1994, I must also make a determination as to whether the matters complained of by him are matters to do with the premises falling into a state of disrepair, or whether they amount to damage, the extent of which affects the ability of the Lessee to utilise the shop. I find that during the periods of the complaint by Mr Gu the shop premises remained opened and continued to trade. Accordingly, on the Application and Cross-Application before me, I draw the conclusion that the matters complained of by Mr Gu were not damage to the point where the shop premises were unusable.

38 At Common Law the covenant by the lessor to repair will often be construed as a covenant to repair on notice.: Bradbrooke and Croft: Commercial Tenancy Law in Australia Second Edition at 10.6. The Landlord’s obligation to start carrying out any work of repair to the subject premises does not arise until he or she has information about the existence of a defect in the premises such as would put a reasonable person on inquiry whether work of repairs were needed: (Supra).

39 It is well established that a tenant’s entitlement to compensation from the landlord for the landlord’s failure to rectify matters for disturbance to the tenant Section 34(1)(e)of the Retail Leases Act 1994. A failure to rectify any break down of plant or equipment under the lessor’s care or maintenance must be by written notice specifically identifying the loss or damage, specifying the tenant requires the matter to be rectified preferably imposing a time limit in which to carry out the rectification. Failure by the lessor to comply with the notice entitles the tenant to compensation. It is my view that to interpret the requirements of Section 36, the standard required for the substance of the notice under Section 34(1) must be the very minimum required for notice under Section 36(1)(d).

40 Mr Gu’s letter of 5 April 2004 is the culmination of letters sent by Mr Gu to GVI’s managing agent dated 3 March 2003, 20 October 2003, 23 October 2003 and 26 November 2003 those letters refer to requests to fix the roof leaks and the air conditioning system. The invoice put in evidence by GVI indicate during this period until June 2003 GVI’s maintenance contractors were regularly responding to complaints about roof leaks and air conditioning in the Centre and including Mr Gu’s premises.

41 GVI provided evidence in Exhibit R1 at tab 31 a certificate from Walter Refrigeration Service Company certifying that the air conditioning units servicing Shop 16 was operational and functional during that Company’s service period from 23 July 2003 to 1 August 2004.

42 I am satisfied that in response to Mr Gu’s notices comprising his letters to GVI’s managing agent up to 26 November 2003 so far as they related to complaints about air conditioning and leaking roof were responded to by GVI.

43 Mr Gu’s final letter of 5 April 2005 upon which he relies as notice under Section 36(1)(d) is for the purposes of that Section insufficient notice upon which he can rely to found his right to terminate under this Section. His letter is non-specific in requiring repairs to be resolved within a time period or in any case within a reasonable time and merely reserves the right to sue GVI for damages as a result of the damage to stock. On balance, I accept GVI’s evidence and submission that GVI responded to Mr Gu’s complaints about the air conditioning and the roof leakage. In response to GVI’s request for further particulars upon which the notice of termination dated 31 May 2004 was based Mr Gu in his letter of 10 June 2004 referred only to the roof leaking being a safety issue so far as the electricity system is concerned for the whole shopping centre and its customers.

44 I find that Mr Gu did not validly terminate the lease dated 20 June 2001 in respect of the retail shop premises at Shop 16 and 16A Miller Community Shopping Centre, Cartwright Avenue, Miller as permitted under Section 36(1)(d).

MATTER NO 045118 CROSS CLAIM

45 In GVI’s cross claim it seeks the following order:

1. A declaration pursuant to Section 72(1)(f)(iii) of the Retail Leases Act 1994 ("the Act) that the Applicant validly terminated lease dated 20 June 2001 registered no. 8153908 of premises known as Shops 16 and 16A Miller Community Shopping Centre, Cartwright Avenue, Miller ("the Premises") between the Applicant’s predecessors in title, Lamothe Pty. Limited and Derisi Pty. Limited (as lessors) and the Respondent, by accepting the Respondent’s wrongful repudiation on 5 July 2004.

2. A declaration pursuant section 72(1)(f)(iii) of the Act that the Respondent wrongfully repudiated the lease by notice dated 31 May 2004.

3. Additionally or alternatively, a declaration pursuant to Section 72(1)(f)(iii) of the Act that on or about 30 June 2004;

(a) the Respondent abandoned possession of the Premises; and

(b) thereby surrendered the Premises to the Applicant; and

(c) thereby wrongfully repudiated the lease.

4. A declaration pursuant to section 72(1)(f)(iii) of the Act that the Respondent failed to deliver up the Premises to the Applicant in good repair, order and condition in that:

(a) the Respondent removed several of the light fittings being property of the Applicant;

(b) he damaged the ceiling near the shop front of the Premises;

(c) he damaged walls by removing lessee’s fittings;

(d) the walls of the Premises were not repainted;

(e) the water main connection was pulled out from the wall;

(f) one power point was pulled out from the wall;

(g) the lock on the back door was damaged;

(h) the door to the storage room was damaged beyond repair.

5. An order under section 72(1)(a) of the Act that the Respondent pay damages to the Applicant in an amount to be quantified at the date of the hearing of this Application.

6. An order under Section 72A(1) and (3) of the Act that the Respondent pay to the Applicant interest on damages awarded under order 5 at the rate of 9% per annum up to and including the date of the hearing and the date of payment.

7. An order under section 77A of the Act and under section 88 of the Administrative Decisions Tribunal Act 1997 that the Respondent pay the Applicant’s costs of and incidental to these proceedings plus GST.

8. Such further or other orders as the Tribunal deems appropriate.

46 Having found in proceedings 45073 that Mr Gu failed to terminate the lease in accordance with Section 36(1)(d) it is for the Tribunal to determine whether Mr Gu abandoned the premises during the term of the lease and, if so, whether he repudiated the lease.

47 The evidence clearly shows that Mr Gu delivered possession of the retail shop premises on 30 June 2004 to GVI.

48 GVI’s Solicitor, Mr Phillip Biber, notified Mr Gu in his letter of 2 June 2004 that by vacating the premises on 30 June 2004 he would be abandoning the premises and stating that GVI would regard such an abandonment as a repudiation of his obligations under the lease and under the general law.

49 In his letter of 20 June 2004 responding to Mr Biber’s letter of 2 June 2004, Mr Gu did not address the assertion that he was required to fulfil his obligations under the lease and refrain from abandoning the premises. His action to abandon the premises amounted to a repudiation of lease.

50 I find that the abandonment of the retail shop premises by Mr Gu on 30 June 2004 as a repudiation of the lease and entitling GVI to damages.

DAMAGES

51 GVI in its evidence Exhibit R2 sets out a Schedule of losses incurred by GVI. It is noted that Statement of Losses was admitted subject to Mr Johnston’s

a) argument as to reasonableness of a rent free period;

b) argument as to reasonableness of repairs in Item 5 of the Schedule of Losses.

52 Exhibit R2 sets out the claimed GVI losses as follows:-

1. Period 01.07.04 to 30.09.04 being a 92 day rent free period granted to the new tenant. Calculated on the basis of the rent that Mr Gu would have paid for that 92 day had he continued to pay rent $82,368.90 (including contribution to outgoings) plus GST $22,837.62

2. Period 01.10.04 to 19.06.05 rent payable by Mr Gu plus outgoings$82,368.90 less rent payable by subsequent lessee $73,500.00. $8,868.90 x 262 days over 365 days equals $6,366.17 plus GST $636.62 $ 7,002.78

3. Period 20.06.05 to 19.06.06 rent payable by Mr Gu $85,407.66 plus outgoings plus 5% rental increase less amount payable by new tenant $77,175.00. $8,232.66 plus GST of $823.26 total $ 9,055.93

4. Balance of unpaid rental and outgoing due to respondent as at date of Mr Gu’s abandonment of the premises $ 1,930.24

5. Other losses. Electrical repairs carried out following Mr Gu’s abandonment $1,595.00. Lighting repairs and installation carried out following Mr Gu abandonment

$ 3,190.00

Total $45,611.57

53 Mr Johnston addressed the Tribunal in relation to the reasonableness of granting a rent free period to the new tenant. He submitted that there was no evidence at all of the circumstances of the grant of new 92 day rent free period and put that the Tribunal was left without any evidence of the unilateral largesse of the landlord.

54 Mr Ellicott submitted that the granting of 92 day rent free period at the commencement of the lease which included an option for a further 5 years was reasonable in all the circumstances.

55 I am satisfied that the rent free period was a commercial practice that was reasonable in order to induce a long term tenant to the premises, and I note a similar benefit was granted to Mr Gu at the commencement of the term of his lease.

56 Mr Ellicott addressed the amount of damages deducted by Mr Gu from the final amount of rent $1,930.24 for which GVI now seeks to be compensated. The business conducted from the premises was operated by Kool Discounts Pty Limited and it owned the stock. Kool Discounts was not a party to these proceedings and, accordingly, I find that the amount deducted for stock damage from the rent was the property of Kool Discounts and that Mr Gu is not entitled to deduct this or offset it.

57 In relation to the electrical repairs, lighting repairs and installation Mr Ellicott submitted that GVI was entitled to be reimbursed by way of compensation for the work carried out following Mr Gu’s abandonment of the premises in order to make then lettable. In photographs tendered and admitted into evidence in Exhibit R1 tab 25 the premises were abandoned by Mr Gu without fulfilling his obligations pursuant to Clause 20.1 of his lease. Accordingly, I find that the costs of the electrical repairs, lighting repairs and installation were a loss incurred by GVI’s result of Mr Gu’s failure to comply with Clause 20.1 of the lease.

58 I have no evidence before me of the provision of the Bank Guarantee as required under the lease and note that as late as 7 November 2002, Solicitors acting for Lamonthe and Derisi were still requesting that the Bank Guarantee under the lease be provided by Mr Gu. On a schedule in Exhibit R1 at Tab 3, no Bank Guarantee for shops 16 and 16A are identified as being in place at the time of sale of Miller Centre to GVI. Accordingly, on the basis that there is no such evidence of provision of the Bank Guarantee, I am unable to satisfy myself that any credit should be allowed for it.

59 GVI seeks interest on the amounts in items 1, 4 and 5 of paragraph 52 above, to which I find it is entitled.

COSTS

60 I note that in Mr Ellicott’s submissions that he did not seek an Order for costs in relation to the proceedings 045118, however he made brief preliminary submissions in relation to special circumstances entitling an award of costs in respect of proceedings 045073.

61 If Mr Ellicott maintains his application for costs in 045073, I invite him to make further submissions with an opportunity for Mr Johnston to do similarly in reply.

62 Accordingly, I make the following Orders:-

1. Application 45073 by Zhi Yun Gu against Gold Valley Investments Pty Limited is dismissed.

2. Application 45118 by GVI Investments Pty Limited against Zhi Yun Gu, Zhi Yun Gu is ordered to pay to GVI Investments Pty Limited:

(a) the sum of $45,611.57 by way of damages;

(b) Interest on $29,552.86 of the GVI’s damages pursuant to Section 72A of the Retail Leases Act at the rate of 9% from 1 July 2004 until the date of payment.

3. Damages and interest in Order 2 to be paid within 21 days of these orders.

4. Each party is invited to file written submissions in relation to the issue of costs in Application 45073 within 28 days of the date of these reasons.