McGlinn v Sassine (No 2) [2010] NSWADT 218 (6 September 2010)

Last Updated: 14 September 2010

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL

CITATION:
McGlinn v Sassine (No 2) [2010] NSWADT 218


DIVISION:
RETAIL LEASES DIVISION

PARTIES:
APPLICANTS
Jodie Ann McGlinn and Sumer Toni McGlinn T/A Westlands Produce

RESPONDENT
George Sassine



FILE NUMBERS:
075166

HEARING DATES:
18 March 2010, 19 March 2010, 1 June 2010, 2 June 2010 and 3 June 2010

SUBMISSIONS CLOSED:
3 June 2010



DATE OF DECISION:
6 September 2010

BEFORE:
Patten D - Deputy PresidentGriffiths G - Non-Judicial Member Fagg N - Non-Judicial Member





LEGISLATION CITED:
Administrative Decisions Tribunal Act
Retail Leases Act

CASES CITED:
Woolworths Ltd v Campbells Cash and Carry Pty Ltd (1996) 92 LGERA 244
Moweno Pty Ltd v Stratis Promotions Pty Ltd [2003] NSWCA 376
Parallel Lines Pty Ltd v Video-Drama Pty Ltd [2007] NSWADT 84
City West Centre Pty Ltd v Galaxy Media Pty Ltd (1998) 6 BPR 16, 313

TEXTS CITED:


APPLICATION:
Termination of Retail Lease – Rights of Lessee to property – Conversion by Lessor

MATTER FOR DECISION:



REPRESENTATION:
APPLICANT
R Winfield of counsel instructed by Papantoniou Blake Lawyers
RESPONDENT
M Seymour of counsel instructed by Greenaway and Tohme Solicitors


ORDERS:
1. Declare that prior to March 2007 there was a lease between Ms Jodie McGlinn and the respondent which constituted a retail shop lease within section 3 of the Retail Leases Act
2. Order pursuant to section 72 (1) (a) of the Retail Leases Act that the respondent pay to the applicants the sum of $63,100
3. Declare that the respondents are entitled to set off against the sum of $63,100 the amount of outstanding rent which subject to order 4 I assess at $17,557.84
4. In the event that either party wishes to challenge the amount of the set off specified in 3 above leave given to that party within 14 days of the date of publication of this decision to lodge submissions in the Registry. The other party may make submissions in reply within a further period of 14 days. Thereafter the matter will be decided on the papers
5. No order as to costs.


Reasons for Decision:

REASONS FOR DECISION

Introduction

1 This is an original application in the Retail Leases Division. The Tribunal is comprised of myself, a Deputy President, but in accordance with clause 3(2) and clause (4(2) of Schedule 2 to the Administrative Decisions Tribunal Act 1997 I was assisted by two other members in an advisory capacity only, namely Mr Garth Griffiths and Mr Neil Fagg. I would like at once to pay tribute to the very considerable assistance I received in the case from their advice. In their amended application to the Tribunal filed 19 February 2009 the applicants claimed that the respondent acted unconscionably within part 7A of the Retail Leases Act 1994 (the RLA) particularised as follows:

a. The respondent during the course of the lease demanded rental in excess of the rent committed (sic) by the lease.

b. The respondent claimed a failure to payment (sic) of rent by the applicant of the excess demanded rent.

c. The respondent locked out the applicant from the premises on the purported ground of failing to pay the excess demanded rent.

d. The respondent failed to return the files, stock, assets and fixtures belonging to the applicant after demand had been made.

e. The respondent destroyed the files, stock, assets and fixtures belonging to the applicant.

2 In addition, claims were made in respect of the detention or destruction of "stock, assets and fixtures" belonging to the applicants and in effect for loss of or damage to their business arising from the alleged locking of the applicants out of the leased premises, the unconscionable conduct of the respondent particularised above and the alleged failure of the respondent to give the applicants a notice under s 44 of the RLA. Ms Winfield of counsel appeared at the hearing which occupied some 5 days and Mr Seymour of counsel for the respondent.

3 When he opened his case, Mr Seymour said that the issues would be:

1. Whether the Tribunal has jurisdiction.

2. Whether rent was demanded in excess of the amount legally payable.

3. Whether the premises were abandoned and/or the lease repudiated.

The Evidence on Behalf of the Applicants

4 Unfortunately the quality of the evidence tendered on behalf of both parties, but particularly that of the applicants, was poor rendering the determination of some factual issues quite difficult. Possibly lapse of time since the relevant events occurred is partly to blame but in any event I mean no criticism of counsel who appeared at the hearing.

5 Ms Winfield read in all some 10 affidavits namely those of Jodie McGlinn sworn 4 February 2009 and 5 March 2010, Sumer McGlinn sworn 4 February 2009 and 5 March 2010, Brett Perry sworn 2 March 2009, Nicole Anthony sworn 3 March 2009, Christine Sollorz sworn 2 March 2009, Dominic Kartbani sworn 3 March 2009, Betty Saad sworn 4 February 2009 and Constable Garry Baran sworn 26 May 2010. A number of the deponents were cross-examined.

6 The unsatisfactory nature of the evidence is well illustrated by Jodie McGlinn’s earlier affidavit which I reproduce in full:

1. I purchased a business called Westlands in 2003 from my aunt and her husband. In this purchase by (sic) was assisted by my mother.

2. The purchase price was $130,000 neither I nor my mother had the money at the time but agreed to pay off the purchase price from the turnover of the business. We paid off the business in approximately April 2004.

3. From on (sic) or about February 2003 when we entered into the business until April 2004 for (sic) the lease was in the name of Sean Saad. The landlord was notified of the arrangement and a new lease was entered into in my name in or about April 2004 in the same terms of the previous lease.

4. This was the business that was operated by my aunt and her husband in (sic) the business which we continued. It sold to the general public.

5. After we purchased the business we added some further storage facilities so that we would be able to purchase items in greater quantities and thereby obtained more savings. The predominant sales have a word (sic) to the general public who came in to purchase pet food and items for the pets and building material.

6. A substantial proportion of our sales was full (sic) brick works in the vicinity of approximately 1000 bricks at a time for some handy men who required to do some odd jobs.

7. Nearly all of the negotiations were carried out by my mother. It was my mother who negotiated directly with the landlord and with a real estate agent. I was occupied with maintaining the business in the functioning manner to make sure that supplies were received and shelves were stocked.

8. On 15^th of May 2007 the landlord attended the premises and occupied the premises changed the locks and prevented us from entering the premises. We were locked out and the business ceased to operate.

9. All the records of the business were kept on the premises despite numerous requests made to the defendant who refused to give them to me. They have now been lost or in the possession of the respondent.

7 Jodie McGlinn in cross-examination said that she is a "recruitment consultant" by occupation and has been since February or March 2007. Before that she had carried out "resourcing work, administrative work". As to the time she spent in the subject business she said that at first she was there on a daily basis but when she obtained "more stable other employment" she was only there on Saturdays " and where I could help out".

8 To Mr Seymour, Jodie McGlinn was very vague as to the part she played in the establishment of the business which is the subject of these proceedings. In effect as I understand it she left all the business arrangements and dealings to her mother Sumer McGlinn.

9 She was however able to describe the physical layout of the premises and the areas where various classes of the business’s stock were located. These were largely matters not in issue between the parties and it is more convenient that I return to the subject when dealing with the evidence of other witnesses.

10 Despite the contents of paragraph 8 of her affidavit Jodie McGlinn admitted to Mr Seymour that she was not present and had no knowledge of the events of 15 May 2007. She also agreed with Mr Seymour that she said nothing in her evidence about ever seeing the respondent at the premises. Asked by Mr Seymour about any contact with Mr Sassine she said she could not remember ever hearing a communication from him nor of seeing him on the premises.

11 Cross examined upon financial records of the business shown to her she could not explain how at June 2007 those records showed closing trading stock at zero notwithstanding her claim that the respondent had detained or converted such stock. She answered "I’m not sure" to the question " You were saying to the government weren’t you that this was a business that you were running down in the period?"

12 To questions about demands for payment by creditors of outstanding debts during the first four months of 2007 Jodie McGlinn responded that she left it all to her mother and forwarded to her any letters which she received.

13 She conceded to Mr Seymour that in the period January to March 2007 she discussed with her mother the possibility of selling the business. However she denied that she was working in another job because the business was not making enough money to pay its debts.

14 The other applicant Sumer McGlinn in her affidavit of 4 February 2009 explained in rather imprecise language that her sister and brother in law Betty and Sean Saad became the operators of a business at 8 Fox St Granville opposite the premises 7-9 Fox St Granville which are the subject of these proceedings and which I will hereafter call the premises. According to the affidavit the business consisted of "the sale of bricks is (sic) flavours (sic), concrete blocks, sand, cement, associate (sic) building materials and bark chips. It also sold general produce and pets, pet food and associated items with (sic) maintenance of pets."

15 As it appears Mr and Mrs Saad transported the business from 8 Fox St Granville across the road to the premises about March 2002. The premises were then occupied under a lease from the respondent to Mr Saad for a term of 3 years from 16 March 2002 with an option for renewal for a term of 2 years. It provided for a basic annual rent of $30,000 payable by monthly instalments of $2500 each and for that rent to be increased by 4% on each anniversary of the date of commencement.

16 Other relevant provisions included:

4.2 If the lessee continues to occupy the premises beyond the expiration of the term of the lease with the consent of the lessor otherwise than pursuant to a further lease granted by the lessor to the lessee, he shall do so as a monthly tenant only, at a rental payable monthly in advance equal to one-twelfth of the Current Rent from time to time payable during such monthly tenancy as reviewed in accordance with the terms of the lease. Such tenancy shall be terminable at any time by either party giving to the other one (1) month’s notice in writing but otherwise shall be subject to such of the provisions hereof as are not inconsistent with a monthly tenancy.

...

5.3 The lessee shall pay to the lessor in addition to the Current Rent the outgoings. Such outgoings shall be payable within fourteen (14) days of the production by the lessor to the lessee of evidence of the assessment in respect of such outgoings.

...

5.5 It is agreed and declared (notwithstanding anything contained in or implied by this (sic) Conveyancing Act 1919 (as amended)) that if the current rent hereby reserved or any part thereof on (sic) the lessee`s proportion of outgoings shall be in arrears or unpaid for (14) days after same shall have become due and payable (whether or not any formal demand has been made for payment) of it (sic) the lessee shall neglect to perform or observe any covenant, condition, restriction, rule or agreement herein contained or implied on the lessee`s part to be performed or observed or if the lessee shall neglect to comply with any proper notice given pursuant to this lease or if the lessee (being a natural person) shall commit any act of bankruptcy or have his estate sequestrated in bankruptcy or shall assign his estate for the benefit of creditors or enter into an arrangement for the liquidation of his debts by composition or otherwise or if the lessee (being a Company) shall be subject to an order for liquidation whether compulsory or voluntary or commit any act of bankruptcy or if the term hereby granted or the interest of the lessee hereunder or the goods and chattels of the lessee within the demised premises shall be attached or taken in execution THEN and in any such case it shall be lawful for the lessor immediately or at any time thereafter and without any notice or previous demand to re-enter (forcibly if necessary) into and upon the premises or parts thereof in the name of the whole and to repossess the same as of its former estate and to expel and remove the lessee and all other occupiers without liability for the tort of trespass and without prejudice to any remedies which might otherwise be available to the lessor to recover arrears of rent or to redress any antecedent breach of covenants hereof AND that such re-entry will (unless the lessor shall otherwise elect) cause this lease to cease determine and be at an end the lessee shall, notwithstanding such re-entry, remain liable to the lessor for all other moneys (if any) due hereunder.

USE ALTERATION AND REPAIR

The Lessee covenants with the Lessor as follows:

6.1 Not to use the Premises or any part thereof or permit or suffer the same to be used:

(a) as a dwelling house or sleeping place or to keep any animals birds or other livestock;

(b) for the carrying on of any auction sale;

(c) for any illegal purposes;

(d) for any purpose other than as specified in Item 6 Part II.

6.6 Upon the determination of this lease at his own expense and in a proper and workmanlike manner:

(i) if the Lessor so requires to remove any sign notice or advertisement erected or displayed by the Lessee on the premises or the building;

(ii) if the Lessor so requires to reinstate any alteration and remove any addition made to the premises by the Lessee; and

(iii) if the Lessee so desires or if the Lessor so requires to remove from the premises all or any part of the fixtures fittings plant machinery utensils shelving counters safes or other articles upon the premises in the nature of trade or tenants’ fixtures brought upon the premises by the Lessee;

PART IV HEREINBEFORE REFERRED TO

If the Lessee shall be desirous of renewing this lease for the further term of two (2) years from the date of expiry of the term of this Lease and of such desire shall give to the Lessor during the last year of this Lease not more than six (6) months and not less than three (3) months previous written notice and if at the same time of such notice and at the time of the expiration of this Lease there shall be no subsisting breach by the Lessee of the terms of Lease then the Lessor shall grant to the Lessee a further Lease for such further period commencing on the date after the date of expiration of the term of this Lease subject to the terms of this Lease but with the exception of this clause at the commencing basic rent to be agreed upon between the Lessor and the Lessee or failing agreement as determined by a Valuer being a nominee of the President for the time being of the Institute of Valuers New South Wales Division, the cost of such valuation to be borne equally by the Lessor and the Lessee.

ITEM 6: Cl. 6.1 USAGE

Warehouse, Storage, wholesale and distribution of rural products and landscape supplies.

17 It also may be concluded from the affidavit of Sumer McGlinn that on an unspecified date in 2003 her daughter Jodie purchased the business conducted in the premises and that for some months prior to the purchase, both Jodie McGlinn and Sumer McGlinn had worked in it as employees of Mr and Mrs Saad.

18 According to Sumer McGlinn, whilst she was associated with the business it was frequented by members of the general public to whom items of stock were sold – "There were a large number of regular customers which (sic) would come in to purchase pet food and items for their pets as well as building material from time to time".

19 Ms McGlinn said that one regular customer was the respondent who "would come into the shop and purchase items on a regular basis at least once each fortnight".

20 Sumer McGlinn said that the purchase price for Jodie’s purchase was $130,000 but as funds of that magnitude were not available to them, the purchase price was paid over a period out of the takings of the business. Steps were taken to transfer the balance of the lease to Jodie McGlinn which seems, once the price had been fully paid, to have occurred with the respondent’s consent between September 2003 and April 2004 as evidenced by correspondence between Greenaway & Tohme Solicitors, acting for the respondent and Consolidated Lawyers, acting for Mr and Mrs Saad and also for Jodie McGlinn. In consenting to the transfer the respondent required the lessees’ bond to be increased to $7,500 and also required that about 100 square metres of the premises be excised from the lease for his exclusive use for storage purposes.

21 In paragraph 18 of her affidavit, Sumer McGlinn claimed that in January 2005 the option for renewal contained in the lease was exercised, although she did not assert that this was done in writing. However she may have done so as the agent Century 21 Commercial NSW wrote to Jodie McGlinn a letter dated 17 January 2005 which, omitting formal parts, read:

RE: EXERCISE OF OPTION

PPTY: 7 FOX STREET, HOLROYD

We refer to the above and your written instruction confirming your acceptance of a further term.

Accordingly the lease provides for a market review of the current rental and as a consequence we provide a brief background to the initial lease negotiations at the commencement of the lease forming part of the lessors rental determination.

"The property was placed on the market at $39,000 per annum including outgoings + GST."

Notwithstanding that the lease provides for a 4% annual increase the lessor agreed to further reduce the rental to $30,000.00 per annum including outgoings + GST to be a fixed rental for the first term (3 years).

This reduction in rental assisted the lessee in relocation costs and generally setting up the business.

We advise that the new rental commencing 16^th March 2005 will be as follows:

Calculations

Lessors Initial Rental Lessee Actual Rental

1^st Year $ 39,000 $30,000

2^nd Year x 4% $ 40,560 $30,000

3^rd Year x 4% $ 42,182 $30,000

TOTAL $121,742 $90,000

TOTAL RENTAL DEDUCTION $31,742.00 (3 years)

22 A week later, on 24 January 2005, Century 21 Commercial NSW wrote a further letter to Jodie McGlinn which, again omitting formal parts, read:

We refer to the above and your lease which expires on 16^th March 2005. The lessor offers you a new lease option arrangement over the premises based on the following terms and conditions:-

TERM: Three years

RENTAL BASED ON MARKET: $45,871.00 + $4,587.10 GST per annum gross

OUTGOINGS: Included in rental Lessee pays water usage

RENTAL REVIEW: CPI Annually

SECURITY: $2,500.00 already held. Require additional $1,704.84

The lessor would appreciate receiving your response in writing within fourteen (14) days from the date hereof.

Should you have any questions or wish to discuss the matter further do not hesitate to contact the writer.

23 Mr Kartbani, on Jodie McGlinn’s behalf, replied to Century 21 Commercial NSW on 23 February 2005, omitting formal parts:

EXERCISE OF OPTION – 7 FOX STREET - HOLROYD

Further to our written instruction of a further term it is imperative that the conditions are exercised as a "further option" in accordance to the current lease. Unfortunately we are not in a financial position to continue a new lease under the currently proposed fee structure.

As noted in your letter. The lessor agreed to a further reduction in the rental based on the relocation and setting up of the business. These costs were calculated and assessed then a lease was drawn up on the bases of three years and further option, plus a 4% annual increase.

You are well aware of the condition that the above mentioned property was in before we moved in and the amount of time and money that went into its clean up. Not to mention that it took well over a year for the lessor to honour its part of the agreement and have certain objects removed off the property.

This is what we are asking for –

1. to continue and fulfil the lease by exercising our option to a further term.

2. the further term be in accordance to the current lease.

3. continue a good and healthy relationship with the lessor.

Finally, I would like to add that both parties have compromised in the first three years. Let us continue our option in good faith and when the term expires and we have had a chance to recoup our relocation and setup costs lets sit down and renegotiate a new term.

Thank you and hope to hear back from you soon.

24 There seemingly followed a meeting in the office of Century 21 Commercial NSW which involved at least its employee John Mus’sell and Mr Kartbani. Thereafter Mr Mus’sell wrote to Mr Kartbani on 21 March commencing "We refer to the above and discussions in our office on 14 March 2005". There followed what purported to be the lessors agreement to a "payment structure". However this was superseded by a further letter of 29 March in these terms:

Please disregard the previous notice because of typographical errors to rental commencement dates.

The lessor has agreed to the following payment structure.

Rental Increase: $45,870.00 + GST per annum

(Fixed for 2 years)

Total: $91,740.00 (2 years)

Year 1

Rental commencing 16^th March 2005 to 16^th September 2005 @ $3,160.00 per month = $18,960.00

Rental commencing 16^th September 2005 to 16^th March 2006 @ $3,490.00 per month = $20,940.00

(Year 1) Total = $39,900.00

Shortfall = $5,970.00 ($497.50 per month)

Year 2

Rental commencing 16^th March 2006 to 16^th March 2007 @ $4,320.00 per month.

The above rental figures exclude GST.

Please find attached the lessors amended adjusted tax invoice for payment, (for 16^th March 2005).

25 It was no part of the respondent’s case that the agent’s letter of 29 March 2005 reflected an agreement reached in the agents office on 14 March. It was merely stating the respondent’s then position. It is certainly common ground that no new lease was executed and it is also common ground that Jodie McGlinn did not actually pay rent in the period up to May 2007 at the rate proposed in the agent’s letter.

26 Further demonstrating to my mind the very unsatisfactory way in which critical evidence in the applicant’s case was presented is the remainder of Sumer McGlinn’s affidavit:

24. In February 2007 we received a letter from the then managing agent of the premises (LJ Hooker commercial) claiming arrears of rent in (sic) the vacation of the property at the end of the lease.

25. The calculation of arrears of rent in the correspondence appears to be upon the basis of a calculation of the rental in excess of the rental allowed under the terms of the lease.

26. During the period February 2007 to May 2007 was there was a constant dispute between ourselves and the respondent in relation to the rent to be paid the rent paid in a quarter terms of the lease was accepted by the respondent by his agent (sic).

27. On 15 May 2007 received a text message on my mobile phone from the respondent’s agent. The text message read:

"If you do not pay all the rent by midday you will be locked out of the building and the locks will be changed".

28. I received a text message at approximately 10:00a.m when I was at a dentist appointment at that time. When I got back to the premises I found that the locks had changed and I could not get back in.

29. On or about 24 May 2007 I received a letter from the solicitors, Greenaway & Tohme dated 24 May 2007 claiming, on behalf of the respondent, possession of the fixtures and fittings and intention to dispose of our property. Copy of this letter is at the premises where I was locked out.

30. At no time did we vacate the premises.

31. At that time we were locked out all the records of the business were held on the premises at 7-9 Fox Street. In addition there were several animals on the premises and respondent refused access to their removal until the intervention of the police.

32. Since then the respondent has refused all requests for the return of the property and has actively destroyed all the records of the business.

27 Paragraph 33 of Sumer McGlinn’s affidavit as sworn read:

33. After inspecting past documents kept at my home the property at the premises which has been destroyed by the responded (sic) is as disclosed in the schedule which is annexed hereto and marked with the letter "I".

28 Upon objection I rejected the paragraph in that form but gave Ms Winfield leave to adduce oral evidence of its subject matter.

29 Pursuant to that leave, Ms McGlinn gave this evidence to Ms Winfield:

Q. Can you tell the court or tell the Tribunal what procedure you went through to compile that list?

A. Well, firstly, I remembered what I bought and what it cost me, I had to look it up on the internet at second hand prices and what it was worth, followed my solicitor’s instructions to do that and did that. Then I asked people that were there can they look at this and see if I’ve left anything out which I had one or two things and that’s how I come to that. I did a lot of, I asked people if you were to buy this how much would you buy this second hand or as it was. Excuse me. And basically just what my solicitor told me to do was get second hand prices of the items and put them down.

Q. As to the items themselves how did you compile the items?

A. From memory.

Q. Leaving aside the value that you’ve attributed to them on that list?

A. From my memory, like going through what I had there, tracing, you know, what was there when you first walked in, what I had in the office, just from memory.

Q. Thank you. You’ve made some alterations on that particular document have you?

A. Yes.

Q. And how did that come about? Perhaps if you tell the Tribunal what--

A. When I looked at it and realised the sum I thought there’s a mistake there, that’s not what it was and I just altered it but I have made a, this is my first one I made, there is another one made that’s more accurate than this.

Q. And is that the one that you gave to Mr Peisley?

A. Yes.

SEYMOUR: Sorry, I have to say I’m completely lost by this evidence. If my friend could just perhaps be a little bit more precise.

WINFIELD

Q. So is this the case that you made a subsequent list?

A. Yes. Because on--

PATTEN: I’m sorry, now you’re confusing me. Subsequent to what, Ms Winfield?

WINFIELD: Subsequent to that one.

WITNESS: To this, yes.

PATTEN: To the one that’s annexed marked I?

WITNESS: Yes. This was the first one and I made another one because I didn’t add in stationery, other things like that which I forgot to.

PATTEN: And the other one is the one that’s gone to Mr Peisley?

WITNESS: Yeah.

WINFIELD

Q. Perhaps we should identify that.

A. And by then I retrieved some stuff from the MYOB computer, the back-up which there was little things that I’d forgotten about that I added or fixed up.

Q. Is that the list that you sent to Mr Peisley?

A. It is.

30 In cross examination, Ms McGlinn explained to Mr Seymour that the business was bought in her daughter’s name because "I wasn’t there the day they went to do it". According to her evidence they were joint owners. She could not however remember ever seeing a contract for purchase of the business. The purchase price she agreed was $130,000 which she said was paid by instalments. For the purpose of the business an account was opened in the name of "Westlands" with Westpac. She could not remember whether it was a joint account with her daughter or when it was closed. The very loose financial controls put in place are evidenced by the following exchange with Mr Seymour:

Q. I’ll withdraw that. Let me ask you this. Did you use the Westlands account to make payments to you sister and brother-in-law in relation to the purchase of the business?

A. Cheques not internet, some cheques and some cash.

Q. Did you use your own money to make payments to your sister and brother-in-law?

A. I don’t know what you mean by my own money.

Q. How, did you get paid a wage by the business?

A. No, not, I didn’t take a wage but if I needed money I used it.

Q. What does that mean?

A. Well, I didn’t weekly on, like every week like people do get paid a wage, I didn’t do that, it wasn’t like that.

Q. All right.

A. I just took money and used it whenever I needed to.

Q. How did you do that?

A. From the sales.

Q. So you just took money from the till?

A. If I had to from the till or before it went into the till and I had to pay somebody wages, the truck people whatever I’d pay them by cash or if I got to the bank I’d write a cheque for it.

Q. Right. Were you keeping records of times that you--

A. Yes, I was.

Q. --would withdraw the money?

A. Yeah, I had to.

Q. Right. And how would you allocate those withdrawals for your personal purposes, how would you describe those in your accounting records?

A. I’d just put my name on there, paid S McGlinn.

Q. But did you give it a description, did you call it petty cash or did you call it--

A. Petty cash.

31 Ms McGlinn was very vague when cross examined as to the components in the purchase price of $130,000 and was unable to state them with any precision although ultimately she said that she thought the stock component was $50,000. She also said that she thought the turnover had been stated at $300,000 "and it reached $500". There was this exchange about profit and the assets of the business:

Q. Did she say when that was?

A. But I don’t understand the terms and that and whatnot I just know that we were making profit because we were buying lots of stuff, I upgraded the business, I don’t know anything else. I’m not very smart like that with all that stuff, I just know that’s what I paid for the business and, and from what they said this is what the business made, they showed me and we went from there.

Q. Okay. Let me ask you this. What were the assets that you understood you were buying out of the sale?

A. I didn’t really understand I just knew they wanted 130, they actually wanted more, they’d given me the business for 130.

Q. Ms McGlinn, I’m going to have to ask you to try harder than that. What did you understand to be the assets that you were buying?

A. Assets?

Q. Ah hmm.

A. I don’t know to be honest. I can’t think, I just know they wanted that much from us for the business. Now, I don’t understand, assets? Could’ve been, but I don’t want to say in case I’m wrong, it could’ve been 80 but then I don’t know all that. I’m not familiar with it, I just know what I was told to do, you want the business, that’s what we’ll take.

Q. Are you asking the Tribunal to understand that you entered into an arrangement whereby you were going to pay $130,000 to your sister and yet you couldn’t work out what that $130,000 represented?

A. No, she, they showed me what the business made, what they were going to, what they’re selling it for but if I wanted it she’d give it to me cheaper but I, they showed me all that, I just don’t remember it all.

Q. All right. Let me just ask you this. I know you can only do the best that you can do, that’s all that anyone can do but of the $130,000 you suggested that about $50,000 of that was stock. I’d like to know how much of that you think was the assets of the business that you bought?

A. Probably 80 but I’m not sure.

Q. Okay. So $50,000 worth of stock and $80,000 worth of assets. You can’t quite identify what the assets were?

A. To my understanding the assets are what’s in the business like the machinery, all that and what’s inside.

Q. Do you remember the words goodwill?

A. Yes.

Q. Did you have any discussion with your sister about goodwill?

A. I don’t really remember, yes, we did.

Q. Did you feel that there was any value for goodwill that you were having to buy, was she saying to you that you needed to buy some goodwill?

A. They showed me what it was turning over, I saw all that before I just went I’ll buy it for that.

Q. Okay. All right. But you can’t remember now what you were being told about the profit of the business?

A. Back in ’03 what they told me I really can’t say, no, I don’t remember, I don’t want to give you a false figure but they did show me that the business made money and it was making money for the, like what they said in the first few years of it but to be, to give you a figure I really can’t remember.

32 Ms McGlinn told Mr Seymour that she upgraded the business by installing new computers and "pallet racking" which enabled the purchase of stock in larger quantities. According to her testimony, customers of the business at the time of her purchase largely stayed loyal and new customers were acquired.

33 She said that the business suffered a downtown in 2005 or 2006 and that in that period she was in ill health. Nonetheless she said that between February 2003 and May 2007 on average she worked full time in the business six days a week.

34 Ms McGlinn was also vague about the payment of rent under the lease. Asked when she stopped paying rent she said "Could be weeks or a month. I was paying up until he locked us out, like little instalments". She agreed that the rent was not up to date. She also agreed that at that time the rent was $3,800 per month. Asked whether the rent would have been up to date if it was $2,500 per month, she replied "I’m not sure to be honest, I think we should be even, but I don’t, I’m not, I don’t know, I can’t answer that. Asked whether "the business was struggling to pay its rent wasn’t it?" she answered "Sometimes yes". She agreed that sometimes cheques given in payment of rent were dishonoured. Asked whether she accepted that in March 2007 she owed Mr Sassine about $17,000 in arrears of rent, she replied "May 2007 yes".

35 She agreed that she was responsible for the opening stock figure at July 2006 of $41,200 in accounts prepared for taxation purposes and that the June 2007 figure was zero. In answer to my question whether she told the accountant that the value of stock as at 30 June 2007 was nil or whether she told him that there was some stock but Mr Sassine had it, she replied "No he knew that Mr Sassine kept stuff of ours, yeah." Asked for an explanation as to why the closing stock was recorded at nil, she said "I have no idea. The account is slack, that’s what I can say. I’ve had like, I wouldn’t say problems, but I’ve had to question him like why is this, this and he just never explained anything so I never understood anything so I never asked him any more". She agreed that the accounts for year ended 30 June 2007 showed a loss of $11,523. (I interpolate that no evidence was forthcoming from her accountant)

36 Questioned by Mr Seymour about the exercise of the option for renewal of the lease, she seemed to have little or no idea of the provision for determination of the rent to be reserved by the renewed lease but agreed that she knew she could dispute the rent sought by the lessor. She recited a list of personal circumstances to explain why she had not taken any formal action to dispute the sum claimed – "and I just kept paying it because I wanted to stay there, I thought I’ll dispute it when I can when I get the chance. I never got the chance". She denied that she was aware that the matter could be the subject of an independent valuation.

37 Ms McGlinn agreed that in the letter from her brother Mr Kartabani to the agent dated 23 February 2005, he was in effect proposing that the rent for the renewed lease continue at $2,500 per month.

38 In relation to the agent’s letter of 29 March 2005 quoted above, Ms McGlinn said that she did not reply in writing but spoke to the agent about it. As I understand her evidence, it was to the effect that she denied agreeing to the rent specified in that letter. There was the following question by me and answer:

PATTEN: Why didn’t you tell them that you wanted the rent determined by a valuer?

WITNESS: I did and they said that they were going, I think the agent said that they’d had it done or something, that they were going to, I can’t remember the exact but a valuer was mentioned but nothing happened.

39 Later in the cross examination Mr Seymour turned to the subject of Ms McGlinn’s personal involvement in the business from March to May 2007. She claimed that she still attended the business 6 days a week but not from 9am to 5pm – "Well I can’t remember the hours. I might come into work 10 o’clock one day, the next day I might not show up there till 1 o’clock but I can’t tell you. I don’t remember what hours I took". It was suggested that she was just visiting the site for the purposes of feeding the animals that were there. She replied:

A. No, I’ve got proof of people that were dropping off bricks, people coming to pick up bricks for deliveries, I’ve got a driver who is coming to pick up so many thousand bricks to take on Singleton, he got there, the gates were locked. He rang me, he said, I can’t get in to get the bricks. I said, We’ve been locked out. I’m sure we were.

Q. I’m talking about the period between March and May.

A. So am I. My business did not stop, the business continued in the same way, I was at the dentist the day they locked me out, there was no me just going for my animal, they were there as show.

40 In respect of the day on which according to her evidence Mr Sassine locked her out of the premises she said that she was at a dental appointment that morning and not present when the lock out occurred. Nonetheless she said that the business was open and employees were in attendance. However no witness in the applicants’ case claims to have been present when the locks of the premises were changed on Mr Sassine’s instructions. In answer to my question Ms McGlinn identified the employees present as "Les" (who lived next door), "Norm" and "Louie". She could not remember any of their surnames.

41 She told Mr Seymour that two birds, three snakes and a cat were on the premises when Mr Sassine locked her out and that they required daily attention. According to her testimony she removed the animals on the afternoon or evening of the lock out. She denied that on this or any other occasion she was given access to remove any other property although she spoke of an occasion when she raised the subject with Mr Sassine:

Q. ... That you haven’t had access to the property to get your personal possession?

A. I have not had access, I did ring the Mr Sassine another time and asked him if I could have my computers and documents so I could--

Q. When was this other time?

A. Maybe about, it was months, a couple of months or a month after the lockout. He said, Yeah, come, it’s all going to the tip if you want to watch it go. I said, Please, can I have my office stuff at least? He goes, Come. I don’t think he thought I was going to and when I got there there’s a guy driving off with our sewing machine and fridge. I walked up to him, I said, The office is empty you said I could come and get my stuff. He goes to his wife or whoever was there, Get the police she’s trespassing. And then his son started abusing us so we left. I looked at him, I said, I will take, I will see you in court. And then I left him a message on my phone which I do have and that was--

42 Mr Seymour suggested to Ms McGlinn that in the period prior to May 2007 she had been closing the business down, a proposition which she denied. However she did accept that in that period she was being pressed by several creditors in respect of unpaid debts and some cheques drawn on the firm’s account were being dishonoured by Westpac.

43 She was also questioned about a Toyota Corolla motor vehicle acquired by her daughter Jodie in October 2006 for $20,780. She said that this vehicle was purchased partly for Jodie’s personal use and partly for use in the business. She answered "probably" to the question "Did you mean by that evidence that you were pulling money from the business to put towards this finance?" She identified the business use of the car as making deliveries on Saturdays but conceded that this occurred only on occasional Saturdays.

44 Mr Seymour challenged Ms McGlinn as to the method she used in assessing values on her inventory of property left in the premises when she was locked out. In relation to the first item, a Hyster Forklift valued at $13,000 she said that she had sought the opinion of people known to her who used such equipment. She said $13,000 was about what she paid for it in 2004 or 2005. She could not remember whether it had been depreciated.

45 The second item on the inventory, a Magna Sedan, which she said she valued at $3,000 was her personal vehicle which was on the premises when she was locked out. She has not had access to it since. She conceded that she had not mentioned this in her affidavit. Seed mixers she valued at $7,000 which represented what she paid for them less something for usage. She confirmed the valuation by consulting the internet.

46 In respect of many other items she gave evidence to similar effect namely that she put the item on the inventory from memory and valued it by a combination of her own knowledge, her recollection of what she had paid, information gained from acquaintances and inquiries on the internet. She was unaware of the depreciated value, if any, of any of the items in the books of the business. The items on the inventory included a new kitchen which was not the property of the business but was being stored on the owners behalf.

47 Other items, antique wardrobes valued at $2,500 and computerware $3,000, she agreed were not assets of the business but rather were stored there on behalf of someone else. Similarly the items "beds, suede lounge and lounge chair" were owned by others and merely stored in the premises. The item "whirly birds" she agreed had become attached to the premises and probably would not have been removed by her in any event. In a similar situation was the item "Full Roof Restoration". In respect of the item CD’s valued at $4,000, she agreed that partly they were her own personal property and partly business software programs. She could not remember in what proportions.

48 Ms McGlinn told Mr Seymour that by March 2007 most of the business revolved around buying, cleaning and selling bricks. She bought them at about 10 cents each and sold them for "up to 60 cents or a dollar eighty for the sandstock". She sold them to "whoever everyone" and it cost her $50 a pallet of 500 bricks to clean them. She would give discounts for big orders as she would to customers buying large quantities of pet food, bird seed etc.

49 As at March 2007 she said that she employed Les Gray (presumably the "Les" referred to earlier), "Norm", "Louie", Christine Sollorz, Brett Perry (her partner), and her daughter Jodie at weekends. Mr Gray was paid about $300 pw. "Norm" and "Louie", who were brick cleaners, received $50 per pallet cleaned and between them averaged about 5 pallets a day which represents $250 or $125 each. They worked 6 days per week. Mr Perry did not receive a set wage but was paid something from time to time. She also drew money from time to time as apparently did her daughter. Ms Sollorz was not paid a regular salary but there was an arrangement that she would be paid "later" and in the meantime "she would get some money weekly like a hundred here and there". She was asked to reconcile the wages paid according to her evidence with the sum of $24,960 recorded as wages and salaries in her daughters income tax returns. She replied "because they were getting cash".

50 Mr Seymour suggested to Ms McGlinn that by March 2007 the business was not trading well. She replied "It was trading but not as good as it, it you know but we did have those moments, sometimes it would be slow, sometimes it would you know, we were trading".

51 Pressed by Mr Seymour, Ms McGlinn, rather reluctantly I thought, agreed that in November 2007 she deposed in an affidavit that in March 2007 the business was not trading very well and that she had suffered a nervous breakdown. She had also said "in my opinion the business was in trouble because of my ill health and not being there all the time to properly supervise what was going on".

52 My assessment of Sumer McGlinn was that she was a very unreliable witness. Frequently her answers to questions were unresponsive but more importantly, her recollection of events was extremely poor. In addition her business practices and procedures were lax particularly in the matter of properly recording salaries paid to staff. She was moreover in my opinion less than frank about the state of the business in the period from early 2007 to the lock out by the lessor in May, a subject to which I will need to return.

53 It will be necessary next to say something briefly about the evidence of other witnesses who gave testimony in the applicants case.

54 Nicole Anthony, in her affidavit, said that from about August 2003 to May 2007 she was a regular customer of the business conducted by the applicants at Fox Street, Holroyd. She purchased dry dog biscuits and bird seeds required by her father who bred birds. She estimated that she conducted business at the store "probably once a fortnight, once a week" throughout the 4 year period.

55 Dominic Kartbani, the brother of Sumer McGlinn testified that he worked in the Westlands Produce Business for about 12 months up to late 2004. He said that the business retailed building products and pet supplies to the public. Bricks were the most significant sale item.

56 He also said that he met the respondent Mr Sassine who "would come in 2 or 3 times a month to visit the business, have a look around and purchase items" which he said included straw and concrete. Mr Kartbani estimated customer flow at about 30-50 persons a day. He observed customers purchase bird food, animal food, bricks, pavers, sand, cement etc.

57 He told Mr Seymour that he received a salary of $600 to $700 per week which was paid in cash.

58 Asked by Mr Seymour to be more specific about the number of times he saw Mr Sassine at the business, he testified that it was "eight nine times". The cross examination continued:

Q. Yes. Or put it more accurately it was your niece’s landlord, correct?

A. Whatever, however you want to look at it.

Q. And it didn’t occur to you that if Mr Sassine came on site that he was the landlord?

A. Yeah, it did, we, we treated him with a lot of respect.

Q. Right. But what about that he might have to give some notice, some period of notice before he came onto the site, that didn’t worry you?

A. No, not at all. We had a good understanding with Mr Sassine. We had a good relationship.

Q. You can’t remember with any precision over 2003 to late 2004 possibly extending into 2005 when it is you say he came in and bought some straw?

A. Not exactly, no.

Q. Are you sure that it happened?

A. Yes.

Q. Where did he pay for it?

A. He didn’t pay for it I think we just let him have it.

Q. Right. During the period that you were there so between 2003 to say the start of 2005 you were there everyday, every week day?

A. Just about unless I was sick or something.

Q. Right. Were you responsible for sales?

A. Yes, pretty much.

Q. All right. What percentage or proportion would you say of the sales, total sales while you were there in your time what proportion of that would be the building supplies?

A. Probably 65% to 70%.

Q. Let me just be a bit more--

A. It was a bit better, the building products made more money than the bird seed or the dog food and stuff.

Q. 65% you said?

A. 65% on average.

Q. All right.

A. Depending on, you know, every week would differ a little bit.

Q. Well, let me just be, let me just be fair to you. What did you think I meant by building supplies?

A. Bricks, pavers, sand, soil, cement.

Q. Okay. And so doing the best you can you’d say it was about 30 to 35% of pet food?

A. Yeah.

59 Mr Kartbani said that he left his employment in the business in early 2005 to go into the demolition industry. Thereafter from time to time he delivered loads of bricks from demolition work to the premises where they were purchased from his employer. He told Mr Griffiths that they were purchased for $100 per thousand "off the back of the truck" and that when he was involved in the business, weekly takings were between ten and fifteen thousand dollars of which the sale of bricks represented approximately half.

60 Mr Kartbani said that when he was involved in the business, cleaned second hand bricks were sold for $450 per thousand rising to $500 per thousand.

61 In answer to questions from me, Mr Kartbani said that small quantities of bricks were sold to customers who wanted them for work in their back gardens at 55 cents a brick.

62 Ms Betty Saad, the previous owner of the business, deposed in her affidavit to the fact that the business provided produce and landscaping material to the general public "similar to that of the large Bunnings stores". She said that Mr Sassine regularly "would come in to see how business was trading" and at times purchased goods such as straw bales and bags of concrete. She said that on occasions she served members of the public in Mr Sassine’s presence.

63 She said that the business was sold to Jodie McGlinn for $130,000 which was finally paid in full about April 2004. About 2005 she worked in the business during a period Ms Sumer McGlinn was ill. She saw that "the McGlinns added extras to the business e.g. pallet racking, whirly birds and upgraded the computers and phone system".

64 In cross examination by Mr Seymour, Ms Saad told him that while she owned the business, Mr Sassine did not impose the 4% annual rental increase in order to offset the value of work done by Mr and Ms Saad in improving the property.

65 Pressed by Mr Seymour as to the breakdown of the consideration of $130,000 paid to herself and her husband between plant, stock etc she was unable to remember any details.

66 Although I think that Ms Saad did her best to tell the truth, she was so vague and her memory so poor that I found little of her testimony to be of much use. Seemingly there was only a loose arrangement made with Jodie McGlinn for the sale of the business and the payment of the purchase price. This may or may not have been evidenced in writing (probably the latter). Similarly I could not place much credence on her evidence as to the value of assets of the business and as to its financial affairs generally. However her evidence as to the knowledge of Mr Sassine regarding the nature of the business as she operated it and to a lesser extent, as it was operated after the sale to Jodie McGlinn, had the ring of truth, particularly as Mr Sassine reserved to himself an area of the property upon which he stored his own belongings. I will need to give further consideration to this aspect of the evidence.

67 Constable Garry Baran, then stationed at Merrylands Detectives Office, swore an affidavit in the Applicants’ case on 26 May 2010. He attended the premises apparently on the day that Mr Sassine locked Jodie McGlinn out of the premises. His affidavit does not state either the date or the time of his attendance but this omission was cured by his oral evidence when he testified that according to the police computer system and his notes he went to the premises on 15 May 2007 at 5/45pm.

68 When he arrived in company with Constable Varlet, he saw 2 female persons and a male person standing on the driveway outside the premises. He had a conversation with one of the females, Sumer McGlinn, who told him she had been locked out of the premises, and "He wont let me in to get my stuff". He told her that he had no power to give her access to the premises and she would need to take civil proceedings. She then told him that animals were inside and he agreed to make inquiries.

69 Constable Baran then had a conversation with the respondent who told him in effect that he had locked the applicants out of the premises for non-payment of rent. He requested Mr Sassine to open the locked external gates so that Ms McGlinn might have access to the animals. Mr Sassine thereupon unlocked the gates and the two police officers escorted Sumer McGlinn and the other female inside. In the perimeter of the building Constable Baran observed "an assortment of building material, a forklift and second hand bricks". Inside he saw "stock pallet racking, hession bags, pallets and other items including a computer printer a cash register filing cabinets desks and paper work scattered on top of one of the desks inside the office which was located within the warehouse".

70 He then watched while Ms McGlinn took three snakes from a large fish tank and placed them in a green garbage bag. He could not recall whether she took possession of any other animals. Nor could he recall whether Mr Sassine said words to the effect that Ms McGlinn could remove her animals and nothing else.

71 Constable Baran was in my opinion a reliable witness and I accept his evidence.

72 Mr Brett Perry who was in a relationship with Sumer McGlinn (whom he described as a "casual partner".) said that he worked part time in the business from February 2003 until 15 May 2007. In his affidavit sworn 2 March 2009 he described the business, the layout of its premises and the role he played in these terms:

3. I worked at Westlands Produce on (herewith after (sic) referred to as the business) a part time basis on the cash register and as a general hand in the office since in or on February 2003, (sic) and until 15 May 2007.

4. We retailed items to the public such as bird seed, chaff, hay, straw pots, fertilizers, sand bricks and pavers and much more.

5. The Westlands Produce was a retail store which was set up so the customers who could choose what they want, get it themselves and bring it to the counter, or ask for assistance.

6. The business had pallet racking around the premises on both sides with the bigger bags on them. Behind the counter were shelves, as well as pallet racking where we had bird seed buy sizes that ranged from 500g, 1kg to 40kg bags.

7. In the back room the business had the mixing machines with about 40 to 50 buckets that had every kind of bird seed and poultry for people who wanted loose mix.

8. Towards the back wall was the sewing machine stainless steel bench with heat sealer bags and Wedderburn scales, which was where we made our own bird seed.

9. I did deliveries on certain days of the week as there was a main driver whose name was Mark Pagett.

I also cleaned and stacked bricks, I was also in charge of keeping record of the boggie loads of bricks that came in, I had to make sure each truck was recorded and given a signed receipt before the drivers left.

10. The business also sold bricks to the public and to building tradesmen.

11. I also assisted in the business after the workers signed off at 3:00pm to drive the forklift, load and unload bricks, sand or other heavy bags.

73 According to the affidavit, the business had regular customers who would order weekly or fortnightly and also customers "who came in off the street".

74 He described Mr Sassine as "a regular of the business" and said that he would store caravans in the area of land reserved for his occupation. Illustrating the vagueness and lack of precision which infected other affidavits relied on in the applicants’ case, Mr Perry described the lock out and its aftermath in these terms:

15. In or about March 2007 I recall that Mr Sassine came to the business to talk to Sumar McGlinn about locking us out.

16. I was standing near Ms McGlinn when I heard Mr Sassine promise he would not lock us out of the business.

17. In or about May 2007 I was with Samar McGlinn when Vince Surace the Agent left a message that we had two hours to pay the $17,500 or we would be locked out.

18. On the following day I arrived to work at midday and the locks were changed.

19. I was with Samar McGlinn when she rang Mr Sassine and asked if we could get our office equipment, Mr Sassine then said he would release it to us.

21. In or about May 2007 Miss McGlinn and I went to the business premises to collect our personal possessions. However, Mr Sassine called the police

22. On our arrival at out (sic) business Ms McGlinn and I observed a Mr Aldo Cassisi driving off with the businesses fridge and industrial sewing machine, Mr Cassisi is the owner of Braeside Produce a customer and supplier of the business.

23. I was also with Samar McGlinn when she rang Pierre Tohme solicitor to inform him of a couple who were interested in buying the business, however, we were not allowed into the business to inspect the business and maintain records.

75 In cross examination Mr Perry told Mr Seymour that he worked in the business 2 or 3 days a week but was not paid a regular wage. He received sums in cash from time to time from either Sumer or Jodie McGlinn. Pressed by Mr Seymour as to the number of times Mr Sassine actually came into the store to purchase items, he agreed that he had seen this occur on only two or three occasions.

76 As to the conversation referred to in paragraph 16 of his affidavit, Mr Perry said that he could not remember Mr Sassine imposing as a condition for his promise not to lock the applicants out that in effect they paid the outstanding rent. There was an exchange with me, as to the extent the business was trading in the period before the lock out:

PATTEN

Q. You were sitting in the back of this room when Mr Surace said that he went there once or twice a week for about four weeks before the lockout and the business was closed. What do you say about that?

A. That’s rubbish because there’s no way we were closed, there was still, where do you think, what do you think he took all the office gear from us so nothing can be proved.

Q. Well, don’t worry about that.

A. Well, the thing is there’s no way it was vacated because we were going there everyday, I was there at different times but I know Mrs McGlinn would at least turn up 11.00 or 12 o’clock each day and the neighbour was watching the shop every time whether he says he’s feeding the animals or what he was watching the shop and serving, you know, the public customers not, he was there everyday, he would open at 7.30 so--

77 I assess Mr Perry as an honest witness doing his best to assist the Tribunal but his knowledge of relevant matters was very limited and his evidence did not significantly advance the applicants’ case.

78 The final testimony in the applicants’ case was given by Ms Christine Sollorz. In her affidavit sworn 2 March 2009, she deposed that she was employed "to help manage Westlands Produce at 7-9 Fox Street, Holroyd" and that she worked in the business six days per week from June 2006 until the lock out. She said that she had management and organisational skills gained in a previous occupation and that as Sumer McGlinn’s illness progressed she "began to take over the management and administrative functions more and more".

79 Ms Sollorz described the physical layout of the business in these terms:

The business was in a corner block position. There was a double driveway with gates on the right-hand side of the property from a street view. The driveway went up three-quarters of the property length. The produce covered the major part of the premises and was sited on the left-hand side of the land. The bricks stacks were on pallets on the right-hand side of the land and the sand was up the back of the property on the right-hand side, behind the bricks. The remainder of the bricks were placed further down the property on the left hand side of the driveway. Inside on the top left-hand corner of the premises were the seed mixes along with the containers. On the left-hand side of the on the fixtures (sic) were dry dog food, potting mix and fertilisers. The office was situated up the back in the right-hand corner of the premises. The office was fully maintained containing various office equipment including fax machines. That is where I would have spent most of my time at work, doing paperwork and other office duties. Placed in front of the office to the right was the counter and cash register.

80 She testified that she saw the respondent only 2 or 3 times but deposed to a conversation with him about March 2007. In this conversation Mr Sassine stated that outstanding rent amounted to $24,000 and added that if this amount was paid "I will not close the gates and allow the business to continue to operate". She raised with him the possibility of a reduction in rent but he refused. She also asked him to put in writing his agreement not to lock the applicants out if they paid $24,000.

81 No such document was ever forthcoming according to Ms Sollorz’s affidavit but she said that when she arrived for work at the premises on 15 May 2007 she found the gates locked.

82 In cross examination Ms Sollorz was adamant that she worked in the business 6 days per week up until May 2007, and that her hours varied according to the workload – "Sometimes it will be 7 o’clock in the morning other times it would be 8 o’clock or 9 o’clock" until 5pm.

83 She said that she had no relationship with the applicants outside the business and somewhat startlingly told Mr Seymour that she received no wages and that her position was voluntary – "I took it upon myself to – well give myself a challenge". Pressed about this she said that "if I needed money for transport or for fuel or for food I would ask Sumer for money but there was never a set wage or anything like that very rarely".

84 She agreed that soon after commencing to work in the business she found that rent was in arrears and about early 2007 spoke to the agent, a Mr Surace, as to the provision of an arrears statement. However she did not follow up his offer to make such a statement available to her.

85 She conceded to Mr Seymour that by March 2007 the business was not paying all its creditors as debts fell due.

86 As to the involvement of Sumer McGlinn in the business, Ms Sollorz said that in the beginning when she commenced in June 2006 Ms McGlinn was there 5 or 6 days per week but by May 2007 there were occasions when she was not present. She said that most of the time they would work in the office together. She seemed to have no knowledge of the outstanding debts of the business referred to in a number of letters produced to her relating to overdue sums claimed to be owed to Axis Telecoms Pty Ltd, Western Commodities Pty Ltd (In Liquidation), D G Exporters Pty Ltd, Bank of Queensland, Elite Pet Products, Dodo Australia Pty Ltd, John Fairfax Publications Pty Ltd, J J Richards & Sons Pty Ltd, Logan and Hitchens Wagic (Wholesale) Pet Supplies, McCann Chaff Mill Pty Ltd, Merrylands Produce and Northern Valley Stockfeeds Pty Ltd. Some of the letters shown to Ms Sollorz threatened enforcement action, some related to debts incurred years previously and some involved quite small amounts of money. She conceded that there were bills coming into the business about which she had no knowledge whatever.

87 Asked by Mr Seymour whether she knew in March 2007 that it would be possible for the business to pay $24,000 to Mr Sassine, she replied "I hadn’t got into that – that – that far".

88 She agreed that she did not arrive for work on 15 May 2007 until about midday. She could not remember any reason for not arriving earlier.

89 Some of the evidence of Ms Sollorz stretches credulity to such an extent that I do not believe it. In particular having regard to the voluntary nature of her work and her apparent lack of knowledge of the detailed operation of the business, I am of the opinion that her hours of work were somewhat less regular than she would have the Tribunal believe. I do however accept the evidence she gave as to her conversation with the respondent in March 2007 even though she seemingly had no reason to believe that the sum of $24000 mentioned could be funded by the applicants.

The Evidence on Behalf of the Respondent

90 The principal witness in the respondent’s case was the respondent himself, Mr George Sassine, who swore an affidavit on 15 June 2009 which was read by Mr Seymour.

91 Mr Sassine deposed to the fact that he purchased the premises in March 2002 and that at all relevant times they were zoned under the relevant planning scheme for light industrial use, a circumstance confirmed by the certificate under s 149 of the Environmental Planning and Assessment Act 1979, Exhibit 1.

92 Soon after acquiring the property, the respondent leased it to Ms Saad, and in about April 2003 was asked to consent to an assignment to Jodie McGlinn. He consented to such assignment in September 2003 and according to his testimony was not aware that Sumer McGlinn was involved in the transaction. He said that during Jodie McGlinn’s occupation of the premises rent was collected by an agent and all dealings were conducted through that agent.

93 As I have previously mentioned, as a condition of Mr Sassine’s consent to the assignment he was given exclusive use of about 100 square metres of the leased property "for the purpose of storing or parking vehicles including a caravan and other property". He was to have access via a secondary gate.

94 Mr Sassine annexed to his affidavit correspondence and documents relevant to the exercise by Jodie McGlinn of the option for renewal of the lease assigned to her. These documents included the submission of a draft lease. He did not however contend that a rent for the renewed lease was agreed upon nor does he or anyone acting on his behalf seem to have addressed their mind to the procedure set forth in the lease itself for determination of that rent.

95 Nonetheless in or about June 2006 Mr Sassine said that he instructed the agent to pursue the lessee for arrears of rent which according to his affidavit remained unpaid. In February 2007 he instructed the agent that he would not renew the lease following the expiration of the option term on 15 March 2007. Pursuant to his instructions his agent Mr Vince Surace of L J Hooker Commercial on 13 February 2007 wrote this letter to Jodie McGlinn (omitting formal parts):

As you are aware your current lease agreement will expire on Wednesday 14^th March 2007.

We confirm the following clear and precise instructions from your landlord:

- Your lease agreement will not be renewed.

- The rent arrears of $24,557.85 to be paid in full by 14^th March 2007

- The property at 7-9 Fox Street, Granville NSW is to be vacated by Jodie McGlinn t/as Westlands Produce with all items associated with Jodie McGlinn t/as Westalands Produce no later than 14^th March 2007 (the lessor requires vacant possession as of 15^th March 2007).

- Action will be commenced as of 15^th March 2007 if all outstanding monies are not received at the expiration of the lease contract.

- A For-Lease signboard will be positioned at the front of the property as of Monday 19^th February 2007.

96 Although it was common ground between the parties that the lessee was locked out of the premises on 15 May 2007 Mr Sassine annexed to his affidavit the somewhat curious letter from his solicitors Greenaway & Tohme dated 24 May 2007 which (again omitting formal parts) read:

We act for the Lessor and note that you have been occupying the above premises since 16 March 2005.

We are instructed that you have vacated the premises without any notice whatsoever. Our client has now secured the premises and has re-entered.

We are also instructed that you are currently in arrears in respect of your obligation to pay rent in the sum of $17,557.84 (copy of Tenant Arrears Report attached). Furthermore, we are instructed that you are liable to pay an additional one month’s rent in lieu of notice, together with the costs of rectification of the premises upon removal of your fixtures and fittings.

We are now instructed that upon the expiration of fourteen (14) days from the date hereof, the Lessor intends to:

1. Take possession of the fixtures, fittings, goods and chattels which you have left at the premises following your departure;

2. Dispose of all your fixtures, fittings, goods and chattels by sale or otherwise, and to direct any proceeds of any sale in reduction of your outstanding rent and other proper charges.

3. Recover any deficiency from you in respect of any outstanding sum.

Please give this matter your urgent and considered attention.

97 It is significant to my mind that the letter in terms gives the lessee no opportunity to remove her property.

98 As to the applicants’ complaint that Mr Sassine refused them access to the premises and destroyed, disposed of or converted to his own use valuable property upon the premises, at the time of the lockout Mr Sassine somewhat cavalierly said:

17. In or about early June 2007 I was advised that a police officer wanted access by the Lessee to the property to retrieve her possessions. I arranged for access to be granted to the Lessee. She returned to the property and collected some snakes and rats which remained on the property. I have not had any contact with the Lessee since that occasion.

18. In or about late June 2007 I arranged for a further inspection of the property. I was informed that the property was left in a dilapidated condition. The Lessee left behind several large concrete blocks and rubbish and debris. I was required to clean the property and remove the rubbish and debris prior to re-leasing the property. I was also required to make arrangements for the removal/sale of all stock and other items which were left on the property by the Lessee.

19. The property was repaired, renewed and subsequently re-let in August 2007. During June & July 2007 I caused to be sold the following items for the respective amounts as noted:

(a) Dog Food - $100.00

(b) Mixers - $150.00

(c) Cat Food - $48.00

(d) Sewing Machine - $50.00

(e) Horse food - $30.00

(f) Bench - $150.00

(g) Snake Pits (x2) - $200.00

(h) Small fridge - $40.00

(i) Scales - $30.00

(j) Pallet racking - $1,000.00

(k) Old Bricks (60 Pallets) - $3,000.00

The following items remain in my possession:

i) 10 Pallets of Bricks

ii) Forklift

iii) Concrete Blocks (on site)

99 As to the occasion which Mr Sassine puts as occurring "in or about early June 2007", he is clearly referring to the occasion on 15 May when Constable Baran was present. It is significant that he does not suggest any other occasion upon which the applicants were given an opportunity to retrieve their property.

100 In oral evidence the respondent told his counsel that ten pallets of bricks remain in his possession and that in effect he would be happy for the applicants to remove them. As to the car left on the premises he said that when he took possession it was out of registration and he sold it for scrap metal.

101 In cross examination by Ms Winfield, Mr Sassine told her that in June 2007 his solicitor told him "you have to write them a letter to come and collect their stuff. We’ll give them notice and we’ll wait". It is regrettable that Mr Sassine either failed to give his solicitors instructions to that effect or if he did they failed to carry them out.

102 Mr Sassine was cross examined at some length by Ms Winfield as to his knowledge of the nature of the business being conducted in the premises by the applicants. There was this exchange:

Q. You knew what the Saad’s business was, didn’t you?

OBJECTION

SEYMOUR: I object to that question too.

PATTEN I’ll allow that.

WITNESS: They are wholesalers of landscape and well - what you call it, animal.

WINFIELD

Q. Animal products.

A. Products.

Q. Bird seeds and that sort of thing.

A. I didn’t go into - into it - all - all it says produce, I didn’t go into the--

Q. You knew they were buying and selling bricks?

A. At the beginning no. But what happened they’ve changed their use. At the beginning when they - they moved in as they moved in as a produce. They didn’t go in as a - as a brick.

Q. So they were buying produce and on selling it?

A. I don’t know.

Q. Well you do know, Mr Sassine, don’t you because you used to go to the premises?

A. I use to go to my area only.

Q. You used to go into the shed and you used to buy things such as sand from the business.

A. I never bought a thing.

PATTEN

Q. Do you say you never went into the shed?

A. I did go into the shed but I never bought any sand because they use - my - my - my requirement is 15 and 20 tonne deliveries.

WINFIELD

Q. Well you heard Ms McGlinn say that you did come to the premises and buy sand, haven’t you?

A. I heard her, doesn’t have to be true.

Q. I suggest to you it was true.

A. I don’t remember.

PATTEN

Q. What don’t you remember, what she said or what was being done?

A. I don’t remember that I bought any sand off anyone except from my - my main supplier.

WINFIELD

Q. You know Mr Dominic Kartbani don’t you?

A. Yes.

Q. You know that he worked at Westlands Produce don’t you?

A. Yes.

Q. And he was in fact working at the business when it was across the road in its original location wasn’t he?

A. Yes.

Q. You knew him when he was working there?

A. Just hi and bye.

Q. The reason you knew him is because you went onto the premises when it - in it’s original location didn’t you, across the road?

A. Yes.

Q. When it was across the road it was selling produce, wasn’t it?

A. I don’t know.

Q. You’re not seriously saying that you don’t know what the business was doing are you?

A. No.

Q. You’re seriously saying--

A. Yeah I’m seriously, I don’t know.

Q. So is this the case you’re telling the Tribunal that you made no inquiries whatsoever as to what the business was doing?

A. All they’re saying is a produce.

Q. Well then you understood them to be selling the produce, didn’t you?

A. Wholesale it.

Q. You were there and saw members of the public coming and going, didn’t you?

A. How would I know if they are member of the public or the - or a client to them?

Q. Well you knew they had grain mixes and small - that they mixed up into small bags for selling didn’t you?

A. I saw mixes but I didn’t see small bag all I see is big bags.

Q. Mr Sassine, you’ve seen the photographs L J Hooker took of the premises, haven’t you?

A. Yes, I have.

Q. You saw, in those photographs a counter in one of the photographs? Might the witness be shown - have a look at the first page, bottom middle photograph. For the whole of the time that the--

FAGG: Could you point it out please.

WINFIELD

Q. First page with the name on it.

A. Yep.

Q. Bottom line.

A. Yep.

Q. Middle photograph. For the whole of the time that the business was on your premises that’s what it looked like inside isn’t it?

A. Possibly, yes.

Q. So far as the counter in the office went.

A. Yep.

Q. And you can see small products in boxes in the counter there?

A. Yes.

Q. And you can see pot plants?

A. Yeah.

Q. And you see I suggest to you that you knew that the owners of the business, whether or not it be the Saads or the McGlinns, were selling those products to the public.

A. No, I’m not aware.

103 Mr Sassine volunteered to Ms Winfield that on occasions when he drove past the premises before May 15, 2007 the gates were locked but he conceded that he did not mention this fact in his affidavit.

104 Cross examined as to whether he gave the applicants the opportunity to remove their property after the lock out on May 15 2007, the respondent could not point to anything apart from his solicitor’s letter of May 24 which he seemed to regard as an offer to allow the applicants to collect their property within 14 days. He said he could not remember Sumer McGlinn asking him in June 2007 for the return of office records, computers, papers etc. He denied or could not recall an occasion when Sumer McGlinn was present when her property was being loaded on to a truck and he told her that it was being taken to a tip. He denied that he threatened to call the police because Ms McGlinn was trespassing.

105 I found the respondent an unimpressive witness principally because he purported to have very little recollection of relevant events particularly those relating to the lock out, the applicants’ attempts to regain their property and as to his knowledge of the nature of the business actually being conducted from the premises. As to the last matter I prefer the evidence of Sumer McGlinn and Mr Kartbani that the respondent at least from time to time entered the business premises and at least occasionally bought items offered for sale. I disbelieve his evidence to the contrary.

106 I also prefer the evidence of Sumer McGlinn as to the events which followed the lock out and I am satisfied that in that period the respondent offered her no reasonable opportunity to regain her property and rebuffed her attempts to do so.

107 The only other person to give oral evidence in the respondent’s case was the agent, Mr Surace, who said that he assumed the management of the premises in August 2006 when he noticed "the tenant of the premises was in significant arrears". Thereafter he said he made contact with the lessee verbally, in writing, and personally. On occasions he collected cheques in part payment of what he described as "outstanding rent" but added "I do not recall ever receiving sufficient funds to clear the rental arrears in full". He also recalled receiving some cheques which were subsequently dishonoured.

108 He received instructions in about February 2007 that the lease would not be renewed when it expired. He claimed that the lessee did not return his telephone calls regarding obtaining possession of the property.

109 In cross examination, Mr Surace admitted that when he assumed management he was unaware that no current lease had been executed. Apparently as it transpired he assumed that the rent properly payable was the figure that appeared in his employers records.

110 Asked by Mr Griffiths whether he made an inventory of the property in the premises at the time of the lock out, he replied "Yes yes with photos". The photos admitted into evidence were apparently taken by Mr Surace about a week after the lock out. These were of limited use in that they did not depict all parts of the premises but they did show images of pallets of bricks, a forklift, a car and stacks of empty pallets.

111 Documents tendered in evidence by the parties and requiring mention include Ex 1 referred to earlier being a certificate in respect of the premises under s149 of the Environmental Planning and Assessment Act. The zoning permitted, with development consent, any purpose other than one prohibited by Schedule 4. Schedule 4 in turn prohibited inter alia "shops" other than of a very limited, and irrelevant for present purposes category.

112 Documents in Ex D include file notes and correspondence supporting Mr Surace’s evidence that he regarded the applicants as being in arrears with rent from when he assumed management of the property. It seems that he assumed the rent properly payable was $3629 per month and on that basis calculated arrears as at 13 February 2007 at $20789.16 with another instalment due on 16 February. Certainly it appears from such records as are in evidence that the applicants paid rent irregularly and by irregular amounts. It seems probable that even if the rent properly payable was no more than they offered to pay after the option was exercised they were in default. The evidence also reveals that a number of rental cheques were dishonoured.

113 Bank statements in Ex C for the business account during the first months of 2007 show little activity and in particular, only a few credits. They suggest that there was very little trading. Moreover evidence of unpaid debts and arrears of rent suggests that the business was insolvent in the sense that it was unable to fund its debts as they fell due for payment. In my opinion while the business had not actually been closed down entirely in the month or so prior to 15 May 2007 it was open at irregular hours largely if not wholly for the occasional sale of bricks. During this period as it appears Sumer McGlinn sought without success to find a buyer for the business.

Jurisdiction

114 In light of the evidence which I have attempted to summarise, a number of issues arise for consideration. First amongst them is whether the Tribunal has jurisdiction in the matter.

115 Mr Seymour submitted that there was never a "retail shop lease" between the parties as required by s 71 of the RLA to found the Tribunal’s jurisdiction. He contended that the definition in s 3 focuses on the terms of the agreement between the parties rather than the actual use to which the premises are put. On that basis he contends that the use stipulated in the lease viz "Warehouse, Storage, Wholesale and distribution of rural products and landscape supplies" does not fall within the businesses prescribed for the purposes of para (a) of the definition of "retail shop". This in turn leads to a consideration of the businesses listed in Schedule 1 to the RLA included in which are "Building Supplies Shops", "Hardware Shops" and "Pet Shops, pet grooming and supplies shops and aquarium shops".

116 It is noteworthy that in the permitted uses the word "wholesale" is separated from the word "distribution" by the conjunction "and". The phrase should be construed disjunctively rather than conjunctively. The word "distribution" has a wide dictionary meaning e.g. The Macquarie Dictionary 3^rd edition "6 the transporting marketing merchandising and selling of a product". In my opinion that meaning readily encompasses businesses described in Schedule 1. In the decision quoted by Mr Seymour, Woolworths Ltd v Campbells Cash & Carry Pty Ltd (1996) 92 LGERA 244 the meaning of words and phrases relevant to this case are discussed but the actual decision turned on the meaning of the phrase "wholesale warehouse". In this case as "distribution" is not qualified by the word "wholesale" the sale by retail of building supplies, pets and pet products are both authorised by the lease and fall within the list of retail businesses prescribed by schedule 1 to the RLA. As the definition of "retail shop lease or lease" in s 3 of the RLA indicates and as held by the Court of Appeal in Moweno Pty Ltd v Stratis Promotions Pty Ltd [2003] NSWCA 376 the focus is upon "the purpose" of the lease of the premises as stated in the lease. Here as indicated the purpose is a business within schedule 1. Moreover in this case as I have already found the premises were actually used for the purpose stipulated and thus complicating factors discussed in Moweno do not arise.

117 Further as indicated earlier, I am satisfied that at least by the time the option for renewal was exercised by Ms McGlinn early in 2005, the respondent from his attendances at the premises and his occasional retail purchases was aware of the precise nature of the business conducted there and either acquiesced in the actual use or is estopped by his acceptance of the exercise of the option from asserting that the business was not conducted in accordance with the terms of the lease.

118 Accordingly in my opinion at relevant times, namely the period of the renewed lease, the predominant use of the premises, indeed the only use, was for the purposes of businesses prescribed in Schedule 1 to the RLA and those businesses were authorised by the lease between the respondent and Jodie McGlinn. It is I think not to the point that such use may have been contrary to the relevant zoning and therefore unlawful. Although the evidence is in any event insufficient to make a finding upon the issue even if the use were unlawful that in my opinion would not take the lease outside the definition of retail shop lease in s3 of the RLA. The reason for that conclusion is that the definition focuses on the purpose for which the lease is granted. If that purpose happens to be unlawful the lease is still a retail shop lease if the requirements of the section are fulfilled. The appropriate remedy is in the hands of the relevant local government authority.

119 I hold that the Tribunal has jurisdiction under s 71.

Was there Unconscionable Conduct?

120 It seems to me that this question does not arise, at least in the period up to the expiration of the lease. I do not infer it from the fact that rent was demanded which may have exceeded the sum legally payable, if the procedure providing for the determination of the rent had been followed. It was open equally to both parties to have that rent ascertained and in that circumstance in my opinion it does not lie in the mouth of either to complain that the other is paying or demanding other than the rent properly payable. Nor in my opinion was it unconscionable for the respondent to lock the applicants out of the premises on 15 May 2007. The lease had expired and the respondent had no obligation to grant a fresh lease. In the circumstances it is unsurprising that he would not have wished to do so. Put at its highest, the agreement which Sumer McGlinn said she reached with Mr Sassine was conditional upon her paying the rent claimed, a condition which she does not seem, and does not claim to have performed. Section 44 of the RLA is inapplicable by virtue of ss (3) and (5).

The Claim for Damages

121 Aside from any question of unconscionable conduct, the claim made by the applicants is a claim which in my opinion falls within s 70(a)(i) of the RLA and arises out of the failure or refusal by the respondent to give the applicants access to their personal property after he locked them out of the premises on 15 May 2007 and his subsequent disposal of that property.

122 In my opinion in the circumstances of this case the Tribunal has jurisdiction under s 70(a)(i). The situation is indistinguishable in my view from that which arose in Parallel Lines Pty Ltd v Video-Drama Pty Ltd [2007] NSWADT 84. I respectfully agree with what was said in that case by Chesterman DP.

123 However it follows from what I have said earlier that the applicants are not entitled to compensation for the loss of their business. The respondent was entitled to lock them out of the premises and in any event in my opinion by May 2007 the business had nil value as a going concern. It was insolvent and had no premises from which to operate. Any claim for loss must be confined to the value of stock and other property left on the premises, the value of which being heavily discounted to reflect the fact that they were no longer employed in an ongoing business operated from secure premises. On the other hand the matter is to be considered on the basis that the respondent chose not to avail himself of the rights given by cl 6.6 of the lease and actively, as I find, prevented the applicants from removing their property even though he was at one point minded to follow his solicitors advice that the applicants be given reasonable opportunity to remove what they owned.

Rights and duties of lessor and lessee
124 None of the property now claimed by the applicants in this case, as I understand it, became attached to the freehold so as to give rise to the question whether it became property of the lessor.

125 In relation to the property which is claimed the rights and obligations of the parties upon the expiration of the lease arise from a combination of the general law when considered with clauses 3.1 (4) and 6.6 of the lease. In this case the lessee had the obvious right to remove her property at any time before the expiration of the lease. She seemingly in the absence of a notice from the lessor had no obligation to remove the property contemplated by clause 6.6 (iii) although such clause does not appear to encompass all or any of the property which is the subject of the present claim.

126 In relation to property left in the premises which was not encompassed by clause 6.6 the common law and clause 3.1 (4) of the lease required its removal before the lease expired. Seemingly the applicants took no steps to remove their property before the expiration of the lease or indeed before they were locked out of them. They had ample notice that the lease would not be renewed even though I accept that in the period up to the date they were locked out they were in discussion with the respondent and his agent and that the very short notice they were given of the respondent's intention to lock them out may have come as a surprise.

127 However in my opinion the applicants title to all the items left in the premises and which they now claim remained with them (see for instance City West Centre Pty Ltd v Galaxy Media Pty Ltd (1998) 6 BPR 16, 313 per Windeyer J). It was certainly not established that the applicants abandoned the property although they were not particularly diligent in seeking to enforce their rights. The respondent became a gratuitous bailee.

128 In my opinion the respondent by selling and otherwise disposing of the applicant's property as though it were his own converted such property to his own use and is liable to damages as a consequence. The problem could have been avoided if the respondent had followed the legal advice he said he received by giving reasonable notice requiring the applicants to remove their property and facilitating access for that purpose.

Damages
129 The measure of damages in conversion is the market value of property converted at the time of conversion which I take to be May 2007. In my opinion all the property left behind was converted by the respondent to his own use and no significance should be attributed to his belated offer to make 10 pallets of bricks available to the applicants now.

130 There are two difficulties one being the lack of reliability of Sumer McGlinn's recollection of what was left behind when she was locked out and the other is the absence of reliable evidence as to value other than the evidence of Sumer McGlinn herself. Unfortunately neither Mr Sassine nor his agent made a detailed inventory of the property but on the other hand the photographs in evidence although somewhat inconclusive suggest as I have indicated that as at 15 May 2007 the business was something less than an ongoing flourishing business.

131 Ms Winfield in her closing submissions acknowledged that the evidence upon which she relied in relation to damages was somewhat inadequate and contemplated that the parties should be given the opportunity to call further evidence but I am not willing to countenance that course. The hearing occupied five days with an adjournment for 2 1/2 months between the first two days and the balance. There was ample opportunity for further evidence to be obtained and presented. Indeed a report by an accountant Mr T Peisley was filed on behalf of the applicants but its tender was not pressed when it became obvious that many of the assumptions made by Mr Peisley were not established. Moreover further evidence would not overcome the fundamental deficiency that there was no reliable evidence as to what was on the premises on 15 May 2007.

132 I propose to do the best I can on the evidence presented. The largest single item claimed was $22,000 for 80 pallets of bricks. I am satisfied that these were saleable and indeed some were sold by the respondent. There was evidence as to the range and price obtainable by the applicants for cleaned bricks and as to the price the respondent obtained for what he sold. However there should be a discount to meet the circumstance that if the applicants had taken possession of them they would need to be stored pending sale and expense would be incurred in selling them probably not in one lot. I discount Ms McGlinn's assessment by 15% and allow $18,700. The second largest single item was a forklift which Ms McGlinn valued at $13,000. In the absence of evidence to the contrary I will allow that claim as according to the evidence the forklift is still in use by the present lessee and I will also allow the sum of $2,500 claimed for the Magna sedan, $4,300 claimed for 100 metres of pallet racking, $8,000 for 3 seed mixing machines and $1,600 for a new cash register. The sum of $10,000 was claimed for 25,000 unwashed bricks. This claim would need to be discounted for the cost of cleaning and selling the bricks. I would allow $5,000.

133 Other items claimed represent office and other equipment, second-hand pallets, breeding boxes, reptile enclosures, stock bags, landscape pebbles, pet food and accessories, stationery, pavers, general stock and computer programs. The total claimed for these items which were numerous exceeded $60,000. However as I have mentioned as the property was owned by an insolvent business with no premises from which to operate the sum claimed must in my opinion be very heavily discounted. For instance according to the evidence no new stock apart from bricks seems to have been purchased after the beginning of 2007 and it may be assumed that such stock as remained was close to unsaleable. In addition to the sums specifically mentioned above I would allow a further $10,000 thus awarding in all the sum of $63,100.

Set Off
134 By its response to the applicant’s claim the respondent among other defences sought to set off against the amount claimed the total of rent outstanding as at 15 May 2007. This claim should be upheld. However as I have indicated earlier there is a degree of uncertainty as to the rent properly payable. On 24 May 2007 the respondent’s solicitors wrote to Jodie McGlinn claiming payment of $17557.84 arrears of rent as at 22 May 2007. It may be that this amount is accepted by the applicants but they do not seem to have been given credit for the bond money they provided. Possibly this has been accounted for separately. I will reserve to the parties the right to make written submissions about the set off if they are so inclined.

Declaration and orders
135
1. Declare that prior to March 2007 there was a lease between Ms Jodie McGlinn and the respondent which constituted a retail shop lease within section 3 of the Retail Leases Act.
2. Order pursuant to section 72 (1) (a) of the Retail Leases Act that the respondent pay to the applicants the sum of $63,100.
3. Declare that the respondents are entitled to set off against the sum of $63,100 the amount of outstanding rent which subject to order 4 I assess at $17,557.84.
4. In the event that either party wishes to challenge the amount of the set off specified in 3 above leave given to that party within 14 days of the date of publication of this decision to lodge submissions in the Registry. The other party may make submissions in reply within a further period of 14 days. Thereafter the matter will be decided on the papers.
5. No order as to costs.