Fasako Pty Limited v TianyD Beauty & Hairdressing Australia Pty Limited and Yao Zhu [2019] NSWCATCD 77

Fasako Pty Limited v TianyD Beauty & Hairdressing Australia Pty Limited and Yao Zhu [2019] NSWCATCD 77

TianyD was not entitled to terminate the lease under s11(2) RLA as there was no material non-disclosure by Fasako; clause 7.8(b) was known to and accepted by TianyD, and any alleged non-disclosure was not found. The Tribunal implied a term of loyalty to the promise into the Lease, which required cooperation for the fitout. Fasako fulfilled its obligations by offering and facilitating a fire engineered solution, but TianyD unreasonably failed to pursue that solution and repudiated the Lease. Consequently, the Notice of Termination was invalid; TianyD repudiated the Lease, Fasako is entitled to damages and to apply the bond. Claims of frustration and breach of quiet enjoyment not established.

Parties
Applicant/cross Respondent: Fasako Pty Limited; Respondent/cross Applicant: TianyD Beauty & Hairdressing Australia Pty Limited; Respondent/guarantor: Yao Zhu
Jurisdiction
Australia
Judgment Date
17 October 2019
Procedural Posture
Retail/commercial Lease Dispute / Principal Judgment on Merits; Damages and Costs to Be Assessed
Outcome
Notice of Termination invalid; Lease subsisted; Fasako entitled to damages and outgoings; TianyD and Mr Zhu liable for rent, outgoings, damages; bond may be applied to amounts due; orders and directions for submissions on quantum and costs.
Legal Topics
Implied Terms in Leases, Non Disclosure in Lessor's Disclosure Statement, Fire Safety and Building Compliance, Breach of Lease, Waiver and Affirmation, Remedies for Breach of Lease
Commercial Law Property Law Lease/retail Tenancy Contract Law Implied Terms in Leases Non Disclosure in Lessor's Disclosure Statement Fire Safety and Building Compliance Breach of Lease +2 more

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Parties

Fasako Pty Limited

Applicant/cross Respondent

TianyD Beauty & Hairdressing Australia Pty Limited

Respondent/cross Applicant

Yao Zhu

Respondent/guarantor

Procedural Posture

Retail/commercial Lease Dispute / Principal Judgment on Merits; Damages and Costs to Be Assessed

Legal Issues

  1. 1 Whether TianyD validly terminated the lease under s11(2) of the Retail Leases Act 1994 (NSW) based on alleged non-disclosure
  2. 2 Whether TianyD was entitled to terminate the lease by reason of breach of implied terms or frustration
  3. 3 Whether Fasako breached any statutory or contractual obligations regarding building compliance/sprinkler system

Ratio Decidendi

TianyD was not entitled to terminate the lease under s11(2) RLA as there was no material non-disclosure by Fasako; clause 7.8(b) was known to and accepted by TianyD, and any alleged non-disclosure was not found. The Tribunal implied a term of loyalty to the promise into the Lease, which required cooperation for the fitout. Fasako fulfilled its obligations by offering and facilitating a fire engineered solution, but TianyD unreasonably failed to pursue that solution and repudiated the Lease. Consequently, the Notice of Termination was invalid; TianyD repudiated the Lease, Fasako is entitled to damages and to apply the bond. Claims of frustration and breach of quiet enjoyment not established.

Court Disposition

Notice of Termination invalid; Lease subsisted; Fasako entitled to damages and outgoings; TianyD and Mr Zhu liable for rent, outgoings, damages; bond may be applied to amounts due; orders and directions for submissions on quantum and costs.

Orders

  • The Notice of Termination dated 13 September 2017 was ineffective to terminate the Lease between the parties.
  • There is implied into the Lease that each party will maintain loyalty to the promise and that TianyD breached the implied term.