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Is a lessor required to disclose anticipated disturbance and potential building works to a lessee?

D’Annunzio v North Sydney Council [2020] NSWCATAP 66 (22 April 2020)

This case looks at when a lessor is required to disclose anticipated disturbance and potential building works to a lessee. It examines misleading and deceptive conduct in a commercial context and provides insight into how the Court applies statutory interpretation towards resolving a dispute.

D’Annunzio v North Sydney Council was an appeal matter heard in the NSW Civil and Administrative Tribunal.

Facts

Mr D’Annunzio was a lessee who was operating a cafeteria business from a retail shop premises owned by the North Sydney Council (the lessor).

In accordance with the Retail Leases Act 1994, the lessee received the lessor’s disclosure statement prior to commencing the lease. The disclosure statement indicated that the lessor did not intend to conduct any work or alterations to the premises or to the surrounding roads of the premises.

However, at the end of 2016, building works commenced on a building adjacent to the lessee’s business. The work restricted access to the walkway of the business and caused dust and noise and a reduction of customers for the lessee.

In his application to the Tribunal, the lessee claimed that the lessor was in contravention of sections 10 and 62D of the Retail Leases Act. Under section 10(1), a party is entitled to compensation if the injured party entered into the lease under a false or misleading representation. Under section 62D, a party to a retail lease shop is prohibited from engaging in conduct that is misleading or deceptive.

The lessee argued that by failing to disclose building works to the adjacent building, the Council had made a pre-lease misrepresentation. The lessee also argued that the definition of “surrounding roads” should also be inclusive of walkways.

The Tribunal rejected the lessee’s application.

Appeal

The lessee appealed the decision, and relied on the following two grounds of appeal:

  • That the Tribunal erred in finding that the word “road” in the disclosure statement did not apply to the walkway, and in doing so applied a restrictive and limited meaning to the word “road”.
  • That the Tribunal erred in finding that the Council did not have a duty to disclose building works in the adjacent building, and that it did not engage in misleading and deceptive conduct.

The Tribunal dismissed the appeal on both counts.

The definition of “Road”

The Tribunal found that this ground of appeal had no basis as a question of law. They confirmed the original findings that the word “road” should be interpreted in accordance with the Macquarie Definition, which is “the track on which vehicles pass”.

Did the Council have a duty to disclose building works?

The lessee argued that the Council had a duty to disclose that the public walkway would be closed during the neighbouring building works.

The Tribunal did not accept this ground of appeal. They found that there was no factual basis that the Council had any prior indication that the lessee’s walkway would be affected by building works to the adjacent building.

The Tribunal relied on the development application to resolve the issue of whether the Council was aware that the building works would disrupt the operation of the lessee’s business. The development application indicated that the work to be done would be limited to the adjacent property, and would not affect the walkway or neighbouring land users. In this respect, the lessee was unable to provide any evidence to the Tribunal that verified his claim that the Council knew or ought to have known about the disruption to the walkway.

Grace Brophy, Lawyer
Paul Carroll, Partner 

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