Appellants v Respondents [2013] VSC 728 | Case summary

Supreme Court of Victoria|2013-12-20|Before: CROFT J

RETAIL LEASES - definition of key-money - goodwill - leave to appeal from orders made by Victorian Civil and Administrative Tribunal - a question of law and a question of fact - estoppel in the face of a statute - Federal Commissioner of Taxation v Williamson [1943] HCA 24; (1943) 67 CLR 561 - Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 - Binder v Alachouzos (1972) 2 QB 151 - Retail Leases Act 2003, s 23,

1 This is an appeal under s 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 ("the VCAT Act") against the orders of the Victorian Civil and Administrative Tribunal ("VCAT"), constituted by Deputy President Lulham, made on 30 January 2013 in VCAT Proceeding R161 of 2012 ("the VCAT proceeding"), where Ratko Spirovski and Marija Spirovski ("the Appellants") were the applicants and Univest Asset Merchants Syndicators Pty Ltd ("the First Respondent") and Robroy Local Hotel Pty Ltd ("the Second Respondent") (collectively "the Respondents"), were the respondents.

2 The reasons[1] given by the Deputy President in the VCAT proceeding with the orders handed down on 30 January 2013 include an outline of the history of the dispute between the parties. This is briefly summarised here for the purposes of providing background to these reasons.

3 The Appellants own hotel premises in Fitzroy. On 22 January 2008 they agreed to lease the premises to the First Respondent, which took possession and began spending money on renovations before a lease was executed.

4 The Appellants sent a draft lease and other documents to the First Respondent. On 22 May 2008 the First Respondent informed the Appellants that they were refusing to execute the documents on the basis that the documents did not accurately record the parties agreement, as well as claiming that the Appellants had purported to charge "key-money" of $180,000, contrary to the Retail Leases Act 2003 ("the Retail Leases Act"). The alleged "key-money" was payable in two instalments; $90,000 which was to be paid by the First Respondent before taking possession of the property; and $90,000 due when the first option to renew under the lease was exercised.

5 The Appellants and the First Respondent subsequently attended a mediation under the auspices of the Small Business Commissioner and, on 22 July 2008, signed Terms of Settlement ("the Terms"). Under the Terms the First Respondent agreed that the Appellants could retain the $90,000 already paid. It was also agreed that the First Respondent would pay the second instalment of $90,000 on the exercise of the first option to renew the lease. These Terms also provided that the Appellants would sign a transfer of the lease from the First Respondent to the Second Respondent. The parties signed a lease and other documents pursuant to these Terms, on 6 August 2008.

6 The first option under the lease was exercised. The Appellants filed the VCAT proceedings in June 2012, claiming payment of rent arrears and similar moneys, and the second instalment of $90,000.

7 The Deputy President found that in order to determine the dispute, it was necessary to consider whether s 23 of the Retail Leases Act applied in the period before the mediation, and if so, whether the Terms of Settlement executed subsequent to the mediation prevented the First Respondent from seeking relief.

8 In finding for the Respondents, the Deputy President made the following orders, from which the Appellants now appeal:

2. The Applicants shall pay the First Respondent plus interest pursuant to statute of $2,113.36.

3. The Tribunal declares that the Terms of Settlement between the parties dated 22 July 2008 are void to the extent that they purport to have the effect of requiring the First Respondent to have paid $90,000.00 in February 2008, of entitling the Applicants to retain that $90,000.00, or entitling the Applicants to payment of a further $90,000.00

4. The Tribunal declares that the Contract of Sale of Business and the Lease executed by the parties pursuant to the said Terms of Settlement are void to the extent that they purport to have the effect of requiring the First Respondent to have paid $90,000.00 in February 2008, of entitling the Applicants to retain that $90,000.00, or entitling the Applicants to payment of a further $90,000.00

5. Costs reserved Any application for costs must be field by 28 February 2013. Any such application shall be confined to the liability for costs. Neither party shall file a taxable bill of costs."

"(1) A party to a proceeding may appeal, on a question of law, from an order of the Tribunal in the proceeding-

(a) to the Court of Appeal, if the Tribunal was constituted for the purpose of making the order by the President or a Vice President, whether with or without others; or

(b) to the Trial Division of the Supreme Court in any other case-

if the Court of Appeal or the Trial Division, as the case requires, gives leave to appeal."

It follows from these provisions that any appeal is dependent upon two important qualifications. First, that the appeal be "on a question of law" and the second qualification is that the court "gives leave to appeal".

10 On 26 April 2013, the application for leave to appeal was heard before Associate Justice Zammit. At the hearing, her Honour granted leave to appeal but stated in "other matters" that such leave was granted only on the basis of the third and fourth question of law that were provided in the draft notice of appeal, as the first and second questions of law (as they were drafted in that notice) did not raise a proper question of law. Leave was granted to file and serve a further amended notice of appeal - the draft notice of appeal provided at the hearing on 26 April 2013 having itself been previously amended by Court order - in relation to the first and second questions of law, and the adequacy of those ground were left to be dealt with by the trial judge.

11 The further amended notice of appeal ("the Notice of Appeal") was filed on 3 May 2013, removing the first and second questions that were put before Zammit AsJ, and setting out the questions of law upon which this appeal is now brought, as follows:

"1. The Learned Deputy President erred in law, in finding upon the facts, that there was no exception pursuant to s. 23(3)(c) and (f) of the Retail Leases Act (Vic) 2003 by finding that:

● the furniture left upon the premises was junk destined for the tip;

● the previous tenant had not conduct [sic] business until the day it left the premises;

● the Applicants had not conducted business after 15 October 2010;

● failing to have regard to the evidence of the Applicants that there were a liquor licence, rooming licence and other licences and permits in effect for the business and that he had run a rooming house business;

● failing to have regard to the evidence of Mr Markovic;

The only evidence upon which the Learned Deputy President could rely was the evidence of the value of the contract.

2. The Learned Deputy President erred in law in finding Terms of Settlement entered into by the parties had the effect that the Respondents could not claim the payments made for the sale of the business was key-money and were thereby not estopped from claiming refunds of the moneys paid.

3. The Learned Deputy President erred in law in finding the payment of $90,000 and the requirement to pay the further $90,000 was not estopped by the conduct of the Respondent by entering into the Terms of settlement."

12 As leave has already been granted by the order of Zammit AsJ to appeal against what are now numbered as the second and third questions of law in the Notice of Appeal, the question with respect to leave turns to whether the first question, as drafted in the Notice of Appeal, provides a proper question of law.

13 The Respondents submit that the proposed new ground of appeal merely raises a question of fact and not a question of law. They say that the Appellants' contention is that the only evidence upon which the Deputy President could rely was the evidence of value in the Contract of Sale of Business ("the Contract"), and that implicit in this assertion is:[2]

"(a) that the Contract of Sale of Business sets out the value of the stock, goodwill and plant equipment; and

(b) that there was no other evidence as to the value of the stock, goodwill or plant and equipment."

The Respondents submit that the Contract provides no separate monetary amounts for stock, goodwill or plant and equipment, with only a composite figure of $180,000 being provided. They say that as the Appellants led no evidence at the VCAT hearing - outside of this composite figure - as to the value of stock, goodwill or plant and equipment, it was open to the Deputy President to find, on the evidence, that the Contract was a sham and that this Court should not now grant leave to the Appellants to so amend their Notice of Appeal.

14 The Appellants reject this position and say that the only evidence upon which the Deputy President could rely was the evidence of the value in the Contract. They say that it was open to him to rely on the fact that:[3]

"● the previous lease had come to an end and has been surrendered and the previous tenant had paid out the balance of the lease payments;

● the business was described as an existing business as hotel and accommodation;

● a liquor licence has to be transferred with the premises;

● There was at least one tenant in the accommodation part of the hotel. The one tenant alone indicates the landlord was operating a business before the sale;"

Further, the Appellants submit that there was evidence before the Deputy President in relation to each of the items listed in paragraph one of the Notice of Appeal,[4] and that in failing to properly take these into account, the Deputy President has made an error in law.

15 While no satisfactory test of universal application has yet been formulated as to the proper distinction between questions of fact and questions of law,[5] the courts have nonetheless articulated some general propositions that serve to highlight the distinction between the two.

16 In S v Crimes Compensation Tribunal,[6] Phillips JA said:[7]

"It cannot be said as a matter of legal principle that a determination of fact can never give rise to an error of law, but ordinarily it will not be so unless it is shown that the fact-finding tribunal arrived at a finding that was simply not open to it. In so referring to a "finding" I use the term not only to include a finding of a fact derived from the acceptance of direct evidence to that effect; I include also an inference of fact drawn by the tribunal from other facts found by it. If the finding (be it a finding on direct evidence or inference) was not open to the tribunal, that may bespeak a relevant error of law."

17 Similarly, in Australian Finance Direct Ltd v Director of Consumer Affairs Victoria,[8] Ashley JA said:[9]

"A huge amount has been written concerning the distinction between questions of law and questions of fact. At the margins, particular difficulties arise. That said, two propositions command general acceptance; first, it will generally be a question of law whether facts found fall within a statutory provision properly construed. Second, a challenge to a finding of fact requires the challenger to contend and establish, for there to be error of law that the finding was unsupported by evidence, or perhaps, was perverse."

18 The legislative policy underlying these provisions is that "VCAT decisions should not generally be disturbed when cases have been decided in that forum other than on questions of law and where there is something about the decision bearing upon the question of law which warrants a grant of leave to appeal."[10] It follows that "[t]his Court is not entitled to enter into the fact finding exercise which the legislature has deliberately entrusted to a specialist tribunal."[11]

19 The leave requirement under s 148 is designed to maintain this position. As Pagone J said in Commissioner of State Revenue v Frost:[12]

"3 The requirement for leave under s 148(1) of the VCAT Act 'is a safeguard that the appeal is on a pure question of law and that the grounds supporting the question of law articulated for determination by the Court do found the subject matter of the appeal'.[13] It also confers a discretion about whether to grant leave[14] which an applicant must persuade the Court to exercise in its favour. What must be shown will depend upon the particular case bearing in mind the statutory criteria being a grant of leave and not special leave.[15] It will ordinarily be necessary (in addition to a clearly articulated question of law)[16] for an applicant to make out a prima facie case[17] and in an appropriate case it may be necessary for the applicant to show that the question upon which leave is sought has public or general importance.[18]"

20 As the authorities indicate it is difficult in the present circumstances to draw a "bright line" between questions of law and questions of fact - and often they are mixed in any event. In my view, as it appears in the reasons that follow, the issues raised in the first question as drafted in the Notice of Appeal, do raise questions of mixed law and fact and are therefore susceptible of appeal.

21 Having regard to this position with respect to the various questions sought to be raised on appeal it is appropriate that the hearing of this application for leave, insofar as it related to the first question, should also be treated as the hearing of the appeal, together with questions two and three.

22 Key-money is defined in s 3 of the Retail Leases Act as follows:

"key-money" means money that a tenant is to pay, or a benefit that a tenant is to give, that is -

(a) by way of a premium, or something similar in nature to a premium, in that there is no real consideration or no true consideration given for the payment or benefit (for example, it is so disproportionate to the benefit that it cannot be true consideration); and

(i) a lease being granted or an agreement being made to grant a lease; or

(iii) the renewal of a lease or the granting of an option for the renewal of a lease; or

(iv) consent being given to the assignment of a lease or to the sub-leasing of the premises to which a lease relates"

23 The definition of "key-money" in s 3 under the Retail Leases Act must be read with s 23 of that Act, which is the operative part of the key-money provisions.

24 Sub-sections 23(1) and (2) of the Retail Leases Act provides:

(1) A person must not, as landlord or on behalf of a landlord, seek or accept the payment of -

(b) any consideration for the goodwill of any business carried out at the retail premises.

(2) A provision of a retail premises lease is void to the extent that it requires the payment of key-money or consideration for goodwill or has that effect"

25 Reflecting a need to balance the protection of tenants from being coerced into payment of key-money with the recognition that such payments may be justified in circumstances of legitimate bona fide business relations between landlords and tenants, Parliament has provided for a number of exceptions to the prohibitive text of ss 23(1) and (2), two of which are relevant in this proceeding.

26 Thus s 23(3) of the Retail Leases Act provides:

"(3) However, sub-sections (1) and (2) do not prevent a landlord from -

(c) claiming goodwill from the tenant in relation to the sale of a business that the landlord operated from the retail premises immediately before its sale, if the lease was granted to the tenant in the course of the sale of the business; or

(f) seeking and accepting payment for plant, equipment, fixtures or fittings that are sold by the landlord to the tenant in connection with the lease being granted;"

27 For the Appellants to show the VCAT decision contained an error of law, it must be established that on the facts before the Deputy President, the payment of $180,000 should have been correctly identified as a payment for the goodwill of the business, or one that was appropriate for the value of the plant, equipment, fixtures or fittings that were left on the premises. It follows from the provisions of s 23(3) of the Retail Leases Act that the landlord must also establish title to the goodwill of the business and to any plant, equipment, fixtures and fittings - as these provisions clearly contemplate as the basis for providing the exceptions to the general prohibition on key-money and goodwill payments.

28 "Goodwill' is not defined by the Retail Leases Act, nor is there any definition or provision in the 2005 Amending Act (or the Retail Tenancies Reform Act 1998) which affects the meaning of the term at general law.[19]

29 In Federal Commissioner of Taxation v Williamson[20] ("Williamson"), Rich J noted the various components possibly involved in the goodwill of the business through an analysis of different customer types. His Honour said:[21]

"Goodwill has been said to be "the attractive force which brings in custom" (Inland Revenue Commissioners v Muller & Co.'s Margarine Ltd. [(1901) A.C. 217, at p. 224]). Hence, to determine the nature of the goodwill in any given case, it is necessary to consider the type of business and the type of customer which such a business is inherently likely to attract as well as all surrounding circumstances. Now, customers vary. In Whiteman Smith Motor Co. Ltd. v Haplin [(1934) 2 K.B. 35, at pp. 42, 49] the types were zoologically classified into cats, dogs, rats and rabbits. The cat prefers the old home to the person who keeps it, and stays in the old home although the person who has kept the home leaves, and so it represents the customer who goes to the old shop whoever keeps it, and provides the local goodwill. The faithful dog is attached to the person rather than the place; he will follow the outgoing if he does not go too far. The rat has no attachments, and is purely casual. The rabbit is attracted by mere propinquity. He comes because he happens to live close by and it would be more trouble to go elsewhere. These categories serve as a reminder that the goodwill of a business is a composite thing referable in part to its locality, in part to the way in which it is conducted and the personality of those who conduct it, and in part to the likelihood of competition, many customers being no doubt actuated by mixed motives in conferring their custom."

30 The nature and components of goodwill were also explored by Young in Hoogerdyk v Condon.[22] His Honour said:[23]

"Goodwill includes every positive advantage that has been acquired in carrying out a business which would give a reasonable expectancy of preference in the face of competition...There is some value in looking at the variety of elements which compose goodwill. These...will vary from business to business. There will be local goodwill represented by the fact that people will patronise the business nearest their home or place of business. There will be personal goodwill generated by the persons who in fact carry on the business. There will be goodwill or habit brought about by customers who are into the habit of buying things at a particular outlet and, unless something happens, they will continue to buy there because something equivalent to Newton's law of motion, or perhaps apathy, operates in favour of the trader. In more modern times it has been seen that having a name which is of good repute in the community generally will attract custom to a business. This, of course, has led to the practice of franchising so prevalent in the last decade or so. It must always be remembered, however, that all these aspects of goodwill attach to a business and one cannot consider goodwill apart from the business...It is also necessary to observe that goodwill can be enhanced, diminished or even extinguished by a number of factors, some of which are internal to the business and some which are external. Personal goodwill can be lost simply by being rude or inattentive to customers. Goodwill of habit can be lost by a competitor fiercely publishing cut-rate prices or otherwise clearly providing a superior service at a cheaper rate."

31 See also Federal Commissioner of Taxation v Murry[24] where the authorities in relation to the nature of goodwill are discussed in great detail.

32 In discussing the nature of goodwill in relation to the sale of assets of a partnership in Geraghty v Minter,[25] Barwick CJ said:[26]

"In any case, goodwill is not something which can be conveyed or held in gross: it is something which attaches to a business. It cannot be dealt with separately from the business with which it is associated: see e.g. Inland Revenue Commissioners v Muller & Co.'s Margarine Ltd. [(1901) A.C. 217, at p. 224] per Lord Macnaghten:

"For my part, I think that if there is one attribute common to all cases of goodwill it is the attribute of locality. For goodwill has no independent existence. It cannot subsist by itself. It must be attached to a business.

Goodwill, in itself is indivisible, though its value, when realized, may be shared in proportions."

33 The Appellants submit that the evidence shows that the premises are a "landmark hotel". They say that even if the hotel was not in operation at the time the Respondents signed the transfer documents and paid the first instalment of $90,000, the fact that the hotel occupied a prominent position and had previously operated for a lengthy period such that "everyone would know in Fitzroy where the Rob Roy Hotel was",[27] is enough to establish goodwill of a locational nature. They say that it then follows that the payment of the $90,000 was, therefore, attributable to this goodwill and, consequently, the excepting provisions of s 23(3)(c) of the Retail Leases Act were attracted. The Appellants would also have the same apply with respect to the second instalment of $90,000; though it might be thought that this payment would fall foul of the provisions of the "key-money" definition in s 3 of the Retail Leases Act.[28]

34 As Rich J indicated in Williamson, the locality of a business can contribute to the value of goodwill that may be attached to a business. For example, a service station that occupies a position on a busy highway, or a restaurant situated on a popular eating strip, may well attract a higher value for the goodwill of the business conducted in these locations than similar businesses situated in less prominent areas. But to suggest that locational goodwill - whether from the perspective of a cat, a rabbit or otherwise[29] - connected merely to a building or other structure can of itself be enough to justify a payment for an amount that would otherwise be determined as "key-money" would be to ignore the emphasis that the courts place on the attachment or connection between goodwill and the actual business that is operating at the location.

35 This attachment or connection between goodwill and the operation of the business was discussed in Commissioner of State Revenue v Uniqema Pty Ltd,[30] where it was held that there was no reasonable basis for asserting that the goodwill of a business had its source to any extent in the site where manufacturing operations were conducted. The Court found that the value added to the land by reason of a factory being built on it had nothing to do with goodwill, but merely added to the usefulness of the land as a means of manufacturing certain chemical products.

36 In discussing the true nature of goodwill, Ormiston JA said:[31]

"True goodwill is unrelated to considerations of that practical kind. It is concerned with the (largely abstract) connection of customers to any business which might or might not be carried on at particular premises. Such goodwill ordinarily has a separate existence from the sources from which it is derived, but it can only be sold or transferred as part of the business to which it adheres."

37 On this basis it is clear that for the exception under s 23(3)(c) of the Retail Leases Act to be enlivened it is necessary to establish that the goodwill was attached to or connected with a business owned and operated by the landlord, rather than merely the premises, and that it is this business that is being sold to the tenant. Without establishing the landlord's title to this business, it cannot be said that the requirements of s 23(3)(c) are satisfied as it cannot be said that the business sold - to which the goodwill is attached or connected - was a "business the landlord operated from the retail premises." Absent this position being established the exemption is not attracted and the unless otherwise excepted the payment will be caught by the general prohibition under s 23(1) of the Retail Leases Act.

38 The Deputy President found that s 23(3)(c) of the Retail Leases Act does not apply because the Appellants were not operating a business from the premises and that there was no business to be sold. The basis of this finding was that the lease granted to the First Respondent was not granted in the course of a sale of a then ongoing business or a business to which the Appellants had title.

39 The Appellants submit that the evidence before VCAT shows that immediately prior to the First Respondent taking possession of the property there was a business still in operation at the premises, and that ownership of this business lay with the Appellants.

40 In support of this submission, the Appellants say the fact the lease referred to a transfer of liquor licence number 31912098 ("the Licence") and that the premises had a rooming house still in operation was sufficient evidence that a business was then being operated,[32] and that Mr Spirovski became proprietor of this business upon taking the surrender of the lease by the previous tenant, Traynor Barrett Pty Ltd ("Traynor Barrett").[33] While the Applicants concede that the hotel business may well have been dormant,[34] they say that the Deputy President erred in law in finding no exception applicable under s 23(3)(c) in light of this evidence.[35]

41 The Appellants concede that although there was no evidence before VCAT that the hotel business had been operated by the Appellants' son - a Mr Denis Spirovski, who was the purported transferee of the Licence - pursuant to the Licence, a transfer of the Licence had nonetheless taken place. In my view the evidence establishes that the Licence was never in fact transferred to either of the Appellants or to Dennis Spirovski. I turn now to the evidence in this respect.

42 On 17 October 2007, Zaichos, Stantchev & Co wrote to Consumer Affairs Victoria on behalf of the Appellants and enclosed an Application to Transfer an Existing Licence or Permit ("the Application") and a cheque for $170.30, that amount being the fee required to effect the transfer.[36] The details of the current licence holder in the Application was shown as Traynor Barrett Pty Ltd, and the name of the proposed licence holder was that of Denis Spirovski. No evidence was produced that would indicate that the Licence was ever registered in the name of Denis Spirovski, nor indeed in the name of the Appellants.

43 On 16 August 2012, a representative from Robroy Local sent by email a request to the Victorian Commission for Gambling and Liquor Regulation ("VCGLR") for the licensee history attached to the Licence. The licensee history provided in response shows that Traynor Barrett was released from its obligations as licensee under the Licence on 21 February 2008. The next name listed on the licensee history provided by VCGLR is that of the Second Respondent, effective from 9 February 2009.

44 Further correspondence between Robroy Local and VCGLR confirmed that upon Traynor Barrett being released from its obligations under the Licence, the Licence became suspended under s 64 of the Liquor Control Reform Act 1998. Section 64 of the Act provides:

(1) A licensee or permittee who desires to vacate licensed premises of which the licensee or permittee has been a tenant may apply to the Commission for release from their obligations under this Act.

(2) On an application under subsection (1), the Commission, if satisfied that the tenancy of the premises has expired, may -

(a) release the licensee or permittee from their obligations under this Act in respect of the licensed premises; and

(b) suspend the licence or BYO permit until it has been transferred or another person has been authorised under this Act to carry on the business under the licence or permit."

The provisions of this section serves to emphasis the position that the Licence was suspended from 21 February 2008 to 9 February 2009 with the consequence that the hotel business - in anyone's hands - could not have been operated during the period. For these and the preceding reasons it is clear that there was no hotel business being conducted at the premises during this period.

45 The Appellants submit that the evidence shows that there was a rooming house business operating on the premises, and that this rooming house business was sold to the Respondents as part of the hotel and accommodation business as provided for in the particulars of sale in the Contract.

46 This contention relies solely the fact that there was an individual occupying one of the 14 rooms situated on the second floor of the premises. No evidence was produced as to any of the registration requirements under either Division 9 of the Residential Tenancies Act 1997 nor of registration with the local council under s 69 of the Public Health and Wellbeing Act 2008, indicia which may have led to a more credible argument that a rooming house business did actually exist.

47 Despite the Appellants' submissions that there was a rooming house licence, no evidence as to this was produced. The Respondents submit that they never sought a transfer of a rooming licence, no rooming licence was ever transferred, nor did the Contract make any reference to the transfer of a rooming licence.

48 The Appellants submit that although there was no rooming house licence transferred to the Respondents, that does not change the fact that there was a rooming house business which required a licence, and that "the particulars of sale describe the business as a hotel and accommodation and it was warranted in the special conditions, special condition 2, that the purchaser would make immediate application for the transfer of the licence 31912098 and would pursue the matter expeditiously to completion."[37] As the Respondents correctly point out, this submission adds nothing to the Appellants argument that a rooming house business existed, as the licence number quoted is that of the liquor licence.

49 In all the circumstances, it may be drawing a long bow to say that evidence of one occupied room on some unspecified and seemingly unlicensed basis establishes the existence of a rooming house business. It is, however, really stretching logic and credulity to seek to argue that what must be regarded as a very minor activity - at best - in possibly renting out one room supports the proposition that there was a business being conducted on the hotel premises which would support the sale of goodwill of an hotel and rooming house business for the best part of $180,000; even assuming the plant, equipment and the like were in fact worth something.

50 The Appellants submit that where was sufficient evidence before VCAT to enliven the exception under s 23(3)(f) of the Retail Leases Act, and that the Deputy President made an error of law in finding both that the items which were left behind by Traynor Barrett on surrender of their lease were of no value, and that no part of the $180,000 was for plant, equipment, fixtures or fittings.

51 It is not in dispute that there were various items of furniture, bedding and other assorted pieces of equipment left behind by Traynor Barrett, despite there being no mention of chattels in the Contract, nor a monetary amount provided for any of stock, plant or equipment.

52 In relation to the evidence as to the stock, plant and equipment which the Appellants submit was evidence that a business was sold to the Respondents, the Deputy President said:[38]

"The inventory itself listed the contents of the 13 rooms, office and hallway upstairs, and of the ground floor and cellar. The contents of the upstairs rooms included used pillows and doonas. The only item listed in the office was a printer, without a brand name or a serial number. The ground floor items were mainly items of furniture such as chairs and tables. Many photographs of the premises taken around November 2007 - January 2008 were tendered in evidence, and they show that the interior of the building was in a very poor condition. The items of furniture in the photographs were filthy old tables with chipped woodgrain laminex, barstools with chipped woodwork and torn plastic coverings, a stained coffee table and the like. The furniture was junk, destined for the tip. There was no "stock" in the nature of liquor or even glasses. I would see these clauses of the Deed as conferring on Open Door Pub and Traynor Barrett the benefit of not having to remove their obsolete and valueless goods. I do not accept Mr Spirovski's evidence that there was any "stock" in the premises."

53 It is submitted by the Appellants that it does not follow from the fact that the plant and equipment left behind were considered junk by the Respondents that its value would be zero or that the plant and equipment should be considered as, simply, valueless. But this submission is no more than a general assertion. There was no evidence before VCAT that this plant and equipment had any particular value or that its characterization as "junk" was unreasonable. Photographs of the premises and its contents which were provided in evidence to VCAT and which were tendered without objection in the hearing of this proceeding do not indicate a position at odds with the findings in the VCAT proceeding.

54 Moreover the failure of the parties to specify the plant, equipment and the like being sold in the Contract - and apportion or estimate value - supports the findings in the VCAT proceeding with respect to these items; and as to the veracity of the purported contract itself.

Conclusion on application of Retail Leases Act

55 For the preceding reasons, it cannot be said that either of the exceptions to the general prohibition in s 23 of the Retail Leases Act operate in this case. Nor was any evidence led that would indicate any assignment of any interest occurred between the former tenants of the premises and the Appellants. While the Appellants contend that they became proprietors of the business previously operated at the premises merely by virtue of the fact the lease was surrendered, there is no basis for such an assertion. It appears that the claim in this respect is, at best, a claim that some locational goodwill was attracted in the Appellants favour as they occupied the premises. However, for the reasons already discussed, a goodwill component of this nature is not relevant or sufficient for the purposes of or to attract the exceptions under s 23(3)(c) of the Retail Leases Act. In any event, the suspension of the Licence would lead to the conclusion that the business had ceased operating for a period of time. To suggest otherwise must have the inevitable conclusion that the Appellants were in serious breach of the liquor licensing laws.

56 On this basis, I am of the opinion that the Deputy President made no error in law in finding that the exceptions pursuant to s 23(3)(c) and (f) of the Retail Leases Act did not operate in favour of the Appellants. This disposes of the first question in the Notice of Appeal.

57 I turn now to the second and third questions in the Notice Appeal. The Appellants submit that that even if they fail with respect to the first question and no protection is afforded to them under the exceptions to the prohibition on key-money and goodwill payments provided for under ss 23(3)(c) and (f) of the Retail Leases Act, the Respondents are now estopped from claiming the benefit of the prohibition having entered into the Terms and having signed the Contract. In failing to find that the Respondents were so estopped, the Appellants say that the Deputy President erred in law in the VCAT proceeding.

58 In finding that the First Respondent was not estopped from making a claim in regard to the $180,000, the Deputy President said:[39]

"76 Terms of Settlement are a form of contract. As such they are subject to the principles and requirements of contract law.

77 The Terms of Settlement identified the parties, as the Applicants and the First Respondent. The provisions were certain. The Terms recorded the consideration passing between parties. Consideration passing to the Applicants included that the lease to the Second Respondent would be guaranteed by three more individuals...and the First Respondent's (now disputed) agreement that the Applicants could retain the first $90,000.00 and would be paid the second $90,000.00. Consideration passing to the First Respondent included the provision that the new lease would contain a further term of 3 years...

78 Clause 6A was consideration passing to both sides. It said:

The parties agree that these terms of settlement reflect their agreement about the terms of their contract documents and will not make any further claim in relation to them, except as expressed in these terms of the documents they contemplate. "

59 After reviewing a number of authorities as to the proper construction of contracts, the Deputy President went on to say:[40]

"88 The terms of settlement purport to have the effect of requiring the payment of key-money or consideration for goodwill both in clause 1 and 2 which refer to payments of $90,000.00, and by the covenant not to sue in clause 6A. To that extent the Terms of Settlement are void.

89 I reach this conclusion with some disquiet given that the First Respondent signed the Terms of Settlement after the issue of key-money had been raised, after a mediation which Mr Borazio attended with Counsel, and where the First Respondent extracted from the Applicants a further term of 3 years. A party should be bound by its agreements. However, the law makes some transactions unlawful and in this instance the Parliament has provided that key-money cannot be sought or accepted and that provisions of a retail premises lease that have the effect of requiring payment of key-money are void. Mr Spirovski confirmed that at the mediation the Applicants would not have agreed to sign a lease had the First Respondent not conceded the $180,000. The Applicants are not entitled to the $180,000.00."

60 The Appellants submit that a party should be bound by its agreements. They say this is a situation where all the parties involved took the view that the $180,000 was not key-money, there was no inequality of bargaining power, nor was it a matter of an innocent buyer entering into a contract unaware of the fine print that then binds it.[41] At the mediation, the First Respondent was represented by counsel who, the Appellants submit, took the view based on the evidence at mediation that the payment was not key-money, and that therefore this issue has reached a finality.

61 In his reasons the Deputy President discussed at length the Privy Council advice in Kok Hoong v Leong Cheong Kweng Mines Ltd:[42]

"92 It is appropriate to quote Viscount Radcliffe at some length because the rule precluding an estoppel is based on public policy.

"The respondent has invoked in support of its defence a principle which appears in our law in many forms, that a party cannot set up an estoppel in the face of a statute. Thus the corporation on which there is imposed a statutory duty to carry out certain acts in the interest of the public cannot preclude itself by estoppel in pais from performing its duty and asserting legal rights accordingly...Similarly, there is, in most cases, no estoppel against a defendant who wished to set up the statutory invalidity of some contract or transaction on which he is being sued, despite the fact that by conduct or other means he would otherwise be bound by estoppel...It does not appear to their Lordships that the principle invoked is confined to transactions that have been made the subject of legislation or that, where legislation is in question, the bare prescription that a transaction is to be void or unenforceable is sufficient by itself to justify the principle's application. Thus,...the common lay may by itself prohibit the enforcement of certain contracts, such as those of an infant not for necessaries, and it cannot be supposed that it would any less refuse to base a judgment on an estoppel against an infant who had so contracted. An infant who has obtained goods from a tradesman by representing himself to be of full age cannot be estopped from setting up his infancy, if sued for the price of the goods"

94 Viscount Radcliffe said that the rule was based on public policy, which he noted was difficult to define with precision. After noting that

"It has been said that the question whether an estopel is to be allowed or not depends on whether the enactment or rule of law relied on is imposed in the public interest or on ground of general public policy. However, a principle as widely stated as this might prove to be rather an elusive guide, since there is no statute, at least public general statute, for which this claim might not be made:

"In their lordships' opinion a more direct test to apply in any case, such as the present, where the laws of moneylending or monetary security are involved, is to ask whether the law that confronts the estoppel can be seen to represent a social policy to which the court must give effect in the interests of the public generally or some section of the public, despite any rules of evidence as between themselves that the parties may have created by their conduct or otherwise. Thus the laws of gaming or usury override an estoppel: so do the provisions of the Rent Restriction Act with regard to orders for possession of controlled tenancies...General social policy does from time to time require the denial of legal validity to certain transaction by certain person. This may be for their own protection, as in the case of the infant or other category of person enjoying what is to some extent a protected status, or for the protection of others who may come to be engaged in dealings with them, as, for instance, the creditors of the bankrupt. In all such cases there is no room for the application of another general and familiar principle of the law that a man may, if he wishes, disclaim a statutory provision enacted for his benefit, for what is for a man's benefit and what is for his protection are not synonymous terms. Nor is it open to the court to give its sanction to departures from any law that reflects such policy, even though the party concerned has himself behaved in such a way as would otherwise tie his hands...These principles, as their Lordships understand them, would point very directly to the conclusion that there can be no estoppel in face of" the relevant moneylender ordinance [emphasis added].

95 It is difficult today to know what public policy was behind the moneylending legislation in this case, particularly given the reference to "monetary security" which might relate to exchange rates between currencies. However, the references to the laws on gaming, usury and Rent Restriction overriding an estoppel seem to me to establish that the public policy which "require(s) the denial of legal validity to certain transactions by certain persons" applies to the attempted seeking and acceptance of key-money by the Applicants."

62 The Appellants concede that it is reasonable to suggest that the prohibition on key-money payments are for the protection of the general public. But, they say, given the business experience of the First Respondent and the fact that he received legal advice, this is not a case where this social policy would apply to the First Respondent.

63 The important role that the public policy underlying a statute plays in determining whether an estoppel may be raised in the face of a provision of that statute has been discussed by the courts in many cases. The approach to be applied in this respect is conveniently captured in these cases to which I now turn.

64 In Equuscorp Pty Ltd v Antonopoulus,[43] the second named appellant in that proceeding had granted Antonopoulus seven separate leases over the same two hectares of land for a combined period of 25 years. The court found that the multiplicity of leases represented an attempt to avoid the provisions of the Local Government Act 1919 (NSW), which forbade the subdivision of land save in accordance with that Act. Buchanan JA said:[44]

"The Court in Silovi Pty Ltd v Barbaro did not stay to investigate the question whether an estoppel lay in the face of the statute [[2002] NSWCA 305 [52]-[56]]. That question depends upon the nature of the statutory provision, its purpose and the social policy behind it ...In the present case I am of the opinion that the nature of the estoppel alleged by Equus did run directly counter to the social policy behind the provisions of the Act concerned with subdivisions. The social policy promoted by the Act was to ensure that a subdivision of land into separate lots was only to occur when a local authority had determined it was appropriate having regard to the matters set out in s 331(1A) of the Act, which included the size and shape of each lot, the length of road frontage, the means of access to each lot, the drainage of the land, whether the land was subject to flooding, whether the land was subject to subsidence or slip and the amount of land to be provided as a public reserve. In my opinion it does fly in the face of that policy to permit the lessor of land to recover rent or monies representing lost rent from a person in consideration of granting him exclusive possession of the land."

65 In Everest Project Developments Pty Ltd v Mendoza,[45] Hargrave J emphasised the need to identify the purpose and social policy behind a statutory provision in determining the application of an alleged estoppel:[46]

"In my view, the Act, upon it proper interpretation, exclude reliance upon doctrines of election, waiver and estoppel to defeat the right of a purchaser to rescind under s 9AE(1). The clear purpose and social policy underlying ss 9AA to 9AH of the Act is the protection of the section of the public compromising purchasers of lots in unregistered plans of subdivision. It would be inconsistent with that purpose and social policy to allow vendors to rely upon the conduct of purchasers as depriving them of their unqualified right to rescind under s 9AE(1)."

66 The legislative history of key-money provisions makes it clear that these provisions have been enacted for the protection of retail tenants who in the course of conducting their business have, in effect, been forced to accept unfair lease terms and conditions as a result of commercial pressures, lack of understanding of the lease terms and conditions of leases, and lack of alternatives if they are to pursue their business.

67 The Retail Tenancies Act 1986 was enacted in order to provide protection for retail tenants. The first major amendment of the 1986 Act occurred with the Retail Tenancies (Amendment) Act 1995 which, among other things sought to expand the operation of the key-money provisions in light of the problems highlighted with the original provisions by the Appeal Division decision in Gillett v Burke.[47] Section 23 of the Retail Leases Act reflects, to a significant extent, s 11 of the 1998 Act, which was the result these amendments made in 1995 to the 1986 Act.

68 In the second reading speech, to the 1995 Amendments, in the Legislative Assembly the minister stated the purposes of these amendments as follows:[48]

"In the recent case [appeal] of Burke v Gillett, the Supreme Court decide that key-money provisions of the Retail Tenancies Act prohibit the payment of key-money only in circumstances where the tenant was under some legally enforceable obligation to pay. This means that, in the common situation where a landlord demands key-money as the price of renewing a lease or granting a further option for renewal, the act would not operate to prohibit the payment of key-money, as the tenant is under no legally enforceable obligation to pay it. Yet the real commercial pressure on the tenant to pay key-money in these circumstances is clear.

This situation is obviously unsatisfactory. If small tenants are to be provided with protection from unfair demands for key-money, the protection offered must be complete. Thus, the government will extend the scope of the legislative provisions to prohibit a landlord or any person acting on his or her behalf from requesting, receiving or retaining any payment of money. Furthermore, any provision in a retail tenancies lease which requires or has the effect of requiring the payment of any key-money or purports to entitle the landlord to any key-money is void.

The prohibition is intended to cover all situations where key-money is paid, regardless of the circumstances. Thus it matters not whether the tenant has an obligation to pay key-money or makes the payment voluntarily, or whether the landlord has a contractual right to retain key-money. The prohibition will extend to all cases where key-money is paid in relation to the granting, renewing or assignment of a lease or sublease."

69 The unequivocal nature of the language used in both the Minister's speech and the actual wording of s 23 of the Retail Leases Act itself makes it clear that the protection is to be afforded to retail tenants in any situation that may involve a landlord requesting, receiving or retaining any payment of money that is key-money for the purposes of the Retail Leases Act, save for the exceptions specified in s 23(3). The Appellants in raising the estoppel claim are effectively attempting to expand this list of specified exceptions to the general prohibition against key-money provided for in the Retail Leases Act to include situations where the tenant is experienced in business, or in relation to the particular business involved and, or alternatively, has been provided with legal advice during the course of negotiations in relation to the terms and conditions of the relevant lease, and, with respect to the operation of the Retail Leases Act with respect to the lease. A number of matters arise in relation to such an attempt. First, if Parliament had intended such an exception it is reasonable to expect that it would have legislated for it in the Retail Leases Act, possibly in s 23(3). Secondly, such an exception would have the potential for creating significant uncertainty in relation to the key-money provisions of the Retail Leases Act and would invite investigation of the business experience of parties and the fact and possibly the content of advice given, all of which carries the real potential for expense and delay. Thirdly, the key-money provisions carry a substantial sanction for their breach - 50 penalty units - so it is hardly likely that Parliament would have intended their application to be shrouded with such potential uncertainty, as the Appellants would have it.

70 The Appellants submit that at the time of the mediation there was a genuine dispute over whether a business was being sold and whether in fact the amount of money sought was properly characterised as key-money. By entering into the Terms, the parties agreed that "the issue of key-money was put to bed."[49]

71 In support of this contention the Appellants rely on passages from the English Court of Appeal decision in Binder v Alachouzos ("Binder").[50] Lord Denning said:[51]

"There are here two competing considerations. On the one hand the Money Lenders Acts are for the protection of borrowers. Judges will, therefore, not allow a moneylender to use a compromise as a means of getting around the Acts. They will inquire into the circumstances giving rise to the compromise. They will not allow the moneylender to take unfair advantage of the borrower. Even if the borrower consents to judgment being entered against him, the courts will go behind that consent if the justice of the case so requires...On the other hand, it is important that the courts should enforce compromises which are agreed in good faith between lender and borrower. If the court is satisfied that the terms are fair and reasonable, then the compromise should be held binding. For instance, if there is a genuine difference as to whether the lender is a moneylender or not, then it is open to the parties to enter into a bona fide agreement of compromise. Otherwise, there could never be a compromise of such an action. Every case would have to go to the court for final determination and decision. That cannot be right."

72 Roskill LJ (as he then was) said:[52]

"Whilst it has always been the policy of the courts not to allow the Moneylenders Acts to be evaded, it has also been the policy of the court to encourage compromises and to enforce compromises when they are made. The position if clearly stated, if I may respectfully say so, in British Russian Gazette and Trade Outlook Ltd v Associated Newspapers Ltd. [1933] 2 K.B. 616, 654 in the judgment of Greer L.J., who said:

"I therefore feel that we are now entitled to decide the question on principle, and I think at the present stage of the development of the law we ought to decide that an agreement for good consideration, whether it be an agreement to settle an existing claim or any other kind of agreement, is enforceable at law by action if it be an agreement for valuable consideration, and such valuable consideration may consist of the promise of the other party.""

73 In Binder, cheques given by the defendant to the plaintiff by way of repayments were not met. The plaintiff bought actions to recover the debts, and the defendant pleaded that these were unlawful moneylending transactions. Evidence was led on both sides on the issue whether the plaintiffs were in fact moneylenders for the purposes of the Moneylenders Acts. An agreement of compromise was made shortly before the trial commenced which included a provision that the defendant admitted and recognised that the transactions the subject of the proceedings were not transactions to which any provision of the Moneylenders Acts applied.

74 In discussing the compromise that had been reached, Lord Denning said:[53]

"In my judgment, a bona fide agreement of compromise such as we have in the present case (where the dispute is as to whether the plaintiff is a money lender or not) is binding. It cannot be reopened unless there is evidence that the lender has taken undue advantage of the situation of the borrower. In this case no undue advantage was taken...The agreement they reached was fair and reasonable."

75 Phillimore LJ, similarly focusing on the bona fide nature of the compromise in that case, said:[54]

"Speaking for myself, I think it is entirely plain that this was a bona fide compromise, and that there is nothing in the evidence here which could make this court say with any confidence that these were moneylending transactions, illegal transactions; and accordingly, as it seems to me, here the court is faced with a bona fide compromise of what was a question of fact. The terms of the agreement are not to be described as colourable. The court ought to be very slow to look behind an agreement reached in such circumstances as these. I cannot think that Mr. Jackson has made out anything like a case which would be strong enough to justify this court in looking behind the terms of what was clearly a bona fide compromise, and I would also accordingly dismiss this appeal."

76 The Appellants submit that effect should be given to the fruits of a mediation. However, it cannot be said that the evidence in the VCAT hearing indicates that the Terms and the Contract that arose out of the mediation proceeding were the fruits of a bona fide compromise, such as might attract application of to the principles discussed in Binder and upon which the Appellants seek to rely.

77 In the course of the VCAT proceeding, Mr Spirovski acknowledged that by the time the parties attended mediation, the First Respondent had carried out extensive renovations to the premises. In regard to Mr Spirovski's evidence, the Deputy President noted:[55]

"When asked in cross examination about the mediation, Mr Spirovski acknowledged that neither the lease nor the Contract of Sale of Business had been executed by then. Mr Spirovski said that that at the mediation the Applicants maintained their requirement that $180,000.00 be paid to them. When asked what Mr Borazio was getting for the $180,000.00 apart from the right to lease the premises, Mr Spirovski answered, "Nothing. Just a 12 year lease". He also said that, had Mr Borazio not agreed at the mediation to pay a total of $180,000.00 all up, the Applicants would not have agreed to sign the lease."

78 In regard to Mr Borazio's - a director of both Respondents - evidence, the Deputy President said:[56]

"56 Mr Borazio said that the $180,000.00 was the biggest issue in the mediation. The Applicants were adamant about enforcing their claim to that money. Because the First Respondent had spent so much, Mr Borazio felt that he had a "gun to his head" and that he had to reach a settlement which provided for a lease to be executed...

67 Mr Borazio was asked in cross examination why he had signed the Terms of Settlement, given that it contained clause 6A. Mr Borazio answered that if he had not signed the Terms of Settlement, he would not be able to lease the premises, and that the amount spent on renovations would have been lost. It seems to me that there are two ways to look at this statement. The first is that Mr Borazio is brave enough to sign a document which contains an express obligation, on the basis that it is unenforceable. The second is that he was still being forced to pay key-money, even though it was disguised in a sham Contract of Sale and Terms of Settlement."

79 The increasing role that the alternative dispute resolution techniques now play in the justice system cannot be overstated given that both courts and tribunals seek to encourage parties to identify and reach agreement on as many issues as possible to avoid the need for trial, or to reduce its length and complexity where a hearing is needed.[57] However, none of these considerations provide any basis for courts or tribunals to give effect to agreements that are rendered void or illegal, either by virtue of statute or common law. A number of cases illustrate this point.

80 For example, in Forlye Pty Ltd v Tiver,[58] the appellant claimed money said to be owing under a building development agreement, while the respondents alleged defective workmanship under that agreement. The proceeding were referred to an arbitrator and on the second day of the arbitration the parties settled the dispute and executed an agreement in writing recording the terms of settlement. The appellants subsequently instituted proceedings to enforce the settlement agreement. The respondents admitted execution of the settlement agreement but contended that it was void and unenforceable because it was an illegal contract by reasons of the provisions of ss 32 and 42 of the Building Work Contractors Act (SA).

81 Section 32 of the Building Work Contractors Act 1995 (SA) provides a number of statutory warranties, including a limitations period for commencing any proceeding for breach of a statutory warranty, while s 42 provides:

"42. Any purported exclusion, limitation, modification or waiver of a right conferred, or contractual condition or warranty implied, by this Act is void."

82 In upholding the judge in the District Court of South Australia's decision that, to the extent that the settlement claim purported to compromise claims for future defects, it was contrary to s 42 and so invalid, Debelle J (Sulan and Vanstone JJ agreeing) said:[59]

"The policy of the courts is to enforce a compromise of an action where it is made bona fide and without impropriety: Greenslade v Commissioner of Taxation (1978) 18 SASR 474 at 477 citing Binder v Alachouzos [1972] 2 QB 151 and Dixon v Evans (1872) LR 5 HL 606. However, a court will not enforce an agreement which is illegal either under statute or under the general law. Equally, a court will not enforce an agreement which is void either under statute or under the general law. The question in this case is whether a compromise of legal proceedings agreed by parties both of whom have been separately advised falls within the ambit of s 42 of the Act."

The Terms of Settlement and the Contract of Sale of Business

83 By the Appellants own evidence, neither the lease nor the Contract had been executed at the time the mediation was held. The Deputy President found that the Contract was a sham. When at the VCAT hearing it was put to the real estate agent who was retained by the Appellants - a Mr Markovic - that the Contract was in fact a sham intended to avoid the prohibition on the procuration of key-money, Mr Markovic denied that the proposition but agreed that Mr Borazio had only enquired about leasing the premises and had not enquired about buying a business.

84 In discussing Mr Spirovski's understating of the contents of the Contract, the Deputy President said:[60]

"Mr Spirovski said that this Contract was drawn by the Applicants' solicitor on his own instructions, but I find that he regarded it a means to an end. He was not concerned with the contents of the document, but only its function of getting $180,000.00 paid to the Applicants. When asked what he understood the Contract to say, he answered "whatever was written down" and that its purpose was to get the Applicants $180,000.00."

85 Section 94 of the Retail Leases Act was enacted as an anti-avoidance provision for the very reason of preventing parties from executing documents which seek to circumvent the prohibitions found with the Retail Leases Act. Section 94 provides:

"(1) A provision of a retail premises lease or of an agreement (whether or not the agreement is between parties to a retail premises lease) is void to the extent that it is contrary to or inconsistent with anything in this Act (including anything that the lease is taken to include or provide because of a provision of this Act).

(2) A provision of a retail premises lease or of an agreement (whether or not the agreement is between parties to a retail premises lease) is void to the extent that it purports -

(a) to exclude the application of a provision of this Act; or

(3) A provision contained in any other agreement or arrangement (whether or not between parties to a retail premises lease) is void if that provision would be void under this Act if it were contained in a retail premises lease"

86 In discussing the West Australian equivalent of s 94 of the Retail Leases Act in Thessaly Pty Ltd v Pelworth Pty Ltd,[61] Murray J said:[62]

"[It] is designed to prevent avoidance of the provisions of the Act by the removal of an offending provision from the retail shop lease and its inclusion in some collateral agreement or arrangement, whether of a formal or informal character."

87 The Terms were similarly found by the Deputy President to contain provisions in it that were included solely for the purpose of seeking to maintain the fiction that the monetary amount sought by the Appellants was owing to them under the guise of a contract of sale for a business owned and operated by the Appellants.[63]

88 The clear language of s 94 of the Retail Leases Act renders both the Terms and the Contract void insofar as they are inconsistent with the Act. In the present circumstances this simply means that it is not possible for the parties to agree that a transaction which - for the reasons already discussed at length - breaches the provisions of s 23(1) of the Retail Leases Act - can be saved by the documented agreement of the parties in a lease or any other document that, in effect, the position is otherwise. It should also be observed that the fact that such an agreement occurs at or arising out of a mediation changes nothing in this respect. First, as the Deputy President indicated an agreement reached at a mediation is no more than a contract and is subject to the same principles and requirements of an ordinary contract.[64] Secondly, although the Retail Leases Act provisions seek to achieve mediation in disputes the subject of the Act its provisions do not go to the intrinsic nature of mediation as a matter of general law and give mediation outcomes any different position with respect to the operation of the mandatory provisions of that Act. The Retail Leases Act confers no "cloak of invisibility" on mediation outcomes - the same position applies as if the agreement were one unrelated to any mediation.

89 The Respondents refer to Dixon J's formulation in Thompson v Palmer[65] and submit that the Appellants have to establish three elements for an estoppel to operate against the Respondents. They say that:[66]

"(1) the Appellants must prove that they adopted an assumption as the basis of the Terms of Settlement

(2) the Appellants, on the basis of that assumption, must have so acted, or abstained from acting, that they will suffer a detriment if the Respondents are allowed to set up rights inconsistent with it.

(3) The Respondents have played such a part in the adoption of, or persistence in, the assumption that to act otherwise than in a manner consistent with it would be unfair or unjust."

90 In response, the Appellants simply say that: [67]

"it is clear that the Appellants adopted an assumption on the basis of both the agreement and the terms of settlement, they have abstained from acting in circumstances where had they understood there would not be $180,000 paid they would not have continued with the contract and the Respondents have played a part in that assumption by first of all signing the contract, second resolving the dispute by agreeing to sign the contract again and in any event, detriment does not necessarily rely upon anything the Plaintiff would have done, the detriment is the failure of the promise to pay $180,000."

91 While it may be that the Appellants did indeed adopt an assumption that formed the basis of the Terms there was little evidence that any detriment was suffered as a result. In any event, for the reasons discussed above, this is not a situation where an estoppel can operate to prevent the Respondents from gaining the benefit of the prohibitions under s 23(3) of the Retail Leases Act. The importance of the public policy of protecting retail tenants from being forced to accept unfair lease terms and conditions due to commercial pressures cannot overridden by claims of estoppel, nor can the court be seen to give effect to agreements made between parties that would otherwise be void. The prohibitive nature of s 94 of the Retail Leases Act only serves to emphasise this point.

(1) the Appellants are granted leave to amend the Notice of Appeal and to rely upon the grounds set out in question one of the Notice of Appeal, as amended, for the purposes of the appeal; and

(2) the appeal is, nevertheless, dismissed with respect to each of the three questions raised in the Notice of Appeal as amended - in other words, on all grounds.

93 The parties are to bring in orders to give effect to these reasons. The question of costs is reserved and I will hear Counsel on this issue as soon as convenient to the parties and the Court.

[1] Spirovski v Univest Assett Merchants Syndicators Pty Ltd & Anor (Retail Tenancies) [2013] VCAT 66 ("VCAT Reasons").

[2] Respondent's outline of submissions, para 4.

[3] Appellants' Reply to the Respondents Submissions, para 1.

[4] Outline of Submissions of the Appellant, para 3.

[5] Collector of Customs v AGFA-Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389.

[6] S v Crimes Compensation Tribunal [1998] 1 VR 83.

[7] S v Crimes Compensation Tribunal [1998] 1 VR 83 at 89-90.

[8] Australian Finance Direct Ltd v Director of Consumer Affairs Victoria [2006] VSCA 245.

[9] Australian Finance Direct Ltd v Director of Consumer Affairs Victoria [2006] VSCA 245 at 78.

[10] Commissioner of State Revenue v Frost [2011] VSC 232 at [5] (Pagone J), referring to Secretary to the Department of Premier and Cabinet v Hulls [1991] 3 VR 331 at 335-6 (Phillips JA); Myers v Medical Practitioners Board (Vic) [2007] VSCA 163 at [28] (Warren CJ).

[11] Boucher v Dandenong Ranges Steiner School Inc [2005] VSC 400 at [15] (Osborn J), referring to Spurling v Development Underwriting (Vic) Pty Ltd [1973] VicRp 1; [1973] VR 1 and Whitehorse City Council v Golden Ridge Investments Pty Ltd [2005] VSCA 198.

[13] Commissioner of State Revenue v STIC Australia Pty Ltd [2010] VSC 608 at [10] (Davies J).

[14] Secretary to the Department of Premier and Cabinet v Hulls [1991] 3 VR 331; Al-Hakim v Monash University (Unreported, Victorian Supreme Court of Appeal, 28 March 2003); Myers v Medical Practitioners Board (Vic) [2007] VSCA 163.

[15] See Morris v R [1987] HCA 50; (1987) 163 CLR 454 at 475 (Dawson J).

Appellants v Respondents

At a glance

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Judgment (239 paragraphs)

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Cases Cited (12)