Applicants v Respondent

1. The Tribunal failed to afford procedural fairness to the Plaintiffs in coming to its decision and when making the orders in that Tribunal:

(a) failed to ensure as far as possible that a "level playing field" between the Plaintiffs and the First Defendant was maintained at all times;

(b) failed to attempt to or properly clarify the submissions of the Plaintiffs;

(c) did not make any or any proper inquiry of the Plaintiffs as to what precisely was the nature of the Plaintiffs' application and what the Plaintiffs expected to achieve by that application;

(d) notwithstanding the Plaintiffs' application for reinstatement of the proceeding,

(ii) dealt solely with the application by the First Defendant for an order for possession of the premises;

(e) did not explain to the Plaintiffs, considering the legal; issues involved in the construction of the terms of agreement and possible defences that the Plaintiffs may be able to raise with legal assistance and the application by the First Defendant for possession of the property if granted would be prejudicial to the Plaintiffs, that the Plaintiffs should be legally represented;

(f) did not ascertain from the Plaintiffs whether the Plaintiffs wished to be legally represented for the application;

(g) did not ascertain from the Plaintiffs whether the Plaintiffs wished to adjourn the application and secure legal representation;

(h) the Tribunal took an aggressive and acerbic tone with the Plaintiffs contrary to its obligations to an unrepresented litigant.

2. The Tribunal, in making its determination and orders, made the following errors of law on the face of the record:

(a) The Tribunal erred in law in:

(i) implicitly construing the Terms of Settlement entered into between the parties, dated the 2nd September 2003, as requiring the Appellants to vacate the premises by the 31st January 2004;

(ii) failing to construe the Terms of Settlement as creating no right or obligation upon the Appellants to vacate the premises.

(b) The Tribunal erred in law in pronouncing the orders in the proceeding in aid of Terms of Settlement entered into between the parties, dated the 2nd September 2003, in that:

(i) the Tribunal, as constituted, did not have power or jurisdiction to make the orders in the proceeding;

(ii) the application by the Respondent for an order for possession in aid of the said Terms of Settlement was not properly before the Tribunal.

(c) The Tribunal erred in law in pronouncing the orders in that it was a precondition to the commencement of the proceeding that the Commissioner of Small Business has certified in accordance with section 87(1) of the Retail Leases Act 2003.

(d) The Tribunal erred in law, as a consequence of section 92 of the Retail Leases Act 2003, in pronouncing an order for costs against the Appellants in that, as no finding was made that the Appellants had acted vexatiously in conducting the proceeding, the Tribunal was required to make no order as to costs.

3. The Tribunal exceeded its jurisdiction in making order 2 of the orders in that it had no power to make an order for costs against the Plaintiffs.

Chronology of Events

4 On 18 March 1999 the Respondent in these proceedings, offered to lease to Cortese Petrov Nominees Pty Ltd (a company of which Dr Wood one of the Applicants, with others, was a director) a portion of the medical centre at 2-10 Yan Yean Road, Diamond Creek, namely two consulting rooms: rooms 9 and 10.[1] Cortese, and the Respondent acted on the offer without formal documentation.

5 The premises are used as a chiropractic clinic by the Applicants. There is also a residential premises which is occupied by them.

6 The Offer to Lease states inter alia:

"Leased Premises: Consulting Rooms 8 & 10 in the Medical Centre

Medical Centre: Approximately 194 m2 consisting of 10 consulting rooms (including an x-ray room) and a large waiting/reception area with male and female and disabled toilets and staff room

Initial term: Three (3) years

Options: Further term of three (3) years

Commencing Rent: $13,000 Gross per annum (based on $250 per week for both rooms) payable monthly in advance."[2]

7 In 2001, Cortese, the Respondent and the Applicants came to an agreement that the lease would be transferred to the Applicants.[3] The Applicants also occupied (and continue to occupy) a separate residential premises on the property.

8 I have assumed for present purposes on these facts that there was an equitable lease for 2 consulting rooms by Cortese in the terms of the Offer to Lease; and an equitable assignment of that lease to the Applicants in 2001.

9 In 2003 the lease had expired.[4] By letter dated 19 May 2003 the Respondent offered to the Applicants a further term of one year for the entire medical centre of 9 rooms.[5] The Applicants objected to the rent sought by the Respondent.

10 A Notice to Quit (relying on a monthly tenancy) dated 14 June 2003 was served on the Applicants on 15 June 2003.[6]

11 The Respondent and the Applicants agreed to a further one year lease on 31 July 2003[7] but the Applicants have not signed that lease. The Applicants stated that their understanding was that the existing lease would remain in force until a new lease was executed.

12 A proposed lease executed by the Respondent and bearing the date 6 August 2003 was forwarded to the Applicants.[8] They did not agree with the terms and further negotiations were entered into.

13 On 26 August 2003, an Application was made to Retail Tenancies Division of VCAT for an order for possession (relying on the Notice to Quit) and an order was made for the alleged failure to pay $3,846.00 in rent.[9] The alleged arrears of rent is contested. No prior or subsequent application was made to the Small Business Commissioner for a mediation.

14 On 28 August 2003, the Applicants wrote to the Respondent enclosing a cheque for "$6,800 being two (2) months rent in advance" and noted that the Respondent had alleged that the rent for April was "lost by the bank" and that he would wait for advice from his bank and forward a new cheque depending upon that advice.[10] He noted that an earlier letter of 22 August 2003 from the Lessor, wherein the offer of lease was purportedly withdrawn, to have been "confusing".

15 The Applicants signed the terms of settlement with the Respondent dated 2 September 2003[11] which provided inter alia:

"1. 'That the Applicant shall allow the Respondent to remain in possession of the medical premises and residence situated at and known as 2-10 Yan Yean Road, Plenty in the State of Victoria until 4.00 pm on the 31st January, 2004'.

[2 and 3] The Woods would pay two sums of $12,123.00 and $2,500.

4. 'That the Respondent shall agree to vacate the residential premises at the site address earlier than the 31st January, 2003 if the responsible Council should deem the said residence inhabitable due to terminate infestation'.

5. 'That in the event of default of any one Term herein the Respondent hereby agrees to immediately vacate the premises and further consents to the Tribunal granting the Applicant an Order for possession of the said premises in default'."[12]

16 On 4 September 2003, by consent, the Tribunal made orders that the proceeding be struck out with a right of reinstatement.[13] The Applicants paid the sums under the Terms of Agreement.[14]

17 By letter dated 28 January 2004, the Respondent demanded that the Applicants vacate the premises by 4 p.m. on 31 January 2004.[15] The premises were not vacated but instead the parties entered into further negotiations for a new lease, it being the Applicants' belief, that the Respondent had waived or elected not to rely on the terms of settlement as they were negotiating a new lease of the premises.

18 The Respondent agreed to accept a lease for the clinic rooms of $35,000 per annum by a fax dated and sent on 4 February 2004.[16] On the same day the Respondent was sent a cheque for $5,000 from the Applicants' solicitors as rent for February 2004. The cheque was presented to the bank.

19 The Respondent's solicitors wrote to the Applicants enclosing a proposed new lease and a disclosure statement.[17]

20 Further negotiations failed and:

(a) the Applicants wrote to VCAT by letter dated 27 February 2004 seeking to have the proceeding reinstated[18] so that all the issues between the parties could be dealt with and heard by VCAT;[19]

(b) the Respondent wrote to VCAT seeking to have the proceeding reinstated following the Respondent's refusal to comply with Terms of Settlement dated 2nd September, 2003 so that the appropriate orders can be made.[20]

21 On 3 March 2004, the Tribunal sent to both parties:

(a) a fax stating that "the application for reinstatement will be heard on 9 March 2004 at 9.30 a.m. You are required to appear before the Tribunal. Please find enclosed a copy of the application and notice of directions hearing".

(b) the attached "Notice of Directions Hearing" stated inter alia:

"At this Directions Hearing, the Tribunal may explore methods to resolve the issues in dispute and make directions for the future conduct of the proceeding. The Tribunal may also make a determination on any legal issues raised. Parties are not expected to bring witnesses as the hearing of the evidence will be listed for a later date. ...

The purpose of the Directions Hearing is to consider the reinstatement application made by the Applicant and the Respondent." [21]

22 On 9 March 2004, the Respondent issued a tax invoice showing an amount of $3,500 paid for the period 1 March 2004 to 6 April 2004.[22]

23 At the hearing at VCAT on 9 March 2004, the Respondent was represented by a solicitor and Dr Wood appeared unrepresented.

24 At the conclusion of the hearing the Tribunal found inter alia:

(1) That the effect of paragraph 1 of the terms of settlement was not merely to restrain the Respondent from ejecting the Applicants prior to 31 January 2004, but also to require them to vacate by 31 January 2004;[23]

(2) That the Applicants did not disagree with that interpretation of clause 1 and it proceeded on that basis;[24]

(3) The circumstances and terms of the leasing arrangements have not been established and remain uncertain. The Tribunal cannot be satisfied that the matter is within the Tribunal's jurisdiction under the Retail Leases Act 2003;[25]

(4) The dispute was within the Tribunal's jurisdiction under the _Fair Trading Ac_t 1999 ...[26]

(5) The Applicants do not deny they agreed to be out of the premises by 31 January 2004;[27]

(6) There being no basis for continued occupation, the terms of settlement required them to be out by 31 January. The Landlord was entitled to an order for possession.[28]

(a) The Applicants must on or before 6 April 2004 yield up possession of the premises at 2-10 Yan Yean Road, Diamond Creek to the Applicant; and

(b) The Applicants must pay the Respondent costs of today's [sic] application to be taxed in default of agreement in accordance with County Court Scale D.

26 On 6 April 2004 an Originating Motion seeking leave to appeal the decision and the order were filed. On 7 April 2004 an Originating Motion seeking a Review pursuant to Order 56 was filed. On 10 May 2004, Master Wheeler refused to grant leave to appeal.

27 On 21 May 2004, an Application was made to the Practice Court seeking to restrain the Respondent from taking possession of the premises. This application was made and subsequently the matter was adjourned until 26 May 2004.

28 On the return date of 26 May 2004 in the Practice Court, an Application was made that the appeal from the decision of Master Wheeler be heard together with the Originating Motion.[29] Coldrey J ordered a stay of the Tribunal's orders of 9 March 2004.

29 The Applicants by way of appeal and judicial review challenge the decision of the Tribunal to enforce the terms of settlement by its order that the Applicants vacate the premises at Yan Yean Road on the following grounds. They submitted that the Tribunal had mis-construed the terms of settlement and had acted without procedural fairness to the Applicants in acting upon, and enforcing, the terms of settlement.

30 The ground concerning procedural unfairness was the only subject of argument. The Applicants submitted that the notified purpose of the Directions Hearing was merely to consider the reinstatement application and to give directions if the proceeding was reinstated.

31 It should be borne in mind that the initial proceedings which brought the parties to the Civil and Administrative Tribunal were proceedings seeking possession of the clinic based upon a Notice to Quit. Those proceedings were subsequently discontinued with a right of reinstatement. The parties had entered into terms of settlement. The proceedings on 9 March 2004 were a directions hearing relating to applications by both parties to reinstate the earlier proceedings. Dr Wood, the firstnamed applicant, had attended the Tribunal for that purpose alone. The Tribunal proceeded to hear the Respondent's application ore tenus to then and there enforce the terms of settlement. In proceeding as the Tribunal did, I am satisfied that Dr Wood was denied an opportunity to address the various complex legal issues that thereby arose.[30]

32 Some of the Tribunal's findings made at the conclusion of the hearing reflect the problems which arise where there is insufficient notice or opportunity given to a litigant to address complex legal or factual issues. Having read a transcript of the proceeding it is doubtful whether Dr Wood agreed, as the Tribunal found, as to the legal construction of paragraph one of the terms of settlement. I also doubt that Dr Wood conceded that the Applicants had agreed to vacate by 31 January 2004.

33 The Tribunal was required to consider why the parties were before the Tribunal, and whether it was open to the Tribunal to do anything more than deal with the application for reinstatement. An important question at the outset was whether it was open to the Tribunal to proceed at all in relation to the terms of settlement of the original proceedings or whether some separate proceeding would be required to enforce the terms of settlement. The construction of the terms of settlement called for careful consideration. The Applicants were entitled to a reasonable opportunity to make submissions as to whether they were required to vacate both premises by 31 January 2004, and whether anything had occurred since 31 January as a result of agreement between the parties which altered the rights of the Respondent under the terms of settlement. All of these questions raised issues of fact or questions of law which I am satisfied Dr Wood was unable to adequately deal with.

34 Dr Wood had attempted to explain to the Tribunal that he understood there had been an extension of his right to remain on the premises after 31 January. The Applicants, in early February, had been provided with a draft lease of the medical premises by the Respondents for a further twelve month period. Those facts alone were sufficient to raise the serious question of whether some subsequent agreement between the Applicants and the Respondent had resulted in a waiver of the Respondent's rights under the terms of settlement.

35 Where judicial review is sought on the ground of a denial of natural justice, additional material may be placed before the Court.[31] The Court is not restricted to an error of law on the face of the record.

".......Where the writ is sought on the ground of jurisdictional error, breach of procedural fairness or fraud, the superior court entertaining an application for certiorari can, subject to applicable procedural and evidentiary rules, take account of any relevant material placed before it. In contrast, where relief is sought on the ground of error of law on the face of the record, the superior court is restricted to the 'record' of the inferior court or tribunal and the writ will enable the quashing of the impugned order or decision only on the ground that it is affected by some error of law which is disclosed by that record."[32]

36 The material placed before me, which was not before the Tribunal, indicates that the Applicants paid a month's rent for the period of February 2004 and that rental was received and banked by the Respondent. That material serves to reinforce the view that some arrangement had been made between the Applicants and the Respondent which affected the Applicants' obligations and the Respondent's rights under the terms of settlement.

37 I had the benefit of a detailed and most helpful written submission by each of the parties which has assisted me in clarifying the nature of the issues. I think it unnecessary to revisit in detail the various matters that, in my view, constituted a denial of natural justice in the way in which the proceeding was conducted. Much of those views has been conveyed to counsel for the Respondent during the course of submissions.

38 Having read the transcript, the view I formed as to the procedure followed and the conduct of the Tribunal was similar to that expressed by Coldrey J on 7 June 2004 when his Honour, sitting in the Practice Court, dealt with an application that the Respondent be restrained from taking possession of the premises at 2-10 Yan Yean Road, Diamond Creek until further order of the Court. His Honour's views are set out at paragraphs 9 to 14 of his Honour's reasons. I think it unnecessary to repeat what his Honour stated about the manner in which the Tribunal dealt with Dr Wood. It accords with my own view of the unsatisfactory course taken in the proceeding.[33]

39 Conscious as I am of the burden which is placed on any Tribunal when dealing with an unrepresented litigant, where the Tribunal is proposing to depart from the application which brought the parties before it and grant other substantive or final relief, it is obliged to make clear what issues the Tribunal intends to resolve. It must provide the unrepresented litigant a meaningful opportunity to consider whether he or she is in a position to deal with those issues, whether they require legal representation and whether an adjournment is needed.

40 The application by the solicitor for the Respondent went beyond any hearing for directions. The application to enforce the terms of settlement raised difficult legal and factual questions. The Tribunal did not appreciate the legal significance of some of the matters touched upon by Dr Wood. The Tribunal did not receive the assistance from the Respondent's legal representative to which it was entitled in clarifying these matters. The circumstances that were disclosed to the Tribunal called for a careful identification of the legal issues raised by the Respondent's application.

41 The conduct of the proceedings denied the Applicants procedural fairness. The Applicants were not afforded an adequate opportunity to address the issues. On that basis and without expressing any views about any of the other questions of law which are raised by these applications, I find the Applicants have made out Ground One of the Originating Motions.

42 I will now hear from the parties as to what formal orders should be made.

[1] Offer to lease. Exhibit "GJK-1" to the Affidavit of Gerald Kirk which became Exhibit MJW1 on this hearing.

[2] Exhibit GJK-1.

[3] Minute - part of exhibit GJK-1 to the Kirk Affidavit.

[4] See Kirk Affidavit at [6] and [7].

[5] Exhibit GJK-2.

[6] Exhibit GJK-4.

[7] Exhibit GJK-8.

[8] Exhibit GJK-10.

[9] Exhibit MJW-3.

[10] Exhibit GJK-12.

[11] Exhibit MJW-4

[12] Exhibit MJW-4.

[13] Exhibit MJW-5.

[14] Wood Affidavit dated 17 May 2004 at [26-27]; Transcript at 2.

[15] Exhibit MJW-7.

[16] Wood Affidavit dated 17 May 2004 at [58-63].

[17] Exhibit MJW-8.

[18] Exhibit MJW9.

[19] Wood Affidavit dated 17 May 2004 at [34].

[20] Exhibit MJW9.

[21] Exhibit MJW10.

[22] Wood Affidavit 17 May 2004 [62 -63]. Exhibit MJWO.

[23] Transcript at 25, lines 2-6.

[24] Transcript at 25, lines 7-10.

[25] Transcript at 28, lines 1-5.

[26] Transcript at 28, lines 9-15.

[27] Transcript at 28, lines 25-26.

[28] Transcript at 29, lines 10-16.

[29] See copy Draft Reasons.

[30] Jarrett v Westpac Banking Corporation [1999] FCA 425; Titan v Babic (1994) 49 FCR 546; (1994) 126 ALR 455; Rogers v Law Coast Mortgages Pty Ltd [2002] FCA 181; Azar v Berry Kitchens Pty Ltd [2001] NSWSC 678.

[31] Vidovich v Mildura Rural City Council [1999] VSCA 49; [1999] 2 VR 399 at [15] per Brooking JA (with whom the rest of the Court agreed).

[32] Craig v State of South Australia [1995] HCA 58; (1995) 184 CLR 163 at 176.

[33] "Guidelines for Trial of Litigation Involving Unrepresented Parties" The Hon. Justice T. Smith - Litigants in Person Management Plans: Issues for Courts and Tribunals - A.I.J.A. 2001.