REASONING
44 Insofar as the tenants seek to uphold the trial Judge's reasoning, they encounter two immediate obstacles. The first is that the trial Judge's conclusion that the Tribunal erred in law depended on his Honour's view that the Tribunal had failed to address "the real question" in the case. His Honour identified the real question (at [84]) as being whether an agreement had been made between GPL and the tenants, after the mortgage had been entered into but before 15 June 1995, with a view to redefining the status of the moneys advanced or to be advanced by the tenants to the company. This, his Honour said, was a different question to whether there had been an agreement entered into in 1994 between GPL and the tenants, as deposed to by Emmanuel and George Notaras.
45 In fact, the Tribunal found that "there never was any such agreement", that is an agreement to treat amounts paid by the tenants to GPL from early 1994 as rent in respect of the units. It made that finding after considering the significance of the letter of 15 June 1995. The Tribunal took the view that the evidence, taken at its highest, merely showed that the tenants were asserting that the amounts they had paid to GPL were in respect of rent. The Tribunal found that the assertion of an agreement (not the making of an agreement) was an afterthought of Emmanuel and George Notaras designed to enable the tenants to continue in occupation of the units.
46 Mr Sullivan conceded in argument that it was not correct to say that the Tribunal had failed to address the "real question" identified by the trial Judge. That concession was not surprising. Mr Sullivan accepted, and indeed asserted (as he had to), that the case put to the Tribunal by the tenants, although primarily based on the 1994 agreement deposed to in the affidavits, included an alternative claim that an agreement had been entered into, at the latest, by 15 June 1995. (The alternative claim appears to have been pressed notwithstanding that neither Emmanuel Notaras nor George Notaras gave evidence of any agreement other than the one allegedly reached in 1994). In view of the tenants' "fallback" argument, the Tribunal's reasons, which are expressed in general terms, should be read as intended to address that argument. Moreover, the considerations relied on by the Tribunal as suggesting that there had been no agreement to treat the payments as rental included the failure of either the tenants or GPL to record the payments as having been applied to rent. It must be remembered that the tenants continued to make payments to GPL as late as April 1996 (that is, well after the letter of 15 June 1995). Even so, there was no evidence that any of the later payments had been recorded as having been made on account of rent.
47 Mr Sullivan contended that, despite his concession, the primary Judge had not fallen into error. He submitted that his Honour had not intended to say that the Tribunal had failed to address the real question, but only that the Tribunal had not considered the question properly. It is true that the trial Judge took the view that the Tribunal had not appreciated the significance of the letter of 15 June 1995 and that this, according to his Honour, constituted an error of law. But his Honour twice stated, in unequivocal terms, that the Tribunal had failed to address the real question. Indeed the thrust of the judgment is that the Tribunal's rejection of the 1994 agreement deposed to by Emmanuel and George Notaras was irrelevant to the real question in the case, namely whether the parties had agreed "not significantly prior to 15 June 1995" to characterise the payments made by the tenants to GPL as rent or prepayments of rent. It was the failure of the Tribunal to address the real question that constituted, in his Honour's view, an error of law. But, as Mr Sullivan conceded, the Tribunal did address that question.
48 The second obstacle in the path of upholding the trial Judge's analysis arises from his Honour's holding (at [54]) that it was
"undeniable that, when the letter of 15 June 1995 was sent, the [tenants] had by then agreed with GPL that the monies due from GPL and to be advanced to it would henceforth be appropriated to rent due or to become due."
Later in the judgment, his Honour said (at [89]) that the letter evidenced an agreement to characterise payments made by the tenants as rent or prepayments of rent and thus made it "legally impossible" for the parties to the agreement to deny its existence.
49 One significant difficulty with this analysis is that the Tribunal found that the letter was sent by solicitors on behalf of GPL to Advance, the mortgagee of the Markets. There was no finding that the letter was sent on behalf of or with the assent of the tenants. The Tribunal said that the evidence, taken at its highest, merely showed that as at June 1995, at the earliest, the tenants were asserting that the amounts they had paid were for rent. This falls short of a finding that the tenants had assented to the sending of the letter. In the absence of such a finding it is not clear how, on the basis of the letter, the tenants can be said to have assented to the representations in the letter, much less entered into an agreement shortly before 15 June 1995 to characterise the advances already made as rent or prepayments of rent.
50 In any event, the letter, as the Tribunal observed, was in cryptic terms and may or may not have been intended to refer to an agreement "of the nature alleged between the tenants and GPL". Mr Sullivan himself acknowledged in oral argument that a reasonable observer could read the letter in a number of ways. This concession rather undercuts the contention that the letter could only be read as indicating that an agreement had been entered into between GPL and the tenants requiring the advances made by the tenants to be applied to rent due under the leases. It is certainly difficult to read the letter as implying (as his Honour seems to have done) that GPL and the tenants must have agreed shortly before the date of the letter to define the status of moneys previously advanced by them to GPL. Had such an agreement been made, the letter might have been expected to refer to its terms and not to have said that the rentals "are progressively paid in advance". Moreover, the evidence did not explain the rather puzzling reference to the payments in advance having "attracted a modest reduction in gross rentals".
51 It may be that his Honour was influenced in his assessment of the letter by the fact that, once the letter was written on behalf of GPL, it was but a small step for George Notaras, on behalf of GPL, to agree with the tenants to apply the advances made by them to past and future rental payments, thereby effectively protecting the family's position. It is one thing, however, for the family members to have been able to take that step had they chosen or been advised to do so; it is another for them to have actually taken the step. Other fact-finders perhaps may have been prepared to infer from the evidence that, not only was the letter of 15 June 1995 written on behalf of GPL, but that GPL and the tenants had in fact agreed shortly before the letter was written, to apply the advances to past and future rental payments (despite the absence of evidence from the Notaras brothers that they had made an agreement other than in April or May 1994). But there was nothing "illogical" or "perverse" in the Tribunal taking the view that the letter was designed to bolster the untrue assertion that an agreement had been entered into in 1994. The Tribunal, by implication, found that the tenants had not turned their minds, prior to 15 June 1995, to the desirability of making an agreement with GPL that (with the benefit of hindsight) would have protected their commercial interests.
52 Mr Sullivan's argument, that the Tribunal had used a "perverse" or "illogical" process of reasoning to reject the existence of the agreement deposed to by Emmanuel and George Notaras, did not advert to the fact that the authorities use the word "perverse" in different senses. It is sometimes used to describe a finding which is against the overwhelming weight of the evidence: see, for example, Azzopardi, at 156, per Glass JA. It is also used in the sense of acting without any probative evidence to support a material finding of fact: Minister for Immigration and Ethnic Affairs v Teo (1995) 57 FCR 194, at 199, per curiam. The authorities suggest that the latter is capable of constituting an error of law, but the former, of itself, is not: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 231, at 359, per Mason CJ.
53 Mr Sullivan did not suggest that there was no probative evidence to support the Tribunal's findings. Rather, the thrust of his submissions was to point to a number of factors which he said were given no or insufficient weight by the Tribunal. It was for this reason that the Tribunal's findings of fact were said to be "illogical", "perverse" or "unreasonable".
54 In our view, the Tribunal's findings cannot be characterised as "illogical", "unreasonable" or "perverse" even in the sense of being against the weight of the evidence. As the trial Judge remarked, some criticisms of the factual analysis adopted by the Tribunal may have some force. It is possible, for example, that a different fact-finder might have taken a different view of the significance of the absence of contemporary records, or of the fact that GPL and the tenants did not deal with each other at arm's length. But the mere fact that different minds might attribute different weight to these factors does not demonstrate that the Tribunal's acted against the weight of the evidence, much less that its reasoning was devoid of logic or irrational.
55 In addition to the considerations specifically relied on by the Tribunal, it must be remembered that the Tribunal had the benefit of observing Emmanuel and George Notaras when they gave their evidence. Although the Tribunal made only one express reference to the credit of the witnesses, it is clear that the Tribunal formed an adverse view of their credibility. This was a factor the Tribunal was entitled to weigh in the balance. The Tribunal was also entitled to take account of the absence of any direct evidence of an agreement having been entered into between GPL and the tenants shortly before 15 June 1995. (It will be recalled that on the trial Judge's reasoning, if an agreement had been made it must have been a relatively short time before the letter of 15 June 1995 was sent.) Indeed, George Notaras, under cross-examination, asserted that he had had a discussion with his brother about the possibility of treating the general financial contributions to the company as prepayments of rent, but that this had occurred after Advance had taken possession.
56 Mr Sullivan criticised the Tribunal's assumption that if GPL had been forced into liquidation, the tenants could have recovered their advances to the company, because they could have offset the advances against their indebtedness for rent. He said, without citation of authority, that the assumption was plainly wrong and that the error had infected the Tribunal's reasoning.
57 It is by no means clear that the Tribunal's assumption was incorrect. The position would depend on s 553C of the Corporations Law, which permits a creditor of an insolvent company to set off sums due by the company against those the creditor owes to the company if there are "mutual dealings". That expression has been given a wide meaning: Gye v McIntyre (1991) 171 CLR 609, at 619 per curiam; In re Daintrey; Ex parte Mant [1900] 1 QB 546. It may well encompass dealings of the kind alleged to have occurred in the present case which (if the allegations were made out) would have been closely related. Section 553C(2) provides that the section does not apply where, at the time of giving credit to the company, the creditor had notice of the fact that the company was insolvent. Whether s 553C(2) operated to exclude a set off in the present case would depend on when, if at all, the tenants had notice of GPL's insolvency.
58 In any event, the purpose of the Tribunal's reference to the position on GPL's insolvency was merely to provide a subsidiary reason for giving little weight to an otherwise cogent consideration in favour of the tenants, namely the absence of evidence that the tenants had paid amounts in respect of rent, other than the advances themselves. Even if the Tribunal had misunderstood the legal position on insolvency, there was a substantial body of evidence supporting its findings.
59 In Eshetu, Gleeson CJ and McHugh J observed (at 626) that
"[s]omeone who disagrees strongly with someone else's process of reasoning on an issue of fact may express such a disagreement by describing the reasoning as "illogical" or "unreasonable", or even "so unreasonable that no reasonable person could adopt it". If these are merely emphatic ways of saying that the reasoning is wrong, then they may have no particular legal consequence."
In our view, this is just such a case.
60 It follows that it is not necessary to consider whether Mr Sullivan was correct in his submission that recent authorities had accepted that perversity, in the sense of a finding made against the overwhelming weight of the evidence, constitutes an error of law for the purposes of statutory provisions such as s 58(1) of the Tenancy Tribunal Act.
61 The final contention advanced by Mr Sullivan was that the question of whether a legally binding agreement has been made is always a question of law. The question that the Tribunal addressed was whether, as a matter of fact, an agreement had ever been made between GPL and the tenants concerning the prepayment of rentals. That depended upon findings as to whether the conversations alleged by Emmanuel and George Notaras had taken place and, if not, whether it should be inferred from the evidence that similar conversations had taken place later. There were no issues as to consideration, unenforceability of a contract or the like. The question determined by the Tribunal was one of fact.