Duncan's Catering Pty Limited v Bankstown City Council [2005] NSWCA 93 | Case summary

REASONS FOR DECISION Introduction 1 In this appeal, the question raised is whether a catering company which supplied catering services to a local council pursuant to an agreement between them lasting one year ('the agreement'), and which used a kiosk within the town hall in order to do so, acquired a right of occupation of the kiosk throughout the period of the agreement and thereby became the council's lessee under a retail shop lease governed by the Retail Leases Act 1994 ('the RL Act'). 2 The Applicant, Duncan's Catering Pty Limited, maintained that under an agreement of this nature with the Respondent, Bankstown City Council ('the Council'), it acquired a right of occupation of a kiosk within Bankstown Town Hall ('the Town Hall') for the period of one year during which it was required by the agreement to supply catering services. It claimed that this right of occupation fell within the definition of a 'retail shop lease' in s 3 of the RL Act, and that the minimum term of this lease was five years, as stipulated in s 16 of the Act. 3 One of several arguments made in response by the Council was that, according to the agreement, the only rights to occupy the kiosk that were conferred on the Applicant were of limited duration. They came into being on each occasion when, at the Council's request, the Applicant supplied catering services. They usually lasted for less than a day and in no instance did they last as long as six months. The Council claimed that the case therefore fell within s 6(1) of the RL Act, which states that the Act does not apply to a lease for a term of less than six months, in the absence of any right for the lessee to extend it. 4 In the decision under appeal (Duncan's Catering Pty Limited v Bankstown City Council [2005] NSWADT 158), the Tribunal, constituted by Mr S Montgomery, Judicial Member, dealt with this issue as a preliminary matter in proceedings that had been instituted by the Applicant. In its decision, delivered on 12 July 2005, it accepted the Council's argument. It accordingly ruled that the Tribunal had no jurisdiction to determine the proceedings. The Applicant has appealed against this decision. 5 In addition to lodging a notice of appeal, the Applicant applied for leave to appeal, on the footing that the Tribunal's decision might have been an interlocutory one, necessitating a grant of leave under s 113(2A) of the Administrative Decisions Tribunal Act 1997 ('the ADT Act'). But since the decision had the effect of finally determining the rights of the parties, we agree with a contrary submission made on behalf of the Council. Accordingly, we formally dismiss the application for leave to appeal, on the ground that it was not required in the circumstances, and we entertain the appeal without any grant of leave. The Tribunal's reasons 6 The agreement commenced operation on or about 15 February 2002. As already indicated, its duration was one year. Although its terms provided for renewal, it was not renewed. 7 The Tribunal ascertained the terms of the agreement from the following sources: (a) a document called 'Tender No. SPC - T - 00/502: Provision of Catering Services to Bankstown Town Hall', issued by the Council in November 2001; (b) a written tender submitted by the Applicant; (c) an Instrument of Agreement prepared by the Council and signed by the Applicant on 15 February 2002 (though never in fact signed on behalf of the Council); and (d) various aspects of the conduct of the parties both before and after the Instrument of Agreement was signed. 8 The only part of this documentation that the Tribunal quoted in its judgment (it did so at [1]) was a passage from the Conditions of Tendering. Amongst other things, this described the relationship that the Council wished to develop with the successful tenderer as a 'partnership'. 9 In its judgment at [2], the Tribunal noted that the kiosk could be used for the sale of hot food, snacks, candy bars and similar products and that the Council showed the kiosk to the Applicant before the Applicant submitted its tender. 10 At [4], the Tribunal outlined relevant features of the layout of the Town Hall:- The Town Hall was a three level building containing a basement (with a large fully functional kitchen and store rooms), a first floor (containing two large function rooms, one auditorium, one theatre setting with a break out room, a finishing kitchen, two bar areas and the kiosk), and a second floor (with three smaller function rooms and another finishing kitchen). 11 At [5], the Tribunal noted that when the agreement commenced the Applicant purchased existing stock from the Council, which had previously done its own catering. 12 At [6], it made the following finding regarding keys to the kiosk:- The keys were generally left in the supervisor's office at the Town Hall. Whenever the Applicant requested that the Council's supervisor provide the kiosk keys to the Applicant, they were handed over. On some occasions the Applicant did not return them to the supervisor immediately. On one such occasion the Applicant retained a set of keys for a continuous period of 2 months. 13 At [7 - 10], the Tribunal summarised the arguments put to it by the Applicant. Included in this summary, at [8], was the following submission by the Applicant:- The Applicant further contends that it had been given a right to occupy the kiosk. It says it was required by its agreement with the Council to sell 'fast food' and the Council represented to it that it could do so. The Applicant says that the only practical way in which it could do so was from the kiosk. This required the Applicant to occupy the kiosk. 14 The Tribunal's summary also included submissions by the Applicant that (a) the kiosk, being a built structure, constituted 'premises' for the purposes of the RL Act; (b) the business to be conducted fell within the RL Act; and (c) the right to occupy the kiosk that the Applicant acquired was a right granted for value, since it was obliged under the agreement to pay to the Council a commission based on the value of the catering services that it provided. 15 At [11], the Tribunal outlined the four 'principal arguments' that the Council had raised. At [12 - 14], it rejected the first three of them. The contents of these three need not concern us. The fourth argument, being the one that does concern us, was formulated by the Tribunal as follows:- … if an agreement is proven, it was only an agreement for occupancy on an "each occasion" basis and falls within the exception in section 6 of the Act. 16 At [12], the Tribunal stated that it agreed with this argument based on s 6 and set out the relevant part of this section (s 6(1)(a)). It is sufficient here to quote the opening words:- 6 Leases to which Act does not apply (1) This Act does not apply to any of the following leases of retail shops: (a) leases for a term of less than 6 months without any right for the lessee to extend the lease (whether by means of an option to extend or renew the lease or otherwise)…. 17 In the ensuing five paragraphs, the Tribunal explained the basis of its decision in the Council's favour:- 17 The Applicant says that the agreement was for a term of one year and that the circumstances of the grant of rights of occupation of the kiosk are similar to the circumstances in the matter of Conoid [ Conoid Pty Ltd v International Theme Park Pty Ltd [1999] NSWSC 1138] in which Simos J found that a retail lease existed. In this matter the Applicant was provided with a separate set of keys for the kiosk. There was no interference from the Council in the conduct of the kiosk. There was no interference in how the Applicant paid its staff, or in how the Applicant directed its staff, or in what products the Applicant purchased to sell at the kiosk. 18 The Applicant concedes that it relied on the Council to procure patrons but says that its reliance upon the Council was less direct and/or significant than was the case in Conoid. The Council did not book the kiosk. Rather, the Council referred whoever had booked the adjacent auditorium to the Applicant in relation to the opening of the kiosk. On occasions, if the booking party did not pay a bond, the Applicant did not open the kiosk. Whether the Applicant made a profit or loss in how it operated the kiosk when it was open was not something over which the Council had control. 19 In contrast, the Council submits that any agreement to grant occupancy was on an "ad hoc" or "from time to time" basis. This is submitted on the basis that the Applicant's use of the Town Hall on each occasion that the Council required the catering services of the Applicant constituted an occupancy of limited duration, in most instances less than a day. The Applicant was granted the occupancy on each of those distinct occasions. Therefore, each instance of occupancy can only be for less than six months and without any right to extend the lease. It would follow, the Council submits, that the Tribunal does not have jurisdiction to hear the present proceedings. 20 I agree with the Council's argument. I do not agree that the agreement prevented interference from the Council in the conduct of the kiosk. The Applicant and the Council were jointly responsible for the catering services. The Council operated the premises; it had control over the access to the kiosk, in particular, the keys. The keys were generally left in the supervisor's office at the Town Hall. In fact, the Council dictated when the Applicant could operate the kiosk as it had control over the entire Town Hall. The kiosk only opened when the Council conducted its business. The Council had input into the services being provided by the Applicant. 21 The definition of 'retail shop lease or lease' in section 3 of the Act includes a right of occupation of premises whether or not the right is a right of exclusive occupation. This provision was considered in: Seguin & Anor v Anglican Church Property Trust Diocese of Sydney (No 1) [2004] NSWADT 146. In that matter the Tribunal was asked to determine the status of a right of interrupted occupation conferred on the applicants by a licence agreement. The applicants were permitted to enter and use premises over a period of two years for a permitted use described as 'sale of antiques'. However, the times within which they could enter and use the premises were restricted to 'any hour Monday to Saturday inclusive but not outside the hours of 12 noon to 6.00 p.m. on any Sunday'. The Tribunal found that the arrangement was a form of non-exclusive occupation and stated at paragraph 56: "the policy of the RL Act could, we think, be averted too easily by commercial landlords if, solely through the device of reserving a right periodically to re-enter the premises for a short period of time, they could claim that a lease or licence granted by them did not fall within the Act." 22 The arrangement in this matter is quite different to that in Seguin. In these circumstances it is my view that the arrangement between the parties is as the Council contends. The Applicant was granted occupancy on each of the distinct occasions upon which it operated the kiosk. The longest period in which it retained a set of keys to the kiosk was two months. All other occasions were for lesser periods and the Town Hall supervisor generally retained control over them. The arrangement between the parties falls within the exception in section 6 of the Act. It follows, in my view, that the Tribunal does not have jurisdiction to determine these proceedings and accordingly the application must be dismissed. Provisions governing this appeal 18 Appeals to an Appeal Panel are subject to s 113(2) of the ADT Act. This is in the following terms:- (2) An appeal under this Part: (a) may be made on any question of law, and (b) with the leave of the Appeal Panel, may extend to a review of the merits of the appealable decision. 19 A number of decisions (see, for example, French v Sydney Turf Club Ltd (No 2) [2003] NSWADTAP 54 at [29]) have held that an Appeal Panel must dismiss an application under s 113(2)(b) for an appeal to extend to the merits if no error of law is shown in the decision under appeal. 20 Although this limitation on the operation of s 113(2)(b) is not established with cast-iron certainty (see the observations of Mason P in Abdul-Karim v Council of the New South Wales Bar Association [2005] NSWCA 93 at [28 - 29]), Mr Reuben, who appeared as counsel for the Applicant, was prepared to concede that his initial task in the appeal was to show that the Tribunal had erred in law. The Applicant's arguments in the appeal 21 The starting-point of Mr Reuben's submissions was the proposition, based on a dictum of Santow JA in Jennings v Credit Corp Australia Pty Ltd (2000) 48 NSWLR 709 at 713, that the interpretation of a written agreement is always a question of law. 22 He drew to our attention a number of provisions of the document called 'Tender No. SPC - T - 00/502: Provision of Catering Services to Bankstown Town Hall', that had been issued by the Council in November 2001. This was one of the documents to which the Tribunal had referred in ascertaining the terms of the agreement (see [7] above). Within this document, the provisions of immediate relevance were these:- Part A, Conditions of Tendering, Clause 2.1, headed 'Items of Work': The Caterer would be required to provide, as a minimum, the following catering services: - Catered functions in the auditorium… or foyers and function rooms… - Alcohol, soft drinks for catered functions - Hot food, snack and candy bar required for various concerts and functions (such as ice cream, chips etc) - … Part B, Conditions of Contract, Clause 2, headed 'Definition': EXCLUSIVE RIGHTS Duncan's Catering Pty Ltd - BTH Catering Services are formally engaged Contractor for the supply of catering services. No other Contractors can use the premises without the permission of Duncan's Catering Pty Ltd. Part C, Contract Specification, Clause 1, headed 'Operating Overview': The successful tenderers would be required to provide the following catering facilities at the Function Centre: - Catering to functions from the auditorium - foyers and function rooms, ranging from 50 - 800 guests, including multi cultural cuisine. - Alcohol, soft drinks for catered functions. - Hot food, snack and candy bar requirements for concerts and exhibitions (such as ice cream, chips etc). - … 23 Mr Reuben argued that in the first and third of these clauses, two separate catering operations were specified, namely, catering for functions (in the auditorium, foyers and function rooms) and providing hot food, snacks etc for various concerts and other functions. It was the second of these operations, he said, that necessitated continuous use of the kiosk by the Applicants. It followed, he said, that by implication the Tender document, interpreted in the light of the subsequent documents exchanged between the parties and their conduct both before and during the period of the agreement, conferred on the Applicants a right to occupy the kiosk throughout this period. Their right of occupation was not confined to the relatively short intervals of time when, at the request of the Council or of a person who had booked an appropriate room, they provided catering services for particular functions taking place in the Town Hall. 24 In advancing this submission, Mr Reuben relied on the decision of the High Court in Radaich v Smith (1959) 101 CLR 209. The Court here held that a deed under which the owner of premises granted a 'licence' to a 'licensee' so that she might 'carry on the business of a milk bar' in the premises actually created a lease of the premises, because the deed, on its true interpretation, conferred a right of exclusive possession. One of the grounds for this decision was, in the words of McTiernan J at 215, that 'such a business could only be carried on in reasonable convenience by a person having the exclusive possession of the premises'. The Court also relied on the following features of the transaction: (a) that the premises were a lock-up shop; (b) that at the termination of the licence, the licensee was required to 'immediately give up possession' of the premises; (c) that several of the rent receipts carried a notation that she was required to pay for all broken or lost windows or keys; and (d) that in the contemplation of the parties she was to have control of the premises at all times. 25 Mr Reuben also referred us to Hayes & Anor v Seymour-Johns (1983) NSW Conv R 55-123. Here Yeldham J held that a 'letter of intent' permitting a person to trade as an antique dealer in specified premises conferred a right of exclusive possession. He quoted the statement of McTiernan J in Radaich v Smith that 'such a business could only be carried on in reasonable convenience by a person having the exclusive possession of the premises'. 26 With reference to the degree of control that the Tribunal found (see its judgment at [20]) to have been exercisable by the Council over the Applicant's operations in the kiosk, Mr Reuben relied on a passage in the judgment of Simos J in Conoid Pty Ltd v International Theme Park Pty Ltd [1999] NSWSC 1138. His Honour noted at [43] that under the agreement in that case granting a right of occupation of certain shops to the plaintiffs, the defendant, who was the owner of a theme park in which the shops were situated, could determine the days and hours during which the park would be open. He held that this of itself would not prevent the agreement from creating a lease. 27 Mr Reuben also drew our attention to evidence that during the period of the agreement (a) the Council permitted the Applicant to store goods in the kiosk; (b) its staff always gave the keys to the kiosk to any employee of the Applicant who requested them; (c) it was only in order to deliver goods to the kiosk that Council staff ever obtained access to it; and (d) bookings for the auditorium or theatre (being the only events that caused the kiosk to be opened) were made with the Council, but were often notified to the Applicant by the person who had made the booking. 28 The Tribunal's judgment included a statement (at [20]) that 'The Applicant and the Council were jointly responsible for the catering services'. Mr Reuben argued that there was, however, no evidence to support this finding. He referred to clauses in the Conditions of Contract that (a) required the Applicant to attend to such matters as insurance and occupational health and safety and (b) prohibited the Applicant and its employees from holding themselves as the Council's agents. 29 We shall briefly mention two other submissions by Mr Reuben. One was that in ascertaining the terms of the agreement, the Tribunal erred in taking account of conduct of the parties occurring after its commencement. The other was that if in fact the Tribunal was entitled to take this conduct into account, it should have permitted cross-examination of a witness (the Council's Manager of Recreation and Open Spaces) who had filed an affidavit in the Council's case. The Council's arguments 30 The gist of what Mr Lee, appearing for the Council, put to us was as follows. Where, as here, a contractual agreement is created only partly by means of written documents, the ascertainment of its terms is not purely a question of law. To the extent that its terms are ascertainable from words or conduct of the parties, the matters to be determined are questions of fact. Each of the factual findings on which the Tribunal relied in dealing with the agreement had evidentiary support. The Tribunal therefore did not err in law in making those findings. 31 These findings, Mr Lee contended, clearly led to the conclusion that the Tribunal reached. This was that the Council, through controlling the opening hours of the Town Hall as a whole and retaining possession of the keys to the kiosk, did not confer any continuing right of occupancy of the kiosk. This right only arose when on an ad hoc basis it provided the keys to the Applicant in order to permit catering for a function that was to take place in the Hall. 32 Mr Lee argued also that, in so far as the Tribunal's decision depended on interpretation of the relevant documents (notably, the Tender issued by the Council), there was similarly no error of law on its part. 33 So far as the specific terms of the Tender were concerned, the only contention by Mr Lee that we need to record was that, despite Mr Reuben's submission to the contrary, nothing in the different sections of the Tender specified the kiosk as the place from which any catering services required from the Applicant were to be delivered. In Mr Lee's submission, the Council, without breaching the agreement, could have closed the kiosk and required that the Applicant make use of other parts of the Town Hall in providing catering services. Our conclusions 34 In our judgment, it is clear that this appeal must fail, as we cannot discern any error of law in the Tribunal's reasons. 35 As the foregoing account shows, neither the Tender nor any of the other documents forming part of the agreement expressly conferred on the Applicant a right of occupancy of the kiosk. They did not even mention the kiosk specifically. The only provision suggesting that the Applicant might have rights of occupancy of some part of the Town Hall was the segment of clause 2 of the Conditions of Contract which stated, alongside the heading 'Exclusive Rights', that no other contractors could use 'the premises' without the Applicant's permission. These 'premises', however, were not defined. 36 Since no rights of occupation were expressly conferred by the agreement, Mr Reuben was compelled to rely on authorities, such as Radaich v Smith, to the effect that the grant of permission to conduct a business in specified premises may by implication confer a right of exclusive possession. But these authorities are not applicable to the present case, for at least three reasons. These are (a) that the premises to which such a right might attach were not specified in the agreement (as we have just pointed out); (b) that there were no clauses in the agreement referring expressly or by implication to any right of possession or occupation to be enjoyed by the Applicant; and (c) that the Council, by retaining the keys to the kiosk and by determining the opening hours of the Town Hall, exercised continuing control over access to the kiosk, even though it sometimes permitted the Applicant to retain the keys for significant periods (on one occasion, for as long as two months). On each of these three matters, Radaich v Smith can be distinguished from the present case. 37 In so far as the Tribunal's decision depended on these and other factual findings, there was, as Mr Lee submitted, evidentiary support for those findings. The only finding that in our view was not sufficiently supported by evidence was the Tribunal's conclusion (at [20]) that 'The Applicant and the Council were jointly responsible for the catering services'. But the Tribunal's ruling that no lease was created was not based to any significant extent, if at all, on this conclusion. 38 We have difficulty in understanding Mr Reuben's submission that the Tribunal erred in taking account of conduct of the parties during the period of the agreement. It seems to us that his own arguments drew significantly on evidence of dealings between the Applicant and the Council during this period. 39 Mr Reuben's submission that the Tribunal should have permitted cross-examination of the Council's Manager of Recreation and Open Spaces was sufficiently countered by Mr Lee's indication to us that both parties had agreed to dispense with cross-examination. 40 In the result, the most that Mr Reuben demonstrated to us was that the agreement conferred on the Applicant a right to exclude third parties from access to the kiosk, or to some area within the Town Hall that included the kiosk. But as against the Council, he established no ground for overturning the Tribunal's conclusion (at [22]) that the extent to which the Applicant was granted rights of occupancy was limited to 'each of the distinct occasions on which it operated the kiosk'. 41 There was, accordingly, no error of law by the Tribunal, either in construing the relevant documents or in making relevant findings as to the conduct of the parties. It follows that the appeal must be dismissed. Costs 42 Mr Lee submitted that this was an appeal without any merit and that accordingly there were 'special circumstances warranting an award of costs' to the Council under s 88(1) of the ADT Act. He relied on the Appeal Panel's judgment in G & M Dawson Pty Limited v Cripps & Ors (No 3) (RLD) [2005] NSWADTAP 24. 43 Mr Reuben's response was that, even if the appeal were dismissed, the requirement of 'special circumstances' was not satisfied. He relied on the Appeal Panel's earlier judgment in G & M Dawson Pty Limited v Cripps & Ors (No 2) (RLD) [2005] NSWADTAP 3. 44 In our opinion, neither of these decisions is directly in point. They do however refer to the proposition on which Mr Lee relied, namely, that when in a retail leases case an appeal, or the defence to an appeal, lacks any merit, the requirement of 'special circumstance' in s 88(1) may be satisfied. Useful authority may be found in Citadin Pty Ltd (No 2) v Eddie Azzi Australia Pty Ltd & General Pants Pty Ltd (RLD) [2001] NSWADTAP 31. 45 In our judgment, this was indeed an appeal without merit. As we said earlier, at [34], it was 'clear' to us that the Tribunal did not err in law. We have had little hesitation in concluding that the appeal was bound to fail. 46 On this ground, we find that there were 'special circumstances warranting an award of costs' within s 88(1) of the ADT Act. The Applicant must pay the Respondent's costs of the appeal.

Duncan's Catering Pty Limited v Bankstown City Council

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