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[2001] VCAT 1130
respondent. Tribunal found no obligation under s 8 Retail Tenancies Reform Act to provide a disclosure statement to this tenant; held the landlord's authorisation of ordinary postal payment did not extend to...
The Tribunal held that (1) the landlord did not need to give a disclosure statement under s 8 of the Retail Tenancies Reform Act 1998 when an existing tenant exercised an option under a pre-1998 lease; (2) the landlord's provision of a P.O. Box authorised ordinary postal payment but did not, without specific agreement, accept registered post; (3) the February rent cheque sent by registered post remained uncollected at the post office and so rent was unpaid for over 14 days, permitting lawful re-entry under the lease; and (4) the landlord's conduct was not unconscionable under s 7 of the Fair Trading Act 1999. The Tribunal resolved these issues for the respondent, adjourned for directions and reserved costs.
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This is a Retail Tenancies List hearing in the Victorian Civil and Administrative Tribunal concerning whether a landlord lawfully re-entered leased premises after a disputed rental payment.
Facts in brief: Mr Janusz Rogowski leased part of a shopping-centre first floor from Bedelis Investments under a lease dated 9 May 1995. The lease contained an option to renew. After an intra-tenant change and the expiry/renewal period, disputes arose. In June 2000 Bedelis sold an on-site liquor business and supplied tenants a paper headed "new details" showing an Australian Business Number and a private P.O. Box (PO Box 5055 Pinewood) as the company's contact address. After this change the tenant used postal methods to send rent cheques. The January rent sent by post was collected and banked. The tenant claims he sent the February rent by registered post on 9 February (envelope date-stamped 12 Feb). The registered envelope remained at the Pinewood licensed post office uncollected. At about 3:30 a.m. on 22 February the landlord re-entered, changed locks and posted a termination notice. The tenant obtained interim relief restoring possession on 23 February by consent; the Tribunal then determined as its principal task whether the lock-out was lawful. The principal issues were: (a) whether the landlord was obliged to give a disclosure statement under the Retail Tenancies Reform Act 1998 when a sitting tenant exercises an option (s 8); (b) whether the landlord's P.O. Box and prior conduct meant that registered post constituted effective payment; (c) whether the re-entry was lawful under the lease; and (d) whether the landlord's conduct was unconscionable under s 7 Fair Trading Act 1999.
The Tribunal (Deputy President M.F. Macnamara) concluded: s 8 did not apply to an existing tenant exercising an option (following Khodr); the landlord’s 'new details' could be taken to authorise ordinary post but did not, without distinct agreement, extend to registered post; the registered envelope remained in Australia Post custody and rent was unpaid beyond the 14-day default period; the re-entry was therefore lawful; and the conduct did not amount to unconscionable conduct under s 7. The Tribunal resolved the contested issues in favour of the respondent (the landlord), adjourned to directions and reserved costs (see [26]-[38], [48]-[58], [59]-[69], [70]-[72]).
The Tribunal's decision proceeds logically from statutory construction, established principles about payment by mail, and equitable doctrine.
Disclosure obligation (s 8 Retail Tenancies Reform Act): The Tribunal adopted the reasoning in Judge Davey’s earlier VCAT decision Khodr (cited at [27]) interpreting 'prospective tenant' as referring to new entrants rather than a sitting tenant exercising an option. Ensabella (Court of Appeal) was considered for the related context (s 17) and the Tribunal emphasised the statutory scheme and the non-retrospective application of substantive provisions. Given Tribunal precedent and the interpretation that the 1998 Act does not retrospectively render prior-Act options into 'prospective' leasing negotiations, the Tribunal held there was no s 8 obligation in the circumstances ([26]-[38]).
Payment by post and registered post: The Tribunal relied on its earlier analysis in Happy Century and on established authorities: general principle that payment by post is only complete when remittance reaches creditor, and that the creditor's prior authorisation of a postal mode may shift the risk of non-delivery (citing Beevers and other authorities at [44]-[46]). The key factual and legal turn was distinguishing ordinary postal authorisation from registered post. Registered post involves additional formalities and an element of personal signature/collection. The Tribunal accordingly held that while the landlord's 'new details' could authorise ordinary postal dispatch, there was no distinct agreement to accept registered post; therefore the risk of non-collection remained with the tenant ([48]-[56], [54]).
Possession and re-entry: Because the registered envelope was in custody of Australia Post and not in the landlord's possession, rent had not been paid in landlord's hands. That default persisted beyond the 14-day contractual default window in clause 10.01(a), so contractual rights to forfeit and re-enter were engaged. The Tribunal found the re-entry lawful on that basis ([56]-[58]).
Unconscionable conduct under s 7 FTA: The Tribunal analysed s 7 by reference to s 51AA TPA jurisprudence (Berbatis) and equitable doctrines (Legione, Stern). The Tribunal concluded that enforcement of contractual re-entry rights, even if done covertly and quickly after expiry of the default period, was not unconscionable in these facts. There was no cogent evidence of deliberate exploitation of postal processes, and the lease authorised re-entry without notice. The Tribunal therefore rejected the equitable unconscionability challenge ([59]-[69]).
Before: The Tribunal had decisions (including Khodr) addressing disclosure-statement obligations under the 1998 Act but the statutory scheme was newly complex and considered difficult even in Ensabella (Court of Appeal). Payment-by-post cases had variable English and Australian authority (Beevers and authorities discussed). Unconscionability under s 7 (reflecting s 51AA TPA) was being developed in federal jurisprudence (Berbatis) and applied in various contexts.
After: The decision reinforces three practical propositions in the Victorian retail-tenancy context:
A sitting tenant exercising an option under a pre-1998 lease will, in VCAT practice, not be treated as a 'prospective tenant' for s 8, absent a higher-court decision to the contrary ([26]-[38], following Khodr).
Landlords who provide a PO Box or otherwise accept postal payment do not automatically accept the additional formal regime of registered post; tenants retain the risk unless there is explicit consent to accept registered post as the mode of payment ([48]-[56]).
The availability of relief under s 7 for enforcement of contractual forfeiture is limited: merely vigorous enforcement of contractual rights shortly after a default, without other equity-disturbing circumstances, will not ordinarily be characterised as unconscionable ([59]-[69]).
This decision therefore cements a cautious approach to expanding disclosure obligations and to shifting postal risk, and emphasises the evidential requirements to sustain unconscionability claims in lease-forfeiture contexts.
“In the result therefore, there was no obligation...to provide a disclosure statement...” [38]
“I remain of the view...would not extend to the use of registered post...” [54]
“...whilst the cheque remained in the Pinewood Post Office it was in the custody of Australia Post...not in the custody or possession of Bedelis Investments.” [57]
“I am clear in my mind that...a court granting relief against forfeiture does not characterise...landlord as having acted unconscionably.” [67]
A sitting retail tenant exercising an option to renew a lease originally entered into pre-1998, who claims non-liability because no s 8 disclosure was provided.
A landlord who changes its point of contact to a PO Box (post-sale of an on-site business), with tenants thereafter posting cheques; later a dispute arises when a posted cheque remains uncollected at a licensed post office.
Cases where a tenant relies on registered post as establishing payment but the registered envelope remains with Australia Post and evidence is contested whether the landlord received card notification.
Disputes invoking s 7 FTA unconscionability allegations after a landlord's swift re-entry for unpaid rent, especially where the lease contains express forfeiture/re-entry clauses.
If the facts include explicit landlord agreement to accept registered post, or express postal collection arrangements known mutually to both parties, the Tribunal’s result on registered post risk might not follow.
This decision expressly follows VCAT authority in Khodr and applies (and distinguishes) Court of Appeal analysis in Ensabella. It also builds on the Tribunal’s prior approach in Happy Century as to payment-by-post risk. The Tribunal cites federal authority (Berbatis) to frame unconscionability but treats the outcome in light of established equitable remedies (Legione, Stern). Practitioners should therefore see this case as consistent with conservative VCAT practice: it defers to prior Vice-President decisions and treats statutory disclosure obligations narrowly in renewal-option contexts. Subsequent courts (Superior courts or Court of Appeal) could overturn the statutory-construction element, but absent that, VCAT members should follow the approach adopted here.
Higher-court authority: The Tribunal relied on Khodr and said it would follow it until overturned by the Supreme Court or Court of Appeal ([36]-[37]). A definitive higher-court ruling could change the reach of s 8 to include some option-renewal situations.
When precisely does a landlord's conduct amount to an express acceptance of registered post? The Tribunal required distinct agreement; but what form of communication suffices? The decision suggests clarity is required but does not set a precise standard (see [54]).
Licensed post office practices: the case turns on particular licensed post office procedures (carding, sorting). Where factual proof shows systemic postal delay or landlord arrangement with Australia Post that delayed collection, the reasoning about risk allocation could differ (compare Ronay and discussion at [47]).
Remedies under Fair Trading Act: the Tribunal emphasised limitations on making s 7-based orders equivalent to relief against forfeiture unless contravention of the Act is established ([66]-[69]). How VCAT's remedial powers under s 158 interplay with standard court practices on relief against forfeiture remains a matter of remedial law nuance.
For practitioners: ensure clear written arrangements if particles of payment-by-post are to transfer risk (expressly agree in writing to accept registered post), and when exercising landlord remedies for late rent, be mindful of the exact custody status of posted cheques and gather evidence about postal carding/collection where disputes are foreseeable.
Retail Tenancies List; Re-entry for Non-payment of Rent; Whether Re-entry Lawful; Whether Landlord Agreed to Remittance of Rent by Post or Registered Post; Where Rent Cheque in Post Office Uncollected by Addressee Landlord; Whether Rent Can be Regarded as Remaining Unpaid; Whether Re-entry Amounted to Unconscionable Conduct Contrary to Section 7 of the Fair Trading Act 1999
Date of Hearing 23, 24 and 26 April and 4 May 2001
1. Adjourned to directions hearing on a date to be fixed.
For the Applicant: Dr C. Croft, SC and Mr D.P. Lloyd of Counsel, instructed by Mingos and Company
For the Respondent: Mr Peter Best of Counsel, instructed by G.S.M. Lawyers
1. Mr Rogowski is a wrestler. As recently as 1995 he was competing to represent Australia in wrestling in the Olympic Games.
2. On 9 May 1995 he and a Mr Michael Bassett entered into a lease with respect to part of the first floor of a building at 33-45 Centreway in the Pinewood Shopping Centre in Mount Waverley. The landlord was Bedelis Investments Pty Ltd.
3. In 1997 Mr Rogowski bought out Mr Bassett's share in the gymnasium business. The landlord apparently raised no objection to Mr Bassett ceasing to be a tenant or to the option for a further three year term contained in the lease being exercised by Mr Rogowski alone.
4. The option to renew was contained in Clause 11 of the 1995 lease and provided for a written request to renew to be delivered to the landlord not more than 12 calender months or less than five calender months prior to the expiration of the original term. Letters were written by or on behalf of Mr Rogowski dated 28 April 1999 and 1 October 1999 which he says had the effect of exercising the option for a further five year term. According to the pleadings in this proceeding and two default notices served by the landlord, the landlord accepts that the lease has been effectively renewed for a further five year period on the same terms (with the exception of the deletion of one option period. No further deed of lease has been executed nor have the parties agreed upon the rental. Mr Best, Counsel for the landlord, said that the admission that the option had been effectively exercised was made only for the purposes of these proceedings. Since the validity of the exercise or purported exercise of the option is not in question in these proceedings I need say no more about it, nor consider whether in the circumstances the point can effectively be reserved by the landlord to be raised at some other time.
5. During the initial term of the lease, landlord and tenant were in dispute as to a number of matters. These included renovations to the building carried out in the latter part of 1999 which Mr Rogowski said interfered with his quiet possession of the premises and the payments of rates, insurance and land tax.
6. In the period from June 1997 to July 1998 the monthly rental paid by Mr Rogowski included a monthly levy to cover land tax. Mr Rogowski then denied that as tenant he was liable to make any payments towards land tax and so he withheld the rental of $3,500 per month for the months of October, November and December 1998. He short paid the rent for January 1999 by $1,000 to recoup himself for what he alleged were overpayments of land tax.
7. On 15 September 2000 the landlord served a notice in accordance with Section 146 of the Property Law Act 1958 alleging a breach of Covenant 3.05 of the lease by way of failure to pay the tenant's share of insurance premiums in the sum of $4,061.85. The notice asserted that failure to pay would amount to a repudiation of the lease and that the landlord would terminate and forfeit the lease and re-enter the premises should the default not be remedied.
8. The insurance and land tax remain unpaid, though the tenant appears now to concede liability to contribute towards these outgoings subject to provision of proper particulars of apportionment by reference to floor area within the building. Affidavit material as to the apportionment was filed and served in the course of the proceeding which Mr Rogowski apparently accepts meet his requirements as to particulars of apportionment and support the apportionment already made by the landlord.
9. The Pinewood Shopping Centre in Mt Waverley was constructed in the 1960s for a number of independent investors. Accordingly the centre as a whole is not owned by a single investor or landlord. Bedelis Investments Pty Ltd, the principal of which is Mr Chris Bedelis, owns about a dozen tenancies in the centre, one of which is occupied by Mr Rogowski's gymnasium business which trades as Pinewood Fitness Centre.
10. Until June 2000 Mr Bedelis' company owned and operated a liquor store known as Bedelis Liquor Emporium which was directly across the road from Mr Rogowski's gymnasium. The practice in the period 1995 to June 2000 was that Mr Rogowski handed the rent cheques to Mr Bedelis, with either Mr Rogowski calling to the Liquor Emporium with the cheque or Mr Bedelis calling in at the gymnasium to collect it.
11. When the Liquor Emporium was sold in June 2000 Bedelis Investments Pty Ltd ceased to have a corporate presence on those premises except as landlord and Mr Chris Bedelis, the Principal of the company, ceased to have a physical presence in the Liquor Emporium building. New arrangements had to be made for the payment of rent. About that time Bedelis Investments issued to its tenants a notice on a white sheet of paper slightly smaller than half an A4 sheet, which set out "new details" for Bedelis Investments Pty Ltd. The notice quoted the company's Australian Business Number for the purposes of the new taxation system but the only address which appeared on it was P.O. Box 5055 Pinewood Victoria. According to Mr Rogowski he "understood from the notice that [he] was to send all future rent cheques by mail to this P.O. Box No.". He despatched his rent cheques by pre-paid post to the P.O. Box number for the balance of the year 2000. The rental covenant appeared at Clauses 3.01 and 3.02 of the 1995 lease. The parties were agreed that the renewed three year term should be regarded as governed by the same clauses as those contained in the 1995 lease at least pending execution of a new deed by the parties (which has not to this date occurred). Clause 3.01 obliged the tenant to "make all payments of such rental to the lessor's address specified in Item 2 of the Schedule or at such other place as the lessor may from time to time designate". The payments were to be made "without any abatement, deduction or set-off whatsoever". The address shown at Item 2 for the landlord was "33-45 Centreway, Pinewood, Mt Waverley 3149". Clause 3.02 provided the rent was to be payable by monthly instalments in advance on the first day of each month. Despite this clause it was common ground between the parties that Mr Rogowski's rent was payable in advance as of the seventh day of each month. In addition, Clause 10.06 required the lessee to pay interest on all moneys due but unpaid for seven days or more at the rate of four percentum per annum to the rate fixed under Section 2(1) of the Penalty Interest Rates Act 1983 at the time that the moneys first became overdue. The calculation of the interest once it began to accrue was taken back to the date on which the moneys were originally payable. According to Clause 10.01(a) if the rent was unpaid for 14 days for any due date (without the necessity of any formal demand) the tenant was to be regarded as having repudiated the lease and the landlord would have and it should .
12. In December 2000 Ms Leinmueller who acted as Mr Bedelis' Secretary and his company's bookkeeper, delivered demands to Mr Rogowski for the payment of interest on a couple of months rental which admittedly had been paid more than seven days after the due date. There were difficulties with computation and it was only on the third attempt that Ms Leinmueller's interest invoices accorded with the lease by:
(a) proceeding on the basis that Mr Rogowski's rent was payable on the seventh of the month rather than the first of the month as stipulated in the written terms of the lease, being the date upon which the rental for Bedelis' other tenants became due; and
(b) applying the correct interest rate as a rate per annum rather than a rate per month.
13. In the course of this process it seems that Mr Rogowski had at least one telephone conversation with Ms Leinmueller and met her face to face at the gymnasium when she delivered the final version of the rental invoices.
14. Precisely what transpired in these talks is the subject of a conflict of evidence between Ms Leinmueller and Mr Rogowski. I will have more to say as to these conversations later. Suffice to say that following those conversations Mr Rogowski decided to pay the rent for the gymnasium by registered post addressed to the box number at the Pinewood Post Office.
15. The rent for January was paid by this means and without incident. The cheque was collected by Mr Bedelis or Ms Leinmueller and was banked to the credit of the landlord's account.
16. At about 3.30 a.m. on 22nd February, Mr Bedelis assisted by a locksmith and perhaps in the company of other persons, re-entered the gymnasium, changed the locks and posted a notice to the effect that Mr Rogowski's lease had been terminated for non-payment of rent. Solicitors acting for Mr Rogowski alleged that payment had been made for the month of February by registered post in the same way as had the January rent.
17. Mr Bedelis attended the Pinewood Post Office to make enquiries. It appeared that a registered envelope awaited collection by his company. When Mr Bedelis opened the envelope he discovered the rent cheque in it. In light of the assertions by the tenant's solicitors he says he carried out a search of Bedelis Investments' office including the waste paper basket. He says he found no card indicating a registered item awaited his company's collection.
18. According to Mr Rogowski he had attended the Pinewood Post Office on 9 February 2001, despatching the rent cheque by registered post. Pinewood Post Office is a so-called licensed post office, that is, it is conducted by private citizens who are not officers of Australia Post but rather operate under a sort of franchise arrangement. According to a Mr Golding, the present franchisee manager of the Pinewood Post Office, the established procedures would entail a registered item being received at the post office with the sender furnished with a receipt. The item would then be despatched to the Waverley Mail Centre, a sorting establishment operated by Australia Post itself. The following business day a registered article addressed to a private post box at Pinewood would be returned to Pinewood (collected by the licensee at the Mail Centre) and sorted to the relevant private post office box. I will have more to say about these procedures later. The 9th of February was a Friday and so the registered article returned to Pinewood Post Office on 12 February. The envelope bears a date stamp of that date. According to Mr Golding the procedure would require that a small card should be placed in the private post box telling the holder that a registered item awaited collection against his signature within the office. This process is colloquially described as "carding". According to Mr Golding, the postal regulations require that if an item remains uncollected, a further carding should take place five business days (in effect one week or seven days) after the first carding. Mr Bedelis or Ms Lienmueller deny finding any card in the Bedelis Investments' post office box stating that a registered article awaited collection. Compliance with the procedures described by Mr Golding would have required a second card to be placed in Bedelis Investments' P.O. Box on 19 February. The completion of this process would be indicated by a second date stamping of the envelope. No such stamping took place.
19. As a result of the "lock-out", solicitors for Mr Rogowski brought on an urgent application for an interlocutory injunction to restore him to possession of the premises. On 23 February by consent of the parties and subject to undertakings by Mr Rogowski of strict compliance with the terms of the lease, I made orders to that effect and gave directions for the final hearing and determination of the matter.
20. Mr Rogowski filed points of claim and then amended points of claim. Bedelis Investments filed a defence and counter claim. These pleadings raise a substantial number of issues of dispute between the parties including some not mentioned in these reasons. The final hearing was called on before me. I was advised by a Counsel for the parties that they desired me to deal at this stage only with the issues relating to the legality or otherwise of the "lock-out" of the 22nd of February.
21. The applicant's amended points of claim, aside from simply denying that the landlord had an entitlement to re-enter because the rent was paid within the 14 day period, raised further points. First (and this was common ground) upon the exercise of the option to renew for the further three year period and at the commencement of that three year period, no disclosure statement in accordance with the Schedule to the Retail Tenancies Reform Act 1998 was furnished to the tenant. The tenant contends that Section 8 of that statute required such a notice to be given. Failure to give the notice, according to the tenant, meant that there was no liability to pay any rent under the new lease. The tenant could not be in default of his obligation to pay rent because at that time no such obligation existed. Moreover, the tenant alleged that the actions of the landlord were unconscionable as contrary to the "unwritten law". The amended points of claim referred to Section 8 of the Fair Trading Act 1999. It became clear however, that the correct and intended reference was to Section 7.
22. The tenant sought a variety of relief including declarations, the re-payment of rent already paid under the renewed lease, damages for the lock-out and relief under the Fair Trading Act, the effect of which was intended to be to restore the tenant to his position as the holder as an equitable term of years in the gymnasium premises.
23. The hearing of the evidence extended over no less than four sitting days. An entire fifth day was taken up with legal submission with both sides handing up written submissions both as to their respective primary cases and by way of reply to the written case made against them. The written submissions were supplemented by further oral submissions. The submissions and evidence ranged far and wide. In the event, the disposition of this proceeding or at least that part of it which I am now asked to determine, does not require me to canvass every one of these extensive range of issues of fact and law. My failure to do so is not intended to indicate any lack of gratitude or admiration for the erudite argument which I heard.
24. The logical starting point is Section 8 of the Retail Tenancies Reform Act which requires in the circumstances described in the Section, a landlord to furnish a disclosure statement to a tenant of retail premises. It is common ground that no such notice was given. Likewise, it is common ground that if a disclosure statement were required by Section 8 and none were given, the consequence would be "the tenant is not liable to pay the rent attributable to the period before the landlord gave the tenant a copy of the disclosure statement" (Section 8(2)(a)). The effect in the present case would be that there is no rent payable at all under the renewed lease terms and there is no basis for the landlord's re-entering on the basis of non-payment of rent. The obligation to pay rent had been negated by Section 8.
25. Mr Best, Counsel for the landlord, submitted that even if by reason of the operation of Section 8 there is no rent at all payable, his client was entitled to re-enter based upon the tenant's failure to comply with the notice under Section 146 of the Property Law Act served in September 2000. This, despite the fact that the landlord after the expiry of the notice, received and banked a number of payments of rent. This submission was based upon the particular terms of the default provision found in the present lease. In the view which I take it is unnecessary to consider or express any final view on these submissions.
26. I turn then to Section 8 itself. It requires the giving of a disclosure statement "at least seven days before a prospective tenant of retail premises enters into a retail premises lease".
27. Judge Davey sitting as a Vice-President of this Tribunal considered similar circumstances in the matter of Salwa Khodr v Foo Qan Eng Holdings Pty Ltd [2000] VCAT 54. His Honour concluded that Section 8 had no application in circumstances such as these where the new lease being entered into was the exercise of an option to renew under a lease entered into prior to the commencement of the 1998 Act with respect to retail premises and hence governed by the Retail Tenancies Act 1986. At paragraph 83 His Honour said:
"The use of the language "a prospective tenant of a retail premises lease" makes it clear that the person or entity referred to is not an existing tenant in the premises but a new tenant. I am reinforced in this view having regard to the potential consequences which may result in the event that a disclosure statement is not given to a person in the position of a person in the position of a prospective tenant.
On any view an existing tenant wishing the renewal of a lease is not a prospective tenant and it would be straining the language in what I consider would be an unjustifiable way to extend the requirement of a disclosure statement to existing tenants."
28. Mr Best placed reliance upon Judge Davey's decision in Salwa Khodr.
29. Dr Croft SC who appeared with Mr D. Lloyd on behalf of the tenant, however submitted that I was not bound to follow Judge Davey's decision and that I should regard it as wrong and hold that Section 8 did apply in the present circumstances.
30. The case Antonino Guiseppina S. Ensabella and Sons v Players on Down Under Pty Ltd (2000) VConvR 54-626 raised an apparently similar issue with respect to the giving of a disclosure statement. The tenant entered into a five year lease of retail premises commencing 16 January 1994 with an option for renewal. The renewal of the lease, were it to be made, would have entailed a further five year lease commencing 16 January 1999. The original lease, like the 1995 lease in the present proceeding was governed by the Retail Tenancies Act 1986. Any new lease granted in January 1999 or commencing from that time would be governed by the Retail Tenancies Reform Act 1998 in the same manner as any renewed lease commencing in March 2000 in the present proceeding would be governed by the Retail Tenancies Reform Act 1998. Judge Davey sitting as a Vice-President of this Tribunal held that the option had been properly exercised. The landlord was claiming inter alia for arrears of rent under the renewed lease. One of the arguments relied upon by the tenant was that it was not liable for this rent because despite the delivery of two documents purporting to be disclosure statements respectively on the 31st of December 1999 and the 21st of January 1999 neither was a sufficient compliance with the statute.
31. For reasons which are not obvious, the tenant placed no reliance at all upon Section 8. It contended that the obligation to provide the disclosure statement in the circumstances described arose under Section 17 which creates an obligation on the landlord to furnish a disclosure statement where a tenant of retail premises has an option under a lease for a further term and the landlord proposes to renew a retail premises lease. Section 17(1) requires the landlord in those circumstances to furnish the disclosure statement "at least seven days before the end of the current term of the retail premises lease".
32. The Court of Appeal held that Section 17 operated only where the option to renew was contained in a retail premises lease within the meaning of the Retail Tenancies Reform Act 1998. In the case before it the option was contained in a lease governed by the 1986 Act and so Section 17 had no application. The Court placed reliance upon Section 4(1) of the 1998 Act which states:
"This Act applies to a retail premises lease that is entered into after the commencement of this Section including one entered into under an option provided under a retail premises lease that was entered into before that commencement".
The result was that whilst the renewed term in 1999 was governed by the Retail Tenancies Reform Act the 1994 lease was not. Phillip JA with whom Ormiston and Charles JJA concurred, said of the situation before the Court:
"The landlord is not renewing `a retail premises lease' to which the Act [that is the 1998 Act] applies. Because the tenant has exercised its option for renewal, the landlord is bound to renew the 1994 lease. (to which the Act [viz. the 1998 Act] does not apply); it is not renewing the 1999 lease (to which the Act does apply)." 2000 VConvR 54-626 at page 64485 paragraph 27
33. What guidance does the Ensabella decision provide in the present dispute? Since no reliance seems to have been placed on Section 8 it would be wrong to regard the Court as even implicitly having said anything directly applicable to Section 8. I was referred to a number of dictionary definitions of the word "prospective" all of which would seem to bear out the approach adopted by Judge Davey in Khodr that prospective denotes futurity and that a sitting tenant would not normally be described as a prospective tenant. Nevertheless, Dr Croft submits that in so far as Section 8(1) creates the obligation to give a disclosure statement "at least seven days before a prospective tenant of retail premises enters into a retail premises lease" the "retail premises lease" referred to must by parity of reasoning with Ensabella be a retail premises lease to which the 1998 Act apply. So much may be accepted. To conclude otherwise would be to give the 1998 Act a retrospective effect inconsistent with the ordinary canons of construction and presumptions against retrospectivity for substantive legislation and also inconsistent with the specific provisions of Clause 4(1) of the Retail Tenancies Reform Act. Dr Croft's submission continues that whilst Mr Rogowski could not in a general sense be regarded as a "prospective tenant" of the gymnasium, having been in possession since 1995, he was to be regarded as a "prospective tenant" with respect to any retail tenancies lease governed by the 1998 Act. Such a lease was coming into existence for the first time in 2000 and therefore in Dr Croft's submission both the lease and the tenant are both properly to be construed as "prospective". In contrast, Mr Best for the landlord, submitted that the reference to a retail tenancies lease in Section 8 was to be regarded as merely generic and not of the particularity that the same phrase was bound to bear by the Court of Appeal in Ensabella in Section 17.
34. Dr Croft submitted that no conclusion against the application of Section 8 to the present circumstances could be drawn on the apparent commonsense basis "why would a tenant who has been in possession of premises for five years already require any disclosure?" because it was plain but in very similar circumstances a disclosure statement was required by Section 17 upon pain of forfeiture of rent should the disclosure statement not be given. To take an example, if a lease were granted of retail premises commencing January 1999 for a term of two years with an option to renew for a further two year period the initial lease (unlike the initial lease in Ensabella) would be governed by the Retail Tenancies Reform Act. Seven days before the expiry of the retail premises lease, since the lease bestowed an option upon the tenant for a further term (Section 17(1)(a)) the landlord would be obliged to give a disclosure statement at pain of forfeiture of rent until the disclosure statement was given (Section 17(2)(b)).
35. The proper conclusion to draw is by no means clear. The issues raised by these disclosure statement sections were found to be complex even by the Court of Appeal. This is testified to by the length of the principal judgment delivered in Ensabella's case by Phillips JA. In dealing with the issue of costs [2000] VSCA 73 Ormiston JA referred to the issues in Ensabella's case as a "complex one over the proper construction of a difficult statute". The policy which appears to be evident in the Retail Tenancies Reform Act is to oblige landlords to make extensive disclosure in accordance with the form of statement set out in the Schedule not merely to tenants who are new to the premises but even to sitting tenants (see Section 17). When one goes to the scheduled form of disclosure statement, some parts of it are clearly inappropriate for sitting tenants. For instance, under the heading "lease" the landlord was required to disclose inter alia "the date on which the tenant is required to commence trading" and "the date on which the premises will be ready for handover to the tenant". Presumably where a disclosure statement is given under Section 17 as in the hypothetical example which I considered earlier, the landlord would designate these matters as "not applicable" or with some equivalent descriptor; but the fact that Parliament has seen fit to require this form of statement to be used under Section 17 where those items are clearly inapplicable, renders it impossible to reason that Parliament could not have intended the use of the same statement under Section 8 in circumstances such as those in the present proceeding where these matters would likewise be inapplicable. The Schedule has been drawn on the "one size fits all" or the "all purpose" basis rather than being specially tailored to every situation. Any approach to construction which assumes a careful tailoring therefore must be misconceived.
36. Were I coming to this mater anew, I would, on balance, be persuaded by the submissions put by Dr Croft. As it is however, there is an existing decision of the Tribunal; namely Khodr and that decision must gain additional authority from the fact that it was given by a Vice-President and a County Court Judge rather than an ordinary non-judicial member. In Anteden Pty Ltd v Glen Eira City Council [2000] VSC 366; (2000) 16 VAR 334 Balmford J was hearing an appeal from a decision of this Tribunal in its planning jurisdiction. The Tribunal had declined to follow an earlier decision on a similar point by its predecessor in the planning jurisdiction, the Administrative Appeals Tribunal. Her Honour observed:
"The Tribunal was, of course, not bound to follow the decision of the AAT, any more than a judge is bound to follow a decision of a single judge of the same court. The approach conventionally adopted by single judges, however, as a matter of judicial comity, is encapsulated in the following passage in the judgment of Blackburn CJ of the Supreme Court of the Australian Capital Territory in Zotovic v Dobel Boat Hire Pty Ltd (1985) 62 ACTR 29 @ 32:
As a Judge of this Court I should follow a decision of another Judge of the Court unless there is a clear reason for not following it. In this case I find no such clear reason. It is not part of a Judge's function to give effect to his sympathy with the plaintiff by altering the law on the ground that decisions more favourable to plaintiffs had been given elsewhere in Australia, under corresponding but not identical legislation. ...
The AAT was the predecessor of the Tribunal, with a similar jurisdiction under the Act, and for this purpose can be regarded as the same Tribunal. Given the wide jurisdiction of the Tribunal in planning matters, there would be many cases where the circumstances were such as to give room for a divergence of views between differently constituted Tribunals. However, the issue in question is indubitably a matter of law, as to which different considerations apply from those in planning matters. Further, the AAT in Chasers Cabaret was presided over by this His Honour Judge Fagan, giving greater weight to the decision on that question of law, and I note that on the hearing of the matter each party was represented by senior and junior counsel. The comment of the Tribunal ... courteously expressed though it is, is not in my view sufficient explanation of the failure of the Tribunal to follow that decision, given the obvious desirability of consistency in Tribunal decisions in matters such as that in issue here." [2000] VSC 366; (2000) 16 VAR 334, 343-4
37. Her Honour's observations are obviously apposite to the situation which confronts me. For the reasons given by Her Honour I believe that unless and until the Supreme Court or the Court of Appeal expresses a contrary view, members of this Tribunal should apply the reasoning of Judge Davey in Khodr's case.
38. In the result therefore, there was no obligation in the present circumstances to provide a disclosure statement and the lack of a disclosure statement is no answer to any failure to pay rent at all or on time which may have occurred.
39. Dr Croft submitted that since Mr Bedelis had moved out of the nearby liquor store which had been the point of payment for rental until June 2000 the dispatch of the document headed "New details" constituted a "designation" for the purposes of the rental covenants in the lease of the post office box as the point for the payment of rent. Accordingly Dr Croft submitted that when Mr Rogowski despatched the rental cheque by registered post on 9 February he was acting in compliance with the terms of the lease. He said that the course of conduct after June 2000 employing the postal service to pay the rent "combined with the new details notice, constituted a collateral agreement between the parties regarding the method of payment of rental under the lease". Further, he submitted that in any event the landlord was estopped from contending otherwise. He referred to Walton Stores (Interstate) Limited v Maher (1988) 164 CLR 388, 428. Mr Best submitted that no estoppel argument should be admitted because none had been pleaded and the estoppel issue was raised for the first time in final submissions.
"It is submitted further that whilst the method of payment of rent is ordinarily at the risk of the tenant, the risk shifts to the landlord where the landlord authorised or accepted a particular method of payment."
41. He referred to Beevers v Mason (1978) 248 EG 781; Luttenberg v North Thorsby Farms Limited [1992] EGLR 261; Happy Century Pty Ltd v Nesbill Pty Ltd (2000) VConvR 546; Trayan Drilling Co Pty Ltd v Nickel Mines Limited [1972] Qd R 330.
42. According to Dr Croft there is no reason for the purposes of these principles to distinguish between ordinary post and registered post. He distinguished my own decision in Happy Century Pty Ltd on the basis that the inconveniences of registered post to which I have earlier referred (where the registered item is delivered to a private address occupied by a creditor and the creditor is at work he must at some later time arrange a visit in person to a local post office which may be remote from his daily activities) would not arise here. The evidence of Mr Bedelis, the Principal of the landlord and office secretary Ms Leinmueller was that the post office box at Pinewood Post Office was cleared daily at about 9.30 a.m. According to Mr Golding the present licensee of the office a person seeking a registered mail item who has had notice of its existence "carded" into his private box needs only to enter the office during business hours and receive the item against his signature. Dr Croft submitted that it was sufficient compliance with Mr Rogowski's rental obligations in the circumstances if he despatched the rental cheque by post during the "period of grace" of 14 days under Clause 10.01. So long as the cheque was ultimately honoured the rent was deemed to be paid on time. He referred to Beevers v Mason; Official Solicitor v Thomas [1986] 2 EGLR 1 and Lo Giudice v Bibiano (No. 2) [1962] VicRp 61; [1962] VR 420, 422.
43. According to Dr Croft, in the circumstances Australia Post should be regarded as the landlord's agent. Any delays "resulting from an arrangement between the post office and the respondent regarding the collection of mail [were] not a matter which should impact upon the applicant". He referred to Ronay Investments Pty Ltd v Pinnacle VRB Limited [2000] VSC 333; (2000) 35 ACSR 247.
44. Since I have recently examined the law as to payment of rent by post at some length in Happy Century Pty Ltd v Nesville (2000) VConvR 58-546 at paragraphs 39 to 54 I will not retrace all those steps or go over the authorities to which I have earlier referred. What I concluded was that as Dr Croft correctly submits, the basic rule that a debtor (including a tenant) must seek out his creditor (including a landlord) and is not regarded as having paid the rent unless the remittance actually arrives in the landlord's possession. The risk of non-arrival may be shifted to the tenant if a particular mode of dispatch is approved by the landlord, for instance via the postal system.
45. I concluded that in so far as Beevers' case entailed a decision by the English Court of Appeal that the mere fact that payment of rent had been made by post over many years constituted an agreement by the landlord that this mode of dispatch was acceptable and that therefore the use of the post was at the landlord's risk, that decision did not seem to be supported either by the earlier English cases or by the Australian authorities notably D. & J. Fowler Limited v French [1914] SALawRp 19; [1914] SALR 254 and Acraman v South Australian Gas Company [1910] SALawRp 7; [1910] SALR 59. Dr Croft says that Beevers' case does not stand alone but has been applied at least twice in Luttenberger v North Thorsby Farms Limited [1993] 1 EGLR 3 and by Official Solicitor v Thomas [1986] 2 EGLR 1. In Luttenberger's case Ferris J. sitting in the Chancery Division distinguished Beevers' case because the cheque which was posted could not have been paid as at the time it was posted because it had only one rather than the two signatures which the account arrangements require. In Official Solicitor v Thomas [1986] 2 EGLR 1 the Court of Appeal also distinguished Beevers' case. The landlord had received two cheques for the payment of rent but refrained from banking them. At that stage the landlord was seeking to act upon a notice terminating the agricultural tenancy which would have been waived had the rent been accepted. The Notice to Quit was subsequently held to be ineffective and the two unpresented cheques being stale, the landlord demanded payment for the rent. The tenant's contention was that based upon Beevers' case, once the cheques had come into the landlord's possession, whether presented for payment or not the rent was conclusively deemed to have been paid. The Court rejected this contention saying that it failed to distinguish between tender and payment.
46. It will be seen that neither of these authorities takes the matter any further. In Luttenberger's case Ferris J. as a Judge of the High Court sitting at first instance was bound by Beevers' case in any event.
47. Nor do I believe that Ronay Investments Pty Ltd v Pinnacle VRB [2000] VSC 333; (2000) 35 ACSR 247 takes the matter further. It was concerned with allotment of shares under a prospectus not the payment of regular debts such as rental. The prospectus required the cheques for the application moneys to be despatched to Computer Share Registry Services Pty Ltd, Level 12, 565 Bourke Street, Melbourne, by 5.00 p.m. on 6 December 1999. The plaintiffs employed the Australia Post service "express post". The evidence was that this would have led, other things being equal, to the subscription moneys arriving at the Share Registry before the deadline. As it turned out, the arrangements that Computer Share had with Australia Post meant that these items were placed in its GPO Box and were not received until after the deadline. Hedigan J. found that it was only this arrangement which led to the moneys not arriving on time. There is no allegation here that any arrangement between the landlord and Australia Post had the effect of delaying the arrival of the cheque for the February rent beyond what Mr Rogowski could reasonably have expected in the circumstances.
48. The first question is, did the events of June 2000 or anything that happened subsequently, amount to an authorisation for the tenant to use the post to pay the rent? The mere fact that the rent was paid by post for a number of months does not to my mind, despite Beevers' case, constitute an authorisation. The "new details" given to the tenant include a postal address viz. a private post box at the local post office but no physical address.
49. The applicant's amended statement of claim included an allegation that the landlord had requested the tenant to pay the rent by registered post. Mr Rogowski swore two affidavits and was cross-examined at extreme lengths by Counsel for the landlord Mr Best. Ultimately no clear account of what occurred emerged. Mr Rogowski was unclear as to whether he or Ms Leinmueller first mentioned the issue of registered post or whether this discussion took place by telephone or "face to face" when Ms Leinmueller delivered substitute invoices for overdue interest. Ms Leinmueller said that she told Mr Rogowski that the use of registered post was "not necessary". She offered to collect the rent herself.
50. In his final submissions Dr Croft submitted no more than that I should conclude that the issue of the use of registered post was raised with Ms Leinmueller and that apart from saying that it was "not necessary" she did not distinctly seek to prohibit its use.
51. The landlord's pleaded case was that whatever Ms Leinmueller might or might not have said as a mere secretary bookkeeper she had no authority to give any directions in these leasing matters.
52. There can be an element of confusion and unclarity in asking the question "did the landlord authorise" a particular mode of delivery of rent? The landlord has an entitlement to be paid the rent but as long as the rent arrives the landlord does not control the mode of its delivery. From the landlord's point of view, unless some form of delivery creates a nuisance at his premises, it is a matter of indifference whether the rent is delivered in an envelope by a postal officer; by the tenant in person or by a bicycle courier in a lurex bodysuit. If the landlord requests a particular mode of delivery then he cannot complain if that mode of delivery goes wrong. When Ms Leinmueller, whatever authority she did or did not have, merely suggested that registered post was not necessary, she was doing no more than acting in compliance with the undoubted reality that it did not matter how the rent was delivered as long as it in fact arrived.
53. Moreover, all of these discussions and debates are overshadowed by a sense of unreality. Mr Bedelis' office was some 40m away from the gymnasium. Mr Rogowski admitted that he had had discussions with Mr Bedelis prior to June 2000 in that office. Moreover, throughout the relevant period he had seen Mr Bedelis in a ground floor coffee shop in the centre. Mr Rogowski said he felt that perhaps Mr Bedelis had severed all links and closed all offices in the centre once his company sold the liquor emporium but Mr Rogowski said that he was surprised at the speed with which Ms Leinmueller was able to arrive in the gymnasium after their telephone conversation. All of these things indicate that whatever his denials might have been Mr Rogowski well knew that Bedelis Investments had an office in the centre. Indeed he described Ms Leinmueller as having "come down" in December, indicating an awareness of where the office was. His explanation for using registered post was that he wanted to have an official receipt to indicate the time of dispatch of the rent. Mr Golding's evidence shows that that rent then had to travel to the Waverley Mail Centre, be sorted and then collected by the licensee of the Pinewood Post Office. As the arrangements existed in February, this had to be done no earlier than 7.30 a.m. From March onwards when Mr Golding took over, the collection could not be made before 8.00 a.m. Sorting had to be completed by the time the office opened at 8.30 a.m. because people could only enter the office after a card display which secured the rear of the private boxes had been moved so as to block access to the boxes and open the way for the door to the street. The post office is in Blackburn Road more than twice as far from the gymnasium as Mr Bedelis' office. The registered item then had to be held at the office with the landlord's representative being alerted to its presence by a card in the private post box. Why this elaborate and inconvenient arrangement involving a significant postal charge was adopted by Mr Rogowski rather than the simple expedient offered by Ms Leinmueller, namely that she would collect the rent in person, must remain something of a mystery. One can only think that there was an element of "posturing" involved. Evidently there had been bitter disputes between landlord and tenant particularly at the time of active renovations in late 1999.
54. There was nothing to suggest that the details of the arrangements in the Pinewood Post Office or the details of the operation in Mr Bedelis' office were matters mutually known to landlord and tenant. In those circumstances though I will accept for the purposes of the argument that the landlord by the issue of the "new details" in or about June 2000 was to be regarded as having authorised the use of postal services to pay the rent, I remain of the view that that authorisation, if it is to be regarded as having been given in the circumstances would not extend to the use of registered post. Registered post entail an additional layer of formality and difficulty which the landlord may accept as a practical means of receiving the rent but which cannot be imposed upon the landlord unless the landlord distinctly agrees. If the additional complexity of registered post lead to non-receipt of the rent if the landlord has not specifically authorised and agreed to the use of registered post (which I find to be the situation here), then the risk associated with the non-delivery must remain with the tenant.
55. Dr Croft did not suggest that Mr Leinmueller or Mr Bedelis or both of them had received notice of the registered item awaiting their company in February and deliberately abstained from collecting it with the view to "setting up" an event of default and an entitlement to re-enter. His suggestion was that a card was likely placed in the Bedelis Investments' private post box on 12 February and mislaid or not noticed by Mr Bedelis or Ms Leinmueller.
56. If as is clearly the case the tenant has the obligation of delivering the rent to the landlord, the tenant would appear to have no grounds for complaint if the rent failed to arrive because the landlord declined to reverse the roles and enter the post office to sign for a registered item (unless the landlord had agreed to the use of registered post). The situation would be a fortiori if the registered item remained uncollected because the landlord received no notice of its presence. There was no evidence from the licensee who conducted the Pinewood Post Office in February. Dr Croft said that according to his instructors that person could not be located. Mr Best did not invite me to draw any inferences from the absence of the licensee holding office at the relevant time. The envelope which contained the February rent shows a date stamp on the 12th of February. Conformably with the system which should have operated in the office, a card notifying the existence of the registered item should have been placed in Bedelis Investments' private box. Mr Bedelis and Ms Leinmueller said they found no such card and a search of their office disclosed no such card. I accept their evidence. That something went astray with the delivery of this item is testified by the fact that the absence of any stamp on the 19th of February shows that the item was not "carded" a second time as the postal rules would have required.
57. It was not disputed that whilst the cheque remained in the Pinewood Post Office it was in the custody of Australia Post and its licensee and not in the custody or possession of Bedelis Investments.
58. In my view therefore it was a default in payment of the February rent which persisted for more than 14 days.
59. Section 7 of the Fair Trading Act 1999 provides:
"A person must not, in trade or commerce, engage in conduct which is unconscionable, within the meaning of the unwritten law, from time to time."
"It would be unconscionable for the respondent to enforce its right of re-entry under Clause 10.1 of the lease, on the basis that:
(a) no prior notice or warning of the re-entry was given;
(b) the history of rental payments by the applicant shows that no rental payments were made within the 14 day `period of grace' and later payments did not attract any re-entry or threat of re-entry;
(c) the re-entry on 22 February 2001 took place covertly some three hours after the end of the 14 day `period of grace';
(d) it was conceded in evidence that the respondent's intention in re-entering the premises was to force the applicant to pay money other than rent allegedly owing by the applicant to the respondent;
(e) even though the respondent clearly had made arrangements on 21 February 2001 for the re-entry, no effort was made by the respondent after mid-morning on that day to check whether the rental payment had been received at Pinewood Post Office (and it is clear from the evidence of Mr Bedelis and also Ms Leinmueller that both had no knowledge of the mail sorting/delivery times to the Pinewood Post Office).
(f) in any event, the applicant was entitled to post the rental cheque on 21 February and no attempt was made to ascertain whether this had occurred (and, in the event, the rent cheque reached the respondent's hands on 22 February 2001 which was the best one could expect of the ordinary course of the post for a letter posted on 21 February 2001);
(g) enforcement of the re-entry would involve a total loss of the applicant's business and livelihood; and the money spent on fitting out the premises, and would expose the applicant for a breach of the gymnasium membership contracts."
61. Dr Croft referred to and relied upon the following decisions: Cameron v Qantas Airways Ltd [1995] FCA 1304; (1994) 55 FCR 147, 177 and following; ACCC v C.G. Berbatis Holdings Pty Ltd [2000] FCA 2; (2000) 169 ALR 324, 326 and following; ACCC v Simply No-nead (Franchise) Pty Ltd [2000] FCR 1365 at 13 and following; Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457, 459; Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422, 431-2 and Torrance v Boulton (1872) LR 8 Ch App 118, 124.
62. The reference in Section 7 to the "unwritten law" is on its face quite obscure. The text of Section 7 derives from Section 51AA of the Trade Practices Act 1974 of the Commonwealth of Australia. In Australian Competition and Consumer Commission v C.G. Berbatis Holdings Pty Ltd [2000] FCA 2; (2000) 169 ALR 324 French J. of the Federal Court of Australia considered the purport of the expression in the Trade Practices Act. His Honour remarked:
"The statutory formula in S.51AA, referring to the unwritten law of the States and Territories from time to time, must be taken to be the Common Law of Australia."
63. His Honour then considered a miscellany of doctrines relative to unconscionable conduct including a large number of decisions of the High Court of Australia dealing with situations as diverse as undue influence; unconscientious conduct; relief against forfeiture and so on. At paragraph 20 of his judgment he concluded:
"It may be seen from the preceding that the concept of unconscionable conduct `within the meaning of the unwritten law' is presently confined in its operation by reference to specific doctrines. Nevertheless the cases indicate that its use is a matter of taxonomy which may be subject to substantial change." [2000] FCA 2; (2000) 169 ALR 324, 334
64. The lengthy list of cases relied upon by Dr Croft represent particular examples of the specific doctrines which were examined by French J. Despite His Honour's prediction as to the future development of the concept of unconscionable conduct within the meaning of the unwritten law, for the moment it is proper to analyse the matter in accordance with previously existing doctrines and categories. Most of the authorities which Dr Croft relied upon related to transactions which were unconscientiously procured. I requested him to refer me to an example of unconscionable conduct in connection with the enforcement of rights under a contract. The sole authority to which he referred me was Torrance v Boulton (1872) LR 7 Ch App 118. This case concerned the rescission of a contract of sale on the basis that the description of the property in the particulars of sale was misleading. Once again, as it seems to me, that case relates to the formation of the contract and not to the enforcement of terms in the contract which are not themselves attacked as being unconscionable. Dr Croft specifically disclaimed any attack on any of the terms of the lease as being unconscionable.
65. One might refer to two high Court decisions that are themselves dealt with in the analysis by French J. in the Berbatis case. In Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489 the High Court by majority held that a purchaser under a terms contract of sale should be granted relief against the forfeiture of the purchaser's interest in the land. Deane and Dawson JJ, two of the majority reached their conclusion on the basis that the reservation of title to the land was adopted as a financing arrangement and in those circumstances it was unconscionable for the vendors to insist upon their strict contractual rights. Gaudron J. concluded that it is unconscionable for the vendors to terminate the contract and forfeit the purchaser's interest in the land rather than obtain a decree of specific performance which would secure all that had been contracted for. In Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406 a majority of the Court, Gibbs CJ, Mason, Murphy and Deane JJ with Brennan J. dissenting held that a court had jurisdiction to relieve a defaulting purchaser against forfeiture of his interest in land even where he had failed to comply with the condition of which time was of the essence. French J. in Berbatis' case said:
"Section 51AA [the equivalent of Section 7 of the Fair Trading Act 1999] prohibits corporations from engaging in conduct which is unconscionable within the meaning of the Common Law of Australia. The meaning of the term is found in the dictionary. Its meaning is not altered by the unwritten law. What the unwritten law does presently is to confine its operation to certain classes of case. The reference in S.51AA to the `meaning of the unwritten law" is a reference to the classes of cases in which the unwritten law will award remedies for unconscionable conduct assessed by the Court. There was no distinct rule which defines such conduct the description embodied in the word `unconscionable' ultimately refers to the normative characterisation of conduct by a Judge having jurisdiction in the relevant class of case. On this basis therefore, and in the sense described, the rules governing the relevant application of the term `unconscionable conduct' and therefore the application of S.51AA are judge-made rules that can change from time to time." [2000] FCA 2; (2000) 169 ALR 324, 336 at paragraph [26]
"There is no rule of equity which prohibits unconscionable conduct. Rather there are remedies available to relieve against or prevent such conduct in certain classes of case. The Act however, creates a prohibition. What then does it prohibit? It prohibits conduct in respect of which a judge in equity would have been prepared to grant relief. The imposition of a prohibition proceeds any actual or notional judicial decision. The Judge deciding a case under S.51AA will be asking himself or herself whether he or she would have been prepared to grant relief in equity on the basis of an assessment of the conduct in question as unconscionable." [2000] FCA 2; (2000) 169 ALR 324, 342 at paragraph [42]
67. Does this mean that the prohibition in Section 7 of the Fair Trading Act is offended in every case in which ultimately the Supreme Court would be willing to grant relief against forfeiture to the tenant? That seems to be the logical consequence of the reasoning of French J. in the Berbartis case and in his references to Legione v Hateley and Stern v McArthur. Does this mean that so long as adequate remedial power can be found in the Fair Trading Act 1999 (I will come to consider the effect of the remedies later) that this Tribunal would be able to take over the role of the Courts in awarding relief against forfeiture to tenants in commercial tenancy disputes which fall within the definition of fair trading disputes in Section 107 of the Fair Trading Act? In my view it does not. The usual order made by the Supreme Court in granting relief against forfeiture, aside from ensuring that all breaches of covenant have been remedied is to require that the tenant or other person relieved pays the cost of the proceeding. See for instance the form of order made by Ormiston J. (as he then was) in Jam Factory v Sunny Paradise [1989] VicRp 54; [1989] VR 584, 592. There are of course exceptions. For recent examples see Lay v Alliswell Pty Ltd [2000] VSC 201. The assumption underlying the usual costs order is that the tenant or other party relieved is at fault and should pay the costs of the innocent part incurred in obtaining an indulgence from the Court. To the best of my knowledge this rule as to costs is not enforced in applications such as those considered in Stern v McArthur and Legione and Hateley. Whatever is the correct approach to the operation of Section 7 with respect to those sorts of forfeitures, I am clear in my mind that save perhaps for instances such as Lay v Alliswell a court granting relief against forfeiture does not characterise the respondent or defendant landlord as having acted unconscionably. If the court did so characterise it would make a costs order such as was made in Lay v Alliswell. It may be that the Tribunal could in circumstances where it felt that a landlord had acted not only vigorously in enforcement of his, her or its rights but unconscientiously might make orders to relieve against the unconscionable conduct.
68. In Cameron v Qantas Airways Ltd [1995] FCA 1304; (1994) 55 FCR 147, 179-81 Beaumont J. of the Federal Court of Australia held that conduct to qualify as unconscionable must be clearly unfair or unreasonable.
69. I will now turn to the various considerations relied upon by Dr Croft as indicating unconscionability. They were as follows:
"(a) no prior notice or warning of the re-entry was given;
(b) the history of rental payments by the applicant shows that no rental payments were made within the 14 day `period of grace' and later payments did not attract any re-entry or threat of re-entry;
(c) the re-entry on 22 February 2001 took place covertly some three hours after the end of the 14 day `period of grace';
(d) it was conceded in evidence that the respondent's intention in re-entering the premises was to force the applicant to pay money other than rent allegedly owing by the applicant to the respondent;
(e) even though the respondent clearly had made arrangements on 21 February 2001 for the re-entry, no effort was made by the respondent after mid-morning on that day to check whether the rental payment had been received at Pinewood Post Office (and it is clear from the evidence of Mr Bedelis and also Ms Leinmueller that both had no knowledge of the mail sorting/delivery times to the Pinewood Post Office).
(f) in any event, the applicant was entitled to post the rental cheque on 21 February and no attempt was made to ascertain whether this had occurred (and, in the event, the rent cheque reached the respondent's hands on 22 February 2001 which was the best one could expect of the ordinary course of the post for a letter posted on 21 February 2001);
(g) enforcement of the re-entry would involve a total loss of the applicant's business and livelihood; and the money spent on fitting out the premises, and would expose the applicant for a breach of the gymnasium membership contracts."
(a) The failure to give notice of the re-entry. Mr Bedelis said that the re-entry was made without notice to avoid physical confrontation. This was also the reason for the selection of the time of 3.30 a.m. The lease specifically authorises the making of re-entries in these circumstances without notice and I cannot see that what was done was clearly wrong.
(b) It is said that the rental payments were mostly made within the 14 day period of grace and late payments would not attract any re-entry or threat of re-entry. First, I believe that to characterise the 14 days as a "period of grace" is inaccurate. It is obvious that the view taken by Mr Rogowski was that he did not have to pay rent on the 7th, rather he had to pay rent within 14 days after the 7th of each month. Given the provision which commences default interest accruing after seven days I do not believe that this was a proper appreciation on his part of his obligations under the lease nor is it the fact that the late payments were received without complaint by the landlord. A number, though relatively a small number of written complaints were made. The levying of the default interest in late 2000 was clearly a manifestation of the landlord's dissatisfaction with the late payment. In this regard one must contrast the situation with the one considered by Beach J,. in the Alliswell case where His Honour found as a fact that the landlord had specifically acquiesced in late payments of rent.
(c) True it is that the re-entry took place covertly and only three and a half hours after the right of re-entry became exercisable. One would have thought that there should be some "tolerance" yet the so called period of grace of 14 days already supplied that tolerance. Once that time was up it is difficult to postulate what further period should have been allowed to elapse so as to render the re-entry "conscionable".
(d) I do not believe that the fact that the landlord was seeking to pressure Mr Rogowski to pay the land tax which he had deducted from rental payment renders his action unconscionable. First, according to the pleadings Mr Rogowski's liability to pay the land tax is not now contested. Whilst there might be some debate about a portion if anyone has acted unconscionably with respect to the land tax it is Mr Rogowski. Moreover, it would not generally seem to be an objection to the exercise of a power by a landlord that it has some "ulterior motive". See Australian Mutual Provident Society v 400 St Kilda Road Pty Ltd [1991] VicRp 80; [1991] 2 VR 417.
(e) It is true that Mr Bedelis did not make further investigations after the private post box was cleared on the morning of 21st February. The evidence of Mr Golding showed however that no further items would have been sorted into the box at that stage since no further sorting took place after 8.30 a.m. As I understood Ms Leinmueller's evidence, she had some acquaintance with the sorting practices at the Pinewood Post Office. She said that when she cleared the box there was a sign "mail sorted". She could not however exclude the possibility that further mail might be delivered later in the afternoon. Of course in fact no such thing occurred. Since the enforcement of legal rights is judged objectively and a party exercising the right is able to rely upon a matter justifying the exercise of the right even if he or she is unaware of it at the time the decision was taken and the right exercise. See Nund v McWaters [1982] VicRp 60; [1982] VR 575. I am unable to see how these matters can amount to unconscionability.
(f) I have already rejected the premise that the applicant "was entitled to post the rental cheque on 21 February" at least by registered post. In fact the rent did not reach the landlord by the stipulated time. To determine this matter based on what might have been done would be inconsistent with Nund v McWaters.
(g) Enforcement of the re-entry would appear to involve a total loss of the applicant's business. Nevertheless nothing that is determined here in the Tribunal can deprive Mr Rogowski of the right to approach the Supreme Court for relief against forfeiture should the Tribunal determine that the re-entry was lawful. No doubt in considering his application the Court will have regard to the effect that an unreversed forfeiture would have upon him. Dr Croft submitted that his client could obtain relief equivalent to relief against forfeiture under Section 158 of the Fair Trading Act specifically under Sections 158(2)(c) by way of an order that the re-entry provision of the lease not be enforced. The relevant paragraph is in the following terms:
"(c) An order that all or any of the provisions in the contract are not to be enforced."
or else under paragraph (g) of the sub-section which is in the following terms:
"(g) An order that the defendants supply services required to be supplied under the contract or agreement to the injured person."
Services are defined in Section 3 to include interests in property and supply is defined to include grant. It is unnecessary for me to consider the availability of these remedies further because according to sub-section (3) of Section 158 those orders can be made only if "a party to the proceedings has contravened the provisions of this Act". The findings that I have made as to unconscionability negative that in the present proceeding.
70. It follows that as to the range of issues argued before me at the recent hearings, I have resolved the matters in favour of the respondent and declined to make findings or grant relief in favour of the applicant.
71. In the circumstances I will publish these reasons and adjourn the matter to hear further submissions as to what further steps need to be taken in the proceeding.
Janusz Rogowski
Bedelis Investments [2001] VCAT 1130
(2000) 169 ALR 324
(1998) 194 CLR 457
(1988) 164 CLR 388
(1994) 55 FCR 147
(1983) 151 CLR 422
(1988) 165 CLR 489
(1983) 152 CLR 406
Tribunal found no obligation under s 8 Retail Tenancies Reform Act to provide a disclosure statement to this tenant; held the landlord's authorisation of ordinary postal payment did not extend to registered post; the February cheque remained uncollected and rent was unpaid for over 14 days; re-entry was lawful and conduct was not unconscionable under s 7 Fair Trading Act 1999; matter adjourned to directions; costs reserved (see [38], [54]-[58], [69]-[71]).