The appellant in this appeal (Ms Le) was the applicant in proceedings against three parties in the Consumer and Commercial Division of the Tribunal. On 26 July 2011 Ms Le entered into a contract to purchase a property at Redfern. The purchase was completed on 15 January 2014. As described in the decision under appeal, the property "consisted of a combined retail premises downstairs and a residential flat upstairs, not formally separated".
The respondent to this appeal, Mr Gallego, entered into occupation of the property (or part of the property) on 13 April 2013, that is before completion of the sale to Ms Le.
The second and third respondents to the original application were the vendor, Mr Bytago and the vendor's agent, Mr Go. No orders were made against them and they are not parties to the appeal.
Without formally making an order, the Tribunal stated at paragraph 27 of the decision under appeal that it could not find any obligation by Mr Bytago to pay any money to Ms Le, nor was there any relationship between Ms Le and Mr Go, so that the claim against the second and third respondents should be dismissed.
It is not in dispute that on 24 February 2014 Mr Gallego entered into a residential tenancy agreement with Ms Le in respect of the residential portion of the premises.
Ms Le asserts that prior to that date Mr Gallego had been in occupation of the entire premises and was liable to Ms Le for rent in respect of the premises from 15 January 2014, the date Ms Le acquired ownership of the premises, until 23 February 2014.
Ms Le also sought orders in relation to moneys that were said to have been paid by Mr Gallego to the former owner by way of bond.
The Tribunal determined that Ms Le had not established that prior to 24 February 2014 Mr Gallego had entered into a lease or agreement to lease either the commercial or the residential parts of the premises, with Ms Le or with the previous owner. The Tribunal Member dismissed Ms Le's claim against Mr Gallego for rent and made no order in respect of the moneys that had been paid to the previous owner. The Tribunal ordered Mr Gallego to pay Ms Le a rental bond in respect of the residential part of the premises in the amount of $1,600.00 being four weeks rent.
It appears that that money has been paid and no issue concerning that order is raised by the appeal.
By her Notice of Appeal Ms Le sought orders:
1. For the payment of rent for the period 14 January to 24 February 2014 in the amount of $5,265 or alternatively $4,592.25;
2. For compensation in respect of a fire door and a vanity which Ms Le alleges had been removed from the premises or otherwise lost by Mr Gallego.
At the hearing of the appeal Mr Owens, solicitor for Ms Le, acknowledged that the second order sought had not been one that was pursued in the proceedings under appeal and he did not press any claim for such an order in the appeal.
At the hearing of the appeal Mr Gallego was represented by Mr Papadopoulos as agent for Ms Koh of KL International Lawyers who was sitting beside him at the bar table. Mr Gallego was at the back of the hearing room with an interpreter.
Pursuant to s80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) Ms Le may appeal as of right on a question of law and with the leave of the Appeal Panel on other grounds.
As this appeal is brought from a decision of the Consumer and Commercial Division of the Tribunal, by virtue of clause 12(1) of Schedule 4 to the Civil and Administrative Tribunal Act, leave to appeal may only be granted under s80(2)(b):
If the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because:
(a) the decision of the Tribunal under appeal was not fair and equitable, or
(b) the decision of the Tribunal under appeal was against the weight of evidence, or
(c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
In Collins v Urban [2014] NSWCATAP 17 the meaning of "substantial miscarriage of justice" was summarized at [71] and [79] as follows:
"[71]. . . [I]t can be seen that the concept of a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred. . . .
[79] In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result . . . it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred."
The principles to be applied by an Appeal Panel in determining whether or not leave to appeal should be granted are set out in the decision of the Appeal Panel in Collins v Urban at [84]:
"The general principles derived from these cases can be summarised as follows:
(1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45];
(2) Ordinarily it is appropriate to grant leave to appeal only in matters that involve:
(a) issues of principle;
(b) questions of public importance or matters of administration or policy which might have general application; or
(c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand;
(d) a factual error that was unreasonably arrived at and clearly mistaken; or
(e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed."
Mr Owens accepted that no question of law was raised by the appeal and that the appeal had to proceed by way of application for leave to appeal.
Ms Le sought leave to appeal on each of the grounds listed in clause 12 of Schedule 4, that is, that the decision was not fair and equitable, that the decision was against the weight of the evidence and that significant new evidence is now available that was not reasonably available at the time of the initial decision.
The "new evidence" relied upon comprises an email from Mr Gallego to Ms Le dated 14 January 2014, attaching additional proposed terms for a residential tenancy agreement and other documents, and an email from Mr Nick Cheun, solicitor, apparently acting on behalf of Mr Gallego, to Citystruct Real Estate, Ms Le's property manager, dated 7 February 2014.
Mr Owens stated that this material had been tendered at the hearing of residential tenancy proceedings between Ms Le and Mr Gallego and that Ms Le assumed that it would have been before the Tribunal in the retail tenancy proceedings as well.
The Tribunal decision and the documents put forward on the appeal establish the following chronology from which the background to the original application and appeal will become apparent.
On 26 July 2011 Ms Le purchased the Redfern premises from Mr Bytago subject to a lease expiring on 30 June 2012.
On 13 April 2013 Mr Gallego entered into occupation of the whole or part of the premises and paid Mr Go on behalf of Mr Bytago the sum of $3,000. Mr Go signed a receipt which stated:
"Received from Walther Gallego the sum of $3,000. Being for deposit for Commercial Lease of Property *** Redfern 2016. Subject to final agreement it's a Refundable Deposit".
In the course of 2013, negotiations concerning a lease by Mr Bytago to Mr Gallego or his company, La Finca Restaurant, which was incorporated on 1 July 2013, were undertaken between Mr Gallego and Mr Go. At some point a document referred to by the Tribunal Member as "Heads of Agreement" was provided to Mr Gallego. That document in fact is a form of offer of terms for a lease over the premises which was expressly stated to be "subject to lessor's approval and lease contract".
At some point Mr Bytago or his representatives prepared a form of lease over the premises between Mr Bytago as lessor and La Finca Restaurant Pty Ltd as lessee.
On 15 October 2013 Ms Le lodged a caveat over the property.
On 15 January 2014 Ms Le settled the purchase of the premises. On the same day, Eric Fung & Co, solicitors for Ms Le, sent a letter to "the Tenant(s)", at the address of the property, directing payment of "all future rents" to Ms Le or at her direction.
On 21 February 2014 residential tenancy proceedings brought by Ms Le against Mr Gallego were dismissed on the basis that the Tribunal did not have jurisdiction.
On 24 February 2014 Ms Le and Mr Gallego entered into a residential tenancy agreement in respect of the residential part of the property.
On 26 February 2014 Ms Le entered into a retail lease of the commercial part of the property to a third party.
The proceedings below were, apparently with the agreement of the parties, determined on the papers, that is without formal hearing.
Ms Le's case (on the appeal as below) hinges upon the question whether Mr Gallego entered into a lease with Mr Bytago (Ms Le's predecessor in title) with respect to the whole or part of the premises.
Apart from the documentary evidence referred to above, Mr Gallego provided an affidavit stating (as summarised by the Tribunal Member in the decision under appeal) "that he never used the downstairs retail premises of the property, he never opened a restaurant in the property, he never signed a retail lease with the applicant and he does not owe the applicant any money".
It was apparent from the documents which the appellant sought to tender by way of new evidence that Mr Gallego had asserted that he had been undertaking a substantial renovation of the premises and had incurred costs in respect of which he was entitled to reimbursement or set off against any obligation to pay rent for the premises.
Although it was not before us on the hearing of the appeal, Ms Le also tendered a building report which indicated that the works completed by Mr Gallego by way of renovation of the premises were not carried out in a tradesmanlike manner and that the bathroom of the residential flat may have to be completely rebuilt.
Ms Le's case, before the Tribunal and on the appeal, relied on the provisions of s8 of the Retail Leases Act 1994 (NSW) which is as follows:
For the purposes of this Act, a retail shop lease is considered to have been entered into when a person enters into possession of the retail shop as lessee under the lease or begins to pay rent as lessee under the lease (whichever happens first).
(2) However, if both parties execute the lease before the lessee enters into possession under the lease or begins to pay rent under the lease, the lease is considered.
Ms Le also relied upon the decision of Pembroke J in Streat v Fantastic Holdings [2011] NSWSC 1097 as authority for the proposition that the question whether parties are bound to a lease in the absence of a written document is:
"resolved by ascertaining the objective intention of the parties as to disclosed in the correspondence and communications viewed in the light of the subject matter and the surrounding circumstances" (at [11]).
That proposition is not controversial. The issue before the Tribunal was whether the "objective intention of the parties as disclosed in their correspondence and communications" indicated that Mr Gallego and the former owner, Mr Bytago, had entered into a lease.
Both at common law (or more precisely in equity) and pursuant to the Retail Leases Act, a lease may come into effect when a person enters into occupation of premises regardless that no written lease has been executed. However the mere entry into occupation is not sufficient, it is necessary that, viewed objectively, the parties have manifested an intention to enter into a lease.
The Tribunal Member determined that, on the evidence, no lease between Mr Gallego and Mr Bytago either of the commercial area or of the residential area had come into effect. The Tribunal Member expressed his reasons for that finding in paragraph 25 of his decision as follows:
"There is no signed lease with anybody and the negotiations are too vague to imply that any form of lease was accepted by the parties as governing the lease arrangement."
Mr Owens submitted that this finding was not just and equitable and was against the weight of evidence.
He pointed to the facts:
1. That Mr Gallego had entered into occupation of the premises (or at least part of the premises);
2. There was an unsigned form of lease in respect of the property;
3. Mr Gallego had paid $3,000 to Mr Go on behalf of Mr Bytago on 13 April 2013 by way of deposit in respect of a commercial lease of the property;
4. as demonstrating that the parties had objectively manifested the intention to enter into a lease in respect of the premises.
We note that Mr Gallego did not acknowledge that he had entered into occupation of the commercial part of the premises. The evidence before the Tribunal Member was equivocal in that, although Mr Gallego's affidavit stated that he "never used" the commercial space and "never opened a restaurant" in the premises, he did not explicitly state that he never occupied the commercial area. Mr Papadopoulos stated at the appeal hearing that Mr Gallego had only every used the commercial area for the storage of materials brought to the site for use in the renovation of the upstairs area. It seems to be tolerably clear that Mr Gallego had some sort of occupation of the whole of the premises commencing in April 2013 but the quality of that occupation in terms of use and exclusivity of possession is not clear, except to the extent that the evidence indicates that the premises were uninhabitable, the commercial section totally and the residential section subject to renovation work which Mr Gallego was doing.
[2]
Decision not fair and equitable or against the weight of evidence
We do not consider that the Tribunal Member's decision was incorrect, not fair and equitable or against the weight of the evidence.
The evidence before the Tribunal Member included: the unsigned document referred to by the Tribunal Member as the "Heads of Agreement", which incorporated proposed terms of a lease of the premises; handwritten documents which appeared to indicate that there were negotiations between Mr Go on behalf of Mr Bytago and Mr Gallego in relation to a lease over the premises; a letter signed by Mr Go dated 23 June 2014 which is set out below; and the unsigned form of lease.
Mr Owens submitted on behalf of Ms Le that the unsigned form of lease constituted clear evidence that the parties had objectively manifested the intention to enter into a lease on the terms set out in that document. However there does not appear to have been any evidence before the Tribunal Member, apart from an assertion to that effect in the submissions filed at first instance on behalf of Ms Le, that the unsigned form of lease was ever provided to Mr Gallego.
The submissions filed on behalf of Ms Le in support of her appeal assert that Mr Gallego "paid the deposit, pursuant to the lease". If that submission is intended to suggest that the payment of the deposit was referrable to a lease on the terms of the unsigned form of lease, it is not correct. The unsigned form of lease itself acknowledges that the deposit had been paid before that document was drafted. Moreover, Mr Go's recording, in the document acknowledging receipt of the payment, that "the payment was subject to final agreement" and that it was "a refundable deposit" is a clear indication that Mr Bytago did not consider the payment of the deposit was to give rise to a binding lease.
Furthermore, there is no consistency between the various documents in relation to the terms of the proposed lease. The "Heads of Agreement" identifies the rent as $750 per week plus GST. This figure has been struck out by hand, $700 has been written in and then struck out and the sum of $900 has then been inserted. The Heads of Agreement provides that there should be a rent free period of two months at the beginning of the lease and a further month rent free after six months, and that a bond of one month's rent should be payable. The document is expressed to be "subject to lessor's approval and lease contract".
The lease term proposed in the Heads of Agreement was three years commencing on 8 August 2013 with a three year option. The lessee was to be responsible for all outgoings. The rent was to be increased by 3% per annum with a market review at the end of the initial term.
The copy of the Heads of Agreement tendered by Ms Le was attached to a letter dated 23 June 2014 signed by Mr Go which stated:
"This letter serves to confirm that the last negotiation for the rental of the whole of the Property ground floor & upstairs with La Finca P/L directors and representative was for $900 weekly + GST & 50% of all outgoings".
The unsigned form of lease relied upon by Ms Le recorded the rent as $36,400 plus GST per annum which equates to $700 per week for the whole property. The unsigned form of lease provided for a three month rent free period with a commencement date of 4 October 2013 and required the payment of a bond of $3,000. The document recorded in respect of that figure of $3,000 "lessor received on April 2013".
The unsigned form of lease further provided that the term of the lease was to be three years with a three year option and that the rent was to be reviewed to CPI each year for the first three years. The rent was expressed to be inclusive of outgoings.
It cannot be said in the light of these documents that Mr Gallego and Mr Bytago had objectively committed to a binding lease. The Tribunal Member's conclusion that the negotiations were too vague was in our in view clearly correct. There was inconsistency between the Heads of Agreement and the unsigned lease in respect of the rent, the provisions for rent review, the rent free period, the commencement date, the liability for outgoings and the amount of the bond. Moreover Mr Go's letter of 23 June 2014 (which we take to have been put forward by Ms Le as a statement of Mr Go's recollection rather than any sort of business record) is not consistent with either of the other documents.
We note that the evidence before the Tribunal did not include any evidence of the circumstances in which the unsigned lease came into existence, whether the unsigned lease had been provided to Mr Gallego, or the circumstances in which it was provided to Mr Gallego.
If the document had not been provided to Mr Gallego it could scarcely constitute the terms of an agreement between Mr Gallego and Mr Bytago as to the terms upon which Mr Gallego would lease the property. Nevertheless, for the reasons outlined above, we do not accept that the document could establish the terms of any binding agreement even if it had been provided to Mr Gallego.
[3]
Significant new evidence
We are not persuaded that the further evidence upon which Ms Le seeks to rely is significant in the sense that there is a significant possibility that, had it been available to the Tribunal, it might have altered the outcome of the proceedings (see Collins v Urban at [74]-[75]).
Ms Le submits that the additional documents contradict Mr Gallego's evidence, in his affidavit put forward in the initial proceedings, that "I have never used that commercial space in the address at 167 Regent Street, Redfern, for any purposes".
The further evidence does contain some acknowledgement by Mr Gallego that he was in possession of the whole premises from 13 April 2013. However that is not inconsistent with the proposition that Mr Gallego never used the commercial space. There is no suggestion the space was ever used by Mr Gallego for any commercial purpose.
In any event, the reason Mr Gallego was not found liable to pay rent was that the Tribunal Member was not satisfied that Mr Gallego was bound by any lease in respect of either part of the premises. Mr Le's claim was founded upon the proposition that there was such a lease. The Tribunal Member's decision was not based upon a conclusion either way as to whether Mr Gallego had occupied the commercial space.
We are also not persuaded that the evidence was not reasonably available at the time of the initial determination of the proceedings. The evidence clearly was available in that it had been tendered in the residential tenancy proceedings.
Ms Le attached to her submissions in support of the appeal the submissions and chronology which she had submitted to the Tribunal at the initial proceedings. The only part of that document which might constitute reliance by the appellant on the documents now put forward as further evidence (which she asserts she believed was before the Tribunal) is paragraph 32 of the appellant's submissions below which is as follows:
"On 20 January 2014 Citistruct on behalf of the applicant served Gallego with a notice of termination of residential tenancy agreement. Gallego's response was to assert his rights under the lease agreement entered into on 13 April 2013".
To the extent that it can be said that the emails included in the further documents involved Mr Gallego asserting his rights under an earlier agreement, they involved Mr Gallego's assertion that he was entitled to compensation in the amount of $19,006 to be set off against future rent for the residential apartment which would be calculated at $300 per week commencing on 13 September 2013. That is scarcely an acknowledgement of a lease agreement in the terms upon which Ms Le seeks to rely.
It cannot be said that the fact that the Tribunal did not have access to and therefore could not have had regard to the additional evidence renders the decision not just and equitable or against the weight of evidence.
This is not a case in which it would be appropriate to grant leave to appeal and the application (and appeal) should be dismissed.
We heard from both Messrs Papadopoulos and Owens on costs. Ultimately Mr Papadopoulos withdrew an application for costs in the event that the proceedings were dismissed.
The orders of the Appeal Panel will be:
1. Leave to appeal refused.
2. Appeal dismissed.
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
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Decision last updated: 15 March 2017