Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd [2004] VSC 400

Supreme Court of Victoria|2004-10-15|Before: KAYE J.

RESTITUTION - money paid by mistake - defences - good consideration - change of position - s.8 Retail Tenancies Reform Act 1998.

This is an appeal from a decision of the Victorian Civil and Administrative Tribunal ("VCAT") dated 17 December 2003. The appeal is brought pursuant to s.148 of the . In the proceedings before the tribunal, the present appellant ("Ovidio") was the respondent, and the respondent to this appeal ("The Dog Depot") was the applicant.

By a lease entered into in August 2000 Ovidio let to The Dog Depot premises known as Shop 4, 490 Whitehorse Road, Surrey Hills for a period of six years from 14 August 2000. The rent payable for the first year was $22,000 plus goods and services tax. Thereafter the rental was to be reviewed annually either to CPI or (at the commencement of the fourth year) to market.

Pursuant to the lease The Dog Depot took possession of the premises and paid rental. However, at the commencement of the lease, the lessor's agent, by oversight, omitted to give a disclosure statement to the tenant as required by s.8(1) of the Retail Tenancies Reform Act 1998 ("the Act"). That oversight was not identified until May 2003. On 5 May 2003 the agent (Mr Dixon) delivered a disclosure statement to the tenant.

Subsequently, The Dog Depot commenced a claim in the Tribunal by which it sought repayment of the rental paid to Ovidio for the period between August 2000 and May 2003. That claim was based on s.8(2) of the Act. The Tribunal upheld that claim and on 17 December 2003 made an order that Ovidio pay to The Dog Depot the sum of $64,953.56. It is against that order that Ovidio now appeals.

"(1) At least seven days before a prospective tenant of retail premises enters into a retail premises lease, the landlord must give to the prospective tenant -

(a) a disclosure statement in the form of the Schedule providing information about the matters set out in the Schedule; and

(b) if the retail premises lease is, or any of the terms of the retail premises lease are, in writing, a copy of the proposed lease or a copy of the written terms of the proposed lease; and

(2) If a tenant has not been given a disclosure statement in accordance with sub-s.(1) before entering into a retail premises lease -

(a) the tenant may withhold payment of rent until the end of seven days after the landlord gives the tenant a copy of the disclosure statement; and

(b) 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; and

(c) the tenant may give the landlord a written notice of termination at any time before the end of seven days after the landlord gave the tenant a copy of the disclosure statement."

The claim made by The Dog Depot was based primarily on the decision of the High Court in David Securities Pty Ltd and ors v Commonwealth Bank of Australia[1]. The tenant claimed that it had made the payments of rent, of which it sought recovery, in the mistaken belief that it was obliged at law to make such payments, and that accordingly it was entitled to repayment of them. In essence, Dr Pannam QC, who appeared with Mr J. Moore on behalf of the appellant before me, contended that the tribunal erred in deciding in favour of that claim by failing to consider and uphold two defences which (it was contended) had been raised to the tenant's claim for return of the rental, namely -

(a) a defence that the payments of rent by the tenants, of which recovery had been sought, were made for good consideration;

(b) a defence that the landlord, as payee, had changed its position in good faith based on receipt by it of the payments of rental of which the tenants sought recovery.

Both of those "defences" were based on the formulation of them by Goff J in Barclays Bank Limited v W.J. Simms Son & Cooke (Southern) Limited[2], which was quoted with approval by the majority of the High Court in David Securities[3] as follows:

"(1) If a person pays money to another under a mistake of fact which causes him to make the payment, he is prima facie entitled to recover it as money paid under a mistake of fact.

(a) the payer intends that the payee shall have the money at all events, whether the fact be true or false, or is deemed in law so to intend; or

(b) the payment is made for good consideration, in particular if the money is paid to discharge, and does discharge, a debt owed to the payee (or a principal on whose behalf he is authorised to receive the payment) by the payer or by a third party by whom he is authorised to discharge the debt; or

Mr D. Forbes, who appeared on behalf of The Dog Depot on the appeal, did not contend that those "defences" are not, in appropriate circumstances, valid answers to a claim made for moneys paid by mistake. However, he contended:

(a) that the tribunal did consider, and was correct in rejecting, the submission that the payments of rent by the tenant had been made for good consideration provided by the landlord;

(b) that in the hearing before the tribunal the landlord had not raised the "defence" of change of position. Further, there was no evidence adduced before the tribunal upon which the tribunal could properly have found such a "change of position" even if the issue had been raised before it.

Consideration

On behalf of the landlord Dr Pannam contended that the tribunal erred in failing to find that the landlord had provided consideration for the payments of rental made to it by the tenant and of which the tenant had sought recovery. Accordingly, it was submitted that the tenant was not entitled to recover those payments as monies paid by mistake. Dr Pannam contended that the consideration consisted of the provision by the landlord to the tenant of the use and quiet enjoyment of the demised premises.

In response Mr Forbes submitted that there was no consideration provided by the landlord for the payments of rental of which recovery was sought. He submitted, both before the tribunal and before me, that under s.8(2) of the Act, the tenant had no liability to pay rent for the period which preceded the date upon which the tenant had received the disclosure statement. Clause 2.1.1 of the lease contains the covenant of the tenant to pay rent to the landlord monthly in advance on the fourteenth day of each month. It was submitted that, in so far as that clause purported to operate before the date upon which the disclosure statement had been provided to the tenant, it was inconsistent with s.8(2)(b) of the Act. Mr Forbes relied on clause 1.3 of the lease which provided:

"This lease must be interpreted so that it complies with all laws applicable in Victoria. If any provision of this lease does not comply with any law, then the provision must be read down so as to give it as much effect as possible. If it is not possible to give the provision any effect at all, then it must be severed from the rest of the lease."

Accordingly, Mr Forbes contended that clause 2.1.1, in so far as it operated to make the tenant liable for rent for the period preceding the date on which the disclosure statement was given to it, was severed from the lease pursuant to clause 1.3. However, the rest of the lease remained valid and operative. Under the lease the landlord provided use and occupation of the premises to the tenant pursuant to the lease. Correspondingly, the tenant had a number of different obligations including (for example, the obligation to pay outgoings and expenses, the obligation to pay insurance, and the obligation to make particular repairs to the demised premises). Thus Mr Forbes contended that the consideration provided by the landlord to the tenant - quiet possession of the premises - was in exchange for the valid and operative obligations of the tenant which did not, pursuant to s.8(2)(b), include an obligation to pay rental before the date upon which the disclosure statement was provided.

Dr Pannam sought to counter Mr Forbes' contention by relying on two principal submissions, namely:

(a) That on its proper construction s.8(2)(b) did not apply where the tenant had in fact paid rent; rather, sub-paragraph (b) only applied where the tenant had withheld payment of the rent under sub-paragraph (a).

(b) Further, if s.8(2)(b) does apply in circumstances where the tenant has paid rent (instead of withholding it under sub-paragraph (a)), sub-paragraph (b) did not render the obligation to pay rent void; it only operated to render that obligation unenforceable.

It is not altogether clear from the reasons of the tribunal whether the issues, which I have outlined above, were addressed by the tribunal. Although the issue of consideration was agitated by the landlord, the arguments which were advanced in respect of that issue do not appear to have been the same contentions as those which have been put to me. The tribunal did, however, address a submission by counsel for the landlord (who was different to counsel who appeared before me) that restitution can only be ordered if there has been a total failure of consideration. The tribunal rejected that submission. It held that s.8 rendered the obligations to pay rent, and any payments of rent, "void" before a disclosure statement is provided. The tribunal held that any such obligations contained in the lease would be severed by clause 1.3. The tribunal then held that the occupation of the premises by the tenant was not dependent on payment of rent alone, but also on the performance by the tenant to the remaining obligations set out in the lease. Accordingly, as I understand it, the tribunal rejected the submission that the landlord had provided consideration for the payment of the rental of which recovery was sought.

The first, and indeed the main, issue between the parties before me concerned the correct construction of s.8(2)(b). Essentially Dr Pannam contended that that provision only operated where the tenant had, under s.8(2)(a), withheld payment of rent. In other words, Dr Pannam contended that s.8(2)(b) was cumulative and dependent upon s.8(2)(a). The main submissions advanced in support of that contention were:

(a) If s.8(2)(b) were independent in its operation from s.8(2)(a), then sub-paragraph (a) would be otiose.

(b) The use of the present tense "gives" in sub-paragraph (a), and the use of the past tense "gave" in sub-paragraph (b), indicates that there is a link between the two sub-paragraphs. In other words sub-paragraph (a) deals with the time before the disclosure statement was provided; sub-paragraph (b) then moves to the time when the same tenant has received the disclosure statement.

(c) Section 8(2)(b) is to be contrasted with s.11 of the Act which prescribes key money. In particular s.11(1)(b) renders any decision relating to key money void; s.11(4) provides that any payment made in respect of key money is recoverable as a debt.

In my opinion, the correct construction of s.8(2) of the Act is that contended for the tenant. In other words I do not accept that sub-paragraph (b) is cumulative or dependent upon sub-paragraph (a).

The main proposition advanced on behalf of the landlord, on the construction of s.8(2)(b), was that sub-paragraph (a) would be otiose if sub-paragraph (b) operated independently of it, and thus operated regardless of whether the tenant had paid rent or withheld it before the disclosure statement had been provided to the tenant. I consider that there are at least two responses to that proposition.

First, sub-paragraph (a) focuses on the period of seven days after the landlord gives the tenant a disclosure statement. By contrast sub-paragraph (b) is concerned with the period preceding the provision of the disclosure statement to the tenant. Thus the scheme of s.8(2) is that the tenant has no liability for rental relevant to the period before the disclosure statement is provided to it (sub-paragraph (b)), and, further, the tenant may withhold payment of any rental for the period of seven days after the disclosure statement has been provided to it (sub-paragraph (a)). It is relevant that s.8(1) of the Act provides that the disclosure statement must be provided to the tenant at least seven days before a prospective tenant enters into a retail premises lease. In that context it makes sense that the focus of sub-paragraph (a) would be on the period of seven days after the disclosure has been given. In that light, sub-paragraph (a) does have work to do, if, on its proper construction, sub-paragraph (b) operates independently of it.

Secondly, if the submission advanced on behalf of the landlord is correct, then the structure and effect of sub-paragraphs (a) and (b) would be curious to say the least. If the landlord's construction is correct, then the effect would be that, where a tenant was alert to its rights and withheld payment of rent, the tenant would be subject to a deferred liability to pay the rent, which remained deferred until the disclosure statement was given to it. If the disclosure statement was never given, then the tenant would have, presumably, an indefinitely deferred liability. Yet once the disclosure statement was provided to that tenant, then the tenant would have, presumably ab initio, no liability to pay the rent. The curiosity of such a construction becomes starker when the situation of the tenant, who is alert to its rights, is contrasted with the situation of the tenant who does not know its rights, and thus pays rental notwithstanding that it has not received the disclosure statement. In such a context, the tenant, suffering from ignorance of its rights, is liable to pay rent; all that such a tenant then derives, after receipt of the disclosure statement, is a right to withhold payment for seven days after such receipt (under sub-paragraph (a)).

The second submission by Dr Pannam in support of the landlord's construction of sub-paragraph (b) relied on the use of the present tense "gives" in sub-paragraph (a) as contrasted to the use of the past tense "gave" in sub-paragraph (b). I accept that the use of the different tenses is consistent with sub-paragraph (b) operating cumulatively on sub-paragraph (a); but logically it does not compel that conclusion, and it is equally consistent with sub-paragraph (b) operating independently of sub-paragraph (a). In this context it is relevant that sub-paragraph (c) also employs the past tense "gave", yet it was (correctly) conceded that sub-paragraph (c) does operate independently to sub-paragraph (a).

The third contention relied on by the landlord in support of its submissions relating to the construction of s.8(2) focussed on s.11 of the Act. As I have set out above, s.11 is to be contrasted in a number of respects with s.8. However, while the comparison is useful for purposes of construing s.8, it cannot be pushed too far. Section 11 deals with an entirely different subject matter to s.8. It commences with a proscription; it prohibits the request receipt or retention of key money. In that context it then provides (s.11(1)(b)) that any provision in a lease requiring key money is void. Such a legislative provision is no doubt an important support to the prohibition on the request receipt or retention of key money specified in s.11(1)(a). Section 11(4) does provide expressly for the repayment of money paid as key money. Section 8 leaves the tenant to its rights at common law. However, that is not the point. That difference does not, in my view, provide any indication as to whether sub-paragraph (b) is to be dependent on, or independent of, sub-paragraph (a).

Finally, as I have noted, it was correctly accepted by the landlord that s.8(2)(c) is not dependent on the tenant exercising its right to withhold rental under s.8(2)(a). As a matter of structure and grammar, if (as contended by the landlord) sub-paragraph (b) is dependent on sub-paragraph (a), so too should be sub-paragraph (c). Both sub-paragraphs are linked by the conjunction "and"; both use the past tense "gave". The fact that sub-paragraph (c) is freestanding from, rather than dependent upon, sub-paragraph (a), supports the conclusion that sub-paragraph (b) is also freestanding of, and not dependent upon, sub-paragraph (a).

For all the above reasons I reject the submission made by the landlord that s.8(2)(b) only operates in circumstances where the tenant has withheld payment of rental under s.8(2)(a).

Consideration: alternative submission by appellant

The landlord further contended that, if (as I have held) s.8(2)(b) operates independently of s.8(2)(a), nevertheless s.8(2)(b) only renders the underlying obligation to pay rent unenforceable and does not render it void for all purposes. Dr Pannam referred to cases such as Pavey and Matthews Pty Ltd v Paul[4] in support of the proposition that s.8(2)(b) does not preclude reliance on the defence of "good consideration". As I understand it, Dr Pannam's submission was that, notwithstanding that the underlying obligation to pay rent was made unenforcable by s.8(2)(b), nevertheless the promise to pay the rent, and the payment of it, was in consideration of the provision by the landlord to the tenant of quiet possession of the demised premises.

The short answer to this contention is that, on its plain wording, s.8(2)(b) does not simply render the covenant by the tenant to pay rent unenforceable for the period during which a disclosure statement has not been provided to the tenant. Section 8(2)(b) expressly provides that the tenant "is not liable" for rent during that period. In other words, on its plain terms, s.8(2)(b) negates the liability to pay the rent of which the tenant sought recovery in this case.

As Mr Forbes has correctly pointed out, s.8(2)(b) does not affect or alter the validity, or the continued existence, of the lease, or any of the other obligations of the landlord and the tenant under the lease. The sole function of s.8(2)(b) is to negate the liability of the tenant to pay rent for the period during which the disclosure statement has not been provided to the tenant. Thus all other promises and obligations of both parties remain extant and enforceable. In that context the payment of rent could not, logically, be said to be in consideration of the use and occupation by the tenant of the premises. There was no obligation to pay rent. The tenant mistakenly made the payment believing that it did have that obligation. Under the lease, which remained valid, the tenant had a right to the use and occupation of the premises, and, equally, remained bound by the obligations prescribed for it by the lease.

Dr Pannam referred to and relied on cases such as Pavey and Matthews (above). In that case the relevant statute provided that a building contract was unenforceable unless it is in writing and signed by both parties. That provision was not complied with. The builder instituted proceedings in the Supreme Court of New South Wales claiming money owing on a quantum meruit. The High Court held that the builder's claim was not affected by the statute. The claim for quantum meruit was not founded in contract, but rather was based on the concept of unjust enrichment. Accordingly, the builder's claim in quantum meruit was not precluded by the relevant statute.

By contrast, in the present case, the landlord is not seeking to assert any claim, other than for rent, in respect of the provision by it of the use and occupation of the demised premises. The landlord asserts that pursuant to the lease itself it provided good consideration to the tenant. A fortiori the landlord relies on the terms of the bargain - the lease - between itself and the tenant to identify whether consideration was provided by it in exchange for the rental mistakenly paid to it by the tenant. Thus the argument made on behalf of the landlord returns to the same point which I have discussed above, namely, that the lease between the parties still exists, with all of its obligations intact, minus any obligation by the tenant to pay rent for the period during which the disclosure statement was not provided. That analysis of the "consideration", on which the landlord relies, takes this case outside the province of cases such as Pavey and Matthews.

The landlord's submissions also referred to a number of other cases including Pohlmann v Harrison[5]; Marshall v Marshall[6]; Sutton v Zullo Enterprises Pty Ltd[7]; Great City Pty Ltd v Kemayan Management Services (Australia) Pty Ltd [8]; Upjay Pty Ltd v MJK Pty Ltd [9] and Investmentsource Corporation Pty Ltd v Knox Street Apartments Pty Ltd [10]. Each of those cases deal with the same issue under consideration in Pavey and Matthews and in particular whether the terms of the statute in question, on its proper construction, prevents recovery on a quantum meruit, or, conversely, prevents a party such as a builder from resisting a claim for payment under mistake. They do not in my view assist the landlord in this case where the payment by the tenant was made in respect of an obligation which, by the terms of the statute, did not exist, and where the consideration relied upon by the landlord was provided in respect of a contract where all other mutual rights and obligations remained intact.

It is appropriate to return to the decision of the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia[11]. In that case the appellant borrowed monies from the respondent bank. Clause 8(b) of the agreement between the parties required the appellant, in addition to paying interest, to pay such additional amounts as may be necessary in order that the net amount received by the respondent would equal the full amount the respondent would have received had a deduction not been made for taxation. Section 261(1) of the Income Tax Assessment Act 1936 (Cth) provided that any such covenant "shall be absolutely void". The appellant, pursuant to clause 8(b), paid amounts of withholding tax in respect to the interest payments made by it. It instituted proceedings in the Federal Court claiming (inter alia) repayment of such amounts. The High Court held that, prima facie, the appellant had a right to recover those amounts, notwithstanding that the mistake made by the appellant was a mistake as to law and not a mistake as to fact. In reaching that conclusion the High Court dispensed with the distinction between mistake of law and mistake of fact. It held that the "unifying concept" of unjust enrichment explained the circumstances in which a court might recognise a right of recovery brought by a person who has paid money by mistake. In such circumstances as existed in David Securities the plaintiff had a prima facie right to recovery. The onus then lay on the respondent to proffer circumstances which showed that its receipt or retention of the payment, made by mistake, was not unjust. As I have stated earlier in this judgment, two such circumstances ("defences") recognised by the court were, first, that the payments by the appellants were made for good consideration and, secondly, that in reliance on the receipt of the payments the respondent in good faith had changed its position to its detriment.

In David Securities the respondent submitted that it had agreed to lend the money to the appellants at the rate specified in the loan agreements because of the respondent's agreement to pay the additional amounts (of taxation) pursuant to clause 8(b). The joint judgment of Mason CJ, Deane, Toohey, Gaudron and McHugh JJ rejected that submission on the factual material before it. The appellants had made the payments because they believed that they were legally obliged to do so. Thus as observed by the majority:

"The appellants thus had no indebtedness in respect of withholding tax, the discharge of which could form consideration for the payments under clause 8(b). Those payments were therefore not made for good consideration within the terms of the defence outlined in Barclays Bank and Westpac Banking Corporation."[12]

Alternatively the respondent, David Securities, contended that the payments of withholding tax made by the appellants were made in consideration of the advance by the respondents of the loan monies on the terms agreed. The majority rejected that submission observing:

"In this case, the bank must prove that the appellants are not entitled to restitution because they have received consideration for the payments which they seek to recover. It does not avail the bank to argue that the appellants were provided with the loan monies agreed."[13]

In this case the position is similar. The tenant paid rental in satisfaction of an obligation which did not exist. The remainder of the lease, with all its attendant obligations and rights, remained intact, including the right of the tenant to use and occupation of the premises, free of an obligation to pay rent unless and until the landlord provided to it the disclosure statement required by s.8 of the Act.

For the reasons which I set out above I therefore conclude that the Tribunal did not err in not coming to the conclusion that the landlord had provided consideration for the payments of which the tenants sought recovery so as to defeat the claim by the tenant for money paid by mistake.

The second main submission made on behalf of the landlord was that the Tribunal failed to find that the landlord had changed its position, consequent upon the payment to it of the rental of which the tenant sought recovery. Accordingly it was submitted that the tenant was precluded from recovering the rental payments which it had made by mistake.

The first question is whether the "defence" of change of position was in fact raised and agitated by the landlord at the hearing before the Tribunal. Certainly no such defence was proffered in the "points of defence" filed in the proceeding. The landlord filed a written document entitled "legal contentions" dated 17 November 2003. That document did (briefly) make submissions under the rubric "estoppel". The submissions referred to the decision of the High Court in Waltons Stores (Interstate) Limited v Maher[14]. It did not however refer to or contain any submissions relating to the defence of change of position. The hearing before the Tribunal took place on 28 November. After brief evidence was called, counsel for the tenant addressed the Tribunal. Counsel for the landlord (who was different to counsel who appeared for the landlord before me) then made oral submissions. Before doing so he handed up a document entitled "Further legal contentions of the respondent". Those contentions did not contain any submissions relying on a defence of change of position.

Counsel then proceeded with his oral submissions. He first made submissions on the construction of s.8(2)(b). He then referred to David Securities, and contended that the payment of the rental by the tenant was voluntary, and therefore not recoverable. (I interpolate that that submission was not made before me). In the context of that submission counsel referred to the decision of the High Court in South Australian Cold Stores Limited v Electricity Trust of South Australia[15]. Counsel referred to a passage from the joint judgment of Dixon CJ, McTiernan, Williams, Webb and Taylor JJ[16] that if the payer had objected to paying, it is a reasonable conjecture that the defects in the order made by the electricity trust would have been remedied before all over payments had been made. Before me counsel for the landlord relied heavily on that passage, and on a comment made by counsel to the Tribunal in relation to it, in support of the proposition that the defence of "change of position" had been argued before the Tribunal. After referring to South Australian Cold Stores counsel before the Tribunal stated that if rent had stopped being paid enquiries would have been made, the omission would have come to the attention of the landlord, and it would have been rectified.

In this context it is important to bear in mind that the decision of the High Court in South Australian Cold Stores was concerned primarily with the question whether the payments made by the customer to the Electricity Trust were voluntary. The High Court held that such payments were voluntary since the plaintiff company was prepared to make the payments without investigating what had been done under the prices legislation and without any demur. It was in that context that the justices of the High Court stated[17]:

"It was a simple case of a bona fide assertion of right on the part of the trust which the company acceded to without inquiry or investigation. Had the company objected to paying and had the form and contents of the notice been brought under critical consideration, it is a reasonable conjecture that the defects would have been remedied by a new notice before all the overpayments which the company now seeks to recover had been made."

In my view it is clear that the landlord did not propound or conduct a defence of "change of position" as described by the High Court in David Securities, in the proceedings before the Tribunal. The passage which I have just quoted was, at the most, an aside by the High Court, but, more probably, was directed to the issue whether the payment made by the company to the Electricity Trust was voluntary. The defence of estoppel, referred to in the original submissions, and briefly commented on by the Tribunal in paragraph 15 of its reasons, is a different defence to "change of position". While the two defences have elements in common, the defence of estoppel, as proffered before the Tribunal, relied on an implied representation made by the tenant to the landlord. The landlord has not sought to impugn the "finding" made by the member of the Tribunal on the defence of estoppel, and understandably so. As the defence of change of position was not agitated before the Tribunal, it accordingly cannot be said that the Tribunal erred in failing to find, in favour of the landlord, that there was a change of position precluding recovery of the rental paid to it by the tenant.

Further and in any event there was, in my view, no evidence upon which the Tribunal might properly have concluded that there was a change of position such as was contended before me. In its submissions to me the landlord contended that it had changed its position on the basis that the receipt of payments of rent, first, by continuing to permit the tenant to occupy the premises, and, secondly, by failing to provide the disclosure statement. There is no evidence of the former aspect of change of position as contended for. In respect of the latter position, the landlord relied on very brief evidence given by the agent, Mr Dixon, before the Tribunal.

In his evidence Dixon was asked what he would have done if the tenant had stopped paying rent. In response Mr Dixon stated that he would have first notified the tenant and asked them when the rent might be expected. If that enquiry elicited no satisfactory response he would have then sent a letter demanding the rent. When asked if no response was received to that letter Mr Dixon stated "I would instruct the lessor's solicitor to commence proceedings for recovery."

Relying on that evidence Mr Moore, who made the reply on behalf of the landlord, submitted that the landlord would be entitled to rely on a number of inferences. First he submitted that, if the tenant had withheld payment because it had not received the disclosure statement, the agent would have contacted the tenant, and would have been told that that was the reason why payment was being withheld. In those circumstances the omission would have been corrected. It was therefore submitted that there was a relevant change of position by the landlord which should have precluded recovery of the rental payment claimed by the tenant.

I do not accept the above submission for two reasons. First, to say the least, I have reservations whether a court would or should properly draw the inferences contended for by the landlord. The argument is based on inferences in respect of matters which might quite easily have been, but was not, the subject of evidence adduced on behalf of the landlord[18]. Secondly, and more significantly, even if those inferences might be drawn, nevertheless such evidence would not, in my view, establish a change of position of the nature discussed in the authorities. In David Securities[19] the joint judgment of the High Court observed:

" ... The defence of change of position is relevant to the enrichment of the defendant precisely because its central element is that the defendant has acted to his or her detriment on the faith of the receipt."

Thus the law focuses on a change of position brought about by the receipt by the payee of the money of which recovery is sought. By contrast the landlord's submission in this case relies on the failure of the tenant to advise the landlord of the reasons why the landlord was not entitled to payment, so that the landlord might then rectify its omission to send the disclosure statement to the tenant. In other words, the change of position was not brought about by a payment by the tenant; rather the change of position relied upon by the landlord was brought about by the failure of the tenant to give information to the landlord which it might have given, if the payment were not made, and if the landlord had made appropriate enquiry of the tenant.

Thus if, contrary to my conclusions, the defence of change of position had been conducted before the Tribunal, I do not consider that there was evidence on which the Tribunal might have found that such a defence had been established on behalf of the landlord.

Finally and for the purpose of completeness, Mr Forbes contended that change of position might only be established where the money, of which recovery was sought, has been dissipated by the recipient to the recipient's detriment. No authority was advanced by Mr Forbes in support of that proposition, but he contended that there was no reported authority which supported the proposition that a change of position might be established in any other set of circumstances. Certainly, there are passages in the joint judgment in David Securities[20] which support the proposition that a change of position is made out if the recipient has either expended the monies, or alternatively has incurred a liability based on the receipt of those monies. In response Mr Moore did provide me with a copy of the judgment of Foster AJ in Gertsch v Atsas and ors[21]. However that case does not advance the question. In that case the third defendant was paid a legacy of $100,000 under the provisions of a will which later proved to be forgery. She successfully resisted a claim by the plaintiff, the administrator of the estate of the deceased, for repayment, on the basis that she had changed her position. However it is clear from the judgment that the change of position relevant to that defence consisted of the fact that she had expended all of the bequest received by her.

It is not necessary for me to resolve this question of law and I shall therefore make no further comment in relation to it.

A third ground of appeal in this matter consisted of the proposition that the Tribunal denied the appellant natural justice by refusing to permit the appellant to rely on the grounds of defence which I have discussed above. There was in fact no such refusal by the Tribunal. In submissions before me the landlord relied on that ground as indicating a failure, rather than a refusal, of the Tribunal to properly consider and determine the two defences which have been the subject of these reasons for judgment. As I have stated it is difficult to assess whether the Tribunal did decide the issue of consideration in the form in which it was agitated before me, because different submissions were put to it. However if such an issue had been agitated before the Tribunal, for the reasons I have already set out, the proper conclusion is that such a submission would have been rejected. I have further concluded that the Tribunal did not err in not considering and determining the question of change of position because that question was not agitated before it. I have also concluded that in any event, on the evidence then before the Tribunal, if such a defence had been raised, as a matter of law it should have failed.

For the reasons I have set out above, I conclude that the appellant has not made out any of its grounds of appeal, and accordingly the appeal should be dismissed. Subject to hearing from counsel I propose the following orders:

[18] c.f. Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298

At a glance

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Judgment (84 paragraphs)

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Cases Cited (8)