Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6

Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6 - VSCA 2006 case summary — Zoe

[11]

It is plain enough that the provision imposed on a lessor of retail premises the obligation to give the prospective lessee a disclosure statement at least seven days before the lessee took possession. In the present case, however, due to an oversight, the landlord did not give the tenant the necessary document until 5 May 2003, which was some years after the tenant had taken possession. This meant, of course, that the tenant could have properly withheld payment of rent until 12 May 2003 but, because it was ignorant of its rights in that regard, it paid the rent reserved by the lease from the commencement of the tenancy until shortly after it received the disclosure statement. It then stopped paying rent, but did not terminate the lease, as it was entitled to do under s.8(2)(c) of the Act. On 9 September 2003, it brought a proceeding in the Tribunal to recover the sum of $64,953.56 that it had paid to the landlord in the mistaken belief that it was required so to do.

3 As I have noted, the tenant succeeded in its claim before the Tribunal and, again, on the landlord's appeal to the Supreme Court. The landlord now appeals by leave against the latter decision.

4 The landlord advanced two principal arguments as to why the tenant was not entitled to recover the rent. First, it claimed that, on its proper construction, sub-s.8(2)(b) only operated where rent has been withheld by the tenant in the exercise of its rights under paragraph (a). It was said that paragraph (b) was cumulative and dependent on paragraph (a) and that Parliament included it in the section only to make it clear that, where the lessee had withheld the rent, the lessor was not entitled to recover it by way of action brought under the lease. The landlord went on to contend that, here, the tenant did not avail itself of its right to withhold the rent and, as a result, paragraph (b) had no operation. Consequently, said the landlord, the tenant could not rely on paragraph (b) to ground its right to recoup the money. Secondly, the landlord argued that, even if paragraph (b) operated independently of paragraph (a), it was nevertheless entitled to retain the money because it had given good consideration for the payment, consisting of the provision to the tenant of exclusive use and occupation of the premises. Moreover, it was said for the landlord, it had a good claim against the tenant for use and occupation of the premises in an amount equal to the rent and that, too, was a good defence to the tenant's restitutionary claim.[2]

Construction of section 8(2)

5 For reasons that are given later, I consider that the landlord has a good defence to the tenant's claim for restitution and, therefore, it is not necessary to deal at length with whether his Honour erred in his interpretation of the legislation. Be that as it may, in my view, the learned judge was correct in rejecting the appellant's claim that paragraph (b) operates only where the lessee has withheld payment of rent under paragraph (a). The landlord's essential case on this issue, below and before us, was that to construe the section as his Honour did would be to render paragraph (a) otiose and fail to recognise the different tenses in which the word "give" is used in paragraphs (a) and (b). I consider, however, principally for the reasons given by his Honour, that neither argument is well founded. There is no merit in the claim that paragraph (a) would be rendered unnecessary if paragraph (b) was construed to operate separately or independently of it. The scope of operation of paragraph (a) is plainly wider than that of paragraph (b). As his Honour explained, the tenant is given the right by paragraph (a) to withhold payment of rent for a period of seven days after the disclosure statement is served, while paragraph (b) relieves it from liability to pay the rent, but only up to the date when the statement is served on it. There is also force, I think, in the respondent's submission that the appellant's construction of the section would effectively require paragraph (b) to be read as if it commenced with the words "if the tenant has withheld rent in accordance with paragraph (a) of this sub-section." Given that each paragraph has work to do, there is no necessity to read such words into the text, so that it would be inappropriate to do so.[3] It is true that, as the learned judge pointed out, the different tenses of the word "give" as used in the two paragraphs arguably suggests that they operate cumulatively. But, as his Honour said, such use of the word does not compel this conclusion. Parliament merely measured out the time for the purpose of paragraph (a) in prospective terms and that for paragraph (b) in retrospective terms. Moreover, in paragraph (c) the word "gave" is used, but it has not been contended that, by reason of that, it does not operate independently of paragraph (a).

6 Dr Pannam, for the appellant, also argued that if Parliament intended paragraph (b) to deal with the situation where the lessee had paid rent before receiving the disclosure statement and, thus, deny the lessor the right to the rent, it would have said so in terms as it did in s.11 of the Act in relation to "key money".[4] Hence, the argument ran, it can be inferred that paragraph (b) operates only where the lessee has withheld rent under paragraph (a). But it seems to me that merely because Parliament did not say, in terms, in paragraph (b) that the lessor is not entitled to retain such rent does not mean that it intended to deny the lessee its common law rights to recover it or that paragraph (b) should be read as being dependent on paragraph (a). In any event, as the learned judge noted, s.11 deals with a completely different subject matter to s.8 and the policy considerations underlying the two sections are also quite different, so that the latter section does not assist in the interpretation of s.8.

7 I mention for completeness two further matters. The first is Dr Pannam's argument that the changes to the Act by the Retail Leases Act 2003, more particularly, s.17 of it, confirm that the Act operates as was contended for by the landlord. As with the position under s.8(2)(a) of the Act, s.17(3) of the 2003 legislation gives the tenant the right to withhold payment of rent if the disclosure statement has not been given to it as required and it relieves the tenant from liability to pay until the lessor rectifies the situation in that regard. The relevant difference between the two provisions is that the lessee acquires such rights under s.17(3) only after it has informed the lessor of the default within the time prescribed by s.17(2). In my view, however, the new section does not assist the landlord's case as counsel would have it because it makes no relevant change to the earlier position, given that it preserves to the tenant the same rights as it had under s.8(2)(b) of the Act, namely, relief from liability to pay rent during the period identified by the provision. The second matter concerns the material that was forwarded to the Court by the tenant's solicitors, after the hearing of the appeal, under cover of their letter dated 24 November 2005. The material consists essentially of extracts from the Retail Leases (Amendment) Act 2005, including s.46. The solicitors for the landlord opposed the Court having regard to that legislation for the purpose of resolving the appeal and asked to be heard if the Court took a contrary view. No doubt the new legislation was put forward on the statutory construction point. In view of my conclusion on that issue, however, it is not necessary to consider the new material.

Defence to restitutionary claim

8 I now turn to explain why I consider that the landlord has a good defence to the tenant's claim for restitution. I have already mentioned that it was common ground that the tenant made the payments in question in ignorance of its right under sub-s.8(2)(a) to withhold them so that, prima facie, it was entitled to repayment of the money by way of restitution.[5] Thus, the real debate before us was whether the landlord could displace that prima facie entitlement. In order to determine this question it is necessary first to identify the nature and character of a restitutionary entitlement.

9 The tenant's action was for money had and received, which is a restitutionary claim as distinct from one founded on contract or tort and from a claim for equitable relief.[6] Historically, restitutionary relief was provided by courts of common law, although equitable principles played an important part in moulding the action. [7] The basis of the claim for money had and received was articulated in the 18th century by Lord Mansfield in Moses v. Macferlan[8]. I will deal later with what his Lordship relevantly said in that regard, but for present purposes it is sufficient to mention what is said in the third edition of Bullen & Leake's Precedents of Pleadings[9] about the gist of the action, namely, that a claim for money had and received is "the most comprehensive of all common counts [and is] applicable wherever the defendant has received money which in justice and equity belongs to the plaintiff, under circumstances which render the receipt of it a receipt by the defendant to the use of the plaintiff." This passage, said Gummow, J. in Roxborough[10], echoed what Lord Mansfield said in Moses v. Macferlan of "the indebitatus count for money had and received." Importantly, this description of the restitutionary action is not inconsistent with how members of the High Court have viewed the matter in recent decisions.

10 It is appropriate to refer first to Pavey & Matthews Pty Ltd v. Paul[11], in which the High Court jettisoned the hitherto prevailing view that a common count, such as that for money had and received, rested on an implied contract, or quasi-contract. [12] The majority explained that the claim was one for restitutionary relief and was based on the concept of unjust enrichment. Deane, J., with whom Mason and Wilson, JJ. generally agreed,[13] relevantly said:[14]

[13]

It is important to note, however, that Deane, J. did not treat unjust enrichment as the legal requirement, or as the legal basis, for a restitutionary claim. Rather, his Honour put forward unjust enrichment as a conceptual framework which, in the particular circumstances, would explain the entitlement to relief.[15]

11 Pavey was not concerned with a claim for money that had been paid under a mistake. Nor did it deal, in terms, with what may amount to a good defence to a claim for restitution. The relevance of the case, for present purposes, lies in the court's recognition that recovery can be had on a restitutionary basis even where the contract in question is rendered unenforceable by legislation. In that case, a builder claimed money as on a quantum meruit in respect of work done under a building contract that had been rendered unenforceable by legislation. The majority recognised that, notwithstanding the legislative provision, the builder could recover fair and reasonable compensation for its work, not under the contract, but on the basis of restitution or unjust enrichment arising from the owner's acceptance of the benefits accruing to it from the builder's performance of the unenforceable contract.[16] Deane, J. observed[17] that, although the legislation rendered the obligation to pay unenforceable, on its proper construction, it did not manifest the intention to deny the builder payment for the work done in the performance of a contract.[18] For reasons given later, it is of importance to note that his Honour also said[19] that, although the builder's entitlement to recover fair compensation for its work was not based on the unenforceable contract, its terms could nevertheless be treated as evidence on what was the appropriate amount of compensation that should be ordered.

12 In ANZ Banking Group Ltd v. Westpac Banking Corporation[20], the High Court dealt with a restitutionary claim for money paid under a mistake and, in that context, further explained the jurisprudential basis of such a claim. Their Honours[21] confirmed that "[t]he basis of the common law action of money had and received for recovery of an amount paid under a fundamental mistake of fact should now be recognised as lying not in implied contract but in restitution or unjust enrichment." In that case, the court held that an agent (the bank) which receives money on behalf of its principal (its customer), where that payment has been made under a mistake of fact, is not liable to the person who deposited that money if, before learning of the mistake, it has paid it to its customer (or has done something equivalent). Importantly, for present purposes, their Honours recognised that the provision of good consideration will ordinarily displace the prima facie liability in the payee to make restitution. Their Honours said:[22]

[21]

16 Importantly, their Honours recognised[28] that any matter or circumstance that showed that the receipt or retention of the payment was not unjust would ordinarily afford a good defence to such a restitutionary claim. The bank raised two defences to the borrower's claim for repayment. For our purposes, it is only necessary to consider the defence of good consideration which, it was claimed, rendered not "unjust" the receipt and retention by it of the money in question. It was the bank's case that, by not charging the borrower the higher interest (which would have been charged if the borrower had not agreed to make payments equivalent to the withholding tax), the bank provided the borrower with due consideration for the payments in question. This argument was rejected because, the court said,[29] since there was no obligation on David Securities to pay the withholding tax, it did not receive the consideration for its payments which it expected, namely, the discharge of its obligation to pay the withholding tax. The obligation to pay the tax was imposed by the legislation on the bank, not on the customer. Thus, the question whether consideration was received by the payer was analysed by the majority from the point of view of the payer. Their Honours concluded, as I have said, that the borrower paid the money in the belief that it was thereby discharging its tax liability whereas, in truth, it was under no such obligation.

17 The question what might amount to a good defence of consideration to a restitutionary claim was more recently considered in Roxborough v. Rothmans of Pall Mall Australia Ltd.[30] In that case the retailers of tobacco products were held to be entitled to recover the money paid by them for the goods supplied by the respondent that reflected a tobacco licence fee that was subsequently held to be invalid by the High Court.[31] The respondent's defence that it had provided good consideration in the form of provision of tobacco products, or an agreement to do so, was rejected by the majority of the court. In their joint judgment, Gleeson, C.J., Gaudron and Hayne, JJ. held in the appellants' favour, principally on the basis that there was a failure of consideration for the money that was paid by the retailers to the respondent so that, in the result, the appellants had the superior claim to the money. Their Honours explained that, in the context of a claim for money had and received, although failure of consideration is not limited to non-performance of the contractual obligation, it does "embrace" failure of the purpose for which the money has been paid. Their Honours concluded[32] that in the case before them no relevant consideration moved from the payee given that, because "the state of affairs, which was within the contemplation of the parties as a basis for their dealings, concerning tax liability [had] altered",[33] the purpose for which the money was paid had failed.[34]

18 The jurisprudential, or doctrinal, basis of restitutionary claims, particularly those brought in the form of an action for money had and received, was analysed comprehensively and explained by Gummow, J. in Roxborough. In the course of this analysis, his Honour examined a considerable number of authorities - from this jurisdiction and other common law countries - as well as extra judicial writings on matters concerning restitutionary rights. It is not necessary, for present purposes, to deal with the whole of his Honour's detailed analysis of this area of the law. It is sufficient to highlight only the following aspects of his Honour's decision. First, his Honour cautioned[35] against judicial acceptance of "any all-embracing theory" of restitutionary rights and remedies founded on the notion of unjust enrichment. Secondly, his Honour emphasised the various judicial pronouncements that linked the remedy of restitution with the notion that retention of the money in question by the respondent would, in the circumstances, be unjust and unconscionable. Thus, for example, in recognising that Lord Mansfield's speech in Moses v. Macferlan was the foundation of the right to such restitutionary relief, Gummow, J.[36] highlighted his Lordship's reference[37] to the action for money had and received being founded in the equity of the plaintiff's case and on the fact that, ultimately, the question whether restitution is available depends on whether the defendant may retain the money "with a safe conscience". I note that Lord Mansfield concluded his speech on this point by saying: "In one word, the gist of this kind of action is, that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money".[38] Gummow, J. also accepted[39] that the following passage in the speech of Viscount Haldane LC in Royal Bank of Canada v. The King[40] derived from what Lord Mansfield said in Moses v. Macferlan:

[23]

Next, his Honour pointed out[41] that Dixon, C.J., McTiernan, Williams, Webb and Taylor, JJ. emphasised in South Australian Cold Stores Ltd v. Electricity Trust Of South Australia[42] that "the reason of the rule under which an action of money had and received lies in cases of payment by mistake" rests on the unconscionability of the retention by the defendant of the money claimed by the plaintiff.

19 Finally, Gummow, J. addressed the matter before the court by posing the question:[43] would it be unconscionable for the respondent to retain the money that was paid in respect of the licence fee where it was not intended that it have that money? His Honour's answer was in the affirmative, but it was given in the context of his conclusion that there was a failure of consideration by the payee, inasmuch as there was "the failure to sustain itself of the state of affairs contemplated as a basis for the payments that the appellants seek to recover." The "state of affairs" to which his Honour referred was the obligation to pay the licence fee so that, when the requirement ceased to exist, from its point of view, the payer received no consideration for its payment - its money was not made applicable to the payment of the licence fee.

20 Although it may be said that the principles of restitutionary relief have not yet been exhaustively or definitely stated by the High Court (which is unsurprising given the nature of the remedy) there is, nevertheless, guidance that is apparent in the authorities to which I have referred as to when such relief is available and, in particular, what may constitute a good defence to a claim for money paid under a mistake. As I understand the cases, once a prima facie entitlement to restitution is made out by the payer, it is for the payee to show that it would not be unjust or unconscionable for it to retain the money if the payer is to be denied restitutionary relief. Thus, in those circumstances, it is for the respondent to demonstrate, for example, that it has given good consideration for the payment. Whether it had done so is to be judged from the perspective of the payer, in this case, the tenant. Moreover, in a context such as the present, it would also be relevant, I think, to consider whether the respondent has a "counter restitutionary" claim against the payer for use and occupation of the premises.

21 As I have said, I consider that the landlord has a good defence to the tenant's restitutionary claim and that is because, broadly, it seems to me, it would not be unjust or unconscionable for it to retain the money in question notwithstanding that it was paid under a genuine mistake. I say this for the following reasons. First, I think that, unlike the position of the payers in David Securities and Roxborough, the tenant here has received good consideration for the money it paid, namely, exclusive possession of the premises that were obviously of use and benefit to it, as is demonstrated not only by the fact that it occupied them since entry for its business purposes, but also by its continued possession of them after it became entitled to terminate the lease pursuant to s.8(2)(c) of the Act. And it is irrelevant that the landlord might have been under an obligation to provide the premises under the lease. The question is not whether the landlord was under such an obligation, but rather whether the tenant gained or accepted a benefit in the form of exclusive use of the premises (as a quid pro quo for the payments in question). As I have said, on the evidence, it is apparent that the tenant received such a benefit and, thus, from its point of view, it received good consideration for its payments. Moreover, it has not been suggested that the contents of the disclosure statement had any relevant bearing on the benefit that the tenant secured under the lease. For instance, there was no suggestion that the statement revealed that the premises, or any matter relating to them, have been misdescribed in the lease, or during the negotiations leading to its execution, such that it would now be unconscionable for the landlord to retain the money.

22 The second, and additional, reason for my conclusion that it would not be unjust for the landlord to retain the money notwithstanding that it was paid under mistake is that I consider that the landlord has a sound claim against the tenant for use and occupation of the premises for the relevant period, in an amount broadly equal to the rent reserved under the lease. As is explained in Woodfall's Laws of Landlord and Tenant[44], a restitutionary claim based on use and occupation arises where the respondent has been given permission by the claimant to occupy its land without there being any binding term as to payment. The essential elements of this cause of action were described in Australia Provincial Assurance Association Ltd v. Rogers[45] and Zegir v. Woop[46], in slightly different terms, namely, the existence of an agreement between the parties - express or implied - to the effect that the occupant/respondent will be the tenant of the claimant and shall pay for the occupation. In my view, there is no difference of substance between those tests. In any event, I think that each is made out in the present case, given the existence of the lease and lack of any suggestion by the tenant that there was an agreement that it was to occupy the premises rent free. And, in my view, there is no statutory prohibition against such a claim. It seems to me that, on its proper construction, s.8 of the Act is of a like character to that considered in Pavey[47], in that it merely renders the rent covenant void for the period in question. The section says nothing of the landlord's rights at common law to compensation for use and occupation of the premises, and a prohibition depriving the landlord of such compensation cannot be implied into it. If Parliament intended to achieve that result it would have said so in

terms in that section as it did, for example, in s.11 in relation to "key-money" which specifically prohibits a lessor from, amongst other matters, retaining key-money that has been paid to it. And, as has been recognised in Pavey, the landlord could establish the amount of compensation to which it was entitled for use and occupation by relying on the rental provisions in the lease as evidence of what was fair and reasonable in that regard. It is true that, ordinarily, proof by the defendant of a demise under seal will provide a good defence to a claim for use and occupation,

but as Sholl, J. explained in Specktor v. Lees[48], the rule is predicated on the claimant being able to sue for rent on the covenant in the deed. In this case, although the lease was made under seal, as the tenant contended, the covenant to pay rent was void for the relevant period and, consequently, the ordinary rule of a deed being a good defence to a claim for use and occupation would not have operated.

23 I should say for completeness, although it should be obvious enough, that it does not follow from what I have said that a lessor can, in all cases, sit on its hands in disregard of the requirements of s.8 of the Act and retain moneys paid to it by a tenant which is ignorant of its rights under the provision. This would be particularly so where the contents of the disclosure statement have a material bearing on the subject of the lease and its terms, which does not appear to have been the case here.

24 Thus, for the above reasons, I would allow the appeal, set aside the orders below and, in lieu of them, order that the order of the Tribunal be set aside and that in its place it be ordered that the respondent's application be dismissed.

[28]

26 Allowing, however, that the effect of the statute is that a tenant may withhold rent until after the disclosure statement is given, it is a separate question as to whether the lessor is precluded from receiving or retaining any consideration paid by the lessee for use and occupation of the demised premises. In terms, s.8(2) provides only that where a lessor does not comply with s.8(1) the lessee is not liable to pay rent. In effect it vitiates the tenant's contractual obligation to pay rent as such in accordance with the covenant for rent. But in contradistinction to s.11 of the Act, which prohibits a lessor from requesting, receiving or retaining the payment of any key-money or any consideration for the goodwill of a business carried on at the demised premises, s.8(2) does not in terms prohibit a lessor from receiving or retaining the payment of an amount for use and occupation of the demised premises.

27 In Davids Securities v CBA,[49] the High Court held that a recipient of a payment made under a mistake of fact or law is prima facie liable to make restitution but that the liability may be displaced by pointing to circumstances recognised in law as rendering an order for restitution unjust. Traditionally, those circumstances have included cases in which a claimant receives some part of the "benefit" provided for in the bargain, be the bargain contractual or of another kind.[50] In that sense, a claim for money had and received lies only as upon a total failure of consideration.

28 "Total failure of consideration" is, however, a complex conception, since the idea of consideration is used in the law in more than one sense. Where a plaintiff's cause of action is for the recovery of money paid under a mistake of fact or law, the relevant conception of "consideration" is in effect limited to the matter considered in forming the decision to make the payment; the state of affairs contemplated as the basis or reason for payment. Therefore, as Gummow, J. explained in Roxborough v Rothmans of Pall Mall,[51] in the present context "total failure of consideration" looks to the benefit bargained for by the payer rather than any benefit which might have been received in fact. [52]

29 In seeking to recover the money which the respondent paid as rent pursuant to the lease, the respondent in effect invokes the reasoning in Davids Securities and Roxborough v Rothmans of Pall Mall. It claims that it paid rent under the lease in the mistaken belief that it was bound in law to pay it, and therefore, because of the mistake, it is entitled now to recover it. But, as has been seen, in order to succeed in that claim the respondent must establish that it paid the rent as upon a total failure of consideration. And, in effect, that necessitates acceptance of the proposition that, whatever benefit the respondent might have received from the use and occupation of the demised premises, the respondent did not receive the benefit for which it bargained. In my view the respondent has not succeeded in establishing that it did not receive the benefit for which it bargained.

30 Admittedly, there is a sense in which the state of affairs contemplated as the basis or reason for payment did not exist at the time of payment. Presumably, the respondent paid the rent because it considered that it was legally bound to pay it. As it now appears, it was not legally bound to pay it. But to reason from there to the conclusion that the rent is recoverable is I think to ignore a significant difference between cases like Davids Securities and Roxborough v Rothmans of Pall Mall and cases with facts like this case.

31 In Davids Securities the bank argued against recovery on the basis that despite the customer's mistake as to the legality of the withholding tax covenant, the customer received the benefit for which it bargained, or at least received part of the benefit, namely, the provision of a loan. Therefore, according to the bank, there was not a total failure of consideration. But that argument failed because the parties had impliedly acknowledged that the consideration could be broken up or apportioned as between principal and interest, on the one hand, and a grossing-up amount to cover withholding tax, on the other hand. The state of affairs contemplated as the basis or reason for payment of the grossing-up amount could thus be seen as the customer's belief that it was legally bound to meet the bank's withholding tax liability. The benefit for which the customer bargained was the benefit of being discharged from what it supposed was its legal liability to pay the grossing-up amount. But, in the events which occurred, Section 261 of the Income Tax Assessment Act 1936 rendered void the bank's attempt to pass on the withholding tax liability to the customer. Therefore, the state of affairs or reason for the customer's payment of the grossing-up amount did not exist and the customer did not receive the benefit for which it bargained.

32 Similarly in Roxborough v Rothmans of Pall Mall, the tobacco company argued against recovery on the basis that, despite the customer's mistake as to the legality of the tobacco licence fees which it paid, the tobacco licence fees were part of the total price of the tobacco products sold and delivered to the tobacco retailer, and therefore that the retailer received the benefit for which it bargained: namely, the provision of the tobacco products. It was held, however, that it accorded with the basis of dealing and contractual arrangements between the tobacco company and the retailer to regard the licence fee component of the net wholesale cost of the cigarettes as a distinct and separate element of the consideration. It followed, as it was held, that the retailer had not received any of the benefit for which it bargained when agreeing to pay that component of the price, and hence that component of the total net wholesale cost was recoverable as money had and received.

33 The position in this case is different. Whereas in Davids Securities the borrower got nothing in return for its payment of the grossing-up amount, and in Roxborough v Rothmans of Pall Mall the tobacco retailer got nothing in return for its payment of the tobacco licence fees, in this case the respondent got the benefit of the use and occupation of the demised premises in return for the rent which it paid. As I see it, that is the benefit which it had in view - the benefit for which it bargained - when it agreed to pay the rent. It is true that the respondent was not under a legal duty to pay the rent and, therefore, it is true that the payment of what it perceived to be rent did not discharge it from an obligation to pay rent. But as I have said, I do not consider that s.8(2) prohibits the lessor receiving or recovering any consideration in respect of the lessee's use and occupation of the demised premises. There does not seem to be any statutory imperative for concluding that the tenant was intended to have the benefit of free use and occupation. And it is to be noted that no other basis has been suggested. It follows, in terms of a conventional analysis, there has not been a total failure of consideration.

34 An alternative way of looking at the matter is in terms of the lessor's right to recover or retain a reasonable satisfaction for the tenant's use and occupation of the premises and, correspondingly, the lessor's right to retain so much of the rent paid as does not exceed the amount of a reasonable satisfaction. For the reasons already given, I do not consider that s.8(2) prohibits a lessor from receiving or retaining a reasonable satisfaction for use and occupation dehors the lessee's express contractual obligation to pay rent. Accordingly, in my view, this is the sort of situation in which the restitutionary principles essayed in Pavey & Matthews Pty Ltd v Paul[53] may apply.

35 In Pavey & Matthews v Paul the High Court held that there was no apparent reason in justice why an unlicensed builder (who was precluded by s.45 of the Builders Licensing Act 1971 (NSW) from enforcing a building agreement) should not bring proceedings on a common indebitatus assumpsit count to recover fair and reasonable remuneration[54] for work which was actually done and which the owner had accepted. Parity of reasoning implies that there is no reason why a lessor who is precluded by s.8(2) of the Retail Tenancies Reform Act 1998 from bringing proceedings for the recovery of rent should not bring proceedings to recover or retain out of the rent paid a reasonable satisfaction for the use and occupation of demised premises.

36 There are of course textual differences between the legislation in issue in each case. Section 45 of the Builders Licensing Act provided simply that the building contract was unenforceable. That may be contrasted with the express statement in s.8(2) of the Retail Tenancies Reform Act that, if a disclosure statement is not given, rent is not payable for the period for which the statement remains unfurnished. But I do not think that the textual differences are significant. The substantive effect of each provision is to render the express contractual obligation for payment unenforceable. The point is made in the decision of the South Australian Full Court in Upjay Pty Ltd v MJK Pty Ltd, [55] in relation to ss.6(2) and (3) of the Land Agents Act 1994 (SA). Section 6(2) provided that an estate agent was not entitled to commission unless registered under the Act and s.6(3) went even further than s.8(2) of the Retail Tenancies Reform Act, by providing that any commission or other consideration paid or given to such a person could be recovered from that person as a debt. But the Full Court held that an unregistered estate agent was still entitled to recover reasonable remuneration for his services as upon a quantum meruit. As Doyle, C.J., with whom Williams, J. agreed, said:

[45]

48 Those observations must be read in conjunction with the warning that it is a mistake to treat restitution as a modern synonym for a refusal "against conscience" to pay the money in question. It is clear enough that an action for money had and received may lie against a defendant who fails to account but who on any sensible understanding of the term has not been enriched and, equally, it is not a condition of an action for restitution on the basis of unjust enrichment that a plaintiff have been impoverished by or to the extent of the defendant's enrichment. Furthermore, and despite the breadth of equitable principle, it remains that the scope of restitutionary remedies is informed, and to a large extent limited, by the categories of the decided cases.

49 But subject to those limitations, it is in accordance with principle, and it has been recognised in at least some of the authorities, that an entitlement to sue for "counter restitution" is pro tanto an answer to a claim for restitution. It follows, at least to that extent, the appellant's retention of the moneys paid as rent would not be unjust.[75] I conclude that the appellant is entitled to raise by way of answer to the tenant's claim that the tenant has had the use and occupation of the demised premises and that in formulating his claim the tenant must allow for a reasonable satisfaction for the benefit of that use and occupation.

50 Since the only evidence of the amount of a reasonable satisfaction for the use and occupation of the demised premises is the lease itself, I see no reasons why the amount to be allowed for use and occupation should not be equal to the rent. It has not been suggested that it is more than a reasonable amount. It follows in my judgment that the tenant's claim to recover the rent it paid should have been held to fail.

Conclusion and orders

51 In the result, I would allow the appeal. The judgment the subject of appeal should be set aside and in lieu thereof it should be ordered that the appeal from the decision of the Victorian Civil and Administrative Tribunal be allowed and the order of the Tribunal the subject of appeal be set aside. In lieu of the order of the Tribunal it should be ordered that the respondent's application for recovery of the amount paid by way of rent be dismissed.

[48]

55 There is a question whether the subject matter of the critical submissions was properly before the Court. I will address that question in a moment. But upon an assumption that the Court was properly seised of the matter , I agree, for the reasons given by Chernov and Nettle J.J.A., that the issue should be resolved as they propose.

56 That outcome, on one view, might be thought anomalous. For it means, in the simple language of money outlaid and money received, that the landlord will retain an amount paid as rent which the tenant was not liable to pay as rent. But that is far from being the whole story. The principles which their Honours have applied mean, on the one hand, that a landlord whose position was unmeritorious would not be able to raise a claim for an amount equivalent to unpaid rent, or retain such an amount if the same had been paid, when once a disclosure statement was supplied; or, on the other hand, that a tenant whose position was unmeritorious would have no liability to the landlord for an amount equivalent to unpaid rent after provision to it of a disclosure statement, or be able to recoup such an amount if it had been paid. By "unmeritorious" I do not refer to some idiosyncratic notion of what would be fair; but rather focus upon the question whether the tenant, in the period in respect of which there was no liability to pay rent, got what it had bargained to pay for, as reflected by the lease.

57 In the present case, the tenant evidently did get what it bargained to pay for under the lease. It got the use of occupation and the premises. There was no suggestion that the premises were other than as described. No allegation was made of any misrepresentation inducing entry into the lease. When the tenant was eventually given a disclosure statement, it did not suggest that its decision to enter into the lease on the terms that it had done would have been any different had the statement been earlier provided. Neither did it exercise its right under s. 8(2)(c) of the Act. To add emphasis to the last of those matters, Ms McLellan, principal of the tenant, agreed in cross-examination that she did not want to terminate the lease. In the event, this was a case in which the tenant's position was not relevantly meritorious.

An Antecedent Issue

58 I have thus far assumed that the critical issue was properly the subject of appeal to the Supreme Court, and was in fact the subject of appeal. Whether that was the case is a question logically antecedent to resolution of the issue. It is not to be confused with the question whether the issue was argued in the Trial Division or in this Court. Nor is it to be confused with the question whether the respondent, either in the Trial Division or in this Court, pressed a submission that the key issue was not properly the subject of appeal.

59 The dispute between landlord and tenant began its legal journey in the Victorian Civil and Administrative Tribunal. A party may appeal, by leave, from the Tribunal to the Supreme Court.[77] The right of appeal is confined by s. 148(1) of the Victorian Civil and Administrative Act 1998 to a "question of law". It must be a question of law which arose in the proceeding.[78] It is beside the point that the parties might agree before the Supreme Court to argue a question of law which was not sufficiently raised before the Tribunal. Section 148(1) does not confer a general appellate function upon either the Trial Division or the Court of Appeal.

60 That takes me to the Points of Claim and Points of Defence. At the heart of the former was the allegation that -

[60]

70 Ground 3 is also of some relevance. It is somewhat opaque. I shall not set it out. It is enough to say that the gist of the two paragraphs appears to be, first, that the landlord was asserting that it had raised an argument before the Tribunal that good consideration had been provided by way of use and occupation of the premises; and second, that it was complaining, inter alia, that the substance of its counterclaim argument had not been addressed by the Tribunal.

71 The combination of grounds 2 and 3 plainly suggests, notwithstanding the Tribunal's reasons, that submissions resembling the submissions which were pursued in this Court were agitated before the Tribunal. That is not to say that the submissions advanced before the Tribunal, the learned judge in the Trial Division, and in this Court, were the same. But it is to say that, probably, the substance of the questions of law stated in the Notice of Appeal had arisen in the tribunal proceeding, and were properly the subject of appeal under s.148(1) of the VCAT Act.

72 It is of significance, I should add, that, so far as appears, counsel for the tenant did not submit to the learned judge in the Trial Division that ground 2 of the Notice of Appeal raised some new matter. The situation is not the same as would have obtained if the Tribunal's reasons should be taken to have fully addressed the landlord's arguments, if there had been no ground 2, and if the landlord in those circumstances had raised what might be called a ground 2 argument without objection being taken by the tenant's counsel.

Different Arguments

73 What I have so far concluded is enough to establish the jurisdiction of the Supreme Court to consider the critical submissions. On the other hand, I consider it clear that the arguments advanced before the Tribunal, the learned judge in the Trial Division, and before this Court, were not the same. So, for instance, the contention that the landlord had an available cross-claim, for an amount equal to the tenant's restitutionary claim, was advanced - though in substantially different form - before the Tribunal; but not, so far as I can see, before the learned Trial Division judge.

74 Again, the "good consideration" submission appears to have altered complexion over time. Accepting that the Tribunal's reasons may not have fully captured what was there submitted, it seems at least clear that the pertinent submission before the learned judge in the Trial Division and before this Court was not the same.

75 In that connection, his Honour noted the landlord's submission that it had provided consideration by way of "the provision by [it] to the tenant of the use and quiet enjoyment of the demised premises". He noted also the countervailing submission. Thus:

[69]

[5] The complexity and uncertainty surrounding the law of restitution is comprehensively examined by Ormiston, J.A. in Hookway v Racing Victoria Ltd [2005] VSCA 310 at [18]- [59]. That case, however, was essentially concerned with a restitutionary claim in respect of a voluntary payment where entitlement to restitution was in dispute. Here, as has been noted, it was accepted that, prima facie, there was entitlement to restitution and the critical question was whether the landlord had a good defence to it.

[6] See, for example, Roxborough v. Rothmans of Pall Mall Australia Ltd. (2001) 208 C.L.R. 516 at 525 per Gleeson, C.J., Gaudron and Hayne, JJ., at 535 and 553 per Gummow, J. and at 590 per Callinan, J.

[7] See, for example, Roxborough at 548, 554 per Gummow, J.

[8] [1760] EngR 713; (1760) 2 Burr 1005; 97 E.R. 676.

[9] At 44. I note that, although the description of the action in the above edition of Bullen & Leake is not relevantly different from that set out in subsequent editions up to the 13th edition (1990) at 654-665, in the 14th edition of the work - (2001) at 1543-1559 - there is no reference to that cause of action by that name. The corresponding part of the work, in terms of precedents and commentary, deals with the matter under the broad heading of "Restitution" and in the context of unjust enrichment.

[10] At 550.

[11] [1987] HCA 5; (1986) 162 C.L.R. 221.

[12] In Mason & Carter's Restitution Law in Australia, the learned authors observe, at 5, that "the High Court's break with implied contract theory in Pavey marked the birth of the law of restitution in this country."

[13] At 227-229.

[14] At 256.

[15] See, in particular, at 254-256, 259 and 263.

[16] See Mason and Wilson, JJ. at 228 and Deane, J. at 262-264.

[17] At 262.

[18] In that respect, the legislation was different from that examined by the Queensland Court of Appeal in Marshall v. Marshall [1999] 1 Qd. R. 173, where it was held that, on its proper construction, the Act disentitled the builder to any monetary compensation for the work carried out by it under the contract that was struck down by the legislation. Accordingly, it was there held that, in light of the terms of the legislation, the owner was entitled to recover the money that it had paid voluntarily to the builder under the mistaken belief that the builder was entitled to it.

[19] At 257.

[20] (1987) 164 C.L.R. 662.

[21] Mason, C.J., Wilson, Deane, Toohey and Gaudron, JJ. at 673.

[22] At 673.

[23] [1992] HCA 48; (1992) 175 C.L.R. 353.

[24] [1980] Q.B. 677 at 695.

[25] Mason, C.J., Wilson, Deane, Toohey and Gaudron, JJ.

[26] At 378.

[27] At 379.

[28] At 379, 384.

[29] At 381-382.

[30] (2001) 208 C.L.R. 516.

[31] Ha v. State of New South Wales [1997] HCA 34; (1997) 189 C.L.R. 465.

[32] At 525-527.

[33] At 526.

[34] The licence fee in respect of which the money was paid was no longer payable.

[35] At 544.

[36] At 548.

[37] At 1009; 679 and 1012; 681.

[38] See also R. v. Brown [1912] HCA 6; (1913) 14 C.L.R. 17 at 25 per Griffith, C.J., Campbell v. Kitchen & Sons Ltd. [1910] HCA 50; (1910) 12 C.L.R. 515 at 531 per Barton, J., Sargood Brothers v. The Commonwealth [1910] HCA 45; (1910) 11 C.L.R. 258 at 303 per Isaacs, J. and British American Tobacco Australia Ltd v The State of Western Australia [2003] HCA 47; (2003) 217 C.L.R. 30 at 52 at per McHugh, Gummow and Hayne, JJ.

[39] At 539.

[40] [1913] A.C. 283 at 296.

[41] At 551.

[42] [1957] HCA 69; (1957) 98 C.L.R. 65.

[43] At 557.

[44] Release 51, Vol.1 at 10.001. See also Australian Provincial Assurance Co. Ltd v. Rogers (1943) 43 S.R.(NSW) 202; Zegir v. Woop [1955] VicLawRp 66; [1955] V.L.R. 394.

[45] (1943) 43 S.R.(NSW) 202.

[46] [1955] VicLawRp 66; [1955] V.L.R. 394.

[47] See also Upjay Pty Ltd v. MJK Pty Ltd [2001] SASC 62; (2001) 79 S.A.S.R. 32, where the claimant succeeded on a quantum meruit claim based on unjust enrichment for services provided by it to the respondent in respect of real estate transactions notwithstanding that the relevant legislation said that a person, not registered as an agent, is not entitled to a commission or other consideration for services as an agent and that any commission paid to a person not entitled to receive it may be recovered from that person as a debt.

[48] [1964] VicRp 2; [1964] V.R. 10 at 18-19.

[49] [1992] HCA 48; (1992) 175 C.L.R. 353.

[50] Ibid. at 382.

[51] (2001) 208 C.L.R. 516.

[52] Ibid. at 555[102]; see also David Securities v Commonwealth Bank [1992] HCA 48; (1992) 175 C.L.R. 353 at 382.

[53] [1987] HCA 5; (1987) 162 C.L.R. 221 at 262.

[54] Albeit never more than the contract sum.

[55] [2001] SASC 62; (2001) 79 S.A.S.R. 32.

[56] Ibid. at 47 [72], my emphasis.

[57] [1920] UKHL 1; [1920] A.C. 508 at 533. (citation omitted)

[58] And, in following Pavey, the South Australian Supreme Court in Upjay did the same.

At a glance

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Legislation Cited (4)