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[2017] VSC 616
Supreme Court of Victoria
2017-10-20
CROFT J
Original judgment source is linked above.
LEASES AND TENANCIES - Whether document styled "heads of agreement" was in the circumstances an immediately enforceable agreement for lease - Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 - Verrocchi v Messinis [2016] VSC 490.
PRACTICE AND PROCEDURE - Victorian Civil and Administrative Tribunal - Appeal against Tribunal orders - Victorian Civil and Administrative Tribunal Act 1998 s 148(1).
1 This proceeding has been brought by Originating Motion, dated 24 August 2017, pursuant to s 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 ("the VCAT Act"). The Plaintiff, Casdar Pty Ltd, is seeking both leave to appeal and to appeal from orders of the Victorian Civil and Administrative Tribunal ("the Tribunal" or "VCAT") which were made by Member A. Kincaid on 26 July 2017 in VCAT proceeding number BP59/2017.[1] The Defendant, Mr Joseph Fanous, resists both the Plaintiff's leave application and the appeal itself.
2 The Plaintiff is described in a document styled "Heads of Agreement", the critical document the subject of these proceedings, as the "Lessor" of premises being "Part of shop 6/51 Heatherton Road, Endeavour Hills" ("the Premises"). The Defendant is described in the same document as the "Lessee".
3 In substance, the critical issue before VCAT was whether the document described as the Heads of Agreement constituted an agreement for lease under which the parties intended to be immediately bound by its terms.
4 In the interests of expedition and economy in terms of time and cost, this proceeding was heard as a combined or "rolled up"[2] application for leave to appeal the Tribunal decision and, if leave were to be granted, the hearing of the appeal itself.
A party to a proceeding may appeal on a question of law from an order of the Tribunal in the proceeding -
(a) if the Tribunal was constituted for the purpose of making the order by the President or a Vice President, whether with or without others, to the Court of Appeal with leave of the Court of Appeal; or
(b) in any other case, to the Trial Division of the Supreme Court with leave of the Trial Division.
6 It follows from this provision that any appeal is dependent upon two important qualifications. First, that the appeal be on a question of law, and secondly, that the Court gives leave to appeal. The legislative policy underlying these provisions is that "VCAT decisions should not generally be disturbed where cases have been decided in that forum other than on questions of law and where there is something about the decision bearing upon the question of law which warrants a grant of leave to appeal."[3] It follows that "[t]his Court is not entitled to enter into the fact finding exercise which the legislature has deliberately entrusted to a specialist tribunal."[4]
7 The leave requirement under s 148(1) of the VCAT Act is designed to maintain this position. As Pagone J said in Commissioner of State Revenue v Frost:[5]
The requirement for leave under s 148(1) of the VCAT Act "is a safeguard that the appeal is on a pure question of law and that the grounds supporting the question of law articulated for determination by the Court do found the subject matter of the appeal".[6] It also confers a discretion about whether to grant leave[7] which an applicant must persuade the Court to exercise in its favour. What must be shown will depend upon the particular case bearing in mind the statutory criteria being a grant of leave and not special leave.[8] It will ordinarily be necessary (in addition to a clearly articulated question of law)[9] for an applicant to make out a prima facie case[10] and in an appropriate case it may be necessary for the applicant to show that the question upon which leave is sought has public or general importance.[11]
8 In considering an application of this nature, courts have been concerned to respect the role entrusted by the legislature to the particular tribunal and not, in effect, subvert this position by seeking out error. Thus, Kirby J in Roncevich v Repatriation Commission said:[12]
Courts conducting this form of review have been repeatedly enjoined by this Court to avoid overly pernickety examination of the reasons.[13] The focus of attention is on the substance of the decision and whether it has addressed the "real issue" presented by the contest between the parties.
Similarly, in Vegas Nominees Pty Ltd v Werribee Sports & Community Club Inc, Ashley J said:[14]
This Court has said more than once that it should not examine briefly stated reasons by an expert Tribunal in an over-legalistic manner or by the over-zealous drawing of inferences in order to disclose some supposed error; although where unambiguous language is used, the user should be taken to mean what the words say. I should add that the Court is not entitled to interfere with the Tribunal's decision unless it is satisfied that there was in fact a vitiating error of law. It is not enough for the appellant to show that the Tribunal's reasons for its decision are so expressed as to suggest the possibility that it proceeded upon a wrong view of the law. In support of the several propositions that I have just stated I refer to Portland Properties Pty Ltd v Melbourne & Metropolitan Board of Works,[15] Michaelis Bayley (Vic) Pty Ltd v Melbourne & Metropolitan Board of Works[16] and Teston Investments Pty Ltd v Melbourne & Metropolitan Board of Works.[17]
Additionally, "[o]n appeal this Court must recognise the forensic realities of the way in which the case was put to the Tribunal. It is these realities to which a Tribunal must respond in its reasons."[18]
9 In terms of the party's submissions, it is clear from the authorities to which reference has been made that the role of a specialist tribunal, such as VCAT, is not to be usurped by the Court and that a decision of such a tribunal is not to be interfered with absent a vitiating error of law.
10 For the reasons which follow, although I am satisfied that the Plaintiff has established a question of law, this does not, in itself warrant the grant of leave to appeal as I do not consider that there is any basis for finding any vitiating error with respect to any such question. Moreover, were this simply an application for leave to appeal, I would, on the material to which reference has been made in these reasons, not find that the Plaintiff has established the "justice of the case" as discussed in Secretary to the Department of Premier and Cabinet v Hulls,[19] and that leave to appeal should be granted. However, as this is a "rolled up" application, for reasons indicated previously, and this proceeding and the hearing has been conducted on the basis that if leave were granted, all matters which the parties would seek to canvass by way of appeal have been canvassed and argued, the Plaintiff would have failed in any appeal had leave been granted.
11 The Proposed Notice of Appeal (as amended by consent at the hearing in these proceedings) ("the Proposed Notice of Appeal") identifies the orders sought in the following terms:
RELIEF OR REMEDY SOUGHT
...
1. Appeal allowed.
2. The defendant to pay the plaintiff's costs of the appeal.
(a) The defendant to pay the plaintiff rent of $93,800.
(b) The defendant to pay the plaintiff interest of $8,539.71.
12 The Proposed Notice of Appeal identified the relevant questions of law and the grounds of appeal in the following terms:
13 As will be seen from the Proposed Notice of Appeal, the Plaintiff seeks an order from this Court pursuant to s 148(7) of the VCAT Act setting aside the Tribunal's orders and substituting fresh orders in the terms sought.
14 The Plaintiff is and was at all material times the freehold owner of the Premises. On or about 29 July 2015, the parties executed the Heads of Agreement in relation to the Premises. It was then the intention of the Defendant to operate an Egyptian café from the Premises. The parties then entered into negotiations in relation to the preparation and execution of a formal lease document, but these negotiations ultimately failed and no formal lease document was ever executed. As indicated, in substance the critical question underlying the VCAT proceedings and these proceedings is whether or not the Heads of Agreement immediately bound the parties according to its terms as an agreement for lease.
15 It is common ground that the labelling of a document as "Heads of Agreement" or otherwise is not determinative of the critical question.[20] Rather, the critical question is to be resolved having regard to the terms of the Heads of Agreement and any relevant context of communications and dealings between the parties.
16 The Heads of Agreement contain a number of provisions which are relevant to the critical question, particularly:
LESSEE NAME: Joseph Fanous
...
LESSEE COMPANY NAME: T.B.A.
LESSEE SOLICITOR: T.B.A.
COMMENCING RENTAL: $350 per square metre x 201 square metres = $70,350 per annum / 12 = $5,862.50 per month + GST + outgoings.
DEPOSIT: $5,862.50 (one month rent).
TERM: 3 years with two options of 3 years each
...
COMMENCEMENT
DATE FOR LEASE: From signing of Heads of Agreement (to be signed within 7 days).
COMMENCEMENT
DATE FOR RENTAL: 2 Months from landlord completion of building works.
COMPLETION OF
BUILDING WORKS: 01 September 2015.
SPECIAL CONDITIONS TO THE AGREEMENT FOR LEASE
...
NOTE: If the lease is under a company name, the Landlord will require a guarantee from the two owners.
The Heads of Agreement were signed by Joseph Fanous as "Lessee" and by Samuel Mondous as "Lessor".
18 The Plaintiff continued constructing the Premises. The Defendant submits that contrary to the Plaintiff's submissions that "[n]o landlord ... would engage in substantial modification of premises at the request of a tenant who was in occupation from month to month pursuant to a periodic lease",[23] at the hearing the Plaintiff's agent agreed that the works that were done were not done specifically for the Defendant, but rather comprised general completion works and shop fixtures.[24] Further, evidence of the agent with respect to works is, in my view and contrary to the Plaintiff's submissions, mere speculation.[25] On the other hand, the Plaintiff submits that the Defendant insisted on the landlord carrying out repairs to the property and that the Defendant had obtained finance and approached the Council to try and get a permit, presumably to operate the business. As discussed further in these reasons, none of these matters are, in the context of the present circumstances, definitive with respect to the critical question.
19 Negotiations for a formal lease began and the Defendant was given a disclosure statement pursuant to the Retail Leases Act 2003 ("the Act") for the first time during the course of those negotiations. Negotiations broke down, apparently as a result of disputes regarding the quality of the building works, the perceived lack of a planning permit for the Premises (which permit was provided for in Special Condition 1 of the Heads of Agreement).[26] It is common ground that no disclosure statement pursuant to the provisions of the Act was provided to the Defendant prior to or at about the time the Heads of Agreement were signed.
20 In terms of factual matters, it is helpful at this point to set out the relevant part of the Tribunal's reasons:[27]
21 In the present circumstances, the leading authority which naturally comes to mind is the High Court decision in Masters v Cameron.[29] In this respect, reference is helpfully made to Professor Carter's work, Contract Law in Australia and the following part of his commentary on agreements "subject to contract":[30]
[5-02] General principles. Often a document has been signed which looks capable of constituting a binding contract, but the document indicates that the parties contemplate that later a further formal contract will be written and executed. Is the first document a binding agreement? Or will the parties only be bound when, if ever, the formal contract comes into force? The leading Australian case is Masters v Cameron[31] in which it was said:
Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
In cases falling within the first two categories referred to in Masters v Cameron the parties are immediately bound. In these cases, but not when the third is applicable, the parties have reached finality in negotiating the terms of their bargain and intend to be bound but yet intend to have those terms stated later in a form which is fuller or more precise.
...
[5-06] Fourth category? There are cases where the parties intend to be bound immediately while expecting to make a later more formal document containing by agreement additional terms. Some cases[32] suggest these situations amount to a fourth class of case. While it would be possible to conceive of several further categories to those identified in Masters v Cameron,[33] the High Court intended to identify three points on a continuum of transactions. The initial agreement in situations where parties are bound by an agreement to execute a formal document containing additional terms falls within the second category because the first agreement will be enforceable unless superseded by a later agreement.[34]
22 In any event, irrespective of which category or class an agreement is held to fall within, the most important consideration is the intention of the parties, for it is the intention of the parties that will determine whether or not they are bound by the informal agreement.[35]
23 The process of determining the intention of the parties in these circumstances does not lend itself to formulaic prescriptive rules, though in general terms regard must be had to any written agreements between the parties and the pre and post-contractual conduct of the parties. More particularly, the position in this respect was helpfully stated by Riordan J in Verrocchi v Messinis as follows:[36]
(a) Where the disputed agreement is in writing, the words used by the parties must be the strongest indicator of whether the parties intended to be legally bound. If, on proper construction of the document, it is sufficiently clear that the parties were content to be bound immediately, then the matter is resolved irrespective of the subject matter, magnitude or complexity of the transaction or whether the parties contemplated a further contract in substitution for the first contract.
(b) The detail of the terms, to which the parties descended in the disputed agreement, may indicate whether the parties did or did not intend to be immediately bound. As was stated by Powell JA in Liquorland (Australia) Pty Ltd v GYG Holdings Pty Ltd:
In carrying out the task of determining ... what was the relevant intention of the parties, a court may have regard, not only to the matters upon which the parties have reached their consensus, but also to the areas in respect of which they have failed to reach any consensus.
(c) Whether the first contract is expressed to be 'subject to contract' or the absence of such words.
(d) An informal agreement which deals with a transaction of great magnitude or complexity 'may suggest that the informal agreement was not intended to constitute a binding contract'.
(e) The established or common practice of agreements of the type in question may indicate that the parties did not intend to be finally bound until the completion of a formal contract. An example of such a practice is with respect to the sale of real estate.
(a) Admissions by conduct of the existence or non-existence of a legally binding contract.
(b) Throwing light upon the meaning of the language in the disputed agreement for the purpose of determining whether the language expresses an intention to enter or not enter contractual relations.
(c) Whether and to what extent there were uncompleted negotiations between the parties; and the significance of the uncompleted issues.
24 On the basis of the provisions of the Heads of Agreement and having regard to the contemplation of the parties that the Heads of Agreement would lead to the execution of a retail premises lease, Member Kincaid found that the Heads of Agreement did not bind the parties:[37]
25 Whilst the Defendant does not contend that the Tribunal made any error in this respect, the Plaintiff submits, in broad terms, that these findings do not provide, in themselves, any support for the proposition that the parties had made their performance of the Heads of Agreement conditional upon the execution of a lease; that is, that the Heads of Agreement were not immediately binding upon the parties.[38] Rather, the Plaintiff emphasises and relies upon what might be described as pre and post-contractual conduct - though mainly the latter - in support of its position. In my opinion, the provisions of and matters pertaining to the Heads of Agreement which were referred to and addressed by Member Kincaid are those which are relevant and critical in construing the effect of this, quite inelegant and poorly drafted, document. There is little point in my repeating the Member's reasoning in this respect as I am of the view that he has addressed all the issues with respect to the Heads of Agreement which I regard as relevant and has expressed the same views as I have formed in relation to these issues.
26 Having regard to the inelegance and poor drafting of the Heads of Agreement and the consequent ambiguities and uncertainties flowing therefrom, one cannot but be drawn to think of the possible application of the contra proferentem rule.[39] Although it is not entirely clear where the document came from or who drafted it, the Plaintiff, as potential lessor, would seem to be the likely proferens. Consequently, its provisions should be construed against it, as the person putting the document forward. I raise this issue for the sake of completeness only and not as a matter weighing in my consideration of matters before the Court in these proceedings - the issue not having been raised in VCAT or these proceedings.
27 As an alternative submission, the Plaintiff contends that the Heads of Agreement was immediately binding on the basis that the Tribunal found that the Heads of Agreement fell into category two of the categories set out in Masters v Cameron. It is not clear, however, how this assists the Plaintiff's position in the present circumstances having regard to the matters regarded by the Tribunal as critical in support of the position that the Heads of Agreement was not intended to be binding upon the parties. Particularly, the matters relied upon by the Tribunal which, in my opinion, disclosed no error, do not provide any basis for isolating or defining any of the "one or more" terms which might be said to be conditional upon the execution of a formal document subsequent to the Heads of Agreement.
28 As indicated by Member Kincaid, it appears to me to be unarguable on the basis of the material before the Tribunal, that any lease contemplated by the Heads of Agreement would not be a lease to which the Act would be applicable.[40] Consequently, the conduct of the parties with respect to compliance with that legislation is, in my view, a significant matter to which regard must be had in the present circumstances as part of the indicia of intention. It should be stressed that, in the present circumstances, the relevance of the requirements of the Act is confined to the issue of intention - there is no issue with respect to the effect or consequences of non-compliance.
29 In this respect, the Defendant submitted, during the VCAT hearing, that the Plaintiff had failed to comply with numerous requirements under the Act, namely:[41]
(a) Section 15, which states that a copy of the lease is to be provided at the negotiation stage;
(b) Section 17, which states that prior to entering into a retail premises lease the landlord must provide the tenant with a disclosure statement;
(c) Section 46, which states that prior to entering into a retail premises lease the landlord must provide the tenant with an estimate of outgoings -
(together, the Disclosures).
31 Thus the Defendant submits, and in my view correctly, that the pre-contractual conduct of the parties is consistent with the Defendant's position that the parties did not intend to be bound. I accept as a reasonable inference that the Plaintiff would have made the Disclosures, and ensured that the term of the lease complied with the Act, if it considered that the Heads of Agreement produced an agreement for lease - which is a "lease" for the purposes of the Act[43] - which was to have immediate effect. Moreover, the Plaintiff did provide a disclosure statement prior to the provision of the Formal Lease.[44]
32 In this respect, the Plaintiff submits that the Tribunal erred in failing to take account of the fact that the parties had acted in a way entirely inconsistent with the notion that they were not presently bound by the Heads of Agreement. No landlord it said - and, a fortiori, no owner of a shopping centre would engage in substantial modification of premises at the request of a tenant who was in occupation from month to month pursuant to a periodic lease.[45] Moreover, it said that neither would a tenant take steps to establish a retail business on the premises - including obtaining finance and seeking a permit from the Council - without first securing security of occupation of the premises.[46]
33 Continuing, the Plaintiff submits that the Tribunal erred in failing to take account of unequivocal evidence in the form of correspondence from both parties evidencing an understanding that they were currently contractually bound by the Heads of Agreement. In this respect it is said that the Defendant, for his part, while rejecting the lease in the form provided by the Plaintiff, nevertheless demanded that the Heads of Agreement be "revoked" and in fact complained that it was the Plaintiff who had not complied with the Heads of Agreement and had thereby delayed the opening of the projected restaurant.[47] In a similar vein, it is said, that the Defendant, in separate correspondence, demanded "a Deed of Settlement and Release executed by all parties terminating the Heads of Agreement and releasing him."[48] It is also submitted that correspondence from the Plaintiff's agent demonstrates that the Plaintiff shared this view of the Heads of Agreement as being immediately binding upon the parties.[49]
34 The Defendant, in responding to these submissions, says that after the signing of the Heads of Agreement the Defendant did obtain finance approval and paid the first month's rent on or about 28 August 2015 and collected the keys to the Premises. Moreover, it is said that the Defendant did not move into the Premises.[50] It is submitted by the Defendant that this conduct is consistent with his desire to establish his café on the Premises, but the Defendant rejects any suggestion that it evinces an intention to be bound immediately.
35 In relation to works on the Premises, the evidence before the Tribunal on the part of the Plaintiff's agent is that works were done on the Premises, but not done specifically for the Defendant, comprising, rather, general completion works and shop fixtures.[51]
36 As indicated previously, it appears that negotiations soon broke down after negotiations for the formal lease began. The Defendant was given a disclosure statement pursuant to the Act for the first time and issues arose in relation to the quality of building works and the lack of a planning permit for the Premises; the latter at odds with the position as stated in Special Condition 1 to the Heads of Agreement.
37 On 30 September 2017, the Plaintiff's agent wrote to the Defendant's solicitors in the following terms:[52]
Hi Anthony,
Following our phone conversation today, regarding the shop 6/51 Heatherton, hereby with this email, as agent's and body corporate managers of the said site revoked all the invoices relating to the expenses until the leases are signed and an official start date is established.
If you have any further questions regarding this matter, please don't hesitate to contact myself at any time.
Kind regards
On 6 October 2015[53] and 27 October 2015,[54] the solicitors for the Defendant wrote to the solicitors for the Plaintiff in terms which, as I have indicated, the Plaintiff asserts demonstrate that the Defendant considered himself to be bound having regard, in particular, to the reference to "revoking" the Heads of Agreement. In my view, the Defendant's analysis of the significance, or otherwise, of this correspondence is correct in that while the language used is unhelpful and often imprecise, it is consistent with the language employed by the Defendant's solicitors in their letter of 19 November 2015[55] in which they specifically say that they do not consider the Defendant bound - citing Masters v Cameron - and demand a Deed of Settlement and Release executed by all parties terminating the Heads of Agreement.
38 In the context of the state of correspondence and negotiations between the parties, no significance can be placed on the use of a word such as "revoke" with respect to the Heads of Agreement and nor can any reference to or request for a Deed of Settlement and Release. In my view, the evidence clearly indicates that negotiations had broken down and that this sort of language or terminology indicates no more than a concern to avoid the sort of arguments that have led to the VCAT proceedings and these proceedings. In this context, it is not indicative of party intention with respect to the effect of the Heads of Agreement.
39 Thus, in my view, there is no basis for criticising the conclusions reached by Member Kincaid in his reasons as the subsequent correspondence - subsequent to the Heads of Agreement - indicates merely that the parties were still negotiating the terms of the lease and that the Defendant did not then consider himself to be bound.[56] In any event, I see no basis for any suggestion that the Tribunal made an error of law in relation to its consideration and treatment of this correspondence. The position reached by Member Kincaid as to the nature and effect of this correspondence in the present circumstances was, in my opinion, entirely within the ambit of the range of proper conclusions which might be drawn from this correspondence. Moreover, insofar as might be relevant, I agree with his conclusions.
Conclusions on construction and the intention of the parties
40 For the preceding reasons, I am of the opinion that Member Kincaid made no error of law in his reasons with respect to the intention of the parties - either in relation to the construction of the provisions of the Heads of Agreement, pre-contractual conduct or post-contractual conduct. In any event, to the extent that Member Kincaid may have made any error with respect to these factual matters and the conclusions drawn therefrom, there was no vitiating error.
41 Finally, in relation to the provisions of and construction of the Heads of Agreement, reference should be made to the Plaintiff's argument - oft repeated, expressly or implicitly at the hearing in these proceedings - that to the extent that the parties have, by their conduct, demonstrated any understanding or belief that they were obliged to comply with any of the provisions of the Heads of Agreement, a presently enforceable lease agreement was thereby established. As I said in the course of the hearing, this does not follow. In my view, an argument in this vein can, at its highest, on the basis of the contents of the Heads of Agreement and the nature of the proposed transaction or arrangement between the parties as demonstrated by the documents and other evidence, only be put to the extent that fulfilment of the matters set out in all or part of the "Special Conditions" was required before any agreement for lease or lease would be entered into. Thus, in my view, to the extent that it might be said that a party was bound or obliged, it was only so bound or obliged in a commercial sense that if these matters were not attended to or resolved satisfactorily between the parties there would be no prospect of an agreement for lease or a lease being entered into. Moreover, as the preceding reasons indicate, I am of the view that the Heads of Agreement were simply not immediately binding on the parties. Consequently, I reject the submissions by the Plaintiff to the effect that the correct characterisation is an agreement which is binding but subject to fulfilment of one or more preconditions before it would, in effect, yield a binding agreement for lease.
42 An alternative argument raised by the Plaintiff is that if the Heads of Agreement were held not to constitute a binding agreement for lease between the parties, the Tribunal erred in finding that the periodic lease had come to an end on 1 January 2016.[57]
43 On this basis, the Plaintiff submits:[58]
44 In response, the Defendant agrees that the letter to which reference was made by the Plaintiff was not discovered and that it was tendered very late in the VCAT proceedings. It is also conceded that it is true that the Plaintiff could have, but did not, discover the 19 November 2015 letter itself. Nevertheless, and consistent with its obligations pursuant to s 97 of the VCAT Act to act fairly and according to the substantial merits of the case, it was, it is said, appropriate for the Tribunal to consider the letter.
45 In any event, as the Defendant submits, counsel for the Plaintiff agreed in the course of the VCAT hearing that the 19 November 2015 letter constituted effective notice for the termination of the periodic lease.[59] Accordingly, the Tribunal was not called upon to decide the legal effect of the letter and, as the Defendant contends, the Plaintiff cannot now seek to do so on appeal.[60]
46 During the course of the hearing in these proceedings, the Plaintiff's counsel sought to withdraw the concession made in the course of the VCAT proceedings as to the effect of the 19 November 2015 letter and sought to make brief written submissions in support of the right to do so. In terms of relevant principles, the Plaintiff submitted that there were three sources of such principles, as follows:[61]
A concession by counsel may be withdrawn provided no prejudice is caused by the making of the concession and its subsequent withdrawal.[63] The relevant prejudice cannot be the opposing party losing the advantage it otherwise would maintain if the concession remained. If that were so, no concession could be withdrawn.
Whether the party is so precluded depends on the nature of the matter conceded, its conduct of its case, whether the concession represented an agreement by the parties as to the facts to be decided, and other relevant circumstances.
47 In applying these principles in the present circumstances, the Plaintiff submitted that there would be no prejudice caused to the Defendant by the withdrawal of the concession; there are good reasons why the Court should disturb what was conceded in the VCAT proceedings as the case is not "merely one of parties agreeing upon what facts should be decided by a trier of fact, nor a case of facts, peculiarly within the knowledge of the party, being conceded"[66] and, further, it is said, importantly, that "the concession had no bearing on the disposition of the case";[67] and that the concession was not made after the Plaintiff had a full opportunity to consider its case and whether the concession should be made. On the contrary, it is said that the Plaintiff had 15 minutes to consider its case and had been taken completely by surprise by the production of a document critical to the case. More particularly, having regard to the substance of the proceedings, it is said that the admission was contrary to the actual facts and that the document quite clearly does not terminate or give notice of termination of a periodic or any other lease. Additionally, it is submitted that the admission was made inadvertently and/or without due consideration and is nothing more than an incorrect statement about the true characterisation of a document that goes to an important characteristic of the matters in controversy. Then, procedurally, it is said that the parties' conduct of the case should be considered in that the Plaintiff ran its case in ignorance of the existence of the document and, finally, that there was no agreement between the parties as to the facts to be decided and that the concession was no more than an "off the cuff" comment in the "heat of the moment".
48 In my opinion, for the reasons which follow, the Plaintiff's submissions in support of its seeking to withdraw the concession are entirely unpersuasive in the particular circumstances.
49 The Defendant agrees with the Plaintiff that the letter was not discovered and that it was tendered very late in the proceedings. The Defendant also says that the Plaintiff was obliged to, but did not, discover the 19 November 2015 letter itself. In my view, there could hardly be any argument in relation to the Plaintiff's obligations in this respect and it is just not credible to suppose that a case properly prepared would not have brought to light the 19 November 2015 letter for the attention and consideration of instructing solicitors and counsel for the Plaintiff. In any event, the Defendant repeats its original submission that, consistently with its obligations pursuant to s 97 of the VCAT Act to act fairly and according to the substantial merits of the case, it was appropriate for VCAT to consider the letter. In this respect, Member Kincaid said:[68]
I've got to get to the heart of this. I've got to decide having regard to the substantial merits of the case. I mean I can't just say - we can't all proceed as if the letter doesn't exist, gentlemen, can we.
As the VCAT transcript indicates, the matter was subsequently stood down so that counsel for the Plaintiff could consider his position and then, after a short break, counsel for the Plaintiff returned and said:[69]
All right, look, where we're standing is I accept this document, I mean it has to come into evidence and it shows that the lease effectively was terminated on the - well, notice was given I should say on the 19th, this was a month to month lease, so that if in a worse case situation the tenant owes the money till 19 December.
50 The 19 November 2015 letter, it should be remembered, is only a letter of 1½ A4 pages and not a complex document in any event. It is certainly not a document, one would have thought, which would cause difficulty in terms of analysis and effect in the eyes of counsel and instructing solicitors in a properly prepared case. In any event, the options or possibilities for counsel in this position acting on behalf of the Plaintiff were to seek a further and longer adjournment to consider the contents and effect of the letter more fully and to seek further instructions, having explained the position to the Tribunal, or simply to decline to make any such concession or otherwise comment on the 15 November 2015 letter.
51 I turn now to the principles relied upon by the Plaintiff. The principal position relied upon, said to be supported by Ubertini v Saeco International Group SPA[70] and H Clark (Doncaster) Ltd v Wilkinson,[71] is that provided no prejudice is caused by the making of the concession and its subsequent withdrawal, the Court may allow such a course. The Defendant, on the other hand, disagrees that this proposition applies in the present circumstances; a position which I also share. Both Ubertini and H Clark involve statements made by counsel during interlocutory proceedings; noting also the position in Ubertini where Elliott J considered that the maker of the "concession" did little more than state his client's present position.[72] The position of a "concession" as between interlocutory proceedings and the final hearing is, at least potentially, very different. Thus, where a party seeks to withdraw a concession made during an interlocutory proceeding, the opposing party can avoid prejudice by taking a variety of steps, such as seeking an adjournment, further discovery or costs to ensure that any evidentiary "shortfalls" are corrected prior to the conclusion of the matter. However, where the concession is made during a final hearing and then sought to be withdrawn on appeal, the point the subject of the concession is over once the concession is made and the opposing party loses the opportunity to put forward any submissions it would have made in furtherance of its argument as those submission are rendered unnecessary given the concession. Additionally, and similarly, in the present circumstances, Member Kincaid was also placed in the position of proceeding to resolve the proceedings on the basis of the concession and, consequently, did not have the opportunity to deal with the periodic termination point as a contested issue.[73]
52 For these reasons, it follows, in my view, that the principles enunciated in Ubertini and H Clark do not, and cannot, apply to concessions made in final hearings which are sought to be "withdrawn" on appeal. Moreover, I accept the Defendant's submission, in the alternative, that it would be prejudiced in the event that the concession were allowed to be withdrawn at this stage on appeal in that it was denied the opportunity, during the final hearing before the Tribunal, of making further submissions in support of its contention that the letter terminated the periodic tendency.
53 Finally, in terms of cases relied upon by the Plaintiff, reference should be made to Drabsch v Switzerland General Insurance Co Ltd,[74] which it says is relevant to the present application. In my view, Drabsch is not a relevant authority in this respect as it involved a question whether the plaintiff in that case, by filing an amended defence, was entitled to withdraw admissions contained in an earlier defence; a position very different from the present one. Moreover, the New South Wales Supreme Court in that case specifically chose not to follow H Clark and, in any event, it is clear that the principles discussed in that case only apply to admissions in pleadings and do not apply to appeals on a question of law. Additionally, the point is made by the Defendant that the Plaintiff has selectively quoted from this case in its written submissions - part of which have been set out previously in these reasons.[75] The passages quoted by the Plaintiff from this case do, as the Defendant submits, omit that which is, in the present circumstances, the most important principle to be derived from that decision. The omitted passage is as follows:[76]
Where a party under no apparent disability makes a clear and distinct admission which is accepted by its opponent and acted upon, for reasons of policy and the due conduct of the business of the court, an application to withdraw the admission, especially at appeal, should not be freely granted.
54 Thus, I am of the opinion that the principles relied upon by the Plaintiff in Drabsch do not apply in the present circumstances. Nevertheless, as the Defendant submits, were I to find otherwise and need to exercise any discretion on the basis of the Plaintiff's submissions as to the effect of this case, I would exercise the discretion against the Plaintiff for the following reasons:[77]
(a) Mr Korman is an experienced counsel, having first signed the bar roll on 20 November 2008;
(b) The matter was stood down so that Mr Korman could consider the 19 November 2015 letter and obtain instructions;
(c) If Mr Korman considered that he didn't have enough time to properly assess the letter then he could have simply reserved his position;
(d) Contrary to the plaintiff's submission in paragraph 9, there was no pressure on Mr Korman to either quickly come to a conclusion or to do everything necessary to complete the matter before the tribunal that day;
(e) The plaintiff also omitted to discover the letter;
...
55 There is a further reason why, in my opinion, and as submitted by the Defendant, the Plaintiff's application to withdraw the concession must fail. The Plaintiff, in its submissions, refers to and relies upon Repatriation Commission v Warren[78] as setting out the guiding principles "governing the discretion to permit a party to argue on appeal matters that were conceded before a Tribunal".[79] Unfortunately, the passages from the decision upon which the Plaintiff relies omit a further dot point in the reasoning of the Court, namely:[80]
Where a concession is made, there must be some difficulty in finding an 'error of law' when the contrary of the concession is raised for the first time in this Court: (Federal Commissioner of Taxation v Raptis [1989] FCA 381; (1989) 20 ATR 1262 at 1267 per Gummow J).
The Defendant submits that as a result of the concession, the Tribunal was not required to interpret the 19 November 2015 letter and that it follows, as a matter of course, that there can be no "error of law" in failing to interpret the letter in the manner advanced by the Plaintiff. It follows that if the Plaintiff is unable to withdraw the concession, which for the preceding reasons is the position, there can be no error of law in the Tribunal's reasoning in these proceedings with respect to the treatment of the termination of the periodic lease issue. In any event, having regard to the contents of the 19 November 2015 letter in the context of the material before the Tribunal, it is difficult to see any basis upon which it might be said that there is a vitiating error of law made by the Tribunal in relation to the resolution of this issue, even putting the concession aside. The Plaintiff, in its written submissions,[81] baldly asserts that "[t]he letter does not constitute notice of termination and it will be unjust in the circumstances of the case to proceed as though it does". No basis for this assertion is provided, either generally or with any particularity.
56 For the preceding reasons, leave to appeal is refused, but if leave had been granted, the appeal would be dismissed with costs.
57 The parties are to bring in orders to give effect to these reasons. I otherwise reserve the question of costs and will hear the parties on this issue.
[1] Casdar Pty Ltd v Fanous (Building and Property) [2017] VCAT 1464 (referred to in these reasons as "Tribunal's Reasons").
[2] An expression now well understood: see R (Miller) v Secretary of State for Exiting the European Union [2016] EWHC 2768 (Admin).
[3] Commissioner of State Revenue v Frost (2011) 83 ATR 832 at 834 [5] citing Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 335-6 and Myers v Medical Practitioners Board (Vic) [2007] VSCA 163; (2007) 18 VR 48 at 55 [28].
[4] Boucher v Dandenong Ranges Steiner School Inc [2005] VSC 400; (2005) 145 LGERA 21, [15] citing Spurling v Development Underwriting (Vic) Pty Ltd [1973] VicRp 1; [1973] VR 1 and Whitehorse City Council v Golden Ridge Investments Pty Ltd [2005] VSCA 198.
[5] (2011) 83 ATR 832 at 833-4 [3].
[6] Commissioner of State Revenue v STIC Australia Pty Ltd [2010] VSC 608; (2010) 81 ATR 682 at 687 [10].
[7] Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331; Al-Hakim v Monash University (Unreported, Victorian Supreme Court of Appeal, 28 March 2003); Myers v Medical Practitioners Board (Vic) [2007] VSCA 163; (2007) 18 VR 48.
[8] See Morris v R [1987] HCA 50; (1987) 163 CLR 454 at 475.
[9] Osland v Secretary to the Department of Justice [No 2] [2010] HCA 24; (2010) 241 CLR 320 at 333 [21].
[10] Morris v R [1987] HCA 50; (1987) 163 CLR 454 at 475; Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 335.
[11] Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 335-6; Commissioner of State Revenue v Challenger Property Nominees Pty Ltd [2006] VSC 203; (2006) 63 ATR 65 at 69 [20], 77 [65].
[12] [2005] HCA 40; (2005) 222 CLR 115 at 136 [64].
[13] Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559 at 575, 597. Cf Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323 at 348 [74].
[14] (Unreported, Supreme Court of Victoria, Ashley J, 21 December 1994) at 13.
[15] (1971) 38 LGRA 6 at 18.
[16] (1980) 44 LGRA 65 at 67-8.
[17] (1985) 62 LGRA 346 at 349-50.
[18] The Gombac Group Pty Ltd v Vero Insurance Ltd [2005] VSC 442, [59].
[20] And see Tribunal's Reasons, [9].
[21] Outline of Defendant's Submissions (2 October 2017), [20].
[22] Outline of the Defendant's Submissions (2 October 2017) with reference (at n 6) to an email from the Plaintiff's agent dated 21 September 2015 and reproduced in Exhibit AG-6 to the Affidavit of Anthony Hany Ghabrial sworn 19 September 2017 ("the Ghabrial Affidavit"); VCAT Transcript (26 July 2017) at 73-4, 125.
[23] Outline of the Plaintiff's Submissions (22 September 2017), [11].
[24] VCAT Transcript (26 July 2017) at 58.
[25] VCAT Transcript (26 July 2017) at 58-59; and see Transcript (10 October 2017) at 21-5.
[26] Outline of the Defendant's Submissions (2 October 2017), [22] referring to the 21 September 2015 email in Exhibit AG-6 to the Ghabrial Affidavit.
[27] Tribunal's Reasons, [13]-[15].
[28] Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153, 163-164 [25]-[26]; see also Contract Formation, Contract Interpretation, and Subsequent Conduct [2006] UQLawJl 7; (2006) 25 University of Queensland Law Journal 77.
[30] J W Carter, Contract Law in Australia (LexisNexis Butterworths, 6th ed, 2013) [5-02], [5-06], 102-105.
[31] Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 at 360.
[32] See, eg GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1996) 40 NSWLR 631; Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101.
[34] For further discussion see Elisabeth Peden, J W Carter and G J Tolhurst, 'When Three Just Isn't Enough: the Fourth Category of the "Subject to Contract" Cases' (2004) 20 JCL 156; D W McLauchlan, 'In Defence of the Fourth Category of Preliminary Agreements: Or are there Only Two?' (2005) 21 JCL 286; Bret Walker, 'The Fourth Category of Masters v Cameron' (2009) 25 JCL 108; G J Tolhurst, J W Carter and Elisabeth Peden, 'Masters v Cameron - Again!' (2011) 42 VUWLR 49.
[35] See Tasman Capital Pty Ltd v Sinclair (2008) 75 NSWLR 1; [2008] NSWCA 248, [26].
[36] [2016] VSC 490, [32]-[35].
[38] See Outline of Plaintiff's Submissions (22 September 2017), [6]-[8].
[39] See Sir Kim Lewison, The Interpretation of Contracts (6th ed, Sweet and Maxwell, 2015), [7.08].
[41] Outline of Defendant's Submissions (2 October 2017), [17].
[42] Outline of Defendant's Submissions (2 October 2017), [18]; referring to VCAT Transcript (26 July 2017) at 57.
[44] Outline of Defendant's Submissions (2 October 2017); referring to the letter from the Plaintiff's agent dated 21 September 2015 and reproduced in exhibit AG-6.
[45] Outline of Plaintiff's Submissions (22 September 2017), [11] referring to Exhibit AG-6 to the Ghabrial Affidavit.
[46] Outline of Plaintiff's Submissions (22 September 2017), [12] referring to Exhibit AG-8 to the Ghabrial Affidavit.
[47] Outline of Plaintiff's Submissions (22 September 2017), [13] referring to Exhibit AG-7 to the Ghabrial Affidavit.
[48] Outline of Plaintiff's Submissions (22 September 2017), [13] referring to Exhibit AG-3 to the Ghabrial Affidavit.
[49] Outline of Plaintiff's Submissions (22 September 2017), [14] referring to Exhibit AG-5 to the Ghabrial Affidavit.
[52] Exhibit AG-5 to the Ghabrial Affidavit.
[53] Exhibit AG-7 to the Ghabrial Affidavit.
[54] Exhibit AG-8 to the Ghabrial Affidavit.
[55] Exhibit AG-3 to the Ghabrial Affidavit.
[57] Tribunal's Reasons, [17]: noting that the Tribunal found that notice of termination was given on 19 November 2015 and reasonable notice in the circumstances was 30 days, to be given on the termination of the current period (30 November 2015).
[58] Outline of Plaintiff's Submissions (22 September 2017), [20]-[23].
[59] VCAT Transcript (26 July 2017) at 110.
[60] See Vlahos Pty Ltd v Vlahos [2017] VSCA 166, [49].
[61] Plaintiff's Submissions: Withdrawal of a Concession (11 October 2017), [4]-[6].
[62] [2013] VSC 468, [24].
[63] H Clark (Doncaster) Ltd v Wilkinson [1965] Ch 694, 703 B-C.
[64] Drabsch v Switzerland General Insurance Co Ltd, NSWSC, 16 October 1996, unreported at 7-8 per Santow J. These principles are frequently cited - see, for example, The Owners - Strata Plan 72379 v Allianz Insurance Australia Limited [2017] NSWSC 1118 per McDougall J at [26].
[65] Repatriation Commission v Warren [2008] FCAFC 64 at [78] per Lindgren and Bennett JJ.
[66] Kuswardana v Minister for Immigration and Ethnic Affairs [1981] FCA 66; (1981) 54 FLR 334 at 343.
[67] Plaintiff's Submissions: Withdrawal of a Concession (11 October 2017), [8] citing the Tribunal's Reasons, [17].
[68] VCAT Transcript (26 July 2017), 107.
[69] VCAT Transcript (26 July 2017), 110.
[70] [2013] VSC 468 ("Ubertini").
[71] [1965] Ch 694 ("H Clark").
[72] Ubertini v Saeco International Group SPA [2013] VSC 468, [21]-[23].
[74] (Unreported, Supreme Court of New South Wales, Santow J) BC96044909 at 7 ("Drabsch").
[76] Drabsch v Switzerland General Insurance Co Ltd (Unreported, Supreme Court of New South Wales, Santow J) BC96044909 at 7.
[77] Defendant's Supplementary Submissions: Withdrawal of a Concession (12 October 2017), [9].
[78] [2008] FCAFC 64; (2008) 167 FCR 511 at 529 [78].
[79] Plaintiff's Submissions: Withdrawal of a Concession (11 October 2017), [6].
[80] Repatriation Commission v Warren [2008] FCAFC 64; (2008) 167 FCR 511 at 529 [78] (the third dot point).
[81] Plaintiff's Submissions: Withdrawal of a Concession (11 October 2017), [18].
Casdar Pty Ltd
Fanous [2017] VSC 616
(1954) 91 CLR 353
(2007) 18 VR 48
(2005) 145 LGERA 21
(1987) 163 CLR 454
(2010) 241 CLR 320
(2005) 222 CLR 115
(1997) 191 CLR 559
(2001) 206 CLR 323
(2001) 53 NSWLR 153
(1996) 40 NSWLR 631
(2000) 22 WAR 101
(2008) 75 NSWLR 1
(1981) 54 FLR 334
(2008) 167 FCR 511