Polymeris v Coopers Canteen Pty Limited

NCAT Appeal Panel|2017-06-09

REASONS FOR DECISION

The Appellant is the lessor and the Respondent the lessee under a registered lease of a retail shop at Caringbah. That lease was for a three-year term commencing on 1 March 2014 and ending on 28 February 2017 (the Lease). The Lease provided two options for renewal, each for a period of three years. The first day upon which the option for renewal could be exercised was 1 September 2016 and the last day for exercise of that option was 30 November 2016. The Lease is subject to the provisions of the Retail Leases Act 1994 (NSW).
In about July 2016, the Respondent negotiated for the sale of the business conducted in the premises that were the subject of the Lease. The negotiations resulted in a contract for sale of the business being entered into on 13 September 2016. It was a condition of the sale contract that the Lease be assigned to the purchaser. That assignment, in order to be effective, required the consent of the lessor.
Although given notice of the sale of the business and an assignor's disclosure statement pursuant to s 41 of the Retail Leases Act, the response of the Appellant on 10 November 2016 reflected neither consent nor refusal of the assignment application that was made. As the time within which the option could be exercised was coming to an end, and the Appellant gave no indication as to when his decision might be made, the Respondent made application to the Tribunal for an extension of time within which the option was able to be exercised.
The applications relevant to this appeal were filed on 28 November 2016. They sought interim and final orders respectively under the Retail Leases Act. Those applications were heard on 1 December 2016.
At the conclusion of the hearing that day the following orders were made: 1. An order in terms of s 72(1)(f)(iii) of the Retail Leases Act 1994 (the Act) declaring: 1.1 that the lease registered no A1528820N (the lease) remains in full force and effect; and 1.2 that the said lease was not determined in or about March 2015, or at any other time. 2. An order in terms of s 72(1)(f)(ii) of the Act declaring that the respondent lessor is not entitled to withhold consent to an assignment of the rights of the applicant as lessee under the lease to Louise Kay Bezzina. 3. An order that the exercise date of the option to renew the said lease is extended to 5PM on 9 December 2016. By his amended Notice of Appeal, the Appellant appealed from only Order 1 of the Orders made on 1 December 2016.

Background

Although there appears from the material provided to us to have been a long history of dispute between the present parties, one of which was mediated, it is only necessary for present purposes to recite the background facts relevant to the determination that we are required to make.
We have already made reference to the contract for sale of its business entered into by the Respondent on 13 September 2016. Completion of that contract was required to take place within three months from that date.
On 21 October 2016, solicitors acting for the Respondent advised the Appellant that contracts for the sale of the Respondent's business had been exchanged and requested the Appellant's consent, as lessor, to the assignment of the Lease. That request was followed on 24 October 2016 by service upon the solicitor acting for the Appellant of the Assignor's Disclosure Statement. A copy of that Statement was sent by the Respondent's solicitor to the Appellant on 26 October 2016.
The response to those documents was received from the Appellant himself. That response, by email dated 10 November 2016 directed to the Respondent's solicitors, is both lengthy and discursive. Long-standing disputes with or criticisms of the Respondent and its Solicitor are stated, as is a request that the Respondent should deal directly with the Appellant rather than through its solicitors. The response concludes by stating "…I will seriously consider, if respectfully approached by the principals to the lease (not you or other agents) to discuss and research the background of their proposed business buyers." A "direct and respectful reply from your clients" is requested.
The Respondent had no wish to exercise the option for renewal under the Lease for its own purposes. It only wished to do so if it was able to complete the contract for sale of its business.
Given the uncertainty attending the Appellant's consent to assignment of the Lease, the Respondent sought to avail itself of the provisions of the Retail Leases Act, enabling the Tribunal to extend time. Such an extension was first granted in proceedings COM 16/51879 on 20 November 2016. The extension then given expired on 2 December 2016. The second extension was sought in proceedings COM 16/51881, being the proceeding ultimately determined on 1 December. In accordance with order 3 to which we have earlier referred, that extension was granted until 5pm on 9 December 2016.

The decision of the Senior Member

After referring to the Lease, the contract for sale of the Respondent's business, the request for the Appellant's consent to the assignment of the Lease and his response of 10 November, the Member recorded that the Respondent sought both interlocutory and final Orders as to the continuing operation and effect of the Lease, as well as an order that the Appellant consent to the proposed Lease assignment. He recorded that there was no appearance at the hearing on behalf of the Appellant, expressing satisfaction that in accordance with the Registrar's "standard practice", a Notice of Hearing had been posted to the Appellant's address and that notice had not been returned undelivered. In his shortly stated Reasons, the Member then said: Further, the Tribunal is satisfied that the Respondent is fully cognisant of the issues in dispute including the applicant's requirements as to assignment of the lease to Ms Bezzina, and as to the applicant's position that the lease continues in operation and effect. This is evidenced by the fact that the respondent's email of 10 November 2016 does not address the financial standing or business experience of the proposed assignee (see s 41(a) of the RLA). While there is no evidence of formal consent, there is no objection taken to the financial or retail skills of Ms Bezzina in the email of 10 November 2016. There has been no further correspondence from the respondent. There is no evidence of outstanding rent or outgoings.
The Member then records the extension of time for exercise of the option under the Lease granted by the Tribunal, the time for completion of the contract for sale of the Respondent's business and the need to resolve the matter promptly. Having expressed his satisfaction that it was "in the interest of justice" that the applications proceed in the absence of the Appellant, the Member then said: The Tribunal finds that there is no evidence to support the allegations in the respondent's email of 10 November 2016 that the lease was determined in or about 2015 or at any other time, for alleged breaches of the lease by the applicant. Indeed, it is difficult to see how the [appellant] can maintain the lease was determined but continues to make claims for 'dues as invoiced'.

The Grounds of Appeal

As we have earlier recorded, by his Amended Notice of Appeal dated 15 February 2017, the Appellant challenges only the two declarations that are encompassed by Order 1 of the Orders made on 1 December 2016. There are, in substance, two grounds upon which the Appellant seeks to sustain his appeal.
First, he alleges that he was not given sufficient notice of the hearing on 1 December, a circumstance that denied him "natural justice". Second, he contends that the Member erred in failing to consider evidence of breaches of the Lease. That contention has two components. The first of those alleges error on the part of the Member in concluding that the Lease was not determined "at any other time", based on the evidence that was adduced before him. The second element of that contention is that he failed to consider evidence and breaches of the Lease "that could be given by the Appellant and which were not before the Tribunal" (sic).
That latter component of the second Ground of Appeal would seem to us to be no more than a demonstration of the first Ground of Appeal, namely that the Appellant had been denied natural justice by reason of the insufficient Notice of Hearing provided to him. Unless the ground is so understood, it makes no sense, with respect, to contend that the Tribunal erred by failing to consider evidence of which it was not aware.
For reasons that will become apparent, it is unnecessary to record, in any detail, the Respondent's written Reply to the Amended Appeal. In essence, that Reply asserted that the decision of the Member was correct for the reasons he stated. The asserted breach of natural justice was denied as was any valid 'determination 'of the lease asserted by the Appellant.

Consideration

There is substance, at least in principle, to the Appellant's contention that he was denied procedural fairness, in that insufficient notice of the hearing of the appeal was given to him. While the Member recorded that the Notice of Hearing had been sent by the Registry and the notice not returned, it seems to us that insufficient consideration had been given in this context to the date upon which the notice had been posted. The Notice of Hearing is dated 29 November 2016 and was apparently sent by ordinary post that day. The hearing, of which it gave notice, was fixed for 1 December, that is the second day after the date upon which notice was posted. Unsurprisingly, the Appellant stated that he did not receive the Notice of Hearing until "on or about 5 or 6 December 2016". We accept that evidence.
As the Appellant submitted, s 76 of the Interpretation Act 1987 (NSW) provides that where an Act or instrument authorises a document to be served by post, that service is taken to be effected "on the fourth working day after the letter was posted". That provision is, so it seems to us, fairly indicative of an appropriate time to allow for a Notice of Hearing, posted by ordinary post, to be received by its intended recipient.
Ordinarily, a finding that notice of a hearing had not been given to a litigant in a timely manner and that the litigant was not, in fact, aware that a hearing had been fixed, would be sufficient in itself to uphold an appeal. The failure to provide appropriate notice in a way that it affords a proper opportunity for the litigant to attend a hearing would constitute a denial of procedural fairness. However, in the circumstances shortly to be described, the finding that the procedural fairness ground has been established by the Appellant does not resolve the appeal.
A finding that a ground of appeal is sustained, even on a question of law founded upon a denial of procedural fairness, does not mandate an order that the appeal be allowed. So much follows from the provisions of s 81(1) of the Civil and Administrative Tribunal Act 2013 (NSW), affording a discretion to an Appeal Panel as to the Orders that it may make. The exercise of that discretion may be informed by the absence of utility in making any order, having regard to the circumstances that exist at the time of hearing the appeal. The utility of making an order may, in an appropriate case, be assessed by application of the guiding principle expressed and addressed in s 36 of the Tribunal Act. In short whether the order is dispositve of an outstanding issue between the parties and whether it will lead to the just, quick and cheap disposition of that issue.
The matters to which we advert in identifying these statutory provisions are events that occurred subsequent to the determination by the Member on 1 December 2016.
It will be recalled that the extension of time granted on 1 December for exercise of the option under the Lease expired on 9 December. In further proceedings brought by the Respondent, that time was further extended on 9 December until 14 December 2016. In subsequent proceedings instituted by the Respondent, that time was ultimately extended to 25 January 2017. That extension was granted by order of the Tribunal on 13 December 2016. At that time, proceedings between the parties were adjourned to enable the Appellant to file evidence. That did not occur.
By letter dated 22 December 2016 from the Respondent's solicitors to the Appellant's solicitors, the conduct of the Appellant towards the Respondent in the manner recorded in that letter was identified as a repudiation of the Lease which the Respondent accepted, as such, and thereby terminated the Lease with effect from 31 December 2016. The Respondent then vacated the premises that were the subject of the Lease, reserving its right to claim damages arising from the Appellant's claimed repudiation. As a consequence of the Respondent's termination of the Lease, the exercise of the option for renewal was no longer available to it.
In an affidavit filed by the Appellant in support of his appeal, he expressed disagreement with the finding of the Member "that the lease was not determined in or about March 2015, or any other time".
In the result, neither the Appellant nor the Respondent contended before us that the Lease remained on foot. Thus, despite the denial of procedural fairness at the hearing on 1 December 2016, there would appear to be little utility in upholding the appeal on that basis.
That observation being made, we were told that there are other proceedings in the Tribunal to which the declarations made in Order 1 on 1 December 2016 are relevant. In these circumstances, we are prepared briefly to address submissions directed to the operation of the Lease as at the date upon which those declarations were made.
Evidence was placed before us by both parties so that we were able to address the competing contentions. The Appellant asserted that the Lease was terminated by him, at least as a fixed term Lease, in March 2015. In that respect he relies upon a letter dated 20 March 2015 from his solicitor, Mr Ktenas, to the Respondent's solicitors, identifying purported breaches of the Lease, stating that the Appellant "considers that the lease is at an end" but indicating that the Respondent could remain in occupation as a monthly lessee "at this stage pending further notice". No notice under s 129 of the Conveyancing Act 1919 had, by then, been served nor was such a notice subsequently served.
Without intending any disrespect to Mr Ktenas, who appeared for the Appellant before us, it is fair to observe that he encountered particular difficulty in explaining the legal basis upon which the Lease could be regarded as having been terminated as a consequence of his letter of 20 March 2015. He experienced even further difficulty in endeavouring to explain the actions of the Appellant which, as the Respondent contended, were consistent with the Lease remaining on foot in the terms in which it was executed by the parties. It is unnecessary to recite all of the evidence reflecting conduct on the part of the Appellant or those speaking for him, that manifest adherence to the Lease.
Two contemporary examples may be given. First, in the written submission prepared by Mr Ktenas, a heading appears as "Breaches of the Lease". Four paragraphs then identify particular provisions of the Lease entered into between the parties that are said to have been breached. One of the contentions asserts amounts outstanding and unpaid under the Lease "as at 1 December 2016". While the assertion that moneys were outstanding is in dispute and was not determined in the proceedings before the Member, the fact that reliance is placed upon a liability said to have accrued under the Lease to 1 December 2016 is contradictory of an assertion that the Lease was terminated in March 2015.
In his email of 10 November 2016, responding to the request for consent to assignment of the Lease, the Appellant states "we are now back to the original lease agreement in which your clients are in breach of many clauses". That statement is consistent only with an acceptance that the Lease, as executed between the parties, was the document that still governed their legal relationship.
Moreover, the prosecution of the present Appeal by challenging only the declarations in Order 1 is inconsistent with the absence of any appeal from Orders 2 and 3 also made by the Member on 1 December 2016. Those Orders are predicated upon the Lease that was able to be assigned by the Respondent. The absence of challenge to those Orders renders a finding that the Lease had been terminated untenable, or, at the very least, inappropriate.
Even if the decision not to appeal from Orders 2 and 3 is regarded as oversight or to have no consequence if the appeal against Order 1 is successful, the conduct of the Appellant, following the decision below is relevant on the issue of estoppel by conduct raised by the Respondent.
Following that decision, a copy of the Orders then made was sent to the Appellant by email on 5 December. The following day Mr Ktenas responded by letter on behalf of the Appellant. After making reference to the Lease in several places, Mr Ktenas wrote: In any event after carefully considering his position, our client consents to the assignment of the lease. We enclose herewith our client's executed authority dated 6 December 2016. That statement is wholly inconsistent with a contention that the Lease had been terminated in May 2015 and thereafter there was only a monthly tenancy.
So also is that inconsistency apparent in the consent attached to that letter which states: I, HARRY POLYMERIS, as lessor consent to the assignment of the lease No.A1528820N for the premises at Shop 1, 2 Willarong Road, Caringbah…from Coopers Canteen Pty Limited ACN 165030697 to Louise Kay Bezzina.
Not only did those documents demonstrate an acceptance of the currency of the Lease by the Appellant, the Respondent relied upon the position then taken to instigate further steps directed to the completion of its contract for the sale of its business. As the events described in the following paragraph illustrate, the Respondent relied upon the continued operation of the Lease as being consistent with the stated position of the Appellant until such time as the later actions of the Appellant resulted in termination of the Lease by reason of the Appellant's claimed repudiation.
On 13 December 2016 a related proceeding was listed before the Tribunal. One of the purposes of that proceeding was to seek an extension of time for the exercise by the Respondent of the option to renew the Lease. Mr Ktenas, who then appeared for the Appellant, did not contest the continuing operation the Lease, stating that the Appellant considered that he had already given his consent to the assignment of the Lease.

Conclusion

For the reasons we have stated, we find no basis upon which to disturb the determination made by the Member that at the time of the hearing before him the Lease remained as an operative Lease, according to its terms, and had not been "determined" (sic, terminated) in 2015. No factual or legal basis has been established upon which the Appellant's argument to that effect can be sustained.
Accordingly, the appeal is dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar

Amendments 05 January 2018 - Cover sheet Tribunal Members name corrected. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 January 2018

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