Ragi Pty Ltd v Kiwi Munchies Pty Ltd; Kiwi Munchies Pty Ltd v Ragi Pty Ltd [2007] VCAT 68 | Case summary

REASONS FOR DECISION 1 Ragi Pty Ltd (Ragi) leased retail shop premises to Kiwi Munchies Pty Ltd (KM) in March 2001. The lease ended on 14 November 2003, when KM vacated following notice to quit given by Ragi for non-payment of rent and outgoings due under the lease. The shop formed part of a development that had shops at the ground level and apartments above, known as the Cocoland shopping centre at 101 Nuwarra Road, Moorebank. It was an established centre with a history going back to at least 1990. Ragi had owned the centre for many years. (In 2004 Ragi sold the centre.) 2 Local Court Civil Claim: In July 2004 Ragi filed a civil claim 1852/04 in the Local Court for money allegedly due to it from KM. A default judgment was entered on 20 September 2004. 3 Ms Sophia Paras, solicitor, KM Legal, moved to set aside the judgment on behalf of KM on the basis that the dispute should be dealt with under the Retail Leases Act 1994 (the RL Act). In preparation for the hearing of that motion both parties prepared affidavit evidence. Under s 75 of the RL Act, a court may remove civil proceedings pending in the court if it is satisfied that: '(a) the dispute is such as may effectively be dealt with as a claim under this Division and that it is appropriate that the dispute be dealt with by the Tribunal, and (b) the interests of justice do not require that the matter be dealt with by the court.' 4 In that regard the court is enjoined by sub-s (2): 'In determining whether or not it is appropriate that a matter be dealt with by the Tribunal, a court is to have regard to the general principle that retail tenancy disputes should be dealt with by the Tribunal rather than by a court.' 5 On 31 March 2005 the Local Court at Parramatta made the following order: 'By consent matter transferred to Administrative Decisions Tribunal Retail Leases Division. Each party to pay own costs.' 6 Types of Claim: The RL Act allows for two types of claim to be made in connection with a retail tenancy dispute: a 'retail tenancy claim' and an 'unconscionable conduct claim'. 7 A 'retail tenancy claim' can be made 'in connection with a liability or obligation with which a retail tenancy dispute is concerned' (s 70). On the other hand an 'unconscionable conduct claim' merely requires the identification of 'conduct' which is unconscionable (see s 62B). It is not essential to show that a specific liability or obligation under the lease has been breached. In the case of an unconscionable conduct claim a wide variety of matters can be taken into account by the Tribunal. These matters are set out in s 62B and the whole provision will not be repeated here. 8 Applicability of the Retail Leases Act: As the following history shows, the parties dealt with each other without regard to the provisions of the RL Act. The first reference to the RL Act is found in the letter from Ms Paras dated 30 September 2004 seeking to have set aside the Local Court default judgment. 9 The parties now agree that they entered into a 'retail shop lease' as that term is defined in s 3 of the RLA ('retail shop lease or lease means any agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop'); and that the exclusions in s 5 (for example, shops over 1,000 square metres) and s 6 (for example, leases for a term of less than 6 months without a right to extend) are not applicable. 10 Application 055041: On 12 August 2005 Ragi filed in the Tribunal a retail tenancy claim which was accompanied by a certificate of failed mediation from the Registrar, Retail Tenancy Disputes. As amended at hearing, Ragi seeks an order against KM for the payment of the sum of $4,292.77 and the legal costs of the proceedings in the Tribunal. This sum is made up of: outstanding rent in the sum of $5,393.50 reduced by the amount of the security bond and interest earned on the bond ($2,237.21), leaving a net sum of $3,156.29; outstanding contribution to outgoings ($1,126.98); cheque dishonour fee, $9.50, in relation to a cheque in the sum of $498 (the monthly outgoings contribution) given to Ragi by KM being returned unpaid. 11 Reply and Application 065142: In its reply filed 5 September 2005 KM denied liability on the ground that the lease had expired in April 2002, and on the ground that the contract was void at common law for misrepresentation. 12 Earlier, on 15 August 2005, KM had sought to file an application of its own under the RL Act seeking various orders against Ragi. This application was not accepted by the Registry, for reasons which are not clear from the file. On 7 September 2006 KM filed an application which was accepted (no. 065412). This application is in similar terms to the one sought to be filed in August 2005. The application contained a combined retail tenancy and unconscionable conduct claim. 13 As amended at hearing, KM seeks various declarations relating to the lawfulness of Ragi's conduct and the following orders for monetary compensation: (a) $6,160 plus interest, this amount being the difference between the rent KM says it should only have been required to pay, $450 per week, and the rent to which it agreed, $550 per week - for pre-contractual misrepresentations relating to there being other interested tenants (b) $9,533.32 plus interest, being rent paid for the months of January 2002 to April 2002 when it is said the shop was unfit for trade due to damage caused by water entry through a leaking ceiling (c) $32,000, in respect of damage to the stock caused by the water entry and dampness in the leaking ceiling (d) a reasonable sum in damages in respect of conduct said to have inhibited the flow of customers (e) $13,944 refund of all outgoings payments, on the basis that they were received unlawfully (f) $9,632 plus interest in respect of payments made by KM towards advertising expenditure for which KM received no benefit, due it is said to Ragi's wrongful termination of the lease (g) interest that should have been earned on the security bond (h) costs of the proceedings in the Tribunal on an indemnity basis (i) interest on the judgment at the District Court rate. The Hearing 14 The hearing of the respective applications was held on 13 and 15 November 2006, and submissions closed on 8 December 2006. (The Tribunal was constituted in the manner required for the hearing of unconscionable conduct claims, with the two non-judicial members sitting in an advisory capacity only: Administrative Decisions Tribunal Act 1997 (ADT Act), Schedule 2, Part 3B, cll 3(2), 4.) 15 Mr van Ede, solicitor, appeared for Ragi. Ragi relied on documentary material and affidavit and oral evidence given by Mr Mark Ross, real estate agent. The managing director of Ragi, then and now, is Mr Henry Zacaropoulos. He swore an affidavit, but was not available for cross-examination when this dispute came on for hearing. As a result the affidavit has not been received into evidence. 16 Ms Paras appeared for KM. KM relied on documentary material and affidavit and oral evidence given by - Ms Anastasia Ualesi, company secretary of KM, Mr Michael Jabbour (tenant Shop 6 since 1990, who operates the business Moorebank Auto Parts and Accessories) and Ms Nicole Baxter (tenant Shop 7, 2000-2004, tenant, Shop 8B, 2004 to July 2006, who operated the business Polk A Dot). The Lease and its Termination 17 Shop 8B fell vacant in January 2001. The outgoing lessee had conducted a video store. In February 2001 Mr Zacaropoulos changed managing agents. He engaged Paramount Real Estate of Beverley Hills, principal Mr Robert Seib. An employee, Mr Ross, was given responsibility for handling the reletting of Shop 8B. 18 In March 2001 Mr Ross commenced negotiations with Ms Ualesi and Ms Paras on behalf of KM. They are sisters. As noted, Ms Ualesi was the company secretary. Ms Paras was a director. Ms Ualesi's husband was also a director. 19 KM retailed goods with a New Zealand provenance (sweets, souvenirs, musical items, jewellery, clothing and the like). Its principal market was the expatriate New Zealand and Pacific Islander community. As at 2001 it already had two shops, one at Ashbury in Sydney, the other in Melbourne. It also traded from its internet site. Ms Ualesi explained in evidence that KM was interested in building its presence in the Moorebank area as it was close to the Liverpool area where many New Zealand and Pacific Islander migrants to Australia lived. 20 In the course of the negotiations Mr Ross took instructions from Mr Zacaropoulos. Agreement was reached on 15 March 2001. KM entered into possession as from 16 March 2001. 21 A standard form lease (the 1996 Estate Agents Co-operative Limited form) was used to document the relationship. It is headed 'Lease of Commercial Premises (for premises to which the Retail Leases Act 1994 does not apply)'. The lease described the permitted use as 'retail specialty shop'. The commencement date was 6 April 2001. The term was one year, renewable annually. The agreed rent was $2,383.33 per month (i.e. $550 per week). It was also agreed that KM would make a contribution to outgoings, fixed at $498 per month. The lessor's part of the signature clause shows next to it the signature of Mr Seib, with Mr Ross as the witness. 22 In evidence Ms Ualesi acknowledged that KM did renew in April 2002. She confirmed that KM had asked for a reduction in rent but was refused. As noted earlier, KM vacated the premises on 14 November 2003. 23 Ragi's agent sent KM a letter dated 8 October 2003 noting that it had failed to pay rent since 6 September 2003. The letter stated: 'I have received instructions from the landlord to give you 30 days notice to vacate the property on 14 November 2003 due to rental arrears.' 24 KM replied by letter signed by Ms Ualesi dated 24 October 2003. It said: 'We acknowledge receipt of your facsimile dated 8 October 2003 by which you have given the tenant notice to vacate the premises by 14 November 2003. We also understand that the landlord and yourself have approached the staff at those premises and made contact with other staff members working at other shop locations to discuss the matter. We would be grateful if you would refrain from doing so. Should your landlord wish to discuss this matter please do so in writing so that we can get further instructions from our principals. We trust this is agreeable to you.' 25 Mr Ross wrote to KM on 10 November 2003. The letter noted that KM were vacating on the 14th and looked forward to return of the keys on that date. The letter reiterates, with some amendments, the claims to outstanding rent and outgoings. 26 KM replied on 14 November 2003 advising of its departure, and contending that rent was paid in advance with the result that one more month than asserted had been paid. There is also a suggestion that the security bond be applied to meet any further outstanding amounts. The latter statement constitutes a tacit admission that some rent at least was due under the lease. 27 The agent wrote to KM on 10 December 2003, this time to Ms Paras. The letter included a claim for the dishonoured cheque ($20). It acknowledged that some interest had been earned on the withheld security bond and took that into account (calculated at 1.25% for the length of the tenancy), and included a make good claim ($1,650) for replacement of damaged concrete at the back of the premises. (The make good claim is no longer being pursued.) 28 Non-payment of rent is a ground for termination of any lease, including a retail shop lease. In the Tribunal's opinion, the lease was properly terminated. Reasonable notice was given. KM vacated in an orderly way. 29 Ragi produced the rental accounts. There is some history of irregularity in payment. The Tribunal is satisfied that KM was up to date as at 6 September 2001. The Tribunal is satisfied that the lessor's calculations as to the unpaid rent and unpaid outgoings are supported by the accounts. The Tribunal is satisfied that the last payment was for the period to 6 September 2001, and KM was in arrears for the period thereafter. 30 Assessment. On ordinary principles, Ragi would be entitled to an order for payment of the rent and outgoings. It would also be entitled to reimbursement of the dishonour fee. KM's Case in Reply 31 As already noted, KM has filed both a retail tenancy claim and an unconscionable conduct claim. The retail tenancy claim relies on alleged specific breaches of the RL Act. The unconscionable conduct claim repeats those particulars and relies on some additional items of conduct. - The Retail Tenancy Claim (1) Pre Lease Disclosure Statement 32 KM submits that Ragi failed to comply with the RL Act in respect of its pre-lease disclosure obligations. Ragi accepts that it failed to comply, for the reason that its agent did not treat the RL Act as applicable. The primary obligation is that found in s 11: ' 11 Lessor's disclosure statement (1) At least 7 days before a retail shop lease is entered into, the lessee must be given a disclosure statement for the lease. A disclosure statement is a statement in writing that contains the information, and is accompanied by the material, that is contained in or required to complete or accompany the form of disclosure statement set out in the prescribed form (but only to the extent that is relevant to the lease concerned). The layout of the disclosure statement need not comply with that of the prescribed form. However, a lessor's disclosure statement is complete for the purposes of this section only if it has attached to it a form to be completed by the lessee in the form prescribed for the purposes of section 11A. Note. Because the disclosure statement need only include information relevant to the lease, if the retail shop is not in a retail shopping centre the disclosure statement need not include information that is relevant only to shops in retail shopping centres. (2) If a lessee was not given a disclosure statement as required by subsection (1) or if the disclosure statement that was given to the lessee was incomplete or contained information that at the time it was given was materially false or misleading, the lessee may terminate the lease by notice in writing to the lessor at any time within 6 months after the lease was entered into, unless subsection (3) prevents termination. (3) The lessee cannot terminate the lease under this section on the ground that the disclosure statement is incomplete or contains information that is materially false or misleading if: (a) the lessor has acted honestly and reasonably and ought reasonably to be excused for the failure concerned, and (b) the lessee is in substantially as good a position as the lessee would have been if the failure had not occurred. (4) If a lease is entered into by way of the renewal of a lease, a written statement (a lessor's disclosure update) that updates the provisions of an earlier disclosure statement given to the lessee is, in conjunction with that earlier disclosure statement, considered to be a disclosure statement given for the purposes of this section at the time the lessor's disclosure update is given. (5) The termination of a lease under this section does not affect any right, privilege, obligation or liability acquired, accrued or incurred under the lease in respect of any period before its termination. (6) A lessor under a retail shop lease is guilty of an offence if subsection (1) is not complied with in relation to the lease. Maximum penalty: 50 penalty units. Note. Clause 20 of Schedule 3 provides that the forms set out in Schedule 2 are taken to be prescribed for the purposes of sections 11 and 11A until regulations prescribing the forms and repealing Schedule 2 are made.' 33 It will be seen that non-compliance with s 11 gives the lessee a right of termination, exerciseable within 6 months after the lease was entered into. KM did not exercise this right, consequently that right has been lost. Section 11 has continuing relevance to these proceedings to the extent that the conduct might support an unconscionable conduct claim. (2) Misrepresentation 34 KM alleges that Ragi and/or Mr Ross made the following misrepresentations in the course of the negotiations: - That the lease agreement had been signed by Mr Zacaropoulos, but the lease was in fact signed by Mr Seib - That other parties were interested in renting Shop 8B to obtain a higher rent for the shop than was initially offered by KM - That the shop was fit for occupation and trade when he knew that the shop suffered from flooding during rainy periods caused by a leaking roof - That they failed to disclose that the premises were susceptible to water entry through a leaking roof during rainy periods. 35 Though this matter is not listed in the amended application, at hearing KM also alleged another misrepresentation: - That they failed to disclose that Ragi had arrangements with other tenants that only involved payment of rent with no separate amount required by way of contribution to outgoings. 36 Section 10 of the RL Act provides: ' 10 Right to compensation for pre-lease misrepresentations (1) A party to a retail shop lease is liable to pay another party to the lease (the injured party) reasonable compensation for damage suffered by the injured party that is attributable to the injured party's entering into the lease as a result of a false or misleading statement or representation made by the party, or any person acting under the party's authority, with knowledge that it was false or misleading. (2) The giving of a lessor's disclosure statement to a prospective lessee under a retail shop lease is considered to be the making of a representation by the lessor to the lessee as to the information in the disclosure statement. (2A) The making of a representation by a prospective lessee in a lessee's disclosure statement given to a prospective lessor under a retail shop lease that the prospective lessee has sought independent advice, or as to statements or representations relied on by the prospective lessee in entering the lease, is considered to be the making of a representation by a lessee to the lessor. (3) This section extends to apply to a statement or representation made before the commencement of this section.' 37 The Tribunal received evidence from Mr Ross and from KM's director, Ms Ualesi, as to what passed between the parties in the lead-up to KM going into occupation. Ms Paras was also involved in these negotiations but she did not give evidence. Mr Ross consulted Mr Zacaropoulos in the course of the negotiations, but, as noted, Mr Zacaropoulos was not able to make himself available to be cross-examined, and his affidavit was not admitted into evidence. 38 The dealings between Mr Ross and KM were marked by a lack of sophistication. The lack of any consideration of the applicability of the RL Act by either party illustrates this, despite Mr Ross being a licensed agent and KM having a solicitor/director, Ms Paras. It is clear that the negotiations were conducted on the basis that there would be one fixed amount for rent and a separate fixed amount for outgoings. The Tribunal notes that from a tenant's point of view a fixed amount arrangement of this kind has the advantage that it makes it easier to budget. 39 Ms Ualesi claimed that she was actively misled by Mr Ross into agreeing to a higher rent by his indication that there were other interested parties. 40 Mr Ross's evidence, given as it was several years after the relevant events, is that that what he said was true, and that he did have other expressions of interest in the premises. 41 While the Tribunal has no reason to disbelieve either Ms Ualesi or Mr Ross, there is, the Tribunal considers, insufficient evidence to conclude that Mr Ross or Ragi made a false statement or misrepresentation in relation to the existence of other offers or expressions of interest. 42 Ms Ualesi said that she learnt after KM went into occupation that Ragi had leases with some tenants under which they only paid an amount for rent and there was no separate amount charged for outgoings. Ms Ualesi said that had she known not all tenants were being treated in the same way, KM might not have agreed to pay the outgoings. 43 Mr Ross acknowledged that no information was provided about the arrangements with other tenants. Mr Ross explained in evidence that the owner had always paid the general outgoings for the centre. He acknowledged that some of the existing tenants had leases which simply prescribed an amount. 44 Accepting for the moment KM's case that Mr Ross's silence in this regard constituted a misrepresentation, the Tribunal is not satisfied that KM suffered any damage that could reasonably be held to be 'attributable to the injured party's entering into the lease as a result of a false or misleading statement or representation'. 45 In the Tribunal's view, the concern of KM throughout was the overall 'price' it would have to pay for taking up the lease. It accepted the price as a fair one, and entered into the lease on that basis. Nor was it, the Tribunal considers, critical to its decision that the price was subdivided into two components. 46 The criticism that KM was wrongly informed that the lease was signed by Mr Zacaropoulos falls into the same category. Accepting for the moment that Mr Ross did say that, the Tribunal is satisfied that it would have made no difference to KM's decision to continue with the lease. In any event there is no problem in law, as the Tribunal sees it, in the managing agent executing a lease on behalf of his client. This is a trivial objection. 47 The Tribunal is not satisfied that Ragi breached its obligation under s 10 in regard to the three alleged misrepresentations so far discussed. As to alleged misrepresentations relating to water incursion, these are considered along with other issues relating to water incursion under heading (3) below. (3) Water Incursion, Adequacy of Maintenance of Centre 48 Water Incursion: In his affidavit Mr Jabbour referred in broad terms to a history of problems with water incursion at his premises, Shop 6; and in broad terms to low standards in the maintenance of the centre. Mr Jabbour referred to the difficulties he had experienced in getting Mr Zacaropoulos to respond promptly to problems generally. 49 In his evidence at hearing Mr Jabbour differentiated between the situation in relation to water incursion in the first seven years of his tenancy (to 1997) and the situation since. He said that around 1997 or 1998 roof repairs had been undertaken involving the application of Silastic sealant. He said that he had not experienced any further 'water entry' problems after that, though there had subsequently been some 'leakage'. 50 Mr Ross, not surprisingly given that his agency had only taken over responsibility for the shopping centre in February 2001, gave evidence that he was unaware of any history of water incursion at the premises. That does not dispose of the responsibility of the lessor in respect of any obligation the lessor might have to disclose a material matter to a prospective tenant. 51 Ragi did not dispute that there had been water incursion problems at the centre especially in the years 1990-1997. It did not accept that serious problems existed at the time that KM took up occupancy. 52 In the Tribunal's opinion, the evidence of Mr Jabbour does not support the conclusion that there was any problem in respect of water incursion of such seriousness that its non-disclosure at the time KM was negotiating to take up space amounted to misrepresentation by silence. In the Tribunal's view, and as Ragi submitted, support for this conclusion can also be drawn from the fact that the tenants' letter of complaint (dated 13 September 2001) over various problems at the centre, water incursion is not listed as a grievance. 53 Mr Jabbour gave evidence that KM's shop, Shop 8B, did suffer some water incursion after the heavy rain in January 2002. In her affidavit, Ms Baxter referred to her shop experiencing water incursion, and noticing the water incursion that had affected Shop 8B. Ms Baxter, like Mr Jabbour, spoke of the difficulty in getting problems affecting her shop, Shop 7, attended to. 54 Ragi accepted that Shop 8B had suffered water incursion after the heavy rains of January 2002. Ragi's evidence, through Mr Ross and the documentary material, is that it attended to the problems. Further roof repairs were done - by Cambridge Roofing. 55 As to the position in November 2003, KM produced photographs showing the state of the premises following their departure. The photographs showed a bucket in a corner of the shop, which, the Tribunal accepts, was used to collect leaks. The photographs show damaged carpet. Mr Ross acknowledged that there was a visible section of wet carpet at the time of KM's departure. 56 There is no evidence that KM made any contemporaneous claim for compensation or took any action to document the extent of damage to stock. In evidence, Ms Ualesi said that the losses were dealt with by way of an insurance claim. No evidence was produced to support that statement. 57 KM's claim that Shop 8B was unfit for trade in the period January 2002 to April 2002 is not established. 58 Adequacy of Maintenance and Cleanliness: The evidence is that several of the tenants, including KM, did raise maintenance and cleanliness issues. For example, the tenants' letter of complaint dated 13 September 2001 referred to the following problems: need to trim trees surrounding the centre; repair of light fittings; some tenants without hot water; need for regular cleaning and hosing of common driveways; need to remove rubbish behind Shops 8A and 8B; need for 'customer parking only' signs in front of shops; need for freshly painted customer parking lines. Mr Ross remembered the letter, and his evidence, which the Tribunal accepts, is that he attended to the issues raised. 59 In its application KM also raised the following additional issues: failing to take measures to prevent the dumping of rubbish on the premises by non-tenants known to the landlord (this issue is referred to in Ms Baxter's evidence); failing to provide adequate power generation during regular blackout periods (this issue is referred to in Ms Baxter's evidence); failure to comply with occupational health and safety measures; failure to fumigate the common areas of the premises on a regular basis; failure to take adequate measures to prevent swelling of doors after water entry which inhibited access to the shops of KM and its customers. 60 The Tribunal has reviewed the correspondence between KM and Mr Ross, attached to Ms Ualesi's affidavit. The Tribunal accepts that some of the matters were raised by KM with Mr Ross. In some instances the only evidence is that given by Ms Baxter. It is not apparent whether the additional criticisms made by Ms Baxter in her affidavit were ever raised with KM. 61 Mr Ross's evidence is that he dealt with issues as they arose; and, in particular, arranged for fumigation on a regular basis. There were some matters on which he was unable to comment, such as occupational health and safety concerns. KM introduced no probative evidence on those concerns. 62 The correspondence shows that Mr Ross was responsive to issues raised by the tenants (including the water incursion issues), but often the responses were slow, corroborating the criticism, already mentioned, by Mr Jabbour and Ms Baxter. 63 The complaints are all ones that could easily have been the subject of claims for adjustment. There is nothing in the correspondence to suggest that KM saw them as so sufficiently serious to seek adjustments or take more forceful action such as suing for compensation or threatening to terminate. 64 The oral and written evidence does not show any significant level of contemporary dissatisfaction by KM over the way the complaints were dealt with. 65 KM has not established that Ragi breached its obligations in relation to maintenance and cleanliness. (4) Security Deposit Interest 66 The RL Act, as it stood in March 2001, provided in s 47 (now repealed) for money paid to a lessor as security for the performance of the lessor's obligations to be held in trust in an interest bearing account. The lessor was required to account to the lessee for interest earned on such a deposit but the lessor was entitled to retain the interest and treat it as part of the security deposit. 67 The evidence in this case is that the money was placed in an account that earned interest, and that interest has been taken into account by Ragi in adjusting its claim for unpaid rent. The complaint of KM is that it was not invested in a way that secured a higher rate of interest (and to that extent diminished KM's debt). The RL Act as it stood at that time laid down no requirements in respect of the level of interest that a lessor should seek to obtain. No breach of the RL Act is demonstrated. (5) Inhibition of Flow of Customers; Contribution to Advertising Expenditure 68 There was no evidence of any probative value placed before the Tribunal in support of these matters. (6) Liability for Outgoings 69 KM paid, without protest as to its legitimacy, the amount specified as outgoings. Ragi did not furnish it with any information as to how it applied that money. Mr Ross's evidence is that the practice of the landlord was to pool all income received from the tenants whether designated rent or outgoings, and for the landlord's expenses to be paid from that fund. 70 The lease instrument stipulated the 'initial base rent' ($2,383.33). Clause 2 of the terms and conditions dealt with other payments. Two of the five items covered by clause 2 were filled in - the amount of the security deposit (one month's rent) and the sub-clause with the words 'percentage of outgoings referred to in clause 25A or the percentage of increases in outgoings referred to in clause 25B'. No percentage is shown; instead alongside these words appears the words '$498 per month'. 71 The meaning to be given to 'outgoings' is covered by cl 26, which provides that it 'means all council rates and local charges, water sewerage and drainage rates and charges not referred to elsewhere in this lease, and land tax, assessed, and all insurance premiums payable, in relation to the premises (or if the premises are only part of the property then in relation to that property)'. 72 The RL Act requires outgoings to be dealt with in a much more transparent and orderly way than occurred in this case. The first step is the giving of the lessor's pre-lease disclosure statement in which an itemised list of all estimated charges for outgoings on an annualised basis is to be given. The statement must show the percentage contribution to those charges that the lessee is to make. The obvious objective is to give the lessee a high level of clarity as to the range of charges and their likely contribution. 73 The standard form lease used in this case, though intended for non-retail premises, reflects the same basic view that the lessee may be required to make a percentage based contribution to the outgoings of the shopping centre. 74 Neither the RL Act nor the standard form used in this case contemplated the making of a fixed price arrangement. 75 Moreover, the RL Act, unlike the standard form contract used in this case, imposes strict obligations on lessors to furnish lessees after occupation with estimates and expenditure statements of outgoings (s 27) and to provide lessees with details of all expenditure by the lessor in each accounting period (s 28). These obligations are imposed as deemed terms of the lease. Sections 27 and 28 provide: ' 27 Outgoings estimates A retail shop lease is taken to include provision to the following effect: (a) the lessor must give the lessee a written estimate of the outgoings to which the lessee contributes under the lease, itemising those outgoings under the item descriptions used in the list of outgoings in the form of lessor's disclosure statement prescribed for the purposes of section 11, (b) the estimate of outgoings must be given to the lessee in respect of each accounting period of the lessor during the term of the lease and must be given before the lease is entered into and thereafter during the term of the lease at least 1 month before the commencement of the accounting period concerned, (c) if the shop is in a retail shopping centre, the estimate of outgoings is to include: (i) a statement of management fees, broken down into the fees to be paid by the lessee towards the administration costs of running the centre and other fees paid to the management company, and (ii) a statement of cleaning costs to be paid by the lessee, broken down into the costs of consumables and other costs, and (iii) any other particulars prescribed by the regulations. 28 Outgoings statements (1) A retail shop lease is taken to include provision to the following effect: (a) The lessor must give the lessee a written statement (an outgoings statement) that details all expenditure by the lessor in each accounting period of the lessor during the term of the lease on account of outgoings to which the lessee is required to contribute. (b) If the shop is in a retail shopping centre, the outgoings statement must include a statement of the current gross lettable area of the shopping centre and details of any material change in that gross lettable area during the period to which the outgoings statement relates. (b1) If the shop is in a retail shopping centre, the outgoings statement is to include: (i) a statement of total management fees paid in respect of the centre, broken down into the fees paid towards the administration costs of running the centre and other fees paid to the management company, and (ii) a statement of total cleaning costs paid by the lessor, broken down into the costs of consumables and other costs, and (iii) any other particulars prescribed by the regulations. (c) The outgoings statement is to be prepared in accordance with relevant principles and disclosure requirements of applicable accounting standards made by the Australian Accounting Standards Board, as in force from time to time. (d) The outgoings statement is to be given to the lessee within 3 months after the end of the accounting period to which it relates. (e) The outgoings statement is to be accompanied by a report (an auditor's report) on the statement prepared by a registered company auditor (within the meaning of the Corporations Act 2001 of the Commonwealth). (f) The auditor's report is to include a statement by the auditor as to whether or not the outgoings statement correctly states the expenditure by the lessor during the accounting period concerned in respect of outgoings to which the lessee is required to contribute, and as to whether or not the total amount of estimated outgoings for that period (as shown in the estimate of outgoings given to the lessee) exceeded the total actual expenditure by the lessor in respect of those outgoings during that period. (g) The outgoings statement may be a composite statement (that is, it may relate to more than one lessee) so long as each lessee to which it relates is able to ascertain from the statement the information required by paragraph (a) that is relevant to that lessee. (h) The outgoings statement need not be accompanied by an auditor's report if the statement does not relate to any outgoings other than land tax, water, sewerage and drainage rates and charges, local council rates and charges, insurance and strata levies, and it is accompanied by copies of assessments, invoices, receipts or other proof of payment in respect of all expenditure by the lessor as referred to in paragraph (a). (2) An auditor preparing a report under subsection (1) (e) or the lessor must ensure that the lessee is given a reasonable opportunity to make a written submission to the auditor on the accuracy of the lessor's proposed outgoings statement. The auditor need not contact the lessee for the purposes of this subsection if the lessor advises the auditor that the lessor has informed the lessee of the lessee's opportunity under this subsection. (3) The auditor must consider any written submissions made pursuant to subsection (2).' 76 The RL Act then imposes in the same way an obligation to adjust contributions to outgoings based on actual expenditure properly and reasonably incurred (s 29). 77 These provisions, it can be seen, all proceed from the premise that the obligation of the tenant to contribute to outgoings is not strictly fixed and is to be shared on a percentage basis with other tenants. 78 Ragi admits that it did not comply with any of the provisions of the RL Act bearing on outgoings. 79 KM submits that these breaches are such that it should have refunded to it all payments made in respect of outgoings. It refers to s 22: ' 22 Recovery of outgoings from lessee (1) The lessee under a retail shop lease is not liable to pay any amount to the lessor in respect of any outgoings except in accordance with provisions of the lease that specify: (a) the outgoings that are to be regarded as recoverable, and (b) how the amount of those outgoings will be determined and how they will be apportioned to the lessee, and (c) how those outgoings or any part of them may be recovered by the lessor from the lessee. (2) In this Part, the expression outgoings to which the lessee contributes refers to any outgoings in respect of which the lessee is liable under the lease to make any payment to the lessor. (3) Costs associated with the advertising or promotion of a retail shop or retail shopping centre, or of any business carried on there, are not outgoings for the purposes of this section.' 80 Provisions in the lease that are inconsistent with the Act are void: ' 7 This Act overrides leases This Act operates despite the provisions of a lease. A provision of a lease is void to the extent that the provision is inconsistent with a provision of this Act. A provision of any agreement or arrangement between the parties to a lease is void to the extent that the provision would be void if it were in the lease.' 81 The result therefore is that the terms of the Act must be read alongside the lease, with the Act's provisions prevailing to the extent of any inconsistency. 82 KM referred to Seguin & Anor v Anglican Church Property Trust Diocese of Sydney (No 1) [2004] NSWADT 146. In that case the applicants conducted an antiques retail business in premises belonging to the respondent under a written agreement headed 'Licence Agreement'. They had, prior to entering into this agreement, occupied the premises under a lease agreement which they had declined to renew. In that case the respondent contended that the Tribunal was without jurisdiction in respect of the current relationship as it did not constitute a retail shop lease within the meaning of the RL Act. In the case, the Tribunal at [53] endorsed the following submission set out at [47]: 'On account of s 7, it was not open for parties to a lease or licence to decide between opting into or out of the regime established by the Act. If the transaction into which they entered satisfied the requirements of the definition of a retail shop lease, and was not excluded from the Act's operation under s 5 or s 6, it would be irrelevant that they did not intend the Act to apply to it.' 83 KM also referred in its submissions to s 12 which provides: ' 12 Lessee not required to pay undisclosed contributions A provision of a retail shop lease that requires the lessee to pay or contribute towards the cost of any finishes, fixtures, fittings, equipment or services is void unless the liability to make the payment or contribution was disclosed in a disclosure statement given to the lessee in accordance with this Part.' 84 This lease did not require the lessee to pay or contribute to the cost of any finishes, fixtures, equipment or services. In the Tribunal's opinion, s 12 is irrelevant to this case. 85 Interaction of ss 22, 27 and 28: The interaction of ss 22, 27 and 28 was considered by the Tribunal in the Wanice litigation: Wanice Pty Ltd v Bocove Pty Ltd [2003] NSWADT 17 (at Divisional level); Wanice Pty Ltd v Bocove Pty Ltd [2003] NSWADTAP 24 (at Appeal Panel level). 86 In that case the parties did contract with each other with an understanding that the RL Act was applicable. The lessee subsequently vacated. As in this case, the lessor first took proceedings by way of a civil claim in the Local Court for arrears of rent and unpaid outgoings. The proceedings were transferred to the Tribunal. 87 The lessee contended that it had agreed on an 'all up' rent of $685 per week with no separate provision for outgoings and that it had never made any separate payment of outgoings during the currency of the lease, despite receiving demands. The lessor, relying on the terms of the pre-lease disclosure statement and the terms of the lease, claimed that the lessee had agreed to pay in addition certain specified outgoings. 88 The lessee had entered into possession prior to the pre-lease disclosure statement being furnished, and prior to the execution of a formal lease. Technically therefore, the lessor was in breach of the obligations under s 11. Nor did the lessor comply during the currency of the lease with the reporting obligations imposed by ss 27 and 28. At first instance, the Tribunal said that in these circumstances the lessee should not be required to pay outgoings: '36 By s. 22 there is no liability on the Lessee to pay outgoings except "in accordance with the provisions of the lease" that specify certain matters. Sections 27 and 28 specify that "a retail shop lease is taken to include provision to the following effect … " as set out above and accordingly those provisions are applicable for the purposes of s.22. 37 The Lessor in its later written submissions concedes that the provisions of s.27 and 28 have not been complied with in this case but argues that this does not preclude recovery of the outgoings because the Lessee now has ample evidence of the details of the outgoings from invoices. 38 In my opinion that is quite contrary to the effect of s.22 of the Act and accordingly in my opinion the Lessor is not entitled to recover the outgoings in respect of Council rates, water rates and strata levies as claimed. Even if there were any doubt as to land tax, water and sewage rates and Council rates because the Lessee now has assessment notices and invoices, an auditor's report is specifically required for management fees or strata levies and has not been provided. In any event, I conclude that s.22 read with ss. 27-28 is a complete answer to the claim that the Lessee has an obligation to pay any outgoings.' 89 The lessor appealed against the Tribunal's dismissal of its claim for unpaid outgoings. The Appeal Panel set aside the decision in this regard. It is helpful to set out the Appeal Panel's summary of two of the arguments made on behalf of the lessor. (The Appeal Panel noted that it did not have the benefit of detailed arguments in reply from the lessee.): '21 Mr Scheib also drew attention to the fact that, if the approach taken by the Tribunal in the judgment under appeal were correct, the consequences for a lessor of non-compliance with s 27 or s 28 could well be distinctly more serious than the consequences of not complying with the lessor's obligation under s 11 to provide a disclosure statement. The effect of any breach of s 27 or s 28, as interpreted by the Tribunal, would be that the lessor could recover no outgoings for the accounting period to which the breach related, or possibly no outgoings at all. Under s 11(2), as just mentioned, a breach of s 11 may entitle the lessee to terminate the lease within six months. Under s 11(5), however, any accrued rights or obligations arising before the termination are not affected. Mr Scheib argued that it could not be correct to interpret a provision for which no consequence of breach was stipulated in such a way that persons in breach might suffer more seriously than if they had failed to comply with a provision which clearly spelled out the consequences of breach. 22 Finally, Mr Scheib maintained that the Tribunal's interpretation of s 22, s 27 and s 28 necessarily entailed the introduction of additional words into one or more of these sections. This, he said, was impermissible, since the natural meaning of the words was readily discernible. Furthermore, he argued, there was no way of determining what consequences of a breach of s 27 or s 28, other than a breach of the lease agreement by the lessor, might have been intended by the legislature.' 90 The Panel continued: '25 Since the hearing of the appeal, the Appeal Panel has however located a decision of the Tribunal in which the consequences of breach of s 27 are specifically considered. In Cronulla Newsagency Pty Ltd v Pizzata & Ors [2002] NSWADT 121, the lessee under a registered lease was obliged to pay the land tax due on the property. On 31 October 1997, the lessor gave the lessee a disclosure statement in which the land tax to be paid was estimated at $5,700 per annum. In respect of two subsequent accounting periods, commencing November 1998, no further estimates as required by s 27 were provided. In February 2001, the lessor, having received a notice of arrears of land tax in the sum of $31,615.18, required the lessee to pay this sum. The lessee denied liability, on the ground that s 27 had not been complied with in relation to the two accounting periods commencing in November 1998. 26 In his judgment, Mr S Montgomery, Judicial Member, rejected this argument by the lessee. He held, at [85 - 93], that the lessee's remedies in respect of the non-compliance with s 27 were confined to damages for breach of the contractual terms which by virtue of s 27 were implied into the lease agreement. He considered that s 27 was not intended to have the same "onerous" effect as other provisions of the Act, such as s 11, which sought to ensure that all relevant aspects of an intended lease were disclosed to the lessee before it was entered into. 27 Mr Montgomery derived support for this ruling from a passage in the second reading speech of Mr Chappell, then Minister for Small Business and Minister for Regional Development, on the introduction of the Retail Leases Bill 1994 into Parliament (New South Wales Parliamentary Debates, Hansard, Legislative Assembly, 20 April 1994, pp 1547-8). Mr Chappell indicated that the Government did not wish to "interfere in commercial agreements". Instead, it sought to ensure that "retail leasing agreements are explicit as to the requirements of both parties and that they are entered into from a position of reasonably equal negotiating strength". Accordingly, he said, failure of a lessor to provide an adequate disclosure statement before the lease commenced might incur a penalty and a claim for compensation. But the general approach of the bill, rather than establishing "external compliance procedures", was to allow leases themselves to impose "internal compliance mechanisms". 28 Having cited this passage, Mr Montgomery stated as follows (at [92]):- In my opinion, the onerous provisions in the Act are consistent with the intentions of the legislature as set out above. These are intended to ensure that adequate information is supplied prior to entry into the lease. There is no stated intention to interfere with the rights of the parties to the same extent once the lease has commenced. The interpretation of section 27 of the Act urged by the Applicant [lessee] would add new external compliance procedures in contradiction to the stated intentions of the Minister. 29 Mr Montgomery referred also, at [87 - 90], to Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, where the High Court outlined the principles governing the implication of unexpressed terms into contracts. Having regard to these principles, he concluded that no term could be implied requiring the lessor to disclose the amount of land tax within a "reasonable" time, or stipulating that compliance with s 27 was a condition precedent to the recovery of outgoings by the lessor.' 91 The Appeal Panel said: '31 … [The Panel] is of the opinion that the Appellant's arguments are well founded and must be accepted. Unlike both the parties and the Tribunal at first instance, it has had the benefit of being able to study both the ruling on s 27 and the supporting reasons contained in the Cronulla Newsagency case. 32 The Panel considers that neither in s 22, nor in s 27 or s 28, can language be found requiring that the obligations imposed on a lessor by the latter two sections must be treated as obligations arising under s 22, so as to produce the result that non-compliance precludes recovery of the outgoings stipulated in the lease. Similarly, for the reasons advanced by the Appellant and, indeed, put forward in Cronulla Newsagency, s 27 and s 28 should not be interpreted as impliedly establishing conditions precedent to the recovery of outgoings. In this connection, the contrast between these two sections and other sections of the Act (including s 22) in which the consequences of non-compliance are clearly spelled out is, in the Panel's opinion, of compelling importance. 33 The Panel notes also that, in addition to an action for damages for breach of contract, a lessee may be able to rely on non-compliance by the lessor with s 27 or s 28 as an element of a claim that the lessor has engaged in unconscionable conduct within the meaning of Part 7A of the Act.' 92 This Tribunal agrees with this approach. A breach of ss 27 or 28 is a breach for which monetary compensation may be ordered. It does not follow that a lessee should be relieved from payment of any or all of the amounts payable in respect of outgoings. 93 In Wanice, the Appeal Panel then dealt with the question of whether the lessor had complied with s 22, standing alone. It held that the lessor had complied with that provision: '34 The Panel raised with Mr Scheib the argument that the Lease in this case may not have contained sufficient material to satisfy all the requirements of s 22 of the Act, standing alone. He submitted in response that these requirements had in fact been fully satisfied. 35 Mr Scheib referred in this connection to Clause 5 and Item 13 of the Lease, which was substantially in the form then recommended by the Law Society. These provisions, he said, made it clear that the Respondent Lessee was obliged to pay 100% of the outgoings in each of the four categories mentioned earlier in this judgment (at [6]). They stipulated further (a) that a request to the Respondent for payment could be made by the Appellant after it had either paid an outgoing or received an assessment or an account for payment, and (b) that payment by the Respondent was required on the next rent day after the Appellant made a request for payment. They also contained further particulars relating to land tax. 36 The Panel agrees that these provisions sufficiently dealt with the matters set out in the three sub-paragraphs of s 22(1). The Respondent accordingly could not contend that this section, considered separately from s 27 and s 28, provided grounds to resist the Appellant's claim for outgoings.' 94 Similar issues to those canvassed in Wanice arose before the Court of Appeal of Western Australia in Heng v Levison & Anor [2006] WASCA 67 (26 April 2006). 95 The lessor sued the lessee for recovery of outgoings incurred by the lessor. The lessee accepted that the written lease gave the lessor the right to recover the type of outgoings in dispute. The lessee resisted making payment on the basis that requirements imposed by the governing legislation, the Commercial Tenancy (Retail Shops) Agreements Act 1985, had not been complied with. Section 12(1) limited the amount payable by the tenant to 'the items of expense that the lease specifies are to be paid … by the tenant' and provided that the amount did not include 'an amount in respect of which the lease does not specify both - (i) how the amount is to be determined and, where applicable, apportioned to the tenant; and (ii) how and when that amount is to be paid by the tenant'. In this instance the lessee claimed that the outgoings (charges for 'postage and petties' incurred by the lessor's managing agent) were not recoverable because the lessor had not specified how the managing agent's fees were to be determined of which postage and petties were an incident. 96 The Commercial Tribunal and, on appeal, a single Judge of the Supreme Court upheld the lessee's argument. The Court of Appeal held in favour of the lessor. It rejected the opinion of the Commercial Tribunal and the single Judge that, at the least, for a lease to comply with s 12 it must do more than merely specify that the whole item of expenditure is payable by the tenant. In their view, it must refer to some method of calculation. 97 Steytler P said: '12 … The evident purpose of s 12 (1) of the Act seems to me to have been that of ensuring that full disclosure is made, in a retail shop lease, of expenses which are to be recouped from the tenant, including the manner of their determination and apportionment. So much appears from the language of the section itself and also from what was said by the responsible minister at the time of the introduction into Parliament of the 1994 Bill. …. 13 There is no doubt that fees paid by a landlord to a managing agent (including postage and petty expenses incurred by the managing agent in the course of managing the leased premises) are expenses incurred by that landlord in operating a building. Nor is there any doubt that a fee of that kind is an item of expense that the lease, in this case, specifies is to be paid by the tenant: see cl 8(a), cl 8(b) and cl 9(a) of the lease. Both parties have accepted that the lease sufficiently specifies how and when the amount payable in respect of these fees is payable. They also accept that, because the leased premises occupy the whole of the building, no question of apportionment of this expense arises. Consequently, the critical issue upon which the appeal turns is that of whether or not the lease specifies how the amount payable in respect of the managing agent's fees is to be determined. If it does, the appellant is entitled to recover that amount from the respondents. If it does not, the appellant has no right of recovery. 14 In my opinion, the lease does specify how the amount payable in respect of the managing agent's fees is to be determined. It informs the tenants, by cl 8(b)(x), that the whole of the fees paid by the lessor to the managing agent is to be recoverable, subject to the requirement in Item 12(b) of the Schedule that those fees have been reasonably and properly incurred. That seems to me to be a sufficient specification for the purposes of s 12(1)(a)(i). While cl 8(b)(x) does not alert the tenants to the amount that they will have to pay in that respect, the scheme of s 12 is such that this information must later be provided to them by means of the estimate which the landlord is required to provide pursuant to s 12(1)(b)(i). … 16 … The word "determined" seems to me to have its normal meaning. What it requires is that the tenant be told how the amount in question will be fixed. That will be achieved if the tenants are told (as they are, by the lease) that they will have to pay the whole of what is required to be paid by the landlord to the managing agent, so long as the management fee was reasonably and properly incurred. There is no justification for giving the word "determined" some other meaning, whether "calculated" or otherwise. I cannot accept the proposition that, because the opening words of s 12(1)(a) require that recoverable items of expense must be specified in the lease, the legislature must, by s 12(1)(a)(i), have contemplated something more than a mere statement that the whole of a particular fee reasonably and properly charged to the landlord will be recovered from the tenant as otherwise there would be no purpose in requiring the amount of the expense to be determined. There might be many ways of determining an expense. It might, as in this case, be the actual expense, to the extent that it was reasonably and properly incurred. Alternatively, a landlord who, for example, uses his or her own staff to effect repairs or carry out maintenance or even to manage the building might charge for those services by reference to some hourly rate or scale, or by reference to a percentage of the cost of wages or even by reference to a percentage of the rental to be paid. Consequently, the fact that in some cases no further determination will be required than by identifying an as yet unquantified expense which is to be reasonably and properly incurred by engaging a third party does not mean that the first requirement of s 12(1)(a)(i) has no function to perform. 17 Nor is it right, in my respectful opinion, to say that the objective of full disclosure is not met by any construction other than that advanced on behalf of the respondents. I have said that a construction which gives to the word "determine" what I take to be its ordinary meaning sufficiently identifies the expenses to be recouped and that s 12(1)(b) satisfies the objective of alerting the tenants to the amount or amounts that they will be required to pay by requiring the landlord to provide the annual estimates there referred to. In my opinion it would be impractical to provide for any greater disclosure than that, given that there must be many expenses in the nature of operating, repair or maintenance costs which are difficult to quantify or even to predict, more especially so in circumstances in which a lease may operate for many years. Counsel for the respondents suggested, in their supplementary written submissions, that a lease could readily provide for a determination with respect to the cost of work which is to be outsourced by reference to the lowest of a specified number of competitive quotations from reputable contractors. Similarly, he suggested that the lease could provide for a determination with respect to the cost of work which is to be performed by in-house staff of the landlord by reference, for example, to materials at cost and to labour at hourly award rates commensurate with the nature of the work being undertaken. There are obvious difficulties in requiring a landlord to accept the lowest of a number of quotations with respect to a particular expense - for example, insurance - without regard to other terms of the quotation, or in requiring it to identify rates for every conceivable kind of work or service that might be required over a lengthy period of time. However, even assuming that it is possible for a retail shop lease sensibly to include provisions of this kind, I can see nothing in the legislation which should be read as requiring this and I very much doubt that the legislature could have thought that it was practicable for a lease to cater, in this kind of way, for all possible eventualities over what might be a very long period of time.' 98 The President noted that this approach coincided with cases in other jurisdictions, including the Appeal Panel decision in Wanice. 99 In Trust Company of Australia Ltd v Skiwing Pty Ltd [2006] NSWCA 387 Basten JA referred to the outgoings provisions of the RL Act: '52. … Under s 22, there is a prohibition on recovery of outgoings otherwise than in accordance with the terms of the lease, which must comply with that section and with the requirements with respect to apportionment in s 30. Further, ss 27 and 28 provide a level of disclosure with respect to outgoings, both anticipated and actual. Section 28 demonstrates a statutory intention that a lessee must either be given an audited statement in relation to outgoings or must be provided with copies of relevant assessments, invoices and receipts where the outgoings are effectively restricted to charges and fees payable to other bodies. Further, in a particular case, as the Appeal Panel noted, a level of disclosure beyond that expressly provided for in the lease or by the Retail Leases Act , may be required depending upon the circumstances of the particular case.' 100 In this instance, in line with directions given at the conclusion of the hearing, Ragi filed a statement from its accountant providing a statement of outgoings paid in connection with the centre for the years ending 30 June 2002 and 30 June 2003. The statement is divided into the following categories: land tax; council rates; water rates; insurance; electricity; repairs and maintenance; cleaning; waste removal; lawns and gardens; security. The total for the year ending 30 June 2002 was $68,302 and for the year ending 30 June 2003, $52,173. 101 It will be seen that this list does not precisely conform to the definition in cl 26 of the lease. Clause 26 refers specifically to council rates and local charges, water, sewerage and drainage rates, land tax, and insurance premiums. It does not mention electricity, repairs and maintenance, cleaning, waste removal, lawns and gardens or security. The Tribunal accepts that these are all items that might properly be included in outgoings. At most they fall within the compendious expression used in cl 26 - 'charges not referred to elsewhere in the lease'. 102 The lease in this case was far more informal than those that came under notice in Wanice and Heng. Mr van Ede submitted that the amount of outgoings, by being set in a fixed amount, had been particularised adequately to meet the requirements of (a), (b) and (c) of s 22(1). 103 Paragraph (a) requires that the lease specify the 'outgoings that are to be regarded as recoverable'. In the Tribunal's opinion, this obligation was, in the circumstances of this case, not satisfied by cl 26 of the lease. The outgoings paid by the lessor, as the accountant's statement shows, went further. Paragraph (c) requires that the lease specify how those outgoings or any part of them may be recovered by the lessor from the lessee. Default in respect of payment of moneys due under the lease is covered by cl 17. Paragraph (c) is satisfied. 104 Paragraph (b) has two requirements. First, the lease must specify how these outgoings will be determined. This is a similar requirement to the one which received attention in the Heng case. Secondly, the lease must specify how they will be apportioned to the lessee. 105 Ragi's submission, in effect, is that this paragraph is satisfied by the fact that the parties 'pre-determined' the amount as a fixed sum. 106 The Tribunal has noted that the clear premise upon which the outgoings provisions of the Act is built is one of a 'floating' or 'adjustable' amount for outgoings which become fixed at the end of the accounting period. This is the kind of situation that was being dealt with in both Wanice and Heng. 107 In this case, the parties did not bargain on that basis. The parties agreed to a payment regime under which the amount for outgoings was fixed. 108 The Tribunal is not satisfied that Ragi complied with s 22. 109 Section 72 of the RL Act provides, materially: '(1) In proceedings for a retail tenancy claim lodged with the Tribunal under this Part, the Tribunal is empowered to make any one or more of the following orders that it considers appropriate: (a) an order that a party to the proceedings pay money to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person, (b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings'. 110 The kind of order sought by KM, return to it of the amounts paid by way of outgoings, is an order in the nature of restitution. 111 Mr van Ede submitted, if the Tribunal concluded (as it has) that s 22 was breached, that it would be inequitable to require Ragi to repay these amounts. Mr van Ede submitted that it would be manifestly unjust for KM to have the benefit of 30 months in occupation and recover the amounts it paid by way of contribution to outgoings. He submitted that in this case the arrangement had given certainty to the tenant as to the amount it was required to pay in respect of outgoings. He noted that the demand for a refund of outgoings was not raised until after the tenancy had ended. 112 Mr van Ede relied on Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221. The High Court held that a licensed home builder who had undertaken work on the basis of an oral agreement could rely on quantum meruit to recover a reasonable sum in respect of building work. It restored the judgment of the primary judge, reversing the Court of Appeal. The builder was not barred in that regard by his failure to conform to the requirements of the home building legislation which prescribed that the contract be in writing and contain specified information, and further provided that failure to satisfy those requirements rendered the contract 'not enforceable against the other party'. The Court held that an interpretation of the statute should be preferred which avoided the harsh and unjust result of depriving the builder of reasonable compensation for work performed, and delivering a windfall to the consumer. 113 The purpose of the statutory provision was to protect the building owner against spurious claims by a builder by preventing the enforcement by him of nonconforming contracts: per Mason and Wilson JJ at [14]. '[T]he foundation of the right to recover on a quantum meruit does not depend on the existence of an implied contract'. The true basis of the quantum meruit claim is restitution and the avoidance of unjust enrichment, not implied contract. In this case the Court said that the execution of the work for which the unenforceable contract provided and its acceptance by the customer gave rise to a right of recovery of a reasonable sum. See per Mason and Wilson JJ at [10]-[11] citing with approval the reasons of Deane J. 114 Mr van Ede also relied on the principle of 'estoppel by convention'. Dr Rory Derham has explained an 'estoppel by convention' in these terms at (1997) 71 ALJ 860: 'An estoppel by convention may arise when parties have agreed to assume the correctness of a state of affairs as the basis of a transaction between them, when the state of affairs may not be a correct description of the true position. It differs from the more usual type of estoppel by representation, since agreement rather than a representation made by one of the parties to the other is the source of the estoppel.' 115 Austin J held in Heggies Bulkhaul v Global Minerals Australia [2003] NSWSC 851; 59 NSWLR 312 that uncertainty in earlier commentaries and authorities had now been resolved in Australia in favour of the view that such an estoppel could arise where the assumption of the parties is an assumption about the effect of the law as well as where it is an assumption about a matter of fact: see [148]. Austin J noted cases in which an assumption as to the existence of private legal rights may be regarded as an assumption of facts for the purposes of this type of estoppel. He referred to a case where the assumed fact was that there was a binding lease agreement between the landlord and the tenant. 116 As to the case before him, Austin J said: '156 The estoppel evidence, when considered together with the evidence of the AMES/Global relationship and the letter of 16 December 1999, establishes that HBL, AMES and Global have, at all times since execution of the instruments of transfer of 8 December 1999, conducted their relations with one another on the basis of an assumed state of affairs. The assumed state of affairs is that Global is bound by the variations to the payment obligations agreed between HBL and AMES, and by the arrangements for a new lease made in September 1999 - in other words, that Global came to occupy the same position vis-a-vis HBL, and had the same rights and obligations in that respect, as AMES had before the transfer. 157 In my opinion the evidence brings the present case within the doctrine of estoppel by convention, both with respect to the arrangements for variation of the payment obligations, and with respect to the arrangements for the new lease. Therefore Global is estopped against HBL from questioning the truth of that assumed state of affairs. 158 Consequently estoppel by convention provides a basis … for HBL to require Global to adhere to the variation of payment arrangements agreed between it and AMES. …' 117 Ragi submitted that an estoppel by convention of the kind described above had arisen in this case. The parties had dealt with each other on the basis that the consideration for entry into occupation of the premises was the combined amount of the amount stipulated as rent and the amount stipulated as outgoings. 118 Interstate Authorities: Mr van Ede's submissions based on quantum meruit are supported by recent interstate authorities. 119 In Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6 (8 February 2006) the Court of Appeal set aside an order made by the specialist tribunal (Victorian Civil and Administrative Tribunal, Retail Tenancies List) requiring the landlord to return to the tenant the sum of $64,953.56 (see The Dog Depot Pty Ltd v Ovidio Carrideo Nominees Pty Ltd [2003] VCAT 1990) being rent for which it was not liable due to breach of the governing statute. The order had been upheld by a single judge of the Court (see Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2004] VSC 400 (Kaye J)). 120 The tenant (Dog Depot) had paid rent over 33 months in circumstances where the landlord had failed to comply with the law's requirements in relation to pre-lease disclosure and the giving of a pre-lease disclosure statement (Retail Tenancies Reform Act 1998 (Vic.), s 8(1)). The Tribunal and the single Judge considered that s 8(2) was applicable: '(2) If a tenant has not been given a disclosure statement in accordance with sub-section (1) before entering into a retail premises lease - (a) the tenant may withhold payment of rent until the end of 7 days after the landlord gives the tenant a copy of the disclosure statement; and (b) the tenant is not liable to pay the rent until the end of 7 days after the landlord gives the tenant a copy of the disclosure statement; and (c) the tenant may give the landlord written notice of termination at any time before the end of 7 days after the landlord gave the tenant a copy of the disclosure statement.' 121 It will be seen that s 8(2)(b) reflects the same policy as s 22 of the RL Act in this case. 122 Chernov JA noted that the tenant's claim was a restitutionary one - for money had and received. His Honour noted that considerations of 'justice and equity' were relevant to the determination of such a claim. He referred to Pavey & Matthews. He said at [11]: '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. … 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.' (emphasis in text) 123 He referred to authority which had recognised that the giving of valuable consideration may amount to a defence to a claim for money had and received under mistake (whether of fact or law), citing ANZ Banking Group Ltd v Westpac Banking Corporation (1987) 164 CLR 662 (mistake of fact) and David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 (mistake of law). 124 Chernov JA reviewed various High Court authorities and concluded at [20]: '…[O]nce 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 [i.e. the landlord] 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 be relevant, I think, to consider whether the respondent has a 'counter restitutionary' claim against the payer for the use and occupation of the premises.' 125 Chernov JA concluded that it would not be unjust and unconscionable for the landlord to retain the rent as the tenant had received good consideration, namely exclusive possession of the premises. 126 Further, he considered at [22] 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', citing a leading text and the cases of Australian Provincial Assurance Association Ltd v Rogers (1943) 43 SR (NSW) 202 and Zegir v Woop [1955] VLR 394. As to the availability of such a claim, Chernov JA did not consider that a barrier arose because of the seemingly stronger expression found in s 8 of the Victorian Act ('not liable') as compared with the statutory expression considered in Pavey ('unenforceable'). He said at [22]: '…[I]n 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 like character to that considered in Pavey , 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.' 127 He noted that, as 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. He concluded: '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.' 128 Nettle JA supported Chernov JA's interpretation of s 8(2)(b). His Honour gave additional reasons favouring Chernov JA's construction based on the extrinsic materials (a working party report, statements made in Parliament). He said: '29. … [The tenant/respondent] claims it paid rent under the lease in the mistaken belief 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.' 129 He continued at [33]: '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.' 130 Like Chernov JA, Nettle JA considered that the 'textual differences' between the Victorian Act and the Act under notice in Pavey were not significant: see [36]. 131 As to the nature of the restitutionary claim, Nettle JA concluded at [41]: 'The lease shows that the benefits of occupation were not intended as a gift, and the claim to recover reasonable compensation for use and occupation is to be characterised as a claim dehors the contract.' 132 Ashley JA also supported his colleagues' construction of s 8(2)(b). Ashley JA saw as the significant question in dealing with the restitutionary claim and counter claim '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': [56]. 133 In a series of cases the Victorian Tribunal has applied the decision in Ovidio Carredeo. 134 Notably the first of these cases involves the tenant in these proceedings, KM, and the circumstances of that case mirrors to an uncanny degree the circumstances of the present case: see Kiwi Munchies Pty Ltd v Nikolitsis [2006] VCAT 929 (29 May 2006). 135 KM had in November 1999 leased retail premises for one year. The lessor was the respondent, Mr Nikolitsis. The parties executed two lease documents, one in 1999, the second in 2001. The documents were standard 'commercial lease' forms produced by the Real Estate Institute of Victoria. The lease was governed by the Victorian retail leases legislation, and no disclosure statements were provided. KM was given notice to quit for non-payment of rent in November 2004. In correspondence in reply KM raised issues relating to compliance with the Victorian legislation. Not unlike the present case, rent was unpaid for a relatively limited period (3 months from 1 September 2004 onwards) and in a relatively small sum ($3,148.20). The dispute found its way to the Tribunal when KM initiated proceedings in October 2005. KM's application contained various claims including for repayment of '$61,493.60 rent paid under mistake'. The landlord counterclaimed seeking '$2,862 unpaid rent, $424.25 interest on unpaid rent to 2 February 2006 and re-instatement costs of $1,980'. There was also a claim for a small sum in respect of locksmith costs. See [20]-[21] of the Tribunal's reasons. 136 The Tribunal dismissed KM's claim for recovery of rent. It said: '22 The basis for the claim to recover rent paid is that by reason either of Section 8 of the Retail Tenancies Reform Act 1998 which deals with prospective tenants or Section 17 which deals with renewal of leases, the landlord was obliged to furnish a disclosure statement to Kiwi Munchies prior to the signature of the 2001 lease. Where there is an obligation to furnish such disclosure statement and it is not furnished, then Section 8(2)(b) or Section 17(2)(b) of the Retail Leases Act 2003 gives the tenant a defence against any claim for rent by the landlord. Both paragraphs state where the disclosure statement is not given 'the tenant is not liable to pay rent attributable to the period before the landlord gives the tenant a copy of the disclosure statement' . Kiwi Munchies said that it was unaware of its defence to the claim and hence paid all of the rent under the 2001 under a mistake of fact. It should be able to recover such rent. 23 This claim must fail. In Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6 the Court of Appeal ruled against such claim. The Court reached this conclusion for two reasons, first, because it considered that a tenant in the circumstances described received good consideration for the rent that it paid based upon the exclusive possession to the relevant premises [2006] VSCA 6, [21] per Chernov JA and secondly because the Court concluded that a landlord in these circumstances would have a countervailing restitutionary claim equivalent to the contractual rent reserved for the use and occupation of the premises [2006] VSCA 6, [22]. The claim for the refund of rent is therefore dismissed.' 137 (It is a matter of great concern to the Tribunal that Ms Paras, a solicitor, did not draw attention either in her oral submissions at hearing or in the written submissions filed 8 December 2006 to this case, involving as it did her company and client, and virtually identical circumstances and identical arguments of principle.) 138 Ovidio Carrideo (sometimes called the Dog Depot case) was applied by the Supreme Court of Victoria in R & C Mazzei Nominees Pty Ltd v Aegean Food Import Export Pty Ltd [2006] VSC 210 (13 June 2006). In that case a retail tenant sought reimbursement of rent moneys paid to a landlord, contending that because of the continuing failure of the landlord to provide disclosure statements it was not liable to pay the rent, referring to s 8. Osborn J observed: '45 In my view the circumstances before the Tribunal disclosed a clear basis for a cross-restitutionary claim of the type recognised and explained by Chernov and Nettle JJA in the Dog Depot case on appeal. The landlord has a cross-restitutionary claim pro tanto for the use and occupation of the premises. 46 Such a claim may not be equivalent to the full value of the rent claimed as paid under compulsion by the tenant. Matters which might potentially affect the assessment of fair and reasonable compensation include: (a) evidence as to the state of repair of the premises during the period in issue (the Tribunal having already found that the landlord was in breach of its obligation to repair during this period); (b) evidence that the renewal of the lease (despite being prepared by the tenant's solicitor) did not fully reflect market value by reason of factors such as misunderstanding as to responsibility for outgoings. 47 It can be seen that such matters potentially reflect detriment flowing to the tenant from a failure to provide a disclosure statement. In this sense the potential for restitution of moneys paid under protest may be impacted upon by reason of the failure to provide a disclosure statement.' 139 As these matters had not been considered, and as the Tribunal had applied the law as it stood at the time (in line with the interpretation of s 8 by the single judge of the Supreme Court in Dog Depot, which was subsequently overruled), the Court remitted the matter to the Tribunal for further hearing according to law. 140 In Lactos Fresh Pty Ltd v Finishing Services Pty Ltd (No 2) [2006] FCA 748 (15 June 2006) the Federal Court (Weinberg J) dealt with similar issues. In an earlier judgment in the same proceedings the Court had, in response to an application by the tenant of factory premises, held that the landlord had breached the covenant relating to the procedure to be followed prior to increasing rent: Lactos Fresh Pty Ltd v Finishing Services Pty Ltd [2006] FCA 2006 219). The Court deferred dealing with the question of the appropriate orders for relief. The second judgment dealt with that matter. It also dealt with a fresh development. 141 Following judgment in the first case, the landlord served a notice in proper form, and followed the procedure required under the lease for a rent increase. It submitted that this action had made good the breach, and it was entitled to the whole rent for the period affected both retrospectively and prospectively. If its argument for retrospective application was not accepted, it argued in the alternative that it should be permitted to retain the overpaid rent, or at least a 'reasonable' sum in that respect, relying on restitutionary principles. The Court refused to hear the former claim (by exercising its discretion to refuse an amendment to the pleadings raising it). It did proceed to deal with the latter claim - the 'restitutionary' claim (it did form part of the pleadings in the main proceedings). The landlord relied on Ovidio Carrideo. The tenant had also relied on restitutionary principles in its claim for reimbursement of the rent paid under protest. The Court analysed in some detail the recent developments in Australia in relation to the law on restitution. 142 It is not necessary to traverse the Court's conclusions as they related to the tenant's claim. As to the landlord's claim, the Court rejected the analogy with Ovidio Carrideo. The Court said: '105 The most obvious point of distinction is that the landlord in Ovidio was found to have a counter-restitutionary claim against the tenant. Although the first respondent in this case submitted it also had a counter-restitutionary claim against the applicant, I do not see how such a claim could succeed. It must be remembered that in Ovideo , the effect of finding the tenant was entitled to restitution would have been that it would have had occupancy of the relevant premises for two and a half years for free. It was in this context that the Victorian Court of Appeal found the landlord would have a counter-restitutionary claim against the tenant for use and occupation of the premises. 106 Those facts are far removed from those in the present case. The parties in this case agreed to a tenancy on the terms set out in the lease. The tenant paid rent pursuant to that lease. The terms of the lease included that the rent be increased if the rental review procedures were followed (at least so far as clause 3.2.2 was concerned). Those procedures were not adhered to. Accordingly, in ordering that the applicant is entitled to restitution of the overpaid rent, the parties will actually get exactly what they bargained for under the terms of the lease, and the rent that the applicant has paid (minus the overpaid rent) constitutes good consideration for its tenancy. In those circumstances, it can hardly be said that the first respondent would have a claim against the applicant for use and occupation of the premises. 107 I do not accept the first respondent's "fall back" submission that I should determine what the "reasonable rent" would have been, and only order restitution of any amount that the applicant has paid over that sum. The amount by which it would have been "reasonable" to increase the rent is not relevant in these circumstances. As Deane J stated in Pavey & Matthews (at 256), restitution does not provide "judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate". 108 The real question is what was the applicant was obliged to pay under the lease? While the applicant did make an offer to pay increased rent by reference to an independent assessment, the first respondent rejected that offer. It did so on the assumption that it was entitled to a higher rent. That assumption proved to be wrong. Accordingly, the agreement on foot between the parties provided that the rent payable was that which was paid, less the overpaid rent. The applicant, therefore, did not receive any additional benefit for its payment of the overpaid rent. 109 This finding is fortified when it is considered that, in Ovidio, when the Court came to determine the quantum of the counter-restitutionary claim, that is, what the "reasonable rent" was that the tenant should pay, their Honours had regard to what in fact the parties had bargained for. They did not themselves embark upon any independent assessment of the reasonable rent (although I acknowledge that there was no evidence before their Honours as to this matter). This demonstrates the inappropriateness of the Court deciding what a reasonable rental figure would be, when the parties have themselves agreed upon procedures to determine this.' 143 The Victorian Tribunal delivered its decision on the remitted case in January 2007: see Aegean Food Import Export Pty Ltd v R & C Mazzei Nominees Pty Ltd [2007] VCAT 68. It rejected various arguments of the tenant seeking to rely on aspects of the decision in Lactos, and proceeded to order that the tenant pay the contractual rent, rejecting claims by the landlord that the order should be in a higher amount because the fair value of the use and occupation of the premises for the period in fact exceeded the amount charged under the lease. Such an application of the restitutionary principles would allow the landlord to obtain a further profit from its own wrong. See generally, paras [41] and ff. 144 Applying these principles recounted in the above line of authority to the present case, the Tribunal's conclusion is that Ragi should be reimbursed in respect of the unpaid outgoings. 145 In my view, the parties to the lease were both commercially experienced. They bargained in a usual way. For the reasons given, I am satisfied that there is no adequate proof of any misrepresentation by the agent in the course of those dealings going to the treatment of other tenants in respect of outgoings. Nor, for the reasons given, do I find any substantive breaches by Ragi of its obligations in such matters as the making of repairs and the like. 146 The present circumstances do not present, I accept, as radical a situation as that dealt with in the Victorian line of authority, where the non-compliant landlord faced loss of the entire rent. In my view, Ragi is entitled to fair compensation for the use and occupation of the premises by KM. KM received good consideration under the contract, void as it is so far as the outgoings covenant is concerned by reason of s 22. 147 As to what is 'fair and reasonable' compensation, I am content, as the Victorian Court was in Ovidio, to be guided by the price agreed between the parties for occupation of the premises. I do not think it should, in effect, be reduced by depriving Ragi of the outgoings component. 148 What KM was concerned to have, for understandable reasons as I have noted, was a fixed price arrangement. At no point, on the evidence, did the parties discuss a 'floating' outgoings arrangement of the kind that appears to have been contemplated by the Parliament when it framed the retail leases legislation, and which, in the experience of the Tribunal, is usual in major retail shopping centre leases. 149 In my view the separate item - 'outgoings', in the present circumstances, represented no more than another part of the overall price KM was prepared to pay to secure occupation of the premises. KM paid the agreed amount regularly for 30 months until the point of default. In the correspondence after that point (as already noted) it acknowledged a continuing responsibility for payment of the agreed amount (in asking for a set off against the security bond, which occurred). 150 Ragi, and especially its agent, should have ensured that the RL Act's requirements were observed. Nonetheless, these were experienced commercial parties. There is nothing about the respective relationships which suggests any degree of inequality. The shopping centre was a small one. KM already had two shops in other locations. KM had as one of its directors a solicitor, Ms Paras, who took an active part in the negotiations and subsequent dealings with the lessor. If anything, KM was in a superior position, for that reason, when it came to appreciating the legal implications of its negotiations. But, like the position in the Victorian case brought to the Victorian Tribunal by KM, KM appears not to have realised that the transaction was affected by the RL Act. 151 As to my conclusion that the price set by the lease can be treated as a reliable index of what is a fair price, I am also influenced by the fact that while KM did seek a decrease in the rent at the end of the first year, it ultimately decided to stay when that request was refused. 152 In light of these conclusions, it is unnecessary to deal with Mr van Ede's alternative argument based on estoppel by convention. Without deciding the matter, the Tribunal notes that the usual principle is that estoppel cannot ordinarily be used to achieve indirectly what can not be achieved directly by the contract: see generally, Aegean Food Import Export Pty Ltd v R & C Mazzei Nominees Pty Ltd [2004] VCAT 1450 at [61] - [62] per Macnamara DP (and endorsed by Osborn J in the Supreme Court ruling in this case at [12]. 153 Conclusion: The Tribunal's conclusion is that Ragi is entitled to the order it seeks for an amount equivalent to the price set as rent and outgoings by the lease for the period from 5 September 2002 to 14 November 2002. KM is not entitled to orders reimbursing to it the amounts paid by reference to the outgoings component of the price set by the lease or in relation to the amounts not paid in that regard in the period 5 September 2002 to 14 November 2002. - The Unconscionable Conduct Claim 154 Section 62B lists a number of matters to which the Tribunal may have regard in determining whether a party has engaged in unconscionable conduct. One of these is the 'relative strengths of the bargaining positions of the lessor and the lessee'. As recently noted above, in the Tribunal's view, there was no inequality of any significance as between these parties. 155 One of the other factors to which the Tribunal may have regard is 'the extent to which the lessor's conduct towards the lessee was consistent with the lessor's conduct in similar transactions between the lessor and other like lessees'. KM did establish that the lessor had dealt with some other tenants, at least, on a different basis in relation to the way the 'price' for entry into occupation was set. In some instances the price paid for occupation was only designated as 'rent' and nothing was charged in relation to 'outgoings'. A landlord should deal in a consistent way with tenants especially in such matters as the imposition and calculation of outgoings. 156 But so far as KM's situation is concerned, I am of the view, as previously explained, that all that was occurring was that a total fixed price for use and occupation of the premises was being set. The landlord's practice - it would appear from the evidence of Mr Ross and the short statement provided by the accountant - was simply to meet the various outgoings of the centre out of the pooled receipts. 157 Another factor that is open to be considered is 'the extent to which the lessor unreasonably failed to disclose to the lessee … any intended conduct of the lessor that might affect the interests of the lessee'. There was no evidence to suggest that at the beginning of the lease Ragi intended to sell the centre. 158 The Tribunal does not consider that these aspects of the behaviour of Ragi are sufficient to establish unconscionable conduct. The omissions in relation to providing a pre-lease disclosure statement, including as to outgoings, the fact that it had dealt with other tenants on a different basis by not having a separate component for outgoings and its possible failure to advise tenants of its intention to sell the centre do not have a 'high level of moral obloquy'. 159 In Attorney General of New South Wales v World Best Holdings Ltd & Ors [2005] NSWCA 261; 63 NSWLR 557, Spigelman CJ said at [121]: 'Unconscionability is a concept which requires a high level of moral obloquy. If it were to be applied as if it were equivalent to what was "fair" or "just", it could transform commercial relationships in a manner which the Minister expressly stated was not the intention of the legislation. The principle of "unconscionability" would not be a doctrine of occasional application, when the circumstances are highly unethical, it would be transformed into the first and easiest port of call when any dispute about a retail lease arises.' Interest 160 Ragi is entitled to an award of interest. The award may be made in relation to the whole or any part of the amount, and in relation to the whole or any part of the period between when the cause of action arose and when the order takes effect: see s 72A. In this instance the appropriate commencement point is 14 November 2001. Though the process has been tortuous, it notified its claim to KM at the earliest opportunity. Costs 161 The usual rule is that orders for costs are only to be made in Retail Leases Division proceedings if there are 'special circumstances': RL Act, s 77A; ADT Act, s 88. The Retail Leases Division's case-law includes a number of cases explaining how this discretion might be applied. 162 In my view this is a case where there should be an order for costs. It should, however, be limited to the costs incurred by Ragi as and from June 2006. 163 Ragi has, to some extent, itself to blame for the way its small debt claim has spiralled into litigation that has now gone on for three years. Had it conducted itself as a responsible landlord, fully conversant with its obligations under the retail leases legislation and diligent in complying with those obligations, it would not have left itself open to the lines of attack that have been mounted by KM. 164 On the other hand, all but one of KM's lines of attack were, in my view, manifestly weak. While the evidence showed that KM had expressed concerns over the adequacy of Ragi's management of the centre during the currency of their relationship, it had never raised any of those to claims of fundamental breach or as claims for damages. These matters were agitated in this way only after it received notice of the lodgement by Ragi of its debt claim in the Local Court. It then produced very thin evidence on these matters to the Tribunal. 165 The one line of attack that did have some plausibility, given the state of the law at the time it was first made (in the document not accepted by Registry in August 2005) was the claim for reimbursement of outgoings. This was a substantial sum exceeding the amount claimed by Ragi. As indicated by the long recitation in these reasons of recent developments, there was credible authority at Tribunal level and at the single Judge level of the Supreme Court in Western Australia and Victoria supporting the argument that a 'no liability' clause in retail leases legislation had the effect of exonerating a tenant from liability from past payments made in circumstances where the landlord had breached the relevant statutory obligation. Submissions seeking to import principles of the kind upheld by the High Court in cases such as Pavey were rejected. 166 This position might only have been seen to have changed with the decisions of the Victorian Court of Appeal in Ovidio in February 2006 and the Western Australian Court of Appeal in Heng in April 2006. Were there any continued uncertainty in the mind of KM as to the shift in legal thinking as to the relationship between 'no liability' clauses and the application of restitutionary principles, it was, I consider, brought home to KM clearly by the decision in the case it brought in the Victorian Tribunal, where judgment was delivered on 29 May 2006 applying Ovidio. 167 The formal filing date of KM's counter application, a combined retail tenancy and unconscionable conduct claim, took place in August 2006. By this time the approach that the higher courts interstate were taking, applying the High Court decision in Pavey, should have been well known to it. KM had itself suffered an adverse decision based on those rulings in May 2006. After that point, in my view, Ragi was put to unnecessary cost in having to meet a defence which was manifestly weak and highly likely to fail. On this occasion, in my view these amount to special circumstances sufficient to attract the exercise of the discretion given to the Tribunal. In my view, therefore Ragi should be compensated for its costs in these proceedings as from 1 June 2006. 168 There is a further matter. Ms Baxter, a witness called by KM, claimed that she had been threatened by a member of Mr Zacaropoulos's family not to give evidence in these proceedings. The question arises as to whether there should be a referral to the Supreme Court for contempt under s 131 of the ADT Act. The Tribunal will deal with this matter by separate communication with the parties. Orders Application 055041 1. Respondent to pay applicant $4292.77 and interest at the District Court rate from 14 November 2001 to the date of this order. 2. Respondent to pay the applicant's costs of the proceedings, as and from 1 June 2006, as assessed or agreed. Application 065142 1. Dismissed.

Ragi Pty Ltd v Kiwi Munchies Pty Ltd; Kiwi Munchies Pty Ltd v Ragi Pty Ltd

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Judgment (11 paragraphs)

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Cases Cited (16)