Romanos v Punjabi Fusion Group Pty Ltd

Issues

1. There is no issue about the Court's power to make the various orders which the parties sought, albeit on the defence case the leave sought to amend the statement of claim was misconceived, there being no applicable limitation period which has expired. What is in issue is whether any of the orders sought should be made, given provisions of the Retail Leases Act and whether: 1. the parties' dispute is a "retail tenancy dispute" as there defined, or rather a contractual dispute about competing claims about breaches of the heads of agreement and whether they bind the parties; 2. NCAT has jurisdiction to grant Mr Romanos the equitable relief which he wishes to pursue against Punjabi; 3. in these proceedings Punjabi is seeking to relitigate matters recently decided against it by NCAT, the parties being bound by that decision until it is overturned on appeal; and 4. what the interests of justice require in all the circumstances.

Should leave to amend be granted?

1. For the following reasons, I am satisfied that justice requires that leave to amend the statement of claim must be granted.
2. Section 65 of the Civil Procedure Act 2005 (NSW) applies to proceedings commenced before the expiry of any relevant limitation period and permits leave to amend the originating process afterwards, in specified circumstances. This is not such a case.
3. Section 64 otherwise permits leave to amend to be given at any time and requires that "[s]ubject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings": subs 64(2).
4. Subsection 58(1) requires the Court to seek to act in accordance with what the dictates of justice in the particular case require, in deciding whether to make any order for the amendment of a document, having regard to ss 56 and 57, as well as the matters specified in subs 58(2). They include the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction made: subs 58(2)(vi).
5. Section 57 specifies other objects which must be borne in mind when considering s 56, which imposes obligations on the Court and the parties in relation to furthering the overriding purpose there specified, the just, quick and cheap resolution of the real issues in the proceedings, namely: (a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources, (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.
6. Consistent with these requirements, it has long been the case that amendments are generally allowed by the Court early in the proceedings, prejudice to other parties being a relevant consideration: Middleton v O'Neill (1943) 43 SR (NSW) 178 at 186. This is such a case.

The pleadings

1. The statement of claim seeks possession of the property as well as damages and interest for unpaid rent, relying on the October 2022 heads of agreement by which it is claimed the parties are bound.
2. While the defences admit that the heads of agreement were arrived at, they deny that they are binding, but also plead various claimed implied terms, including that Punjabi was entitled to remain in occupation until the sale of the business was concluded. They otherwise deny what is claimed, including as to liability, because of Mr Romanos' alleged breach of the heads of agreement, as to which it is pleaded: "… the liability alleged is denied, including for reasons of the plaintiff's breach of the 'Heads of Agreement' (where that document is found to be binding) including in relation to the conduct of the plaintiff in negotiations with a prospective purchaser and the time taken by the plaintiff; the plaintiff's unconscionable insistence on particular terms of the 'Heads of Agreement' including in particular following the conduct of the plaintiff; that the plaintiff's claim would involve the forfeiture of the first defendant's interest and entitlements; and on the transfer of these proceedings (or where a transfer application fails) the first defendant intends to file a further defence and cross-claim to the claims of the plaintiff."
3. The amended statement of claim seeks in the alternative, declaratory relief that the heads of agreement is a valid and enforceable agreement which ought to be specifically performed; in the further alternative, that the defendants are estopped from resiling from the deed which Mr Romanos executed; and that the defendants are also estopped from denying him possession of the property in all the circumstances.
4. It is whether NCAT can grant the equitable relief there sought to be pursued which is in issue between the parties.

The scheme of the Retail Leases Act

1. In final submissions Punjabi's case was advanced on the premise that the heads of agreement are a lease to which the Retail Leases Act applies. Mr Romanos' case was that while they refer to such leases being granted, the heads of agreement are not themselves a lease, albeit he accepts that they bind the parties, his case being that they were breached by Punjabi.
2. The scheme of the Act is relevant to this and other issues, beginning with whether the leave to amend sought should be granted.
3. Whether the heads of agreement are themselves a lease turns on the definition of "retail shop lease or lease" in s 3 of the Act to mean "any agreement under which a person grants to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop - (a) whether or not the right is a right of exclusive occupation, and (b) whether the agreement is express or implied, and (c) whether the agreement is oral or in writing, or partly oral and partly in writing."
4. A "retail shop" is defined in s 3 to mean "premises that - (a) are used, or proposed to be used, wholly or predominantly for the carrying on of one or more of the businesses prescribed for the purposes of this paragraph (whether or not in a retail shopping centre), or (b) are used, or proposed to be used, for the carrying on of any business (whether or not a business prescribed for the purposes of paragraph (a)) in a retail shopping centre."
5. There is no issue that use of the premises as a restaurant is such a prescribed purpose under the applicable regulations.
6. It is relevant that despite the NCAT proceedings Punjabi brought in 2023, neither party has referred their dispute to mediation. Subsection 66(1) of the Retail Leases Act permits such referral in relation to "a retail tenancy dispute or other dispute or matter referred to in section 65 (1) (a1)". The latter concerns "disputes or applications under section 31 (3) or 31A (3) or the subject, or possible subject, of a claim under section 62B": subs 65(1)(a1). Section 31 is concerned with market rent; s 31A with information supplied to a valuer; and s 62B with unconscionable conduct in connection with a retail shop lease.
7. The term "retail tenancy dispute" is defined in subs 63(1) of the Act as: … any dispute concerning the liabilities or obligations (including any obligation to pay money) of a party or former party to a retail shop lease or former lease, being liabilities or obligations which arose under the lease or former lease or which arose in connection with the use or occupation of the retail shop to which the lease or former lease relates, and (without limiting the generality of the foregoing) includes a dispute about a security bond, but does not include a dispute of the kind referred to in section 31 (1) (b) as to the rent payable under a retail shop lease (where the rent is to be current market rent for the shop).
8. It follows that for the parties' dispute to come within this definition, it is sufficient for Punjabi to be a party or former party to a lease or former lease, if the dispute concerns its liabilities and obligations under the lease. Thus the importance of the question of whether the heads of agreement themselves fall within the s 3 definition of "retail shop lease or lease". The parties' dispute not turning on the short term lease Mr Romanos granted Punjabi, as the heads of agreement contemplated.
9. Punjabi relies on s 68, which has the effect that pursuit of proceedings in this Court about a retail tenancy dispute is precluded until either the Registrar of Retail Tenancy Disputes certifies that mediation under the Act has failed to resolve the dispute, or the Court is otherwise satisfied that such mediation is unlikely to resolve the dispute or matter: subs 68(1). But that section does not preclude resort to NCAT without mediation. That such mediation is required in this case is also disputed.
10. Section 68 was considered to reflect a legislative policy of protection of retail tenants by mediation: GPT Management Ltd & Anor v Spa Heaven Pty Ltd & Ors [2005] NSWSC 1043 at [15]. There Palmer J discussed the breadth of the statutory definition of "retail tenancy dispute", in his view extending even beyond disputes about the parties' legal rights: at [16]-[20].
11. The wide-ranging orders which NCAT may make in respect of a "retail tenancy claim" are those specified in s 72. That term is defined in s 70 to mean "any of the following - (a) a claim in connection with a liability or obligation with which a retail tenancy dispute is concerned, being - (i) a claim for payment of money (whether or not stated to be by way of debt, damages, restitution or refund), (ii) a claim for relief from payment of a specified sum of money, (iii) a claim for the doing of specified work or the provision of specified services, (iv) a claim for the surrender of possession of specified premises, (v) a claim for assignment of rights under a lease or for a declaration that a lessor is not entitled to withhold consent to an assignment of the rights of a lessee, (vi) a claim for relief against forfeiture, (vii) a claim for the rectification of the lease or the lessor's disclosure statement, (viii) a claim regarding the invalidity of a lease for inconsistency with this Act or the regulations, (ix) a claim for a declaration of the rights, obligations and liabilities of the parties under a lease, (x) without limiting the generality of subparagraph (i), a claim for compensation under section 10, 34, 35 or 62E, (xi) without limiting the generality of any other subparagraph, a claim with respect to the entitlement of a party or former party under a lease to receive payment of the whole or a part of a security bond, (b), (c) (Repealed) (d) an application by a specialist retail valuer under section 31 (3) (including as applied by section 32A), (e) a claim against a specialist retail valuer under section 31A (3) (including as applied under section 32A) for compensation for loss or damage suffered as a consequence of the use or communication or divulging of information."
12. If theirs is a retail tenancy dispute, some of the parties' claims and foreshowed claims undoubtedly fall within s 70. Orders NCAT may make under subs 72(1) in relation to retail tenancy claims are: (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, (c) an order that a party to the proceedings - (i) do any specified work or perform any specified service or any obligation arising under this Act or the terms of a lease, or (ii) surrender possession of specified premises to another person, or (iii) assign his or her or its rights under a lease to a specified person, or (iv) do or perform, or refrain from doing or performing, any specified act, matter or thing, (d) an order granting a party to the proceedings relief against forfeiture, (e) an order (as permitted by section 72AB) requiring the rectification of the lease or the lessor's disclosure statement, (e1) an order (as permitted by section 72AB) deeming a disclosure statement given by the lessor after the lease is entered into (with or without amendments specified by the Tribunal) to have been given in compliance with section 11 before the lease was entered into, (f) an order - (i) declaring any provision made by a lease to be void for being inconsistent with this Act or the regulations, or (ii) declaring that a lessor is not entitled to withhold consent to an assignment of the rights of a lessee, or (iii) declaring the rights and liabilities of the parties under law, whether any consequential relief is or could be claimed or not, or (iv) declaring that a party is or is not entitled to receive payment of the whole or a part of a security bond, (g) such other order, in the nature of an interlocutory order of a kind referred to in paragraphs (a)-(f), as the Tribunal considers proper to be made in order to resolve or assist resolution of the dispute between the parties.
13. NCAT may also make interim orders and ancillary orders "as it considers necessary for the purpose of enabling an order under this section to have full effect": subss 72(2) and (4). It may also impose such conditions as it considers appropriate when making an order: subs 72(3). That NCAT's powers include granting the equitable relief Mr Romanos seeks to pursue, in the event the heads of agreement are not binding, is also in issue.
14. The Tribunal also has wide powers in relation to unconscionable conduct claims made in respect of a retail shop lease and may then also make orders for the payment of money: s 62B and s 72AA. Such claims have been foreshadowed.
15. Punjabi contends that these provisions empower NCAT to make even the orders sought in the amended statement of claim, which Mr Romanos disputes. On his case, despite the breadth of what it is empowered to do, NCAT's powers do not extend to granting the equitable relief which he wishes to pursue.
16. But the Act also proceeds on the basis that there is jurisdictional overlap between the Court and NCAT, which is regulated by s 76. Before these proceedings were commenced the proceedings Punjabi commenced before NCAT in 2023 were already on foot. That engaged subs 76(1), which provides: (1) If a retail tenancy claim or an unconscionable conduct claim has been lodged with the Tribunal under this Part and at the time it was lodged no issue arising under the claim was the subject of a dispute in civil proceedings pending before a court, a court has no jurisdiction to hear or determine such an issue in civil proceedings, unless - (a) the claim lodged with the Tribunal, or the part of that claim to which the issue relates, is withdrawn or is dismissed for want of jurisdiction, or (b) a court of record has, on a judicial review, quashed or declared invalid an order, determination or ruling of the Tribunal made in respect of the claim on the ground that the Tribunal had no jurisdiction to hear and determine the issue.
17. As events unfolded NCAT has dismissed Punjabi's application for want of jurisdiction. There was no suggestion that even if what it had there claimed was a retail tenancy claim, or even if it pursued the unconscionable conduct claim it has foreshadowed, that this Court does not have jurisdiction to deal with what is claimed in these proceedings.
18. It is also relevant that if Punjabi did pursue an unconscionable conduct claim before NCAT, that would empower it to transfer those proceedings to this Court and it would be required to do so, if the requirements of subs 76A(2) are met. They are specified to be satisaction that: (a) the nature of the claim is such that it may be more effectively and appropriately dealt with by the Supreme Court, and (b) the interests of justice do not require the matter to be continued to be dealt with by the Tribunal.
19. But even when a court has jurisdiction to hear a matter, the Act also requires courts to have regard to "the general principle" that retail tenancy disputes should be dealt with by NCAT, given the provisions made in s 75 for the transfer of such disputes: GPT Management at [15]. It provides: 75 Removal of court proceedings to the Tribunal (1) If civil proceedings pending in a court involve a retail tenancy dispute, the court must on the application of any party to the proceedings transfer the proceedings (or so much of the proceedings as involve such a dispute) to the Tribunal to be dealt with as a claim under this Division, but only if the court 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. (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. (3) Proceedings are taken to involve a retail tenancy dispute if any issue in dispute in the proceedings involves a liability or obligation with which a retail tenancy dispute is concerned. (4) This section does not prevent a court from granting urgent relief of an interlocutory nature where it is in the interests of justice to do so. (5) This section does not apply to proceedings by way of an appeal. (6) A court may make such ancillary orders as it considers necessary for the purpose of enabling an order under this section for the transfer of proceedings to the Tribunal to have full effect. (7) This section applies despite anything in Schedule 4 to the Civil and Administrative Tribunal Act 2013 concerning the removal of court proceedings to the Tribunal.
20. Also in issue is whether the Court can be satisfied about the matters specified in subs 75(1)(a) and (b) in this case.

The transfer Punjabi seeks to NCAT is not a proper basis for refusing leave to amend the statement of claim

1. Consideration of Mr Romanos' application for leave to amend must have regard to the parties' cases and that: 1. s 76 expressly preserves the Court's jurisdiction to deal with certain retail tenancy claims, even when NCAT has power to deal with them under the statutory regime; 2. s 75 expressly contemplates that there will be no transfer of civil proceedings involving a retail tenancy dispute to NCAT, in the circumstances there specified; and 3. what is sought to be pursued by the amended pleading does not depend only on the statutory provisions earlier discussed, Mr Romanos contending as he does that the claims he wishes to pursue include equitable relief not within NCAT's jurisdiction to grant, but rather within this Court's powers.
2. There is a dispute about the latter. But the possibility that NCAT does not have such jurisdiction is plainly incapable of providing a just basis for refusing Mr Romanos the leave which he seeks, particularly at this early stage of these proceedings. It was certainly not suggested by Punjabi that Mr Romanos was not entitled to pursue equitable relief, in the event that the heads of agreement which the parties executed did not bind them.
3. It is also relevant to take into account that Punjabi refusing its consent to the leave sought did not accord with the obligations imposed on the parties by s 56 of the Civil Procedure Act. As it contended, it is entitled to a costs thrown away order, if the leave sought is granted. But that is not a basis for refusing it. It is also relevant that such costs cannot have been significant.
4. Punjabi has the right, under the Rules, to file an amended defence, if the leave sought is granted. That also supports its grant.
5. Given that s 64 requires leave to be granted in order that the real questions raised by or otherwise depending on these proceedings are properly put before the Court, I am satisfied that justice does require that leave to amend be granted.
6. Mr Romanos having acted promptly, as he did, to give notice of the amendments proposed, soon after it was appreciated that the defence raised matters which ought to have been pleaded in the statement of claim, supports that conclusion. That also explains why the leave he sought at the hearing, to further amend the proposed pleading must be granted, given problems only then raised in submissions.
7. It was Punjabi's case at the hearing that some aspects of the proposed pleading did not accord with some applicable requirements of the Rules. That was properly accepted. Rule 15.1 not only requiring that particulars of a claim be given as are necessary to enable the opposite party to identify the case that the pleading requires him or her to meet, but r 15.3 also requiring that "particulars of any fraud, misrepresentation, breach of trust, wilful default or undue influence on which the party relies" be given.
8. Given how promptly the amended pleading was produced by Mr Romanos after service of the defences at the latest time permitted by the Rules, the nature of the pleading deficiencies only identified at the hearing and their acceptance by Mr Romanos, I am satisfied supports the conclusion that justice also requires that orders permitting him to file a further amended statement of claim to remedy those deficiencies, must be made.
9. Mr Romanos giving the required particulars of his claim for equitable relief will clearly have the result that the real issues lying between these parties are thereby properly put before the Court, as s 64 of the Civil Procedure Act intends.

Should a transfer order be made?

1. But I have also concluded that the transfer order cannot be made. I am not persuaded that this dispute is appropriate for it to deal with. Rather, I consider that the interests of justice require it to be dealt with by the Court.
2. At the moment the parties are bound by NCAT's 2023 decision. It is difficult to see how it could have the power to set aside the 2021 consent orders it made, as Punjabi sought by its application, relying on alleged breaches of the heads of agreement, those orders not having been successfully challenged by any appeal.
3. That does not arise for determination on the parties' motions. Punjabi's motion has to be determined at a time when it has foreshadowed, but not successfully pursued an appeal against NCAT's summary dismissal of its 2023 claims.
4. It may be accepted that this does not necessarily preclude a transfer order, given what is sought is possession of property and money orders which NCAT has powers to make. But it tells against a transfer.
5. It is also relevant that the defences plead that the heads of agreement are not binding on the parties, even though it is also claimed that they included implied terms such as that Punjabi could stay in occupation of the premises on the same terms as the 2019 lease. At the hearing it was also contended that the heads of agreement were themselves a lease, which was disputed.
6. But if the heads of agreement are not binding, they cannot be a lease falling within the statutory definition of "retail shop lease or lease" and the parties' dispute cannot be a "retail tenancy dispute". Orders against Punjabi for possession and damages which Mr Romanos pursues in these proceedings would then necessarily depend on the exercise of powers which NCAT does not have.
7. The defence also pleads that Ms Luthra and Mr Singh did not validly execute the heads of agreement and so are not bound by them. If they are not, in their case orders will also depend on the exercise of powers that NCAT does not have.
8. Even if the heads of agreement are binding on the parties, it seems to me that the better view is that they did not come within the s 3 definition of "retail shop lease or lease" under the Retail Leases Act. That is because: 1. They required Mr Romanos to grant Punjabi a lease of the premises and the parties to execute a deed to which a proposed lease for the purchaser was annexed. Both necessarily had to be achieved by the taking of other steps. 2. Mr Romanos in fact took the contemplated steps to give Punjabi the lease by which it acquired the right to occupy the premises from November 2020, but that right expired on 1 April 2021. 3. Mr Romanos also took the necessary steps to create the deed which he executed. But the second lease, which the heads of agreement contemplated the purchaser of the business would enter, had he approved of it, was never brought into existence. 4. As those events unfolded, the result appears to be that the heads of agreement gave Punjabi no right to occupy the premises after 1 April 2023.
9. That is because the heads of agreement provided for Punjabi's entry into the sale agreement within 28 days of 1 April. That would have resulted in its right to remain in the premises until settlement "as caretaker". It follows that this potentially brought the heads of agreement within the statutory definitions. But that did not materialise.
10. It was not in issue that the business sale contract entered on 31 March was rescinded by the purchaser, ab initio. The result was that there was no sale of Punjabi's business and Mr Romanos entered no lease with the purchaser, so that Punjabi did not acquire any right to continue occupying the premises after the expiry of its lease.
11. It is thus difficult to see that if the heads of agreement were binding, they fell within the statutory definition of a "retail shop lease or lease". What is here in issue in that event would not concern a retail tenancy dispute within NCAT's jurisdiction.
12. If the heads of agreement were not binding, whether Mr Romanos is entitled to possession and the equitable relief he pursues, Punjabi being estopped from resisting his claims, given his reliance on what was so agreed, arises to be determined.
13. It is these claims which I consider NCAT has no power to deal with. Despite the wide powers it is given, I am not satisfied that they include the grant of such equitable relief.
14. In CAC Pty Ltd v Diamon Hill International Pty Ltd (Supreme Court (NSW), 29 May 1996, unrep) Young J, as his Honour then was, concluded that the powers then granted to the former tribunal did not include specific performance. The Act was later amended to greatly increase the powers NCAT now exercises, including the power to require the performance of specific acts and to declare the rights and liabilities of the parties under law.
15. But they do not extend to the exercise of this Court's undoubted power to determine the claim that Punjabi is estopped from resisting Mr Romanos' claims, given his reliance on the terms on which the 2021 proceedings were settled and its breach of those terms, to its claimed benefit and his detriment. That conclusion is reinforced by the claims of Mr Romanos' breach and unconscionability, which Punjabi intends to advance by its foreshadowed cross-claim.
16. It is also relevant that there is no suggestion that NCAT, like this Court, is empowered to enforce agreements which underpin consent orders which it makes, in the event of their breach. Section 33 of the Civil and Administrative Tribunal Act 2013 (NSW) specifies that NCAT has an enforcement power, but it is limited to dealing with alleged or apparent contempt and when dealing with an application under s 77 for a contravention of a civil penalty provision of that Act. That supports the conclusions I have reached.
17. In the result, it follows that: 1. the claims advanced in these proceedings do not concern the retail tenancy dispute which was the subject of Punjabi's 2019 application to NCAT. That dispute was resolved by its 2021 consent orders, by which the parties remain bound; 2. Punjabi's 2023 application to NCAT to set aside those orders also did not concern that retail tenancy dispute, it having been settled by the 2021 orders. What it there advanced concerned later claimed breaches of the heads of agreement which underpinned that settlement; 3. these proceedings concern Punjabi's disputed ongoing occupation of the property and the damage that has caused, despite Mr Romanos' demands that it vacate the property, which turns on the parties' dispute about the 2021 heads of agreement, not any retail tenancy; 4. s 68 does not preclude the Court dealing with those claims without mediation; and 5. s 75 does not require the transfer of those claims to NCAT.
18. All that the parties pursue in the proceedings and have foreshadowed is inextricably interlinked. In the result, I am also not satisfied that a transfer order could justly be made of even a part of the proceedings had they, contrary to my conclusions about the heads of agreement, fallen within NCAT's powers. Given the equitable relief pursued, which I am satisfied is not within NCAT's powers, such an order could not sensibly be made.

Future conduct of the proceedings

1. Neither party suggested that any mediation of what is in issue could resolve their differences. Given what their dispute is over, an earlier settlement, that possibility should not be ignored and so I direct the parties to confer about that, as well as the further directions which should be given, when the matter next comes before the Registrar.

Costs

1. The usual order under the Rules is that costs follow the event. In this case that is an order that Punjabi bear Mr Romanos' costs, as agreed or assessed. Unless the parties approach to be heard within 14 days, that will be the Court's order.
2. In that event they should also file and serve written submissions about what is in issue within those 14 days.

Orders

1. For the reasons given I order that: 1. Mr Romanos is given leave to file the amended statement of claim as well as the foreshadowed further amended statement of claim. 2. The foreshadowed further amended statement of claim be filed within 14 days. 3. Mr Romanos must bear Punjabi's costs thrown away in respect of the statement of claim. 4. Orders sought transferring the proceedings to NCAT are refused and Punjabi's motion is dismissed. 5. Unless the parties approach to be heard within 14 days, Punjabi must pay Mr Romanos' costs of the parties' motions, as agreed or assessed. 6. The matter be adjourned to the Registrar's list for further directions on 3 October 2023.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 September 2023