Sassine v McGlinn & Anor t/as Westland Produce [1993] FCA 342 | Case summary

REASONS FOR DECISION Introduction 1 This appeal raised a number of issues regarding the approach to be taken by the Tribunal in deciding whether it has jurisdiction in proceedings on the ground that the lease with which proceedings are concerned is a 'retail shop lease' within the meaning of the Retail Leases Act 1994. 2 The present proceedings were instituted on 6 September 2007 by Ms Jodie McGlinn and Ms Sumer McGlinn (hereafter 'the Lessees'). They were the lessees under a lease ('the Lease') relating to premises at 7-9 Fox Street, Granville. 3 In a document headed 'Amended Application and Affidavit of Sumer Toni McGlinn' and filed on 15 November 2007, the Lessees alleged that the Lessor, Mr George Sassine, had unlawfully locked them out of the premises on or about 15 May 2007. They claimed damages under various provisions of the Retail Leases Act (hereafter 'the RL Act'): namely sections 34(a)-(c) (disruption of business conducted by lessee), 62B(unconscionable conduct) and 62D (misleading or deceptive conduct). 4 The Lessor maintained that the Lease was not a retail shop lease and that the Tribunal therefore did not have jurisdiction over the proceedings. 5 In circumstances soon to be described, the Tribunal directed, with the consent of the parties, that this question should be determined as a preliminary question, without a hearing. Under section 76 of the Administrative Decisions Tribunal Act 1997 ('the ADT Act'), the Tribunal 'may determine proceedings by considering the documents or other material lodged with or provided to the Tribunal and without holding a hearing if it appears to the Tribunal that the issues for determination can be adequately determined in the absence of the parties'. 6 The Tribunal delivered its decision on jurisdiction (J & S McGlinn trading as Westlands v Sassine [2008] NSWADT 54) on 19 February 2008. It held that the Lease was a 'retail shop lease' and that the Tribunal therefore had jurisdiction to hear the proceedings. 7 On 5 March 2008, the Lessor filed an application for leave to appeal and a notice of appeal under Part 1 of Chapter 7 of the ADT Act. During the hearing, we raised the question whether leave to appeal was required. It was suggested to us that the requirement of leave, stipulated for appeals against interlocutory decisions by section 113(2A) of this Act, might not apply because of the potential of a decision on jurisdiction to bring proceedings to a conclusion. We indicated that if leave was required, we would be disposed to grant it. The procedure adopted by the Tribunal 8 When the proceedings first came before the Tribunal, on 14 September 2007, the Lessees applied for an urgent interim order requiring the Lessor to return a number of their possessions to them and to refund their security deposit. The Tribunal, constituted by Judicial Member Molloy, dismissed this application, but granted leave to the Lessees to re-apply for an order of this nature and also to file an Amended Application for Original Decision. 9 Further directions hearings took place before Molloy JM on 4 October and 15 November 2007. 10 On 15 November 2007, as already mentioned, the Lessees filed a document headed 'Amended Application and Affidavit of Sumer Toni McGlinn'. They also filed a similar, though shorter, document headed 'Amended Application and Affidavit of Jodie Anne McGlinn'. Both these documents were in the form of affidavits and were affirmed before a duly qualified witness. 11 At a directions hearing on 29 November 2007, the Lessees' solicitor, with the consent of the Lessor's solicitor, entered an appearance and indicated to Molloy JM that (a) the Lessor contested the issue of jurisdiction and (b) the parties wished to propose a procedure for determination of this issue. Adopting their proposal, Molloy JM made consent orders in the following terms:- 1. That the Respondent file and serve its submissions in reply as to jurisdiction by 13 December 2007. 2. That the issue of jurisdiction then be determined by the member in chambers and a determination notified to the parties. 12 The Lessees' and Lessor's submissions regarding jurisdiction were filed on 29 November and 18 December 2007 respectively. The Lessor filed no affidavits or other documentary evidence. 13 At a directions hearing on 31 January 2008, at which the solicitors for both parties appeared, Molloy JM recorded the following note: 'Issue of jurisdiction referred to Molloy JM for determination on the papers'. He adjourned the proceedings for further directions on a date to be fixed. The Tribunal's observations regarding the evidence 14 In its judgment, the Tribunal's observations relating to the general nature, as opposed to the content, of the evidence on which it based its determination included the following statements and phrases:- 8 For the reasons set out in Spuds Surf Chatswood Pty Ltd v. P.T. Ltd [2007] NSW ADT 130 there is no need for me to make any determination as to the veracity or otherwise of the sworn material. It is on that material however that the parties have made submissions as to whether this Tribunal has jurisdiction. 15… No sworn material was put before the Tribunal by the Respondent such that I am asked to determine the issue of jurisdiction on the thus far unchallenged evidence of the Applicants. 22 I repeat, if I may, that it is not necessary for me to form any particular view, and certainly not any final view (even if I had the jurisdiction so to do), on the material currently before the Tribunal. The material is unchallenged, not the subject of any cross-examination and no contrary material has been filed. Understandably so, for the same reasons that I advanced in Spuds Surf… Further, and equally as importantly, the evidence shows that … The plain fact is that this evidence is, on this jurisdictional point, unchallenged…. 25 It seems to me that the evidence thus far before the Tribunal is overwhelming, that is, that the business conducted from the premises is… In my opinion no other conclusion is reasonably available from the evidence. It is further plain from the evidence that… 29 If I am wrong in my clear conclusion that… I am clearly of the view that… on the evidence thus far… 30 I am therefore of the very clear opinion that on the evidence before me thus far… That is not to say that all the claims of the Applicants are within jurisdiction - but a determination of that issue can await the hearing before the Panel. The factual basis of the Tribunal's decision 15 As summarised in the Tribunal's judgment at [10 -11], [17] and [22], the factual basis of its decision, derived from the Lessees' affidavits, was as follows. 16 The Lease was originally granted by the Lessor to Mr Sean Saad. It had a term of three years, commencing on 16 March 2002, and an option to renew for two years. 17 In or about April 2004, the Lessees bought the business, which traded under the names 'Westlands' or 'Westlands Produce and Building Supplies', from Mr Saad. It had originally been conducted on other land owned by the Lessor or his family across the road. Mr Saad was related to the Lessees by marriage. At the time of the sale to them, they were employed by him and his wife in the business. About the time of the sale of the business, the Mr Saad transferred his interest under the Lease into the name of Ms Jodie McGlinn. 18 According to Ms Sumer McGlinn's affidavit, the 'main business' conducted was 'retail sales of bricks, pavers, concrete blocks, sand, cement and associated building materials such as landscaping pebbles and bark chips'. She said that the business 'also sold pet food supplies such as bird seed and dog food'. 19 Ms McGlinn also stated in this affidavit that the Lessor and an estate agent engaged by him were aware of the nature of the business, both as operated by Mr and Mrs Saad and after the Lessees bought it. 20 A copy of the Lease was annexed to Ms McGlinn's affidavit. Clause 6.1 contained a covenant by the lessee 'not to use the premises or any part thereof or permit or suffer the same to be used… for any purpose other than as specified in Item 6 Part II'. Item 6 in Part II was headed 'Cl. 6.1 Usage' and contained the phrase 'Warehouse, Storage, wholesale and distribution of rural products and landscape supplies'. The Tribunal's reasoning 21 At [23], the Tribunal stated that there was in its view 'no need to embark upon an analysis of Section 7 [of the RL Act], the law relating to rectification, mistake or estoppel'. This statement was prompted by the fact that each of these areas of the law had been invoked by one or other of the parties in their submissions on jurisdiction. 22 At [24 - 25], the Tribunal drew attention in the following way to the fact that while the terms of the Lease sought to preclude the use of the premises for any purpose involving retail sales, the use to which they were actually put involved retailing in ways falling within the RL Act:- 24 Schedule 1 of the Act, coupled with Section 3, makes it plain that a retail shop is caught by the Act if it comprises (relevantly) "premises that are used, or proposed to be used, wholly or predominantly for the carrying on of one or more of the businesses prescribed" … in Schedule 1. One of those businesses is "building supplies shops". Another is "pet shops, pet grooming and supplies shops and aquariums shops". No argument has been advanced that the premises the subject of the lease and its subsequent assignment were not in fact "premises" or a "retail shop" (in the common use of those words) but rather, as I understood the argument, they were not caught by the Act because warehousing is not a retail use and the whole of the purpose specified in the lease, namely "Warehouse, Storage, wholesale and distribution of rural products and landscapes supplies" is also not caught by the Schedule. 25 It seems to me that the evidence thus far before the Tribunal is overwhelming, that is, that the business conducted from the premises is a retail business selling to the public "bricks, pavers, concrete blocks, sand, cement and associated building materials such as landscaping pebble and bark chips" as the predominant use at all material times. "All material times" includes the whole of the period from the commencement of the lease to, including and after the assignment to the Applicants. In my opinion no other conclusion is reasonably available from the evidence. It is further plain from the evidence that the Respondent knew from his own knowledge and/or from his knowledge through his agent of that business. 23 At [26], the Tribunal quoted at some length from Tringas v Quach [2007] NSWADT 24, a decision on jurisdiction under the RL Act. The quoted passage focused principally on the approach to be taken where the permitted use stated in a lease was outside the range of uses listed in Schedule 1 to the RL Act, but with the consent of the lessor the premises were at some stage actually used, wholly or predominantly, for one or more purposes falling within Schedule 1. 24 In the present context, it is sufficient to reproduce the following extracts from the passage in Tringas v Quach that the Tribunal quoted in its judgment in the present case:- 46. It has been said, perhaps in reliance upon the statement by Young CJ in Eq in Moweno (quoted above at [30]) that in order to determine the use of the premises "if the lease actually states the use that is conclusive." Furthermore in Moweno (2003) NSW ConvR 56-050, Barrett J was of the opinion that the question of whether a retail shop exists in a particular case is not to be approached by proceeding directly to an examination of the actual use and regarding that as the primary matter to be investigated. In his Honour's view, where there is a written lease the question of whether a retail shop lease exists at a particular time will depend on the scope and content of the parties' agreement as it exists at that time. 47. The difficulty with that approach, although endorsed by the Court of Appeal, is simply this: if the premises are described in the lease as business A (being a business not included in Schedule 1) and at all times the business conducted from the premises is business B (being a business within one or more of the descriptions in Schedule 1) how could it be asserted that the premises from which the business is conducted is not actually used wholly or predominantly for business B? Surely the words "are used" mean what they say, that is actual use… One needs therefore to look at, not only the description of the permitted use in the lease (if there is such a description) but also look at the actual consented use to which the premises were put at the commencement of the lease - that use determines the contractual rights of the parties, absent consent variation, as to nature of the business and whether the business falls within the Schedule 1. If the actual consented use is that of a Schedule 1 business then the premises are caught but so it seems to me, if the actual consented use is not within one of those Schedule 1 categories then the premises are not caught by the Act unless the contracted permitted use is that of a Schedule 1 business. 48. This view is supported, in my very respectful opinion, by the definition of "retail shop" as set out above. One needs to look at the whole or predominant use of the premises… 59. In my opinion the principles/steps that one should adopt when deciding whether a business falls within one or more of the described businesses in Schedule 1 are consistent with the recent Judgment of Judicial Member Higgins in Lauven Pty Ltd v Venus Adult Shops Pty Limited [2006] NSW ADT 359. In that Judgment, the learned Judicial Member distinctly set out principles that should apply. I adopt entirely her reasoning. It seems to me that when one is looking at whether the business carried on from premises falls within one or more of the businesses prescribed in Schedule 1 then the Tribunal needs to carry out the following steps: "1. Firstly, look at the contract, the lease, to see what is the permitted/agreed use. 2. If that use fits within one or more of the businesses described in Schedule 1, then the premises are a "retail shop" within the meaning of the Act (provided the other indicia apply). 3. Thirdly if the permitted/agreed use is not clear, or is uncertain, or is capable of a number of interpretations, or the use covers a number of different types of businesses some of which are, or may be, within the Schedule 1 described businesses, then an analysis is required of the use(s) to determine the actual use(s), to determine the predominant use(s) and if the predominant use(s) falls within one or more of the described businesses then the premises are a "retail shop". 4. Fourthly, if the contracted use, not being a prescribed business, was somehow changed/varied by agreement, express or implied, then an analysis is required of the actual use(s). In the case of a change that would cause the actual use to fall within one or more of the prescribed businesses, then (but not deciding) it is arguable that the premises become "a retail shop" from the time of such change - this may well activate Section 16 such as to create a minimum five year term from the date of such change." 25 At [28 - 30], the Tribunal set out the following reasoning in support of its conclusion that it had jurisdiction in these proceedings:- 28 Applying the above principles one firstly needs to look at the lease contract to see what is the permitted/agreed use. That use, on the evidence was limited to "Warehouse, Storage, wholesale and distribution of rural products and landscape supplies". Like a bait and tackle shop the use of those words does not necessarily instantly equate with words used in Schedule 1 of the Act. Consequently, the permitted/agreed use is not clear, or is uncertain or is capable of a number of interpretations, or the use covers a number of different types of businesses. In any of these circumstances an analysis is required of the use(s) to determine the actual use(s) to determine the predominant use(s) and then, if the predominant use(s) falls within one or more of the described businesses in Schedule 1 then the premises are a "retail shop". In my opinion, for the reasons I have stated above, the evidence is overwhelming to the effect that at all material times the premises comprised a "building supplies shop" within Section 3. 29 If I am wrong in my clear conclusion that the use of the premises was caught by Schedule 1 at the commencement of the lease and prior to the assignment, I am clearly of the view that from the date of assignment to the date of vacation of the premises the business, on the evidence thus far, was a business caught by Schedule 1 and, as importantly, was a business as described in the evidence to the knowledge of the Respondent and/or his agent such that there has been a change or variation, express or implied, or the Respondent is estopped from asserting that the nature of the business is not as described in the affidavit material at those times. 30 I am therefore of the very clear opinion that on the evidence before me thus far the premises the subject of the assignment are premises which constitute a "retail shop" within the meaning of the Act, that the Applicants are parties to a retail shop lease and that they have lodged, albeit not in the correct form, a retail tenancy claim within the jurisdiction of this Tribunal (Section 70). That is not to say that all the claims of the Applicants are within jurisdiction - but a determination of that issue can await the hearing before the Panel. 26 Order 1 of the Tribunal was as follows:- 1 Declare that the Tribunal has jurisdiction to hear and determine the Amended Application. Relevant legislation 27 As pointed out by the Tribunal, the principal components of the definition of 'retail shop lease' are to be found within section 3 of the RL Act. The following are the relevant provisions within this section:- retail shop means premises that: (a) are used wholly or predominantly for the carrying on of one or more of the businesses specified in Schedule 1 (whether or not in a retail shopping centre), or (b) are used for the carrying on of any business (whether or not a business specified in Schedule 1) in a retail shopping centre. 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: (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. 28 It is not necessary here to quote from Schedule 1. It is sufficient to record that, as indicated by the Tribunal, the list of 'retail shop businesses' that this Schedule contains includes 'building supplies shops' and 'pet shops, pet grooming and supplies shops and aquariums shops', but not warehousing or any of the other purposes specified in the Lease. 29 Section 71(1) is also relevant. It states: 'A party or former party to a retail shop lease or former retail shop lease may lodge a retail tenancy claim in respect of the lease with the Tribunal for determination of the claim.' The Lessor's submissions 30 In challenging the Tribunal's decision, Mr Seymour, counsel for the Lessor, advanced two lines of argument. These were (a) that the Tribunal erred in basing its determination on jurisdiction solely on the evidence contained in the affidavits of the two Lessees and (b) that in deciding whether the Lease was a 'retail shop lease' within section 3 of the RL Act, it erroneously focused on the nature of the activity undertaken by the Lessees in the premises, instead of the nature of the agreement between the Lessor and the Lessees as to what that activity should be. 31 On the first of these matters, Mr Seymour argued it was 'procedurally unfair' for the Tribunal to have made findings regarding the Lessor's knowledge of the nature of the business carried on in the premises and to have held that the Lessor was estopped from asserting that the actual use of the premises was as stated in the Lessees' affidavits. His reasons were that neither party had been directed to file evidence on the issue of jurisdiction and the Lessor had not been given any opportunity to raise objections to the affidavits by the Lessees or to cross-examine them. The Lessor did not in fact realise that the allegations contained in the Lessees' affidavits would be taken into account. 32 In this connection, Mr Seymour pointed to a footnote in the written submissions on jurisdiction that were put before the Tribunal. It was appended to a submission that the actual use to which the premises were put was irrelevant to the question whether the Lease was a retail shop lease. The footnote was as follows:- Further, in making this submission the Respondent would not want to appear as conceding that there was a retail use of the premises on the unsatisfactory evidence presented to the Tribunal on this issue. 33 In support of these submissions regarding the procedure adopted by the Tribunal, Mr Seymour relied on observations of Allsop J in SZJBA v Minister for Immigration and Citizenship [2007] FCA 1592 at [38 - 40]. 34 Mr Seymour also argued that the Tribunal should not have derived guidance regarding the assessment of evidence from the decision in Spuds Surf Chatswood Pty Ltd v P T Ltd [2007] NSWADT 130. The reason, he said, was that the issue in that case was whether the Tribunal should grant interlocutory relief. He submitted that the principles governing the assessment of evidence in such interlocutory applications had no role to play in a decision on jurisdiction. 35 According to Mr Seymour, the Tribunal should instead have assumed that the facts alleged in the Lessees' Amended Application were true. He referred here to Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (Receivers and Managers Appointed - In Liquidation) [1993] FCA 342 at [16]. He submitted that even if the Lessor's objection to jurisdiction had been treated as a demurrer, this still would not have entitled the Tribunal to find that those allegations were unchallenged, that the Lessor would have known them to be true and that the Lessor would be estopped from denying them. 36 As to the second matter, Mr Seymour submitted that the starting-point for determining whether a lease fell within the RL Act was the definition of 'retail shop lease' in section 3, not (as the Tribunal apparently believed) the definition of 'retail shop'. In the former definition, the key words, he submitted, were 'any agreement under which a person grants or agrees to grant… a right of occupation of premises for the purpose of the use of the premises as a retail shop'. He maintained further that where the agreement between lessor and lessee specified a permitted use for the premises, that use was 'conclusive'. If it was a use falling within Schedule 1 of the RL Act, the lease would be a retail shop lease. 37 Mr Seymour relied here on the judgment of Young CJ in Equity (with whom Hodgson and Ipp JJA agreed) in Moweno Pty Ltd v Stratis Promotions Pty Ltd [2003] NSWCA 376. At [32], in commencing a discussion of whether the lease between the parties was a retail shop lease, his Honour said that 'the basal question on this appeal is whether the premises are leased for the purpose of use as a restaurant' ('restaurant' being a form of business listed in Schedule 1). At [43 - 48], he rejected the contention that in so doing one should pay 'prime attention' to the actual use of the premises rather than to the words of the lease. At [49] he said as follows:- 49 … when looking for the purpose of a lease, a court looks to the use reasonably contemplated by the parties when they entered into the lease (except when they have varied that intention). Further, if the lease actually states the use that is conclusive. 38 Mr Seymour placed particular emphasis on the final sentence of this passage. But he acknowledged that Young CJ in Equity indicated subsequently that this sentence did not state an absolute proposition. At [51], his Honour said:- 51 Of course there may be cases where the circumstances of the actual user of the premises with the acquiescence of the lessor may show that there has been some variation of the lease and that the purpose of the letting has changed. There may even be an oral arrangement which operates by way of estoppel… 39 Mr Seymour referred also to the following sentence in the judgment of Young CJ in Equity in Tribond Pty Ltd v Atinon Pty Ltd [2007] NSWSC 1079:- I do not consider that the evidence as to user is sufficiently strong to get over the prima facie rule that I discussed when a member of the Court of Appeal in Moweno Pty Ltd v Stratis Promotions Pty Ltd [2003] NSWCA 376 at [49] to [51]. 40 A further submission made in this context by Mr Seymour was that the Tribunal had erred in holding, at [28], that the permitted use stated in Item 6, Part II of the Lease was 'not clear'. The Tribunal should instead, he asserted, have treated this use as 'conclusive'. 41 Relying on the Court of Appeal's decision in Woolworths Ltd v Campbell's Cash and Carry Pty Ltd (1996) 92 LGERA 244 (a decision under planning law), Mr Seymour submitted next that warehousing was not a retail use. It followed, he said, that on account of the covenant in clause 6.1 of the Lease, the parties could not be taken to have agreed that the purpose for which the premises were to be used fell within any of the categories of 'retail shop'. 42 Finally, Mr Seymour contended that there was no material, even within the affidavits filed by the Lessees, on which the Tribunal could conclude either (a) that the Lessor had agreed to a variation of the Lease or (b) that the Lessor was estopped from denying that a variation had been agreed to. For the former conclusion to be reached, he said, consideration would have had to be provided by the Lessees. 43 For these reasons, Mr Seymour submitted that we should allow the appeal, set aside the Tribunal's decision on jurisdiction and dismiss the Amended Application with costs. The Lessees' submissions 44 The response of Mr Kristofferson, who appeared for the Lessees, to the claim of procedural unfairness made by Mr Seymour was as follows. The Lessor, who had been legally represented throughout, had had the same opportunity as the Lessees to file evidence, but had made a 'forensic choice' (which Mr Kristofferson described as 'surprising') not to do so. Accordingly, the Lessor could not now complain that the Tribunal denied him procedural fairness by basing its decision on jurisdiction on the evidentiary material contained in the Lessees' affidavits. 45 In Mr Kristofferson's submission, this material, which was 'untraversed and uncontradicted', provided an entirely appropriate foundation for the Tribunal's decision. It was obvious, he said, that the Tribunal 'had to rely on something' in reaching that decision. 46 With reference to the reasons given by the Tribunal for ruling that the Lease was a retail shop lease, Mr Kristofferson argued that it was quite in order for the Tribunal, relying on statements in the Lessees' affidavits, to draw the inference that the Lessor was aware of the actual mode of use of the premises by the Lessees. The evidence in fact demonstrated that there had been an 'agreement by conduct' between the parties, to the effect that this mode of use should be treated as the permitted use under the Lease. 47 On this basis, Mr Kristofferson submitted, the Tribunal's decision was correct and should not be disturbed. For the Lessor to seek now to deny the true nature of the tenancy constituted an attempt to derogate from the grant of a tenancy that he had made in the Lessees' favour. The Tribunal's approach to questions of evidence and procedure 48 In our opinion, the approach that the Tribunal adopted in obtaining and assessing evidence on the issue of jurisdiction gives cause for concern. Our concerns resemble, but are not identical with, those raised in Mr Seymour's submissions. 49 In explaining these concerns, we draw attention first to the fact that, as indicated above at [26], the Tribunal's order on the question of jurisdiction - Order 1 in its decision - was as follows: 'Declare that the Tribunal has jurisdiction to hear and determine the Amended Application.' This order is in unqualified terms. It purports to resolve finally, for the purpose of these proceedings, the question of jurisdiction. 50 Despite this, the Tribunal, earlier in its judgment (at [8]), stated that 'for the reasons set out in Spuds Surf Chatswood Pty Ltd v. P.T. Ltd [2007] NSW ADT 130', there was 'no need' for it to 'make any determination as to the veracity or otherwise of the sworn material'. 51 As Mr Seymour pointed out, the issue in the Spuds Surf case was in fact whether the Tribunal should grant interlocutory relief - that is, whether it should make an order (such as an interim injunction) designed to achieve the fairest possible outcome as between the parties until the dispute between them is resolved by final orders. It is well established that where short-term relief of this nature is applied for, the court or tribunal should refrain from making findings on disputed issues of fact and should assume, generally speaking, that the allegations contained in affidavits supporting the application are true. 52 For this important reason, the evidentiary basis for the Tribunal's decision was insufficient, in our opinion, to support the order that it apparently made. At most, it was adequate for an order, in the nature of a declaration, to the effect that the evidence relating to jurisdiction adduced by the applicant Lessees was capable of supporting a decision that the Tribunal had jurisdiction. 53 It could be argued that the declaration in Order 1 should in fact be construed in this way. The basis for such an argument would be that the Tribunal, in making the observations on the evidence that we have quoted above at [14], showed that it well recognised the provisional nature of its decision. The Tribunal described the evidence as 'unchallenged' and said that parts of it led to conclusions that were 'clear' or 'plain'. But it also acknowledged that its findings were based only on 'the evidence thus far' and it said, at [22], that it had not formed, and was probably not in a position to form, a 'final' view on the evidence. 54 We are bound to say, however, that if this is what the Tribunal meant in Order 1, it should have made this clear. It is not appropriate that any significant qualifications to the seemingly final nature of the declaration that it made should be left to implication. 55 We make the following comment on the submission by Mr Seymour that is summarised above at [35]. If the Lessor's objection to jurisdiction had taken the form of maintaining that, even on the basis of the factual material put forward by the Lessees, the Lease was not a retail shop lease, the Tribunal could properly have based its decision - which would have been a provisional decision only - on the assumption that the facts alleged in the Lessees' Amended Application were true. But only on this footing would such an approach be warranted. The authority that Mr Seymour cited in this context (Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (Receivers and Managers Appointed - In Liquidation) [1993] FCA 342) related in fact to the determination of an application for an order that matters pleaded by a defendant 'disclosed no reasonable defence', not to a decision on jurisdiction. 56 The circumstances in which the Tribunal, with the consent of the parties, indicated that it would determine the question of jurisdiction as a preliminary question are outlined above at [11 - 13]. They suggest strongly that neither the Tribunal nor the parties gave consideration at this stage to two questions: (a) the nature of the determination - interim or final - that the Tribunal would make; and (b) in the light of the answer to this question, what procedures for obtaining and assessing evidence should be adopted by the Tribunal. 57 In view of this aspect of the case, the Lessor's decision, described by Mr Kristofferson as a 'forensic choice', to refrain from filing, or even seeking to file, any evidence in response to the Lessees' affidavits cannot preclude him from asserting in this appeal that the Tribunal, before making a declaration such as Order 1 contains, should have sought evidence from him on factual matters relevant to jurisdiction, such as the extent to which he was aware of the purposes for which the Lessees used the premises. 58 In our view it was not unreasonable for the Lessor to assume, given the lack of any contrary indication from the Tribunal, that his objection to jurisdiction would or at least might be interpreted and dealt along the lines indicated above at [55]. On this assumption, this 'forensic choice' by him was quite appropriate. Because, as matters transpired, the Tribunal's approach to dealing with his objection was materially different from what he reasonably expected, his decision not to file evidence setting out his version of relevant matters does not prevent from claiming now that the Tribunal's decision was defective due to the absence of this evidence. 59 It is significant also that, as noted above at [32], the Lessor did make it known to the Tribunal that he did not accept unquestioningly the allegations made in the Lessees' affidavits. This alone is enough to indicate that the Lessor could not be taken to have admitted for all purposes the truth of what the Lessees said on issues such as his knowledge of the purposes for which they used the premises. 60 It follows from the foregoing analysis that Order 1 must be set aside. Our reasons may be summarised as follows. If on its proper interpretation Order 1 was intended to resolve finally the question of jurisdiction, the ground on which it must be set aside is that it was based on clearly insufficient evidence. The Lessor is not precluded in this appeal from relying on this ground even though he did not file evidence such as would have repaired the deficiency. If on the other hand Order 1 was intended to operate as a provisional or interim determination, it is not properly phrased to have this effect and should not be permitted to stand. 61 Because the issues canvassed in this discussion are important for the work of the Retail Leases Division (if not also the other Divisions of the Tribunal), it is desirable that we add some further comments of a general nature. 62 In our opinion, a decision as to the jurisdiction of this Tribunal in proceedings instituted under the RL Act should not be a decision which, like other interlocutory decisions, is provisional only and limited as to duration. Even if the issue of jurisdiction is designated as a 'preliminary issue', the Tribunal's decision should resolve finally as between the parties such issues of fact and law as are required to establish that the Tribunal either possesses, or does not possess, jurisdiction to hear and determine the application to which it relates. 63 An important consideration supporting this view is that the implications of a decision by the Tribunal that it has jurisdiction in proceedings of this nature potentially go beyond the question of jurisdiction. Because such a decision must be founded on a determination that the lease between the parties is or was a retail shop lease, it means also that a number of provisions of the RL Act apply to the lease. By virtue of section 7, many of these provisions, regulating the rights and liabilities of the parties, override any contrary stipulations in the lease. A decision denying jurisdiction will indicate, on the other hand, that those rights and liabilities must be ascertained without reference to what the RL Act provides. 64 We are not aware of any other decision as to jurisdiction under the RL Act in which this Tribunal (or a court) indicated expressly or by implication that it had adopted the approach to evidentiary material that has been established for determining applications for interlocutory relief. Instead, the Tribunal has recognised that the decision may depend on findings of fact as well as on conclusions of law reached by examination of the terms of the lease, and has received evidence from both parties relating to these factual issues. As examples, we may cite Wood & Wilson v Bergman [2003] NSWADT 82 and Ozkan v Ayab [2007] NSWADT 3. 65 As these two cases and the present proceedings illustrate, the factual issues to be resolved in determining jurisdiction under the RL Act may indeed be complex and finely balanced. The Tribunal may have to decide, for instance, whether the lessor has agreed (in writing, orally or by conduct) to a variation of the use of the premises stated in the lease, or what is the 'predominant' use among two or more uses on which the parties have agreed. 66 A major disadvantage of delivering a provisional decision on jurisdiction, based on evidence of the type that is appropriate and sufficient to ground interim relief, is the likelihood that the issue will have to be relitigated. If jurisdiction is denied, that will mean (presuming that the applicant had the opportunity to file all relevant evidence) that the proceedings can be summarily dismissed. The applicant's only possible recourse will be to appeal against the decision. But if the Tribunal determines (provisionally) that it has jurisdiction, it will be obliged, at or before the substantive hearing of the proceedings, to give to the respondent the opportunity to raise again the issue of jurisdiction, to tender evidence designed to rebut the applicant's evidence on this issue and to cross-examine the applicant's witnesses. The Tribunal will then have to determine the question of jurisdiction all over again. 67 For these reasons, we consider that the Tribunal adopted an unsatisfactory approach regarding the evidence on which its decision on jurisdiction should be based. A preferable approach would have involved basing the decision on such admissible evidence as the parties sought to tender after being given an explicit opportunity to do so and on such cross-examination as they wished to conduct. The evidence that it did take into account was adequate only to support a provisional decision which does not greatly advance the resolution of the dispute between the parties. 68 On account of what we have already said, we do not need to discuss at length the Lessor's claim that he was subjected to 'procedural unfairness'. We will make just three observations about it. 69 First, it cannot be said that the Lessor was denied procedural fairness through not having an adequate opportunity to argue that evidence from him on matters relating to jurisdiction should have been sought by the Tribunal before it made its determination on this matter. As can be seen from the foregoing account of the directions hearings between October 2007 and January 2008 (see [9 - 13]), he had ample opportunity to make submissions to this effect. 70 Secondly, since the Tribunal indicated in its reasons that it had reached its decision without reference to evidence from the Lessor, the fact that he did not file any evidence may not, in the final analysis, amount to procedural unfairness. So far as matters of procedure are concerned, the chief complaint that he can legitimately make about the decision is (as has been explained) that the Tribunal expressly chose to resolve the matter on the footing that his evidence was not required, not that it purported to make a decision based on all relevant evidence without having given him any or any proper opportunity to test the Lessees' evidence by cross-examination or to file his own evidence. 71 Our third observation, which qualifies to some extent what we have just said, is that the Tribunal, while generally taking pains to point out the limitations of the evidence on which it based its decision, did on occasions describe the Lessees' evidence in ways suggesting that it had overlooked these limitations. In particular, on two occasions within paragraph [22], it described parts of this evidence as 'unchallenged'. The reason why no 'challenge' was present was that the Tribunal had determined that it should proceed without evidence from the Lessor. Accordingly, in so far as the term 'unchallenged' might suggest that the relevant parts of the Lessees' evidence should be given special weight, there was a denial of procedural fairness to the Lessor. A similar comment might perhaps be made about the use of the phrase 'overwhelming evidence' in the final sentence of paragraph [28]. The Tribunal's approach to the definition of 'retail shop lease' 72 We accept, as submitted by Mr Seymour, that the legal principles of primary importance in determining whether the Lease is a retail shop lease are those stated by Young CJ in Equity (with whom Hodgson and Ipp JJA agreed) in Moweno Pty Ltd v Stratis Promotions Pty Ltd [2003] NSWCA 376. It is convenient to set out again the two most pertinent passages in his judgment, which are at [49] and [51]:- 49 … when looking for the purpose of a lease, a court looks to the use reasonably contemplated by the parties when they entered into the lease (except when they have varied that intention). Further, if the lease actually states the use that is conclusive. 51 Of course there may be cases where the circumstances of the actual user of the premises with the acquiescence of the lessor may show that there has been some variation of the lease and that the purpose of the letting has changed. There may even be an oral arrangement which operates by way of estoppel… 73 In its judgment at [28], the Tribunal, having referred to the need to look at the permitted use set out in the Lease, quoted its terms - 'Warehouse, Storage, wholesale and distribution of rural products and landscape supplies'. It then observed that 'the use of those words does not necessarily instantly equate with words used in Schedule 1 of the Act'. It then said:- Consequently, the permitted/agreed use is not clear, or is uncertain or is capable of a number of interpretations, or the use covers a number of different types of businesses. In any of these circumstances an analysis is required of the use(s) to determine the actual use(s) to determine the predominant use(s) and then, if the predominant use(s) falls within one or more of the described businesses in Schedule 1 then the premises are a "retail shop". 74 We agree with Mr Seymour's contention that the labels 'not clear' and 'uncertain' are not appropriate for the phraseology used in the Lease. If 'distribution' is taken to include retail as well as wholesale distribution, it may well follow that the purposes stipulated include retailing as well as clearly non-retail activities. But that does not justify a conclusion that 'consequently' the purposes are 'not clear' or 'uncertain'. 75 Towards the end of the following paragraph ([29]), the Tribunal did address the question which according to Moreno it was then required to answer, namely, whether 'there has been a change or variation, express or implied' in the agreed user, or whether the Lessor was 'estopped from asserting that the nature of the business [was] not as described in the affidavit material'. 76 We are inclined to agree, however, with Mr Seymour's submission that the evidence in the Lessees' affidavits did not clearly show either (a) that the Lessor had agreed to a variation of the Lease or (b) that the Lessor was estopped from denying that a variation had been agreed to. The Lessees did not allege that the Lessor had made any such agreement in writing, or indeed orally, and Mr Kristofferson's contention that there was 'agreement by conduct' is based on evidence going scarcely further than to indicate or suggest that the Lessor and his agent knew how the Lessees were using the premises. 77 In making these comments, we do not mean to imply that on a consideration of all the evidence, including that of the Lessor, the Lease would most likely be held not to be a 'retail shop lease'. Instead, the purpose of these comments is simply to lay greater emphasis on certain aspects of the methodology stipulated in Moweno than can, we think, be discerned from the Tribunal's judgment. Having determined earlier in these reasons that the Tribunal's decision should be set aside for the reason, principally, that it was based on insufficient evidence, we do not consider it profitable to determine what is or might be the correct decision as to jurisdiction based on that evidence. Concluding observations 78 For the reasons set out above at [48 - 67], the appeal should be allowed and Order 1 of the decision under appeal should be set aside. 79 We see no reason to disturb Orders 2 and 3, which granted leave to the Lessees to file an amended application and directed that particulars be filed. Order 4 was for further directions to be given at a date now past. 80 We consider it appropriate that the proceedings should be remitted to the Tribunal for further hearing. To that end, the Tribunal proceedings are set down for further directions at 10.30 a.m. on 4 September 2008. 81 If the Lessor wishes to maintain his objection to the Tribunal's jurisdiction, that will no doubt be a matter to be considered at this or a subsequent directions hearing. 82 A matter that may also require consideration is the requirement of mediation contained in section 68 of the RL Act. It is not clear to us from the Tribunal's file whether mediation has been attempted. 83 Under section 77A of the RL Act and section 88 of the ADT Act, costs may be awarded in appeal proceedings such as these, but only if there are 'special circumstances warranting an award of costs'. This appeal, which we have allowed, has not been easy to resolve. One consequence of this is that it does not fall within a well-recognised category of 'special circumstances' - namely, where a party to proceedings has persisted with an unmeritorious claim or defence. 84 There are, however, other recognised categories of 'special circumstance'. We accordingly give directions on the matter of costs. 85 Any application for costs in these appeal proceedings must be filed and served, with supporting submissions, within 28 days of the date of this decision. The opposing party must file and serve submissions in reply within a further 28 days. Unless reasons are advanced for a hearing to be conducted, the matter will be resolved 'on the papers', pursuant to section 76 of the ADT Act.

Sassine v McGlinn & Anor t/as Westland Produce

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Judgment (12 paragraphs)

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