Sydney Supermarkets Pty Limited v Xu and Anor [2006] WASCA 67 | Case summary

REASONS FOR DECISION 1 This is an appeal under the Retail Leases Act 1994 (RL Act) by a retail shop lessee against the following decisions of the Retail Leases Division of the Tribunal: - The dismissal of its application for orders to be made against the lessor (see Sydney Supermarkets Pty Limited v Xu and anor [2008] NSWADT 131 (decision no. 1) and the first part of Sydney Supermarkets Pty Limited v Xu and anor (No 2) [2008] NSWADT 284 (decision no. 2)). - Its order that the lessee pay the lessor's costs (see the balance of decision no. 2). 2 The appeal arises in the following way. The Lease Relationship 3 The appellant, Sydney Supermarkets Pty Ltd, leased from the respondents as co-owners, Mr Chuan Min Xu and his wife Ms Hua Liang, retail shop premises comprising contiguous units 25 and 26 at 25/26A Lime Street, Sydney (and two associated car spaces). Lime Street is in the Darling Harbour area of the Sydney CBD at the western end of King Street. The units are at street level of a unit complex, and the ownership is by way of strata title. 4 The appellant company was already conducting a grocery and liquor sales business at the premises without a lease. The premises were owned until 22 June 2004 by an associated company. That company and the appellant company carried on the business under a joint arrangement. Dr Fawzy Soliman was at all relevant times a director of each of the companies. Both are family companies. 5 The lease was executed on 25 June 2004. It was for a term of five years, with an option to renew. The rent was fixed at $12,208.33 per month plus GST and was indexed. The permitted use was 'Supermarket and off-licence retails'. The lease was in the usual form of a commercial lease, and was registered on 22 July 2004. 6 It included a covenant (cl 14) under which the appellant agreed to pay outgoings as specified. Eight categories of outgoings were stipulated (for example, rates attributable to the premises, land tax, utility charges) and the proportion payable (100%). The lease also required the appellant to provide a bank guarantee issued in favour of the respondents in the sum of $40,287.50. 7 The lease made no reference to the RL Act, and its requirements. This appears to be another case to reach the Tribunal where the parties or their representatives did not at the time of entry into the lease give consideration to the RL Act. 8 The lessor engaged as its managing agent Sydney Advance Realty Pty Ltd ('SAR') of Sussex Street, Sydney, the 'licensee in charge' being Mr Dennis Zhou. Ms Liang was herself an employee of that business. 9 The appellant sold the business during 2005 in two tranches. The supermarket business was sold in February 2005 for $200,000. The liquor sales business was sold in October 2005 for $150,000. There were separate buyers. 10 The buyer of the supermarket business immediately moved into occupation, and took control of 75% of the space in the premises. The appellant company continued to conduct the liquor sales business in the remaining space. 11 In October 2005 the respondents agreed to terminate the lease with the appellant, subject to all outstanding obligations relating to the payment of rent and outgoings being met. 12 The respondents executed a new lease with each of the buyers, both effective from 1 November 2005. Like the previous lease, the agreed term of the new leases was for five years, with an option to renew. 13 The key feature of this short account is that there was no assignment of the previous lease. 14 The total rent under the new leases was $10,602.24 plus GST and indexed. This was a lesser amount (by about $1,600 per month) than had been agreed under the previous lease. The Application 15 On 10 April 2007 the appellant lodged an application seeking orders against the respondents to repay to the appellant two specified amounts - $34,242.87, said to have been 'excessive rent', and $40,287.50, the amount withdrawn by the respondents under a bank guarantee said to have been done 'without due cause and excuse'. In addition the appellant sought other orders including general damages for pain and distress, interest and costs. The application was cast as both a retail tenancy claim and an unconscionable conduct claim (as to the distinction, see RL Act, s 70 and s 62B, respectively, and related provisions). 16 The principal argument in support of the application was that the lease had been lawfully terminated by a notice invoking rights given to a lessee by s 11 of the RL Act. The notice was said to have been given on 10 November 2004. The contention was that from that point onwards the appellant remained in occupation on a holding over basis until 31 October 2005, and was liable only for rent, and not for outgoings. 17 Section 11 of the RL Act requires a lessor to give the lessee a disclosure statement at least 7 days before a retail shop lease is entered into. The disclosure statement is to include a detailed statement as to liability for outgoings, and any relevant proportions. Section 11(2) provides that if the lessee is not given the disclosure statement 'the lessor may terminate by notice in writing to the lessor at any time within 6 months after the lease was entered into', subject to qualifications that appear in sub-section (3). 18 The two amounts mentioned total $74,530.37 and that is, basically, equivalent to the amount of outgoings in the various categories (for example land tax, strata levies, council rates, water rates) attributable to the period 23 June 2004 to 31 October 2005. The Circumstances 19 On 5 July 2004, the managing agent gave the appellant a notice requiring payment of certain outgoings. 20 Dr Fawzy Soliman in his affidavit evidence stated that on that day, or soon after, he telephoned the managing agent, and questioned the basis for the demand for payment of outgoings. He said that he indicated that his understanding was that the outgoings payable under the lease were settled as part of the sale itself, and there was no further liability. Any belief of that kind was plainly inconsistent with the express terms of the lease into which the appellant had so recently entered. The managing agent pressed the demand. The appellant did pay outgoings at various intervals in the period to 10 November. 21 As already noted, the key contention of the appellant is founded on a notice said to have been given by letter dated 10 November 2004. The alleged letter contained a demand for provision of a lessor's disclosure statement. See further paras [23] to [25] of the Tribunal's reasons, for a summary of the letter, and its principal terms. 22 The next event of significance from the viewpoint of the appellant is a letter that Dr Soliman says he sent to the respondents dated 1 March 2005. The terms of the alleged letter are set out at para [42] of the Tribunal's reasons. It advised the respondents of the 'proposed' sale of the supermarket side of the business. It named the buyer, and furnished a text of a new proposed lease which would have the effect of giving that company the right to occupy the whole of one shop and 75 per cent of the other shop, with no change in the rent, and included a request for an extension of the term of the lease. The respondents denied receiving any such letter. 23 The sale which the letter described as proposed had in fact been completed on 22 February 2005. 24 The next set of events of significance from the viewpoint of the appellant are two meetings between Dr Soliman and the respondents at a coffee shop, the first on 22 May 2005, the second on 10 June 2005. 25 There were differences between the parties as to the precise content of those conversations. 26 Dr Soliman's evidence is that he requested the respondents to consent to an assignment of the lease to a prospective buyer. The respondents' evidence is that at the first meeting Dr Soliman merely indicated that he was having trouble with the rent, and might want to sublease part of the premises. Their evidence is that they were asked to consent to a sub-lease, and said that if all overdue amounts were brought up to date, he could talk to the managing agent about that. 27 They said that at the second meeting there was no discussion of the possible sale of the business just a discussion about the payment of rent and outgoings. 28 There was also a question as to when the respondents first became aware of the actual sale of the supermarket side of the business. In their affidavits, they said that they first heard about the sale in August 2005. Initially in oral evidence they said that they did not receive notification until the October/November 2005 period, but later in cross examination they altered their evidence, and agreed that August was the correct date. 29 The Tribunal found that the correct date was in late August or early September. The Tribunal accepted evidence that the appellant's solicitor had informed the managing agent by telephone on 29 August 2005 of the sale of the supermarket business, which was then confirmed in writing by a letter from the solicitor to the managing agent dated 5 September 2005. In the letter the solicitor requested the grant of a lease for 'the supermarket premises only … and not the adjoining alcohol 'bottle shop''. The letter raised the possibility of a new lease, and stated that this step would be 'likely to require' a surrender of the existing lease. 30 At this point the respondents reviewed the situation in relation to shortfalls in payment under the lease. On 8 September the managing agent notified the appellant's solicitor of the amount said to be outstanding as 'around $35,000'. On 16 September he advised the respondents' solicitor that the exact amount was $35,926.82. 31 On 19 September the appellant notified the respondents of its intention to sell the liquor part of the business. The appellant entered into an agreement for sale on 6 October 2005. The appellant executed a formal surrender on 10 October 2005. 32 On 13 October 2005 the respondents moved to draw down the bank guarantee given on entry into the lease ($40,287.50) in the amount of $36,507.82. That occurred on 17 October 2005. The solicitors for the respondents also made claims on the appellant for payment of costs for the work associated with the new leases and in calling on the guarantee, relying on a covenant in the lease (cl 5.1.8). 33 On 8 November 2005 the solicitors requested the bank to pay the balance of the guaranteed amount ($3,779.68) to the respondents' account following the failure to pay the costs. Tribunal Decision 34 The Tribunal found on the balance of probabilities that the letter of 10 November 2004 had 'never' been sent to the respondents, 'even if it was at some stage composed by Dr Soliman': para [81]. Consequently the parties remained bound by the lease. 35 We note that had the Tribunal found that the letter had been sent, the Tribunal would still have been required to assess whether the qualifications in sub-section (3) applied to exonerate the respondents, i.e. whether the lessor had acted honestly and reasonably and ought reasonably to be excused for the failure concerned, and whether the lessee is in substantially as good a position as the lessee would have been if that failure had not occurred. 36 In the alternative, the Tribunal considered the position if it was wrong in relation to its finding that the letter had not been sent and the result was that the lease had been effectively terminated by notice given 10 November 2004. The Tribunal held that if the lease had subsisted on a holding over basis it included an implied term to pay outgoings. It rejected the submission of the appellant that payments made in relation to outgoings after 10 November 2004 were made under duress, as there was 'no evidence' of that (see para [85]). 37 The Tribunal also rejected the appellant's submissions that sought to deny liability for outgoings in reliance on ss 27 and 28 of the RL Act. In summary, s 27 requires a lessor prior to the commencement of the lease and during its currency at regular intervals to give the lessee a statement of future outgoings. Section 28 implies into a retail shop lease a non-excludable term that the lessor furnish the lessee at regular intervals with a statement of all expenditure by the lessor on account of outgoings to which the lessee is required to contribute. 38 In this case there was no evidence that the respondents (or their managing agent on their behalf) complied with ss 27 and 28. The Tribunal proceeded on the basis that they had not complied. The Tribunal held that non-compliance did not exonerate a lessee from the obligation to pay outgoings, referring to the authority of Wanice Pty Ltd v Bocove Pty Ltd (RLD) [2003] NSWADTAP 24. 39 The Tribunal rejected a submission by the appellant that the respondents were in breach of s 41 of the RL Act. Section 41 requires a lessor to deal expeditiously with a lessee's request for assignment of the lease, and to give an answer within 28 days after the date on which the lessee has given notice and satisfied other pre-conditions which is the later. The Tribunal made the following adverse finding against the appellant: '95 The Tribunal's view of this matter is, however, that far from complying with the requirements of section 41(d) and of the Lease with regard to assignment, the Applicant's conduct in selling the supermarket business and permitting [the buyer] to operate it without giving notice of these matters to the Respondents was in breach of the prohibition, in clause 10.7 of Annexure B to the Lease, against parting with possession of any part of the Premises without the Respondents' consent.' 40 As to the respondents' solicitors costs, the Tribunal referred to cl 5.1.8 allowing the lessor to recover from the lessee its 'reasonable legal costs relating to default'. It was satisfied that the respondents had been compelled to deal with the situation that had developed (separate buyers taking over different parts of a previously undivided business, and being already in occupation) by negotiating new leases rather than seeking to obtain an assignment of the existing lease. The conduct of the appellant, in the view of the Tribunal, amounted to a relevant default under cl 5.1.8. 41 The balance of decision no. 1 deals with the precise calculations bearing on the claim that the appellant had, even if it was fully liable for all rent and outgoings during the lease period, had nonetheless paid an excessive amount under the lease. The Tribunal's task was made difficult by the accounting practices on both sides. For example, some of the payments on account of the appellant were by means of cheques drawn by the new buyer of the supermarket business. The ledger practices of the managing agent had confusing aspects. In decision no. 1 the Tribunal concluded that there had been no overpayment with one qualification. It expressed uncertainty as to the position in relation to whether an amount of $12,581.89 had been tendered by the appellant in the October period and received by the respondents. If that was the case, an overpayment would have occurred. The Tribunal gave directions for that issue to be dealt with by written submissions, and for it to be dealt with in its decision no. 2, the principal purpose of which was to deal with the respondents' costs application. 42 The Tribunal found that the amount had not been tendered. The Tribunal ordered that the appellant pay the respondents' costs of the proceedings. The Appeal 43 An appeal may be made on a question of law, and, by leave of the Appeal Panel, an appeal may be extended to the merits: RL Act, s 77A; Administrative Decisions Tribunal Act 1997 (ADT Act), s 113. 44 Out of caution, the appellant lodged a notice of appeal within the prescribed period (28 days) after the delivery of each of the Tribunal decisions. The original appeal grounds are to be found by reading in combination the Notice of Appeal relating to decision no. 1 (File 089040) and the Amended Notice of Appeal relating to decision no. 2 (File 089075). The respondents' reply and written submissions are to be found in the Notice of Reply filed 12 December 2008. 45 The notices of appeal do not clearly identify any questions of law. They include an application for leave to extend the appeal to the merits. They were prepared personally by Dr Soliman. They simply dispute the findings negative to the appellant and the failure to make certain findings adverse to the respondents. 46 On 7 January 2009, the appellant filed an Outline of Submissions prepared by Dr Azzi of counsel. They assert errors of law. Dr Azzi appeared at the hearing of the appeal. His submissions, in effect, reformulated the grounds of appeal. 47 Mr Hassett, solicitor, appeared for the respondents. He declined an opportunity given by the Appeal Panel for him to file written submissions in reply to the reformulated grounds, and replied orally. Asserted Errors 48 In the submissions and at hearing Dr Azzi took the Appeal Panel to various parts of the transcript of evidence. 49 He submitted that the Tribunal had erred in: - Failing to draw adverse inferences against the respondents as a consequence of their rejected attempt to tender before the Tribunal a document said to show that they had given the appellant a form of disclosure statement setting out the outgoings. - Failing to reconcile the 'contradictory' accounts of the coffee shop meetings given by Dr Soliman, on the one hand, and the respondents on the other hand. - Failing to draw adverse inferences from the retraction of a denial by the first respondent, Mr Xu, of his awareness of the appellant's solicitor's advice of the sale of the supermarket business (29 August, 5 September) and the subsequent notice of the proposed sale of the liquor business (19 September 2005). - Being unfair in that it was highly critical of Dr Soliman's evidence in certain respects, and was not similarly critical of serious shortcomings in the respondents' evidence. - Failing to take into account Dr Soliman's uncontradicted affidavit evidence that during the period prior to the new lease, from 16 December 2002 - 22 June 2004, no outgoings had been paid to the body corporate. - Failing to make a finding about the veracity and relevance of the letter of 1 March 2005, which, it is said, was a material oversight. 50 As to the last point, the appellant further submitted that: - Had the Tribunal proceeded to make a positive finding as to the sending of that letter, and proceeded to make a positive finding as to the July 2004 communication in relation to the outgoings issue, it would have been less likely to have taken a negative view of his general veracity and more likely to have found in his favour on the issue of whether the 10 November notice was sent. 51 The appellant also contended that the Tribunal: - Erred in law in its interpretation and application of ss 27 and 28 of the RL Act. - That it erred in its treatment of the possible payment of $12,581.89. - Erred in the exercise of its costs discretion. Adequacy of Reasons 52 All but the last three points question the adequacy of the Tribunal's reasons, and assert a degree of dereliction in the exercise of the fact-finding function such that the Tribunal has erred in law. 53 The Tribunal in this case gave a lengthy decision. Under the heading 'outline of evidence' it canvassed what it saw as the material facts from paras [6] to [68]. The Tribunal's conclusions 'on the matters raised by this evidence' occupy paras [69]-[103] of the decision. After that the Tribunal dealt with 'the question whether the aggregate amounts received by the Respondents is excessive' (paras [104] to [119]). 54 The short account of the circumstances we have given is a very much condensed version of what appears in the Tribunal's reasons between paras [6] and [68]. In that account the Tribunal did refer to the four events (or sets of events) given most attention by counsel for the appellant, i.e. the conversation on or about 5 July 2004 in which Dr Soliman says he raised concerns about any liability to pay outgoings; the alleged notice of 10 November 2004; the alleged letter of 1 March 2005; and the two coffee shop conversations. 55 The appellant submits that the Tribunal should have made findings in relation to each of these events, addressing specifically the conflicts in the evidence. It did so in relation to the 10 November event, but should, it was submitted, not have reached its conclusion on that matter without having made findings in relation to the other events. 56 The Tribunal is obliged to give adequate reasons. Appeal Panels of the Tribunal have routinely accepted the principles enunciated in the line of cases that include Soulemezis v Dudley (1987) 10 NSWLR 247, Mifsud v Campbell (1991) 21 NSWLR 725 and Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430. The Tribunal is a deliberative body engaged in the exercise of a judicial function when hearing and determining applications, giving reasons for decision and making final orders. See recently, Campbelltown City Council v Vegan (2006) 67 NSWLR 372, esp at [109] ff per Basten JA. The Commonwealth authorities relating to Commonwealth tribunals are to similar effect. See, for example, Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 366; Dornan v Riordan (1990) 24 FCR 564 at 568; Edwards v Guidice (1999) 169 ALR 89 at [10], [43]. 57 In our view, s 89(5) of the ADT Act, to which counsel for the appellant gave emphasis, does no more than confirm the law as it would in any event have applied to the Tribunal. 58 Section 89(5) states that the Tribunal must in reasons published under s 89 set out: '(a) the findings on material questions of fact, referring to the evidence or other material on which these findings are based, (b) the Tribunal's understanding of the applicable law, (c) the reasoning processes that lead the Tribunal to the conclusions it made.' 59 (In that regard we note that strictly interpreted s 89 is not applicable to this case. Section 89 is concerned with the circumstance where the Tribunal does not publish written reasons at the time it makes its final orders.) 60 A trier of fact is not obliged to address, and reconcile, every contradiction or inconsistency in the evidence. The law does 'not require lengthy or elaborate reasons' but it is 'necessary that the essential ground or grounds upon which the decision rests should be articulated': Soulemezis v Dudley (Holdings) Pty Ltd per McHugh JA at 280. 61 In the present appeal, counsel for the appellant took the Appeal Panel to selected passages from the transcript and the filed affidavit material, and exhibits. The warning sounded by Kirby J in State Rail Authority of New South Wales v Earthline Constructions (1999) 160 ALR 588 at 619 warrants repetition: 'The true advantages in fact-finding which the trial judge enjoys include the fact that the judge hears the evidence in its entirety whereas the appellate court is typically taken to selected passages, chosen by the parties so as to advance their respective arguments. The trial judge sees and hears all the evidence. The evidence is generally presented in a reasonably logical context. It unfolds, usually with a measure of chronological order, as it is given in testimony or tendered in documentary or electronic form. During the trial and adjournments, the judge has the opportunity to reflect on the evidence and to weigh particular elements against the rest of the evidence whilst the latter is still fresh in mind… [B]ecause trials remain public procedures for the resolution of disputes, it is inescapable that, in some cases at least, credibility assessments will be required where there is no documentary, electronic or other controvertible evidence to resolve the conflict presented for decision. In such cases it will remain the fact that, try as it might, the appellate court cannot procure from the printed record exactly the same materials on which to base the judicial decision as the trial judge had.' 62 Here the critical questions were, one, was there a factual basis for the claim that the lessee had exercised the right given by s 11 to give notice of termination, and, two, if so, was it effective. The Tribunal dealt with the evidence surrounding the factual question, found that the appellant had failed to prove its assertion, and, accordingly dismissed the claim that a valid termination had occurred. 63 Counsel for the appellant put great store in the Tribunal's omission to enter a specific finding in relation to whether the 1 March 2005 letter was sent. In our view, had it, for example, made the finding pressed by the appellant - that the letter was sent - that finding would not have disturbed the finding it made in relation to 10 November 2004. At most, such a finding would simply have meant that there might have been a further finding that the respondents were apprised, in March not August, of activity in relation to the possible sale of the business. 64 In any event, we think it is clear enough from the Tribunal's reasons that it did not accept Dr Soliman's evidence as to the 1 March 2005 communication or aspects of the coffee shop conversations. It found, on the basis of evidence available to it, that the respondents first became aware of the sale of the supermarket business in or about late August 2005. It follows that it did not accept that they had become aware of the sale by way of the communication in March 2005 (which they had denied receiving) or by way of the coffee shop conversations. 65 In our view, the Tribunal dealt to a satisfactory extent with the evidence, especially the witnesses who gave oral evidence, Dr Soliman, Mr Xu, Ms Liang and Mr Zhou. It noted the difficulties in the evidence of both sides. It referred to unsatisfactory aspects of the respondents' evidence. 66 The Tribunal gave reasons, founded in the evidence, for its assessment of Dr Soliman's overall credibility. The alleged letter of 1 March 2005 hardly stands in favour of Dr Soliman's credibility. Plainly it was misleading. It referred to a proposed sale when one had been consummated. Moreover, to have sold the business, and allowed the purchaser into occupation of the premises without prior notice to the lessor, and the consent of the lessor, was a clear breach of a tenant's duty under a commercial lease of the present kind. 67 In our view, the case presented by Dr Soliman in relation to liability for outgoings was untenable. He was a person of commercial experience. He entered into a lease which was fully documented and contained all the usual elements of a commercial lease. The provision in relation to outgoings was of a usual kind. 68 His case was that the express obligation of the lease could be ignored on the basis of a pre-existing state of affairs between his family's companies and the body corporate which it was said the respondents had accepted. The Tribunal noted that, nonetheless, the appellant had gone on paying accounts for outgoings, albeit sometimes late. It referred to the absence of any evidence in support of the claim of duress as an explanation for his continuing to pay outgoings when he considered they were not due. 69 In our view, the Tribunal complied with its duty. It addressed satisfactorily the key questions, i.e. was the lease validly terminated by the alleged letter of 10 November 2004 (answer, no, because the letter if it was composed at the time, was never sent); was the appellant liable for the outgoings claimed by the respondents (yes, lease applicable, see answer to first question). 70 The submissions also suggested that the Tribunal should have drawn an adverse inference from the failed attempt to have brought into evidence a document said to constitute a disclosure statement. We have reviewed the transcript, and accept the explanation of the solicitor for the respondents. He said that the respondents only became aware of the importance of the disclosure statement issue on the day of the hearing. They searched in their records, and found a document that they felt responded to the obligation. The Tribunal ruled that it was not prepared to receive the tender at such a late stage. There was no need in our view for the Tribunal to take this matter any further. 71 In light of these conclusions it is not necessary for us to address some of the more esoteric law that has developed in the Federal courts around the duty to give reasons. Counsel for the appellant noted that failure to discharge the duty to give adequate reasons may not only amount to an error of law, but may amount to a constructive failure of jurisdiction. See, for example, Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323. As, in our view, there was no error, we do not have to ask whether any error was such that there was a failure of jurisdiction. Sections 27 and 28 of the Retail Leases Act 72 As already noted, this case like many of the cases that reach the Retail Leases Division, is marked by an absence of reference by the parties in the pre-lease stage and in the lease, as agreed, to the requirements of the RL Act. 73 The timing of the two critical events - the sale to the respondents by one Soliman family company, and the lease back to the other Soliman family company within three days of each other would, we think, have left no time for many of the procedural obligations imposed by the RL Act to be observed prior to the entry into the lease. Moreover, this was a case where the lessee had already been in business at the premises for some years, and was merely dealing with a change in the ownership structure leading in turn to the need for a lease to continue in occupation. 74 The Tribunal accepted that the respondents failed to adhere to the requirements of ss 27 and 28. The scheme of the RL Act is such that in relation to some non-compliances by a lessor there is a specific provision stating that as a consequence the lessee is 'not liable' to pay the amount involved (s 22 is an example, see further below), whereas in the instance of other non-compliances such a consequence is not specified. It was not disposed to make an order in relation to the non-compliances. 75 In a recent decision, Naim v PBPSF Pty Ltd [2008] NSWADT 202, the President sitting at first instance, referred to the difference between s 22 and ss 27 and 28: '64 Non-compliance by the lessor with s 22 gives rise to the consequence that the lessee is 'not liable' to pay any amount to the lessor. In contrast, there is no express provision rendering a lessee not liable if non-compliance with ss 27 and 28 is demonstrated. This difference in the stated consequence has led the Tribunal to conclude that non-compliance with a requirement of s 27 and s 28 does not necessarily lead to the lessee being immunised from liability for outgoings to which it must contribute under the lease. It may be that an award of damages, a reduction of the liability or some other lesser form of order is sufficient to deal with the breach. See, generally, for example, Cronulla Newsagency Pty Ltd v Pizzata [2002] NSWADT 17 at [36]; Wanice Pty Ltd v Bocove Pty Ltd (RLD) [2003] NSWADTAP 24; Brandonia Pty Ltd v Lenola Pty Ltd [2006] NSWADT 319 at [77]-[81].' 76 Further, the decision of the Appeal Panel in Wanice has been cited, with approval, by the Court of Appeal of the Supreme Court of Western Australia in a decision dealing with similar issues arising under the equivalent Western Australian legislation: see Heng v Levison & Anor [2006] WASCA 67 at [12] ff per Steytler P. 77 In our view, the Tribunal did not misconstrue ss 27 and 28 or misapply those provisions in this case. Calculations Made by Tribunal 78 The Tribunal made findings based on the available evidence in relation to the state of the accounts at the time of the expiry of the lease. We doubt whether it needed to go as far as it did in its examination of the payment history. It was for the appellant to prove its case that it had been overcharged. The appellant should have brought forward a proper payment history, and pointed to the errors. 79 What appears to have occurred from February 2005 onwards when the new owner of the supermarket business took over operation of that business was that payments were made on some occasions by means of cheques drawn by the new owner. Further in the period September to November, there was confusion as to whether cheques of that kind were in discharge of obligations of the appellant under the lease or were payments being made in relation to the new leases being granted to the business buyers as the new lessees. We are inclined to agree with the submissions of Mr Hassett for the respondents that the question of whether there had been a payment too many by the appellant which should be the subject of an order for reimbursement was not put in issue by the appellant. In any event, the Tribunal's directions dealt fairly with the issue. It was a matter readily capable of being addressed by means of the filing of any additional documentation, and submissions. The appellant was given that opportunity, and the Tribunal was not satisfied that any error had occurred. The Costs Decision 80 In light of the Tribunal's findings, and its assessment of the evidence, it exercised the discretion given by s 77A of the RL Act, and s 88 of the ADT Act (as it then stood). In our view, the Tribunal had ample grounds to make the ruling it did. In our view, the Tribunal had regard to relevant considerations, did not overlook any material consideration that may have tended against the order, and had regard to the facts as found by it, which went to the key matters in dispute. The exercise of the discretion did not infringe the principles laid down in House v The King [1936] HCA 40; (1936) 55 CLR 499 per Dixon, Evatt and McTiernan JJ: 'The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.' Separate Jurisdictional Argument - s 74 RL Act, Requirement for Mediation 81 In the written submissions the appellant put an argument that was not raised orally at hearing. We will deal with it briefly. The submission is that the Tribunal failed to exercise the obligation cast upon it by s 74, it was a pre-condition to jurisdiction, and consequently it was without jurisdiction to embark on the hearing of the matter. This point was, we note, not raised at first instance. 82 Section 74 provides: ' 74 Tribunal must attempt to conciliate (1) The Tribunal must not make an order in respect of a retail tenancy claim or an unconscionable conduct claim that is before it unless it has brought, or used its best endeavours to bring, the parties to the claim to a settlement acceptable to all of them. (2) For that purpose, the Tribunal may adjourn the hearing of a claim to enable the dispute or matter concerned to be referred to the Registrar under Division 2 for mediation of the dispute or matter. (3) If such a settlement is reached, the Tribunal must make an order under this Division that gives effect to the settlement to the extent permitted by this Division. (4) Part 4 of Chapter 6 of the Administrative Decisions Tribunal Act 1997 does not apply to a retail tenancy claim or an unconscionable conduct claim that may be made to the Tribunal under this Act.' 83 Sub-section (4) refers to the Part of Chapter 6 headed 'Alternative Dispute Resolution', the general provisions of the ADT Act relating to mediation. 84 The Tribunal file discloses that this dispute was listed for directions hearings on five occasions, on 6 May 2007, 7 June 2007, 16 August 2007, 30 August 2007 and 27 September 2007. It is usual in directions hearings for the parties to be encouraged to settle their differences. In the standard directions sheet recording the first directions hearing the member has noted that 'mediation has failed'. The standard directions sheet has a box responding to s 74 ('Parties referred to Registrar of Retail Tenancy Unit for mediation'). It is not ticked. 85 The certificate required by s 68(1) of the RL Act is attached to the appellant's application. The Registrar, Retail Tenancy Disputes, stated on the certificate of failed mediation as the reason for the failure of mediation that the respondents 'refused to attend mediation as arranged by the Registrar'. 86 It is the case that sometimes parties refuse to co-operate with each other in relation to attendance for mediation, whether before the Registrar or the Tribunal. 87 The limited information before us indicates that the Tribunal engaged in its usual process in bringing this matter on for hearing. The limited information indicates a lack of preparedness on the part of the respondents to compromise - the essence of the usual settlement. 88 The RL Act gives a special emphasis to the mediation of retail tenancy disputes. There will be occasions where a party refuses to engage in mediation, or participates in mediation in a manner that is truculent or tokenistic. It was not the Parliament's intention, as we read the Act, to debar a party from pursuing a claim for relief in those circumstances especially where the non-co-operation flows from the respondent party. 89 Equally, there may be little the Tribunal can do by way of 'best endeavours' to alter the impasse. In our view, this was a case of this kind, and no failure to satisfy the pre-condition has been identified. 90 It is not necessary, therefore, to deal with the further issue raised by the submission, i.e. whether a failure by the Tribunal to use its 'best endeavours' would leave the Tribunal without jurisdiction, and consequently the parties (in particular any co-operating party) without access to the Tribunal to have the dispute resolved. The Unconscionability Issue 91 In light of our conclusions in relation to the Tribunal's determination of the retail tenancy claim, there are no matters of substance that could have been separately agitated by the appellant that might independently have supported a finding that the respondents' behaviour constituted unconscionable conduct within the meaning of the RL Act.

Sydney Supermarkets Pty Limited v Xu and Anor

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Judgment (13 paragraphs)

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Cases Cited (11)

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