Atma Investments Pty Limited v The Astor Pty Limited

[2001] NSWADT 212

CITATION:	ATMA Investments Pty Limited -v- The Astor Pty Limited [2001] NSWADT 212
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT ATMA Investments Pty Limited RESPONDENT The Astor Pty Limited
FILE NUMBER:	015106
HEARING DATES:	On papers
SUBMISSIONS CLOSED:	12/05/2001
DATE OF DECISION:	12/10/2001
BEFORE:	Donald B - Judicial Member
APPLICATION:	Jurisdiction
MATTER FOR DECISION:	Jurisdiction
LEGISLATION CITED:	Retail Leases Act 1994
CASES CITED:
REPRESENTATION:	APPLICANT S Taylor, agent RESPONDENT P Terrett, solicitor
ORDERS:	1. Declare that the amended application is within the jurisdiction of the Tribunal; 2. Matter to be listed for directions.

1 The dispute between the parties arises from the endeavour by a lessee under a retail lease to transfer its business to an approved new tenant either by way of surrender and new lease or assignment of the existing lease.

2 Following declarations made by me on 16 November 2001 on an urgent interim application, this matter was stood over to permit the Applicant Lessee to consider whether, in light of the declarations then made, and on advice, it wished to amend its application. I also considered it sensible to give the parties an opportunity to seek to resolve their dispute in light of the declarations.

3 Those declarations were in summary that the proposed assignee’s use was a permitted use, that it was unreasonable for the lessor to have withheld consent to the proposed assignment and that there was a deemed consent to assignment pursuant to s.41(d) of the Retail Leases Act 1994.

4 Depending upon the course to be chosen by the Lessee, there was the real possibility of a dispute as to the jurisdiction of this Tribunal to entertain an Amended Application. This would in particular have been the case had the Lessee sought to join the prospective assignee of its business in these proceedings.

5 Having taken advice, the Lessee has reformulated its application pursuant to the Tribunal's consent in that regard and now seeks final orders in the form of Attachment 2 to the Amended Application filed 21 November 2001 as follows:

Pursuant to s. 72(1)(a) of the Retail Leases Act 1994, that the Applicant, ATMA Investments Pty Limited, be restored to the position the Applicant would have been in if the sale of the business, and the consent to the assignment of lease, registered in the Land Titles Office Book 4232 No. 204, to Mr Cowdrill, had not been unreasonably withheld by the Respondent, The Astor Pty Limited as follows:
(a) The Respondent to pay damages to the Applicant in the sum of $197,103 forthwith; and
(b) The Applicant surrender the said licence agreement and lease to the Respondent pursuant S. 72(1)(c)(ii); and that,
(c) The Respondent release the Applicant from any claims for any further moneys payable pursuant to the said lease S. 72(1)(a).
(d) That the Respondent pay the applicant’s legal costs of these proceedings pursuant S. 77A in the sum of $5,015.00.
Or in the alternative to a, b and c
1) That pursuant S. 72(1)(a) of the Retail Leases Act 1994, the Respondent, The Astor Pty Limited, pay damages to the Applicant Atma Investments Pty Limited in such amount as is considered reasonable by the Tribunal.
2) That pursuant to S. 77A the Respondent pay the legal costs of the Applicant in respect of the Application.
3) That the Respondent pay interest pursuant to S. 72A.
4) Such further or other order pursuant to S. 72(3) as this Honourable Tribunal sees fit.
6 The question for determination at this stage is, by consent of the parties, limited solely to whether or not the orders sought are within the jurisdiction of the Tribunal. These reasons do not deal with the substance of the Application.

7 There is no question that the lease is a retail shop lease. The orders sought by the Lessee include a claim for damages flowing from the Lessor unreasonably withholding consent to the assignment of the lease together with claims for surrender and release.

8 The Lessor submits in essence that because this Tribunal has declared that as a result of lapse of time in the circumstances, consent is deemed to have been given under s. 41(d) of the Act; there is no breach by the Lessor and accordingly there is no ‘retail tenancy dispute’ within s. 63 of the Act as there is no breach by the Lessor giving rise to a liability or obligation under the lease.

9 Further the Lessor argues that because the Tribunal has made a final determination on the issue of deemed consent, this exhausts the Tribunal's jurisdiction in the matter. The Lessor contends that the remaining real issue is the contractual status of the sale of business by the Lessee to the proposed assignee and any loss flowing from failure of that agreement to have proceeded. That, contends the Lessor, is a contractual dispute with a third party that can only be determined in a court and not a dispute under the lease within the jurisdiction of this Tribunal.

10 In my opinion, the amended application as formulated is a series of claims against the Lessor for liability flowing from the Lessor having unreasonably withheld consent contrary to both the provisions of clause 6.5 of the lease and s. 39(1) of the Act. Accordingly they are claims in relation to a ‘retail tenancy dispute’ within the classes of ‘retail tenancy claim’ in s. 70. Accordingly they are within the jurisdiction of this Tribunal.

11 The determination by the Tribunal that s. 41(d) applied in the circumstances to deem consent to have been given was not the sole order of this Tribunal. Nor were those orders expressed to be the final determination of the entire matter, only of the question of consent. It was expressly left open by the Tribunal for the Lessee to press further claims flowing from the circumstances of the withholding of consent.

12 A determination that s.41(d) applies such that a lessor is ‘taken to have consented’ does not preclude a claim that the failure of a lessor to have consented within time was unreasonable and that consequences flow from that. S. 41(d) simply provides one mechanism for a lessee to proceed in the absence of consent if the lessee is in a position to proceed.

13 It should be noted that the Lessor contested the date of service of the Lessee’s request for consent and thus the application of a crucial element of the operation s.41(d). The Lessor also contested whether the proposed use was a permitted use. It only conceded receipt as at 15th August when the urgent interim application was first before the Tribunal on 6th November 2001 and the determination of its contest of the use did not occur until the decision of the Tribunal on 16 November 2001.

14 Therefore it is not correct, as the Lessor contended, that this is simply a matter of the failure of the Lessee to have pursued the assignee after it became aware in late September that there was deemed consent. This was not clear for the Lessee until the first determination of the Tribunal.

15 Furthermore, the Lessee does not seek orders against the third party proposed assignee relating to the contractual relations between them; such an application may well have taken the matter beyond the jurisdiction of this Tribunal.

16 The fact that the determination of the Lessee’s claims against the Lessor may involve argument as to whether any damage was caused not by the Lessor's unreasonable refusal of consent but by the inability of the Lessee to be able to enforce its bargain with the proposed assignee, does not preclude jurisdiction. That argument would solely be in the context of determining whether any damage alleged to have been suffered was as a consequence of a breach of the lease or a consequence of some other cause.

17 The Lessor's suggestion that the Tribunal is not authorised to make a complex assessment of damages including whether or not the status of third party relations have been a cause of damage rather than conduct of the parties to the lease, is not a correct analysis of this Tribunal's powers in retail lease disputes. In so far as this Tribunal is required to determine causation of damage and to assess that damage, then it does have power to make determinations, as between the parties to a lease, concerning the impact of third party rights and obligations on the question of whether conduct of a party to a lease was a cause of loss.

18 Accordingly, I am of the opinion that the matter as pleaded in the application is properly before this Tribunal and that directions should now be given for the determination of the substantive issues raised.

19 The matter will be listed for directions.