Bluestream Enterprises Pty Ltd v Perich Property Pty Ltd

[2025] NSWCATCD 2

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Bluestream Enterprises Pty Ltd v Perich Property Pty Ltd [2025] NSWCATCD 2

Hearing dates:

18 September 2024

Date of orders:

02 January 2025

Decision date:

02 January 2025

Jurisdiction:

Consumer and Commercial Division

Before:

D G Charles, Senior Member

Decision:

1 The application by the applicant, Bluestream Enterprises Pty Ltd, for orders of the Tribunal under the Retail Leases Act 1994 NSW, is dismissed.

2      Bluestream Enterprises Pty Ltd is to pay the respondent’s costs of the proceeding on the ordinary basis, as agreed or assessed.

3      The following orders apply if a party contends for a different costs’ order in relation to the proceeding:

(a)   Order 2 above ceases to have effect if an application for a different costs’ order is made in the proceeding.

(b)   The party contending for a different costs’ order (the costs’ applicant) is to file and serve the application for costs, supported by evidence and submissions, within 14 days of the date of these orders.

(c)   The other party (the costs’ respondent) is to file and serve any evidence and submissions in response to the costs’ application within 28 days of the date of these orders.

(d)   The costs’ applicant is to file and serve any material in reply within 35 days of the date of these orders.

4 Subject to the parties’ submissions on this point, any application for a different costs’ order in the proceeding will be determined without a hearing based on the written submissions and evidence provided, pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 NSW.

Catchwords:

RETAIL LEASE – whether payment of rent invoices waived – no evidence of misleading or deceptive conduct, unconscionability, or breaches of the COVID Regulations by a lessor – no estoppel by silence of lessor – no wrongful termination and re-entry by lessor – all lessee’s causes of action, including a rent reduction claim, dismissed.

Legislation Cited:

Retail Leases Act 1994 NSW

Retail and Other Commercial Leases (COVID-19) Regulation 2020 NSW

Retail and Other Commercial leases (COVID 19) Regulation 2022 NSW

Civil and Administrative Tribunal Rules 2014 NSW

Civil and Administrative Tribunal Act 2013 NSW

Cases Cited:

PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446

Nitopi v Nitopi [2022] NSWCA 162

Norsk Dor Pty Ltd v Tuxfend Pty Ltd [2020] NSWCATAP 183

Australian Securities and Investment Commission v Kobelt [2019] HCA 18

Darzi Group Pty Ltd v Nolde Pty Ltd (2021) NSWSC 774

Tuon Popo Big Bowl Noodles Pty Ltd [2022] NSWCATCD 172

Sneakerboy Pty Ltd v Georges Properties (No 2) [2020] NSWSC 1141

Jamaican Coffee Kitchen Pty Ltd v M20 Pty Ltd [2022] NSWCATAP 203

Waltons Stores (Interstate) Limited v Maher [1988] HCA 7; (1988) 164 CLR 387

Sabouni v Revelop Building and Developments Pty Ltd (2021) NSWSC 31

Category:

Principal judgment

Parties:

Bluestream Enterprises Pty Ltd – Applicant

Perich Property Pty Ltd - Respondent

Representation:

R Lay – Applicant’s director

Solicitors:

Marsdens Law Group - Respondent

File Number(s):

2024/00102876

Publication restriction:

Unrestricted

REASONS FOR DECISION

Introduction & Overview of Matters in Dispute

1. By an Application lodged with the Tribunal on 13 March 2024, the Applicant, Bluestream Enterprises Pty Ltd (the Lessee) brought claims against the Respondent, Perich Property Pty Ltd (the Lessor) under the Retail Leases Act 1994 NSW (the RL Act).

2. Since on or about 6 September 2019, the Lessee has traded as a cooked burger and fish and chips’ retail shop business, known as ‘Flaky’s. The Lessee’s business is situated at the Oran Park Podium Shopping Centre, Oran Park NSW (the Premises).

3. The Lessor is the developer of the Oran Park Precinct (in joint venture with Landcom) and is the owner of the Shopping Centre. In or about August 2019, it leased the Premises to the Lessee for a term of five (5) years, with an option to renew for one further term of 5 years (the Lease). The Lease remains on foot, and the Lessee continues to occupy the Premises. The matters in dispute in the proceeding are historic and relate to conduct arising from the COVID-19 pandemic.

4. The Lessee contends that the Lessor breached the RL Act and the Lease, resulting in it incurring loss and damage, as put in the Lessee’s Points of Claim in the proceeding bearing date 15 May 2024, as follows:

1. The Lessee is entitled to damages in an amount of $43,057.96 arising from alleged misleading or deceptive and/or unconscionable conduct, breaches of the COVID-19 Regulations, and breaches of the Lease, because the Lessor is estopped by silence, and further, because a breach notice issued by the Lessor was defective (the Damages Claim),

2. The Lessee suffered loss or damage because of the Lessor terminating the Lease and re-entering the Premises for a period of 6 days, in an amount of $8,335.00 (the Termination of Lease Claim),

3. The Lessor has improperly applied rent reviews under the Lease, resulting in damages in an amount of $7,025.61 for incorrect rental increases, and continuing at an amount of $541.19 per month (the Rent Review Claim).

5. For the hearing on 18 September 2024, and in its Closing Submission dated 30 September 2024 (the Applicant’s Closing Submission), the Lessee confirmed that it advanced further grounds for relief, albeit grounds which were not referred to in the Points of Claim for the proceeding. The further relief is a claim for punitive damages, a declaration that the Lessor is barred from recouping ‘Unissued Invoices’, and an order that the Lessor’s General Counsel be referred to the Law Society of NSW for alleged professional disciplinary action.

6. The Lessor says the claims for punitive damages and for the referral of its General Counsel are misconceived, and that in any case, they are beyond the Tribunal’s jurisdiction. It otherwise denies any breaches of the RL Act, and the Lease, and submits that the proceeding must be dismissed, with costs.

Jurisdiction

7. There is no dispute that the Lease is a retail lease for the purposes of the RL Act. The RL Act confers power on the Tribunal to hear and determine applications for orders in respect of a retail tenancy claim. A retail tenancy claim is a claim in connection with a liability or obligation with which a retail tenancy dispute is concerned, and includes claims for payment of money, for doing work, and for declarations as to rights: see, generally, RL Act, s 70 and s 72(1)(a) – (g). The present limit on the Tribunal’s jurisdiction to hear and determine claims under the RL Act is $750,000.00 in respect of retail leases, such as the Lease, made on or after 1 July 2017: RL Act, s 73(1).

8. I am satisfied that the Application lodged with the Tribunal on 13 March 2024 concerns a retail tenancy dispute, that the proceeding constituted by the Lessee’s Application to the Tribunal is a “retail tenancy claim” as defined in s 70 of the RL Act, and that having regard to the Lessee’s conduct of the hearing on 18 September 2024, and the Applicant’s Closing Submission dated 30 September 2024, the Lessee does not seek an order for payment of money in an amount exceeding $750,000. In consequence of those findings, the Tribunal has jurisdiction to hear and determine the matters in dispute in the proceeding.

9. There is, however, no jurisdiction in the Tribunal to hear and determine the Lessee’s claims for further relief (see the Applicant’s Closing Submission at [8], [11], and [83]), in respect of punitive damages, and a referral of the Lessor’s General Counsel to the NSW Law Society for disciplinary action. Nor do the Lessee’s further submissions as regards public interest at [41] – [43] of its Submission in Reply dated 10 November 2024, assist it in establishing the Tribunal’s power to grant such further relief.

Written Evidence and Submissions

10. The parties appeared by their respective representatives at the hearing on 18 September 2024; in the case of the Lessee, by its director, Mr R Lay (Mr Lay), and in the case of the Lessor, by its solicitor, Mr R Blackstone.

11. Prior to the commencement of the hearing, the Lessee had filed and served the Points of Claim bearing date 15 May 2024 and the Statement of Robert Lay dated 11 March 2024 with Annexures A – E1; while the Lessor had filed and served Points of Defence bearing date 20 August 2024, together with the Affidavits of Milton Liolios (Mr Liolios) sworn 1 August 2024, and of Damien Turski (Mr Turski) sworn 1 August 2024 including Exhibit DT-1 to Mr Turski’s Affidavit.

12. The parties’ written material for the hearing formed a joint tender bundle or Tribunal Book, which became Exhibit 1 (comprising 471 pages). Exhibits 2 and 3 were the Respondent’s Opening Submissions and the Respondent’s Chronology of Events, respectively. Exhibit 4 comprised further copies of the Lessor’s Invoices dated 1 December 2020, 1 February 2021, 1 July 2021, 2 August 2021, and 1 October 2021.

13. At the hearing on 18 September 2024, Mr Lay gave oral evidence in the Lessor’s case, to augment the Lessee’s written material in Exhibit 1, and Mr Liolios, and Mr Turski, gave oral evidence in the Lessor’s case, subject to cross examination by the Lessor’s representative, Mr Lay.

14. Furthermore, pursuant to directions made on 18 September 2024, the parties’ representatives provided closing written submissions, as follows:

• Applicant’s Closing Submission dated 30 September 2024,

• Respondent’s Closing Submissions dated 30 October 2024, with a transcript of the hearing on 18 September 2024 (the Transcript), and

• Submission in Reply dated 10 November 2024.

15. I have considered the entirety of the written material including the written submissions and supporting documents of the parties, as well as the oral evidence and submissions given at the hearing on 18 September 2024. In these Reasons for Decision, I may focus on the material which I consider is central to the considerations of the Lessee’s application for orders of the Tribunal under the RL Act; but to the extent that the Reasons may not refer to a specific piece of evidence or singularly deal with a submission, it should not be assumed that I have ignored that evidence or submission.

16. As in any civil proceedings, applicants for orders of the Tribunal bear the legal onus of presenting sufficient evidence to satisfy the Tribunal, on the balance of probabilities, that the orders sought in the application must be made.

Factual Background to the Parties’ Disputes in the Proceeding

17. The COVID-19 pandemic arose in early 2020. Before any request for rental assistance was requested by the Lessee, the Lessor provided a 50% reduction to rent for the months of April and May of 2020 in response to the pandemic: Exhibit 1, p 335.

18. Following implementation of the National Cabinet Mandatory Code of Conduct (the Code of Conduct) in April 2020, the Lessor invited the Lessee to provide evidence of its downturn in business to assess any rent relief to be given - Exhibit 1, pages 333-334.

19. While the Lessor provided rent relief to the Lessee from April 2020 onwards, the Lessor’s case is that the Lessee never provided any, or any sufficient, evidence that it was an ‘impacted lessee’ within the meaning of the applicable Regulations: see Mr Turski’s Affidavit at [61] – Exhibit 1 p 253. As regards the applicable Regulations, on 24 April 2020, the New South Wales Government enacted the Retail and Other Commercial Leases (COVID-19) Regulation 2020 NSW (the First COVID Regulation) which was subsequently amended on 3 July 2020 to give effect to the Code of Conduct commencing on 24 April 2020. The First COVID Regulation ceased to have effect on 24 October 2020. A further four (4) regulations were implemented (in similar form to the First COVID Regulation) culminating in the Retail and Other Commercial Leases (COVID-19) Regulation 2022 NSW (the Fifth COVID Regulation), in force from 13 January 2022 to 13 July 2022.

20. The Lessee’s case (see the Statement of Mr Lay at [26] – Exhibit 1, p 67) is that during 2020 he had “concern about the inadequacy of the level of rental assistance”, however, the Lessor says such concern was not communicated to it.

21. On 25 November 2020, the Lessor sent an email to the Lessee about outstanding rental arrears in the amount of $16,583.40. Mr Lay on behalf of the Lessee, then responded as follows:

I wish to state my appreciation of the rental assistance being provided to me as a consequence of Covid-19. Although trade has improved since the April lows, it still remains below that in February/early March.

The issue as to why I am falling behind on my lease payments relates to the circumstances preceding covid-19. As I indicated in my letter (April 6, 2020), occupancy costs to that date were 23% of sales. In my situation, the assistance being provided via the proportional reduction in rent to sales, does not offer the same degree of relief as it does for other retailers. In my circumstance, each dollar in lost sales due to covid-19 was already being used to cover operating expenses. The business never had the opportunity (to) get established, nor the luxury of being profitable going into this event.

It is my view that the current business is much better than the previous, and I am confident that a base is being established for future growth. The timing of the virus outbreak has just been unfortunate.

Perhaps we could meet and have further discussions. Otherwise let me know what you are prepared to do.

22. The following day (i.e., 26 November 2020) the Centre Manager, Mr Turski, sent an email to Mr Lay about the Lessee’s rental arrears, which said:

I need you to propose a payment arrangement for consideration by the Board. The Leasing code of conduct was very clear that tenants must meet their obligations under the lease to continue to receive rental rebates. We have been applying these rebates to your rental since April, but you have not been making any payments towards the arrears.

23. On 6 December 2020, Mr Lay sent this email to Mr Turski, which stated, relevantly:

If it is acceptable, I will bring my rentals up to date by the end of June 2021 (if possible, I will try and do so by April 2021).

24. From November 2020 onwards, the Lessee alleges that it did not receive invoices for December 2020, January 2021, February 2021, July 2021, August 2021, and October 2021 (the Disputed Invoices). On the other hand, the Lessor’s case is that all the Disputed Invoices (except for February 2021) were issued to the Lessee. Indeed, a central element of the Lessee’s case is that the Disputed Invoices were not issued by the Lessor and that the alleged ‘non-issuance’ of the Disputed Invoices constituted rental relief to the Lessee by way of waiver of payment of rental invoices – see Mr Lay’s Statement at [51] – [52], Exhibit 1, pages 69 - 70.

25. On 11 November 2022, a breach notice (Exhibit 1 p 176) was issued by the Lessor to the Lessee for unpaid rental arrears in an amount of $58,549.43. While there was correspondence between the parties, including complaint by the Lessee about inadequate rental assistance (Exhibit 1, pages 202 and 458), the Lessee did not pay the rental arrears.

26. On 14 February 2023, a second breach notice (Exhibit 1 pages 452 - 453) was issued by the Lessor to the Lessee for unpaid rental arrears in an amount of $59,219.33. There was further correspondence between the parties, in which the Lessee referred to ‘non-issuance’ of the Disputed Invoices, inadequate Covid-19 rental relief, and an incorrect rent review increase in March 2022.

27. The parties’ correspondence about the second breach notice culminated in the Lessee’s email to the Lessor sent on 7 March 2023 at 3:30 pm (Exhibit 1, pages 200, and 455- 456), which stated:

I am terribly upset with the manner and the substance in which this matter has arisen and been managed.

I have made every effort to co-operate, including sharing with you the evidence in support of my claim. The evidence is clearly contrary to your statements.

Since it is now obvious that you are not interested in facts, reason or observing my legal rights, I am resigned to this matter becoming a legal dispute.

I await your termination letter and final date for me to vacate the premise.

28. On 8 March 2023, the Lessor terminated the Lease and re-entered the Premises.

29. The Lease was subsequently reinstated by the Lessor on or about 13 March 2023 following the Lessee making payment (albeit, under protest) of rental arrears ($59,219.33) and a locksmith callout fee ($275): see the exchange of email correspondence on 9 and 13 March 2023 between the Lessor’s General Counsel, Mr Lavorato, and the Lessee’s then solicitor, Mr Herro – Exhibit 1, pages 466 – 471.

Issues for the Tribunal’s Determination

30. I am satisfied that the issues to be determined in the proceeding, are:

• Whether the Lessee is entitled to damages for unconscionable conduct, misleading and deceptive conduct, or breaches of the COVID-19 Regulations, or otherwise is estopped from claiming by way of rent arrears, and therefore that the Lessor must refund as an ‘overpaid’ amount, $43,057.96 (referred to as the Damages Claim),

• Whether the Lessee is entitled to damages resulting from the termination of the Lease (referred to as the Termination of Lease Claim), and

• Whether the Lessee is entitled to damages for an improperly applied rental review (referred to as the Rent Review Claim)

31. Before dealing with the Lessee’s Claims, I will consider matters of evidence and the credit of the witnesses, which while pertinent to all Claims, are especially relevant to the Lessee’s Damages Claim in its various iterations.

Evidence and Credit

32. Only witnesses in the Lessor’s case, Mr Turski and Mr Liolios, were cross-examined. In its Closing Submission (at [49] – [68]), the Lessee Applicant submitted that I should give no weight to the evidence of Mr Turski and Mr Liolios, that I should make adverse findings as to the credit of those witnesses, and further, that I should find documents filed by the Lessor had been falsified.

33. I reject the Lessee’s submissions that the evidence of Mr Turski and Mr Liolios should be discredited and given no weight at all. They are submissions without any, or any proper, basis.

34. On the contrary, I observed Mr Turski and Mr Liolios as they gave their evidence during the hearing, and my impression was that they are truthful and reliable witnesses. I have also considered the Transcript of the hearing now provided by the Lessor’s legal representatives. Materially, other than Mr Lay’s assertions, the Lessee could not identify any part(s) of those witnesses’ oral evidence to substantiate the underlying submission that I should prefer Mr Lay’s evidence to the evidence of the Lessor’s witnesses. I find that the evidence of the Lessor’s witnesses is supported, objectively, by contemporaneous documents and by the circumstances for the parties’ dispute, as apparent from the written evidence of both parties in Exhibit 1.

35. I accept Mr Turski’s evidence that the Lessor received no requests for rental assistance following the flat percentage (50%) reduction which had been provided to the Lessee shortly after the onset of the pandemic; that the Lessor did not receive the requisite information and supporting documents about JobSaver Payment status and business turnover to establish whether the Lessee was an ‘impacted lessee’ for the purposes of the COVID Regulations (see, for example, Transcript, at pages 68 and 69); and that had the Lessee sought further rental assistance, the Lessor would have considered the request and responded to it in good faith.

36. Moreover, to the extent the Lessee’s allegation that the Lessor did not issue the Disputed Invoices may be pertinent to the Damages Claim, I also accept Mr Turski’s evidence as to the issuing of rental invoices at [39] – [48] of his Affidavit (Exhibit 1, pages 249 – 251). Further, I am satisfied that Mr Turski’s explanations during his cross examination as to alleged inconsistencies in the Lessor’s documents (being the alleged inconsistencies referred to at [62] of the Applicant’s Closing Submission) were clear and logical explanations, and that they should be accepted by the Tribunal.

32. Regarding Mr Liolios’s evidence, I find that the Lessee’s submissions (see Applicant’s Closing Submission at [63] – [76]) do not go to that witness’s credibility; rather they go to the weight to be given to Mr Liolios’ evidence, which is a matter that can be addressed in the context of the consideration of the Lessee’s Claims.

33. The Lessee contended (see the Applicant’s Closing Submission at [26] – [38]) that the invoices it received were different to those contained in the Lessor’s evidence and thus the documents must be fraudulent. I reject the Lessee’s contentions.

34. Mr Liolios and Mr Turski gave evidence, which I accept, that the documents contained within the Lessor’s bundle of documents for the proceeding, were reproductions of the invoices as the accounting system previously operated by the Lessor was no longer used. The difference, which only arose as to the template of the document, was stylistic (Transcript, page 41). Materially, there was no difference to the substance of the invoice(s), in the amount payable, the payee, the payor, the bank details, the invoice number, or the due date (Transcript, page 42). Other than an unsubstantiated submission that the Lessor cannot do what it has done, the Lessee’s evidence and submissions offer no persuasive reason why the Lessor’s evidence in this respect should be rejected.

35. The Lessee takes issue with the shaded blocks in which the company logo was affixed, on the Disputed Invoices – see the Applicant’s Closing Submission at [35]. However, this is not a reason to challenge the authenticity, let alone, the relevance of the Lessor’s documents, in circumstances where there is no difference in the substance of the documents and the most likely explanation for the shaded blocks is the printing setting for when the documents were printed.

36. Further, there is no basis for the Lessee’s contention (see the Applicant’s Closing Submission at [37]) that the Lessor’s emails sent contemporaneously to the Lessee with the Disputed Invoices should also be regarded as fraudulent. In any event, the Lessee did not serve any evidence in reply addressing this issue of the ‘fraudulent’ emails or lead any cross examination as to the said emails.

37. In the circumstances, I find that the said emails evidence contemporaneous records of the Disputed Invoices having been issued, and that the Lessee’s contention that the Disputed Invoices were not received, has no basis. Moreover, even if I had found that the Lessor had failed to issue the Disputed Invoices, the terms of the Lease apply – see clause 4.1(b), which provides that the Lessee must pay rent without demand. In that way, the non-issuing of an invoice does not absolve the Lessee of its contractual obligation to pay the annual rent under the Lease.

Damages Claim

Generally

43. In the Lessor’s case, there are various iterations of its Damages Claim:

• Misleading and Deceptive Conduct,

• Unconscionable Conduct,

• Breaches of the COVID-19 Regulations,

• Estoppel (albeit related to the other iterations).

44. I am not satisfied that the Lessee has discharged its onus of proof (i.e., on the balance of probabilities) in respect of any of the legal and factual issues affecting the various iterations of the Damages Claim.

Misleading and Deceptive Conduct

45. As far as can be ascertained from Mr Lay’s Statement and the Lessee’s written and oral submissions, the alleged misleading and deceptive conduct is put as the Lessor failing to act on the rent arrears. It is contended that this was done with the intent of inducing the Lessee to assume that the Lessor waived payment of the whole amount(s) of the Disputed Invoices.

46. Whether conduct is misleading or deceptive, or is likely to mislead or deceive, is determined objectively.

47. Having considered the available evidence, I do not think it can be said, objectively, that the Lessor, in contravention of s 62D of the RL Act, engaged in conduct that is misleading or deceptive, or which is likely to mislead or deceive, in connection with the Lease. In this regard, I make the following findings of fact:

1. In response to the COVID-19 pandemic, the Lessor sought information from tenants of the Shopping Centre, including the Lessee, to determine rental relief,

2. The Lessee gave no response to the Lessor’s general enquiry (as above),

3. The Lessor provided some rental relief to the Lessee in the form of a flat rent reduction (50%), and this was consistent with the Code of Conduct, in the absence of it being provided with other information pertinent to additional rental relief such as a lessee’s JobSaver Payment status and a lessee’s business turnover,

4. The Lessee did not commence negotiations with the Lessor about rental relief and it did not seek further assistance beyond the relief already provided to it,

5. There was no deliberate act on the part of the Lessor to not issue invoices for rent, as alleged by the Lessee, (in this regard, the Lessor’s evidence demonstrated that all invoices were issued to the Lessee in the same form that they had have been previously issued, i.e., by email – see Exhibit 1 from p 418 onwards),

6. At no time, did the Lessor confirm to the Lessee that it would be providing rental relief in the form of waiving payment, completely, of its invoices,

7. All rental relief provided to the Lessee was in the form of reductions to invoices, not a waiver of the whole invoice,

8. Mr Turski’s written and oral evidence, both generally and in this context (Exhibit 1, p 245), is reliable, and can be accepted.

48. Nevertheless, even if I had found the Lessor’s conduct was, in some way, misleading or deceptive, the Lessee’s case cannot address other legal issues, such as loss or damage by reason of misleading or deceptive conduct (RL Act, s 62E). As indicated, the terms of the Lease are clear. There is a contractual obligation, in clause 4 of the Lease, for the Lessee to pay annual rent for the Premises, without demand. The Lessor had up to 6 years to prosecute a claim to recover rent arrears. That the Lessor did not take action to recover rent arrears for a time after it had issued the rent invoices, in and of itself, is not a circumstance that points to the Lessor acting misleadingly or deceptively. If anything, it is beneficial to the Lessee who was afforded an extended period to make payment of its rent. Nor can it be a circumstance which gives rise to some form of estoppel because, given the obligation to pay the annual rent on demand, there can be no altered position, i.e., detriment to the Lessee. Such claim of estoppel is considered in further detail later in these Reasons.

49. For those reasons, I decline to make any order for compensation under s 62E of the RL Act.

Unconscionable Conduct

50. I find that the Lessee’s evidence and submissions do not establish the necessary elements for a case in unconscionability. In a decision dealing with the application of the unconscionability provisions of the RL Act, the Court of Appeal in PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 at [99] has observed that a finding of unconscionability is not made lightly and requires a “high level of moral obloquy”.

51. The factors for consideration by the Tribunal in an unconscionability claim are set out in subsection 62B(3) of the RL Act. The Lessee has not addressed these factors in submissions, and it is not clear what (if any) of the factors are relied upon in support of the Lessee’s claim.

52. In this instance, I cannot be satisfied that there is any evidence of special disadvantage or position of vulnerability (or even elucidation as to what the disadvantage or vulnerability may be), how it is said that the Lessor knew of such disadvantage or vulnerability, or how the Lessor took advantage of that with a “predatory” state of mind: Nitopi v Nitopi [2022] NSWCA 162 at [101], [181] per Ward P; see also Norsk Dor Pty Ltd v Tuxfend Pty Ltd [2020] NSWCATAP 183 at [66].

53. The Lessee was under a contractual obligation to pay the annual rent of the Lease, without demand. It did not. The Lessee was issued with demands for payment of outstanding rent. It did not pay in answer to those demands. The Lessee was issued with a breach notice inviting it to remedy the breach of Lease or risk termination. By its email of 7 March 2023, the Lessor acknowledged its dispute with the Lessor about the rent arrears and then, in effect, it invited termination, which occurred with the Lessor re-entering the Premises.

54. There is simply no objective material that points to conduct of the Lessor which may be characterised as victimisation, or exploitation, or conduct that is so outside societal norms of commercial behaviour as to warrant being condemned as conduct that is offensive to conscience: Australian Securities and Investment Commission v Kobelt [2019] HCA 18 (Kobelt) at [14], [92], & [118]. What is objectively available on the evidence is that invoices for unpaid rent were issued by the Lessor and that the annual rent of the Lease went unpaid. The Lessee assumed that its obligations to pay rent under the Lease had been waived by the Lessor. In my determination, there was no basis for that assumption, and there was no conduct on the Lessor’s part which caused or encouraged that assumption.

55. Further, even if the evidence had supported a finding of unconscionability (which it does not), there is, as was the case in the context of a claim based on misleading or deceptive conduct, no evidence of loss or damage to support an order under s 62B(8) of the RL Act.

56. For those reasons, I decline to make any order under s 62B of the RL Act.

Breaches of the COVID-19 Regulations

57. The Lessee’s Retail Leases Application lodged on 13 March 2024 alleges that the Lessor’s demand for rental arrears was in breach of the Code of Conduct.

58. The protections afforded to the Lessee as a retail lease tenant arise from regulations enacted under the RL Act being the COVID Regulations as referred to earlier in these Reasons.

59. The Fifth COVID Regulation as of 13 January 2022 provided (relevantly) that:

1. An “impacted lessee” was a lessee who qualified for one or more of the 2021 Micro-business Grant, COVID-19 Business Grant, 2021 JobSaver Payment and had a turnover of less than $50 million for the 2020-2021 financial year - s 4,

2. An impacted lessee must give the lessor a statement to the effect that the lessee is an impacted lessee and evidence that the lessee is an impacted lessee – s 7(1),

3. The information may be given before, or as soon as practicable after, a prescribed breach occurs, and must be given within a reasonable time after it is requested by the lessor – s 7(2),

4. A party to an impacted lease “may” request that the other parties renegotiate the rent payable under, and other terms of, the impacted lease – s 10(1),

5. A party to an impacted lease “must, if requested” under s10(1) renegotiate in good faith the rent payable under, and other terms of, the impacted lease, and commence renegotiations within 14 days of receiving the request or another period agreed by the parties – s 10(3),

6. “Prescribed action” included (relevantly) re-entry, eviction, and/or termination – s 3,

7. “Prescribed period” was the period commencing 13 July 2021 and ending 30 June 2022 – s 3,

8. A lessor must not take prescribed action against an impacted lessee on the grounds of a prescribed breach during the prescribed period unless the parties had been referred to mediation, except for any breach which occurs after 13 March 2022 – s 9.

60. Having regard to the requirements of the COVID-19 Regulations, and in the events which occurred, I find that the Lessee did not provide the requisite information to the Lessor to demonstrate it was an impacted lessee. While there is a letter from Kamper Chartered Accountants bearing date 28 May 2020 (Exhibit 1 at p 164), the Lessor led unchallenged evidence, which I accept, that the accountants’ letter was never received by it from the Lessee – see Mr Turski’s Affidavit at [29] – [30] (Exhibit 1, p 248). Moreover, the Lessee led no evidence that the accountants’ letter was provided to the Lessor. Instead, it appears that the Lessee submitted the Lessor should have inferred that the Lessee required further rental assistance – see, for example, the Transcript at page 63, and page 85. Nevertheless, even if I had found the evidence supported such an inference, it would be insufficient to meet the requirements of the applicable Regulations.

61. As the party seeking the protection afforded by the COVID-19 Regulations, the onus always rested on the Lessee to seek to renegotiate the rent payable under, and other terms of, the Lease. The Lessee’s Application and supporting evidence and submissions referred to Darzi Group Pty Ltd v Nolde Pty Ltd (2021) NSWSC 774 (Darzi’s case), apparently, to support its submission as regards the Lessor’s breach of the Regulations, as well as the alleged estoppel (considered below).

62. However, it is difficult to see how Darzi’s case assists the Lessee in the present circumstances, because the facts are materially different. The principles expressed in Darzi’s case by Robb J are only enlivened when:

1. A lessee can demonstrate that there is an impacted lease at the time (but there is no evidence before me to make such a finding),

2. Prescribed action is taken during the prescribed period (yet any action taken by the Lessor occurred after the expiry of the Regulations, and therefore outside any prescribed period - indeed, action was not taken in relation to rent arrears until November 2022, when the first breach notice issued, being 4 months after the expiry of the prescribed period),

3. A request to renegotiate had been made by a lessee and the lessor had failed to engage or renegotiate in response to that request (but where the evidence in this case established no such requests were made by the Lessee, and the contemporaneous evidence is that the Lessee was content, even appreciative, of the assistance which had been provided by the Lessor – Exhibit 1, pages 350 – 351).

63. This case is plainly distinguishable from that of Darzi’s case. The Lessee is seeking to renegotiate through this proceeding in the Tribunal, relief it says it was entitled to, but never requested. In the circumstances, I am satisfied that the Tribunal cannot make a finding that the Lessor breached the COVID-19 Regulations. Nor can the Tribunal impose any orders akin to those made in Darzi’s case. However, even if I am incorrect about there being no breach of the applicable Regulations, it is not open to the Tribunal to determine an amount of rent payable by an impacted lessee (which is, in substance, what the Lessee’s Damages Claim asks the Tribunal to do), where the parties have not reached agreement on the appropriate level of reduction, or on the split between waiver and deferral of rent, or on the time allowed to a lessee to pay deferred rent: see Tuon Popo Big Bowl Noodles Pty Ltd [2022] NSWCATCD 172, [81] – [90], citing as binding, the decisions of Sneakerboy Pty Ltd v Georges Properties (No 2) [2020] NSWSC 1141, Darzi’s case, and Jamaican Coffee Kitchen Pty Ltd v M20 Pty Ltd [2022] NSWCATAP 203.

Estoppel

64. The findings of Robb J in Darzi’s case at [116] – [125] in relation to a ‘permanent bar’ are distinguishable from the circumstances of this case. Firstly, the application of the COVID-19 Regulations turned on whether the plaintiff in Darzi’s case was, at the time, an impacted lessee. There is no evidence before the Tribunal that the Lessee was an impacted lessee at any time, including during the period where the Disputed Invoices (on the Lessee’s case) were not issued. Secondly, the dispute in Darzi’s case related to prescribed action taken by a defendant at a time that the plaintiff was an impacted lessee and entitled to the various protections afforded to a lessee by the COVID-19 Regulations in force at that time. In this instance, the action taken by the Lessor (i.e., the re-entry of the Premises on 8 March 2023) occurred after the expiry of the COVID-19 Regulations, not during it. Thirdly, in Darzi’s case there was a request made by the plaintiff to renegotiate rent when the applicable Regulations were in force, which did not occur. It was the lessor’s failure to renegotiate rent following a request being made (contrary to the Regulations) which underpinned Robb J’s decision that a bar to recovery was created. In the circumstances now before the Tribunal, the evidence is that the Lessee made no such request to renegotiate the annual rent for the Premises.

65. To the extent the Lessee’s submission rests upon alleged silence by the Lessor, it is well settled that the circumstances in which silence might found an equitable estoppel are limited to those in which the relevant assumption of the party claiming the estoppel could be fulfilled only by a diminution of a defendant’s rights (or an increase of a defendant’s obligations) and the defendant, with knowledge of the other party’s reliance on the assumption may cause detriment to that other party if not fulfilled, failed to deny to the party claiming the estoppel the correctness of that party’s assumption: Waltons Stores (Interstate) Limited v Maher [1988] HCA 7; (1988) 164 CLR 387.

66. At no time during the relevant period when the Disputed Invoices were sent did the Lessee make any enquiry of the Lessor (which the Lessor failed to address), nor did the Lessor represent a specific circumstance which could have led the Lessee to reasonably believe that the parties were conducting themselves on a basis where invoices for rent would not be issued. To the contrary, the evidence establishes that when the Lessee raised the Disputed Invoices for the first time, the Lessor responded by confirming all invoices were sent, and the contemporaneous documents of the Lessor evidence that the said Invoices were issued. The Lessor did not indicate, offer, or propose to waive an entire month’s rent as a form of rental relief to the Lessee. It is unclear why the Lessee came to the assumption it did, but I am satisfied it was not based on any conduct of the Lessor. As indicated, the Lessee did not make any enquiries concerning the Disputed Invoices, such as to confirm whether the Lessor had in fact waived payment of invoices or even why it had not (on its case) received invoices for December 2020, February 2021, July 2021, August 2021, and October 2021.

67. For those reasons, the Lessee’s claim of estoppel against the Lessor in relation to the Disputed Invoices, must fail.

Termination of Lease Claim

68. While the Lessee’s Application and the Statement of Mr Lay refer to this Claim, the Lessee did not address the Claim in any detail in the Applicant’s Closing Submission. Nevertheless, I have determined that the Lessee’s claim for alleged losses in an amount of up to $8,335 comprising $5,457 on account of loss of business income and damage to perishable foods (i.e., economic loss), $2,669.15 for solicitors’ fees, and $209 for locksmith charges, should not be accepted in any event, for the following reasons.

69. Firstly, instead of attempting to remedy the breach of the Lease prior to expiry of the second breach notice, the Lessee acquiesced to the breach and invited the Lessor to terminate – Exhibit 1, pages 200, and 455 – 456. To the extent any loss arose, that loss is because of the Lessee’s own conduct, not that of the Lessor. I find that the Lessee failed to mitigate its own loss by remedying the breach prior to termination and instead, only remedied the breach after termination when the Lease was reinstated on or about 13 March 2023 after payment (albeit, under protest) of rental arrears of $59,219.33.

70. Secondly, there is no evidence of the economic loss said to have been suffered by the Lessee. At best, the Lessee’s evidence (see the Statement of Mr Lay at [129] – [133] – Exhibit 1, p 78) is an estimate of potential lost sales derived from its own calculations, but with no independent evidence to substantiate the amount claimed. The Lessee also claims loss of stock despite the Lessor inviting (via its termination notice dated 8 March 2023 – Exhibit 1 p 461), the Lessee to collect any perishable goods. There is no evidence that the Lessee actually paid the costs claimed for the perishable goods.

68. Thirdly, the Tribunal is guided by the well-known principles recently summarised by Black J in Sabouni v Revelop Building and Developments Pty Ltd (2021) NSWSC 31 at [42] which, as applied in this proceeding, lead to a finding that the Lessee, having the burden to discharge, has not proved its case and in the absence of evidence, the Tribunal would not speculate as to an amount of damage, where precise evidence of the damage (i.e., economic loss) could have been adduced but was not.

69. Fourthly, as regards all the alleged losses in the Termination of Lease Claim, including the Lessee’s out-of-pocket expenses for solicitor’s fees and locksmith charges, the Lessee has not established a legal basis for any relief under the RL Act. Pertinently, the Lessor’s termination and re-entry of the Premises in March 2023 cannot be wrongful, in circumstances where the Lessee was duly issued a breach notice for rent arrears, which it failed to remedy. For reasons given above, I am satisfied that the Lessor always proceeded within its rights under the Lease.

Rent Review Claim

73. The underlying premise of this claim is that the reviews of rent as applied by the Lessor in August 2022 and August 2023, respectively (i.e., there being no reviews of rent in August 2020 and August 2021), were, in some way, detrimental to the Lessee’s position, and otherwise contrary to the COVID-19 Regulations.

74. The Lessee’s principal contention is that the rent review conducted by the Lessor in March 2022 was in breach of the COVID-19 Regulations at the time: see the Applicant’s Points of Claim at [17] – Exhibit 1, p 10. As at March 2022, the Fifth COVID Regulation was in force and s 8 of that Regulation provided as follows:

8 Obligation to not increase rent.

The rent payable under an impacted lease must not be increased during the prescribed period, other than rent or a component of rent determined by reference to turnover.

75. As a threshold issue to all the Lessee’s complaints now the subject of a retail lease claim in this proceeding, no evidence was ever produced (contrary to the Lessee’s obligations under s 7 of the Fifth COVID Regulation) that the Lessee was a party to an impacted lease. In those circumstances, there can be no prohibition on the increase of rent under the Lease. It not available to the Lessee to bring this claim in relation to the conduct of the Lessor where the Lessee failed, contemporaneous to the events, to exercise any rights it had at that time and provide the evidence that it was an impacted lessee.

76. While it is unclear how the Lessee arrives at the figure of $7,025.61 in relation to its Rent Review Claim, I accept the written and oral evidence of Mr Liolios on behalf of the Lessor (see especially, the Transcript at pages 33 and 45) that the reviews in August 2022 and August 2023 were conducted by the Lessor, ultimately to the benefit of the Lessee, and that the Lessee has, in fact, suffered no loss. I find that the Lessee is in no worse position than it would have been under the Lease but for the COVID-19 pandemic. Indeed, having heard the cross examination of Mr Liolios by Mr Lay during the hearing on 18 September 2024, I find that the Lessee is in a better position in that a further review for Year 5 of the Lease was never passed on to the Lessee.

77. Otherwise, to the extent the Lessee might say it was open to the Lessor to renegotiate the Lease, I find that on a proper interpretation of the COVID Regulations, any request “may” be initiated by either party, however, the requirement to renegotiate only arises to bind the parties when a request is made. This is not a case where request(s) were made and went unanswered.

78. For the foregoing reasons, the Applicant’s claim in an amount of $7,025.61 plus an ongoing monthly amount, or in any lesser sum, must fail.

Conclusion and Orders (including directions as to costs)

79. Because the Damages Claim ($43,057.96), the Termination of Lease Claim ($8,335), and the Rent Review Claim ($7,025.61, and continuing at an amount of $541.19 per month) are not established, whether on factual or legal bases, the proceeding must be dismissed.

80. With the amount in dispute exceeding $30,000, r 38 of the Civil and Administrative Tribunal Rules NSW 2014 NSW applies to the proceeding, such that special circumstances do not need to be established to warrant an order for costs of the proceeding. The Tribunal, therefore, may exercise the costs’ discretion.

81. Given that the Lessor has been wholly successful in having all claims of the Lessee dismissed, and with due regard to the Tribunal’s guiding principle of determining the real issues in the proceeding justly, quickly, and cheaply (see Civil and Administrative Tribunal Act 2013 NSW, s 36), I will express a preliminary view on the issue of the costs of the proceeding. Such preliminary view is that costs ‘follow the event’ and absent any disentitling conduct by the Lessor, or other discretionary reason, the Lessee should be ordered to pay the Lessor’s costs of the proceeding on the ordinary basis.

82. However, if a different costs’ order is contended for by a party because there are circumstances of which I am unaware, or otherwise, I have made orders and directions for the filing and service of evidence and submissions as regards the issue of costs only.

83. The orders of the Tribunal are:

1. The application by the applicant, Bluestream Enterprises Pty Ltd, for orders of the Tribunal under the Retail Leases Act 1994 NSW, is dismissed.

2. Bluestream Enterprises Pty Ltd is to pay the respondent’s costs of the proceeding on the ordinary basis, as agreed or assessed.

3. The following orders apply if a party contends for a different costs’ order in relation to the proceeding:

1. Order 2 above ceases to have effect if an application for a different costs’ order is made in the proceeding.

2. The party contending for a different costs’ order (the costs’ applicant) is to file and serve the application for costs, supported by evidence and submissions, within 14 days of the date of these orders.

3. The other party (the costs’ respondent) is to file and serve any evidence and submissions in response to the costs’ application within 28 days of the date of these orders.

4. The costs’ applicant is to file and serve any material in reply within 35 days of the date of these orders.

4. Subject to the parties’ submissions on this point, any application for a different costs’ order in the proceeding will be determined without a hearing based on the written submissions and evidence provided, pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 NSW.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 16 May 2025