Chronopoulos v. Carossel Pty Limited

[2010] NSWADT 191

CITATION:	Chronopoulos v Carossel Pty Ltd [2010] NSWADT 191 This decision has been amended. Please see the end of the decision for a list of the amendments.
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT John Chronopoulos RESPONDENT Carossel Pty Limited
FILE NUMBER:	095177
HEARING DATES:	7 July 2010
SUBMISSIONS CLOSED:	7 July 2010
DATE OF DECISION:	29 July 2010
BEFORE:	Molloy G - Judicial Member
CATCHWORDS:	Estoppel by convention
LEGISLATION CITED:	Retail Leases Act, 1994.
CASES CITED:	Amalgamated Investment and Property Co Ltd (in liq) v. Texas Commerce International Bank Ltd [1982] QB 84 Aspen Funds Management Ltd v.Hurst & Lim Pty Ltd [2009] NSWADT 286 AWPF Management Pty Limited v. Red Roll Pty Limited (RLD) [2009] NSWADTAP 3 Blockbuster Australia Pty Limited v. Karioi Pty Limited [2009] NSWSC 1089 Con-Stan Industries of Australia Pty Limited v. Norwich Winterthur Insurance (Australia) Ltd (1986) 160CLR226 Republic of India & Ors v. Indian Steamship Co Limited (reported House of Lords, Session 1997-98 decided 16 October 1997) O’Neill v. Henry (RLD) [2010] NSWADTAP 40 at [42-45] Prasad v. Fairfield City Council [2000] NSWADT 164 Tanzone v. Westpac [1999] NSWSC 478 Trustees of the Pious Society of St Charles v. Vodap Pty Limited [2004] NSWADT 71 Water, Wine and Juice v. Konstantopoulos [2009] NSWSC 1475 Waterman v. Gerling Australia Insurance Company Pty Limited [2005] NSWSC 1066 Watermark Restaurant Pty Limited v. Hunters Beach Investments Pty Limited [2004] Webb v. Clifton [2008] NSWADT 132 Workcare Management Pty Limited v. Gajic Holdings Pty Limited [2010] NSWSC 479
REPRESENTATION:	APPLICANT S Ipp instructed by H Danalis & Co RESPONDENT P Folino-Gallo instructed by Carbone Lawyers
ORDERS:	1.The Application is dismissed 2.Vacate the interim consent orders made 8 October 2009. In this regard liberty is granted to either party to apply, within 14 days 3.No order as to costs; save that should either party file and serve an Application for costs coupled by appropriate submissions, within 14 days, then the other party is to file and serve its reply within a further 14 days; and the Tribunal will make a decision on the papers as permitted by the Administrative Decisions Tribunal Act 1997, s.76, unless persuaded that there should be oral submissions.

REASONS FOR DECISION

Introduction

1 The issues agitated by the parties raised quite a number of interesting aspects of the law. It is convenient to start with the background facts, and then deal with the various issues of law raised by both parties.

2 As will become apparent, the case agitated by the Applicant shifted, such that the legal issue ultimately argued by the Applicant at hearing differed, or correctly, was totally different – to the issues as pleaded, such that the Applicant was obliged to re-plead its case during the course of the hearing by a Further Amended Application for Original Decision filed in the Tribunal by leave at 2-00 pm during the course of the hearing. I shall deal with this aspect in more detail below; but I observe that counsel for the Respondent and his instructing solicitor were more than generous in their approach to the proceedings and did not suggest that there was any prejudice, although the arguments raised by the Applicant were totally different from those in the pleadings.

The Basic Facts

3 Polifroni Pty Limited was, in 2007, the registered proprietor of the whole of the land in Folio Identifier B/413001, being property situate at 169 Annangrove Road, Annangrove and being land under the Real Property Act. This property consisted of a number of shops which together constituted a “retail shopping centre” within Retail Leases Act 1997, Section 3. Pausing at this point, it was not argued to the contrary, save that there was initially some debate on whether the business operations of the Applicant fell within the retail shop businesses as specified in Schedule 1, about which I shall make some observations later in this Decision.

4 In December 2006 the Applicant was interested in leasing Shop 1 in the retail shopping centre at 169 Annangrove Road, Annangrove (“the centre”). He and a friend with whom he proposed to enter into partnership (which partnership did not eventuate) inspected the property and agreed with the representatives of Polifroni Pty Limited to enter into a 1 year lease, with 3 successive options to renew, each for five years.

5 A lease was subsequently entered into for a term of 1 year commencing 19 February 2007, terminating 18 February 2008 with an option to renew “for a period of three successive periods of five (5) years”.

6 The lease described the premises as “Shop 1, 169 Annangrove Road, Annangrove and 3 petrol tanks under the land and 3 petrol bowsers”. The permitted use was described as “grocery store, sale of fruit and vegetables and petrol station save and except that the use does not provide for the sale of:

a) delicatessen products but excluding pre-packaged products.

b) sliced meat and cheese products”.

These restrictions on the permitted use were required, as I understood the evidence, to protect the business interests of other lessees within the centre.

7 The lease contained three five year options, provided for adjustment of annual rent for the first term and each of the years during each of the five year options (if exercised); and also contained the following specific terms:

a) It defined the “Complex” as meaning “the land, or building or other improvements on or under the land and which the lessor manages as a shopping complex, but excluding any improvements on and under the land which the lessor may from time to time exclude from the shopping complex”.

b) It defined “Common Areas” as “those parts of the Complex designated by the lessor for the use by the tenants and other occupiers of the Complex in common with each other”.

c) It made provisions for relevant disclosure statements as required by the Retail Leases Act.

d) In clause 2.5, under the heading “Whole Agreement”, it provided that the “Lease comprises the whole agreement between the lessor and the lessee. The only enforceable obligations in relation to the subject matter are contained in this lease. Any representations, communications or prior agreements in relation to the subject matter are merged in and suspended by, this lease”.

e) It provided for mandatory trading hours (clause 11.15) and required the Applicant as lessee to “cause the petrol tanks supplying petrol to the petrol pumps to at all times have petrol therein so that petrol is available for sale to the public on every day throughout the year” (clause 11.16). [This requirement for petrol to be available for sale “every day throughout the year” seems to me to be in conflict with the mandatory trading hours, but no argument was raised on this issue].

f) Certain obligations were imposed upon Polifroni Pty Limited as lessor; in particular it was required to provide certain services (Clause 15.2); to “keep and maintain in good order and repair and in a clean and tidy conditions all Common Areas” (Clause 15.7); made provision for the Applicant and its employees to “use the Common Areas for the purposes of which they were designed or intended to be used” (Clause 15.8); provided that the Applicant “must not obstruct or permit its employees and others over whom it may have control to obstruct any part of the common areas (including the vestibules, entrances, passage ways, driveways, Loading Docks and stairways) or by leaving in them any article or thing or by any meeting of persons” (Clause 16.3); gave power to Polifroni Pty Limited as lessor to revoke the licence of any invitee of the Applicant as lessee in relation to any part of the Common Areas (Clause 16.4); provided that the Applicant as lessee “must not permit persons under its control … to use the appurtenances contained in or about the common areas for any purpose other than for those to which the same were constructed …” (Clause 16.6(a)); gave power to Polifroni Pty Limited to “make and amend rules and regulations relating to the Common Areas …” (Clause 16.7); gave further power to Polifroni Pty Limited to erect and remove various structures “in any part of the common areas” and to “grant any person exclusive use of any such use of any such structures …” and to “grant any person a licence to use any part of … the Common Areas …” (Clauses 17.4 and 17.5).

8 The Lessor provided a Disclosure Statement in the normal form. There are two relevantly important parts of this Statement: firstly, the lettable area is said to be “246m2”; secondly, it provided (as is standard) a warning to the lessee to “make sure that all negotiated agreements are written into the lease”.

9 The Applicant as lessee also provided a separate Disclosure Statement, which contained the usual requirement that the Applicant has relied on the information in the lease, the information in the Lessor’s Disclosure Statement and “the following verbal commitments or written statements made by the lessor (which was left blank) and that the lessee acknowledges that apart from the statements or representations as set out above, no other promises, representations, warranties or undertakings (other than those contained in the lease) have been made by the lessor to the lessee in respect of the premises or the business to be carried out on the premises”.

10 This Disclosure Statement by the Applicant was an important document. The Applicant asserted, as the primary (and only) basis of its case in this Tribunal, that the area that was in fact let was not the specified area of Shop 1, and having an area of 246m2 , but rather the area from the front of Shop 1 down to and including the Loading Dock, the parameters of which I seek to describe below but which were marked red on the plan attached to the Amended Application for Original Decision filed 8 October 2009.

11 Within this Loading Dock area there was situate a coolroom, which the Applicant purchased from Polifroni Pty Limited pursuant to a Deed of Sale of Plant Equipment Chattels made 28 February 2007. The evidence discloses that the coolroom was in fact a very large and essentially immovable item situate within the Loading Dock near the rollerdoor access door at the rear of the Loading Dock.

12 The Applicant exercised the first option to renew and entered into a registered Lease AE408507N commencing 19 February 2008 and terminating 18 February 2013, which Lease itself contained two further successive option periods each of five years. This registered lease relevantly contained the same terms and conditions of the original one year lease. As far as I can see from the material no further Disclosure Statements were provided by either party to the other.

13 It is without doubt that the Applicant occupied the Loading Dock area exclusively. I am satisfied beyond doubt that it was only the Applicant who had the key to the Loading Dock area, it was only the Applicant who had access to that area, it was only the Applicant who permitted delivery trucks to enter the Loading Dock area and deliver to the Applicant’s business in Shop 1 necessary goods and items for sale. The evidence clearly discloses:

i) Shop 1 was at the front of the retail shopping centre;

ii) its entrance and exit door from the point of view of public access was an external glass door opened only from the inside, next to which, and inside, was a security rollerdoor also opened only from the inside.

iii) the goods delivery door to the shop itself was situate at the rear abutting the Loading Dock area and only opened from the Loading Dock side;

iv) the Loading Dock area itself was a totally enclosed area with itself two rear doors, one for persons seeking to enter and leave (this door was permanently fixed in a closed position) and a large rollerdoor through which trucks could enter and leave with deliveries and which itself was only to be opened from the outside;

v) within the Loading Dock area was situate the coolroom, not far from the external rollerdoor;

vi) within the Loading Dock area was the alarm system exclusively for the use of the lessee of Shop 1 (the Applicant);

vii) the Applicant had sole use and enjoyment of the Loading Dock area, held the only key to access the Loading Dock area, and thought that he was entitled to sole use and enjoyment of the Loading Dock area, to the exclusion of all others such that he thought that it formed part of Shop 1, the subject of the two abovementioned leases.

14 The last-mentioned finding is an important finding, because the Applicant asserted that the Respondent was estopped by convention from asserting that the Loading Dock area did not form part of the leased premises.

15 On 21 August 2009 the Respondent purchased the whole of the retail shopping centre at 169 Annangrove Road, Annagrove from Polifroni Pty Limited. Evidence on behalf of the Respondent was given by Sarah Therese Carbone, sole director and shareholder of the Respondent. Copies of all the leases for the various shops in the centre and their relevant Disclosure Statements, were annexed to the contract for the purchase. In particular, the two Disclosure Statements to which I have made reference above, plus the registered Lease commencing 19 February 2008, were annexed. It is plain, from her evidence, that there were no Disclosure Statements relating to the five year lease commencing 19 February 2008. Her evidence was that, prior to completion of the purchase, she received from Polifroni Pty Limited a plan (forming part of Exhibit E) which, relevantly, showed the Loading Dock area, the relevant doors, the location of the various shops including, in particular Shop 1 with a stated area of 246m2. Importantly, this plan shows clearly the rear door of Shop 1 (in the plan marked “Shop 6”), the identification of the area to the rear as a “Loading Dock” and the rear rollerdoor giving entrance/exit to and from the Loading Dock. It is also tolerably clear from this plan that there was no access to the rear of Shops 7 and 6 (identified as “Shop 2 (and) Shop 2A” on the plan received by Ms Carbone) but rather does show the door (marked “exit”) which the evidence showed was sealed up. Her evidence was that the Loading Dock constituted common area and was “capable of providing deliveries to Shops 6, 5A, 5 and 3” (being otherwise described as Shops 7, 6, 3 and 2). Put more simply, her evidence was that the Loading Dock was capable of providing deliveries to all of the shops in the centre with the exclusion of four shops only.

16 In her affidavit Ms Carbone said that she inspected the property prior to entry into the contract and “noticed that a wall had been erected joining the male toilets at the rear of the premises which prevented access into the Loading Dock area”. In her oral evidence she stated that she carried out an actual inspection of the centre after the Respondent brought the centre; she had no discussions with the vendor Polifroni Pty Limited about the tenants, but only discussed the financial aspects of the shopping centre; that she did not examine details of the leases but knew about their terms and rentals, being only interested in the financial aspects of the purchase.

17 It was only after the purchase that she met the Applicant in the Loading Dock area (during the course of the proceedings this area was generally called the store room but I have avoided reference to that appellation simply because the plans as tendered describe the area as “Loading Dock”). She agreed that the Loading Dock area had been locked off; that she had never seen any other tenants in the area; did not know how the various shops opened; did not know about the alarm system inside the locked area of the Loading Dock area; agreed that the Applicant used the Loading Dock area for his exclusive use; but observed that the Respondent was not receiving any rent for the Loading Dock; that other shops did not have access; that in her view it was a question of “equity”, the Applicant occupying “massive space”; that other stores did not have anywhere to store their goods; and the Loading Dock space was not utilized to its maximum capacity.

18 Shortly after the Respondent purchased the centre, in late September 2009, the Respondent was in the process of negotiating with a proposed tenant of another shop – this proposed tenant wished to sell “fruit and vegetables” and in order to assist in those negotiations the Respondent prepared a proposed “Variation of Lease”, submitting it to the Applicant and seeking to vary the terms of the Applicant’s lease to exclude the “sale of fruit and vegetables” from his permitted use. The Applicant, not unreasonably, declined. In any event, the proposed new tenancy did not proceed.

19 The next significant fact is that on 1 October 2009 the Respondent demanded, in writing and in some detail, that the Applicant cease his “continuing exclusive use of the Loading Dock/common area … no later than Friday 9 October 2009”. The letter asserted that “the Loading Dock and small area and common area located at the rear of your premises have been used by you to the exclusion of all other lessees of the Centre. Your lease does not grant you exclusive use of such area which I have hatched yellow on the attached plan”. The letter asserted the terms of clause 16.3, noting that the Applicant must “not obstruct any part of the common areas including the passage ways and Loading Docks. The steel wall erected adjacent to the toilet facilities is obstructing the use of the common areas and Loading Dock by the other lessees and you are therefore in breach of clause 16.3.” The letter went on to request “removal of all stock, goods, equipment, furniture and rubbish located in the common areas no later than Friday 9 October 2009. (The letter asserted that the Respondent) will be removing the steel wall erected adjacent to the toilet facilities and hatched blue … on the morning of Saturday 10 October 2009. I put you on notice that should you not remove your property from the common areas prior to the wall being dismantled, the lessor will not accept any responsibility for your property which may no longer be secured”.

20 The above are the basic facts.

Course of Proceedings

21 The Applicant commenced proceedings in this Tribunal on 6 October 2009. The proceedings were said to be a “retail tenancy claim” and sought rectification of the lease commencing 19 February 2008 to “include in the area occupied or leased that area shown in red in the plan attached hereto”. The application also sought an order that the Applicant “be provided with a Disclosure Statement”. (The purpose of this last-mentioned prayer is not clear to me).

22 The plan attached to this Application showed, in red, (more correctly purple), the land in question (the Loading Dock area) and also included in the purple colouring an area described as “Covered Loading Bay” which was situate to the rear of the Loading Dock and to the rear of the rollerdoor.

23 The Applicant also filed an Application for Urgent Interim Order on 6 October 2009 seeking an order that “the Respondent be restrained from removing the steel wall erected adjacent to toilet facilities referred to in (its) letter of 1 October 2009; (and the) Respondent be restrained from occupying or allowing other tenants from occupying the area hatched red in (the) plan”. The plan, this time, is coloured pink and included the “Covered Loading Bay”. The Applicant asserted that it was the lessee, that it occupied the coloured area, that it had occupied that area since February 2007 and that it “has used the area … to the exclusion of all other tenants for storage of stock and its plant and equipment”. The Applicant asserted that “the shop leased by the Applicant had since at least (February 2007) had erected the steel wall to allow the lessee exclusive possession”.

24 There is no need to trawl through the various interlocutory hearings and interim orders and directions. Suffice it to say that by Amended Application for Original Decision filed 8 October 2009 the Applicant sought (relevantly) that “the lease entered into between the Applicant and the Respondent dated 15/8/08 and commencing 19/2/08 be rectified to include in the area leased that area shown in red in the plan annexed” to the Amended Application; and that the Respondent provide a Disclosure Statement. The Applicant pleaded, inter alia, the Deed of Purchase of Plant and Equipment “including a coolroom”, that it “continued after the entry into the lease to conduct the same business as that to which (Polifroni Pty Limited) had previously conducted; that when the Applicant commenced “to carry on his business there was erected a steel wall … to allow exclusive use of the area to him”; that he was advised by Polifroni Pty Limited that the relevant area was “part of the leased area known as Shop 1”, and further pleaded that the Disclosure Statement issued by Polifoni Pty Limited “when the first lease was entered into in February 2007 did not have a plan annexed to it”, and when the current lease was entered into (in February 2008) no Disclosure Statement was issued by Polifroni Pty Limited. It was said that without “the use of the area … I would not be able to store my plant and equipment and stock”. Further, “my security alarm and controls are located in the area …”. It is relevant to observe that in the plan annexed to this amended pleading the coloured area did not include the “Covered Loading Bay” but only included the “Locking Dock” area.

25 At this point, it is clear that all the way through the various Direction Hearings commencing 8 October 2009 through to 3 June 2010, the case for the Applicant was rectification of the lease.

26 When the matter came before me for hearing 7 July 2010 counsel for the Applicant abandoned the rectification argument, stating that it was not a rectification case, neither was it a declaration case; but rather it was asserted to be an “estoppel by convention” case and the Tribunal had power to make the relevant orders under Retail Leases Act Section 72(1)(f). The point was also made that, although the original Application and the Amended Application joined Polifroni Pty Limited as First Respondent and Carossel Pty Limited as “Second Respondent” no formal orders or relief were sought against Polifroni Pty Limited. In this regard it was probably forgotten by the Applicant, and those advising him, that the Tribunal was informed at the Directions Hearing 19 November 2009 that the Applicant was not proceeding against Polifroni Pty Limited and the Tribunal formally ordered “Polifroni Pty Limited is dismissed from the proceedings”. Thus, the only Respondent was the purchaser of the centre, Carossel Pty Ltd.

27 As the hearing progressed, not only did it become plain that this was an estoppel by convention case but also, if the Respondent was correct, the coolroom purchased by the Applicant from Polifroni Pty Limited, and quite immoveable (apparently), was situate on the common area, part of the Loading Dock area.

28 In order to regularise the proceedings so that all parties knew with precision what orders were being sought, and not simply being told from the Bar table in circumstances where the Orders sought were totally different from the relief as pleaded, I directed that the Applicant prepare a Further Amended Application for Original Decision and hand that up after the luncheon adjournment. The Applicant, through its legal advisers, did so (in a form without the pleaded grounds/particulars, such being unnecessary in the circumstances) and sought the following Orders:

“1. A declaration pursuant to s.70(a)(ix) of the Retail Leases Act 1994 that the Respondent is estopped from denying that the definition of Premises in clause 2.1 of the Lease dated 19 February 2008 includes the area marked in red attached to the Amended Application filed on 8 October 2009.

2. Alternatively, a declaration that the Second Respondent is estopped from denying that the definition of Premises in clause 2.1 of the Lease dated 19 February 2008 includes the coolroom marked on Exhibit E.

3. An order that a memorandum be executed varying the Lease so that the definition of Premises in clause 2.1 of the Lease dated 19 February 2008 includes the area marked in red attached to the Amended Application filed on 8 October 2009.

4. Alternatively, an order that a memorandum be executed varying the Lease so that the definition of Premises in clause 2.1 of the Lease dated 19 February 2008 includes the coolroom marked on Exhibit E.

5. Alternatively, an order that the Lease dated 19 February 2008 be rectified so that the definition of Premises in clause 2.1 of the Lease dated 19 February 2008 includes the area marked in red attached to the Amended Application filed on 8 October 2009.

6. Alternatively, an order that the Lease dated 19 February 2008 be rectified so that the definition of Premises in clause 2.1 of the Lease dated 19 February 2008 includes the coolroom marked on Exhibit E.”

29 It can be seen from the above that firstly, Orders are sought in the alternative; secondly, relief 1 and 2 seek (effectively) findings of estoppel by convention; thirdly, and perhaps in order to avoid the strictures of s.72(1)(e) (which gives power to the Tribunal to order parties to proceedings to rectify a lease, but only with the consent of the parties) the execution of some form of memorandum; fourthly, an order for rectification (notwithstanding s.72(1)(e)). The Applicant through his counsel asserted that the Tribunal had power to make these various orders under s.72(1)(f)(iii), which entitles the Tribunal to make an order “declaring the rights and liabilities of the parties under law, whether any consequential relief is or could be claim or not”, such that, I opine, that even if the Tribunal does not have power to make an order for rectification, absent consent, it would have the power to declare that there ought to be rectification, such power being caught by the words “whether any consequential relief is or could be claimed or not”.

Estoppel by Convention

30 There is, I think, no requirement for me to embark upon a lengthy dissertation of what is, or is not, estoppel by convention. There are quite a number of learned articles by senior judicial officers on this common law relief. Although there was no unconscionable conduct asserted in this matter (and there could not be as the case was pleaded), and there is much judicial debate about whether there ought to be, or ought not to be, some form of unconscionability attached to this type of estoppel, it is clear to me that, whatever may be the state of judicial thinking, a breach of a legal/factual situation created by estoppel by convention would constitute seriously unfair conduct by the party in breach. The reason for that, and although it is not important in this case, is derived from the meaning given to “estoppel by convention” in the authorities.

31 Furthermore, there are many types of estoppel and there is judicial argument as to whether there ought to be, or ought not to be, some sort of overarching estoppel principle. For what it is worth, I do not think that it advances the legal entitlements of parties to try and call in aid some general overarching estoppel principle.

32 A convenient starting point is Republic of India & Ors v. Indian Steamship Co Limited (reported House of Lords, Session 1997-98 decided 16 October 1997) where there Lordships said:

“A general review of the requirement of these estoppels is not necessary. It is said that an estoppel by convention may arise where parties to an transaction act on an assumed state of fact or law, the assumption being either shared by the both or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption … It is not enough that each of the two parties acts on an assumption not communicated to the other. But it was rightly accepted by counsel for both parties that a concluded agreement is not a requirement for an estoppel by convention”.

33 Estoppel by convention is a common law remedy. It is, of course, not the source of a legal obligation but rather the source of that obligation is that which the (in this case) the Applicant has assumed to exist and the Respondent is estopped from denying. In other words, it is a shield from the legal position that would, but for the estoppel, otherwise exist. In the case before the Tribunal it is plain that the registered lease does not include the Loading Dock area, such that any person searching the title (and it is important to note again that the title is Torrens Title, Real Property Act) would not see the “right” or “entitlement” claimed by the Applicant over the Loading Dock area. Rather, what they would see would be that area being not part of the leased area to the Applicant and therefore part of the common area of the whole of the land comprising the centre.

34 It a speech to the Australian Law Journal conference: Celebrating 80 Years, 16 March 2007, His Honour Brereton J said this:

“The similarities between the two doctrines should not be allowed to mask their differences, which reflect the disparate origins of promissory estoppel and conventional estoppel. Conventional estoppel, a creature of the common law, is focussed on the consensual basis of the parties’ relationship: it operates when both parties have adopted the same assumption as the basis of their relationship, often without appreciating that any departure from the strict legal position is involved, so as to hold both parties to their common understanding. Promissory estoppel , a creature of equity, is, typically, focussed on the conscience of the defendant: it operates when the defendant has induced or acquiesced in the adoption by the plaintiff of an assumption that the defendant will not assert its strict legal rights, so to prevent unconscientious insistence by the defendant on them”.

35 Pausing at this point it is important to note that the Applicant did not rely on Retail Leases Act Section 10, probably as a result of the fact that the Respondent was a purchaser and thus would not be bound by any representation asserted to have been made by Polifroni Pty Limited (see AWPF Management Pty Limited v. Red Roll Pty Limited (RLD) [2009] NSWADTAP 3). So, whatever may have been the position relating to Polifroni Pty Limited in relation to the asserted representations said to have been made in relation to the area to be leased by the Applicant, the Respondent would not be bound by those representations, even if that was to the detriment of the Applicant. Thus, the Applicant is obliged to seek some other remedy, particularly where (as in this case) Polifroni Pty Ltd subsequently went into liquidation.

36 The Applicant relied on two important decisions. Firstly, a decision by Brereton J in Waterman v. Gerling Australia Insurance Company Pty Limited [2005] NSWSC 1066. There is no need to refer to the details of this case. Counsel relied on a number of nominated paragraphs of His Honour’s decision, but making the point that the Applicant was not relying on pre-contractual agreements. At [78] His Honour stated that an “estoppel by convention depends upon an assumption adopted by the parties as the conventional basis of their relationship” and called in aid the decision of the High Court in Con-Stan Industries of Australia Pty Limited v. Norwich Winterthur Insurance (Australia) Ltd (1986) 160CLR226 at 244 where their Honours Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ said:

“… Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted upon a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying”.

37 At [83] His Honour referred to the “substantial overlap between many of the species of estoppel” and stated that in “conventional estoppel it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship of that mutual assumption. It is inherent in the idea of a mutually agreed or assumed convention the each party knew or intended that the other act on that basis. And it seems that a conventional estoppel will not arise unless departure from the assumption will occasion detriment to the plaintiff”.

38 At [84] His Honour thought that there was “no reason why a mutual assumption as to the state of affairs made by two contracting parties arising out from their conduct after the contract is made should in this respect be any different a position from a unilateral assumption made by one party but known to or encouraged or acquiesced in by the other”.

39 And, importantly, at [87] he said that there is “no conventional estoppel unless the parties have in fact adopted the alleged assumption as the conventional basis of their relationship …”. At [91] he said: “I do not overlook the requirement that a representation or assumption founding an estoppel be “clear and unequivocal”: though this has usually been recognised in the field of equitable promissory or proprietary estoppel … the requirement that a representation - or assumption – must be clear if it is to bound an estoppel in pais or a promissory estoppel, does not mean that it must be express, and a sufficiently clear representation – or assumption – may properly be implied from words, conduct or even silence, and it is not necessary that a representation – or assumption – be clear in its entirety, it sufficing that so much of it as is necessary to found the propounded estoppel satisfies the requirements … (and later) … the requirement that a party should not be estopped on an ambiguity does not mean that the precise terms of the assumption or representation which founds the claimed estoppel must be entirely or unequivocally clear: an estoppel can arise even though the precise terms of the assumption or representation may be difficult to ascertain, as long as it is clear that there was an assumption, and the scope of the assumption, though its full extent may be uncertain, is at least sufficient that it can be said that the defendant’s conduct would involve a departure from it”.

40 At [92] His Honour referred to the speech of Lord Denning MR in Amalgamated Investment and Property Co Ltd (in liq) v. Texas Commerce International Bank Ltd [1982] QB 84 at 121:

“… There is no need to inquire whether their particular interpretation is correct or not – or whether they were mistaken or not – or whether they had in mind the original terms or not. Suffice it that they have, by their course of dealing, put their own interpretation on their contact, and cannot be allowed to go back on it”.

41 Finally, at [96], His Honour referred to the importance of establishing detriment from a departure from the assumption. And, at [97] noted that in Waterman “the detriment here is plain”. Clearly, in my opinion, the case now before the Tribunal demonstrates that, absent the asserted estoppel, the detriment to the Applicant would be the loss of the Loading Dock area, his ability to have unencumbered sole access to that area, his ability to store goods in that area, his ability to have sole access to the alarm to the demised premises, and his ability to use the coolroom which he purchased from Polifroni Pty Limited and which he owns, and which is (from a practical point of view) immoveable.

42 The Applicant also relied upon Blockbuster Australia Pty Limited v. Karioi Pty Limited [2009] NSWSC 1089. This is a lengthy decision of His Honour Price J. Again, there is no need to review the facts before His Honour, but my specific attention was directed to a number of nominated paragraphs in the decision. His Honour commenced his consideration of estoppel by convention at [83]. At [85] His Honour identified six elements “which the plaintiff must prove to establish a convential estoppel”. These elements he set out as:

“(1) The plaintiff [in the case now before the Tribunal, the Applicant) has adopted an assumption as to the terms of his or her legal relationship with the defendant.

(2) The defendant has adopted the same assumption.

(3) Both parties have conducted their relationship on the basis of that mutual assumption.

(4) Each party knew or intended that the other act on that basis.

(5) Departure from the assumption will cause detriment to the plaintiff.

(6) In all the circumstances it would be unconscionable to allow the other party to resile or depart from the assumption …”.

The requirement (4) above is satisfied (at [87]) “that in asking whether there is a mutual assumption, the enquiry is not what the parties thought, but into their objective conduct”.

43 But it is important to remember that there cannot be a conventional estoppel “unless it can be shown that the alleged assumption has in fact been adopted by the parties as the conventional basis of their relationship …” (see Con-Stan Industries at 245).

44 So, it seems to me that the Applicant in this case needs to prove firstly, that he has adopted the assumption that the Loading Dock area formed part of the leased area; secondly, that the Respondent adopted the same assumption; thirdly, that both he and the Respondent have conducted their relationship on that mutual assumption; and fourthly, that a departure from the assumption will occasion detriment to the Applicant.

45 It seems to me there are a number of significant hurdles that confront the Applicant. Before specifying these hurdles it is important for me to observe that conventional estoppel, once proven, has the effect of overcoming these hurdles. That having been said, however, identifying the hurdles puts in greater or more specific focus the difficulties of proof faced by the Applicant. These hurdles, so it seems to me, are as follows:

1. The land upon which the demised premises are situate is Real Property Act, Torrens Title.

2. It follows that a person searching the title would not find any right or entitlement in the Applicant to the Loading Dock area. Rather, what they would find would be common property to which all the various Shops would have access.

3. The lease over the demised premises is a registered lease. Again, anybody searching the lease would not be seized of knowledge of the claim asserted by the Applicant. There is nothing in the lease (which, after all, is the contract between the parties) which would alert a diligent searcher (as in the case of the Respondent as purchaser), or to which the Applicant could refer to as supporting his claim. In particular, the lease itself makes it plain that the demised premises form part of a retail shopping centre, that there are common areas and common access to those areas, and imposes various obligations in relation to those common areas and access.

4. The respective Disclosure Statements also make no reference to the Loading Dock area. It is significant that the Lessor’s Disclosure Statement (provided, to the Respondent as purchaser, by Polifroni Pty Limited) quite specifically specifies the demised premises as having an area of 246m2 . By no stretch of the imagination could it be contended that the Loading Dock area forms part of that 246m2 . It clearly does not.

5. Whatever may have been the situation between the Applicant and Polifroni Pty Limited, the case agitated by the Applicant is not against Polifroni Pty Limited but rather against the Respondent. Thus, the Applicant must prove conventional estoppel against the Respondent. That, in itself, poses considerable evidentiary difficulties because the Respondent purchased the shopping centre on 21 August 2009 and wrote to the Applicant on 1 October 2009 asserting its entitlement (see above at [19]). This is a period of six weeks. So, as against the Respondent, the Applicant would need to demonstrate a conventional estoppel arising within that period of six weeks.

46 There are a number of observations that I would seek to make in relation to the above. Firstly, and absent any authority, I would need to be persuaded that, even if there was a conventional estoppel proved as against Polifroni Pty Limited, that somehow the Respondent purchaser would be bound by it. That, it seems to me, would fly in the face of the Torrens system of title. In order to be bound it would be necessary, in my opinion, for it to be demonstrated that the Respondent adopted the estoppel. There was, in my opinion, absolutely no evidence that the Respondent did any such thing. Rather, in my view, the evidence demonstrates the opposite.

47 Secondly, there is some authority for that expression of opinion. In Tanzone v. Westpac [1999] NSWSC 478 His Honour Windeyer J was faced with a factual situation in which a Mr & Mrs Raymond purchased certain property on 31 August 1984 and on-sold that property to Tanzone Pty Limited on 16 December 1993. An argument arose as to whether there was a mistake. It was said that Tanzone had certain beliefs and, at [25] His Honour observed that the “defence based on conventional estoppel is founded on the claim that prior to the purchase by Tanzone, rent reviews were conducted on the basis that the ratchet approach was correct, that Tanzone knew of this, that both Tanzone and Westpac assumed that it would continue and that up to 14 March 1995, Tanzone adopted that course of dealing”.

48 At [35] His Honour observed: “The defence by estoppel by convention might possibly have been available if the Raymonds had in 1995 attempted to enforce the lease on its strict terms. However, the fact (that) Tanzone was aware of the prior course of dealing does not mean it assumed it would continue; in fact the evidence makes it quite clear its assumption was that it would not. The defence based on conventinal estoppel fails”. And, at [36] His Honour makes this observation:

“The defence based on estoppel by representation relied upon representation by silence. There is no evidence of any relationship or contract between Tanzone or Westpac prior to the action, so it is impossible to see how Westpac could have relied upon Tanzone accepting its assumed position. Silence after purchase was immaterial as there was no review until 1995. This defence fails.”

49 Similarly, to some extent, in the case now before the Tribunal. There is not the slightest jot of evidence that would indicate that the Respondent adopted any asserted estoppel which may have been created prior to its purchase; and there is not the slightest jot of evidence that would demonstrate that the Respondent adopted any sort of estoppel after its purchase. Rather, to the contrary. In my opinion it moved with considerable speed in order to assert its entitlements to the Loading Dock area as common property.

50 Counsel for the Applicant submitted that it was the sequence of events that was important, not the length of time. It was submitted that the Respondent accepted and adopted the position by submitting a variation of lease regarding the proposed new fruit and vegetable tenancy, and thereby confirmed the mutual assumption. I am unable to see that. The submission of a variation of lease has got nothing to do with any mutual assumption or estoppel; rather all it was merely an attempt by the Respondent to secure a new tenant for a vacant shop within the Centre. The Respondent was simply attempting, as its sole director said was her intention, to maximise the returns from the Centre. To elevate that into some form of confirmation of mutual assumption, or conventional estoppel, in my view is unsupportable. I agree entirely with the submission made by counsel for the Respondent that it cannot be said that the Respondent adopted whatever the position may have been between the Applicant and Polifroni Pty Limited. There was only a short period of time between 21 August and 1 October 2009; and the Applicant must establish the asserted estoppel by convention against the Respondent as the purchaser. There is no need for me to make any finding in relation to the relationship between the Applicant and Polifroni Pty Limited; but even if it was established that there was a conventional estoppel between those parties, the Applicant would need to re-establish that estoppel as against the Respondent as the purchaser. Whatever may have been the views or assumptions of the Applicant (see [13 (vii) and 14, above) the Applicant has not proved a mutual assumption by the Respondent.

51 That leaves us with the coolroom. It is situated, as I find, on common property. It is a distinct item of property. It was sold by Polifroni Pty Limited to the Applicant as a distinct separate purchase. There was not the slightest evidence that the Respondent was aware that the coolroom item was owned by the Applicant; even if there was, and even if the Respondent knew, it does not follow, as a matter of law, that somehow the coolroom should be included as part of the lease or that somehow the Respondent should be bound not to disturb the location of the coolroom by some form of estoppel by convention.

52 I am of the view that the arguments advanced by the Applicant, on the facts before the Tribunal, do not establish any of the prayers as sought in the Further Amended Application for Original Decision filed 7 July 2010.

Jurisdiction

53 The Respondent agitated a number of arguments relating to the jurisdiction of this Tribunal. Firstly, it asserted that the Tribunal needed to find that the business of the Applicant was a business caught by Schedule 1. Ultimately, I think, that submission was not pressed because of the definition of “retail shop” in Section 3, Retail Leases Act, in particular sub-paragraph (b), these premises forming part of a retail shopping centre. There was no argument, on the documentation or otherwise, that the premises did so form part of a retail shopping centre. I record that during the hearing I refused permission to counsel for the Respondent to cross-examine the Applicant on his business and his financial affairs – firstly, because no prior notice had been given to the Applicant in or to the effect that a challenge would be made to the jurisdiction of this Tribunal on the basis that the Applicant’s business did not fall within Schedule 1; and secondly, simply because the Applicant was totally unprepared to meet this type of cross-examination, with no available documents, no prior subpoenas having been issued, such that the jurisdictional question on this issue was truly by ambush. Although it is true that an Applicant must demonstrate jurisdiction, and although it is further true that, even by consent, the Tribunal cannot exercise powers that are outside its jurisdiction, a challenge to jurisdiction is more properly telegraphed to the other party well prior to the hearing date; thus the other party can prepare, put on such additional evidence as may be necessary in order to meet the jurisdictional challenge, and be available for cross-examination on that specific issue. None of these were present in the case. I make reference to my decision is Aspen Funds Management Ltd v.Hurst & Lim Pty Ltd [2009] NSWADT 286 where I stated at [32] that this “is not a Tribunal that should permit trial by ambush and the orderly conduct of proceedings in this Division require a challenging Respondent to make plain its challenge up-front …” I adhere to those words.

54 Furthermore, the Respondent’s Written Submissions deal extensively with the issue of jurisdiction but (and curiously) do not deal with the plain unadorned fact that these demised premises formed part of a retail shopping centre. That fact should have been clearly aware to the Respondent, it having purchased a retail shopping centre! The Lease and the Disclosure Statement speak volumes for the fact that the demised premises form part of a retail shopping centre. How it could be argued otherwise is not immediately apparent to me. In any event, that argument simply ignored the definition of “retail shop” in Section 3 of the Retail Leases Act which relevantly provides, in paragraph (b), that a retail shop means premises that “are used, or proposed to be used, for the carrying on of any business (whether or not a business prescribed for the purposes of paragraph (a)) in a retail shopping centre” [my italics]. It is plain to me that once demised premises fall within a retail shopping centre then whatever the use to which the premises are put, or proposed to be used, that question/issue is irrelevant because the premises are simply caught by the definition, and therefore fall within the jurisdiction of this Tribunal.

55 The Respondent also argued that the proceedings were really, in substance, a claim for rectification, and therefore the Tribunal did not have jurisdiction to deal with that issue. It is true that Section 72(1)(e) gives the Tribunal power to make an order “requiring the parties to the proceedings to rectify a lease” but makes it plain that such an order can only be made “by consent of the parties” [my italics]. As I have opined above, it is perhaps because of the sub-section that the Applicant has mounted its argument on the principle of conventional estoppel and relied upon Section 72(1)(f)(iii) which empowers the Tribunal to make an order “declaring the rights and liabilities of the parties under law, whether any consequential relief is or could be claimed or not”. It seems to me, absent authority, that one should not seek to read down or qualify those words – it seems to me they were deliberately chosen in order to give the Tribunal a wide and varied power to make binding declarations of rights and liabilities of the parties to a lease. If I am right in that appreciation then the Tribunal simply has the power to declare rights and liabilities, even if no consequential relief is or could be claimed or otherwise.

56 There is some authority for this view. In Watermark Restaurant Pty Limited v. Hunters Beach Investments Pty Limited [2004] NSWADT 97 the Tribunal determined at [10] that it had the right to interpret sub-clauses of a lease which affected the rights and liabilities of the parties to the lease. This was so even though (as I understand it) neither party sought consequential orders; but the fact of the declarations would have in themselves affected the continuing rights and liabilities of the parties. See also Prasad v. Fairfield City Council [2000] NSWADT 164.

57 In Trustees of the Pious Society of St Charles v. Vodap Pty Limited [2004] NSWADT 71, the Tribunal stated at [20] that the provisions of Section 75 “underline the general approach that retail tenancy disputes should be dealt with by the Tribunal rather than by the Courts. The Tribunal should deal with all disputes within its powers, however in order to determine a retail tenancy dispute the Tribunal must find the power to do so within the provisions of the Act. It is incumbent upon the Tribunal to see that it acts within the powers granted to it. The Tribunal cannot be given jurisdiction by consent of the parties”. I respectfully agree with those observations. The Tribunal in Vodap formed the view, at [74ff], that it did have the power to make “some of the orders sought be the Applicant by way of an award of damages, or making an appropriate declaration, or dealing with it by way of other orders”.

58 It is odd that the Parliament saw fit to restrict the power of the Tribunal to order rectification of a retail lease. It is odd because it would seem that in all other respects the Tribunal is in fact a “one stop shop” for the resolution of disputes between lessors and lessees in retail lease matters – see, for example, O’Neill v. Henry (RLD) [2010] NSWADTAP 40 at [42-45]; the definition of “retail tenancy dispute” in Section 63(1) of the Act; and Webb v. Clifton [2008] NSWADT 132 at [11-20], especially [15] and [17].

59 Thus, even if the Tribunal was of a mind to make a declaration of the type originally sought by the Applicant, in my opinion it could make the declaration which would be binding upon the parties (subject to usual rights of appeal) and if the parties did not comply with the declaration, being the rights and liabilities declared by the Tribunal, then the parties, in the case of rectification, would either need to come back to the Tribunal seeking other orders, damages and so on; alternatively, take enforcement proceedings in the Supreme Court. It seems to me that the Legislature may contemplate re-visiting the restrictive nature of Section 72(1)(e).

Further Observations

60 On the issue of costs the Respondent has made detailed Written Submissions. With respect, these Submissions seem to me to be misconceived simply because they have been based upon the “old” Administrative Decisions Tribunal Act 1997, s.88, rather than the amended s.88 which came into operation on 1 January 2009. There are now numerous Decisions of this Tribunal in relation to that “new” section and (so it seems to me) it is to that “new” section to which the parties should apply their respective minds if an application for costs is made.

61 During the course of Directions Hearings a number of interlocutory orders were made with a view to retaining the status quo. These orders were made by consent on 8 October 2009 and were consistent with the principles set out in Spuds Surf Chatswood Pty Limited v. P T Limited [2007] NSWADT 130, at [59-69], especially [60]; and also consistent with two recent decisions of the Supreme Court, namely Water, Wine and Juice v. Konstantopoulos [2009] NSWSC 1475 where McDougall J held that in circumstances where there was a serious question to be tried as to whether there was a breach of the lease and there were no discretionary considerations relied upon that relief should be withheld, the injunctions should be granted to retain the status quo; and Workcare Management Pty Limited v. Gajic Holdings Pty Limited [2010] NSWSC 479, where White J granted an injunction on the balance of convenience (where “questions of the balance of convenience are fairly evenly balanced” [21]) where it was seriously arguable that the lessor (at [24-26]) was in breach of an express term of the lease by not providing essential services, thus “not doing what is necessary to be done on its part to enable (the lessee) to proceed with its fitout”[19]. Having regard to the findings that I have made above it is plain to me that, not only should the application be dismissed, but also I should vacate the interim consent orders made 8 October 2009.

Orders

1. The Application is dismissed.

2. Vacate the interim consent orders made 8 October 2009. In this regard liberty is granted to either party to apply, within 14 days.

3. No order as to costs; save that should either party file and serve an Application for costs coupled by appropriate submissions, within 14 days, then the other party is to file and serve its reply within a further 14 days; and the Tribunal will make a decision on the papers as permitted by the Administrative Decisions Tribunal Act 1997, s.76, unless persuaded that there should be oral submissions.

17/08/2010 - Typographical error Applicant replaced with Respondent - Paragraph(s) 60