Gan v Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd - [2017] NSWSC 1322

Supreme Court

New South Wales

Medium Neutral Citation: Gan v Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd [2017] NSWSC 1322
Hearing dates: 9 June 2017
Date of orders: 29 September 2017
Decision date: 29 September 2017
Jurisdiction: Common Law
Before: Walton J
Decision:
(1) Leave to appeal is refused.
(2) Within 28 days of the publication of this judgment, the defendant shall file and serve any application for costs and a short submission in support of the same. The plaintiff shall reply by written submissions filed and served no later than 28 days thereafter. In the absence of any request for an oral hearing on costs, the Court shall decide the question without further sittings upon the written submissions filed by the parties.
Catchwords: APPEAL – civil – appeal from the NSW Civil and Administrative Tribunal Appeal Panel – whether questions of law – principles governing grant of leave to appeal – whether the Appeal Panel erred in law by finding that the lease had been lawfully terminated by the defendant – rental determination with respect to “current market rent” – whether “rent free period” for the new lease – under option – whether there was an error of law by not entertaining or refusing leave to bring claims for the conversion and unconscionable conduct – plaintiff failed to establish a proper basis for the grant of leave to appeal – leave to appeal was refused
Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW)
Civil Procedure Act 2005 (NSW)
Conveyancing Act 1919 (NSW)
Retail Leases Act 1994 (NSW)
Cases Cited: Allen v TriCare (Hastings) Pty Ltd [2015] NSWSC 416
Be Financial Pty Ltd v Das [2012] NSWCA 164
Bronze Wing International Pty Ltd v Safe Work NSW [2017] NSWCA 41
Davis v NSW Land and Housing Corporation [2016] NSWCA 325
Dee-Tech Pty Ltd v Neddam Holdings Pty Ltd [2010] NSWCA 374
Gan v Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd [2016] NSWCATAP 210
Gan v Shop, 228-230 Hanvaylee Parade Kensington Pty Ltd [2016] NSWCATCD (unreported, decision dated 20 April 2016)
Hughes Brothers Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91
Mamo v Surace (2014) 86 NSWLR 275; [2014] NSWCA 58
NSL Pty Ltd v 2 Roslyn Street Pty Ltd [2013] NSWSC 930
Re McCafferty [1994] 2 Qd R 538
Renard Constructions (CME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234
The Age Company Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA
The Owners - Strata Plan No 73943 v Gazebo Penthouse Pty Ltd [2014] NSWSC 1536
Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell [2011] NSWCA 389
Waterways Authority of New South Wales v Coal Allied (Operations) Pty Ltd [2007] NSWCA 276
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48
Texts Cited: Duncan, W D, Commercial Leases in Australia, (7th ed, 2014, Thomas Reuters)
Category: Principal judgment
Parties: Sing Kian Gan (Plaintiff)
Shop 3, 228-230 Hanvaylee Parade Kensington Pty Limited (Defendant)
Representation:
Counsel:
G Lucarelli (Defendant)
Solicitors:
Herro Solicitors (Defendant)

File Number(s): 2016/00302402
Decision under appeal

Court or tribunal:

Civil and Administrative Tribunal New South Wales

Jurisdiction:

Appeal Panel

Citation:

[2016] NSWCATAP 210

Date of Decision:

13 September 2016

Before:

P Durack SC, Senior MemberJ McAteer, Senior Member

File Number(s):

AP 16/22149

Judgment

HIS HONOUR: The plaintiff, Sing Kian Gan, and the defendant, Shop 3, 228-230 Hanvaylee Parade Kensington Pty Limited, were tenant and landlord, respectively, of premises operated as a restaurant at Shop 3, 228-230 Hanvaylee Parade, Kensington (“the premises”).
The plaintiff became the tenant when, on 15 March 2012, a registered lease under the Retail Leases Act 1994 (NSW) (“the RLA”) (“the lease”) for the premises was assigned from the former tenant, Kaki Kima Restaurant Pty Limited, to the plaintiff. The plaintiff operated a Malaysian restaurant called the Spice Bowl (the permitted use of the premises under cl 4.1 and Item 8 was “Malaysian restaurant eat in or take away” and, therefore, the restaurant is a retail shop for the purposes of the RLA: see the definition of “retail shop” in s 3(1) (see also Sch 1 and Sch 3 Pt 6 cl 17 of the RLA).
The lease was for a period of five years commencing on 25 April 2009 and terminating on 24 April 2014. There was an option for renewal for an additional five year term.
The option to renew the lease was exercised by the plaintiff, by a letter dated 24 February 2014. The defendant confirmed the plaintiff’s exercise of that option. However, in the circumstances which then unfolded, on 24 July 2014, the defendant terminated the plaintiff’s lease of the premises by re-entry.
The termination of the lease was the genesis of proceedings brought by the plaintiff and the defendant under the RLA before the Consumer and Commercial Division of NSW Civil and Administrative Tribunal (“the Tribunal”): see, as to the jurisdiction of the Tribunal sitting in that Division, s 16(1)(b), Sch 1 Pt 1cl 13(2)(a) and Sch 4 Pt 3 of the Civil and Administrative Tribunal Act 2013 (NSW) (“the CAT Act”). Both parties brought, what was described in their originating processes as a “retail leases application” pursuant to s 71(1) of the RLA on 20 July and 11 September 2015, respectively.
The relief claimed in the respective retail tenancy claims fell within the meaning of “retail tenancy claim” as defined in s 70(a)(i) of the RLA, namely, a claim for money (whether or not stated to be by way of debt, damages, restitution or refund). The nature and bases for the claims will be discussed further below. Neither party sought orders for an unconscionable conduct claim pursuant to s 71A of the RLA.
The plaintiff stated under the heading: “What are your reasons for requesting the above order/s?”:

BREACH OF CONTRACT – MEDIATION FAILED.
ATTACH [sic] A COPY OF SUMMARY OF EVENTS WITH SUPPORTING DOCUMENTS.

The attached document was entitled: “Spice Bowl: Summary of Events – Breach of Contract: Unlawful Re Entry and Eviction – Shop 3, 228 Anzac Parade Kensington” (hereafter “the plaintiff’s summary of events”).

The plaintiff stated in his application that he had attached a document showing a “computation of estimate loss and damage” (this does not seem to appear in the Court Book). He also filed in the Tribunal proceedings a document in support of his application in the proceedings entitled, “Points of Claim” (hereinafter referred to as “the Points of Claim document”). In that document the plaintiff claimed $400,000 for “loss and damage” for breach and repudiation of contract and to put the plaintiff back in his “original position” before that breach and repudiation. The Points of Claim document had attached to it another document entitled, “Background Facts” (which shall hereafter be referred to as “the Background Facts document”).
The defendant sought damages for the plaintiff’s breach of the lease for, inter alia, a failure to pay rent, outgoing, rectification and the costs associated with the termination of the lease.
The Tribunal constituted by Principal Member, Mr D Patten, delivered its decision with respect to the applications on 20 April 2016: Gan v Shop, 228-230 Hanvaylee Parade Kensington Pty Ltd [2016] NSWCATCD (unreported, decision dated 20 April 2016) (“Gan No 1”). The application by the plaintiff was dismissed. The application by the defendant was granted, in part, and an order for $19,696.47 was made against the plaintiff.
The plaintiff filed a notice of appeal against the decision of the Tribunal constituted by the Principal Member on 26 April 2016. That was an internal appeal brought under Pt 6 Div 2 of the CAT Act (the matter was within the internal appeal jurisdiction of the Tribunal pursuant to s 32(1)(a) of the CAT Act).
Section 80 of the CAT Act permitted an appeal from the decision of the Tribunal at first instance “as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds”: s 80(2)(b).
As to leave to appeal, the provisions of Sch 4, Pt 6, cl 12(1) of the CAT Act applied to the appeal before the Appeal Panel. Clause 12(1) provides as follows in:

12   Limitations on internal appeals against Division decisions
(1) An Appeal Panel may grant leave under section 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because:
(a)  the decision of the Tribunal under appeal was not fair and equitable, or
(b)  the decision of the Tribunal under appeal was against the weight of evidence, or
(c)  significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).

Note: Under section 80 of this Act, a party to proceedings in which a Division decision that is an internally appealable decision is made may appeal against the decision on a question of law as of right. The leave of the Appeal Panel is required for an internal appeal on any other grounds.

The plaintiff challenged the “whole order” of the Tribunal and sought relief in that appeal payment of “depreciated value of Construction and Fit Out of ‘Landlord’s’ bareshell premises”, overpaid rent, three months bank guarantee, rent free period from termination, estimated loss of trading stock and estimated loss of net profit. He did not make application for leave to appeal.
By a decision made by the Appeal Panel on 13 September 2016, constituted two senior members of the Tribunal, Mr P Durack SC and Mr J McAteer (“the Appeal Panel”), orders were made dismissing the appeal: Gan v Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd [2016] NSWCATAP 210 (“Gan No 2”). It may be noted, however, that, despite the ultimate form of the orders made, the Appeal Panel made a variety of determinations as to the respective grounds of appeal (most of which are related to the grounds of appeal brought in this matter)
As to the “wrongful termination of lease” grounds, the Appeal Panel found that questions of law had been raised. The first concerned whether the defendant was required to give notice before re-entry. The second was whether the Tribunal was in error in failing to deal with the plaintiff’s contention that notice was inadequate and, therefore, the termination was invalid. Upon the construction of the lease the Appeal Panel, found no error of law as to the first question. It found no error on the second because upon the correct answer to the first question, the second was otiose. Whilst no orders were proposed with respect to these grounds, as such, it was clear the Appeal Panel, absent findings as to any other grounds, dismissed the appeal upon the basis of those grounds.
As for the ground concerning a “Rent Free Period”, the Appeal Panel did not make a final ruling as to whether this ground raised a question of law but concluded that the ground was without merit and, if the plaintiff had sought leave to appeal, it would have been refused.
As to the ground of “Conversion”, the Appeal Panel found that, whilst the “new claim for conversion” raised questions of law, it also raised questions of fact (and it may be inferred, thereby, found the plaintiff required leave to bring the appeal). The Tribunal found the appeal ground should not be “entertained as it was not raised below” and that, in any event, leave should be refused, for various reasons conforming with the requirements (it may be interpolated) of Sch 4 Pt 6 cl 12 of the CAT Act.
As to the “Unconscionable Conduct” ground, a similar conclusion was reached as to the “Conversion” ground vis-à-vis the failure to raise the point below and the refusal of leave.
It is clear from the foregoing that the Tribunal dismissed the appeal on the wrongful termination ground upon the basis that the questions of law raised were productive of an appeal as of right but no errors of law were demonstrated by the plaintiff.
It is tolerably clear that the Appeal Panel considered the remainder of the grounds of appeal raised, at best, mixed questions of fact and law and that there was no appeal as of right. It is not entirely clear why the Tribunal approached the question of leave differently as between the “Rent Free Period” ground (rejecting the ground on basis that leave had not been sought) and the “Conversion” and “Unconscionable Conduct” grounds (rejecting the grounds, in part, by refusing leave). It may, however, be noted the findings as to leave, with respect to the latter two grounds, was an alternative ruling to the refusal to entertain an appeal based upon a new ground.
No issue was raised, as such, in this appeal as to whether the Appeal Panel’s rulings as to questions of law were correct. As to the “Rent Free Period” ground, a fresh contention was developed here as to how that ground may give rise to a question of law. In the remaining two grounds of “Conversion” and “Unconscionable Conduct” the appellant sought to impugn the finding that these grounds raised new issues before the Appeal Tribunal as well as seeking to argue the merits of the grounds.
It is sufficient to conclude, at this juncture, that, was to the “Rental Free Period”, “Conversion” and “Unconscionable Conduct” grounds, the Appeal Panel found that questions of law had not been raised, the appeal was therefore, not as of right and that leave should not be granted either because it was not sought or it was not appropriate to grant (the determination by the Appeal Panel that it would not entertain the appeal would seem to ultimately invoke the question of leave as if the appeal was not of right, the Appeal Panel was required to determine whether leave would be granted to bring the Appeal).
By a summons filed on 8 November 2016, the plaintiff sought leave to appeal the whole of the decision of the Appeal Panel. Whilst not specifying the provisions of the CAT Act relied upon to bring the appeal, the nature and form of the appeal conveyed that it was brought under s 83(1) of the CAT Act. The decision of the Appeal Panel’s was one, as mentioned above, caught by s 83 as it constituted an internal appeal.
The plaintiff was right to confine that appeal to one brought from the Appeal Panel rather than the Principal Member of the Tribunal as ss 82 and 83 of the CAT Act confined the scope for appeal under s 83 to one brought from the Appeal Panel: Bronze Wing International Pty Ltd v Safe Work NSW [2017] NSWCA 41(“Bronze Wing International”) at [10] (per Basten JA) (although this matter involved an appeal from a decision of Senior Members which was a general decision (see ss 32(1) and 29(1) of the CAT Act)).
Sections 83(1) and 83(3) are in the following terms:

83 Appeals against appealable decisions
(1) A party to an external or internal appeal may, with the leave of the Supreme Court, appeal on a question of law to the Court against any decision made by the Tribunal in the proceedings.
…
(3) The court hearing the appeal may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) the following:
(a) an order affirming, varying or setting aside the decision of the Tribunal,
(b) an order remitting the case to be heard and decided again by the Tribunal (either with or without the hearing of further evidence) in accordance with the directions of the court.

RELEVANT PRINCIPLES

The appeal brought by the plaintiff thereby requires the grant of leave and is an appeal “on a question of law”: Davis v NSW Land and Housing Corporation [2016] NSWCA 325 (“Davis”) at [44] (per McColl JA, with whom Meagher and Leeming JJA agreed) and Allen v TriCare (Hastings) Pty Ltd [2015] NSWSC 416 at [57] (per Beech-Jones J).
The following observations by McColl JA in Davis (at [77]-[79]) identify the parameters application to an appeal on a “question of law” as follows:

[77] First, on such appeal, the existence of a question of law is not merely a qualifying condition to the right of appeal, but the question of law alone is the subject matter of the appeal. The Supreme Court cannot engage in a “review of the merits” of the decision.
[78] Secondly, such an appeal is in the nature of a judicial review in which it is necessary to examine for legal error what has been done in the Appeal Panel. That will almost inevitably require consideration of the Tribunal’s findings to determine whether the Appeal Panel’s conclusion on the question of law identified in respect of the Tribunal’s reasons was open.
[79] Thirdly, on such an appeal, in certain circumstances, a new issue, not raised before the Tribunal, may be raised. In considering whether to permit that course in the exercise of the court’s discretion, the court will take into account Coulton v Holcombe considerations. It will also take into account considerations specific to the limited nature of an appeal from the Tribunal on a question of law, for example that referred to by Gummow J in Federal Commissioner of Taxation v Raptis, “that there is difficulty in finding an ‘error of law’ in the failure in the Tribunal to make a finding first urged in this Court.”
[Footnotes omitted.]

As to the third proposition by her Honour the following observations of Basten JA in Bronze Wing International at [11] may be mentioned:

[11] It would be a rare case in which the Supreme Court would grant leave to appeal on a question of law which had not been raised before the Appeal Panel and which, accordingly, had not been the subject of “any decision made by [the Appeal Panel] in the proceedings.” No such ground for leave was invoked in the present case. Accordingly, the grounds available before the primary judge in the Common Law Division were limited to matters of law which had been raised before the Appeal Panel.

As mentioned above, an appeal to this Court under s 83(1) of the CAT Act can only be brought with leave of the Court. I agree with the observations of the Hamill J in The Owners - Strata Plan No 73943 v Gazebo Penthouse Pty Ltd [2014] NSWSC 1536 at [18] that the determination of leave should be the first matter considered by the Court in proceedings of that character and that the statements of principle enunciated by Basten JA (with whom Tobias AJA agreed) in Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 (“Be Financial”) at [32]-[36] should be applied to applications for leave under s 83(1) of the CAT Act.
Those passages from Be Financial, together with [37] of that judgment, are as follows:

[32] The principles governing cases such as these have recently been restated in Zelden v Sewell; Henamast Pty Ltd v Sewell [2011] NSWCA 56. As Campbell JA noted (with the agreement of Young JA) at [22]:
"It is of some importance to reiterate the principles that were stated in Carolan v AMF Bowling Pty Limited [1995] NSWCA 69, where Sheller JA said that an applicant for leave must demonstrate something more than that the trial judge was arguably wrong in the conclusion arrived at. Cole JA relied on a principle that where small claims are involved, it is important that there be early finality in determination of litigation, otherwise the costs that will be involved are likely to swamp the money sum involved in the dispute."

[33] In Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 Campbell JA, with the agreement of Young and Meagher JJA, expanded on his summary of Carolan, noting that Kirby P had recognised "that ordinarily it was appropriate to grant leave to appeal only concerning matters that involve issues of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond [what is] merely arguable": at [46].
[34] Kirby P in Carolan set out a number of reasons for the constraint on rights of appeal in such cases. Not all of them have been repeated in later cases. Not all are universally relevant. Thus, the delay in obtaining a hearing in this Court appears to have been greater at that time than is the case presently, although an overly liberal approach to leave applications might well result in an increase in the period between filing and hearing.

[35] In Coulter v The Queen [1988] HCA 3; 164 CLR 350, dealing with a challenge to a refusal of the South Australian Full Court to grant leave to appeal in a criminal matter, the majority noted that a leave requirement was a preliminary procedure "recognised by the legislature as a means of enabling the court to control in some measure the volume of appellate work requiring its attention": at 356 (Mason CJ, Wilson and Brennan JJ). That statement is clearly applicable to civil, as well as criminal, appellate jurisdiction.
[36] As the High Court has noted, an application for leave is not a proceeding in the ordinary course of litigation but a preliminary procedure: Collins v The Queen [1975] HCA 60; 133 CLR 120 at 122; Coulter at 356. On the other hand, there is no reason to doubt that s 58 of the Civil Procedure Act 2005 (NSW), requiring a court to act in accordance with "the dictates of justice" when making an order or direction "for the management of proceedings", applies in respect of a leave application. One of the factors to be taken into account pursuant to s 58 is "the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction": s 58(2)(b)(vi). That provision, like s 56, identifying the overriding purpose of the Civil Procedure Act as being to facilitate the just, quick and cheap resolution of the real issues in the dispute, recognises that questions of injustice are relative. Similarly, the requirement that this Court not order a new trial unless it appears that "some substantial wrong or miscarriage" has been occasioned, also reflects a principle of parsimony in requiring that the parties be put to the expense of a second trial: UCPR, r 51.53.
[37] The idea that injustice may be measured on a scale reflects a number of underlying considerations. First, the ability to assess the existence of an injustice in a preliminary proceeding, such as a leave application, is limited. In assessing the merit of a proposed appeal, the Court may well apply a vague criterion, such as whether the judgment below is attended by "sufficient doubt". Secondly, injustice involves a balancing exercise. The delay and cost of further litigation will constitute a form of injustice to the successful party below, whatever the outcome of the appellate process. Thirdly, the entitlement of the parties to justice is not unconditional, but is dependent upon the resources of the court made available by the government and the appropriate allocation of resources by the parties, which may depend upon their individual assessments of the importance of the issues in dispute. The parties may well make disparate assessments in a particular case.

As to principles applicable to the interpretation of the lease, reference may be made to the judgment of McColl JA in Waterways Authority of New South Wales v Coal Allied (Operations) Pty Ltd [2007] NSWCA 276 at [215] as follows:

[215] … Its meaning was to be determined by what a reasonable person would have understood it to mean having regard to its text, the surrounding circumstances known to the parties and the purpose and object of the transaction: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd & Ors [2004] HCA 52; (2004) 219 CLR 165 at [40]. Being a commercial contract, the lease should be given a businesslike interpretation taking into consideration not only its language, but also the commercial circumstances it addressed and the objects it was intended to secure: McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579 at [22] per Gleeson CJ; Wilkie v Gordian Runoff [2005] HCA 17; (2005) 221 CLR 522 (at [15]) per Gleeson CJ, McHugh, Gummow and Kirby JJ.

GROUNDS OF THE APPEAL

There were seven grounds of the appeal each of which was the subject of particularisation omitting the particulars, the grounds were as follows:

The Tribunal Members erred in fact and/or in law and/or seriously misdirected themselves when they decided that the Plaintiff shall pay the Defendant $19,969.47 plus costs on both applications on a party-party basis as agreed or assessed.

The Tribunal Members erred in fact and/or in law and/or seriously misdirected himself when they dismissed the Plaintiff's claim.

The Tribunal Members erred in fact and/or in law and/or seriously misdirected themselves when they did not found the Defendant's notices of breach and demand dated 4 July 2014 and 18 July 2014 respectively premature, invalid and defective under the law.

The Tribunal Members erred in fact and/or in law and/or seriously misdirected themselves when they misinterpreted and misunderstood the Defendant's Valuer rent determination report in relation to current market rent and rent free period for the new lease.

The Tribunal Members requested new hearing to properly resolve the point of Conversion by the Defendant.

The Tribunal Members requested new hearing to properly resolve the point of unconscionable conduct by the Defendant.

The Tribunal Members ought to have held the Defendant's notices of breach and demand premature, invalid and defective. Accordingly, the Tribunal Members also ought to have held that the Defendant's re-entry and eviction wrongful.

Mr G Lucarelli, counsel for the defendant, constructed his arguments on the appeal by treating grounds 1 and 2 as being of a general character and grouping the remainder of the grounds together so far as they attracted or presented similar issues. On that approach grounds 3 and 7 were grouped, as were grounds 5 and 6. The grounds were then dealt with sequentially in the appeal by dealing first with grounds 3 and 7, secondly with ground 4 and thirdly grounds 5 and 6. There was no dispute from the plaintiff as that approach, and having regard to the contentions advanced in support of the grounds of appeal, it appears to me to be a sensible one which I will adopt in the disposition of this appeal.
The Appeal Panel set out the factual background to their appeal in [8]-[29] of its decision in Gan No 2. That summary represented a compression of the lengthy discussion of the factual background contained within the decision of the Tribunal in which many of the documents relied upon by the parties, in both the Tribunal and Appeal Panel proceedings, were set out more or less verbatim.
In these proceedings, the parties confined the material before the Court to a Court Book consisting of two volumes. Volume one was prepared by the defendant and volume two by the plaintiff (the second volume overlapped, to some extent, with the first volume and included an admixture of documents relied upon by the plaintiff as well as his submissions). A number of the documents referred to in the factual background given by the Appeal Panel have not been provided as such in the Court Book. However, any such deficiency seems to have been rectified, as I have mentioned, by the practice of the Tribunal of setting out comprehensively the content of the material documents in its decision (although, it should be noted that the material placed before the Court did not include the transcript of proceedings before the Appeal Panel or the Tribunal).
Bearing in mind that there was no demur in these proceedings to the factual background provided by the Appeal Panel (from [8]-[21] and [23]) (“the factual background”), and the Court has had the opportunity of examining its contents in the light of the copies of documents, where available, in the Court Book, and the transcriptions of documents as set out in the Tribunal’s decision. I shall consider the issues raised in this appeal in the light of the factual background, together with the Background Facts document provided by the plaintiff, which shall be set out after the extract of the factual background below. I note that [22] and [24]-[29] of the factual background intersects with some of the controversy sought to be raised by the plaintiff, with respect to grounds 5 and 6 of the appeal.
The factual background (omitting some introductory components and those which have already been referred to in this judgment) was as follows:

[10] The option to renew was duly exercised by the Appellant by letter dated 24 February 2014. There followed communications between the Appellant and the Respondent about the new rent to be paid for the second five year term. The lease (cl 15.3) provided that the rent for the new term was to be the current market rental determined in accordance with cl 3.3.3 of the lease.
[11] Agreement on the current market rental was explored by the parties, but could not be reached. As a result, in accordance with cl 3.3.3, a valuer (Mr McCarney) was appointed to determine the rental. His written determination was dated 30 June 2014, which was just over three months after the expiry of the term of the original lease. In the interim, between 29 April 2014 and the date of the determination, the Appellant continued to be charged and to pay (albeit with delays) the rental applicable under the first five year term.
[12] Mr McCarney’s determination resulted in an increase in the rental. He concluded:
I consider a reasonable rent free incentive for the demised premises for the remaining five year term would be 4 Months, noting that the fixed 5% annual reviews are slightly above current market parameters.
Taking all factors into account, I have concluded that a fair and reasonable face rental for the demised premises would be $475/m2 gross with a rent free incentive of four months, calculated as follows:
ASSESSMENT
Area 113m2@$475/m2 p.a. gross $53,675 p.a.
Allow 4 months rent review free for 5 year term $3,578 p.a.
Effective Gross rent: $50,097 p.a.
Adopt as Rental Value: $50,000 p.a. gross
DETERMINATIONI determine the current market rental value of the herein described demised premises, upon the terms and conditions of the Lease and as at the review date of 25 April 2014, at:
FIFTY THOUSAND DOLLARS PER ANNUM EXCLUDING GST
($50,000 per annum excluding GST)

[13] Such revised annual rental equated to a monthly rental of $4,583.34, excluding GST. The previous monthly rental had been $3,899.73. A letter from the Appellant to the Respondent’s agent dated 16 June 2014 suggests that the Appellant was expecting the determination to result in a reduced rental, not an increase.
[14] On the same date as the determination and, probably, before the Respondent received notice of the determination, the Appellant wrote to the Respondent. In the letter he referred to the need for his wife, the chef at the restaurant, to have a long break following an injury. He proposed that the Respondent buy his investment in the construction and fit out of the restaurant in which he had invested about $300,000.
[15] On 4 July 2014, the Respondent’s agent (LJ Hooker) sent two letters to the Appellant. One letter informed the Appellant that the Respondent did not wish to purchase the fit out, proposed a meeting to discuss the lease and also referred to the new increased rent of $50,000 per annum. The second letter, which contained the heading “NOTICE OF BREACH”, referred to the failure to pay the rent due on 1 July 2014 and stated that the tenant was now $4,583.34 in arrears. It advised that the tenant must rectify the breach and pay all outstanding money by 18 July 2014. It concluded by saying that the landlord reserved all rights and remedies under the lease, including that of termination. Oddly, the letter had earlier referred to an obligation to pay money by equal monthly instalments under cl 5 of the lease. Clearly, that was a mistake because that clause dealt with insurance and not with the subject of rent.
[16] In an email to the Appellant sent on 15 July 2014, LJ Hooker inquired about when the rent would be paid and pointed out that the rent of $4,583.34 was 15 days in arrears. It was stated that if the rent was not received by 18 July 2014 a notice of demand would be sent. The Appellant replied in an email on 16 July 2014 making a proposal that would give him until the end of December 2014 to find a partner or sell the business. The proposal included:
1) Use the 4 month free rent period now to take the rent to end of August.
2) Part paid April, full paid rent of May and June to be used for September and October Rent.
3) My 3 months bond to cover Nov & Dec rent.

[17] Hence, the Appellant’s proposal included that no further rent be paid until November 2014 on the basis that the Appellant had the benefit of a four month rent free period from the start of the second five year term.
[18] The proposal met with two responses. The first was a letter from LJ Hooker dated 18 July 2014 titled a Notice of Demand. Again, incorrectly, it referred to cl 5 of the lease as containing the obligation to pay rent. It stated that the tenant had not complied with the lease obligations and owed rent, plus interest on the unpaid rent, in the amount of $4,583.34. The letter stated that if payment was not received by 5pm on Tuesday, 22 July 2014, the Respondent may proceed to take action for recovery of outstanding payments without further notice and that the Respondent reserved all its rights under the lease and otherwise for recovery of any losses.
[19] The second response was the communication from LJ Hooker referred to in paragraph 20 of the reasons at first instance, which pointed out that the rental determination did not entitle the tenant to a rent free period, but that the rent concession had been incorporated into the annual rental determination of $50,000. It also referred to breach of the lease in failure to pay the July rental, as advised in the Notice of Breach and Notice of Demand, and to the deadline of 5pm on 22 July.
[20] By an email to the Appellant dated 22 July 2014 at 10:53, LJ Hooker stated that should the rental payment not be paid by 5pm that day they would be looking to take further action to recover the amount owing. It asked to be advised if the payment would be made.
[21] By email at 12:18 on 22 July 2014, the Appellant replied:
Hi Jess,
I am seeing a potential buyer today, as well as sourcing some fund.
Give me a little more time…..Friday. I don’t mind a commercial interest charged for the overdue. [our emphasis]
Regards,
Gary

[22] The Tribunal at first instance, correctly, in our opinion, regarded this email from the Appellant as a “significant admission” that he was in default in the payment of rent: at [27].
[23] On Thursday 24 July 2014, the Respondent re-entered possession of the premises. By an email to the Appellant from LJ Hooker dated 24 July 2014 at 10:41, the Appellant was informed that the Respondent had taken possession of the premises in accordance with cl 9.4.1 of the lease. Upon re-entry, the Respondent found a notice on the door:
NOTICE
We are close (sic) from Monday, 28 July 2014 to 1 September 2014 until further notice.
Our apology for any inconvenience this may cause.
Management
Kaki Lima Restaurant
23 July 2014

[24] The following facts are not fully covered in the reasons of the Tribunal at first instance and are somewhat short on detail. As will become clear, presumably, this was because the Appellant did not raise a claim of conversion of tenant’s property or unconscionable conduct in relation to these events in the proceedings at first instance.
[25] In an email to the Appellant dated 25 July 2015, LJ Hooker said that they were writing to arrange a time for access for the Appellant to the premises so as to allow him to collect any “personal items you need from the Premises”. On 29 and 30 July 2014, following emails from the Appellant to LJ Hooker, the Appellant was given access to the premises. By an email to the Appellant dated 29 July 2014 at 4:01pm, LJ Hooker said that they wrote to confirm that all items the Appellant required had been removed from the premises that day and informed the Appellant that if he needed to collect any further items he should so advise by close of business on 30 July 2014.
[26] After 30 July 2014, the Appellant did not seek any further access to the premises.
[27] By a claim on the bank guarantee supplied by the Appellant, dated 7 August 2014, the Respondent obtained payment in the sum of $9,625.
[28] The Respondent advertised the premises for lease at an annual rental of $65,000, plus GST. The advertisement made reference to a “Full Restaurant Fit-Out” comprising a commercial kitchen with refrigeration, chest freezer, existing benches and exhaust system.
[29] The premises were re–let to Domino’s Pizza as from 1 October 2014 for a term of five years, with an option to renew for two further terms, each of five years, at a commencing rental of $62,500. The lease included a three month rent free period. Under clause A1 of this lease, the lessee agreed at its own expense to remove all the lessee’s equipment, fixtures and fittings. This was a separate obligation from a make good obligation prior to the end of the term: cl A6.
[Original emphasis.]

The determination of Mr McCarney of KJ McCarney Co Ltd, Valuers & Real Estate Consultation, dated 25 April 2014 (referred to in [12] of the factual background) shall, in accordance with the title of the report, hereinafter be referred to as “the rental determination”.
I return then to the foreshadowed further observations regarding that factual background. They are fivefold.
First, it would not appear that the letter from the plaintiff exercising the option under the lease is in the Court Book. However, the reply by the defendant’s agent is set out in the Tribunal’s decision as follows (at [5]):

[5] … the option for renewal was duly exercised as evidenced by the letter dated 24 February 2014 from the landlords agent L J Hooker to Mr Gan;
Re: Proposed Market Rent - Shop 3, 228-230 Anzac Parade, Kensington NSW 2031
We confirm that your lease expires on the 24 April 2014. Thank you for confirming that you wish to exercise the option for a new term.
In accordance with your Lease, Clause 3.3.3 upon exercise of the option period, your rent will be reviewed to market on the 24 April 2014 to an amount, which in the option of the lessor, would be the Current market rent for the premises as at the review date.
We wish to advise that the rent for shop 3, 228-230 Anzac Parade, Kensington NSW 2013 has been reviewed to $75,000 +GST per annum effective 24 April 2014.

Secondly, at [15], the Appeal Panel observed that on 4 July 2014, two letters were sent to the plaintiff by the defendant’s agent, LJ Hooker. Given the submissions of the plaintiff placed emphasis on the “Notice of Breach dated 4 July 2014”, it is appropriate I extract the contents of that “second letter”.
The second letter was dated 4 July 2014 and draws the attention of “Gary Gan”. It addressed to Kaki Lima Restaurant Pty Ltd at an address in Kingsford and forwarded by LJ Hooker, it was said, by post and email.
The second letter was headed “Notice of Breach” and referred to the premises as being “Retail Shop 3, 228-230 Anzac Parade, Kensington NSW 2031”. It referred to the lease being identified as “3, 228-230 Hanvaylee Parade Kensington P/L (‘Landlord’) lease to Kaki Lima Restaurant Pty Ltd (‘Tenant’)”.
The second letter then stated:

We note the tenant must pay the money under the lease to the landlord by equal monthly instalments in advance in accordance with cl 5 of the lease. To date the tenant has not made payment which is due on the 1st of July 2014. The tenant is now $4,583.34 including GST in arrears. The landlord reserved its rights under cl 16 of the lease.
We advise that the tenant must rectify the breach of the lease and pay all outstanding money by no later than 18 July 2014 which is 14 days from the date of this letter…

(The second letter shall be hereinafter referred to as “the 4 July Notice”.)

Thirdly, at [18], the Appeal Panel summarised a Notice of Demand dated 18 July. Again, there is no error in that summary but given the significance of the correspondence in the proceedings I will set out its contents in full below. It may be noted that the address and reference details, save for the correspondence being entitled “Notice of Demand”, are the same as the 4 July 2014 notice. The contents of this correspondence was as follows:

NOTICE OF DEMAND
To the Tenant:
3, 228-230 Hanvaylee Pde Kensington P/L ('Landlord') lease to Kaki Lima Restaurant Pty Ltd ('Tenant') Premises: Retail Shop 3, 228-230 Anzac Parade, Kensington NSW 2031
We refer to the above Lease.
We note:
1. In accordance with Clause 5 of the Lease the Tenant must pay rent and other monies to the Landlord on the due date.
2. The Tenant has not complied with its obligations under the lease and owes $4,583.34 to the Landlord on account of unpaid rent and interest on unpaid rent.
If we do not receive payment by 5pm on Tuesday the 22nd of July 2014, then the Landlord may proceed to take action against the Tenant for recovery of outstanding payments without further notice and reserves all its rights under the Lease and otherwise for recovery of any losses it incurs due to the Tenant's failure to comply with its obligations under the Lease.
Yours faithfully
[Signature Omitted]
Property Manager Retail & Commercial
LJ Hooker

(This correspondence shall be hereinafter referred to as the “18 July notice”).

Fourthly, at [19], the Tribunal decision refers to a communication from the plaintiff to the defendant’s agent. The Tribunal does not give a date for that communication but it would appear to be the communication referred to by the plaintiff in his evidence in these proceedings (see [67] of this judgment and paragraph [24] of the plaintiff’s summary of events and his evidence in his proceedings). According to the plaintiff’s evidence, the communication was three days after a meeting with the defendant’s agents on 19 July namely, 21 July. The plaintiff says that, he requested an “urgent refund [of] the significant overpayment of rent” which he stated was made in the period 25 April to 30 June 2014 (upon the basis of a rent free period).
Fifthly, leaving aside for the moment issues concerning a rent free period, the Tribunal made a finding as to the failure of the plaintiff to pay rent due as follows (at [27]):

[27] Having rejected Mr Gan's submissions as to the rent lawfully payable by him under the renewed lease, I am satisfied that as at 24 July 2014 he was in default with the payment of rent under cl 3.1 and cl 3.2 of the lease to the extent that clause 9.3.1(a) became applicable. In my view Mr Gan's email of 22 July 2014 is a significant admission to this effect. As a result the landlord was entitled to determine the lease by re-entry in accordance with clause 9.4.

In [21] of the Appeal Panel decision, emphasis was placed upon the words “the overdue” in an email forwarded by the plaintiff on 22 July to the defendant’s agent. In [22], the Appeal Panel approved of the view expressed by the Tribunal in Gan No 1 that the email represented a significant admission by the plaintiff that he was in default of the payment of rent. I agree with this view although, given the issues raised on this appeal, particular attention must be given to whether that rent was due on 1 July 2014. In that respect, I note the Appeal Panel also made findings as to when rent was due at [53] sub-para (1) (see [74] of this judgment). I will return to this question in the context of the grounds of appeal at [78] of this judgment.
There is one final matter. In [1], the Appeal Panel refers to “re-entry” being affected on 24 July 2015. That reference should read 24 July 2014. Nothing turns on this minor error.

THE LEASE

The lease form sets out the primary components of the lease, the terms of which are contained in Annexure A. The lessee was Kaki Lima Restaurant Pty Ltd ACN 133 665 479. No address was given for the lessee (although an address is given for a guarantor in Item 12 of the “Reference Schedule” annexed to the lease). The address for the premises was nominated as Shop 3, 228-230 Anzac Parade, Kingsford.
The lease commenced on 25 April 2009. The termination date was 24 August 2014, with an option for renewal (in cl 4) for a period of 5 years in accordance with cl 15.1 of Annexure A (the terms of the lease) (cl 15.1 is set out below).
I will set out a number of components of Annexure A to the lease.
Clause 2 concerns the “Exclusion of Implied Terms and Conditions”. Clause 2.1 provides:

2.1 The covenants and powers implied in every Lease by virtue of Section[s] 84 and 85 of the Conveyancing Act, 1919 (as amended) shall not apply to or be implied in this Lease except in so far as the same are expressly included in the covenants herein contained.

Clause 3 deals with “Rent and Outgoings”. Subclauses 3.1, 3.2 and 3.3 provide as follows:

3.1 Rent: The Lessee will during the whole of the term of the Lease and any renewal or extension of the Lease pay lo the Lessor at such place as the Lessor may from time to time direct free of all deductions and without any set off whatever rent at the rate specified in Item 4 of the Schedule.
3.2 Method of Payment of Rent: The Lessee shall pay the rent by equal monthly instalments in advance and proportionately for a part of a month the first of such payments to be made upon the commencement of the Lease.
3.3 Rent Review: The rent shall be reviewed at each review date specified in I tem 5 of the Reference Schedule and the new rental shall be determined in accordance with such method of determination set out in clauses 3.3.1, 3.3.2 or 3.3.3 as is specified in the said Item 5 of the Reference Schedule.
(a) the Lessor is entitled to give written notice to the Lessee at any time from the date which is 60 days prior to the review date specifying the Lessor's determination of the rent to apply from the review date and the Lessor's determination shall be the new rent payable from the review date unless the provisions of clause 3.3.3(b) apply.
(b) If the Lessee disagrees with the Lessor's determination of rent then:
(i) the Lessee must within 14 days of the Lessor giving notice under clause 3.3.3(a), give written notice to the Lessor disputing the Lessor's determination of rent and specifying the Lessee's estimate of current market rent;
(ii) the Lessor and the Lessee must try in good faith to agree on the rent to apply from the review date;
(iii) if the Lessor and the Lessee cannot agree on the new rental within 14 days of the Lessee's notice then the rent shall be determined by a valuer under the provisions following.

(c) The current market rental to be determined by a valuer is the current rent that would reasonably be expected to be paid for the premises having regard to the following matters:
(i) the provisions of this lease
(ii) the rent that would be reasonably expected to be paid for the premises if they were unoccupied and offered for rent for the same or a substantially similar use to which the premises may be put under the lease;
(iii) the gross rent, less the lessor's outgoings payable by the lessee; and
(iv) rent concessions and other benefits that are frequently or generally offered to prospective lessees of unoccupied premises of a similar type.

The current market rent is not to take into account the value of goodwill created by the lessee's occupation or the value of the lessee's fixtures and fittings in the premises.
…

Clause 4 deals with the “Use of Premises by the Lessee”. As earlier mentioned, cl 4.1 deals with permitted use. Clause 4.9 deals with the tenants fixtures and is in the following terms:

4.9 Tenant's Fixtures: All fixtures plant machinery utensils shelving counters safes and other materials or articles brought onto the premises by the Lessee shall be trade or tenant's fixtures and subject to tenant's rights and the Lessee may at or prior to the expiration of the Lease take remove and carry away the same from the premises but the Lessee shall in such removal do no damage to the premises or the building and shall make good any damage it may occasion. The Lessee's obligation to observe and perform this covenant shall survive the expiration or termination of this Lease.

Clause 9 deals with “Default and Termination”. Clause 9.3 sets out, in that respect, “Essential Terms”. Relevantly, cll 9.3.1(a), (d) and 9.3.2 provide:

9.3.1 the obligations of the Lessee under the following clauses are essential terms of this Lease:
(a) clauses 3.1 & 3.2 (payment of rent) where payment is in arrears by more than 14 days although no formal demand for payment has been made;
…
(d) the Lessee does not comply with an obligation under this Lease which is not an essential term and in the Lessor's reasonable opinion the non-compliance is not remedied to the Lessor's satisfaction with a reasonable time after the Lessor gives the Lessee a notice requiring it to be remedied;
…

9.3.2 Clause 9.3.1 does not prevent other terms of this Lease from being essential terms.

Clause 9.4 deals with the “Termination of Lease”. Clauses 9.4.1, 9.4.2 and 9.4.3(a) relevantly provide as follows:

9.4 Termination of Lease: The Lessor may terminate this Lease at its discretion by giving to the Lessee notice in writing or by re-entry if:
9.4.1 an event of default occurs; or
9.4.2 the Lessee repudiates its obligations under this Lease.
9.4.3 Event of default means:
(a) the Lessee does not comply with an essential term of this Lease;

The plaintiff made reference to cl 9.9 of the lease concerning “Power of Attorney”. This clause provides as follows:

9.9 Power of Attorney
9.9.1 If the Lessor has validly terminated this Lease, the Lessee irrevocably appoints the Lessor and, where applicable each director of the Lessor to be the attorney of the Lessee for the purpose of:
(a) executing and registering any document to effect a surrender or transfer of this Lease;
(b) withdrawing any caveat lodged relating to the Lessee's interest in the premises; and
(c) removing from the premises, storing and selling any of the Lessee's property (including chattels) left on the premises by the Lessee after the Lessee has vacated the premises and this Lease is terminated or has expired.

9.9.2 Whatever the Lessor as the attorney of the Lessee lawfully does, purports to do or causes to be done pursuant to the above appointment is ratified and confirmed by the Lessee.
9.9.3 The power of attorney granted under this clause may be exercised by the Lessor at the Lessor's absolute discretion.

Clause 9.11 deals with the “Removal of the Lessee’s property and making good”. Clauses 9.11.1 and 9.11.2 provide as follows:

9.11.1 Subject to clauses 9.12 and 9.13, the Lessee must remove the Lessee's property from the premises before the expiry or termination of this Lease or, if it is terminated by the Lessor, within 7 days after this Lease is terminated.
9.11.2 After the Lessor terminates this Lease, the Lessee may have access to the premises whilst the Lessor has possession and control over the premises at times nominated by the Lessor for the purposes of removing the Lessee's property and to comply with clause 9.11.4.

Clause 9.12 deals with a “Failure to remove the Lessee’s property” and is in the following terms:

9.12 Failure to remove Lessee's Property
If the Lessee fails to remove any of the Lessee's property from the premises, the Lessor may:
9.12.1 have the Lessee's property removed from the premises and stored at the Lessee's risk and the Lessor will not be liable to the Lessee for loss or damage to any of the Lessee's property;
9.12.2 sell or otherwise dispose of all or any of the Lessee's property, with or without removing it from the premises, in the name of and as agent for the Lessee.

Further, cl 9.13 deals with “Abandonment” and is in the following terms:

9.13 Abandonment
9.13.1 In respect of all or any of the Lessee's property which the Lessee has failed to remove from the premises after 7 days written notice from the Lessor, the Lessee is considered to have abandoned such property and title to it and the Lessor as its option acquires title to such property through abandonment.
9.13.2 The Lessor is not obliged to account to the Lessee for the value of any of the Lessee's property whose title vests in the Lessor by abandonment.

Clause 13 is entitled “General”. Clause 13.1 concerned notice and was in the following terms:

13.1 Notice: Without prejudice to any other means of giving notice any notice or other document or writing required to be served delivered or given hereunder may be served delivered or given to the Lessee by forwarding the same by pre paid post addressed to the Lessee at the premises or by leaving the same at the premises. Any such notice or other document or writing shall when forwarded by post be deemed to have been served or delivered or given on the second business day after the day of posting.

Clause 15 deals with the “Option for Renewal”. That clause is in the following terms:

15. Option for Renewal
The Lessor and the Lessee further covenant and agree:
15.1 If the Lessee shall desire to take further lease of the premises for the further term specified in Item 11 of the Reference Schedule and gives the Lessor notice in writing of not less than three (3) months nor more than six (6) months before the expiration of the term hereby granted and shall in the meantime duly and punctually pay the rent reserved by this Lease and all other moneys payable pursuant to this Lease at the times and in the manner herein provided for payment thereof and shall duly observe and perform the covenants conditions provisos and agreements by and on the part of the Lessee express or implied in this Lease up to the expiration of the term hereof the lessor shall grant to the Lessee a lease of the premises for the said further term subject to the provisions set out hereunder.
15.2 The new lease will be upon and subject to like covenants terms conditions obligations and agreements as are herein contained excepting
15.2.1 this present covenant for renewal will be deleted (unless there is provision for a further option);
15.2.2 any provision for a rent free period will be deleted;
15.2.3 the commencement and termination dates will be amended;
15.2.4 the new rent will be as determined in clause 15.3 hereunder.

15.3 The rent for such renewed lease shall be the current market rental of the premises determined in accordance with Clause 3.3.3 of the Lease as if this Lease and the new lease were one continuous lease and the commencement date of the new lease was a rent review date.

Clause 15 has a relationship to cl 18, which deals with “Special Conditions”. Clause 18.1, relevantly, is in the following terms:

18.1 Rent Free Provision: The Lessor will grant a rent free period equivalent to three months rent to enable fitout of the premises by the Lessee. This provision will be implemented by a reduction in the monthly rent payable during the first year of the lease so that the Lessee will pay to the Lessor the reduced rent of $26,250.00 plus GST by monthly instalments of $2,187.50 plus GST. This provision will not be taken into account in determination of rent under the rent review provisions contained in the lease.

FORM OF THE PLAINTIFF’S SUBMISSIONS

The plaintiff filed a number of versions of his submissions, including those attached to a List of Documents field on 4 January 2017. The submissions were generally provided as an attachment to an affidavit. It was confirmed by the plaintiff that the version of his submissions relied upon in this appeal was that annexed as Exhibit GSK-2 to an affidavit in reply field by the plaintiff of 21 May 2017 (which was contained within Vol 2 of the Court Book).
I note the plaintiff also filed affidavits affirmed on 8 and 28 November 2016 in support of this appeal (which appear in Court Book Vol 1). The first affidavit traversed various factual matters and the second contained the plaintiff’s contentions (which were updated by the affidavit filed on 21 May 2017).

CONSIDERATION

Grounds 3 and 7: Wrongful Termination of Lease

The plaintiff’s submissions

There are two limbs to this aspect of the plaintiff’s appeal central to which were the contention that the Appeal Panel erred in law by finding that the lease had been lawfully terminated by the defendant.
By the first limb, the plaintiff contended that the Appeal Panel erred in law by construing cl 9.4 of the contract as permitting the defendant to terminate the lease without notice. It was submitted that upon the proper construction of the lease, the defendant had failed to terminate the lease in accordance with its terms because no notice of an intention to re-enter the premises had been given to the plaintiff in accordance with the requirements of the lease before the actual act of re-entering (the lease required 14 days’ notice).
The second limb of these grounds of appeal was less well defined in the plaintiff’s submissions. In broad terms, the plaintiff contended, that the Appeal Panel had erred in law in failing to find any notice provided by the defendant (or the defendant’s agent) was “premature, invalid and defective”. In substance, the plaintiff contended that such notice as was given by the defendant in the form of the 4 July Notice or the18 July Notice was invalid.
The reasons for invalidity were advanced as follows:

In written submissions, the plaintiff contended the rent under the lease was not overdue because the rent was not due on account of a rent free period (the issue raised by ground 4). It was also submitted that, a notice of breach for 4 July 2014 rent was in arrears for 4 days and not 14 days. In oral submissions, it was accepted that the contention that rent was overdue was “only correct if the rent information report on the current market rent, rent free period [was] properly treated”.

The notice did not categorically state the defendant’s intention to terminate the lease by re-entry and take possession of the premises: Dee-Tech Pty Ltd v Neddam Holdings Pty Ltd [2010] NSWCA 374 at [61]-[62] (per Sackville AJA, with whom Campbell and Young JJA agreed). This contention seems to be interlocked with the first limb.

Notice was defective because it was not addressed and delivered by prepaid post to the premises. Further, the notice was sent to the address of the former tenant in Kingsford and not the current address of the plaintiff at Mascot. The notice was not received by the plaintiff.

The plaintiff appeared to contend that the assignment of the lease to him from the former tenant had “never formerly finalised” although it is not clear that this was a discreet contention from the previous submission that there had been a defective service of that notice.

Whilst s 129(8) of the Conveyancing Act 1919 (NSW) provides that no notice is required for re-entry for non-payment of rent, that provision only applies when rent is more than one month in arrears by virtue of s 85(1)(d) of that Act as at 24 July 2014. The alleged rent owing was 24 days in arrears, which was less than one month. Further, cl 2.1 of the lease excludes implied power given to the lessor s 85(1)(d) of the Conveyancing Act to re-enter without notice when rent is more than one month in arrears.

Findings of the Appeal Panel

The plaintiff contended that [42] and [45] of the Appeal Panel’s decision constituted the abovementioned errors of law (the plaintiff also made reference to [27] of the Tribunal’s decision but that issue was not relevantly before this Court).
The Appeal Panel set out the relevant findings of fact bearing upon these grounds at [15]-[23] of its decision (extracted above).
The findings of the Appeal Panel bearing upon these grounds, as a matter of law, were found at [40]-[53] as follows:

[40] As outlined above, the Appellant makes various arguments about lack of valid or proper notice of breach before re-entry occurred.
[41] Deficient notice of breach was part of the Appellant’s case in the hearing at first instance, although it is not clear that the Appellant identified the basis for a contention that such notice was required by law. Be that as it may, the arguments about defective notice are not addressed in the reasons for decision. Although not articulated by the Appellant, we regard the contentions of the Appellant on this subject as raising a question of law, namely whether there was error by the Tribunal in not dealing with such contentions.

[42] In our opinion, there was no error of law by the Tribunal in this respect. This is because it is clear enough that the Tribunal at first instance proceeded on the basis, correctly, in our opinion, that no demand or notice of breach was required, in view of the terms of clauses 9.3 and 9.4. Hence, issues concerning any deficiencies with the notices of 4 and 18 July 2014 were otiose.
[43] As indicated above, the Tribunal reasoned (at [27]) that the rental default had become a breach of an essential term by the operation of cl 9.3.1(a) (the July rental was in arrears by more than 14 days and no formal demand was required) and, based upon the terms of cl 9.4, the right to terminate by re-entry had arisen. This was because an event of default had occurred, within the meaning of cl 9.4.1.
[44] Such reasoning by the Tribunal followed the contractual description of the right to terminate. Clause 9.4 made provision for two methods of exercising the termination right – by notice in writing “…or by re-entry…”.
[45] In our opinion, it is plain that the lease sets out a specific right to terminate for breach in the payment of rent, without the need for demand for that rent or notice to remedy or any other notice. It is, sufficiently, apparent that the Tribunal below recognised that the lease conferred such a right and that the conditions for its exercise had been satisfied on the facts.
[46] On appeal, the Appellant referred to the common law requirement for a demand for rent, where it is proposed to forfeit the lease for non-payment of rent, and that there had been a failure to comply with this requirement. This raised a question of law.
[47] However, there is no such requirement where the lease dispenses with a formal demand (or such demand is excused by statute): W D Duncan, Commercial Leases in Australia, 7th ed at [130.4000].
[48] As we have already indicated, in our opinion, the lease does so dispense with such a demand.
[49] For completeness, we mention that reference was made in argument to sections 85(1) (d) and 129(8) of the Conveyancing Act.
[50] It is clear that the power given to a lessor in s 85(1) (d) to re-enter, without demand for rent, where rent is in arrears by more than one month, is not applicable in this case. This is because the lease excluded the section from application: cl 2.1. In effect, this allowed for re-entry for a shorter period of default in payment, as provided for in clauses 9.3 and 9.4.
[51] As to s 129(8), the Respondent contended that pursuant to this section there was no requirement for the Respondent to serve a notice of breach in respect of the non-payment of rent, giving an opportunity to remedy the breach. We agree, in so far as it is intended by this submission to contend that s 129(8) permits the lease provisions themselves to operate unaffected by the requirement for notice contained in s 129(1). Section 129(8) provides that s 129(1) does not affect the law concerning re-entry for the non-payment of rent. That law includes the common law rule that permits the lease to dispense with formal demand.
[52] In the circumstances, it is not strictly necessary for us to deal with the arguments about deficiencies with the notices of 4 and 18 July 2014. However, should we be wrong in our opinion about the lack of need for notice, in our opinion, sufficient notice was given by, at least, the notice of 4 July 2014.
[53] Briefly, this is because:
(1) It was not premature to make a demand for payment on 4 July 2014. The rent was due on 1 July 2014 (it is clear that the parties had for some time proceeded on the basis that rent was due from the beginning of the month, rather than the month from the commencement date of the 25th of the month). Had a demand been required, we see no reason why the lessor would need to wait until after the expiry of the 14 day period referred to in cl 9.3.1(a) in order to make a valid demand.
(2) The notice gave notice of the prospect of termination. The Appellant did not refer to any authority which required that a valid demand must state in categorical terms that it is the lessor’s intention to terminate or to re-enter.
(3) The notice was directed to the attention of the Appellant. Clearly, it was received by him. The Appellant did not dispute that the address given on it was the address for the tenant given in the Deed of Consent to Assignment.
(4) The mistaken reference to cl 5 was inconsequential. It was clear that the Respondent was relying upon the indisputable obligation to pay rent and a breach of that obligation.
(5) We should mention here that the Appellant suggested on the appeal (not, apparently, in the proceedings at first instance) that the obligation to pay rent monthly meant that he could make the payment at any time during the course of the month. Such contention is, plainly, wrong. That is not the meaning of the obligation to pay rent “by equal monthly instalments in advance… the first of such payments to be made upon the commencement of the Lease”: cl 3.2.

Finding of the Tribunal

The Tribunal’s finding as to rent being overdue as at the end of July 2014 was as follows:

[27] Having rejected Mr Gan's submissions as to the rent lawfully payable by him under the renewed lease, I am satisfied that as at 24 July 2014 he was in default with the payment of rent under cl 3.1 and cl 3.2 of the lease to the extent that clause 9.3.1 (a) became applicable. In my view Mr Gan's email of 22 July 2014 is a significant admission to this effect. As a result the landlord was entitled to determine the lease by re-entry in accordance with clause 9.4.

Consideration: Grounds 3 and 7

There was no dispute that grounds 3 and 7, as developed by the plaintiff in the first and second limbs of his contentions in support thereof, involved questions of law. I consider that concession by the defendant to be properly made. The first limb involved the construction of the lease. The second limb raised whether the notices of termination were valid having regard to the terms of the lease and s 129 of the Conveyancing Act.
There is one further matter that requires mention at this juncture, particularly having regard to the second limb of the plaintiff’s contentions. By the plaintiff’s oral submissions in reply, it became clear that the plaintiff accepted that, if his submission that there was in possession of a four month rent free period was rejected, rent due on 1 July 2014 was unpaid as at the date of re-entry.
That concession was consistent with the finding of the Appeal Panel at [53] sub-para (1) which was unchallenged (the challenge mounted by the plaintiff to the Appeal Panel’s decision, in that respect, concerned a finding that the 4 July Notice was not premature) and [27] of the Tribunal decision (see [48] of this judgment). It was also consistent with the material contained in the Court Book. Rent was due on the first day of the month (after an agreed adjustment by the parties to the lease from an earlier payment date). Thus, rent was due on 1 July 2014. The last payment of rent by the plaintiff would appear to have been made on 17 June 2014 for rent due on 1 June 2014 (although the plaintiff insisted he had overpaid rent by that time as part of his contentions under ground 4: see the plaintiff’s affidavit of 8 November at paras 14-15). On 15 July 2014, Mr Scanlon of LJ Hooker sent an email to the plaintiff asking when would be paid and stated, “Your [sic] currently 15 days in arrears and a total of $4,583.34 is outstanding”.

The First Limb

I do not consider that any error of law has been established by the plaintiff under the first limb of these grounds for the following reasons:

The lease may be terminated by a lessor by the lessor giving notice in writing or re-entry if an “event of default” occurs (cl 9.4.1).

An “event in default” is defined in the lease as meaning, relevantly, the lessee has failed to comply with an essential term of the lease (cl 9.4.3(a)).

The relevant essential term in the present matter was that arising from the terms of cl 9.3.1(a) of the lease. That provision made cll 3.1 and 3.2 essential terms where payment of rent was in arrears by more than 14 days. I agree with the submission of Mr G Lucarelli, counsel for the defendant, that cl 9.3.1(a) resulted in the obligation to pay rent becoming an essential term when rent was in arrears for more than 14 days.

Clause 3.2 made rental payable by equal monthly instalments in advance, the first of such payments being required to be made upon the commencement of the lease. It followed that rent was due in the instant case for the premises on 25 June, or by a later arrangement, on 1 July, subject to the issue raised by the plaintiff concerning a four month rent free period. No payment for rent due on 1 July 2014 was made by the plaintiff by 15 July 2014 or any time up to the termination of the lease by re-entry. The defendant was, therefore, in default for the purposes of cl 9.4 and was, in particular, in breach of an essential term at the time of termination.

The phrase “although no formal demand for payment has been made” in cl 9.3.1 had the effect of dispensing with the common law requirement that a demand for rent must be made before it is proposed to forfeit the lease for non-payment of rent. Further, in my view, as explained below, the language employed in the sub-clause, when read with sub-cl 9.4.3, is consistent with an intention by the drafters to dispense with any requirement for notice in the event the conditions of the sub-clause were met, namely rent is in arrears for more than 14 days.

Clause 9 deals with “Default and Termination”. The provisions of 9.3 and 9.4, and in particular, 9.4.3 operate cohesively to deal with circumstances where a default of a requisite character gives rise a right in the landlord to terminate the lease. When viewed in this light, even though a different language (“demand” and “notice”) is employed in cl 9.3.1(a) and the preamble to 9.4, the notion of dispensing with a requirement for a “formal demand” in the case of the breach of an essential term giving a landlord a right to terminate a lease is antithetical to the notion that, in those circumstances, the landlord is required to give notice of an intention to terminate. This conclusion is supported by the terms of cl 9.4.3 which, by way of contrast, required notice in the case of non-compliance with a non-essential term.

This conclusion is reinforced by the fact that cl 9.3.1(a) has a temporal requirement, namely, payment of rent becomes an essential term, when payment is in arrears by more than 14 days. By this means, the lease provides, in effect, the requisite notice in the case of overdue rent by stating that termination may occur where rent is in arrears for that period of time.

In any event, it implicit that a demand will constitute notice, that is, notice of what is demanded. In this sense, dispensing with a requirement to make a demand will have the effect of dispensing the notice provided by it. The notion of “formal” in cl 9.3.1(a) in the clause would seem to add little as it is most likely a reference to a demand or step in accordance with the requirements of law, namely, the lease.

The resultant condition in cl 9.4 is that the lease may be terminated for the “event of default” in cl 9.4.3(a) without notice. A means of effecting such a termination is, in my view, by means of re-entry. The “or” in the preamble to cl 9.4, when viewed in context, is disjunctive. Re-entry is plainly intended under the lease as an alternative means of terminating the lease when no notice is required such as a breach of an essential term, (where, inter alia, rent is in arrears for more than 14 days).

Section 129(1) of the Conveyancing Act does not countermand the terms of the lease, in this respect, because of the provisions of s 129(8). In substance, the aforementioned construction is in complete conformity with the provisions of the Conveyancing Act, given the sub-s (8) provides that the provisions of sub-s (1) have no effect with respect to re-entry for non-payment of rent. (Sub-section (1) provides that a right to re-entry is unenforceable unless and until notice of a particular kind is given to the lessee)

The implication provided by s 85(1)(d) of the Conveyancing Act is excluded by the operation of cl 2.1 of the lease.

It follows that the first limb of the contentions of the plaintiff, with respect to grounds 3 and 7, must fail. So too must the second limb of grounds 3 and 7 fail because, upon the above considerations, no obligation to give notice of an intention to terminate by re-entry was imposed by the lease in circumstances where the plaintiff was in default of an essential term of the lease. Nonetheless, I will deal below the issues raised by the plaintiff as to the validity or regularity of notice given by the defendant, namely, the second limb of his contention.

The Second Limb

In any event, I consider the contentions advanced in support of the second limb of the plaintiff’s submissions are unmeritorious. My short reasons for that conclusion are as follows:

If any requirement for notice existed under cl 9.4, there is no specification under the lease as to when, and by what period, notice is to be given to the lessee (this further illustrates why the conclusive answer to the unlawful termination grounds 3 and 7 is that provided in the resolution to the first limb of the plaintiff’s contentions). By cl 9.3.1(a) the period required before failure to meet the obligation to pay rent is an essential term. The provision merely specified the period which must pass before the failure to pay rent becomes an essential term bringing about a default triggering rights to termination. Thus, there is nothing invalid or premature in the defendant giving notice on 4 July 2014 when the rent was overdue, provided that the right to act upon the default did not arise until the passage of 14 days.

I agree with the Appeal Panel that, if notice was required, there was no condition within the lease requiring that such notice state that it was intended termination would be affected by re-entry. In any event, the reservation by the defendant’s agent in the 4 July notice as to all rights and remedies under the lease including in relation to the termination of the lease must be taken as incorporating the provisions of cl 9.4 of the lease and, in particular, re-entry. This is because that clause provides that termination may be affected by re-entry as one of the two potential courses which may be taken by a lessor to terminate the lease.

As to the plaintiff’s contentions that the defendant failed to properly effect notice by delivering to the address shown in the lease rather than the address provided by the plaintiff at Kingsford, it may be observed there was nothing in the deed of assignment of the lease which provided that notice would be given to the address of the assignee (the plaintiff) as opposed to the address for the original tenant. Further, cl 12 of the deed of assignment provided that notice or other communication may be affected by delivery “personally”. The finding by the Appeal Panel was that the 4 July notice and 18 July notice was directed to the plaintiff and that it was received by him. This must be fatal to this aspect of the plaintiff’s argument.

Having regard to the statement of principles as to the grant of leave to appeal earlier provided in the judgment, I consider leave to appeal should be refused as to grounds 3 and 7. I consider these grounds, when understood in the light of the plaintiff’s contentions, to be unmeritorious. Further, they engender no issues of principle or matters of general importance and, at best for the plaintiff, concern the resolution of questions bearing upon the construction of the subject lease which, in my view, was correctly determined the Appeal Panel. Further, I note (as it partially bears upon these grounds) that as I will find, there is no merit in the plaintiff’s contention (under ground 4) that there was a four month rent free period.

Ground 4

The plaintiff’s submissions

The plaintiff contended that the Appeal Panel “erred in fact and or/in [sic] law/or [sic] seriously misdirected themselves” by misinterpreting or misunderstanding the rental determination with respect to current market rent and the rent free period for the new lease arising under the auction. The plaintiff submitted that he did not dispute the rental determination. The issue concerned the “interpretation of the figures that produce the new lease”.
In substance, the plaintiff contended that the proper understanding of the rental determination and the provisions of s 31 of the RLA, the plaintiff was entitled to a four month rent free period at the commencement of the lease. The “current market rent” for the purposes of s 31(2) was $53,675 per annum and not $50,000 per annum as found by the Appeal Panel. The “face rent” was “$475/m2 pa gross” and the sum of $50,000 was properly described as a “current market rental value”. It was claimed that the Tribunal had accepted that view of current market rent.
The plaintiff relied upon the minority judgment of Ambrose J in Re McCafferty [1994] 2 Qd R 538 (“McCafferty”) at 545 where his Honour stated:

In my view no competent experienced valuer would have any difficulty in distinguishing between “a rental” and “a rental value” if neither of those terms were defined in the lease. “A rental” is simply the money paid as rent for a defined period under a lease. “A rental value” on the other hand in my view is the sum arrived at after making proper allowance for all collateral advantages and disadvantages ascertained upon a proper examination of all the arrangements made between lessor and lessee including the various rights and obligations under the terms of the lease which reflects the net consideration passing to the lessor from the lessee under the lease and associated collateral arrangements. In this regard I refer to King v Cadogan [1915] 3 K.B. 485 at 492–493 per Warrington L.J.; Nixon v Doney (1960) 61 S.R. (N.S.W) 311at 316 and Ex parte Lathouras [1964–5] N.S.W.R. 254 at 257.

The value of four months’ rent free period is spread over the period of the lease only for the purpose of demonstrating the net return from an investment perspective.
Section 31(1)(a)(iv) required the rent free period assessed under the rental determination be treated as a benefit available separately from the current market rent. To do otherwise would make the rental determination invalid.
It was submitted that s 7 of the RLA overrode “any offending provisions of the lease, including cl 15.2.2”.
The defendant was not entitled to apply the rent free period as a rental reduction over the 60 month period in which the lease operated.
It was submitted that, therefore, as a the date of re-entry by the defendant, the rent was in fact overpaid by $8,579 which represented rental payments for part of the month of April and the full months of May and June 2014. The rent free period extended from 25 April to 24 August 2014.
The plaintiff also submitted that he had proposed that a bank guarantee be used to pay rent in advance so that together with the rent free period his rent would be discharged for six months to December 2014 or early January 2015.
Finally, it was submitted that it was standard commercial practice by landlords to give a rent free period at the beginning of a retail lease in order to show a higher rental income and return from investment after the expiry of the rent free period. It was contended that this would increase the value of the property and the demand for it by prospective buyers and investors.

Findings by the Appeal Panel

The findings of the Appeal Panel to which this ground is directed were as follows:

[37] We do not see how the Appellant’s contentions about a rent free period based upon the valuer’s determination raise any question of law because it is concerned with the interpretation of the valuer’s determination and not with the construction of the lease. However, whether or not it is properly regarded as an appeal on a point of law, in our opinion, there is no legal basis for a contention that the valuer, carrying out the contractual task of determining the current market rental for the purposes of the renewed lease, could confer a right to a rent free period. As is plain from the above extract from Mr McCarney’s determination, he did not seek to do so. Moreover, cl 15.2.2 of the lease makes it clear that the renewed lease is not to include any rent free period.

[62] In the circumstances, in our opinion, the restriction on entertaining a new point on appeal is applicable. Furthermore, for the same reasons as given in respect of the new claim of conversion, leave to appeal is required and the conditions for the grant of leave are not satisfied

It should be mentioned in this respect that the Tribunal made the following observation in this respect (at [29] and [30]):

[29] I should mention that shortly before the hearing Mr Gan raised as an issue that the landlord had failed to fulfill the implied duty to act in good faith. He referred to cases including Renard Constructions (CME) Pty Ltd v Minster for works (1952) 26 NSW LR 234 and Hughes Bros v Trustees Roman Catholic Church (1993) 31 NSW LR 91. He did not however point to any particular act relied on as constituting absence of good faith. Mr Herro who appeared for the landlord conceded that his client had a duty to act in good faith but submitted that there was no evidence to the contrary.
[30] I agree with Mr Herro's submission. The landlord did no more in my opinion than rely on its contractual rights in the face of repeated and continuing breaches by Mr Gan of his obligations. There was in my view no breach of faith by the landlord.

Consideration: Unconscionable Conduct

It was central to the rejection of this ground of appeal by the Appeal Panel that the plaintiff had failed to raise the issue of unconscionable conduct before the Tribunal. The Appeal Panel recorded that the plaintiff accepted the fact of that failure.
The question of law raised by the ground was again whether the discretion of the Appeal Panel miscarried in refusing to entertain the appeal and/or refusing leave to bring the appeal as a “fresh” ground that had not been raised before the Tribunal. The plaintiff also sought to advance merit grounds as to why the defendant’s conduct was unconscionable all of which did not raise questions of law (they all concerned an evaluative judgment predicated upon questions of fact).
The plaintiff did not challenge, as such, the Appeal Panel’s recording of that concession by him, but nonetheless pointed to the Tribunal’s reference to a submission by him that the defendant was in breach of an implied duty to act in good faith, as an indication that, in substance, the issue of unconscionable conduct was raised before the Tribunal. (I note that, the defendant did not dispute the description or categorisation attributed to his case, in that respect, by the Tribunal but rather, as I have noted, relied upon it). The defendant relied upon some contentions or statements of fact in the Background Facts document.
As earlier mentioned, the Court does not have a transcription of the Tribunal proceedings. Notwithstanding the limited materials before the Court, a conclusion may be comfortably reached, in my view, that the plaintiff did not, in form or in substance, raise a claim based upon unconscionable conduct before the Tribunal.
Unconscionable conduct is regulated in Pt 7A of the RLA. Although the plaintiff did not refer to those provisions, in terms, in this appeal the types of conduct of which he complained in his submissions on the merit of the appeal (which were, in large measure, before the Appeal Panel) would appear to raise the matters described in s 62B(3)(c) and (k) (in the latter respect, the plaintiff contended the defendant did not act in accordance with a duty to act in good faith).
Part 8 of the RLA deals with dispute resolution and Div 3 thereof concerns the determination of claims by the Tribunal. Within Div 3, s 71A provides for the lodgment of an unconscionable conduct claim with the Tribunal and s 72AA prescribes the powers of the Tribunal with respect to such an application.
In Item 10 of the retail lease application form (published by the Tribunal on its website), is the question, “What orders do you want?”. Next to that entry is a prompt as follows: “NCAT can make the following orders under the Retail Leases Act 1994. Tick the order/s you want”. There is then a further prompt, given by a “tick box”, for an election to be made by an applicant as to which type of claim (followed by a provision of the RLA). One such election is designated as “Unconscionable conduct claim (section 71A)”. The plaintiff did not tick or mark the box adjacent to this item but did tick “Retail tenancy claim (section 7)” box, appearing immediately above it.
The reference in [29] of the Tribunal’s decision to a submission by the plaintiff that the defendant had not conformed with an implied duty to act in good faith did not, in law, constitute a claim by the defendant for relief based upon an unconscionable conduct by the defendant.
Such a cause of action arises from a different category of legal right. A breach of an implied duty to act in good faith is dependent upon a demonstration of a breach of the lease itself (albeit in relation to an implied term). In contrast, Pt 7A of the RLA provides a particular or special scheme regulating “unconscionable conduct and misleading and deceptive conduct”. By s 62B(1) of the RLA, conduct is prohibited which is “in all the circumstances, unconscionable.”
It is true s 62B(3) refers to a non-exhaustive list of matters the Tribunal “may have regard to” in determining whether there is a contravention of s 62B (including a reference to whether a landlord had acted in good faith). However, that phrase and the non-exclusive introductory words “without in any way limiting” of the section serve only to indicate matters the Tribunal may take into account in determining whether there is a breach. The reference in s 62B(3)(c), namely, as I have mentioned, the extent to which the lessor and the lessee acted in good faith, is no more than a factor which may be taken into account in determining whether there has been a contravention of the prohibition vis-à-vis unconscionable conduct and is not dependent upon a finding of breach of an implied term.
Further, it may be readily inferred that the Tribunal understood it was not dealing with a claim for unconscionable conduct. The reference to a breach of an implied duty in [29] of the Tribunal’s decision follows immediately upon the culmination of the Tribunal’s discussion as to whether the lease was lawfully terminated and the plaintiff’s claim for damages. The opening of [29] of the Tribunal’s decision with the words “I should mention” is the equivalent of stating that the Tribunal should examine a further matter connected with the same subject matter, namely, the issue of wrongful termination. In any event, it may be expected that the Principal Member hearing the matter could be well aware of the provisions of Pt 7A of the RLA and could, at the least, mention that fact in the course of deliberations, if that matter had been raised or was perceived to be an issue.
Further, the reference to a breach of an implied term of good faith as opposed to a claim for unconscionable conduct (whether based on a breach of good faith or otherwise) does not seem to be a mere slip in ‘terminology’ by the plaintiff arising from his lack of legal training. The Tribunal recorded that the plaintiff placed reliance upon two authorities dealing with a similar legal question (and the related question of an implied duty of reasonableness): Renard Constructions (CME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 (“Renard Constructions”) and Hughes Brothers Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91 (“Hughes Brothers”).
Renard Constructions concerned a construction contract. Priestly JA, within whom Handley JA agreed, found that ad hoc implied terms and an implication by law could be found in a clause of a contract thereby imposing a requirement of reasonableness on the part of the principal when considering whether a contractor had failed to show cause within a period specified in that clause to the satisfaction of the principal, and at a stage when the principal (the contractor having failed to show cause) was considering whether to exercise more than one of the powers under the clause (at 262). His Honour emphasised that ruling concerned the “contracts of the class now being considered”. Similarly in Hughes Brothers Priestly JA (with whom Kirby P agreed) found an implied condition of reasonableness with respect to clause of a construction contract where it was open to a principal because of an event specified in a bankruptcy clause, to exercise a power conferred under the contract.
It follows that the plaintiff, in my view, did not raise the issue of unconscionable conduct, as such, before the Tribunal.
Nor do I consider that, making due allowance for his unrepresented status, it may be concluded that the issue was raised, in substance, by some other means. I have contemplated whether, making such allowance, the plaintiff should be taken as having raised the issue of a failure to act in good faith before the Tribunal indirectly, by means of referring to the implied duty to act in good faith and, thereby, raised a relevant factor bearing upon a breach of s 62B(1) of the RLA. I consider that any such contemplation should be answered in the negative for the following reasons.
It may be observed as preliminary to this record that, as I will discuss below, the Tribunal found that the plaintiff had made no attempt to demonstrate how such an implied term may be found in the lease (particularly in relation to its termination). That position has not changed up to the time of this appeal. It is unnecessary to resolve the merits of that question, but I have significant doubts that such a contention may be made good, particularly in relation to the termination of the lease, given its comprehensive express terms. Notwithstanding the concession by the defendant’s solicitor, as recorded by the Tribunal in its decision, significant doubt has been cast upon the drawing of implications of an obligation of good faith or reasonableness in commercial leases such as retail shop leases because such leases, such as the one now under consideration, have comprehensive written clauses covering most fields of contention: W D Duncan, Commercial Leases in Australia, (7th ed, 2014, Thomas Reuters) at 78.
Referring to the immediate question, it is clear from the Tribunal’s reasons that, in so far as the plaintiff raised an issue that the defendant failed to act in good faith, the contentions were, essentially devoid of content. I refer to two aspects of the Tribunal’s reasons in this respect (neither of which were challenged in this appeal or before the Appeal Panel).
First, the Tribunal recorded that, notwithstanding the plaintiff had shortly before the hearing raised a breach of an implied duty to act in good faith, he did not point to any particular act of the defendant which he relied upon as constituting a breach of a duty to act in good faith. Further, the plaintiff raised before the Appeal Panel, and here, the issue of a loss of the value of the commercial fit out which concerned a separate and additional consideration not advanced in the plaintiff’s Points of Claim document (as mentioned above, the reference made to fit out concerned the increased future value of the property for the defendant including as to rental income).
Secondly, the Tribunal opined that that failure needed to be considered in the light of the fact the defendant did no more than rely upon his contractual rights in the face of “repeated and continuing breaches [by the plaintiff] of his obligations” (a factual finding which received little attention in these proceedings but which appeared available on the material in the Court Book). In any event, the Tribunal seems to have rejected the notion that the defendant had not acted in good faith because the termination of the lease was lawful.
That conclusion does not resolve this ground of appeal as the question remains as to whether the Appeal Panel’s discretion miscarried in rejecting this ground of appeal in the light of the plaintiff’s failure to raise the ground before the Tribunal. Nonetheless, in my view, the answer to that question should also be in the negative as the Appeal Panel did not reject the plaintiff’s unconscionable conduct ground of appeal merely upon the basis that the plaintiff had failed to raise the issue before the Tribunal, but also did so because the plaintiff’s prosecution of that ground involved a significant factual controversy. In short, as with the conversion ground, the Appeal Panel refused that ground on two bases. First such a case did not fall within the exceptions permitting a fresh case on appeal. Secondly, the nature of the fresh case the plaintiff sought to advance under this ground was of such a nature in terms of factual content (presumably in terms of the extent and complexity of the contest) as warranted the refusal of leave to appeal.
As will be mentioned shortly, those discretionary bases for decision were, in my view, entirely open to the Appeal Panel when recourse is had to the written submissions filed by the parties as to the unconscionable conduct ground (the transcription of oral submission not being available).
In the proceedings before the Appeal Panel, in short summary, the plaintiff made the following written submissions:

The defendant’s agent abused the holding over provisions of the lease to demand rent which was not due because of the rent free period and the resultant overpayment by the plaintiff.

The agent sent notices at the start of the month to allege breach and threaten termination even though no rent was due, as a result of the rent free period. These were highly unethical tactics and solely for the benefit of the defendant.

There was actually a cash flow benefit to the defendant in the arrangements proposed by the plaintiff vis-à-vis the rent free period, overdue rent and use of the bank guarantee.

The plaintiff had requested an urgent refund of the accumulated overpayment of rent.

The defendant was in a position of greater strength under the lease and was not prepared to negotiate.

The defendant eventually released the premises for improved rent, taking advantage of the plaintiff’s investments in the premises.

The defendant disputed a good deal of the plaintiff’s contentions. Some particular references may also be given to the defendant’s submissions to elaborate upon the prospective factual contest involved in the unconscionable conduct ground:

It was disputed that holding over arrangements were inappropriate. The defendant contended that the plaintiff was required to pay rent, notwithstanding that new rent was to be struck as a result of the rental determination.

The defendant rejected any contention that there was a four month rent free period and further disputed that rent had been paid up to 30 June 2014.

The defendant contended that the plaintiff had misunderstood the valuation and had misstated its practices through its agent in sending breach notices.

The defendant disputed that there was any evidence of unconscionable conduct and relied upon the Tribunal’s statement that the defendant was entitled to rely upon his contractual rights in the fact of repeated and continuing breaches by the plaintiff.

The defendant accepted that the rent payable by the new tenant was higher but disputed the defendant’s calculation of improvements in lease returns or the value the plaintiff attached to improvements made. Ultimately, it was submitted that the lease was terminated due to the breaches by the tenant.

In reply, the tenant submitted that the defendant had not provided a proper opportunity for him to remove his property from the premises (which was apparently disputed by the defendant) and had made additional rental income as a result of termination of the lease. The defendant had gained through being able to lease a fully constructed and fitted out restaurant. The tenant did not abandon his business and property.
The Appeal Panel found that a new hearing would be required to determine the relevant facts including the potential for a more details examination of the relationship between the plaintiff and defendant with respect to the operation of the lease and the circumstances leading to its termination.
In this appeal, the plaintiff contended the defendant had engaged in unconscionable conduct contrary to the provisions of s 62B of the RLA by re-entering the premises and evicting the plaintiff in breach of the lease. The plaintiff contended that the defendant’s conduct was generally misleading and unethical (including as to the assistance that would be given to the plaintiff), and, resulted in a windfall gain. In his affidavit of 8 November 2016, he contended that he had offered to pay rent on 22 July although contended that the defendant had wrongly refused to repay overpaid rent and that he had acted because of a threat of termination by the defendant’s agent “to assist the defendant’s cashflow at [the plaintiff’s] expense”. Not dissimilar submissions were advanced before the Appeal Panel. Little of that character was advanced by the plaintiff before the Tribunal. All of those matters attracted factual controversies.
The combination of all those considerations must result in an acceptance of the defendant’s submission that leave should be refused on this ground. When properly understood, the plaintiff’s ground as to unconscionable conduct was, in fact, no different position than that of conversion. The contention was, in reality, advanced for the first time before the Appeal Panel, in circumstances when the contentions in support of the appeal were heavily reliant on contested factual issues. The Appeal Panel recognised that position and, in my view, properly exercised its discretion, to reject that ground of the appeal before it.
I note further that, whilst the question of a remitter was not raised in this appeal, there would be substantial reasons, given the principles stated in the Civil Procedure Act, and given the nature of the jurisdiction and the practices of the Tribunal, not to take that course in the aforementioned circumstances.
There is a further consideration warranting the refusal of leave to bring this ground of appeal. The Appeal Panel also rejected the appeal below upon the basis that leave was required to bring it and “the conditions for the grant of leave” were not satisfied (relying upon the same factors it took into account, in that respect for the conversion ground). That conclusion was reasonably open given the nature of the factual controversy with respect to this ground and the provisions of Sch 4 cl 12 of the CAT Act. In the final analysis, the plaintiff sought leave to bring a ground of appeal which incorporated a substantial factual contest not the subject of any prosecution before the Tribunal and about which no changed circumstances were demonstrated.
It may be noted that the plaintiff pointed to no error with respect to the Appeal Panel’s refusal to grant leave.
The defendant contended that leave should be refused by the Court because of the limited prospects of the plaintiff establishing a merit case on that ground. It is strictly unnecessary to resolve that question but I would observe, for the short reasons I will now give, there is some substance to that submission.
Many of the particulars relied upon in this appeal (and before the Appeal Panel) to demonstrate the merits of the unconscionable conduct ground were predicated upon the basis that the plaintiff was correct in his contentions vis-à-vis the wrongful termination of the lease (grounds 3 and 7), and the factors relied upon in support of ground 4 including the existence of a four month rent free period and an overpayment of rent. They were also predicated, in part, upon appeal ground concerning notions of conversion. That those grounds have been found wanting in this appeal lends support to the contention by the defendant that there is insufficient prospects to warrant the grant of leave.

Secondly, it may be acknowledged that the plaintiff also contended that the defendant did not act in good faith by misleading the plaintiff into thinking that the defendant would assist the plaintiff in recovering his investment whilst, at the same time, “planning” re-entry and eviction for a “windfall gain”. Reference was also made to the offer on 22 July 2014 to pay the rent due on 25 July. If proven, that conduct might contribute to a finding of moral taint of the kind to which the provisions of s 62B applied: Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell [2011] NSWCA 389 at [291] and [293] (per Allsop P).
These are fundamentally factual issues but there is material before the Court (including the plaintiff’s own documents or evidence) casting serious doubt that the plaintiff could sustain a claim for unconscionable conduct associated with the termination of the lease.
It is true there are some tell-tale indications which might be relevant to the adjudication to a dispute of that kind in favour of the plaintiff such as the timing of the actions of the defendant, an apparent offer of support provided by the defendant’s agent and the plaintiff’s email of 22 July offering to pay rent in a few days. But there are also significant countervailing factual considerations (on the material before the Court) such as follows:

the long period of tardiness by the defendant in meeting rent obligations (before July 2014) (see [13] of the Tribunal’s decision and the attachment to the defendant’s application to the Tribunal).

The progressively more serious warnings to the plaintiff by the defendant via its agent regarding the non-payment of rent in the period after 1 July. Putting aside the 4 July notice, communications were sent to the plaintiff on the following dates in July (at which time the plaintiff was in breach of an essential term of the lease) before re-entry: 15 (inquiry as to whether rent would be paid as it was 15 days in arrears), 18 (the 18 July notice issuing a demand and a deadline of 22 July) and 22 (providing a deadline of 5pm that day with a notice that further action may be taken).

The plaintiff’s efforts to abate concerns in the defendant were, in fact, more likely to enliven them for following reasons:

The proposal made on the 30 June alerted the defendant to the imminent close of the restaurant for a long period and was accompanied by a proposal for the defendant to buy his fit out (the defendant gave him advice on 4 July it did not wish to do so);

The plaintiff’s proposal of the 16 July to pay no rent until November 2014 based principally upon a misconception of a four months’ rent free period.

The plaintiff’s proposal of 21 July for the defendant to repay alleged over paid rent based upon the same misconception.

The plaintiff’s offer to pay rent on 25 July should be viewed in the light of that background, the notice of a final deadline (being 22 July) and the persistence by the plaintiff, as part of the proposal advanced on 22 July (as the plaintiff put in his own evidence in this appeal) to seek the unfounded return of overpaid rent and exercise a four months’ rent free period. There were no arrangements proposed to cover future rent.

There was found on the door of the premises, upon re-entry by the defendant, a note from the plaintiff to customers that the restaurant would be closed until at least September 2014 (or “until further notice”). This gave actual confirmation (combined with earlier indications) that the plaintiff was intent on closing the restaurant until at least September and sustaining that closure by the non-payment of rent.

In my view, leave should be refused with respect to this final ground before which contentions were made.

OTHER GROUNDS

No submissions were advanced by the plaintiff in support of grounds 1 and 2 of the appeal (and consequently the defendant did not make submissions in that respect). I note that ground 2 is merely a general or catch all ground challenging the dismissal of the plaintiff’s claim. Without more, it is devoid of any real content. Ground 1 concerned the assessment of damages to the defendant (and costs) and did not raise question of law.

CONCLUSION

In all the circumstances, I consider that the plaintiff has failed to demonstrate in contentions in support of his grounds of appeal, that the Court should grant leave to appeal. Thus, whilst I have found the plaintiff has successfully identified questions of law with respect to, grounds 3 and 7 and, in some respects, 4, 5 and 6, he has failed to establish a proper basis for the grant of leave to appeal. Orders should be made accordingly. No issue was raised as to costs. Accordingly, directions will be made to resolve any issue in that respect should it exist.

ORDERS AND DIRECTIONS

I make the following orders:

Leave to appeal is refused.

Within 28 days of the publication of this judgment, the defendant shall file and serve any application for costs and a short submission in support of the same. The plaintiff shall reply by written submissions filed and served no later than 28 days thereafter. In the absence of any request for an oral hearing on costs, the Court shall decide the question without further sittings upon the written submissions filed by the parties.

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Decision last updated: 29 September 2017

Medium Neutral Citation:	Gan v Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd [2017] NSWSC 1322
Hearing dates:	9 June 2017
Date of orders:	29 September 2017
Decision date:	29 September 2017
Jurisdiction:	Common Law
Before:	Walton J
Decision:	(1) Leave to appeal is refused. (2) Within 28 days of the publication of this judgment, the defendant shall file and serve any application for costs and a short submission in support of the same. The plaintiff shall reply by written submissions filed and served no later than 28 days thereafter. In the absence of any request for an oral hearing on costs, the Court shall decide the question without further sittings upon the written submissions filed by the parties.
Catchwords:	APPEAL – civil – appeal from the NSW Civil and Administrative Tribunal Appeal Panel – whether questions of law – principles governing grant of leave to appeal – whether the Appeal Panel erred in law by finding that the lease had been lawfully terminated by the defendant – rental determination with respect to “current market rent” – whether “rent free period” for the new lease – under option – whether there was an error of law by not entertaining or refusing leave to bring claims for the conversion and unconscionable conduct – plaintiff failed to establish a proper basis for the grant of leave to appeal – leave to appeal was refused
Legislation Cited:	Civil and Administrative Tribunal Act 2013 (NSW) Civil Procedure Act 2005 (NSW) Conveyancing Act 1919 (NSW) Retail Leases Act 1994 (NSW)
Cases Cited:	Allen v TriCare (Hastings) Pty Ltd [2015] NSWSC 416 Be Financial Pty Ltd v Das [2012] NSWCA 164 Bronze Wing International Pty Ltd v Safe Work NSW [2017] NSWCA 41 Davis v NSW Land and Housing Corporation [2016] NSWCA 325 Dee-Tech Pty Ltd v Neddam Holdings Pty Ltd [2010] NSWCA 374 Gan v Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd [2016] NSWCATAP 210 Gan v Shop, 228-230 Hanvaylee Parade Kensington Pty Ltd [2016] NSWCATCD (unreported, decision dated 20 April 2016) Hughes Brothers Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91 Mamo v Surace (2014) 86 NSWLR 275; [2014] NSWCA 58 NSL Pty Ltd v 2 Roslyn Street Pty Ltd [2013] NSWSC 930 Re McCafferty [1994] 2 Qd R 538 Renard Constructions (CME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 The Age Company Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA The Owners - Strata Plan No 73943 v Gazebo Penthouse Pty Ltd [2014] NSWSC 1536 Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell [2011] NSWCA 389 Waterways Authority of New South Wales v Coal Allied (Operations) Pty Ltd [2007] NSWCA 276 Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48
Texts Cited:	Duncan, W D, Commercial Leases in Australia, (7th ed, 2014, Thomas Reuters)
Category:	Principal judgment
Parties:	Sing Kian Gan (Plaintiff) Shop 3, 228-230 Hanvaylee Parade Kensington Pty Limited (Defendant)
Representation:	Counsel: G Lucarelli (Defendant) Solicitors: Herro Solicitors (Defendant)
File Number(s):	2016/00302402
Decision under appeal	Court or tribunal: Civil and Administrative Tribunal New South Wales Jurisdiction: Appeal Panel Citation: [2016] NSWCATAP 210 Date of Decision: 13 September 2016 Before: P Durack SC, Senior MemberJ McAteer, Senior Member File Number(s): AP 16/22149