JASHAN TECHNOLOGY PTY LTD and PHOENIX PROPERTIES INTERNATIONAL PTY LTD - [2019] WASAT 30

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)
CITATION:   JASHAN TECHNOLOGY PTY LTD and PHOENIX PROPERTIES INTERNATIONAL PTY LTD [2019] WASAT 30
MEMBER:   MS D QUINLAN, MEMBER
MS C BARTON, MEMBER

HEARD:   27 FEBRUARY, 3 AND 4 APRIL 2019
DELIVERED          :   21 MAY 2019
FILE NO/S:   CC 2397 of 2018
BETWEEN:   JASHAN TECHNOLOGY PTY LTD
First Applicant
VINOD PARIHAR
Second Applicant
SANTOSH PARIHAR
Third Applicant
AND
PHOENIX PROPERTIES INTERNATIONAL
PTY LTD
Respondent

Catchwords:

Retail shops - Whether misleading and deceptive conduct - Whether representations made - Whether representations relied upon - Whether legal opinion constitutes a representation - Whether unconscionable conduct

Legislation:

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 15C(1), s 15C(2), s 15F, s 15F(1), s 16C, s 16D, s 16D(1), s 25C, s 26, s 26(1)(c)

Result:

Application dismissed

Category: B

Representation:

Counsel:

First Applicant	:	Mr J Jacobson
Second Applicant	:	Mr J Jacobson
Third Applicant	:	Mr J Jacobson
Respondent	:	Mr H Jackson & Mr L Hager

Solicitors:

First Applicant	:	Jacobson and Associates
Second Applicant	:	Jacobson and Associates
Third Applicant	:	Jacobson and Associates
Respondent	:	Hager Grubb & Partners Lawyers

Case(s) referred to in decision(s):

Attorney General (NSW) v World Best Holdings Ltd [2005] 63 NSWLR 557
Automasters Australia Pty Ltd v Bruness Pty Ltd & Anor [2002] WASC 286
Goldbreak Holdings Pty Ltd and Lendlease Real Estate Investments Ltd [2018] WASAT 51
Grainger v Williams (2009) WASCA 60
Head and Zimmermann Investments Pty Ltd [2010] WASAT 95
Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (1991) 28 FCR 151; 100 ALR 447
Morton Seed & Grain Pty Ltd v Phillbourne Manufacturing Pty Ltd [2018] WASC 386
Murphy and Fremantle Markets Pty Ltd [2009] WASAT 84
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

This proceeding arises in the Tribunal pursuant to an application made under s 16C of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (the Act) by Jashan Technology Pty Ltd (the tenant or applicant) alleging that Phoenix Properties International Pty Ltd (the landlord or respondent) has engaged in misleading or deceptive conduct. The tenant has also alleged that the landlord has engaged in unconscionable conduct contrary to s 15C(1) of the Act.
The landlord is the owner of premises at No. 150 St Georges Terrace, Perth, which comprise an office tower and three retail tenancies, including a café and bar. The applicant became a tenant of the café premises (known as the Deck) and bar premises (known as the Grand) by deeds of assignment, variation and transfer having effect from 14 October 2015.
A condition of the original liquor licence (6380141607) issued in relation to the Grand on 6 January 2012 (Original Liquor Licence) limited the sale of alcohol from the Deck until after 4 pm on business days. The Deck is subject to an extended trading permit (0200292715) under the Original Liquor Licence and includes an external area (known as the Corridor) which is located adjacent to the entrance to the Grand.
On 6 November 2015, the tenant applied to the Director of Liquor Licensing (Director) to amend the conditions of the Original Liquor Licence to permit the sale of alcohol from the Deck (including the Corridor) commencing from 12 noon on business days. The Director granted his approval to the application on 20 January 2016.
On 19 August 2016, the landlord notified the tenant that it had breached special condition 2.1 of Schedule 4 to the lease that applied to both the Deck (Deck Lease) and the Grand (Grand Lease) (Special Condition 2.1). The alleged breach arose from the tenant amending the Original Liquor Licence without the landlord's consent. The tenant disputed any such breach.

The application

In this proceeding, the tenant makes a number of allegations and seeks a number of orders, none of which are well articulated. This is due in part to the applicant initially being unrepresented. The Tribunal has summarised the allegations and orders sought as follows.
The tenant alleges that the landlord (through its managing agent, Knight Frank) engaged in misleading or deceptive conduct in connection with the Deck Lease contrary to s 16C of the Act. In particular, the tenant submits that Special Condition 2.1 does not, as asserted by the landlord, prevent the tenant from varying the Original Liquor Licence. The tenant also submits that the landlord engaged in unconscionable conduct in connection with the Deck Lease contrary to s 15C(1) of the Act.
The parties entered into a deed of variation of the Deck Lease (Variation Deed) which, by its terms, does not permit the sale of alcohol from the Deck before 4 pm on business days. The tenant seeks orders from the Tribunal under s 15F(1) and s 16D(1) of the Act setting aside the Variation Deed so that the tenant can make a fresh application to the Director to permit the sale of alcohol from the Deck from 12 noon on business days.
In its application to the Tribunal, the tenant also sought an order for compensation for loss of income from August 2016 as a result of it entering into the Variation Deed. However, no evidence was adduced by the tenant at the hearing to support its claim for compensation. Counsel for the tenant submitted at the hearing that, should the tenant be successful in any of its allegations, the Tribunal should grant leave for the tenant to adduce further evidence to support its claim for compensation. However, for the reasons which follow, this issue does not arise for determination in this proceeding.
Finally, the tenant seeks an order for the costs of the application before the Tribunal and the cost of a fresh liquor licence application to the Director.
The application was accompanied by a certificate issued by the Small Business Commissioner under s 25C of the Act which is a prerequisite to the making of an application to the Tribunal. While the certificate refers to the tenant's claim for misleading or deceptive conduct, it does not make reference to the matter of unconscionable conduct which may limit the Tribunal's jurisdiction. As the Tribunal had allowed the tenant to include the unconscionable conduct allegation as part of its case, the Tribunal has determined to make findings on those allegations. For the reasons set out below, the Tribunal has ultimately found that the evidence does not substantiate the tenant's allegation that the landlord had engaged in unconscionable conduct for the purposes of s 15C(1) of the Act. If the Tribunal had found such allegations substantiated we would have to hear from the parties and consider the jurisdiction issue which arises in relation to the certificate.

Issue for determination

The issue to be determined by the Tribunal in these proceedings is whether, in the exercise of the Tribunal's discretion under s 15F, s 16D and s 26 of the Act, the Tribunal should make orders that:
(a)the Variation Deed be set aside because the tenant relied on representations made by the landlord in relation to the meaning or effect of the Deck Lease (including Special Condition 2.1) before signing the Variation Deed which were misleading or deceptive or likely to mislead or deceive; and
(b)compensation be paid to the tenant for loss or damage suffered by the tenant in relation to (a) above and/or because the landlord's conduct before and after the tenant's entry into the Variation Deed was so oppressive, unfair or unreasonable to amount to unconscionable conduct.

Chronology of relevant events

The Tribunal considers it useful to outline the historical and factual background to the dispute between the parties which is summarised below.
The tenant took possession of the Grand and the Deck premises as assignee of the Deck Lease and Grand Lease and commenced trading on 23 October 2015.
As assignee of the Deck Lease and Grand Lease, the tenant was required to provide bank guarantees to the landlord in the sum of $41,027.94 for the Deck and $106,347.98 for the Grand.
There was a further requirement on the tenant to 'top-up' the bank guarantees. The tenant's director, Mr Vinod Parihar, requested the landlord's indulgence not to require the top-up of the bank guarantees. The landlord agreed to waive this requirement subject to the tenant making capital investments in the Deck and the Grand, including the creation of an alfresco area at the Grand designed by the landlord's architect (New Alfresco Area).
As noted above, the tenant made an application to the Director on 6 November 2015 to vary the Original Liquor Licence to extend the hours for the sale of alcohol at the Deck. There is an oblique reference to the licence application in an email sent by Mr Parihar to Mr Craig Dawson at Knight Frank on 21 December 2015.
On 20 January 2016, the tenant received confirmation from the Director that he had approved the variation to the Original Liquor Licence. An extended trading permit was granted by the Director subject to condition 3 that '[n]o alcohol to be sold in the Grand Central Outer Deck Coffee Lounge until 12 noon on business working days'.
On 14 April 2016, the tenant provided further documents to the Director in support of an application to licence the New Alfresco Area which the tenant had constructed at a cost of $74,000. The Director approved the liquor licence for the New Alfresco Area on 21 April 2016.
On 26 May 2016, Mr Parihar met with Mr Alex Meneghello from Knight Frank and sought rent abatement to alleviate the tenant's cash flow issues. Mr Meneghello agreed to discuss the tenant's request with the landlord. At the time of the meeting, the New Alfresco Area which was due for completion on 15 April 2016 had not been completed.
Mr Parihar followed up his request for rent abatement with Mr Meneghello by email on 20 June 2016. On 24 June 2016, Mr Parihar was asked to provide a formal proposal/request for rent abatement which Mr Parihar provided to Mr Meneghello on 1 July 2016.
On 12 July 2016, Mr Parihar received confirmation from Mr Meneghello of the landlord's agreement to rent abatement of $47,560.28 per annum for the Grand and $25,118.68 per annum for the Deck subject to two conditions. First, that the tenant complete the New Alfresco Area with the works to be signed off by the landlord's architect and, second, that there was no breach of the Deck Lease or Grand Lease by the tenant.
Mr Meneghello conducted an inspection of the premises on 22 July 2016 and on 10 August 2016 requested the return of the basement car bay informally used by the tenant as it was required for the landlord's contractors.
On or about 12 August 2016, Mr Meneghello observed patrons consuming alcohol at the Deck before 4 pm on a business day and emailed Mr Parihar that day in relation to his concerns.
On 19 August 2016, Mr Parihar attended a meeting with Mr Meneghello at the Deck. Mr Meneghello advised Mr Parihar that the change to the Original Liquor Licence was contrary to Special Condition 2.1 because it was done without the consent or approval of the landlord. Mr Parihar disputed the breach and sent an email to Mr Meneghello dated 19 August 2016 outlining the tenant's position. The tenant also sought written confirmation of the breach in order to consult with its lawyers.
A formal breach notice from the landlord's solicitor under clause 13.1 of the Deck Lease was sent to the tenant on 29 August 2016 (Breach Notice), in addition to two other letters from the landlord's solicitor of the same date. A letter marked 'without prejudice' of 29 August 2019 refers to the proposed Variation Deed.
On 29 August 2016, Mr Meneghello also provided Mr Parihar with a report from the landlord's architect dated 23 August 2016 setting out minor items in the New Alfresco Area that required completion, including a missing tile, chipped steel balustrades and the omission of recessed stair lights.
On 2 September 2016, a letter was sent to the tenant by Mr Meneghello advising the tenant that the rent abatement approved on 12 July 2016 would be held in abeyance until the New Alfresco Area was completed and the breach of the lease referred to in the Breach Notice was rectified. Mr Parihar advised the landlord by email that it would be seeking legal advice in relation to Mr Meneghello's letter before responding. The landlord did not receive any correspondence from the tenant's lawyers.
A meeting was held between Mr Parihar and Mr Meneghello on 6 September 2016 at the offices of Knight Frank, which was also attended by Mr Renzo Deleonardis and Mr Craig Dawson. The meeting focussed on the alleged breach by the tenant of Special Condition 2.1 and the tenant's desire for rent abatement. During the meeting, Mr Dawson asked Mr Parihar words to the following effect: 'How important is the rent for you?' To which Mr Parihar responded: 'Very'. Mr Dawson replied with words to the effect that there would be no rent abatement if the tenant did not bring itself into compliance.
The parties agreed at their 6 September 2016 meeting that for the rent abatement to commence:
(a)the tenant would complete the New Alfresco Area;
(b)the tenant would stop serving alcohol at the Deck before 4 pm on weekdays commencing 6 September 2016; and
(c)the tenant would apply to the Director to alter the liquor licence so that it reverted to its original condition that alcohol could not be sold at the Deck until 4 pm (instead of 12 noon) on business days.
Later on 6 September 2016, Mr Parihar advised Mr Meneghello by email that the tenant would submit an application to the Director to alter the liquor licence for the Deck to re-instate the original hours for the sale of alcohol. An application was made to the Director by Mr Parihar the same day.
Following the meeting between the parties on 6 September 2016, Mr Meneghello recommended to the landlord that the use of the Corridor to serve alcohol be specifically identified as a matter that would be considered a breach of the lease.
On 22 September 2016, the tenant was provided with two proposed deeds of variation being the Variation Deed and a further deed by which the leased premises of the Grand Lease was extended to incorporate the additional area of the New Alfresco Area.
The Variation Deed is signed but undated and it was not clear on the evidence before the Tribunal on which date it was entered into. Although it bears no significance to the Tribunal's decision, the Tribunal notes that the Variation Deed was entered into between 22 September 2016 and 4 October 2016.
On 29 September 2016, the tenant was asked by the landlord's agent to remove a sign promoting Oktoberfest and was subsequently denied permission to host a Melbourne Cup event.
On 4 October 2016, the tenant complained to the landlord that the Variation Deed had been 'rushed' but the rent relief arrangements had not yet been implemented. That same day the landlord provided the tenant with two deeds to implement the rent abatement.
On 17 July 2017, Mr Meneghello issued a breach notice to the tenant regarding the sale of alcohol from the Deck before 4 pm. The landlord ceased the rent abatement for one month due to the breach. Mr Parihar, on behalf of the tenant, responded to the breach notice by asking Mr Meneghello to investigate the breach.
On 31 July 2017, Mr Meneghello issued a further breach notice to the tenant for the same alleged breach and advised the tenant that the landlord would now permanently cease the rent abatement.
The effect of the breach notices dated 17 July 2017 and 31 July 2017 to the tenant was that discounted rent for August and September 2017 was not applied. However, there was evidence before the Tribunal that the tenant did not pay the full rent, but paid the discounted amount for these months.
For the period between 1 October 2016 and 30 September 2017, the total rent abatement provided by the landlord to the tenant was $21,015.93 in relation to the Deck and $40,957.27 in relation to the Grand.

The tenant's submissions

The tenant's submissions may be summarised as follows:
(a)The application to the Director to change the hours of alcohol sale is consistent with the terms of the Deck Lease and there is no breach of any legitimate interest of the landlord.
(b)The tenant did not breach Special Condition 2.1 as alleged in the Breach Notice. Special Condition 2.1 is aimed at protecting the liquor licence and continuity of the business, and does not restrict tenants who intend to work to improve sales.
(c)The tenant was misled and deceived by three representations made during the meeting of 6 September 2016 and/or the Breach Notice, as follows:
(i)that in order to change the liquor licence, the tenant required the approval of the landlord;
(ii)that it was a term of the Deck Lease that the sale of alcohol before 4 pm was prohibited; and
(iii)that by extending the trading hours of the liquor licence the tenant was in breach of Special Condition 2.1.
(d)The representations caused the tenant to change the conditions of the liquor licence back to those of the Original Liquor Licence and enter into the Variation Deed, thus preventing the tenant from serving alcohol from the Deck from 12 noon on business days.
(e)The landlord's representatives failed to disclose the need for the Variation Deed at the meeting of 6 September 2016.
(f)The landlord engaged in unconscionable conduct by using unreasonable commercial pressure in making the tenant accept the Breach Notice, specifically withholding rent relief which the tenant desperately needed, and by forcing the tenant to accept the conditions of the Original Liquor Licence by inserting an additional requirement in the Variation Deed of restoring the liquor licence to its original state.
(g)Serving alcohol during lunch hours maximises the venue's potential and helps the business succeed. The venue is incapable of fulfilling its rent commitments by single use as a café. It is unconscionable for the landlord not to allow the Deck to be used for the consumption of alcohol from 12 noon on business days.
(h)There is a negligible gap between the rent for the Deck and the Grand which supports a conclusion that both venues were rented purely on the pretext of being fully licensed to sell alcohol.

The landlord's submissions

The landlord's submissions may be summarised as follows:
(a)The tenant was not misled or deceived into signing the Variation Deed. The tenant was presented with the opinion of the landlord's solicitors and agents as to the proper construction of the Deck Lease. In the absence of evidence to suggest that the opinions expressed were not genuinely held, the matter can go no further.
(b)The landlord does not concede that its opinion as to the proper construction of the Deck Lease was incorrect.
(c)The evidence before the Tribunal shows that Mr Parihar did not accept the landlord's construction of the Deck Lease as contained in the Breach Notice and, therefore, it cannot be found that the tenant relied on the landlord's opinion.
(d)The landlord has not acted unconscionably. There was no evidence before the Tribunal that the landlord's agents were working towards the delay of rent abatement or the architect's sign off of the New Alfresco Area. The landlord's agents were ensuring that the conditions imposed by the landlord were met before the rent abatement commenced.
(e)The tenant was not pressured into reversing the amendment to the Original Liquor Licence. The tenant knew as at the meeting on 6 September 2016 that if it did not accept the landlord's interpretation of the Deck Lease it would not grant the tenant the indulgence of rent relief.
(f)The tenant was entitled, upon receiving the Breach Notice, to insist that its preferred construction was correct. The tenant knew it had the option of having the proper construction of the clause determined by an independent body because it referred to 'consulting Small Business Development Corporation and our lawyers' in an email to the landlord of 19 August 2016.
(g)The tenant's contention that it was pressured unconscionably into reversing the amendment to the Original Liquor Licence, in part, due to its dire financial circumstances is unsubstantiated. There was insufficient material before the Tribunal to draw a conclusion that the tenant was in dire financial circumstances at the time it was seeking rent relief.
(h)The landlord gave the tenant rent abatement totalling $61,973.20 and a rent free lease over the New Alfresco Area on the basis that the tenant would agree to enter into the Variation Deed.

The Tribunal's consideration

There was no dispute that the Deck Lease and Grand Lease are each a 'retail shop lease' as defined under the Act.
The tenant contends that the landlord engaged in misleading or deceptive conduct in contravention of s 16C of the Act. Section 16C of the Act provides:
A party to a retail shop lease must not, in connection with the lease, engage in conduct that is misleading or deceptive to another party to the lease or that is likely to mislead or deceive another party to the lease.
The tenant also contends that the landlord's conduct prior to and following the tenant's entry into the Variation Deed was so oppressive, unfair or unreasonable to constitute unconscionable conduct for the purposes of s 15C(1) of the Act. Section 15C(1) of the Act provides:
A landlord under a retail shop lease shall not, in connection with the lease, engage in conduct that is, in all the circumstances, unconscionable.

The witness evidence

The landlord relies on its response to the tenant's statement of issues, facts and contentions, the bundles of documents provided to the Tribunal and the evidence of the following witnesses:
(a)Mr Aaron Bettridge who is a Director of Portland Properties which has been the Property & Asset Manager for the applicant since 2003;
(b)Mr Alexander Meneghello who is the current allocated property manager by his employer, Knight Frank, which is the Managing Agent appointed by Portland Properties; and
(b)Mr Craig Dawson who was the allocated property manager from Knight Frank when it first became the landlord's property manager in 2013 until 2016. Mr Dawson is now the Head Partner in Western Australia for Knight Frank.
All of the landlord's witnesses attended the Tribunal to provide oral evidence and afford the tenant the opportunity for crossexamination of their evidence as well as answer questions from the Tribunal.
The tenant relies on its statement of issues, facts and contentions, the bundles of documents provided to the Tribunal and the evidence of Mr Parihar.
On the whole, the Tribunal found Mr Parihar's evidence regarding the factual circumstances of the issues to be determined to be unreliable. In giving his evidence, the Tribunal found Mr Parihar prone to exaggeration and at times evasive. Mr Parihar referred to an 'intensification of harassment' and 'systematic harassment' toward him by the landlord's agents but could not provide concrete examples of harassment, whether major or minor, other than the landlord's request on 10 August 2016 for the return of a service car bay.
Mr Parihar's credibility was further eroded by his contention that the tenant was in a dire financial situation in May 2016 when it sought rent abatement from the landlord. This contention was unsupported by the evidence before the Tribunal. To the contrary, Mr Parihar acknowledged in cross-examination that in September/October 2016 the tenant had raised funds to purchase The George Tavern located at No. 216 St George's Terrace, Perth, for around $400,000: ts 56, 3 April 2019.
The Tribunal finds, where there are any factual inconsistencies as to the recounting of events, the Tribunal prefers the evidence of the landlord's property manager from Knight Frank, Mr Meneghello, over that of Mr Parihar. Mr Meneghello was balanced in his demeanour and gave his evidence in a steady, honest and forthright manner. He credibly denied in cross-examination that he had sought to make life difficult for the tenant in his dealings with Mr Parihar or tried to delay the agreed rent abatement. When Mr Meneghello was directly challenged with the proposition that he viewed Mr Parihar as a difficult tenant, Mr Meneghello readily acknowledged that Mr Parihar is difficult. Mr Meneghello stated that this did not change how he treated the tenant as he gets paid regardless of whether tenants are difficult or not.
Mr Dawson, a senior property manager with Knight Frank, also gave evidence for the landlord. The Tribunal finds that Mr Dawson was an honest and forthright witness. Whilst the Tribunal finds that it can prefer the evidence of Mr Dawson where it differs from that of Mr Parihar, the Tribunal does find on occasion that Mr Dawson's responses to questions in cross-examination were unnecessarily defensive. We find that this defensiveness somewhat lessens the extent to which the Tribunal finds it could rely on his evidence. For this reason, to the extent of any inconsistency, between Mr Dawson and Mr Meneghello, the Tribunal prefers the evidence of Mr Meneghello.
There was conflicting evidence given by the witnesses, particularly in relation to the tenant's claims concerning the conduct of the landlord's agents. On balance, and for the reasons already stated, the Tribunal finds that it prefers the evidence of Mr Meneghello and Mr Dawson to that of Mr Parihar.

Misleading or deceptive conduct

The test of whether conduct is misleading or deceptive is an objective one. Conduct is misleading or deceptive, or is likely to mislead or deceive, if it has a tendency to lead a reasonable person in the position of the recipient of the information into error. Proof of an intention to mislead or deceive is not required. Even if the representor acted honestly, the representation may still be objectively misleading: Goldbreak Holdings Pty Ltd and Lendlease Real Estate Investments Ltd [2018] WASAT 51 at [102].
In Morton Seed & Grain Pty Ltd v Phillbourne Manufacturing Pty Ltd [2018] WASC 386 at [546-547], Pritchard J stated, in a decision involving the interpretation of s 18 of the Australian Consumer Law, as follows:
Whether particular conduct is misleading or deceptive is a question of fact that is to be objectively determined. In determining whether a contravention of s 18 has occurred, the task of the Court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in light of the relevant surrounding facts and circumstances. It is an objective question that the Court must determine for itself.
Often that will involve two steps: first, making findings of fact about what was said and whether any pleaded representation is established; secondly, determining whether the proven representations (or other conduct) are misleading or deceptive.
A representation which is an opinion of law can constitute misleading or deceptive conduct if the represented opinion was not in fact held by the representor. In Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (1991) 28 FCR 151; 100 ALR 447 (Inn Leisure Industries) at 463, French J stated:
A representation of law may be made in different ways which send different messages to the recipient. It may do no more than convey what is, on the face of it, the untutored opinion of the representor. As such it would be unlikely, if wrong, to constitute misleading or deceptive conduct. If the represented opinion were not in fact held by the representor, then that would be a misrepresentation of fact and able to be characterised as misleading or deceptive conduct. It is on that basis also that a fraudulent misstatement of law may be actionable.
The situation in which advice, expert or otherwise, as to the law may be misleading or deceptive will depend on the context and the circumstances in which it is proffered and the representations implied or expressed that accompany it: see Inn Leisure Industries at 463.
In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199 and 209, the High Court found that legislation to protect against misleading or deceptive conduct is not designed to protect people who failed to take reasonable care to protect their own interests.
To prove a breach of s 16C of the Act, the claimant must also establish that, in reliance on the conduct complained of, it acted in a particular way that caused it loss: Grainger v Williams (2009) WASCA 60 at [93]. That is, there must be evidence before the Tribunal that the tenant was induced by the misleading or deceptive representation to enter into the Variation Deed and, as a consequence, suffered financial loss.

Were representations made by the landlord?

Special Condition 2.1 provides as follows:
The Tenant must comply with the provisions of the Act and its Licence conditions and do nothing which might jeopardise the operation or continuance of the Licence, or which might lead to an alternation [sic] in the conditions that apply to its use, or to a restriction on trading rights.
It was agreed by the parties at the hearing that the reference to 'alternation' in Special Condition 2.1 should read 'alteration'.
'Licence' is defined in clause 19 of the Deck Lease to mean 'a liquor licence or permit granted in respect of the Premises under the Act'.
'Act' is defined in clause 19 of the Deck Lease as the Liquor Control Act 1988 (WA).
The special conditions in Schedule 4 to the Deck Lease are incorporated and form part of the Deck Lease by virtue of clause 18.23 of the Deck Lease.
The Breach Notice dated 29 August 2016 identifies the change by the tenant to the Original Liquor Licence, in particular condition 3 which states '[n]o alcohol to be sold in the Grand Central Outer Deck Coffee Lounge until 12 noon on business working days'. The Breach Notice continues:
•This is an alteration to the conditions of the Original Licence.
•No consent or approval was sought by the Lessee from the Landlord to this alteration in the terms as required by Special Condition 2.1 of Schedule 4 of both the Deck Lease and the Grand Lease.
•The Landlord objects to the variation of the Original Licence to incorporate the change to the trading hours allowing alcohol sales from commencing at 12 noon on business days (as opposed to 4pm on business days).
•This failure by the Lessee to obtain the Landlord's approval is a default by you (and the Guarantors) under the Deck Lease and the Grand Lease.
The Breach Notice sought rectification of the breach by the tenant within 14 days.
Mr Parihar contends that he relied on representations made at the meeting with the landlord's agents on 6 September 2016, and in the earlier Breach Notice relating to the effect of Special Condition 2.1, to enter into the Variation Deed. Entry into the Variation Deed meant that the tenant was prevented from serving alcohol from the Deck (and the Corridor) from 12 noon on business days.
Based on the evidence before the Tribunal, it is difficult for the Tribunal to discern the precise nature of the communications that took place at the meeting of the parties on 6 September 2016. However, the Tribunal does find that:
(a)Mr Meneghello and Mr Dawson made statements to Mr Parihar at the meeting to the effect that it was a term of the Deck Lease that the sale of alcohol before 4 pm is prohibited;
(b)Mr Meneghello and Mr Dawson made statements to Mr Parihar at the meeting to the effect that it was a breach of Special Condition 2.1 to extend the Original Liquor Licence to sell alcohol from 12 noon; and
(c)the statements by Mr Meneghello and Mr Dawson at the meeting constitute an opinion which was based on an interpretation of Special Condition 2.1 and the Deck Lease which Mr Meneghello and Mr Dawson believed to be true.
The tenant contends that Special Condition 2.1 (or any other clause of the Deck Lease) did not expressly require the consent or approval of the landlord to modify the Original Liquor Licence. The Tribunal finds that the statements made by Mr Meneghello and Mr Dawson at the meeting on 6 September 2016 were not representations of fact but were opinions they expressed in relation to the legal meaning of Special Condition 2.1. Therefore, as the Tribunal has found above that this interpretation of Special Condition 2.1 is one that Mr Meneghello and Mr Dawson believed to be true, the Tribunal finds that any statement by them that the consent or approval of the landlord was required to modify the Original Liquor Licence cannot amount to a representation for the purposes of an allegation of misleading or deceptive conduct under s 16C of the Act.
The tenant contends that similar statements in the Breach Notice wrongly interpreted Special Condition 2.1 and represented that there had been a breach of the Deck Lease by the tenant's failure to obtain the consent or approval of the landlord. The Tribunal finds that a stated view or opinion on the interpretation of Special Condition 2.1 referred to in the Breach Notice is not, in the context and circumstances of this case, a representation. There was no evidence before the Tribunal that the landlord's solicitor did not hold the stated view or opinion expressed in the Breach Notice about the landlord's legal position.
Accordingly, the Tribunal finds that there were no representations made by the landlord for the purposes of the allegation made by the tenant that the landlord had engaged in misleading or deceptive conduct under s 16C of the Act.

Were the representations misleading or deceptive?

If the Tribunal is incorrect and the matters referred to at the meeting on 6 September 2016 and in the Breach Notice did amount to relevant representations, for completeness the Tribunal will consider if they were misleading or deceptive or likely to mislead or deceive.
The tenant submits that Special Condition 2.1 is aimed at 'not jeopardising' the liquor licence and continuity of the business, and is not intended to restrict tenants who work to improve sales. Examples of 'not jeopardising' the liquor licence were provided by the tenant's counsel, such as not selling alcohol to underage patrons and ensuring that staff were properly trained in the sale of alcohol. The landlord submits that there was a breach of Special Condition 2.1 when the tenant modified the Original Liquor Licence to extend the hours in which alcohol could be served at the Deck.
The Tribunal has considered whether the interpretation of Special Condition 2.1 by the landlord's solicitor and agents is reasonable and open for the purpose of determining if the landlord's conduct, when viewed objectively, was misleading or deceptive. It is not necessary for the Tribunal to make a conclusive finding on the meaning of Special Condition 2.1.
The Tribunal finds that the interpretation given to Special Condition 2.1 by the landlord's solicitor in the Breach Notice is an interpretation that is reasonable and open. Although it could be argued that Special Condition 2.1 is aimed at protecting the liquor licence as contended by the tenant, Special Condition 2.1 does provide that the Tenant must 'do nothing which might lead to an alternation [sic] in the conditions that apply to its use…'. Arguably, obtaining an extension to liquor trading hours is altering the conditions that apply to the use of the liquor licence and a breach of the Deck Lease. On this basis, the Tribunal finds that, when viewed objectively, the statements made by the landlord's solicitor and agents in relation to the tenant's non-compliance with Special Condition 2.1 are not misleading or deceptive or likely to mislead or deceive.
The landlord's interpretation of Special Condition 2.1 is supported by evidence that the purpose of limiting the sale of alcohol from 4 pm is due to the proximity of the Deck (and Corridor) to the entrance to the former Commonwealth Bank tenancy and the potential for adverse impact on that tenancy if alcohol was sold at the Deck from 12 noon.
The liquor licence conditions for the Deck are incorporated into the terms of the Deck Lease by virtue of Special Condition 2.1 which provides that the tenant 'must comply with the provisions of the Act and its Licence conditions'. Therefore, the Tribunal finds that the statement by the landlord's agents that it was a term of the Deck Lease that the sale of alcohol before 4 pm was prohibited is not misleading or deceptive or likely to mislead or deceive.
The representation relating to the failure by the tenant to request the landlord's consent or approval to modify the Original Liquor Licence was addressed in evidence. Mr Meneghello stated that in order to change the conditions of the Original Liquor Licence, the parties would be required to enter into a deed of variation to modify the terms of the Deck Lease. He gave evidence that he saw this as akin to seeking the consent or approval of the landlord. The Tribunal finds that the landlord's consent or approval would be required to vary the Deck Lease and, therefore, the statement made by Mr Meneghello and repeated in the Breach Notice by the landlord's solicitor was not misleading or deceptive or likely to mislead or deceive.
Finally, Mr Parihar had requested the Breach Notice of the alleged breach from the landlord in order that the tenant may seek its own legal advice. It was open to Mr Parihar to challenge the landlord's legal position if he (or his lawyer) considered that the views or opinions expressed by the landlord's solicitor in the Breach Notice were erroneous.

Did the tenant rely on the representations?

The Tribunal finds there is insufficient evidence to establish the tenant relied on the content of the landlord's statements to enter into the Variation Deed. Rather, the evidence before the Tribunal supports a finding that Mr Parihar (on behalf of the tenant), at all material times, has not agreed with the interpretation of Special Condition 2.1 and the Deck Lease as expressed by the landlord's agents at the meeting on 6 September 2016 and in the Breach Notice.
Mr Parihar gave evidence that after receiving the Breach Notice he was shocked but that he held his position in relation to the interpretation of Special Condition 2.1. He said that he hadn't done anything wrong in modifying the Original Liquor Licence and that the onus was on the landlord to prove the breach. Mr Parihar said that he stood his ground as he had not breached the Deck Lease: ts 33-34, 3 April 2019.
From the evidence before it, the Tribunal infers that the reason the tenant entered into the Variation Deed was purely to protect its commercial interests. The Tribunal finds that the tenant agreed to sign the Variation Deed, not because Mr Parihar relied upon a misrepresentation, but because the tenant would not obtain the requested rent abatement if it did not enter into the Variation Deed. Mr Parihar had requested the Breach Notice so that he could obtain legal advice. If the tenant had not agreed with the interpretation of Special Condition 2.1, based on advice from its lawyer, the tenant had the opportunity to and could have contested the issue. However, the Tribunal finds that the need for rent relief was paramount in Mr Parihar's decision to have the tenant sign the Variation Deed and he did not rely on the relevant statements made by the landlord's solicitor and contained in the Breach Notice.
Accordingly, the Tribunal finds that the landlord did not mislead or deceive the tenant under s 16C of the Act because no representations were made for the purposes of that provision. Even if the content of the Breach Notice and statements by the landlord's agents could be said to contain representations, the Tribunal finds that there was no reliance on those representations by the tenant. That is, the Tribunal finds the tenant was not induced into entering into the Variation Deed by the content of the Breach Notice or the statements made by the landlord's agents at the meeting on 6 September 2016.

Unconscionable conduct

Section 15C(2) of the Act provides a list of matters to which the Tribunal may have regard to in determining whether a landlord has engaged in conduct that is unconscionable for the purposes of s 15C(1) of the Act. The list is not exclusive: Nhung Huy Duong and Coventry Village Pty Ltd [2016] WASAT 32.
The matters listed in s 15C(2) of the Act include:
(a)the relative strengths of the bargaining positions of the landlord and tenant; and
(b)whether, as a result of conduct engaged in by the landlord, the tenant was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the landlord; and
(c)whether the tenant was able to understand any documents relating to the lease; and
(d)whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the tenant (or a person acting on behalf of the tenant) by the landlord or a person acting on behalf of the landlord in relation to the lease; and
…
(k)the extent to which the landlord acted in good faith; and
(l)the extent to which the landlord was not reasonably willing to negotiate the rent under the lease; and
(m)the extent to which the landlord unreasonably used information about the turnover of the tenant's or a previous tenant's turnover to negotiate the rent; and
(n)the extent to which the landlord required the tenant to incur unreasonable refurbishment or fit out costs.

For conduct to be regarded as unconscionable, serious misconduct or something clearly unfair or unreasonable must be demonstrated: Automasters Australia Pty Ltd v Bruness Pty Ltd & Anor [2002] WASC 286 at [395].
Unconscionability will be established where there has been a high level of 'moral obloquy': Attorney General (NSW) v World Best Holdings Ltd [2005] 63 NSWLR 557 at [121].
In Head and Zimmermann Investments Pty Ltd [2010] WASAT 95 at [37] the Tribunal found that unconscionable conduct for the purposes of s 15C(1) of the Act is 'a standard of behaviour which, in all the circumstances, is well outside what might be expected in relations between parties to an arm's length commercial relationship and therefore unacceptable'.
In Murphy and Fremantle Markets Pty Ltd [2009] WASAT 84 (Murphy) the Tribunal stated at [77]:
Unconscionability is a well established equitable doctrine which has been applied by the courts for centuries. Yet the concept of unconscionable conduct is difficult to define and it has been said that is it 'better described than defined': Antonovic Volker (1986) 7 NSWLR 151 at 165. As discussed in the High Court Decision in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 72 and following:
The term 'unconscionable' is used as a description of various grounds of equitable intervention to refuse enforcement of or to set aside transactions which offend equity and good conscience. The term is used across a broad range of the equity jurisdiction.
…
The Tribunal observed in Murphy that a number of decided cases suggest that a party to a contract is entitled to insist upon strict enforcement of the relevant obligations and to drive a hard bargain. However, an overwhelming case of unfair, bullying and thuggish behaviour is likely to constitute unconscionable conduct: Murphy at [85].

Was the landlord's conduct unconscionable?

The tenant contends that the actions of the landlord prior to and following entry into the Variation Deed constitutes unconscionable conduct for the purposes of s 15C(1) of the Act.
There was evidence before the Tribunal that the landlord had provided the tenant with an opportunity to avoid a future breach of the Deck Lease and the Grand Lease (for non-payment of rent) by agreeing to rent abatement on certain terms. One of these terms was that there was no breach by the tenant. The tenant's action in seeking a modification to the Original Liquor Licence was considered by the landlord (and arguably was) a breach of Special Condition 2.1. The landlord is entitled to strictly enforce the terms of the Deck Lease and the Grand Lease. The Breach Notice sent to the tenant on 29 August 2016 did just that and the issuing of it to the tenant cannot be considered unconscionable conduct.
Mr Parihar was advised by the landlord's agents at the meeting at Knight Frank on 6 September 2016 that if the agreed rent abatement was to commence the tenant would have to comply with the terms of the Deck Lease and revert to the conditions of the Original Liquor Licence. Counsel for the tenant submitted that the relative strengths of the bargaining position of the landlord and tenant must be considered by the Tribunal in relation to this meeting and, in the circumstances, the bargaining position was weighed against the tenant. Counsel referred to a number of emails in which Mr Parihar had made it clear to the landlord's agents that he was in financial difficulty and required rent abatement.
The Tribunal finds that Mr Meneghello and Mr Dawson were clearly aware of Mr Parihar's financial difficulty when they met with Mr Parihar on 6 September 2016, however they did not use that information in a way that could be found to be unconscionable. There was evidence before the Tribunal that the tenant's interests would be best served if it agreed to remedy the alleged breach as it would then be eligible for rent relief. This is what was said by the landlord's property manager, Mr Dawson, to the tenant. The Tribunal finds there was an element of bargaining applied by the property manager to achieve an outcome that would be satisfactory to the landlord, but the Tribunal finds that this conduct was well within the expected conduct that characterises commercial relationships.
The Tribunal finds that the preparation of the Variation Deed for the tenant to sign and the inclusion in that deed of a clause which prohibited the tenant from altering the liquor licence does not amount to unconscionable conduct. The tenant conceded in cross-examination that the formalisation of an agreement by the creation of a written document was entirely normal and appropriate: ts 55-56, 3 April 2019. It was also open to the tenant to seek legal advice on the terms of the Variation Deed but the tenant stated in cross-examination that he returned the signed Variation Deed promptly because he wanted the rent abatement.
In closing submissions, counsel for the tenant submitted that forcing the tenant to change the liquor licence back to 4 pm was not something that was reasonably necessary for the protection of the legitimate interests of the landlord. The Tribunal finds that the tenant was not 'forced' to change the liquor licence back to 4 pm. The tenant elected to change the liquor licence in exchange for the rent abatement. The Tribunal finds that the landlord did have a legitimate interest to protect. This legitimate interest being the proximity of the Deck to the entrance to the former Commonwealth Bank tenancy and the potential for adverse impact on that tenancy if alcohol was sold at the Deck prior to 4 pm.
The completion of the New Alfresco Area was an issue of contention between the parties. Mr Parihar considered the matters raised by the landlord's architect in its report of 23 August 2016 to be minor and should not have been used by the landlord's agents as a reason to delay the agreed rent abatement. Because the landlord's agents knew that the tenant was in financial difficulty, the tenant contends that the landlord's actions in delaying the rent abatement after Mr Parihar entered into the Variation Deed was unconscionable. The evidence provided by Mr Meneghello, which the Tribunal accepts, is that he did not try to delay the agreed rent abatement. Mr Meneghello gave evidence that the rent abatement was subject to the tenant finalising the works for the New Alfresco Area and remedying any breach of the Deck Lease.
The Tribunal finds that the parties had agreed at their meeting on 6 September 2016 that rent abatement would not commence until the landlord was satisfied that the works for the New Alfresco Area had been completed. It was unclear whether the landlord's architect signed off on the remaining minor works but the rent abatement promised by the landlord did commence in October 2016. The Tribunal finds that any delay by the landlord in providing rent relief due to the completion of minor works to the New Alfresco Area does not constitute unconscionable conduct under s 15C(1) of the Act. The Tribunal's finding is not altered because the tenant had advised the landlord of its financial difficulty. The landlord was already aware of the tenant's financial difficulty when Mr Parihar made the request for rent abatement.
Mr Parihar gave evidence that the landlord's agents did not want to work with the tenant after the conditional rent abatement offer was confirmed by Mr Meneghello on 12 July 2016. Mr Parihar said that the landlord's agents conducted unnecessary inspections, took photos of the tenancy unannounced, prevented the use of a service car bay and requested that the tenant correct minor issues at the premises relating to rubbish disposal and cleaning. Later, on 29 September 2016, the tenant was asked by the landlord's agent to remove a sign promoting Oktoberfest and was subsequently denied permission to host a Melbourne Cup event. Mr Parihar conceded in cross-examination that the written communications he received from the landlord's agents during this period were professional but stated that their actions amounted to harassment: ts 50, 3 April 2019.
The Tribunal finds that the conduct by the landlord's agents outlined above does not constitute unconscionable conduct. The tenant brought itself under the scrutiny of the landlord's agents by seeking rent relief, which was conditional on compliance with the terms of the Deck Lease and the Grand Lease as well as completion of the New Alfresco Area.
The Tribunal finds that the activities of the landlord's agents described by Mr Parihar are not examples of 'major systematic harassment' as he asserted. Indeed, when asked in cross-examination, Mr Parihar was unable to provide examples of harassment other than the landlord's decision to prevent the use of a service car bay (which the Tribunal finds did not form part of the tenant's leased premises whether by exclusive use or licence).
The tenant has also claimed that it is unconscionable for the landlord to not allow the Deck to be used for the consumption of alcohol from 12 noon on business days. There was evidence before the Tribunal that the tenant entered into the Deck Lease on the basis that the Original Liquor Licence permitted the sale of alcohol from 4 pm on business days. If the tenant wished to modify the terms of the Deck Lease that relate to the sale of alcohol, this could have occurred prior to it entering into the deeds of assignment, variation and transfer for the premises. In these circumstances, the Tribunal finds that the landlord has not acted unconscionably in not giving its consent to a change to the current liquor licence to allow the serving of alcohol from the Deck (and the Corridor) for extended hours.
The Tribunal concludes that the conduct of the landlord (or its agents) cannot be found in any way to be oppressive or clearly unfair or unreasonable in order to substantiate a finding of unconscionable conduct under s 15C(1) of the Act.

Conclusion

In accordance with these reasons, the Tribunal concludes and finds that:
(a)the landlord did not make any representations of fact which were misleading or deceptive or likely to mislead or deceive the tenant in relation to the meaning or effect of the Deck Lease and Special Condition 2.1;
(b)if the Tribunal is incorrect in relation to (a), the Tribunal finds that the tenant did not rely on any representations made by the landlord prior to the tenant's entry into the Variation Deed; and
(c)the landlord's conduct prior to and following the tenant's entry into the Variation Deed did not amount to unconscionable conduct in connection with the Deck Lease or the Grand Lease.
Therefore, there is no basis for the Tribunal to exercise its discretion under s 15F, s 16D and s 26 of the Act to make any of the orders sought by the applicant.

Orders

Accordingly, in the exercise of the Tribunal's discretion, the Tribunal orders as follows:
1.Pursuant to s 26(1)(c) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) the proceeding is dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.

MS D QUINLAN, MEMBER

21 MAY 2019

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)
CITATION: JASHAN TECHNOLOGY PTY LTD and PHOENIX PROPERTIES INTERNATIONAL PTY LTD [2019] WASAT 30 (S)
MEMBER:   MS D QUINLAN, MEMBER
HEARD:   DETERMINED ON THE DOCUMENTS
DELIVERED          :   1 AUGUST 2019
FILE NO/S:   CC 2397 of 2018
BETWEEN:   JASHAN TECHNOLOGY PTY LTD
First Applicant
VINOD PARIHAR
Second Applicant
SANTOSH PARIHAR
Third Applicant
AND
PHOENIX PROPERTIES INTERNATIONAL PTY LTD
Respondent

Catchwords:

Retail shop - Costs - Landlord successful against serious allegations made by tenant - Tenant wholly unsuccessful - Unreasonable conduct by tenant - Costs unnecessarily incurred by landlord

Legislation:

Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 49
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 15C(1), s 16C
State Administrative Tribunal Act 2004 (WA), s 9, s 87(1), s 87(2), s 89