Keighery v Nodnarb Investments Pty Ltd

[2005] NSWADT 241

CITATION:	Keighery v Nodnarb Investments Pty Ltd [2005] NSWADT 241 This decision has been amended. Please see the end of the decision for a list of the amendments.
DIVISION:	Retail Leases Division
PARTIES:	1. APPLICANT Mark Damien Keighery RESPONDENT Nodnarb Investments Pty Ltd 2. APPLICANT Nodnarb Investments Pty Ltd RESPONDENT Mark Damien Keighery
FILE NUMBER:	055076; 055036
HEARING DATES:	21/07/2005 20/10/2005
SUBMISSIONS CLOSED:	10/20/2005
DATE OF DECISION:	10/24/2005
BEFORE:	Fox R - Judicial Member
APPLICATION:	Application to transfer
MATTER FOR DECISION:	Principal matter (055076) and interlocutory (055036)
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994 Victorian Civil and Administrative Tribunal Act 1998
CASES CITED:	AG NSW v World Best Holdings [2005] NSW CA 261 Citaden (2) v Eddie Azzi 2001 NSWADTAP31 Irresistible Frocks Salon Pty Limited v Sparbac Pty Limited & Roche Group Pty Limited [2003] NSW ADT 241 Prasad v Fairfield Council 2002 NSWADT2
REPRESENTATION:	APPLICANT M McFadden, barrister RESPONDENT M Heath, barrister
ORDERS:	ORDERS MADE 20 OCTOBER 2005; Orders – File number 055076:; 1. Find that there is evidence which may establish an unconscionable conduct claim; 2. Find that the nature of the claim is such that it may be more effectively and appropriately dealt with in the Supreme Court because it may involve Orders for amounts of more than $300,000.00 and that the interests of justice do not require the matter to be dealt with by this Tribunal. The matter is transferred to the Supreme Court pursuant to Section 76A.3 ; Applicant to pay respondents costs of preparation for and appearance on 21 July 2005 and today; Orders – File number 055036; 1. Adjourned for further directions 3.15 pm 24 November 2005.

1 This matter illustrates yet one more of the difficulties which result from the rigid separation by the Retail Leases Act of Retail Tenancy Claims and Unconscionable Conduct Claims.

2 The evidence hinted at in this matter, being the unsworn Statements of Theo Gregory Onisforou both dated 7 July 2005 both filed on 11 July 2005 raises a strong possibility that, if successful, the unconscionable conduct alleged by Application 055076 (“the Unconscionable Claim”) will raise an entitlement under Section 72AA to an Order for payment of substantially more than $300,000.00, well over the jurisdictional limit of this Tribunal as set by Section 73.

3 At a directions hearing on 21 July 2005 the Applicant Lessee sought an Order for transfer to the Supreme Court under Section 76A. Counsel for the Respondent Lessor indicated that he had no objection to that course, but, at the same time, sought a direction from me that the Lessor’s initial application (055036), (“the Retail Claim”) for the unpaid rent, also be transferred to the Supreme Court because, in effect, the Lessees’ Application was nothing more than a cross-claim or claim of setoff. On further enquiry it became clear that the Lessor did not concede that the Lessees’ claim might raise an entitlement for more than $300,000.00, and consequently I indicated that I was not prepared to make an Order under Section 76A. I asked for some evidence, and that, at the next directions hearing, elicited the unsworn statements above referred.

4 It is striking that Section 76A refers only to Unconscionable Conduct Claims. It seems to me that almost every section between Section 65 and 76A in some way or other underscores the distinction between Retail Tenancy Claims and Unconscionable Conduct Claims. See:

Section 65(i)(a) and (a)(i),

Section 66(i),

Section 68(i) and (ii),

Section 69,

Section 70,

Section 71 and 71A,

Section 72 and 72AA,

Section 72A(i) and (ii),

Section 73,

Section 74 (i),

Section 76(i) and (ii).

5 A simple comparison of the introductory words in their various forms in these sections allows of no other interpretation. There is a clear distinction made between Retail Tenancy Disputes and Claims under Section 62B on the one hand in the earlier sections, and “a Retail Tenancy Claim or an Unconscionable Conduct Claim” on the other hand in the later sections. In the face of that clear legislative distinction I am satisfied that Section 76A (and, for that matter, Section 75) is specifically limited to proceedings for an Unconscionable Conduct Claim only. There is no similar power in the legislation to transfer Retail Tenancy Claims. (See now Spigelman CJ, AG NSW v World Best Holdings [2005] NSW CA 261).

6 This, of course, may lead to the odd result that, if proceedings for a Retail Tenancy Dispute turn out to involve much more than $300,000.00, a party would appear to have no choice but to discontinue in the Tribunal (and, in an appropriate case, if the facts show special circumstances, risk an adverse costs order) as a preliminary starting proceedings in a Court with wider jurisdiction, whilst the party who makes the same discovery in relation to proceedings properly brought for an Unconscionable Conduct Claim has the prospect of transferring direct to the Supreme Court.

7 It seems to me just as clearly to follow that the reference in Section 76A to “proceedings for an Unconscionable Conduct Claim” must mean a claim which is properly made. I note the distinction between a proper claim and one which is a mere colourable device. I suppose Section 76A might be read to mean “any proceedings in which Unconscionable Conduct is properly alleged”, an interpretation which highlights the obligation to consider whether the claim is proper, or is no more than a fiction. I make this observation because it was proposed in the Retail Claim there was a defence of Unconscionable Conduct and that that defence rendered the Retail Claim into “proceedings for an Unconscionable Conduct Claim”. That would appear to be a correct application of the section, if the allegation of unconscionable conduct is validly made. In my view this particular defence, which asserts:- “it is unconscionable for (the lessor) to claim the outstanding rent and goods and services tax and outgoings when it is in breach of the lease because it has not repaired the structural defects as is its bounden duty under the lease”, does not cross that threshold. The pleading seems to me to be a claim of justification, raises a factual issue of the physical condition of the building, but raises nothing which might be an indication of Unconscionable Conduct. It remains a Retail Tenancy Claim, and I have no power to order the transfer of that.

8 On the same basis, a party wishing to have exercised in its favour the power granted the Tribunal by 76A, must first establish either in the formal application, or by subsequent sworn evidence that there is some conduct which might amount to unconscionable conduct. A perusal of the papers filed in the Unconscionable Claim seems to me to indicate that it, too, despite the fact that it uses the words “unconscionable conduct”, is nothing more than a dispute about either pre-lease misrepresentations (well accommodated within Section 10 of the Act), or, alternatively, simple breaches of the covenants for quiet enjoyment. Be that as it may it does seem to me that there may be some prospect in the Application as pleaded of establishing unconscionable conduct arising out of Nodnarbs taking advantage of the relationship between Keighery & Diesel Wholesale Pty Limited, or establishing the kind of conduct found to be unconscionable in Irresistible Frocks Salon Pty Limited v Sparbac Pty Limited & Roche Group Pty Limited [2003] NSW ADT 241.

9 I note that this matter first arose at a directions hearing, when I indicated that I wished to see some evidence, and note that although that further evidence was at a further directions hearing, both parties appear to have dealt with the matter as if it were a formal Application, and I will deal with it on that basis.

10 The Application to transfer the Retail Claim will have to be denied; I am not satisfied that I have the power because I am not satisfied that the papers before me indicate any issue of unconscionable conduct. The Unconscionable Claim as pleaded does appear to raise a prospect of an issue of unconscionable conduct and so is properly described as an Unconscionable Conduct Claim to bring it within Section 76A.

11 Although hardly satisfactory as evidence, as I have indicated at the beginning of these Reasons, that which has been filed over the signature of Mr Onisforou does seem to me to raise the prospect of the Unconscionable Claim exceeding the jurisdiction of the Tribunal and consequently I am satisfied in accordance with Section 76A(2)(a). Further, nothing appears to arise, nor has anything been raised by the Lessor which would enliven the test in subsection 76A2(b) and consequently I am obliged to make the order for transfer.

12 In view of the World Best Holdings decision published after the submissions in this matter, it is appropriate that I make the following observation. I am of the view that Section 24A of the Administrative Decisions Tribunal Act gives the Tribunal as constituted by me the power to deal with the Section 76A Application because in truth it falls within “any other interlocutory issue before the Tribunal” (Section 24A(1)(i)). Whilst the order which I propose to make in the Unconscionable Claim may finally dispose of the matter in the Tribunal – it does not finally dispose of the matter as between the parties. On that basis it seems to me to fall within the traditional definition of interlocutory matter – see Halsbury’s Laws of Australia [325-2700] “… generally, an interlocutory application is an application which seeks any order other than the final judgment or decree sought to be pronounced in any action…”

13 I do not yet make these orders because the question of costs has not been raised in either matter. The parties have leave to place written submissions before me within the next seven (7) days in relation to that aspect.

14 Furthermore, in view of the fact that when made, my orders will leave the Retail Claim alive in this Tribunal, which would appear to be a distinctly inconvenient (if not inappropriate) result, Mr Heath should have the opportunity to elect whether he seeks a formal stay, or, whether as an alternative, to simply discontinue. That would appear to be yet another aspect in which there is a prospect of an application for an order for costs.

15 There are too many variables left in the matter to allow it to be resolved “on the papers”. In the interest expedition and some finality the parties have liberty, after the expiry of seven (7) days, to approach the Registrar to make arrangements for a short final hearing by telephone linkup. If nothing is heard by either party by that time, I will simply make the orders as above indicated, will list the Retail Claim for further directions in October or November, and will make no order for costs.

16 Subsequent to my making the above known to the parties, the lessee indicated that further oral argument was desired, and so the matter was listed for further hearing on 20 October 2005. Ms Richardson appeared for Keighery and Mr Heath appeared for Nodnarb.

17 Ms Richardson argued that I had put a gloss on the words of the statute by requiring some hint of evidence to suggest that there is an issue of unconscionable conduct in the Retail Tenancy Claim. That gloss is in effect to insert the word “proper” before the word “unconscionable” in the opening words of Section 76A. I can only reiterate what I have said earlier in these Reasons, the clear legislative words separating the two (2) kinds of claim bring with them the requirement of a minimum threshold to allow the matter to be properly categorised. Ms Richardson also adverted to the fact that the defence to the Retail Tenancy Claim raised pre-lease representations about the quantity of retail space available within the premises, and claimed structural defect subsequently discovered having rendered an important part of that unusable. The lessee apparently abated the rent, which resulted in the lessor making the Retail Claim. Accepting all of that, I cannot see any indication of conduct prohibited by Section 62B, when the conduct in question is the simple action of, in effect, “suing” for the disputed amount of rent.

18 As to the question of costs, I am satisfied that the application 055 076 was brought in this Tribunal seeking immediate transfer to the Supreme Court, see 9.17 of annexure A to the application. I do not question the right in the applicant to take that course, but say that it would have been much more appropriate and less expensive to initiate in the Supreme Court. The Unconscionable Claim application was filed on 9 June 2004, in response to the Retail Claim which had been filed in May 2004. Mr Onisforou’s statement relied on a valuation which had been made more than a year before this dispute erupted, and that valuation was the basis upon which it was claimed that the dispute involved more than $300,000.00. It having been clear at all times that the lessee’s claim exceeded the jurisdiction of this Tribunal, it should have been brought in the Supreme Court. The right created by Section 76A should not be used as an initial stepping stone to the Supreme Court.

19 A convenient guide to identify special circumstances is found in Section 109 of the Victorian Legislation (Victorian Civil and Administrative Tribunal Act (1998)) - see Prasad v Fairfield Council 2002 NSWADT2 and Citaden (2) v Eddie Azzi 2001 NSWADTAP31. The actions of the lessee applicant, in my view, clearly describe as having unnecessarily disadvantaged another party. Even if I have too widely interpreted that particular yardstick, then I am in any event satisfied that the action taken has unreasonably prolonged the matter. Had the applicant initiated in the Supreme Court in response to the Retail Claim then the directions hearing of 9 June 2005 in all probability would have resulted in an appropriate course of action for matter number 055036 in the Tribunal, and the appearances of 21 July 2005, and today would not have been necessary.

Orders – File number 055076:

1. Find that there is evidence which may establish an unconscionable conduct claim.

2. Find that the nature of the claim is such that it may be more effectively and appropriately dealt with in the Supreme Court because it may involve Orders for amounts of more than $300,000.00 and that the interests of justice do not require the matter to be dealt with by this Tribunal.

The matter is transferred to the Supreme Court pursuant to Section 76A.

3. Applicant to pay respondents costs of preparation for and appearance on 21 July 2005 and today.

1. Adjourned for further directions 3.15 pm 24 November 2005.

24/10/2005	-	To correct date in order 1. - Paragraph(s) Orders - file number 055036
25/10/2005	-	To add the date the orders were made - Paragraph(s) Orders