Leda Holdings P/L v Vasilakis Holdings P/L
[1997] QSC 88
•7 May 1997
IN THE SUPREME COURT
OF QUEENSLAND
No. 8461 of 1996
Brisbane
Before Mr Justice J.A. Dowsett
[Leda Holdings P/L v Vasilakis Holdings P/L & Ors]
BETWEEN:
LEDA HOLDINGS PTY LTD
Plaintiffs
AND:
VASILAKIS HOLDINGS PTY LTD
First Respondent
AND:
RETAIL SHOP LEASE TRIBUNAL
PAUL LOEWENTHAL
MALCOLM McRAE and
ALEXANDRA KIRLE
Second Respondents
AND:
MEPC AUSTRALIA LIMITED
Third Respondent
No. 8463 of 1996
[MEPC Aust P/L v Vasilakis Holdings P/L & Ors]
BETWEEN:
MEPC AUSTRALIA LIMITED
Applicant
AND:
VASILAKIS HOLDINGS PTY LTD
First Respondent
AND:
RETAIL SHOP LEASE TRIBUNAL
PAUL LOEWENTHAL
MALCOLM McRAE and
ALEXANDRA KIRLE
Second Respondents
AND:
LEDA HOLDINGS PTY LTD
Third Respondent
REASONS FOR JUDGMENT - DOWSETT J
Judgment delivered 7 May 1997
CATCHWORDS: ADMINISTRATIVE LAW - judicial review - natural justice ‑ fair hearing - decision on basis not argued - adequacy of reasons - jurisdiction of Retail Shop Leases Tribunal - abandonment of excess of jurisdiction
Counsel:Mr J.D.M. Muir Q.C. with him Mr J.D. Batch SC for the applicant in No.8461 of 1996
Mr S.L. Doyle SC with him Mr R.I.M. Lilley for the applicant in No. 8463 of 1996
Mr J.D. Douglas Q.C. with him Mr P.W. Hackett for the first respondent in both applications
Solicitors:Malleson Stephen Jaques for the applicant in No.8461 of 1996
Deacons Graham and James for the applicant in No.8463 of 1996
Cleary Hoare for the respondents in both applications
Crown Solicitor for the second respondent in both applications
Hearing dates: 18 and 25 March 1997
IN THE SUPREME COURT
OF QUEENSLAND
No. 8461 of 1996
Brisbane
Before Mr Justice J.A. Dowsett
[Leda Holdings P/L v Vasilakis Holdings P/L & Ors]
BETWEEN:
LEDA HOLDINGS PTY LTD
Plaintiffs
AND:
VASILAKIS HOLDINGS PTY LTD
First Respondent
AND:
RETAIL SHOP LEASE TRIBUNAL
PAUL LOEWENTHAL
MALCOLM McRAE and
ALEXANDRA KIRLE
Second Respondents
AND:
MEPC AUSTRALIA LIMITED
Third Respondent
No. 8463 of 1996
[MEPC Aust P/L v Vasilakis Holdings P/L & Ors]
BETWEEN:
MEPC AUSTRALIA LIMITED
Applicant
AND:
VASILAKIS HOLDINGS PTY LTD
First Respondent
AND:
RETAIL SHOP LEASE TRIBUNAL
PAUL LOEWENTHAL
MALCOLM McRAE and
ALEXANDRA KIRLE
Second Respondents
AND:
LEDA HOLDINGS PTY LTD
Third Respondent
REASONS FOR JUDGMENT - DOWSETT J
Judgment delivered 7 May 1997
THE DISPUTE
The applicant in application No. 8461 of 1996, Leda Holdings Pty Ltd ("Leda") was the developer of a shopping complex at Capalaba. The applicant in application No. 8463 of 1996, MEPC Australia Limited ("MEPC") purchased the shopping complex in circumstances which led to its being liable for the consequences of certain conduct alleged against Leda in connection with the letting of premises therein. For present purposes, it is not necessary to elaborate upon the circumstances which produced that result. The first respondent to each application, Vasilakis Holdings Pty Ltd ("Vasilakis") became a tenant of shop premises in the complex pursuant to a lease dated 28 October 1994. Prior to that date, Vasilakis had commenced fitting out the premises as a coffee shop and continued thereafter. Trading commenced on 29 November 1994 and concluded on 17 or 20 January 1996 when Vasilakis effectively abandoned the premises. The lease was terminated by MEPC on 1 October 1996, allegedly because of Vasilakis' failure to remedy certain breaches. By that time, the proceedings which are the subject of these applications had been determined by the second respondents to each application who constituted a retail shop lease tribunal pursuant to the Retail Shop Leases Act 1994 ("the Act").
Those proceedings concerned a dispute between Vasilakis as claimant and Leda and MEPC as respondents, which dispute arose out of the lease. The outcome was that the applicants were ordered to pay Vasilakis the sum of $200,000. They now seek judicial review of that order. The second respondents have indicated that they will abide the order of the court. It is necessary that I give a detailed history of proceedings in the tribunal. On 5 June 1995 Vasilakis lodged a notice of dispute pursuant to s.55(1) of the Act. The notice stated the points of dispute to be:"The allegations relate to false and misleading statements made by the agents and the Landlord as to the drawing capacity of the shopping centre, the viability of the shopping complex, that is [sic] would be fully leased when opened, that it would attract 120,000 people per week, that there would be 100 specialty shops in the complex, that there would be a compatible tenancy mix which would act as a drawcard, and that no shops were available for lease in the mall except for the shop ultimately occupied by the Lessee and that there would be not more that [sic] 9 shops in the food court, together with misrepresentations as to the car parking capacity of the centre."
This notice had the effect of invoking the mediation procedure prescribed by the Act. On 15 June 1995 the appointed mediator, purportedly acting pursuant to s.63(1)(a)(i) of the Act, referred the matter to a retail shop lease tribunal on the ground that the parties were unable to reach a mediated agreement. Section 63 actually required the mediator to refer the dispute to the chief executive. Pursuant to s.65, the chief executive should then have appointed a tribunal to hear the dispute and notify the members of their appointment. No point was taken about this apparent irregularity. It is possible that the process was justified by an instrument of delegation under s.117(2), although there was no evidence to that effect.
In the course of proceedings in the tribunal, Vasilakis was permitted to add two further allegations as follows:"It was also represented that the area of the premises would be 120 square metres and that the rental was determined on the basis of a product of the area at a nominated rate per square metre. It was further represented that the type of operation required to be set up by the applicant in the centre was an upmarket coffee shop/cafe."
I am told that proceedings continued in the tribunal for 22 hearing days, although some of that time was attributable to the hearing of complaints by other tenants or former tenants which were being heard at the same time. Three sets of written reasons and/or decisions were delivered by the tribunal on 11 March, 20 June, and 10 September 1996 respectively, resulting in the order to which I have referred. The applicants now complain:
That the tribunal had no jurisdiction to determine the matter; and
That the present applicants, Leda and MEPC were denied natural justice by the procedure adopted in the tribunal.
WANT OF JURISDICTION
The jurisdiction of such a tribunal is limited both as to the nature of the subject matter of any claim and as to the amount involved. In order to demonstrate these limitations and other relevant matters, it is necessary to examine a relatively lengthy chain of provisions in the Act. I will try to arrange the sections in an order which will assist the reader in understanding their effect. This involves some departures from the order adopted in the Act.
Section 5 defines a "retail tenancy dispute" as:
"... any dispute under or about a retail shop lease, or about the use or occupation of a leased shop under a retail shop lease, regardless of when the lease was entered into."
Other relevant sections are:
"55.(1) A party to a retail tenancy dispute that is within a mediator's jurisdiction under section 97 (Mediators' jurisdiction) may lodge notice of the dispute with the chief executive."
"97.(1) A mediator has jurisdiction to mediate retail tenancy disputes, other than a retail tenancy dispute -
(a)...
(b)about -
(i)arrears of rent under a retail shop lease; or
(ii)the amount of rent payable under a retail shop lease; or
(iii)the amount of a lessor's outgoings under a retail shop lease; or ...".
There is no monetary limit upon the claims which may be the subject of mediation pursuant to s.55. Upon receipt of a notice of dispute, the chief executive must refer the matter to a nominated mediator within seven days and give notice to the parties of the identity of the mediator and the date and place of mediation.
Sections 63, 64, 65, 72, 73, 74 and 83 deal with references to, and proceedings in a retail shop lease tribunal. Relevant provisions are as follows:"63.(1)This section applies if -
(a)a retail tenancy dispute is within a tribunal's jurisdiction and -
(i)the parties cannot reach a mediated solution to the dispute; or
(ii)a party to the dispute does not attend the mediation conference for the dispute; or
(iii)the dispute is not settled within 4 months after the dispute notice is lodged; and
(b)the retail shop lease has not ended (whether by expiry, surrender or termination) more than 4 months before the dispute notice was lodged.
(2) The mediator must, by written notice given to the chief executive, promptly refer the dispute to the chief executive."
"64.(1) ...
(2) A party to a retail tenancy dispute may, by notice given to the chief executive in the approved form, refer the dispute to the chief executive if -
(a)any of the following provisions apply -
(i)the party claims that another party to a mediation agreement has not complied with the agreement within the time specified in it or, if no time is specified, within 2 months after the agreement is signed;
(ii)a mediator refuses to refer the dispute to the chief executive because the mediator is of the opinion that the dispute is not within a tribunal's jurisdiction;
(iii)a court has ordered that a proceeding started in the court for the dispute be removed to a tribunal; and
(b)the retail shop lease has not ended (whether by expiry, surrender or termination) more than 4 months before the dispute notice was lodged."
"65. Within 14 days after a retail tenancy dispute is referred to the chief executive, the chief executive must -
(a)appoint a tribunal from the tribunal panel to hear the dispute; and
(b)give written notice to the tribunal panel members of their appointment to hear the dispute; and
(c)give written notice to the parties to the dispute of the appointment and composition of the tribunal to hear the dispute."
"72.(1) When conducting the hearing, the tribunal must -
(a)observe natural justice; and
(b)act as quickly, and with as little formality and technicality, as is consistent with a fair and proper consideration of the issues before it.
(2)In conducting the hearing, the tribunal -
(a)is not bound by the rules of evidence; and
(b)may inform itself of any matter in the way it considers appropriate; and
(c)may decide the procedures to be followed for the hearing.
(3)However, the tribunal must comply with this subdivision and any procedural rules prescribed by regulation."
"73.(1) The tribunal may at any stage of the hearing of the retail tenancy dispute amend the particulars of the dispute in the way it considers appropriate ‑
(a)if asked by the party who lodged the dispute notice; or
(b)on its own initiative if the parties to the dispute agree.
(2)For this Act, the amended dispute is taken to be the dispute."
"74.(1) A question before the tribunal must be decided by a majority of the tribunal members.
(2)However, a question of law must be decided by the chairperson."
"83.(1) The tribunal may make the orders the tribunal considers to be just to resolve the retail tenancy dispute.
(2)Without limiting subsection (1), the tribunal may make any 1 or more of the following orders -
(a)an order for a party to the dispute to do, or not to do, anything (an "enforcement order");
(b)an order requiring a party to the dispute to pay an amount (including an amount of compensation) to a specified person (a "payment order");
(c)an order that a party to the dispute is not required to pay an amount to a specified person;
(d)an order setting aside the mediation agreement between the parties to the dispute;
(e)an order that an item, or part of an item, of the lessor's outgoings for the retail shopping centre or leased building in which the leased shop is situated was or was not reasonably incurred in, or directly attributable to, the operations, maintenance or repair of the centre or building;
(f)if the dispute is about the payment of compensation by the lessor to the lessee under the retail shop lease and the lease contains provision for the amount of compensation payable or a formula to calculate the amount of compensation payment - an order that the amount of compensation payable under the lease is reasonable;
(g)an order giving effect to a settlement agreed on by the parties to the dispute. ...".
The composition of the tribunal has some significance. The relevant sections are ss.102, 103, 106 and 107. Those sections provide as follows:
"102. The Governor in Council may appoint as members of a panel of retail shop lease tribunal members (the "tribunal panel") -
(a)1 or more persons who -
(i)have been Supreme or District Court judges; or
(ii)are lawyers of at least 5 years standing; and
(b)the number of representatives of lessors and lessees under retail shop leases the Governor in Council considers necessary."
"103.(1) A tribunal panel member must be appointed for a term not longer than 3 years.
(2)A tribunal panel member may resign by signed notice of resignation given to the Minister."
"106. A tribunal is to consist of the following tribunal members -
(a)a person appointed under section 102(a) (Appointment of members of tribunal panel); and
(b)a representative of lessors under retail shop leases; and
(c)a representative of lessees under retail shop leases."
"107. The tribunal member mentioned in section 106(a) (Composition of retail shop lease tribunals) is the chairperson of the tribunal to which the member is appointed."
Section 108 defines the tribunal's function:
"108. A tribunal's function is to hear retail tenancy disputes that -
(a)are within a tribunal's jurisdiction; and
(b)it is appointed to hear."
Other relevant sections are:
"109.(1) A tribunal has jurisdiction to hear retail tenancy disputes, other than a retail tenancy dispute -
(a)...
(b)about -
(i)arrears of rent under a retail shop lease; or
(ii)the amount of rent payable under a retail shop lease; or
(iii)the amount of a lessor's outgoings under a retail shop lease; or
(c)if the amount, value or damages in dispute is more than the monetary limit of a District Court within the meaning of section 66 of the District Courts Act 1967 (District Courts' civil jurisdiction); or ...".
"110.(1) A tribunal may do all things necessary or convenient to be done for, or in relation to, the performance of its function.
(2)Without limiting subsection (1), a tribunal has the powers conferred on it by this Act.
(3) Without limiting subsection (1), a tribunal may make, or cause to be made, the investigations it considers necessary for its hearings, including, for example, investigations about current market management costs and fees for the retail shopping industry."
Finally, s.66 provides for a directions hearing:
"66.(1) Before the retail tenancy dispute is heard by the tribunal, the chairperson may decide to hold a directions hearing.
(2) If the chairperson decides to hold a directions hearing, the chairperson must give reasonable written notice to the parties to the dispute of the time, date and place of the directions hearing.
(3) The provisions of this division (other than section 71(2) and (3) (Limited right of representation)) about the conduct of, and procedure at, a tribunal's hearing of a retail tenancy dispute and the tribunal's powers at the hearing apply, with the necessary changes, to the directions hearing.
(4)At the directions hearing -
(a)the tribunal is constituted by the chairperson; and
(b)the tribunal may make the decisions and give the directions it considers appropriate.
(5)Without limiting subsection (4), the tribunal may make decisions and give directions about -
(a)questions of law; and
(b)the tribunal's jurisdiction; and
(c)discovery and inspection of documents; and
(d)the parties' representation at the dispute hearing."
The reference in s.109 to "the monetary limit of a District Court within the meaning of section 66 of the District Courts Act 1967" should now be taken as a reference to s.68 of that Act which fixes such monetary limit at $200,000.
From this rather lengthy rehearsal of the relevant provisions, it emerges that should the mediation process fail, the mediator is to refer the matter to the chief executive if it is within the jurisdiction of a tribunal. The chief executive is then to refer the dispute to such a tribunal. Presumably, if the matter is not within the jurisdiction of a tribunal, the claimant must commence proceedings in court or refer the matter to arbitration if that is provided for in the relevant lease or otherwise consented to by the parties. If there is a dispute between the parties as to whether or not the matter is within the jurisdiction of a tribunal, and the mediator is of the opinion that it is not, then the party asserting jurisdiction may refer the matter to the chief executive pursuant to s.64(2)(a)(ii). It is then to be referred to a tribunal. The chairperson of the tribunal may determine jurisdiction at a directions hearing. If the question of jurisdiction is not determined in that way, and the question arises before the tribunal in the course of the hearing of the dispute, then it will presumably be decided by the tribunal pursuant to s.74. If the dispute is as to a question of fact going to jurisdiction, it will be decided by a majority of the members of the tribunal. If, on the other hand, the question of jurisdiction involves a question of law, it will be determined by the chairperson.
The applicants submit that Vasilakis' claim exceeded the monetary jurisdiction of the tribunal and that the whole of the dispute was therefore beyond that jurisdiction. The document which effectively commenced proceedings was the notice of dispute given by Vasilakis to the chief executive to commence the mediation process. Neither in its original, nor in its amended form did this document quantify the amount in dispute. There are cases which suggest that to invoke the jurisdiction of a court of limited jurisdiction, the initiating process must demonstrate that the claim is within the relevant limits. See Startune Pty Ltd v Ultra-Tune Systems (Aust) Pty Ltd [1991] 1 Qd.R. 192 at p.197 and the cases there cited. However that approach cannot be relevant here where the claimant validly commenced the mediation process (which was without any monetary limitation to its "jurisdiction") and was not required to take any further steps in order to invoke the jurisdiction of the tribunal.
After the mediation process had failed, the mediator's obligation to refer the matter to the chief executive pursuant to s.63 depended upon its being within the jurisdiction of a tribunal. Although the section does not say so expressly, s.63(1)(a) and s.64(1)(a)(ii) demonstrate that it was for the mediator to satisfy himself or herself as to that matter. In view of the current assertion that the matter was beyond jurisdiction, two questions suggest themselves. Firstly, did the mediator turn his or her mind to the issue of jurisdiction? Secondly, was there evidence upon which he or she could have been appropriately satisfied? Neither of these questions was ventilated before me because the correctness of the mediator's decision was not challenged. Presumably, it was open to judicial review, but the applicants preferred to attack the proceedings before the tribunal.
As previously mentioned, Vasilakis' claim against the present applicants was heard in conjunction with claims against them by two other claimants, Million Dollars Pty Limited and Philip Parker. Prior to the commencement of the hearing, a directions hearing was held. In the course of it, the solicitor for MEPC raised the question of the jurisdiction of the tribunal to entertain those two claims. The relevant claimants had filed statements for use at the hearing, which statements disclosed that both claims exceeded $200,000. The chairperson indicated that unless each claimant abandoned the excess, the tribunal could not hear those matters. After some discussion, the solicitor for MEPC said that he had instructions to apply to the court for a declaration that the tribunal did not have jurisdiction to entertain the claim. The chairperson assumed that he was being invited to determine the question of jurisdiction and indicated that he was not willing to do so at that time. Instead, he put the two claimants on terms, requiring that they file notices of abandonment within seven days, failing which he would rule that the tribunal did not have jurisdiction to hear their claims.
The solicitor for MEPC queried whether a claim could be brought within jurisdiction by notice of abandonment, this apparently being the question which his client wished to ventilate in court. The chairperson indicated that in the absence of any rules, he considered that he had the powers of a court of common law to make rules from time to time and that in the present case, he was ruling that the claims could be brought within jurisdiction by appropriate notices of abandonment. This was merely an observation made in passing, and I do not wish to reflect adversely upon the chairperson. However there is a difference between making general rules which regulate proceedings prospectively and making a ruling on a question of law which arises in the course of determining a particular matter. Further, although proceedings in such a tribunal are probably judicial in nature, it may not be appropriate to equate a tribunal to a court, given the composition of the former and the requirement contained in s.69(1) that proceedings be conducted in private. See Halsbury, 4th ed. vol.10, para.702. In any event, it is unlikely that a court of limited jurisdiction could bring a matter within its jurisdiction by any procedure adopted in exercise of a power to regulate its own proceedings. This discussion at the directions hearing did not relate to Vasilakis' claim, presumably because it had not at that time filed material indicating that its quantum was in excess of $200,000.
On 1 September 1995, I determined the disputed question of jurisdiction in connection with the Parker and Million Dollars' claims. See Leda Holdings Pty Ltd, ex parte Parker and Million Dollars Pty Ltd (unreported OS No. 600 of 1991). The point for determination was whether or not an abandonment of excess could bring a larger claim within jurisdiction. I held that the expression "the amount, value or damages in dispute" should be taken to refer to the amount claimed, taking into account the abandonment of any excess. That judgment was given ex tempore in chambers and, with hindsight, I would express myself a little differently. Section 109(1)(c) requires that "the amount, value or damages in dispute" be not more than the monetary limit of a District Court. The amount in dispute is obviously the amount claimed but not admitted. When part of a possible claim is abandoned, that part is no longer claimed and cannot be in dispute. Save for that matter of expression, I see no reason to depart from the view previously expressed. It is true that the Act makes no provision for abandonment, and in the absence of a provision such as s.73 of the District Court Act, it may be arguable that an abandonment will not be effective to bar a claim for the abandoned amount in another forum. If a claimant sought to follow that course, one would expect such a claim to be restrained on grounds analogous to those considered by the High Court in Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589 or by reliance on current notions of estoppel. This matter was not debated before me.
Vasilakis gave a notice of abandonment on 22 August 1995. It was in this form:"Vasilakis Holdings Pty Ltd hereby gives notice that it is prepared to proceed in this matter with the full knowledge that the monetary limit capable of being awarded by the Retail Shop Leases [sic] Tribunal is limited to the amount of $200,000 and abandons it's [sic] entitlement to any excess in award of damages above $200,000."
The hearing before the tribunal extended over 22 days, commencing in September 1995 and concluding in April 1996. In the course of those proceedings, the claims by the other claimants were settled so that only the Vasilakis claim proceeded to determination. As I understand it, the present applicants did not then question the jurisdiction of the tribunal to entertain Vasilakis' claim. I was told in argument that the only occasion on which it appeared that the claim might exceed the sum of $200,000 was in addresses, when it was suggested that in addition to awarding monetary compensation totalling $200,000, the tribunal should order that Vasilakis be relieved from the obligation to pay rent under the lease. This latter submission is now said to have taken the matter beyond the tribunal's jurisdiction. It is further argued that the notice of abandonment was ineffective to bar such an extended claim as it related only to a claim for money or damages. In the event, the chairperson ruled that the tribunal had no jurisdiction to grant such relief, and so the only order made by the tribunal was that which I have indicated, namely that the present applicants pay Vasilakis the sum of $200,000.
Clearly, the limitation imposed by s.109(1)(c) assumes that the issues in dispute in a tribunal will be objectively identifiable. The duty to observe the rules of natural justice also implies or assumes that proposition. The absence of pleadings makes it more than usually difficult to determine what the issues were in this case. The notice of dispute (as amended) alleged "false and misleading statements". The written submissions and published reasons indicate that the claim was for compensation for the consequences of such statements. Although the exact nature of the cause of action is not spelled out, it is probable that the claim was pursuant to s.43(2) of the Act which, pursuant to s.42, was incorporated into the lease. Section 43(2) provides:"The lessor is liable to pay to the lessee reasonable compensation for loss or damage suffered by the lessee because -
(a)the lessee entered into the lease, or a renewal of it, on the basis of a false or misleading statement or misrepresentation made by the lessor or any person acting under the lessor's authority; ..."
Section 44(1) provides that in the absence of agreement, the amount of compensation is to be decided by way of the dispute resolution process. This is a reference to the process prescribed in Part 8 of the Act, relevant extracts of which I have already set out. The definition of "dispute resolution process" in s.5 so prescribes. If the proceedings were for compensation pursuant to s.43(2), then the notice of abandonment was appropriate to limit the amount of such compensation to a sum not exceeding $200,000. The section does not itself authorise the granting of other relief, although other sections of the Act may do so.
To understand the submissions made on quantum, it is necessary to know something more about the proceedings and the issues involved. The tribunal first determined separately the issue of liability and also decided that the purported determination of the lease by Vasilakis was ineffective, Vasilakis having previously affirmed the lease with knowledge of the various misrepresentations. Exhibit NOC7 to the affidavit of Mr O'Connor filed on 7 November 1996 is Vasilakis' outline of submissions on the issue of compensation. The outline conceded that the proper measure of compensation pursuant to s.43 is the measure in tort rather than that in contract. The wording of the section suggests this approach, although in view of the incorporation of s.43 into the lease, it may have been possible to argue that the contractual measure was more appropriate. The point does not presently arise.
One approach to the question of quantum (assuming the appropriateness of the measure of damages in tort) might have been to value the lease in light of the known circumstances, awarding Vasilakis the difference between that value and the amount it was actually obliged to pay under it. Vasilakis did not approach the problem in this way. Notwithstanding acceptance of the measure of damages in tort, it rather claimed what were called "trading losses", including lost anticipated profits calculated by reference to projections which assumed the truth of the actionable misrepresentations. This suggests the measure of damages in contract rather than that in tort. There was also a claim for part of the cost of fitting out the shop.
As the tribunal had previously found that the lease was still in force, the submissions proceeded upon that basis and upon the basis that rent was therefore continuing to fall due. The so-called "trading losses" were calculated to 20 January 1996, the Monday after Vasilakis closed the business,and took into account the liability for rent up to that date. Vasilakis' legal advisers apprehended that the present applicants (or at least MEPC) might seek to set off past and future rent against any award of compensation in favour of Vasilakis. It was therefore submitted that as the tribunal had no jurisdiction to order the payment of arrears of rent, it followed that the tribunal had no jurisdiction to allow such a set off against an award of compensation. I am not sure that this proposition is correct in law, but that is not relevant for present purposes. It was then submitted that the tribunal should make an order "that [Vasilakis] is not required to pay any money to [Leda and MEPC] including any rent, outgoings or promotional levies pursuant to the agreement to lease and the lease ...". The power to make such an order was said to be found in s.83(1) of the Act which authorises the tribunal to "make the orders the tribunal considers to be just to resolve the retail tenancy dispute". I should add that the chairperson also considered the possibility that s.110 might confer such power.
Given that the tribunal is expressly prohibited from hearing disputes concerning arrears of rent or the amount of rent payable under a retail shop lease (see s.109(1)(b)), it seems most unlikely that such an order could have been within jurisdiction. Correctly, in my view, the chairperson ruled that there was no power to "rewrite the agreement or contract between the parties ..., nor to cancel an agreement or contract ....". This seems to have been an indirect recognition of the limitations imposed by s.109. In the circumstances, I have no doubt that the tribunal was correct in declining to make such an order upon the basis that it had no appropriate jurisdiction.
The present applicants submit that Vasilakis' submission had the effect of depriving the tribunal of jurisdiction to determine any part of the matter, notwithstanding that until the making of such submission, the dispute appeared to be within its jurisdiction, assuming that the notice of abandonment was effective to reduce the quantum of the claim to the appropriate level. It may be assumed for present purposes that the claim for additional relief, if valid, would have taken the amount in dispute beyond the total of $200,000 as not only the amount of accumulated damages, but also the amount of future rent would then have been in dispute. It is on this basis that the matter is said to have been beyond jurisdiction. The present applicants did not, at any time in the tribunal, take this point. They now submit that such failure could not confer a jurisdiction which did not otherwise exist.
I start with the proposition that the dispute of which the tribunal was seized was, at the outset, a claim for compensation pursuant to s.43. I cannot see that it could have been anything else. That claim must be seen in light of the notice of abandonment, which clearly identified the limitation on the jurisdiction of the tribunal and accepted it. Since a claim for compensation must be a claim for a money sum, the notice of abandonment was appropriate to limit the claim to $200,000, which was within jurisdiction, both having regard to subject matter and amount. Obviously, the parties proceeded on this basis. Although the parties may not be able to confer jurisdiction beyond that conferred by the Act, where a tribunal's jurisdiction depends upon a particular factual basis, I see no reason why the parties may not agree that such basis exists. If they do so, then they can be held to that agreement, whether because there is a contract or an estoppel, or by an exercise of the tribunal's power to regulate its own process. One must therefore ask whether Vasilakis was entitled, in the course of submissions, to claim further relief if such would take the matter beyond jurisdiction.
In Incorporated Nominal Defendant v Donelan (1973) 437 ALJR 138 the High Court was concerned with the meaning of the phrase "the amount sought to be recovered" in the County Court Act 1958 (Vic). Barwick CJ was of the view that this expression meant:"The amount expressed in the plaint or originating process either as originally framed or as formally amended during the proceedings."
His Honour considered that it did not include:
"The exhortations, submissions or calculations of counsel in address during or at the close of the trial."
Stephen J expressly agreed with the Chief Justice's reasons and it appears that Gibbs J (as his Honour then was) also agreed. I have no doubt that the proposition is correct. Although the wording of the current section is slightly different, the expression "the amount, value or damages in dispute" is clearly intended to refer to an identifiable claim. It is probable that the Act contemplates a rather more formal delineation of issues than that adopted in the present case, but the original notice of dispute and the subsequent notice of abandonment were sufficient for that purpose. That the Act contemplates some such delineation is also evidenced by the terms of s.73, dealing with amendment. It is "the particulars of the dispute" which may be amended. This assumes that such particulars are identifiable, and in this case, they clearly were. The representations were particularised in the notice of dispute, and the amount of the claim was identified in the notice of abandonment. Vasilakis could only have gone beyond that claim by seeking leave to amend pursuant to s.73, and this was not done. In those circumstances, to adopt the words of Barwick CJ in Donelan (supra), the exhortations, submissions or calculations of the legal advisers at the close of the hearing did not deprive the tribunal of jurisdiction.
In my view, a second problem faces the applicants. They seek relief pursuant to either Part 3 or Part 5 of the Judicial Review Act. To succeed pursuant to Part 3, they must be persons "aggrieved by a decision". See s.20(1). Section 7(1) provides:"In this Act, a reference to a person aggrieved by a decision includes a reference -
(a)to a person whose interests are adversely affected by the decision; ...".
As to Part 5, an application pursuant to s.41(2) is an application for review by virtue of the combined operation of s.43(1) and s.3 (definition of "prerogative order"). Pursuant to s.44, a person is entitled to make such an application:
"... if the person's interests are ... adversely affected in or by the matter to which the application relates."
It is difficult to see how the present applicants are either aggrieved or otherwise adversely affected by the decision of the tribunal not to grant relief which was beyond jurisdiction and to limit its decision to matters which the applicants were apparently happy to litigate before it. It is, however, not necessary to take this matter further.
DENIAL OF NATURAL JUSTICE
In order to understand this argument, it is again necessary to consider the course by which the tribunal reached its ultimate decision. As I have said, it published three different decisions or sets of reasons. At some stage, the tribunal determined to resolve the issue of liability before dealing with quantum. The decision published on 11 March 1996 dealt with the former issue. A number of the claims of misrepresentation were dismissed because there was no evidence to support them, but the tribunal found that the following representations were made:-
That all speciality shops, or nearly all of them, would be leased at the time of the opening of the centre;
That traffic flow would be at least 120,000 persons per week
That the tenancy mix would be "first class";
That no other shops remained available for lease.
These representations were held to have been false or misleading. The tribunal also found that but for the representations:
a)that the shopping centre would be fully leased on opening;
b)that 120,000 persons per week would use the shopping centre; and
c)that there would be a compatible tenancy mix,
Vasilakis would not have entered into the lease.
The tribunal then considered the purported termination of the lease by Vasilakis. The notice of termination was given on 17 January 1996. The tribunal found that by the time the shop opened on 29 November 1994, Vasilakis was aware of the falsity of the representations that the centre would be fully leased on opening, that there would be a compatible tenancy mix and that no shops were available except for that offered to Vasilakis. It became aware of the falsity of the representation concerning traffic flow within "at the most a matter of a few months" of opening. Notwithstanding this knowledge, Vasilakis continued to trade until January 1996. The tribunal found that there was "no suggestion that the complainant remained in possession to preserve the existing business or to protect its goodwill" and that although it had not paid rent since June 1995, such failure was attributable to financial inability and not to any earlier election to determine the lease. The tribunal said:
"The claimant continued running his business and, it is a matter of commonsense, that if there had been a turnaround in his business and it had become profitable, then he would not have sought to terminate or rescind the contract. Although the matter of prejudice has not been canvassed, we take the view that delay in itself probably leads to prejudice when it exceeds reasonable limits. We therefore find that there was no basis for the claimant to terminate the lease in January 1995 [sic]."
Issues on Quantum
The matter was then stood over for evidence and argument on the issue of quantum of compensation. This matter was heard in April, 1996. There was a substantial amount of evidence led on the question, and I have the benefit of the written submissions then provided by the parties, being exhibits NOC7 and NOC8 to the affidavit of Mr O'Connor filed on 7 November 1996. I have previously referred to some of the submissions on behalf of Vasilakis, but it is necessary that I now summarise those submissions comprehensively.
After referring to the findings as to liability, the submissions addressed the measure of compensation, broadly adopting the general measure in tort. They then addressed the circumstances of this case under a number of headings. The first was "Trading Loss". The introductory paragraph commenced:
"The actual trading position of the applicant adopting the rental found by the tribunal set out in paragraph 1.2(b) above must be compared with the anticipated trading position had the representations been fulfilled."
As I have already commented, this suggested the measure of damages in contract rather than that in tort. The rest of this part of the submission proceeded on that basis, concluding that the claimant was entitled to recover under this heading an amount of $379,027.48, which appears to have been the sum of accumulated losses to 20 January 1996, together with the profit previously forecast as likely to be derived from the business, presumably upon the basis that the various representations were true.
A further claim was made for what was described as "Loss of Fit Out", calculated at $168,729, being the difference between the written down value of the fit out ($200,544) and the salvage value ($31,815). Vasilakis expressly abandoned any claim for loss of wages or future trading losses, whatever the significance of that concession may have been.
The submissions then addressed the question of rent. I have already dealt with this aspect. It is effectively summarised in the following passage:"The fact that there are competing claims (compensation beyond 20 January 1996 and rental pursuant to the lease) that subsist in the light of the Tribunal's decision to date necessitate the Tribunal making the further order ...
... that the applicant is not required to pay any money to the respondents including any rent, outgoings or promotional levies pursuant to the agreement to lease and the lease ...".
The thrust of this submission was that the damage suffered or to be suffered after 20 January 1996 was equivalent to the amount of rental and other charges payable pursuant to the lease. The submissions then dealt with an offer of settlement made by the other parties and with what was described as "the failure of the claimant to repudiate the terms of the lease at an earlier date". This related to the period during which Vasilakis continued to trade and therefore continued to incur trading losses.
Submissions on behalf of Leda and MEPC are exhibit NOC8 to Mr O'Connor's affidavit. After summarising the findings as to misrepresentation and the legislative provisions, the submissions pointed out that as at the date of hearing, the lease remained in force and that there was no allegation that the lessor was in breach. The latter submission may have overlooked the effect of s.42 of the Act, but that is not relevant for present purposes. They pointed out that the lessee was aware of the misrepresentations at a relatively early stage, at the latest within a matter of a few months after going into possession. The submissions conceded that some allowance might be made for early trading losses. They then dealt with the question of compensation for fit out, denying any liability for same. It was submitted that such compensation would only have been recoverable if the lease had been rescinded.
The submissions then dealt with the measure of damages, adopting the tortious measure and relying upon the words of s.43(2)(a) as justifying this course. They described the proper measure as:"... the amount by which the victim of the deceit is worse off because of the deceit. In the case of a purchase of property, it is the difference between the true value of the property and the amount paid for the property, as at the date of purchase of property."
Attention was then drawn to the absence of evidence from which it could be inferred that any such loss was suffered.
The June Rulings
After consideration of these submissions, the tribunal published "Rulings of Law" on 20 June 1996. The tribunal accepted the submission that the appropriate measure of damages was that in tort and held:
"In general terms the compensation is the difference between the price agreed to because of the misrepresentations and the market price which would have been made [sic] had the representations not been made."
The tribunal recognised that there was no or insufficient material on which to assess the proper amount of compensation and then continued:
"As intimated by the Chairman on the last day of the latest hearing, a Member of the Tribunal who is well acquainted with retail shop leases and current market rentals had made a note indicating what the Member regarded as a reasonable market rental for the premises. Such note was made at a very early stage and before any evidence was heard and would, of course, have to be qualified in the light of the material before the Tribunal.
The Chairman has ruled in other matters, and again rules in this matter, that under the provisions of s.110(3) of the Retail Shop Leases Act 1994, the Tribunal may make use of the expert knowledge and experience of Members of the Tribunal, but should not do so without giving the parties an opportunity of dealing with such material, either by way of evidence or argument, after it has been put before the parties."
The tribunal referred to the terms of s.110 and then continued:
"In the absence of this section [s.110], the Tribunal would on the Chairman's ruling have been forced to dismiss the claim. However, the Tribunal has the powers set out and the question arises as to when and in what circumstances it should use them. Where a party is not legally represented, the Tribunal frequently makes use of these powers. Where a party is legally represented and the legal representative for some reason fails to properly deal with an issue before the Tribunal, the question becomes more difficult. The Chairman rules that the Tribunal has the power to make its own investigations or to rely on the expertise of its own Members, but whether it should do so is a matter for the full Tribunal and not for the Chairman alone.
The way in which the Tribunal normally makes investigations is to request parties to investigate the matter and place relevant material before the Tribunal. Whether it should do so in this case is a matter to be decided by the whole Tribunal after hearing argument from the parties."
The tribunal ruled that it had no power to grant the additional relief sought by Vasilakis, which I have previously discussed in connection with the quantum of jurisdiction, and then dealt briefly with the evidence led on the issue of quantum, conceding that:
"In the light of the rulings on questions of law by the Chairman, it may well be that the further material put before the Tribunal on the question of the amount of compensation becomes irrelevant."
The reasons concluded with this paragraph:
"I direct that these rulings be forwarded to the parties who are requested to deal with them in writing. In particular the questions to be dealt with is [sic] whether further oral evidence be received and whether this should be the subject of argument."
Further Submissions
On 18 July 1996 Leda and MEPC delivered an outline of submissions opposing any reopening of the case on behalf of Vasilakis. Subsequently, although the date is unclear, Vasilakis delivered submissions attached to which was a valuation dated 24 July 1996 by John Horrigan and Associates Pty Ltd. This purported to fix the reasonable market rental of the premises at $31,050 per annum. At about this time, the registrar of the Retail Shop Leases Registry wrote to the solicitors acting for the present applicants as follows:
"The chairman Judge Loewenthal has asked me to advise you that he is reconsidering the rulings on law he has made in this matter. If he comes to a different conclusion than that presently advised, he will notify you as soon as possible."
The solicitors for the present applicants responded on 7 August 1996, asking for identification of the rulings which might be subject to review. They also asserted that the tribunal was functus officio with respect to rulings of law and complained about the inclusion of the valuation with Vasilakis' submissions, indicating that they wished to reopen and re‑argue certain other rulings. On 8 August 1996 the present applicants submitted an outline of submissions in reply to the claimant's submissions. Again, they complained about the inclusion of the Horrigan valuation. They expressly declined to deal with its merits and sought to limit the issue for consideration to the question of whether or not Vasilakis should be allowed to reopen its case to lead further evidence.
The September Decision
Following all of this, on 10 September 1996 the tribunal published a "decision". It stated:"On 20 June 1996 the Chairman made certain rulings of law. These were circulated to the members of the Tribunal and the legal representatives of the parties. These rulings were not a final determination of the matter. Certain questions were specifically left open for future determination. Before further written submissions were received from the parties, the Chairman requested the Registrar of the Tribunal to advise the parties that he was considering the rulings of law he had made. Such advice was given to the parties a few days after the Chairman had requested the Registrar to do so, at a time when the submissions from the parties had already been received by the Registrar."
The decision asserted that the tribunal was entitled to make new rulings at any time prior to the delivery of its final decision. There was then a reference to the passage in the June rulings in which the chairman had ruled that:
"... the measure of damages was the difference between the price agreed to because of the misrepresentation and the market price which would have been made had the representations not been made."
The September decision continued:
"Having considered the general law and rulings made by various courts under section 52 of the Trade Practices Act, the Chairman rules that the right to compensation also covers loss suffered as a direct result of the injured party acting on the misrepresentation, provided that such loss is reasonably foreseeable by the parties. Applying this ruling to the facts of the matter before the Tribunal, the Chairman rules that the compensation is the difference between the agreed rental and that which could have been a reasonable rental if the representation had not been made, together with the loss suffered by the claimant from entering into the lease and reasonably foreseeable by the parties.
The Chairman has communicated this ruling to the full Tribunal and the Tribunal has decided that it is in a position to assess compensation without hearing any further evidence."
The tribunal then indicated that it considered that Vasilakis was entitled to an amount in excess of $200,000, the upper limit of its jurisdiction.
After referring to the amount of the annual rental, the tribunal said:"We take into account what was reasonable and the steps which the claimant should have taken to mitigate the damages. The claimant would have known when the centre first opened that material representations were false. He had already spent approximately $240,000 on shop fittings. The value of such shop fittings would have decreased very substantially if the shop fittings would have been removed from the shop for which they were manufactured. This appears not only from the evidence of the experts called but also from the personal knowledge and experience of members of this Tribunal. In other words, the value of the shop fittings if removed from the premises would only be a small portion of the cost of construction and installation.
Having committed himself to some substantial expense, the claimant would be reasonable in trading for a period to ascertain if the business would become viable and if the representations made would finally become true. In particular, the claimant would be entitled to continue to trade and see whether pedestrian flow increased to that represented and vacant shops became tenanted. Taking into account the amount of his commitment, we think that it would not have been unreasonable for him to wait up to a year before cancelling the lease and giving up possession. By going beyond this period, he has waived his rights or acquiesced in the position as the case may be.
From a practical point of view, it makes no difference whether he had rescinded the lease after six months or after twelve. The loss on the cost of shop fittings and his loss after a few months of trading (and here we do not take into account the anticipated profit) would have exceeded the jurisdiction of this tribunal, whether the period be six months or twelve."
The tribunal then rejected a contention on behalf of Vasilakis that the premises were worth nothing and that it should therefore be allowed to stay in possession without further payment of rent.
Rules of Natural Justice - The Complaints
The rules of natural justice are not so precise as to allow of easy integration into the Act in the way suggested by s.88. For present purposes, however, the applicants rely on two aspects of the rules which are beyond dispute. Firstly, they submit that they were not afforded an opportunity to be heard in connection with the basis upon which the tribunal determined the amount of compensation. This assertion, if proven, would constitute a denial of natural justice. Secondly, the applicants claim that the reasons given by the tribunal for its decision are so inadequate as to constitute a denial of natural justice. The decision of the Court of Appeal in Cypressvale Pty Ltd v. Retail Shop Lease Tribunal [1996] 2 Qd.R. 62 suggests that decisions of the tribunal may be attacked on this ground.
Irrelevant Issues
This aspect of the case has been complicated by two matters which are, in the end, irrelevant. The first is the assertion by the tribunal that it was entitled to change an earlier ruling. I accept that a court or tribunal may vary decisions made in the course of proceedings, provided that it does so prior to the completion of the task assigned to it, and provided that there is no denial of natural justice to any party. The variation in question was not particularly significant. The chairman simply acknowledged that the measure of damages in tort might go beyond the difference between the price paid and the value of the property obtained to include other items of loss suffered by a claimant as a result of a misrepresentation, provided that they were reasonably foreseeable by the parties. This had been substantially conceded by the present applicants in their submissions at the quantum hearing in April 1996. See ex.NOC8 to the affidavit of Mr O'Connor filed on 7 November 1996 at para.8 et seq.
The parties had made their submissions on quantum prior to the June rulings and had presumably said all that they had to say. The applicants could complain only if the September decision was made upon a basis other than that upon which they had made those submissions. The fact that the tribunal made the June ruling and then varied it did not disadvantage the applicants in any way. Had the tribunal corrected the error in the course of delivering the June rulings, there could have been no complaint. The delay between June and September does not affect the position. It is true that the parties subsequently made submissions as to whether Vasilakis should be allowed to reopen its case, and in a sense, those submissions were based upon the June rulings. In the end, however, that course was not followed. The applicants were not denied the right to be heard as a result of the variation of the earlier ruling.
The second irrelevant issue is the tribunal's raising of the possibility that Vasilakis might be permitted to reopen its case or that the tribunal might conduct its own investigations as to quantum. It would have been obliged to allow the parties to be heard before adopting either proposal. If either course were adopted, it would also have been necessary to allow them to lead further evidence, cross‑examine and make further submissions. However the tribunal did not take either course and so no denial of natural justice arose from those proposals. I treat the reference to "the personal knowledge and experience of members" in the September decision as indicating only that such knowledge and experience were consistent with the evidence. The proposition in question was, in any event, a matter of commonsense. I should add that there is no reason to believe that the tribunal received into evidence the Horrigan valuation or acted upon it.
The Right to be Heard
I turn to the assertion that the applicants were not heard on the basis adopted by the tribunal for fixing quantum. In particular, they assert that the factual basis upon which the tribunal proceeded to fix quantum differed from that established in the March decision and that they were not given an opportunity to make submissions with knowledge of that different basis. Unfortunately, the September decision is somewhat difficult to follow. It may assist if I first set out my understanding of the appropriate measure of damages in tort. The decision of the High Court in Gould v Vaggelas (1983-85) 157 CLR 215 demonstrates that in a case such as this, where the innocent party has affirmed the contract, the assessment of damages will usually commence with a consideration of the difference between the value of the property acquired and the price paid for it (per Gibbs CJ at pp. 220-2, Brennan J at pp. 254-5 and Dawson J at pp. 265). This is a particular example of the general rule that the injured party is to receive "... a sum representing the prejudice or disadvantage he has suffered in consequence of his altering his position under the inducement of the fraudulent misrepresentations ..." (per Gibbs CJ at p.220).
Other losses may also be recovered if they are shown to have been the direct consequence of the misrepresentation and perhaps, provided they were foreseeable (per Gibbs CJ at p. 221). However the plaintiff bears the onus of proving a causal connection between the misrepresentation and such further loss. As Gould v Vaggelas and the cases there cited demonstrate, this is not always an easy task. It is also necessary to ensure that the award of any such further sum does not result in double indemnity. This may arise, for example, where the possibility of losses in a business has already been taken into account in assessing the value of the business as at the date of acquisition. When the injured party rescinds for misrepresentation, the measure of damages will again be designed to return the claimant to the position he would have been in had the misrepresentation not occurred. In that case, however, the continuing value of the property in question will not be relevant.
Considerable difficulty has been experienced in this case because of a tendency to treat the transaction in question as involving the acquisition of a business when in fact it was the acquisition of a lease. I doubt whether s.43(2)(a) authorises the award of compensation for loss suffered as a result of carrying on a business on leased premises. It purports only to authorise compensation for loss suffered as a result of entering into the lease in question. This point appears not to have been taken at any stage. Other similar causes of action at common law or pursuant to the Trade Practices Act are not subject to the same limitation of available remedies, but in those cases, the more difficult questions to which I have referred must still be addressed, namely the extent to which the alleged loss was attributable to the relevant misrepresentation and the extent to which it has otherwise been taken into account in valuing the property in question.
Findings and Consequences of the March Decision
The following propositions are either expressly established by the March decision or inevitably follow from it:
(a)That Vasilakis knew of all but one of the relevant misrepresentations prior to opening on 29 November 1994 and of that one "within at the most a matter of a few months";
(b)That Vasilakis affirmed the lease with knowledge of the representations at some unspecified time, but not later than the date of payment of the rental for June, 1995;
(c)That Vasilakis did not remain in possession to protect the business or to protect the good will, but because he had affirmed;
(d)That as a result of the affirmation, Vasilakis retained the lease and fittings and therefore the right to use them.
Having regard to the measure of damages to which I have referred, calculation of the question of compensation should have commenced with a consideration of the difference between the rent payable under the lease and the market rent. Alternatively, the capital value of the lease on its face and its actual market value may have been used. To the extent that this approach failed to give full compensation, other amounts may have been allowed, provided they had not already been included in the award and provided the necessary causal link was demonstrated.
Findings in the September Decision
The September decision appears to have been based on the following propositions:-(a)That it was reasonable for Vasilakis, with knowledge of the misrepresentations to trade "for a period to ascertain if the business would become profitable and if the representations made would finally come true."
(b)That it would not have been unreasonable "for him to wait up to a year before cancelling the lease and giving up possession."
(c)"(That) (b)y going beyond this period, he has waived his rights or acquiesced in the position as the case may be."
(d)That the loss on the cost of shop fittings and the loss after "a few months of trading" would have exceeded $200,000 "whether the period be six months or twelve."
The notion of "reasonableness" raised in paras. (a) and (b) was not addressed in the March decision, nor was it apparently relevant to the assessment of compensation based on that decision. Thus the applicants had no opportunity to make submissions concerning its relevance, nor as to what a "reasonable" period might have been. Para (c) appears to be inconsistent with the finding in the March decision that affirmation was evidenced by Vasilakis paying the rent until the end of June 1995. It is not clear when this was, but rent was paid on 7 and 14 February, 6 March, 6 April, 10 and 24 May and 16 June, 1995.
The finding set out in para. (c) suggests affirmation after twelve months of trading. The perceived importance of this finding appears to have been that it limited the period for which trading losses might be allowed in the award of compensation. If loss of the right to rescind was to be given such significance, then the applicants were entitled to know that the tribunal proposed to depart from its March finding that Vasilakis had lost that right at a much earlier stage so that they could make submissions on that basis. They were not given that opportunity. As to proposition (d), the tribunal tried to ameliorate the effect of its change of position by asserting that in any event, trading losses for six months would, with the "lost" cost of fit out, exceed $200,000. The March decision had said nothing of a six month period. It had said that Vasilakis had knowledge of all misrepresentations after "at most a matter of a few months" and with such knowledge, had affirmed the contract. There was no finding that he had "rescinded the lease after six months or after twelve" as is at least arguably suggested in the September decision. If the tribunal proposed to depart from the March decision or if the period of six months was intended to be a more precise substitute for the period of "at most a few months", then the applicants ought to have been informed so that they could make submissions with knowledge of those variations.
Had the approach taken by the tribunal been correct in law and arguably open on the evidence, it might be said that any reasonably competent lawyer ought to have known that the matter would, or might be disposed of in that way and ought to have made appropriate submissions. Unfortunately, I consider that no lawyer could have been expected to anticipate the approach adopted by the tribunal as neither of the two "amounts" said to make up the total in excess of $200,000 was apparently recoverable in light of the March decision.
As to the sum of $240,000 adopted as the prima facie amount "lost" in connection with the fit out, this may have been the actual cost of acquisition and installation, but in Vasilakis' submissions on compensation, the amount claimed under this heading was only $168,729. This was arrived at by "writing down" the actual cost over the period of trading to a sum of $200,544 and deducting therefrom the salvage value of $31,815 (presumably assuming that the fittings were removed and sold), showing a net "loss" of $168,729. Even if some amount was to be allowed for loss on fit out, it is difficult to see how any sum greater than that claimed by Vasilakis could have been allowed without giving the present applicants an opportunity to make appropriate submissions. They were entitled to proceed upon the basis that the tribunal would not go beyond the ambit of the claim made by Vasilakis under that heading. However the applicants did not complain of this in argument before me.
In any event, as Vasilakis had affirmed the lease with knowledge of the misrepresentations, it is difficult to see how it could recover the whole, or even a substantial part of the fit out expenses, given that it had retained the benefit of them. It is possible that the fit out may have been less elaborate had Vasilakis known the truth about the premises (that is, had it not been misled by the misrepresentations), in which case any extra cost may have been recoverable, but the case was not conducted in that way. The problem is that although Vasilakis retained the fittings, it was also substantially compensated for them.
As to trading losses, the question of causation was a difficult one for Vasilakis. The tribunal had found that it knew of the misrepresentations within a few months of opening and yet continued to trade. The position on the evidence was actually worse than this from Vasilakis' point of view.
According to the applicants' submissions before the tribunal (ex NOC8) at para.10:-"By (December, 1994), the lessee was aware of the fraud ... and was in serious trouble of ‘going broke if something is not done now’. In his oral testimony, Mr Vasilakis himself said that from Day One he formed the view the shop had a nil saleable value, and from the very first week the turnover did not reach the expectations, and he knew the shop would never increase."
There was no suggestion that these assertions were inconsistent with the evidence. They are certainly consistent with the March decision. In those circumstances, it is difficult to see how trading losses, apart from very early losses, were attributable to the misrepresentations. Vasilakis continued to trade with knowledge of the misrepresentations, and the March decision excluded any special reason for continuing to trade such as minimizing unavoidable continuing loss. In addition, the award of trading losses meant that Vasilakis was, in effect, allowed to keep the lease and recover the rent which it had paid as this was included in the calculation of trading losses.
There is a more fundamental problem with the September decision. The tribunal there asserted that Vasilakis was entitled to wait for up to a year before "cancelling the lease and giving up possession". I am not sure what relevance this had to the calculation of compensation. The tribunal having previously determined that Vasilakis had affirmed the contract by its conduct, the question of when, at the latest, it would otherwise have been entitled to rescind was of no relevance. The tribunal held that:"From a practical point of view, it makes no difference whether he had rescinded the lease after six months or after twelve. The loss on the cost of shop fittings and his loss after a few months of trading ... would have exceeded ($200,000) whether the period be six months or twelve."
This is really the nub of the decision. The reference to these periods of time may imply an assumption that Vasilakis was entitled to accumulated trading losses up to the date of rescission. I know of no authority for that proposition. Such an interpretation implies a departure from the earlier finding of affirmation on an unidentified date and substitution of a finding of rescission after six or twelve months. Alternatively, it may be that the tribunal was asserting that Vasilakis was entitled to damages up to the latest date at which it might have rescinded, regardless of whether or when it actually rescinded. I also know of no authority for that proposition. If the period of six or twelve months was fixed as the latest time at which rescission might have been permitted, having regard to some notion of "reasonableness", then it was a finding of fact not made in the March decision. Such an approach would not have been consistent with authority. See Sargent v. ASL Developments (1974) 131 CLR 634 and Immer (No 145) Pty Ltd v. Uniting Church in Australia Property Trust (NSW) (1992-1993) 182 CLR 26. Having regard to the March decision and the law, the approach to quantum adopted by the tribunal could not have been foreseen by the applicants or their legal representatives.
Notwithstanding the apparent legal errors in the approach taken by the tribunal, intervention under the Judicial Review Act depends upon the applicants' showing that they were denied an opportunity to be heard on issues relevant to the quantification of compensation. Vasilakis' submissions claimed compensation for accumulated trading losses and loss on fit out. Thus the mere inclusion in the award of amounts under those headings cannot be said to have been beyond the range of the issues addressed by the parties in their submissions. However the applicants' complaint is that their responses to those claims were made upon the basis of the March reasons, and that in the September decision, the tribunal departed from those reasons without allowing them an opportunity to make submissions taking account of those departures.
Gibbs CJ said in Kioa v West (1985) 159 CLR 550 at p.563, "The rules of natural justice are flexible, requiring fairness in all the circumstances ...". It is difficult to see how fairness is achieved by permitting a case to be decided on a foundation of mistakes which renders the approach adopted and the decision unforeseeable as outcomes of the way in which the case has been conducted. This appears to be the basis of decisions such as Somaghi v Minister for Immigration (1991) 102 ALR 339 at p.348 and Commissioner for ACT Revenue v Alphaone Pty Ltd (1994) 127 ALR 699. In Somaghi at p.348 Jenkinson J suggested that:"There are other observations, which may be thought to constitute another gloss on the general rule, that an unfavourable animadversion, by the decisionmaker or expressed by a departmental officer to the decisionmaker, upon the conduct of an applicant, or even of another person whose interest in a decision favourable to the applicant is to be weighed by the decisionmaker, should be disclosed to the applicant so that he may respond, if the animadversion is not an obviously natural response to the circumstances which have evoked it ..."
Gummow J said at p.359:
"However, in a particular case, fairness may require the applicant to have the opportunity to deal with matters adverse to the applicant's interests which the decisionmaker proposes to take into account, even if the source of concern by the decisionmaker is not information or materials provided by the third party, but what is seen to be the conduct of the applicant in question."
These passages seem to suggest that the party to be adversely affected by a decision should be made aware of the intention of the decisionmaker to act in reliance upon particular matters if the party may not otherwise be aware of the possibility that this may occur and should be heard on such matters. Similarly, in Alphaone Pty Ltd (supra) at p.715 the Full Court of the Federal Court said:
"Where the exercise of a statutory power attracts the requirement for procedural fairness, a person likely to be affected by the decision is entitled to put information and submissions to the decisionmaker in support of an outcome that supports his or her interests. That entitlement extends to the right to rebut or qualify by further information, and comment by way of submission, upon adverse material from other sources which is put before the decisionmaker. It also extends to require the decisionmaker to identify to the person affected any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made. The decisionmaker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material. Subject to these qualifications however, a decisionmaker is not obliged to expose his or her mental processes or provisional views to comment before making the decision in question."
These observations were made in connection with non-judicial decisions, but this does not affect their relevance for present purposes.
For reasons previously given, I conclude that the applicants were denied natural justice in that they were not given an opportunity to be heard on the basis adopted by the tribunal in determining quantum.
Adequacy of reasons
In Cypressvale Pty Ltd v Retail Shop Lease Tribunal (supra), the majority said of such a tribunal at p.483:"The extent of the duty to give reasons is affected by the function that is served by the giving of reasons. The requirement is considered an incident of the judicial process, the hallmark of which is, as McHugh JA stressed in Soulemezis (1987) 10 NSWLR 247, 278-279, ‘the quality of rationality’, which is what serves to distinguish a judicial decision from an arbitrary decision. The giving of reasons is thus an aspect of judicial accountability, which was identified by his Honour in Soulemezis as the second of three purposes served by the judicial duty of giving reasons. The first, his Honour said, is that ‘it enables the parties to see the extent to which their arguments have been understood and accepted, as well as the basis of the judge's decision’. The third is that judicial reasoning provides a precedent for the decision of future cases. ...
A test which has been propounded in New Zealand for determining whether reasons for a decision are adequate or not is whether the unsuccessful party is justified in feeling not merely ‘disappointed’ at the decision against him, but ‘disturbed’ ... With respect, however, it must be at least doubtful whether it results in much more than a value judgment, rather than a reasoned justification for holding in a particular case that the reasons given for a decision are or are not adequate.
From the many cases in which the question of adequacy has been considered it is possible to extract some indications of what is required or expected. It has already been noticed that the choice between conflicting witnesses, including experts, is recognised as often being a matter not of reasoning but of judgment ... It has been said to be ‘plainly unnecessary’ for a judge to refer to all the evidence led in the proceedings, or to indicate which of it is accepted or rejected ... although failure to explain the basis of a crucial finding of fact involves a breach of principle ... But the obligation of doing so does not exist in respect of every matter of fact or law, which was or might have been raised in the proceedings ... . Nor is it necessary for a judge who is exercising a discretionary judgment to detail each factor which he has found to be relevant or irrelevant, or to itemise, for example, in the assessment of damages for tort, which of the factual matters to which he has had regard ...".
Finally at p.485, their Honours said:
"The tribunal obviously has some judicial attributes; but it is plainly not intended simply to mimic a court of law, or to conduct its proceedings in the manner of a court, or even to decide disputed questions in precisely the same way as a court. The ‘adequacy’ or otherwise of its reasons must be viewed in the light of these considerations."
I make the following comments concerning the adequacy of the September decision:
The departure of the chairperson from his June reasons causes me no difficulty. As a matter of principle, he merely recognised a supplementary head of damage which the parties had also correctly identified at an earlier stage.
The reasons, however, say nothing about the way in which the tribunal justified allowing most of the sum of $240,000 as compensation for the shop fittings. As I have pointed out, Vasilakis, by affirming the lease, retained possession and use of them. It could not sensibly be asserted that they were of no value. That they may have had a very much reduced value had they been removed and sold was irrelevant in this case because, at the time at which the tribunal was making its decision, that had not occurred. The lease had not been validly determined by either side, and so Vasilakis was entitled to use the premises, together with those fittings.
There is no attempt to value the lease (as opposed to the shop fittings) which remained in Vasilakis' possession.
No attempt is made to identify the way in which the alleged trading losses could be attributed to the misrepresentations as opposed to other causes.
In effect, the tribunal merely took the figure of $240,000 as the cost of fitting out, added to it an unspecified sum for trading losses, and asserted that as the total must have been over $200,000, an award of $200,000 was justified. The reasons do not disclose the basis of the tribunal's decision and therefore deny natural justice to the applicants.
ORDERS
As I have said, these applications were made pursuant to either Part 3 or Part 5 of the Judicial Review Act. There is some doubt about the applicability of Part 3, relating as it does to "a decision to which this Act applies", a term which is defined to mean "a decision of an administrative character". See s.4. The jurisdiction of the tribunal depends upon the existence of a dispute, whether in connection with a s.43 claim or otherwise. The resolution of such a matter is, in my view, clearly a judicial exercise in that it involves the resolution of a dispute about pre‑existing rights. It cannot be properly characterised as administrative. It is therefore appropriate to proceed pursuant to Part 5 of the Judicial Review Act. The distinction is probably of little significance in the final result. The susceptibility of the decision to judicial review (although limited) is clearly established by s.88 of the Retail Shop Leases Act and was not disputed before me.
In argument, Vasilakis submitted that even if there had been a denial of natural justice, there was nothing more that the applicants could have said and that therefore, the decision should stand. I do not understand this to be a basis for upholding a decision notwithstanding a denial of natural justice. See Annamuthoda v Oilfields Workers' Trade Union [1961] AC 945 at p.956. It is also no answer to the complaint of inadequate reasons. The order must be set aside.
It is submitted that I should determine the appropriate quantum, but I am unable to identify any power to do so in the circumstances of this case. The decision should be made by the tribunal. Further, as there has been a substantial amount of evidence already led on the issue of quantum, some or all of which may be relevant to the true quantum issue, it is difficult to see how the matter can be referred to a tribunal other than that which has heard such evidence, unless the whole issue of quantum is to be re‑heard. Nonetheless, the applicants ask that if the matter is to go back to the tribunal, it should be differently constituted, and I can understand their point of view.
Under the Act, it is the chief executive who may refer a matter to a tribunal, and I am not aware of any power to regulate the way in which he chooses to do so. I am not sure that even he has power to remove the matter from one tribunal to another once he has assigned it. These matters were not the subject of submissions, and I feel that they should be addressed before I dispose of the matter. I will therefore stand the matter over for further argument as to the form of order and as to costs.
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