Nhung Huy Duong and Coventry Village Pty Ltd
[2016] WASAT 32
•8 APRIL 2016
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)
CITATION: NHUNG HUY DUONG and COVENTRY VILLAGE PTY LTD [2016] WASAT 32
MEMBER: DR B DE VILLIERS (MEMBER)
HEARD: 2 FEBRUARY 2016
DELIVERED : 8 APRIL 2016
FILE NO/S: CC 353 of 2015
BETWEEN: NHUNG HUY DUONG
Applicant
AND
COVENTRY VILLAGE PTY LTD
Respondent
FILE NO/S :CC 744 of 2015
BETWEEN :COVENTRY VILLAGE PTY LTD
Applicant
AND
NHUNG HUY DUONG
Respondent
Catchwords:
Commercial tenancy Right to exclusively sell certain products Termination of lease for late payment of rent Estoppel Unconscionable conduct causing tenant to enter into new lease Unconscionable conduct leading to termination of lease Variation of lease if lease had been terminated Coercion to execute lease Is disclosure statement and tenant guide required if existing tenant takes up new lease within the same retail shopping centre? Rule of Jones and Dunkel Inferences drawn of noncalling of potential witnesses
Legislation:
Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA), s 6(1), s 6(4), s 15(C), s 15C(1), s 15C(2)
State Administrative Tribunal Act 2004 (WA), s 87
Result:
1. Matter CC 353 of 2015 is dismissed in its entirety.
2. Matter CC 744 of 2015 is successful in part in that Coventry Village Pty Ltd is entitled to be compensated for rent loss as a result of the termination of the first lease dated 11 November 2011. Matter CC 744 of 2015 is dismissed in all other respects.
3. The parties may, by no later than 15 April 2016, file with the Tribunal a minute of consent orders in which the quantum to be paid by Mr Duong to Coventry Pty Ltd, pursuant to orders, as well as the time for payment are agreed. If the parties fail to file a minute of consent orders, the Tribunal will determine the quantum and date of payment.
4. The parties may, by no later than 15 April 2016, file with the Tribunal an application, if any, for legal costs arising from these proceedings. If no application is filed, the Tribunal will make the following order: 'There be no order as to costs'.
Summary of Tribunal's decision:
This dispute concerned six principal questions (as summarised by the Tribunal from the 19 issues identified by the parties) pursuant to the Commercial Tenancy (Retails Shops) Agreement Act 1985 (WA). The dispute concerns two leases between the same parties in the Coventry Market Gardens. For the sake of convenience, reference is made to the Tenant and the Owner to identify the parties. The first lease was terminated by the Owner. The parties then entered into a second lease. The Tenant voided the second lease.
The six principal questions were: Firstly, whether the Owner in regard to the first lease induced the Tenant into the belief that the Tenant would be the sole tenancy that could operate as an Asian grocery store. Secondly, whether the Owner terminated the first lease unlawfully for late payment of rent since the Owner had created an assumption in the mind of the Tenant that late payment of rent was acceptable to the Owner. Thirdly, whether the second lease entered into by the parties was a new lease or a variation of the first lease. Fourthly, whether the Tenant was coerced into signing the second lease. Fifthly, whether the voidance of the second lease by the Tenant was lawful. Sixthly, whether either party is entitled to damages.
The Tribunal found in response to these principal questions as follows: Firstly, there was inadequate evidence to satisfy the Tribunal that the Owner had given any assurance to the Tenant that it would be the sole tenancy to operate as an Asian grocery store. Secondly, the Owner terminated the first lease lawfully; the Owner did not act unconscionably; and the Owner was not estopped from exercising its contractual rights for the mere reason that it had previously accepted late payments of rent. Thirdly, the second lease was a new lease, not a variation of the first lease. Fourthly, the Tenant was not coerced into signing the second lease. Fifthly, the new lease should have been preceded by a disclosure statement and the Tenant acted lawfully by voiding the second lease. Sixthly, the Owner was entitled to loss of rent and interest but all other claims for costs and damages by the parties were dismissed.
Category: B
Representation:
CC 353 of 2015
Counsel:
Applicant: Mr M Blundell
Respondent: Mr Guy Douglas
Solicitors:
Applicant: Solomon Brothers
Respondent: Douglas Cheveralls Lawyers
CC 744 of 2015
Counsel:
Applicant: Mr Guy Douglas
Respondent: Mr Andrew Thorpe
Solicitors:
Applicant: Douglas Cheveralls Lawyers
Respondent: Solomon Brothers
Case(s) referred to in decision(s):
Automasters Australia Pty Ltd v Bruness Pty Ltd and Anor [2002] WASC 268
Azzopardi v The Queen (2001) 205 CLR 50
Dyers v The Queen (2002) 210 CLR 285
Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36
Head and Zimmerman Investments Pty Ltd [2010] WASAT 95
Jones and Dunkel (1959) 101 CLR 298
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
This is a dispute between a Tenant and an Owner about two leases within the same retail tenancy shopping area. Several issues are at stake, such as the circumstances that gave rise to the Tenant entering into the first lease; the lawfulness of the Owner's termination of the first lease; the circumstances that gave rise to the parties entering into the second lease; and the lawfulness of the Tenant voiding the second lease. Both parties are claiming damages.
Issues
The issues as set out in the application of the Tenant (CC 353 of 2015) are as follows:
[1].Whether Burmingham and/or Coventry acted unconscionably, contrary to s.15C of the Commercial Tenancy (Retail [S]hops) Agreements Act 1985 ('the Act') (all references to sections are to sections of the Act unless otherwise specified), by representing to Mr Duong that his business would be the only Asian grocery store in Coventry Square Markets and subsequently permitting another tenant to open and operate an Asian grocery store in Coventry Square markets in direct competition with Mr Duong: (CC 353 of 2015)
[2].Whether the termination, on or about 14 April 2014, by Coventry of the First Lease was unconscionable contrary to s.15C[.] (CC 353 of 2015)
[3].Whether Coventry was estopped from being entitled to terminate, on or about 14 April 2014, the First Lease[.] (CC 353 of 2015 and CC 744 of 2015)
[4].Whether, upon Mr Duong and Coventry executing the Variation, Mr Duong and Coventry agreed to reinstate the First Lease and the First Lease was impliedly surrendered at law and a new lease ('Second Lease') of the Alternative Premises was created, the terms of which were terms comprised in the First Lease as varied by the Variation[.] (CC 353 of 2015 and CC 744 of 2015)
[5].Whether Mr Duong entered into the Variation due to illegitimate pressure exerted on him by Coventry[.] (CC 353 of 2015 and CC 744 of 2015)
[6]Whether Mr Duong validly elected to avoid [sic] the Second Lease as it was entered into as a result of duress? (CC 353 of 2015 and CC 744 of 2015)
[7]Whether the First Lease was reinstated by Mr Duong electing to avoid [sic] the Second Lease for duress[.] (CC 353 of 2015 and CC 744 of 2015)
[8]Whether Coventry repudiated the First Lease after it was reinstated[.] (CC 353 of 2015 and CC 744 of 2015)
[9]Whether Mr Duong was entitled to terminate, and did terminate, the Second Lease by reason of Coventry's failure to give Mr Duong a disclosure statement, pursuant to s.6(1), or incorporate a tenant guide in the Second Lease, pursuant to s.6A(1)[.] (CC 353 of 2015 and CC 744 of 2015)
[10].Whether Mr Duong is entitled to repayment of a bond of $6,721 he paid upon entering into the First Lease which has not been returned despite demand and cl.9.2(h) of the First Lease[.] (CC 353 of 2015 and CC 744 of 2015)
[11].Whether Mr Duong suffered loss by reason of the above matters[.] (CC 353 of 2015 and CC 744 of 2015)
[12].Whether Coventry suffered loss as a result of Mr Duong's late payment of his rent for April 2014[.] (CC 744 of 2015)
[13]Whether Mr Duong repudiated the Second Lease[.] (CC 744 of 2015)
[14].Whether Coventry suffered loss as a result of Mr Duong's repudiation of the Second Lease[.] (CC 744 of 2015)
[15].What orders should be made by the Tribunal? (CC 353 of 2015 and CC 744 of 2015)
In addition to the issues identified by the Tenant, the Owner identified the following issues in a crossapplication (CC 744 of 2015):
[1].Was the termination of the Lease on 14 April 2015 by Coventry a lawful termination of Lease?
[2].What is the quantum of damages Mr Duong is liable to pay to Coventry for breach of the Lease?
[3].Did Mr Duong repudiate the Variation by letter on 22 April 2014, and did Coventry accept that repudiation, terminating the Variation, by letter dated 23 April 2014?
[4].What is the quantum of damages Mr Duong is liable to pay to Coventry for breach of the Variation?
Since the matter comprises a crossapplication, these Reasons do not refer to 'applicant' and 'respondent'. Reference to 'Tenant' is to Nhung Huy Duong and reference to 'Owner' is to Coventry Village Pty Ltd.
Brief background
The parties entered into a lease on or around 25 November 2011 (first lease) whereby the Tenant would operate an Asian grocery store in a retail shopping centre, known as Coventry Market Gardens ('Market'). At the time of the parties entering into the first lease, the Disclosure Statement indicated that the Market would comprise of shops, fresh produce, eateries and a microbrewery. The permitted use of the area the subject of the first lease was 'Asian grocery, fruit and vegetables'. The Owner terminated the first lease on 14 April 2014. The Owner offered the Tenant a new lease on 14 April 2014 within the Market and the parties executed the new lease on 15 April 2014 (second lease). The Tenant voided the second lease on 22 April 2014. Both parties are claiming costs and damages. It is noted that during the course of the first lease Burmingham Pty Ltd was replaced by Coventry Square as registered proprietor of Coventry Market Gardens. There is some dispute on which date this took place, whether on 19 October 2012 or 8 February 2013, but nothing turns on it.
The key issues that lie at the core of the dispute can be summarised as follows:
•The Tenant says that in regard to the first lease, the Tenant was given the assurance by the Owner and induced into the belief that the Tenant would be the sole shop selling Asian groceries, and that the Owner breached that assurance by allowing other shops to sell products that competed with those that the Tenant had on offer. The Owner denies that such an assurance had been given and says that it is in the nature of the Market for competing products to be allowed.
•The Tenant says that the Owner created an assumption that the Owner would accept late payment of rent at any time during the month when payment was due and that the Owner is estopped from strictly enforcing the termination clause of the first lease. The Tenant also says that the Owner terminated the first lease for nonpayment of rent because the Owner had a hidden agenda to get rid of the Tenant so as to enable another tenant to expand into the area that was held by the Tenant. The Owner says the Owner had no hidden agenda and that the Owner acted within the terms of the first lease by giving a termination notice to the Tenant and subsequently terminating the first lease.
•The Tenant says that the second lease is a new lease and not a variation of the first lease; that the second lease was signed under duress; and that the Tenant acted within its rights to void the second lease. The Owner says that the second lease was a variation of the first lease; that no disclosure statement needed to be given; that there was no unlawful or unconscionable pressure exerted unto the Tenant; and that the Tenant breached the second lease by seeking to void it.
•In regard to damages, the Tenant says it is entitled to damages as a result of the failure of the Owner to honour the undertaking of exclusivity and the unlawful termination of the first lease by the Owner. The Owner says it is entitled to damages since the Tenant breached the first lease by failing to pay rent and the Tenant breached the second lease terminating it without cause.
Agreed facts
The following facts are uncontested:
On or around 25 November 2011, the Tenant and the Owner entered into the first lease pursuant to which the Tenant leased Shop 192a of Nos 243253 Walter Road, Morley, known as 'Coventry Market Gardens'. Upon execution of the first lease, a bond of $6,721 was paid by the Tenant to the Owner. The bond is refundable within three months after the expiry of the first lease if there was no dispute arising that impacted upon the bond. The first lease provided that rent would be paid on the first day of the month, one month in advance (Clause 5, Schedule to the first lease). The name of the shop operated by the Tenant was 'Asian Oz Groceries'. During the period of the first lease, another grocery store (MCQ Fresh Supermarket) commenced trading in the premises adjacent to the Tenant. There was an overlap of products sold by Asian Oz Groceries and MCQ Fresh Supermarket.
Between June 2012 and 14 April 2014, the Owner sent the Tenant around 27 reminders (principally by email) that rent was overdue, and on eight occasions a second reminder was sent. The Tenant was late in rent payment in around 21 of the 29 months of the tenancy. Staff employed by the Owner regularly visited the premises of the Tenant to remind the Tenant that rent was overdue.
On 8 April 2014, the Owner sent to the Tenant a letter entitled Notice of Breach of Lease (Notice of Breach) of the first lease. The Tenant failed to pay rent, and on 14 April 2014, the Owner served a Termination Notice (Termination Notice) on the Tenant for late payment of rent. As a result of the Termination Notice, the first lease was terminated and the Tenant was required to give possession to the Owner on the same day (14 April 2014).
On 14 April 2014, the Owner offered to the Tenant the second lease according to which the leased premises would change to Shops 140a, 140b, 176 and 177 within the Market. The Tenant executed the second lease on 15 April 2014. On 22 April 2014 the Tenant gave notice that it was voiding the second lease.
Submissions
The following is a summary of the submissions made by the parties. The Tribunal will deal in more detail with the submissions within its consideration of the respective issues.
In essence, Mr Blundell for the Tenant says that the dispute is not about the terms of the first or the second lease but about the conduct of the Owner and what inferences and conclusions are drawn from the conduct. The Tenant says that:
a)the Tenant was induced into signing the first lease since the Tenant was given an assurance by the Owner that the Tenant would be the sole tenant operating as an Asian grocery store;
b)although the Tenant had often been late in paying its rent, several other tenants in the Market had also been late and no action was taken against them; the Owner had a scheme to terminate the tenancy of the Tenant so as to make the floor space available to another tenant; and the Owner should be estopped from termination of the first lease because the Owner had created an assumption in the mind of the Tenant that the Owner would accept late payment of rent anytime within the month when rent was due, and that the Owner would not act on the strict terms of the first lease or, in the alternative, that the Owner acted unconscionably in terminating the first lease;
c)the Tenant was coerced into signing the second lease; the second lease was a new lease and therefore a disclosure statement and tenant guide had to be given to the Tenant; and that the voidance of the second lease was lawful; and
d)the Tenant was entitled to damages suffered as a result of the termination of the first lease as well as losses the Tenant suffered as a result of not being the sole provider of Asian grocery produce within the Market.
In essence Mr Douglas for the Owners says that:
a)the Owner did not induce the Tenant into signing the first lease and did not give to the Tenant any assurance that the Tenant would be the sole provider of Asian groceries;
b)the Owner acted in accordance with the first lease by terminating the first lease for nonpayment of rent; the Owner is not estopped from exercising its contractual rights for the mere fact of having accepted late payments of rent; the Owner did not act unconscionably when the first lease was terminated; and the Owner acted within commercial reality by considering who might become a tenant should the first lease be terminated;
c)the Tenant was not coerced into signing the second lease; the second lease was offered to the Tenant because of the predicament in which the Tenant found himself; the second lease was, in effect, a variation of the first lease and therefore the Owner was not obligated to provide a disclosure statement or tenant guide to the Tenant; and the Tenant breached the second lease; and
d)the Owner was entitled to damages for reason that there was rent and interest owed pursuant to the first lease and the second lease.
Consideration
The parties agree that there are certain factual disputes that, once determined, would assist to resolve remaining questions of law. The Tribunal will therefore address those factual disputes and in doing so, consider the submissions made by the parties in regard to the specific dispute. In regard to each area of dispute, the Tribunal will first make its finding known and then provide the reasons for the finding.
The Tribunal will consider the evidence and submissions under the following headings:
•Was the Tenant induced into executing the first lease?
•Was the termination of the first lease lawful?
•Was the Tenant coerced into signing the second lease?
•Was the second lease a new lease or a variation of the first lease?
•Was the voidance of the second lease by the Tenant lawful?
•Is either party entitled to costs arising from its application?
•Summary of findings
•Noncalling of potential witnesses
•Final reply to all issues identified by parties
•Orders
Was the Tenant induced into executing the first lease?
The Tenant contends that it was induced into entering the first lease and that the conduct of the Owner was unconscionable within the meaning of s 15C(1) of the Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA) (The CTRSA Act).
The CTRSA Act does not define 'unconscionable conduct' but it is accepted by the Tribunal that conduct of the Owner would be unconscionable if the conduct was well outside the expected conduct that characterises commercial relationships: see Head and Zimmerman Investments Pty Ltd [2010] WASAT 95 at [37]. The list of indicia to guide the quest when unconscionable conduct is considered contained in s 15C(2) of the CTRSA Act are not exclusive of all possible examples of conduct that may fall within the range of unconscionability. The Tribunal must take into account all the information before it and then determine whether, given the nature of commercial relationships, the conduct of the Owner was unconscionable.
For the sake of convenience s 15C CTRSA Act is quoted in full below:
15CLandlord not to engage in unconscionable conduct
(1)A landlord under a retail shop lease shall not, in connection with the lease, engage in conduct that is, in all the circumstances, unconscionable.
(2)Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a landlord has contravened subsection (1), the Tribunal may have regard to
(a)the relative strengths of the bargaining positions of the landlord and tenant; and
(b)whether, as a result of conduct engaged in by the landlord, the tenant was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the landlord; and
(c)whether the tenant was able to understand any documents relating to the lease; and
(d)whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the tenant (or a person acting on behalf of the tenant) by the landlord or a person acting on behalf of the landlord in relation to the lease; and
(e)the amount for which, and the circumstances under which, the tenant could have acquired an identical or equivalent lease from a person other than the landlord; and
(f)the extent to which the landlord's conduct towards the tenant was consistent with the landlord’s conduct in similar transactions between the landlord and other similar tenants; and
(g)the requirements of any applicable industry code; and
(h)the requirements of any other industry code, if the tenant acted on the reasonable belief that the landlord would comply with that code; and
(i)the extent to which the landlord unreasonably failed to disclose to the tenant
(i)any intended conduct of the landlord that might affect the interests of the tenant; and
(ii)any risks to the tenant arising from the landlord's intended conduct that are risks that the landlord should have foreseen would not be apparent to the tenant;
and
(j)the extent to which the landlord was willing to negotiate the terms and conditions of any lease with the tenant; and
(k)the extent to which the landlord acted in good faith; and
(l)the extent to which the landlord was not reasonably willing to negotiate the rent under the lease; and
(m)the extent to which the landlord unreasonably used information about the turnover of the tenant's or a previous tenant's business to negotiate the rent; and
(n)the extent to which the landlord required the tenant to incur unreasonable refurbishment or fit out costs.
(3)In considering whether a landlord has contravened subsection (1), the Tribunal
(a)is not to have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and
(b)may have regard to circumstances existing before the commencement but not to conduct engaged in before the commencement.
[Section 15C inserted by No. 47 of 2006 s. 23.]
The Tribunal finds that the Owner did not make a promise or give an assurance or induced the Tenant in any way into the belief that the Tenant would be the only Asian grocery store operating in the Market. The conduct of the Owner in the process leading to the parties entering into the first lease was therefore not unconscionable.
The reasons for this finding are:
a)Mr Jim Sheridan, who represented the Owner in the negotiations giving rise to the first lease, denies having made a representation or having given an assurance of any kind to the Tenant to the effect that the Tenant would operate the only Asian grocery store in the Market. No other person stood witness to such a purported undertaking or assurance having been made by Mr Sheridan or any other agent of the Owner, and no other communications refer to the purported assurance. The Tribunal finds the evidence of Mr Sheridan credible and prefers it to the evidence of the Tenant, who says that an assurance of exclusivity had been given, but with insufficient corroborating evidence to support the evidence of the Tenant. Mr Sheridan denies that the Tenant insisted on exclusivity as a precondition to the first lease and Mr Sheridan denies that he offered or suggested such exclusivity to entice the Tenant into signing the first lease. Mr Sheridan explained in detail how the Market contained a mix of tenancies and how the products on offer by the respective tenancies often overlapped to some extent. This, according to Mr Sheridan, increases competition between tenancies and draws more customers to the Market as a place of trading and competition. In this regard, Mr Sheridan explained how he told a key cutter that practically the key cutter may not face competition within the Market, but legally it was open to another tenant to also offer the same type of service since the Owner could not and would not prescribe to a tenant what products or produce to sell. The Tribunal accepts the evidence of Mr Sheridan that he was under no authority or directive to offer to the Tenant any exclusive rights, nor did he, at his own initiative, offer any exclusive rights to the Tenant.
b)The Tribunal does not accept that a word, ostensibly 'Asian', that had been scratched out of some other leases (see paragraph 115 of the Tenant's Closing Submissions dated 26 February 2016) justifies the inference that is sought to be drawn by the Tenant. Although it appears that a word had been scratched out in those leases, there is insufficient evidence before the Tribunal as to what the word may be; whether it was the same word in each lease that had been scratched out; why the word had been inserted and then scratched out of the lease; who had scratched the word out; and how the removal of the word bears relevance to this proceeding. The Tribunal cannot, on the basis of the evidence before it, draw the inference proposed by the Tenant.
c)There is no clear definition before the Tribunal as to what is meant by an 'Asian grocery store' or 'Asian produce' or 'Asian products'. Clause 7 of the Schedule of the first lease refers to the business of the Tenant as 'Asian grocery, fruit and vegetables and associated products'. In failing to provide a clear definition, the weakness in the propositions of the Tenant is emphasised. Does 'Asian grocery store' entail products from all of Asia; does it refer to a specific subregion of Asia; or are those products so unique that they are only found in Asia and nowhere else in the world? These are but some of the questions that are not addressed in the evidence of Mr Duong and his wife, Ms Pham; nor in the first lease; nor in the disclosure statement; nor in any communications leading to the first lease. The Tenant and his wife were particularly vague in their evidence about what exactly was meant by 'Asian grocery store'. On the one hand, mention was made that it referred to general Asian produce, but on the other hand, Ms Pham in particular referred to it as meaning Chinese/Vietnamese produce - which is much reduced in scope than the general reference to 'Asian'. Mr Duong and Ms Pham were ambiguous in responding to examination as to what exactly had been promised to them; what products were purported to be within the Tenant's exclusive domain; and what were the items that fell within and outside of their purported exclusivity. In contrast with the evidence of Mr Duong and Ms Pham, Mr Sheridan had very clear and consistent recollection of the discussions leading to the entering into the first lease, and most particularly that several tenancies within the Market sold products that could be associated with 'Asian groceries' and that it was never agreed between the parties nor promised to the Tenant that the Tenant would have the sole right to sell such a wide and undefined category of products on an exclusive basis.
d)Much was made by the Tenant about a socalled 'Vihenti' who had purportedly expressed interest in becoming a tenant in the Market and who had purportedly been refused by Mr Sheridan on the basis that the Tenant had sole rights to sell Asian groceries. First of all, it is not clear who 'Vihenti' is; what products it had on offer; and how those products overlapped with the products offered by the Tenant. Secondly, there is insufficient evidence before the Tribunal to collaborate the evidence of Mr Duong since 'Vihenti' was not called to give evidence about whether he/she had indeed expressed interest in taking up a tenancy in the Market. Thirdly, although Mr Sheridan recalls vaguely that he spoke at some stage to the Tenant about the possibility of a 'Vihenti' becoming a possible tenant (it is not clear if this is the same person or entity referred to by the Tenant), Mr Sheridan was adamant that he never gave the assurance to the Tenant that Vihenti would not be allowed to trade. On the contrary, Mr Sheridan's evidence was that the Vihenti that Mr Sheridan was referring to would have been a major tenant and that Mr Sheridan would have strongly encouraged Vihenti to take up tenancy in the Market had Vihenti expressed an interest. The Tribunal therefore rejects the evidence of the Tenant that Mr Sheridan gave to the Tenant an assurance of exclusivity to the exclusion of Vihenti.
e)No communication or correspondence between the parties prior to or after entering into the first lease contains any reference to an assurance of exclusivity purportedly made by the Owner. Although Mr Sheridan acknowledges that the Tenant, several times after the first lease had been entered into, made comments to Mr Sheridan about the Tenant wishing to have exclusive rights, no such exclusivity had been agreed to prior to entering into the first lease and Mr Sheridan's response was consistent; namely, that it would not be in the interest of the Owner to offer exclusivity. The Tribunal rejects the evidence of Ms Pham that she wanted to complain on several occasions about the Tenant not having been granted exclusive rights, but that she could not find anyone to speak to. It is implausible that if exclusivity was so important to the Tenant, Mr Duong or Ms Pham could not formally make their views and concerns known to the Owner, particularly since it would have been a breach of the first lease to allow a competitor into the Market. The evidence before the Tribunal is that staff of the Owner were in regular attendance at the tenancy of the Tenant and were available via a centre manager.
f)The Tenant continued trading for a substantial time after the first lease had been entered into without commencing proceedings to enforce the purported undertaking or assurance of exclusivity. Although conduct after the entering into a contract is not necessarily relevant to establish the terms of the contract, it is noted by the Tribunal that no conduct, comment or correspondence of the Tenant prior to or after entering into the first lease supports the evidence of the Tenant that an assurance of exclusivity had been given to the Tenant by the Owner or by an agent or employee of the Owner.
g)The first lease does not contain any reference to an assurance or promise of exclusivity.
h)The first lease specifically waives any assurance that may have been given that is not contained within the first lease and the parties declare that no assurance other than those contained in the first lease had been given (clause 5.43 of the first lease).
i)The disclosure statement which preceded the first lease does not contain any reference to exclusivity although the Tenant did add other matters into the disclosure statement that were important to the Tenant.
j)The first lease explicitly empowers the Owner to grant leases to other tenants, 'including as to the type of business to be operated on such premises...'. (clause 5.30 of the first lease).
The Tribunal finds that neither the Owner nor an agent nor employee of the Owner made a promise, a representation or gave an assurance of any kind to the Tenant or Ms Pham that the Tenant would be the only Asian grocery store operating in the Market. The Tribunal is therefore not satisfied that the Tenant has proven that the Tenant was induced into entering the first lease or that the conduct of the Owner in regard to the parties entering into the first lease was unconscionable.
The application in regard to this element of the complaint as set out in more detail in the Tenant's closing submissions dated 26 February 2016 in paragraphs 130 to 131should therefore be dismissed, including any damages or costs incurred by the Tenant that are said to have arisen from the purported inducement.
Was the termination of the first lease lawful?
The parties are in agreement insofar as the essential facts are concerned that give rise to this question; namely, in summary, that:
•the first lease was entered into on or around 25 November 2011;
•rent pursuant to the first lease was payable on the first day of each month in advance;
•the Tenant was late in rent payment on several (around 21) occasions;
•whenever the Tenant was late in rental payment, a reminder notice (usually by email) had been sent;
•on several occasions where the Tenant continued to be late in rental payment following the first reminder notice, a second reminder notice (around eight in total) had been sent;
•even if the Tenant was late in payment of rent, the rent was always paid within the same month in which the rent was due;
•a notice of breach for nonpayment of rent (sent by letter not email) was sent by the Owner to the Tenant on 8 April 2014;
•no rent payment took place prior to the termination notice being handed to the Tenant at around 9 am on 14 April 2014.
The Tribunal will first make known its finding to the question whether the termination of the first lease was lawful and then provide the reasons for the finding.
The Tribunal is satisfied that the termination of the first lease was lawful.
The reasons for this finding are as follows:
a)The Owner acted in accordance with the terms of the first lease when it terminated the first lease. The Tenant failed to pay rent on 1 April 2014 in advance for April, as is required by the first lease; the Owner issued a Notice of Breach for nonpayment of rent on 8 April 2014; the Tenant failed to pay rent and on 14 April 2014, the first lease was terminated. The conduct of the Owner was consistent with the terms of the first lease (see clause 5.2(a) of the first lease) and within the rights of the Owner.
b)The Tribunal does not accept that the conduct of the Owner, by accepting late payment of rent from time to time during the first lease, waived the right of the Owner to terminate the first lease pursuant to the terms of the first lease. The preverbal 'Good Samaritan' cannot be blamed if, after multiple efforts to secure timely payment of rent, it resorts to enforcement of its contractual rights. Mr Duong acknowledged in evidence that he fully understood that the nonpayment of rent constituted a breach of lease. Mr Duong was not a newcomer to the commercial world and he knew, or should have known, that late payment of rent may carry serious consequences and even if he did not know, the Notice of Breach should have focused his mind particularly in light of him being aware that some other tenancies in the Market had been terminated. Although Mr Blundell sought to sketch a portrait of the Owner scheming in the background, waiting to pounce on the unsuspecting Tenant, this was not borne by reality, as is shown in these reasons. This element of the case was, in effect, simple and straightforward: the Tenant repeatedly failed to pay rent on time as required by the first lease; when, on 1 April 2014 the Tenant again failed to pay rent, the Owner issued a breach notice as per the first lease; the Tenant remained in breach by not paying rent regardless of the breach notice; the Owner terminated the first lease on 14 April 2014. There was no scheme on the part of the Owner, there was only nonpayment of rent on the part of the Tenant that put the termination process in motion.
c)The Tribunal does not accept the contention that since the Owner accepted late payment of rent on many occasions, the Owner thereby created the assumption in the mind of the Tenant that rent would always be accepted at any stage during the month in which rent was due or that the Owner would not enforce the terms of the fist lease. The Owner sent a rent reminder, usually an email, each month when rent was late; in some instances, a second reminder was sent if rent was not paid in response to the first reminder; several reminders mentioned that 16% interest is charged on late payment of rent; and ongoing oral interaction took place between staff of the Owner and the Tenant about persistent late payment of rent. The Owner at no stage consented, explicitly or implicitly, to the terms of the first lease being waived or varied whereby rent would be accepted anytime of the month in which it was due. It appeared from the evidence as if it were Mr Duong and Ms Pham who adopted an overly relaxed or even careless approach to payment of rent by not making it their business to pay on the first day of each month. They are ultimately to blame for their misfortune. The conduct of Mr Duong and Ms Pham that led to the termination of the first lease cannot be placed before the door of the Owner.
d)The Tribunal does not accept that the Owner is, by its conduct, estopped from enforcing the terms of the first lease. The facts are that the Owner regularly reminded the Tenant to pay rent on time; the Owner consistently levied interest on outstanding rent; the Owner and staff employed by the Owner regularly reminded the Tenant of the terms of the first lease and the importance to pay prior to or on the first day of each month; and staff of the Owner regularly discussed with the Tenant their concern about the frequent late payment of rent. This is not the conduct of an oppressive landlord or a landlord having waived its rights, or a landlord that had accepted, by conduct, that terms of the first lease had been varied or that the terms of the first lease would not be enforced. This is the conduct of an Owner who tries its best to accommodate the Tenant but who ultimately makes a decision that is in the best commercial interests of the Owner to terminate the first lease and to find an alternative tenant. There is nothing untoward about this conduct. The evidence does not support the image that the Tenant sought to portray of the Owner as being overbearing, unconscionable and vindictive. On the contrary, the Owner was remarkably accommodating by accepting late payments; by discussing with the Tenant challenges that the Tenant's new business was facing; and by only terminating the first lease after multiple and persistent late payments of rent.
e)The Tribunal rejects the proposition that the Owner had devised in an unconscionable manner a scheme to get rid of the Tenant by having discussions with prospective tenants about taking over the area the subject of the first lease, should the Tenant default and space become available. The Owner did what any responsible owner might do; namely, to assess what commercial options were available if the Tenant continued to breach the first lease. The aide memoire dated 2 February 2016 prepared by Mr Blundell of an expansion of the footprint tenancy of another tenant does not justify an inference of unconscionable conduct on the part of the Owner. TheOwner merely contracted with another tenant to expand and consolidate the area leased by the other tenant. This is not a devious scheme, this is commercial reality. The Tribunal accepts the explanation of Mr Thorpe that the Owner took into account several considerations before it decided to terminate the first lease one such consideration being whether an alternative tenant may be found for the space that was occupied by the Tenant. The Owner was under no obligation to discuss the options that the Owner had under consideration with the Tenant, including the possibility of offering the area occupied by the Tenant to another tenant within the same Market, or from the outside of the Market, should the first lease be terminated. The Tribunal does not find anything untoward about the Owner negotiating terms and conditions to a prospective tenant that were different from the terms and conditions of the first lease. The Owner may, within its discretion, seek an alternative tenant and negotiate terms with such a potential tenant in the event that an existing tenant defaults. The Tribunal accepts that after the termination of the first lease, another tenant had taken up not only the area that used to be occupied by the Tenant but also other areas within the Market. Nothing turns on this. Ultimately, the trigger for the termination was not the conduct of the Owner. The Tenant and Mr Blundell consistently played down the fact that it was eventually the conduct of the Tenant by failing to pay rent on time, and failing to pay rent after he had received the breach notice, that caused the first lease to be terminated. The Tenant is solely and entirely to blame for the misfortune that struck him. The Tribunal on the other hand does not accept the contention of Mr Douglas and the Owner that the Tenant on purpose delayed paying rent so as to negotiate for lower rent. The possible reasons for late payment of rent by the Tenant are not for the Tribunal to ascertain, but the consequences of the Tenant's conduct are, unfortunately, clear.
f)The Tribunal does not accept the proposition that, since other tenancies in the Market may have been late in payment of rent as per the 7 May 2014 Tenant Arrears Report (Report), in this matter, the Owner discriminated or acted unconscionably or unfairly towards the Tenant by enforcing the rights of the Owner under the first lease. Firstly, the Tribunal was not given detailed evidence about the status of payment by other tenants for the same period as that of the Tenant. No two tenants are exposed to exactly the same circumstances and, in order to support a proposition of discrimination or unfair or unequal treatment between tenants, more evidence than a general allegation or assertion is required. Secondly, the utility of a single month of purported payment arrears comparing the status of the Tenant with those of other tenants is of little use. The Report merely presents at face value one month's statistical basis of comparison of a tenancy that had run 29 months. No reasonable or conclusive inference or conclusion can be drawn from one month's comparison. Thirdly, the accuracy of the Report has not been established since it is not clear who the author of the Report was and whether the Report was indeed accurate. The Tribunal may not be bound by the rules of evidence, but this Report cannot be relied upon since it is not supported by direct evidence, and even if it could be relied upon, the Report does not constitute adequate proof of discrimination or unfair or unequal treatment against the Tenant and is therefore of little or no weight. At best, the Report only shows that on a certain date a certain number of tenants within the Market may have been in arrears. That is inadequate to demonstrate unconscionability, unfair treatment or discrimination on the part of the Owner towards the Tenant.
g)The Tribunal rejects the contention that the Notice of Breach should have clarified in greater detail what the potential consequences of the breach were. Firstly, all other nonpayment of rent was followed by a Rent Reminder (usually per email) to the Tenant which often included reference to a penalty interest payment; secondly, the use of the words 'Notice of Breach' was clearly in bold on the letterhead of the Owner and is consistent with the terms of the first lease. The Notice of Breach should have forewarned the Tenant that the seriousness of the nonpayment has been elevated from a rent reminder to a breach of the first lease; and thirdly, there is no obligation on the Owner to spell out in the Notice of Breach what the consequences are of such a notice or the consequences of noncompliance with the Notice. The Notice of Breach stated the following:
Failure to promptly pay your account by the due date place you in breach of the lease and result in interest (at a rate of 16% compound daily) being charged on the overdue account.
(Tribunal added emphasis)
The reference to interest is merely a repeat of what had been said previously in rent reminders; namely, that late payment attracts interest. There is no reasonable basis to conclude that the Owner waived any rights or should be estopped from exercising any rights, or that the Tenant was induced into assuming that the Owner would not exercise its rights pursuant to the first lease.
The Tenant was obligated to give the Notice of Breach the serious attention it deserved. The trigger for termination was nonpayment of rent. The Tenant released the trigger. It is said by Mr Blundell that the Owner had already devised a plan in the previous month (March 2014) to issue a notice of breach. There is nothing untoward in the conduct of the Owner. The Owner may have had a proverbial plan B in mind in the event that the Tenant defaults, but the moment that caused the events to materialise in April 2014 was the nonpayment of rent on the first day of the month and by the Tenant ignoring the breach notice which provided a second opportunity to pay rent. There is nothing untoward for the Owner to have decided after so many rental reminders that the next failure to pay rent on the due date would be treated as a default of the first lease.
h)The Owner was under no obligation to spell out in the breach notice what the implications were of failure to pay rent as per the first lease. The terms of the first lease (see clause 5.2 of the new lease) clearly set out the potential consequences for nonpayment of rent. The Owner also did not waive its rights by not enforcing the terms of the first lease when a nonpayment occurred previously. It was within the discretion of the Owner whether it wished to strictly enforce the terms of the first lease or whether it preferred to allow additional time for the Tenant to pay rent. By not enforcing the terms of the first lease, the Owner did not waive or surrender rights; the Owner is not estopped from acting in accordance with the terms of the first lease; and the Owner did not act unconscionably by terminating the first lease. If the Tenant had been under an assumption that the Owner would not enforce the terms of the first lease, such an assumption is not reasonable given the facts of this case.
i)The failure of the Owner to give a disclosure statement to a tenant that followed upon the Tenant is not in itself adequate proof of the existence of a scheme to terminate the first lease. The conclusion that is sought to be drawn from the nonprovision of a disclosure statement to the next tenant is speculation at its highest and is rejected.
j)The Tribunal accepts that s 15C of the CTRSA Act places limits on the way in which contractual rights are exercised, and the Tribunal accepts that in principle, the termination of the first lease is not excluded from scrutiny under s 15C. But there is insufficient evidence in this case that any of the indicia of s 15C(2) of the CTRSA Act applies to the conduct of the Owner. The mere assertion of unconscionable conduct is not adequate for conduct to be so classified. In this case, other than the picture of a scheming, underhand Owner being painted, there is a lack of evidence to remotely attract the provisions of s 15C(2) of the CTRSA Act. Although Mr Blundell referred the Tribunal to the matter of Automasters Australia Pty Ltd v Bruness Pty Ltd and Anor [2002] WASC 268 (Automasters), the decision does not bear relevance to this proceeding. In the Automasters matter, his Honourable Haslup J pointed out in [396][398] that a person had acted 'capriciously' and 'unreasonably' in circumstances 'where there was not a sufficient basis to terminate the contract'. In addition, the Court found that there was a breach of the Franchising Code of Conduct which was indicative of unconscionable conduct. In this matter before the Tribunal, none of these indicia is met, since the Owner did have a sufficient basis to terminate the first lease and the conduct of the Owner was neither unreasonable nor capricious.
In summary:
1)If the Tenant had acted on an assumption that rent for any month could be paid at any time during the month or that the terms of the first lease would not be enforced, the Owner cannot be held liable for such an assumption; the Owner did not create such an assumption; and the Owner did not induce the Tenant into acting on the basis of such an assumption.
2) The Owner did not employ unfair tactics to the Tenant; the Owner's conduct in regard to other tenants were not shown to be inconsistent or unreasonable visàvis the Owner's conduct towards the Tenant; and the Owner did not unreasonably fail to disclose to the Tenant the plans the Owner had, should the Tenant default.
3)The Owner cannot be estopped from exercising the Owner's contractual rights pursuant to the first lease since the assumption that is said to have existed in the mind of the Tenant was not reasonable and was not supported by the facts of the matter; the Owner did not induce the Tenant into adopting the assumption; if the Tenant acted on the illfounded assumption the blame is not to be put to the Owner; and the Owner had not been aware of the purported assumption in the mind of the Tenant, nor did the Owner contribute in any way to sustain the assumption.
In conclusion, the application in regard to the question whether the first lease had been lawfully terminated is answered in the positive. The complaint of the Tenant should therefore be dismissed, including any damages, losses or costs claimed by the Tenant as a result of the termination of the first lease. The Owner is entitled to claim for loss of rent and interest as a result of the termination of the first lease.
Was the Tenant coerced into signing the second lease?
The facts giving rise to the question whether the Tenant had been coerced by the Owner into signing the second lease can be summarised as follows.
On 14 April 2014, after the Termination Notice had been served earlier on the same day, Mr Murray Archibald for the Owner presented to the Tenant the second lease in draft form for Shops 140a, 140b, 176 and 177 (proposed premises) in the Market. The draft second lease had been prepared by the Owner after Mr Raymond Tan, lawyer for the Tenant, had called Mr Thorpe. The Tenant and a representative of the Owner also inspected the proposed premises prior to the second lease being entered into. The terms and conditions of the second lease were essentially the same as the first lease. The Tenant signed the second lease late on the afternoon of 15 April 2014. The Tenant notified the Owner on 22 April 2014 that the Tenant had voided the second lease for three reasons:
1)the Tenant had signed the second lease under duress;
2)no disclosure statement had been provided to the Tenant in regard to the second lease; and
3)no tenant guide had been provided to the Tenant in regard to the second lease.
The Tenant finally got locked out of Shop 192a on 23 April 2014 and moved the last of his stock out of Shop 192a in May 2014.
The Tribunal will first make known its finding to the question whether the Tenant was coerced into signing the second lease and then provide its reasons for the finding.
The Tribunal finds that the Owner did not coerce the Tenant into signing the second lease.
The reasons for this finding are as follows:
a)The Tribunal accepts that the Tenant was under severe pressure and stress on 14 April 2014 after he had received the Notice of Termination. He saw his entire business come to a standstill. Whether he showed emotions or not is not material. Human nature would tell that he must have been shocked, stressed and anxious. These emotions would not be dissimilar to what is experienced by many tenants that are in default and then locked out of a tenancy. The Tribunal is, however, not satisfied that the conduct of the Owner was unconscionable or untoward later on the day of 14 April 2014 when he offered to the Tenant the second lease to take up an alternative premises within the Market. This would have enabled the Tenant to move his equipment, shelves and produce from one tenancy to another so as to minimise potential losses and costs. The Tenant inspected the proposed premises and the Owner offered to assist with the relocation and to make available staff to help the Tenant to transfer equipment. Although the situation was stressful, the Tribunal is not satisfied that the conduct of the Owner was improper or that the Owner abused its relationship with the Tenant by coercing the Tenant into signing the second lease. The Tribunal is also not satisfied that the conduct of the Owner or words that were said by Mr Thorpe or Mr Holtham comprised a threat or illegitimate pressure as referred to in Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [31] and [32]. The onus is on the Tenant to prove on the balance of probabilities: (i) what words were said and (ii) that those words or conduct were unconscionable. The Tenant fails in both respects.
b)The Tribunal accepts the explanation given by Mr Thorpe for the Owner as to why the Owner would, on the one hand, terminate the first lease, but, on the other hand, offer a second lease to the Tenant who had had trouble paying rent as per the first lease. The explanation of Mr Thorpe was that the proposed premises offered pursuant to the second lease may have provided better exposure to the Tenant and thereby may have improved the turnover of the Tenant. The Tribunal accepts that the Tenant may not have shared this assessment of the Owner, but the rationale of the Owner is plausible. The rationale of the Owner is supported by the expert evidence of Mr Geers, (a valuer called by the Owner) who says that, from a rental perspective, the proposed premises the subject of the second lease was of similar value as the tenancy the subject of the first lease. This is not to say that the Tenant saw the two tenancies of similar value. The Tenant may have had a different view, but the conduct of the Owner did not amount to an abuse of power or coercion. It was for the Tenant to accept or refuse the offer of proposed premises after the first lease had already been terminated.
c)Although the Tenant had only received the draft of the second lease on 14 April 2014 and executed it late on 15 April 2014, it is noted that it was the phone call from the legal representative of the Tenant, Mr Raymond Tan, to Mr Thorpe on 14 April 2014 that initiated the negotiations for the second lease; it appears as if the Tenant and Ms Pham did receive legal advice from Mr Tan in regard to the draft second lease; and Mr Tan exchanged emails with Mr Thorpe about the proposed terms of the second lease and some variations were made to the draft second lease as a result of the inputs made by Mr Tan to Mr Thorpe. The Tribunal accepts that the entire process leading to the signing of the second lease was speedy and stressful, but that does not mean the Owner coerced the Tenant into signing the second lease. The proposition by the Owner that the Owner offered a lifeline to the Tenant is credible and there is insufficient evidence before the Tribunal to find that the Tenant was coerced or forced into signing the second lease.
d)It is not clear what exactly was said on 14 and 15 April 2014 when representatives of the Owner met with the Tenant on site. On the one hand, the Tenant says he was put under unbearable pressure and told that if he did not sign the second lease within 15 minutes he would be locked out. Mr Thorpe, who attended the site on 15 April 2014, denies that such words were spoken or that an ultimatum of such nature was given. The members of the family of the Tenant who purportedly overheard the discussions, were not called to give evidence to collaborate the version of the Tenant. Account must be taken that since the first lease had been terminated on 14 April 2014, the Owner was entitled to possession of Shop 192a: see clause 5.2(i) of the first lease. The image of the events sought to be portrayed by the Tenant is not credible. The facts are that the first lease was terminated lawfully on 14 April 2014; the Owner had the right to take possession of the premises; the Owner offered to the Tenant a second lease at the request of Mr Tan and gave the Tenant a licence to remain on the premises subject to the second lease being executed so as to enable the Tenant to move to the proposed premises; and the Owner made it clear to the Tenant that if the Tenant did not sign the second lease, then lockout would proceed. The Tribunal accepts that the Tenant may have executed the second lease in a hurry and fuelled by the panic of his business being closed down, but at the same time there was no obligation on the Owner to offer a second lease or to grant a licence to the Tenant to remain on site after 14 April 2014. The conduct of the Owner was not improper and did not constitute coercion. The Tribunal rejects the proposition that the Tenant signed the second lease as a result of the 'extraordinary and patent pressure exerted' by the Owner: see paragraph 67 of Closing Submissions of the Applicant dated 26 February 2016.
The Tribunal therefore finds that the Owner did not coerce the Tenant into signing the second lease; that the Owner did not abuse its power; and that the second lease could not be voided as a result of the purported coercion by the Owner.
Was the second lease a new lease or a variation of the first lease?
The parties disagree as to the proper characterisation of the second lease. The Tenant says the second lease was a new lease and therefore the Owner should have provided the Tenant with a disclosure statement and a tenant guide pursuant to s 6(1) and s 6(4) CTRSA Act. The Owner says the second lease was a variation to the first lease; that the first lease had been reinstated; and that there is no requirement for the Owner to provide the Tenant with a disclosure statement or a tenant guide.
The relevant part of the CTRSA Act provides as follows:
6. Disclosure statement, tenant's rights if not given by landlord etc.
(1)Where a retail shop lease is entered into and the tenant has not, at least 7 days before the entering into of the lease, been given a disclosure statement in accordance with subsection (4) or the disclosure statement given is incomplete or contains false or misleading information, the tenant may, in addition to exercising any other right, do either or both of the following
(a)within 6 months after the lease was entered into give to the landlord written notice of termination of the lease, unless subsection (3) prevents termination;
(b)apply in writing to the Tribunal for an order that the landlord pay compensation to the tenant in respect of pecuniary loss suffered by the tenant as a result of
(i)the omission of the landlord to give a disclosure statement in accordance with subsection (4); or
(ii)the giving of an incomplete disclosure statement by the landlord; or
(iii)the giving of false or misleading information by the landlord in the disclosure statement.
(2)Where the tenant under a retail shop lease gives to the landlord a notice of termination under subsection (1) the lease terminates upon the expiry of a period of 14 days after the notice was given.
…
(4)A disclosure statement given for the purposes of this section shall be in the prescribed form duly completed and signed by or on behalf of the landlord and the tenant and shall contain a statement notifying the tenant that he should seek independent legal advice.
6A. Tenant guide, tenant's rights if not in lease etc.
(1)Where a retail shop lease is entered into and the retail shop lease does not incorporate a tenant guide in accordance with subsection (4), the tenant may, in addition to exercising any other right, do either or both of the following
(a)within 60 days after the lease was entered into, give to the landlord written notice of termination of the lease[.]
The proper characterisation of the second lease holds the key to the question whether the Tenant could void the second lease.
The Tribunal will first make known its finding to the question whether the second lease was a new lease or a variation of the first lease and then provide the reasons for the finding.
The Tribunal finds that the second lease was a new lease and not a variation of the first lease.
The reasons for this finding are as follows:
a)The first lease was terminated on 14 April 2014. The second lease was executed on 15 April 2014. Even if the second lease used the terms of the first lease as a basis for purposes of drafting, that does not enliven the first lease. It merely means the second (new) lease that came into being in some respect contained terms and conditions similar to a previous (first) lease.
b)The second lease contained terms that were materially different from the first lease, most particularly the date of commencement of the lease, the location of the premises and the size of the premises.
The Tribunal finds that the second lease was a new lease.
Was the voidance of the second lease by the Tenant lawful?
Since the second lease was a new lease, the question is whether the Tenant should have been provided with a disclosure statement and a tenant guide as prescribed by s 6 CTRSA Act.
The Tribunal finds that the Tenant should have been provided with a disclosure statement and a tenant guide.
The Tribunal does not accept the contention by Mr Thorpe that once a lease had been signed in a retail shopping centre, no further disclosure statement or tenant guide needs to be given to a tenant, even if a new lease is entered into within the same retail centre. The CTRSA Act contains no such exception and therefore the general protective measures foreshadowed in the CTRSA Act must be followed by a landlord.
Since the Owner failed to provide the Tenant with a disclosure statement and a tenant guide, the Tenant could void the second lease pursuant to s 6(1)(a) of the CTRSA Act. The Tenant chose to do so and acted within its rights by voiding the second lease.
The Tribunal finds that the voidance of second lease by the Tenant on 22 April 2014 was lawful. The crossapplication by the Owner for damages suffered as a result of the voidance of the second lease should therefore be dismissed.
Is either party entitled to costs arising from its application?
Both parties have had limited success in this proceeding.
Following the findings made by the Tribunal above, the respective applications for costs, losses and damages are determined as follows:
a)The Tenant is not successful in any of the cost, damages or losses claimed pursuant to the first lease.
b)The Owner is not successful in any of the cost, damages or losses claimed pursuant to the second lease.
c)The Owner is entitled to claim for loss of rent and interest as a result of the termination of the first lease. The Tribunal will make orders for the parties to submit, if agreed, a minute of consent orders as to the quantum and terms of payment.
d)The Owner is not entitled to any other consultancy or expert evidence fee. The Owner had already withdrawn the application for fees claimed by Mr Thorpe, and the Tribunal finds that the Owner, who wished to call Mr Geers to give expert evidence, should bear the cost of Mr Geers' report and attendance.
e)In regard to cost for legal representation, the Tribunal notes that no application for such costs has yet been made by either party. The Tribunal will allow the respective parties to file submissions in regard to a cost application, if any, by not later than 15 April 2016. The attention of the parties is drawn to s 87 of the State Administrative Tribunal Act 2004 (WA). In the absence of an application for costs, an order shall be made that each party is responsible for its own cost arising from these proceedings.
Summary of findings
The findings of the Tribunal are summarised as follows and orders shall be made to give effect thereto:
1)The Owner did not induce the Tenant into the belief that the Tenant would be the sole Asian grocery store in the Market.
2)The Owner lawfully terminated the first lease.
3)The Owner did not coerce the Tenant into signing the second lease.
4)The second lease was a new lease, not a variation of the first lease.
5)The Tenant lawfully voided the second lease since a disclosure statement and a tenant guide had not been provided to the Tenant by the Owner.
6)The Tenant is not entitled to any costs, losses or damages.
7)The Owner is entitled to damages as a result of the termination of the first lease.
8)The parties may file submissions in regard to a cost application by not later than 27 April 2016. If no application for costs is received, the Tribunal will make the following final order: 'There be no order as to costs'.
Noncalling of potential witnesses
Both parties invited the Tribunal to draw inferences from the noncalling of potential witnesses by the opposing side. The Owner says that the Tenant could have called Mr Raymond Tan, Mr Mitchell, either of the Lam brothers, and family of Mr Duong, whom, it is said by the Tenant, overheard some of the exchanges on 14 April 2014. The Tenant says that the Owner could have called Ms Gisella Pigliardo and Mr Jay Poland.
The Tribunal finds that no inference can be drawn by the noncalling of witnesses by the respective parties.
The reasons for this finding are as follows:
a)Each party is at liberty to decide which witnesses it wishes to call in light of the issues before the Tribunal; the contribution the potential witness can make; the relevance of the potential evidence; the evidence already before the Tribunal; and the cost of the proceeding. The mere fact that a potential witness is not called or that a witness statement is withdrawn does not, by itself, merit an inference that the witness may have given evidence that might have prejudiced the case of the party not calling the witness.
b)It is noted that neither of the parties sought to summons those persons whom they suggest could have been called by the other side to give evidence. The Tribunal invited Mr Blundell during the hearing, after Mr Douglas had indicated that the Owner would not be calling Ms Pigliardo and Mr Poland, to adjourn the proceeding so as to enable the Tenant to summon those persons. Mr Blundell indicated that he did not want to summon those persons.
c)The rule in Jones and Dunkel (1959) 101 CLR 298 (Jones) does not mean that if a potential witness is not called to give evidence, the only inference to be drawn is that the evidence of the witness would have damaged the case of the party not calling the witness. It is accepted that the potential wide application of the rule of Jones is to be restricted: see Dyers v The Queen (2002) 210 CLR 285 at [5] and Azzopardi v The Queen (2001) 205 CLR 50 at [74]. In the current matter before the Tribunal, both parties decided at their own discretion that they would not call any additional witnesses. The Tribunal is satisfied that the direct evidence before it is adequate for the findings to be made as set out above. No inference can be drawn that persons who might have been called to give evidence were not called by either party because such a person may have given evidence that was detrimental to the case of the party not calling them.
The Tribunal therefore finds that no inference can be drawn by the noncalling of witnesses by the respective parties.
Final reply to all issues identified by the parties
[1].Whether Burmingham and/or Coventry acted unconscionably, contrary to s.15C of the Commercial Tenancy (Retail [S]hops) Agreements Act 1985 ('the Act') (all references to sections are to sections of the Act unless otherwise specified), by representing to Mr Duong that his business would be the only Asian grocery store in Coventry Square Markets and subsequently permitting another tenant to open and operate an Asian grocery store in Coventry Square markets in direct competition with Mr Duong: (CC 353 of 2015)
The answer to this question is negative.
[2].Whether the termination, on or about 14 April 2014, by Coventry of the First Lease was unconscionable contrary to s.15C[.] (CC 353 of 2015)
The answer to this question is negative.
[3].Whether Coventry was estopped from being entitled to terminate, on or about 14 April 2014, the First Lease[.] (CC 353 of 2015 and CC 744 of 2015)
The answer to this question is negative.
[4].Whether, upon Mr Duong and Coventry executing the Variation, Mr Duong and Coventry agreed to reinstate the First Lease and the First Lease was impliedly surrendered at law and a new lease ('Second Lease') of the Alternative Premises was created, the terms of which were terms comprised in the First Lease as varied by the Variation[.] (CC 353 of 2015 and CC 744 of 2015)
The answer to this question is negative.
[5].Whether Mr Duong entered into the Variation due to illegitimate pressure exerted on him by Coventry[.] (CC 353 of 2015 and CC 744 of 2015).
The answer to this question is negative.
[6]Whether Mr Duong validly elected to avoid [sic] the Second Lease as it was entered into as a result of duress? (CC 353 of 2015 and CC 744 of 2015)
The answer to this question is negative.
[7]Whether the First Lease was reinstated by Mr Duong electing to avoid [sic] the Second Lease for duress[.] (CC 353 of 2015 and CC 744 of 2015)
The answer to this question is negative.
[8]Whether Coventry repudiated the First Lease after it was reinstated[.] (CC 353 of 2015 and CC 744 of 2015).
The answer to this question is negative.
[9]Whether Mr Duong was entitled to terminate, and did terminate, the Second Lease by reason of Coventry's failure to give Mr Duong a disclosure statement, pursuant to s.6(1), or incorporate a tenant guide in the Second Lease, pursuant to s.6A(1)[.] (CC 353 of 2015 and CC 744 of 2015).
The answer to this question is affirmative.
[10].Whether Mr Duong is entitled to repayment of a bond of $6,721 he paid upon entering into the First Lease which has not been returned despite demand and cl.9.2(h) of the First Lease[.] (CC 353 of 2015 and CC 744 of 2015).
The answer to this question is negative.
[11].Whether Mr Duong suffered loss by reason of the above matters[.] (CC 353 of 2015 and CC 744 of 2015).
The answer to this question is negative.
[12].Whether Coventry suffered loss as a result of Mr Duong's late payment of his rent for April 2014[.] (CC 744 of 2015).
The answer to this question is affirmative.
[13]Whether Mr Duong repudiated the Second Lease[.] (CC 744 of 2015).
The answer to this question is negative.
[14].Whether Coventry suffered loss as a result of Mr Duong's repudiation of the Second Lease[.] (CC 744 of 2015).
The answer to this question is negative.
[15].What orders should be made by the Tribunal? (CC 353 of 2015 and CC 744 of 2015).
Refer to Orders.
In addition to the issues identified by the Tenant, the Owner identified the following issues in a crossapplication (CC 744 of 2015):
1.Was the termination of the Lease on 14 April 2015 by Coventry a lawful termination of Lease?
The answer to this question is affirmative.
2.What is the quantum of damages Mr Duong is liable to pay to Coventry for breach of the Lease?
See orders made by the Tribunal.
3.Did Mr Duong repudiate the Variation by letter on 22 April 2014, and did Coventry accept that repudiation, terminating the Variation, by letter dated 23 April 2014?
The answer to this question is negative.
4.What is the quantum of damages Mr Duong is liable to pay to Coventry for breach of the Variation?
Mr Duong is not liable to pay any damages pursuant to lease.
Orders
1.Matter CC 353 of 2015 is dismissed in its entirety.
2.Matter CC 744 of 2015 is successful in part in that Coventry Village Pty Ltd is entitled to be compensated for rent loss as a result of the termination of the first lease dated 11 November 2011. Matter CC 744 of 2015 is dismissed in all other respects.
3.The parties may, by not later than 15 April 2016, file with the Tribunal a minute of consent orders in which the quantum to be paid by Mr Duong to Coventry Pty Ltd pursuant to order 2 as well as the time for payment are agreed. If the parties fail to file a minute of consent orders, the Tribunal shall determine the quantum and date of payment.
4.The parties may, by not later than 15 April 2016, file with the Tribunal an application, if any, for legal costs arising from these proceedings. If no application is filed, the Tribunal will make the following order: 'There be no order as to costs'.
I certify that this and the preceding [54] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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DR B DE VILLIERS, MEMBER
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