O'Neill v Henry
[2009] NSWADT 254
•30 September 2009
CITATION: O’Neill v Henry [2009] NSWADT 254 DIVISION: Retail Leases Division PARTIES: APPLICANT
Jeffrey Raymond O’NeillFIRST RESPONDENT
Jamie Michael Raymond HenrySECOND RESPONDENT
THIRD RESPONDENT
Stephen Paul Dykes
Jennine Gay DykesFILE NUMBER: 085214 HEARING DATES: 16 March 2009 SUBMISSIONS CLOSED: 10 August 2009
DATE OF DECISION:
30 September 2009BEFORE: Chesterman M - Deputy President; Ward R - Non-Judicial Member ; Griffiths G - Non-Judicial Member LEGISLATION CITED: Administrative Decisions Tribunal Act 1997
Retail Leases Act 1994CASES CITED: Attorney General of New South Wales v World Best Holdings Ltd (2005) 63 NSWLR 557
Balfour v Balfour [1919] 2 KB 571
Cohen v Cohen (1929) 42 CLR 91
Galaxy Motors Pty Ltd v Carroll & Weekes [1965] NSWR 40
Jones v Padavatton [1969] 2 All ER 616
Massart v Blight (1951) 82 CLR 423
Thai Star Video Pty Ltd v Walpole [2007] NSWADT 193REPRESENTATION: APPLICANT
R Murphy, solicitorFIRST RESPONDENT
In personSECOND RESPONDENT
THIRD RESPONDENT
In person
S Dykes, agentORDERS: 1. The Applicant’s claim against the First Respondent is dismissed
2. The Applicant’s claim against the Second and Third Respondents is dismissed
3. Unless within 21 days a party files and serves submissions showing why costs should be awarded, there will be no order as to costs in the proceedings between the Applicant and the First Respondent
4. Unless within 21 days the Applicant files and serves submissions raising arguments to the contrary, the Applicant is to pay on a party-party basis the legal costs and the disbursements incurred by the Second and Third Respondents in the proceedings between these parties
5. If submissions are filed by a party pursuant to Order 3 or Order 4, the opposing party or parties must file and serve submissions in response within a further 21 days. The Tribunal will determine the matter raised in the submissions without a hearing, pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.
REASONS FOR DECISION
Introduction
1 In this case, the main questions raised for determination were two in number. The first was whether premises held by one of three lessees (the First Respondent) under a retail shop lease were subleased to the Applicant pursuant to an oral arrangement whereby the Applicant took over possession of them for the purposes of his business. The second, which arises if the first is answered in the affirmative, was whether the Applicant is entitled to recover damages from the First Respondent and/or the Second and Third Respondents, who are the owners of the premises, on the ground that he was unlawfully denied entry to the premises, with the consequences that he no longer had access to goods situated in them, that he lost both the benefit of equipment purchased and work done to the premises in order to maintain his business and that he no longer had the opportunity to derive profits from this business.
2 The Applicant is Mr Jeffrey O’Neill. He was represented in these proceedings by Mr Richard Murphy, of Pavey & Murphy, Solicitors. The First Respondent, Mr Jamie Henry, represented himself at the hearing but subsequently retained Mr John Hollier, of Peter Evans & Associates, Solicitors, to prepare and file written submissions on his behalf. At the hearing, the Second Respondent, Mr Stephen Dykes, represented both himself and the Third Respondent, Mrs Jennine Dykes, who is his wife. Mr and Mrs Dykes subsequently retained Mrs Kathryn Halyburton, of Harris Wheeler, Lawyers, to prepare and file written submissions on their behalf.
3 Because the proceedings instituted by Mr O’Neill include an unconscionable conduct claim, the Tribunal is constituted in accordance with Clauses 1 and 4 of Part 3B of Schedule 2 of the Administrative Decisions Tribunal Act 1997 (‘the ADT Act’). It is constituted by a Deputy President who is a member of the Retail Leases Division, assisted by two other appropriately qualified members acting in an advisory capacity only.
4 The Tribunal received the evidence in the case at a hearing at Belmont Local Court on 16 March 2009. After a transcript of this hearing had been sent to the parties, they prepared and filed written submissions. The last of these submissions was filed on 10 August 2009.
Outline of evidence
5 The premises involved in the proceedings (‘the Premises’) are located at 65 King Street, Warners Bay. Under a registered lease (‘the Lease’), Mr and Mrs Dykes leased them to three lessees, who included Mr Henry and his wife Ms Rachael Henry, for a period of five years commencing on 1 April 2003. The Lease contained an option to renew for a further seven years. The initial rent was $1,640.80 per month, payable monthly in advance on the first day of each month, but during the period of relevance to these proceedings the monthly amount payable for rent and outgoings was in excess of $3,000.00.
6 The permitted use was defined in the Lease as follows: ‘Manufacturing and retail sale of pizza’s (sic) and associated lines.’ Clause 12 contained a covenant by the lessees not to assign or transfer the Lease, or to ‘sub-let, part with, share the possession of, or grant any licence affecting’ the Premises without the lessor’s consent, which would not be unreasonably withheld if certain common-form conditions were met. It was agreed by the parties that the Lease was governed by the Retail Leases Act 1994 (‘the RL Act’).
7 By late 2006, the only lessee taking an active part in the business at the Premises was Mr Henry. He decided to close it down. Early in 2007, Mr O’Neill, who is his cousin, visited him at a shop that he operated in premises nearby. Mr O’Neill expressed interest in establishing a pizza takeaway business at the Premises. Because Mr Henry was still paying rent under the Lease, he was agreeable to this plan. Following further discussions, they agreed that Mr O’Neill would take over occupation of the Premises, pay all the rent and outgoings and comply with the other terms of the Lease. They also agreed that Mr Henry could have some use of a cool room and cooking equipment in the Premises for the purposes of a restaurant business that he was operating nearby.
8 Mr Henry and Mr O’Neill did not set out this agreement in writing. In describing it at the hearing, Mr Henry said that he allowed Mr O’Neill to have the use of the Premises and of equipment owned by Mr Henry (without any payment on account of the equipment) ‘as a favour’, in order to assist him. He also said that Mr O’Neill initially wished to occupy the Premises for ‘approximately six months’ only.
9 Mr O’Neill stated in his principal affidavit (sworn on 10 December 2008) and in evidence in chief that Mr Henry subsequently took him to Mr Dykes’ office where he met Mr Dykes and a woman whom Mr Dykes introduced as Mrs Dykes. At this meeting, Mr Dykes agreed to his taking over occupation of the Premises and indicated that a larger insurance premium would be payable because of the nature of Mr O’Neill’s business. He also said that the Lease would not be changed, but that when it came up for renewal early in 2008 a new lease could be prepared in Mr O’Neill’s name if Mr O’Neill so wished.
10 During cross-examination by Mr Dykes and Mr Henry at the hearing, Mr O’Neill said, however, that the meeting in question may have taken place in a car park at the rear of the Premises and that the woman to whom he was introduced was not Mrs Dykes. (Mrs Dykes was present at the hearing.) Mr O’Neill also stated that he was not given a copy of the Lease, that he had never read it and that at the alleged meeting Mr Dykes neither mentioned a sublease to him nor gave him keys to the Premises.
11 Mr Dykes did not file any written evidence, though some correspondence conducted by him, including letters from him to the Tribunal and a copy of a statutory declaration by him and his wife, was admitted into evidence. According to his oral evidence, at some time early in 2007 Mr Henry advised him that Mr O’Neill would be ‘running’ Mr Henry’s shop at the Premises and that a takeaway pizza business was to operate there. Mr Dykes interpreted this to mean that Mr O’Neill would be the ‘manager’ for Mr Henry. He said that he indicated to Mr Henry that because a deep fryer was to be installed, a higher insurance premium would be payable.
12 Mr Dykes testified that on the only occasion on which he met Mr O’Neill (which took place at the rear of the Premises), Mr Henry simply introduced him as ‘my cousin Jeff’. Mr Dykes never knew that ‘Jeff’ was the person who had taken over as the manager of the business at the Premises.
13 The evidence on these matters given by Mr Henry (who also filed no written evidence) was to similar effect. Mr Henry also said that after Mr Dykes told him of the need to pay a higher insurance premium he passed this information on to Mr O’Neill.
14 As from 1 April 2007, Mrs Angela O’Neill, who acted as Mr O’Neill’s bookkeeper, paid the rent and outgoings due under the Lease direct to Mr and Mrs Dykes. She made ten payments, the first of which was on 18 April 2007 and the last on 29 January 2008. But the monthly invoices issued by Mr and Mrs Dykes were addressed to ‘Jamie Henry and Rachael Henry’, not to Mr or Mrs O’Neill.
15 The first of the invoices had an annotation in Mr Dykes’ handwriting: ‘28/3/07 Rent will change on opening of new shop.’ Mr Dykes explained that this referred to the increase in insurance premium. The invoices for July 2007 and subsequent months all included an additional amount of $365.50 described as ‘Extra Insurance’.
16 Mr O’Neill stated that on occasions Mr Dykes or the woman whom Mr O’Neill believed to be Mrs Dykes delivered the invoices to the Premises. Mr Dykes denied ever having done this.
17 The rent payments came from various accounts controlled by Mr and Mrs O’Neill. They were made by internet transfer or by cheques in favour of an account nominated by Mr Dykes. None of the cheques had the name ‘O’Neill’ on it. According to Mrs O’Neill, she sometimes took cheques to Mr Dykes’ office, which was situated close to the Premises, and on other occasions gave them to Mr Henry to deliver to Mr and Mrs Dykes. She said also that the details of the nominated account were attached to one of the invoices rendered by Mr Dykes. All of the rent payments were made after the date on which, according to the Lease, they were required to be made.
18 According to Mr and Mrs O’Neill, Mr Dykes knew that they, not Mr Henry, were paying the rent. Mr Dykes denied this. He said that when he noticed that the rent was overdue, he would contact Mr Henry. Mr Henry would then promise to ‘sort it out’, while not mentioning to Mr Dykes that the rent was in fact being paid by Mr O’Neill. Mr Henry’s evidence on this matter was to similar effect.
19 Annexed to Mr O’Neill’s principal affidavit was a copy of a development application made by him in April 2007 to Lake Macquarie City Council, seeking permission to install an exhaust fan in the Premises. Both the application form and an accompanying form of owner’s consent bore signatures by Mr and Mrs Dykes in their capacity as owners. Their signatures on the application form were dated 10 April 2007. The signature of Mr O’Neill was dated 11 April 2007. The Council approved the application on 9 May 2007.
20 Mr O’Neill stated in a supplementary affidavit (sworn on 16 March 2009) that during a meeting with Mr Dykes on a footpath near the Premises he told Mr Dykes that the Council required both Mr and Mrs Dykes to sign the consent form. Mrs O’Neill was present at this meeting. He stated that he then ‘saw Mr Dykes sign his wife’s signature on the Consent Form’. During cross-examination by Mr Dykes, however, he said that during April 2007 he took these documents to Mr Dykes’ office and asked him to sign them.
21 The evidence of Mrs O’Neill included a statement that on one morning during this month she saw her husband meet Mr Dykes on a public footpath and obtain a signature on a form from him. She said that she saw Mr Dykes sign the form ‘on the back of Jeff’s car’. She was not sure, however, whether it was the form granting consent on the part of the owners to the development application.
22 According to both Mr Dykes and Mr Henry, it was Mr Henry who gave the form to Mr Dykes for signature by the owners. Mr Dykes said that he took it home for himself and his wife to sign, then returned it next day, signed and dated, to Mr Henry. At this stage, other parts of the form, including the name of the applicant, had not yet been completed. In cross-examination by Mr Murphy, it was put to Mr Henry that during 2007 he had travelled more than once to the USA and that he might in fact have been out of Australia during the period when this form was completed. Mr Henry’s answers revealed some uncertainty on his part as to when he visited the USA during that year.
23 On 13 April 2007, Mr O’Neill registered a business name (‘JJ’s at the Bay – Takeaway and Pizza’) specifying the Premises as the principal place of business. Between April and June 2007, he carried out cleaning and renovation works on the Premises and installed some new equipment: for example, the exhaust fan for which the Council had granted approval. On 27 June 2007, he opened his takeaway food business, using both the new equipment and the facilities that Mr Henry had left in the Premises.
24 Mrs O’Neill testified that Mr Dykes visited the Premises on a number of occasions thereafter, offering comments on aspects of the business being conducted there. Mr Dykes said, however, that he only visited the Premises once during the period when Mr O’Neill was in occupation. He and members of his family purchased food from Mr O’Neill, but because they were not impressed by its quality they did not return.
25 According to Mr O’Neill, he carried on his takeaway food business at the Premises between 27 June 2007 and 30 January 2008. He said that after a slow start it generated sufficient revenue for him to pay all bills and draw wages of about $350.00 per week. As at 30 January 2008, the rent was paid up to date. This was only by virtue of a payment made on 29 January. As already mentioned, the payments had consistently been in arrears since Mr O’Neill took over the Premises.
26 Mr Henry said, however, that about six months after the business commenced, Mr O’Neill said that he was having trouble paying some of its bills. Soon after, a former supplier to the business advised Mr Henry that it had ceased trading with Mr O’Neill. Mr Henry also heard from the representatives of other suppliers that Mr O’Neill had told them that he was about to close the business down. In cross-examination, however, Mr O’Neill denied having said anything of this nature to his suppliers.
27 Mr Henry testified that on 29 or 30 January 2008 he entered the Premises and discovered that some of his equipment was no longer there. He specified this equipment as a pizza bag heater, a cash register, some computers, some benches and some tables. He also saw that the refrigerator and the freezers were empty and that there were food remains on the counter. An invoice tendered by him at the hearing showed that the purchase price of the pizza bag heater in 2003 was $8,195.00.
28 Mr Henry said that he thereupon formed the view that Mr O’Neill was ‘doing a midnight runner’. He therefore effected the lockout on which Mr O’Neill’s claim in these proceedings is based. He put an additional padlock on the door to the Premises and left a note of explanation on the door addressed to Mr O’Neill.
29 Mr O’Neill found out next morning what had occurred. He denied finding a note from Mr Henry on the door. Having consulted the local police and a chamber magistrate, Mr O’Neill caused a Notice of Demand to be served on Mr Henry on 31 January 2008. A list of goods which he claimed to be owned by him and locked inside the Premises was attached. The Notice required their immediate return.
30 In cross-examination by Mr Henry, Mr O’Neill said that he had indeed removed the specified goods owned by Mr Henry from the Premises, but that he had done so with Mr Henry’s consent and that they were located in Mr Henry’s ‘storage shed’.
31 In cross-examination by Mr Murphy, Mr Henry stated that at the time of the lockout he took from the Premises two items of property owned by Mr O’Neill – a deep fryer and a potato peeler – and that they were in storage at his own premises.
32 On 19 February 2008, Mr Murphy, acting on instructions from Mr O’Neill, wrote to Mr Henry claiming that Mr Henry had granted a sublease of the Premises to Mr O’Neill and had acted unlawfully in locking him out of the Premises. The letter required that arrangements should be made for Mr O’Neill to retrieve his goods from the Premises, adding that this was without prejudice to his recovering damages for the cost of food and other perishable goods left in the Premises and for the unlawful termination of the sublease.
33 It was not until an unspecified day in March 2008 that Mr Henry responded to the Notice of Demand or the subsequent letter. He said in cross-examination that he sent a letter to Mr O’Neill requesting the return of his equipment. In the meantime, he made contact with the police about this matter, with the consequence that they raised it with Mr O’Neill.
34 On 19 February 2008, Mr Murphy sent a copy of his letter of that date to Mr and Mrs Dykes. In a covering letter, he asked them to contact him urgently if they wished to ‘make any comment’ in relation to Mr O’Neill’s demands. In his correspondence with the Tribunal, mentioned above at [11], Mr Dykes stated that when he rang Mr Murphy’s office a receptionist told him that Mr Murphy was unavailable. He then left a message requesting Mr Murphy to call him back, but this was never done.
35 During brief cross-examination by Mr Dykes, Mr Murphy stated that because the receptionist had described Mr Dykes’ attitude on the telephone as ‘extremely rude’ he had elected not to return the call. He had assumed instead that Mr Dykes would write to him.
36 Mr O’Neill filed his Application in the Tribunal on 30 October 2008. It was asserted on his behalf during the hearing, without any opposition from Mr Henry or Mr Dykes, that none of the Respondents was prepared to participate in the mediation procedures mandated by section 68 of the RL Act.
37 In his correspondence with the Tribunal, Mr Dykes claimed more than once that the present dispute was entirely between Mr O’Neill and Mr Henry and that there was no reason why he or his wife should be involved in it. This correspondence also included a copy of an email message sent to him at 10.58 a.m. on 4 December 2008 by Mr Henry. The text of this message, referring apparently to a directions hearing held at the Tribunal about half an hour earlier, was as follows:-
Steve
That was a waste of time.
If required I will write a letter stating that your only involvement was collecting the rent from Jeff. I presumed they would have dropped you from this matter. This is simply a civil matter between Jeff & myself. The only interest you had in it was collecting the rent, and owning the premises.
Regards
Jamie
Assessment of the witnesses
38 As will be apparent from the foregoing outline, Mr O’Neill gave differing accounts of a number of matters of significance: for example, his meeting with Mr Dykes and Mr Henry in April 2007 and the circumstances in which Mr Dykes signed the owners’ consent form annexed to the development application. On a number of matters – in particular, the dates of particular events – his recollection was faulty. He also made – somewhat casually, it must be said – an improbable allegation of distinctly improper behaviour by Mr Dykes: namely, that Mr Dykes forged Mrs Dykes’ signature on the consent form. The signature appearing on the form is in a different handwriting to Mr Dykes’ own signature and there is no other evidence that might corroborate this allegation by Mr O’Neill.
39 In his submissions on Mr O’Neill’s behalf, Mr Murphy drew attention to a statement by Mr O’Neill in his supplementary affidavit that he was ‘not well educated’ and to his statement in oral evidence that he did not keep a diary.
40 In the Tribunal’s opinion, Mr O’Neill must be viewed as an unreliable witness. It does not need to determine the extent to which the defects in his evidence should be attributed to the matters raised by Mr Murphy.
41 On a few specific matters – for example, the number of occasions on which Mr Dykes visited the Premises while Mr O’Neill’s pizza takeaway business was in operation – there was a conflict between Mr Dykes’ evidence and that of Mrs O’Neill. For reasons that will become apparent, the Tribunal does not need to determine which of these witnesses gave a correct account of these matters.
42 Mr Henry’s account of his dealings with Mr O’Neill was on the face of it more convincing than that offered by Mr O’Neill. The Tribunal would not, however, regard Mr Henry as a wholly reliable witness. The matters that it takes into account in reaching this conclusion include the following: (1) an apparent desire at the hearing (on which Mr Murphy placed significant emphasis in his submissions) to ensure that his evidence was in accord with that of Mr Dykes; (2) the fact that Mr Henry, having filed no written evidence before the hearing, enjoyed the advantage of hearing all of Mr and Mrs O’Neill’s testimony before furnishing his own; and (3) occasional signs of reluctance to answer questions during his cross-examination (for example, Mr Murphy’s questions regarding his visits to the USA during 2007) where the answers might be disadvantageous to his case.
43 The first two of the three points just made with regard to Mr Henry’s evidence apply also, broadly speaking, to the evidence of Mr Dykes. Subject to these considerations, the Tribunal sees no reason to doubt Mr Dykes’ general credibility. In any event, for reasons that will become apparent, the question of his credibility is not of major significance in deciding the questions arising in this case.
44 The first of these questions is the legal basis of Mr O’Neill’s occupation of the Premises between April 2007 and 30 January 2008. The answer to this question has major significance for his claims both against Mr Henry and against Mr and Mrs Dykes.
On what basis did Mr O’Neill occupy the Premises?
45 In his opening address Mr Murphy suggested that the dealings between Mr O’Neill, Mr Henry and Mr Dykes during April 2007 might possibly have resulted in an assignment, with Mr and Mrs Dykes’ consent, of Mr Henry’s interest under the Lease to Mr O’Neill. But both in this address and in his written submissions following the hearing, the contention that Mr Murphy advanced was that Mr Henry granted a sublease to Mr O’Neill, by virtue of certain provisions of the RL Act.
46 This sublease was, in Mr Murphy’s submission, on the same terms and conditions as the Lease itself. Its duration was, in the first instance, until the date (31 March 2008) on which the Lease would terminate if the option to renew were not exercised. In order to simplify matters, the parties agreed that Mr O’Neill would make the required payments of rent and outgoings to the head lessor (Mr and Mrs Dykes) rather than the sublessor (Mr Henry).
47 In asserting that a sublease was created, Mr Murphy relied on the Tribunal’s decision in Thai Star Video Pty Ltd v Walpole [2007] NSWADT 193. Here the Tribunal held that an agreement whereby the applicant company occupied and paid rent for a defined part of premises held by the respondent under a lease from the owner of the premises constituted a sublease falling within the definition of ‘retail shop lease’ in section 3 of the RL Act, even though the agreement was oral only. The relevant parts of section 3 state:-
lessor means the person who grants or proposes to grant the right to occupy a retail shop under a retail shop lease, and includes a sublessor…lessee means the person who has the right to occupy a retail shop under a retail shop lease, and includes a sublessee…
retail shop lease or lease means any agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop:
(a) whether or not the right is a right of exclusive occupation, and
(c) whether the agreement is oral or in writing, or partly oral and partly in writing.(b) whether the agreement is express or implied, and
48 In reaching this conclusion in the Thai Star Video case, the Tribunal took account of section 8(1) of the Act, which provides that ‘a retail shop lease is considered to have been entered into when a person enters into possession of the retail shop as lessee under the lease or begins to pay rent as lessee under the lease (whichever happens first)’.
49 In his submissions on behalf of Mr Henry, Mr Hollier acknowledged that by virtue of subparagraph (a) of the extract just quoted from section 3, the fact that Mr Henry retained keys to the Premises and made use of the facilities situated in them was not enough to prevent the arrangement between him and Mr O’Neill being a sublease under the Act.
50 Mr Hollier argued, however, that the evidence of the conversations between Mr O’Neill and Mr Henry that led to Mr O’Neill’s occupation of the Premises showed that they did not intend to enter into legal relations at all, but merely to work out an informal ‘arrangement’ between family members which was not contractually binding. Mr Hollier argued that the onus lay on Mr O’Neill to prove that there was an intention to be contractually bound. He relied on the following features of the arrangement: (a) that Mr Henry was Mr O’Neill’s cousin (Mr Hollier described this as ‘the crux of it all’); (b) that according to Mr Henry’s evidence he entered into the arrangement in order to assist Mr O’Neill; (c) that there was some uncertainty as to the intended duration of Mr O’Neill’s occupation of the Premises; (d) that the parties took none of the formal steps associated with granting a retail shop lease (for example, preparing and signing appropriate disclosure statements and an agreement for lease, paying bond money and formally transferring business assets and goodwill); and (e) that after being locked out Mr O’Neill did not seek relief against forfeiture but only demanded access to his goods.
51 In support of this submission, Mr Hollier cited the decision of the English Court of Appeal in Jones v Padavatton [1969] 2 All ER 616. This case concerned an arrangement between a mother and her 34-year-old daughter whereby the daughter agreed to leave her home and a job in Trinidad in order to study for the English Bar in London and the mother agreed to provide both accommodation in a house that she purchased and maintenance at a specified rate. The parties’ intentions regarding the house were uncertain in some respects. The Court held that this arrangement between close relatives was not an enforceable contract because the parties did not intend to be legally bound.
52 In the Tribunal’s opinion, this argument should not be accepted, for three reasons in particular. First, since the arrangement was of a commercial nature, the presumption of contract law is that the parties did intend to be legally bound. Mr Hollier’s submission to the opposite effect is clearly at odds with (for example) the law as stated in Carter and Harland, Contract Law in Australia (4th edn, 2002) at [401], [405]. Secondly, the leading authorities in which no intention to create legal relations was held to exist (for example, Jones v Padavatton, Balfour v Balfour [1919] 2 KB 571, Cohen v Cohen (1929) 42 CLR 91) concerned closer relationships (parent and child, husband and wife) than that of two cousins. Thirdly, Mr Henry’s further reasons (other than wanting to ‘assist’ Mr O’Neill) for entering into the arrangement had an entirely commercial flavour. They were that the Premises were empty and he did not want to have to continue paying the rent for them while deriving no income from them. It may be added that at [403] Carter and Harland expressed the opinion that at the present day Jones v Padavatton might be decided differently.
53 Although, as Mr Hollier submitted, the evidence regarding the intended duration of the sublease was not wholly clearcut, the Tribunal finds that the parties intended it to last until the termination of the Lease itself: that is, until 31 March 2008. This would be the natural inference to be drawn from the conversations described in the evidence.
54 It follows that when during April 2007 Mr O’Neill both commenced paying rent on Mr Henry’s behalf to Mr and Mrs Dykes and took possession of the Premises (initially to carry out cleaning and renovation works and install new equipment for the purposes of a retail shop) a sublease was created pursuant to section 8(1) of the RL Act. On account of the provisions quoted above from section 3 of the Act, it did not matter that the agreement between the parties was oral only or that Mr O’Neill’s right of occupation was not exclusive. The terms of the sublease were, with the necessary modifications, those set out in the Lease.
55 Furthermore, this sublease was valid as between the parties irrespective of whether Mr and Mrs Dykes gave their consent in accordance with clause 12 of the Lease (as to which, see [6] above): see Massart v Blight (1951) 82 CLR 423 at 440; Galaxy Motors Pty Ltd v Carroll & Weekes [1965] NSWR 40 at 44.
Mr O’Neill’s claim against Mr Henry
56 Mr Murphy submitted that Mr Henry’s conduct in locking Mr O’Neill out of the Premises amounted to an unlawful termination of the sublease, since at the date of the lockout Mr O’Neill was not in breach of the covenant to pay rent or of any other term set out in the Lease. Accordingly, Mr Henry was liable to Mr O’Neill under section 34 of the RL Act for the losses caused by the lockout.
57 Mr Murphy argued further that Mr Henry had engaged in unconscionable conduct under section 62B of the RL Act. The relevant conduct by Mr Henry was as follows: (a) allowing Mr O’Neill to spend significant amounts on renovating the Premises and purchasing equipment; (b) failing after the lockout to permit Mr O’Neill to regain possession both of the Premises and of the goods remaining in them; (c) ‘denying’ Mr O’Neill’s ‘rights’ both before and during the hearing; and (d) refusing to participate in mediation of the dispute between them.
58 The heads of damage claimed by Mr O’Neill were as follows: (a) the costs incurred in cleaning and renovating the Premises and installing new equipment in them; (b) the cost of this new equipment; (c) the value of the goods to which Mr O’Neill ceased to have access on account of the lockout; and (d) lost profits from the business during the period between the lockout and the date of expiry of the Lease.
59 According to invoices and other documentary evidence tendered by Mr O’Neill, the following amounts were recoverable under the first three of these heads of damage: (a) $9,942.35; (b) $8,088.89; (c) $7.069.00. In relation to the fourth head, the only evidence of relevance was Mr O’Neill’s statement that by the time of the lockout his business generated sufficient revenue for him to pay all bills and draw wages of about $350.00 per week.
60 Mr Hollier submitted that Mr O’Neill’s alleged behaviour in the period preceding the lockout constituted a repudiation of his agreement with Mr Henry, providing grounds for Mr Henry to terminate the agreement forthwith. The behaviour in question was Mr O’Neill’s statement to Mr Henry that he was having trouble paying his bills, his statements to suppliers that he would be closing down the business and his removal (as he himself admitted) of equipment belonging to Mr Henry from the Premises. According to Mr Hollier, this behaviour gave good grounds for Mr Henry to believe that Mr O’Neill was ‘doing a runner’.
61 A further submission of Mr Henry was that at the time of the lockout Mr O’Neill was in arrears of rent.
62 The Tribunal has already indicated (see [41] above) that it does not consider Mr Henry to have been a wholly reliable witness. But even if Mr Henry’s evidence on the matters outlined in the penultimate paragraph is to be taken at face value, the Tribunal is not prepared to hold that Mr Henry was entitled to treat the sublease as having been repudiated by Mr O’Neill.
63 In the Tribunal’s opinion, Mr O’Neill’s admitted removal of Mr Henry’s goods provided reasonable grounds for Mr Henry to form the view that Mr O’Neill was ‘doing a runner’ and had closed down, or would soon be closing down, the takeaway pizza business conducted in the Premises. In reaching this conclusion, the Tribunal takes particular account of the fact that the goods in question were significant in the context of the business being conducted. As indicated above at [27], they comprised a pizza bag heater, a cash register, some computers, some benches and some tables.
64 Mr O’Neill’s removal of these goods might further have justified the step of locking the Premises for a short period to protect such goods owned by Mr Henry that remained there, pending the resolution of his dispute with Mr O’Neill over the removal that had already occurred.
65 The Tribunal considers, however, that the closure of a business being carried on in premises occupied under a lease does not of itself constitute a repudiation of the lease. Similarly, while the unauthorised removal from the premises of goods owned by the lessor no doubt gives rise to civil remedies (for example, in the tort of conversion), it does not constitute repudiation of the lease.
66 Grounds for Mr Henry to treat the sublease as repudiated might well have arisen if (for instance) he had contacted Mr O’Neill after the lockout to explain what he had done and had been told that Mr O’Neill had no further use for the Premises. But no such contact was made or even attempted.
67 Having reviewed the evidence regarding rent payments, the Tribunal cannot accept Mr Hollier’s contention that the rent was in arrears. As Mr Hollier acknowledged in his written submissions, a payment made on 29 January 2008 covered the rent due for that month. It may be that at the time of the lockout neither Mr Dykes nor Mr Henry knew of this payment, but that is of no consequence.
68 For these reasons, the Tribunal concludes that the termination of the sublease on 30 January 2008 was not justified either under the terms set out in the Lease or on the ground that Mr O’Neill had repudiated the sublease.
69 The Tribunal does not, however, uphold Mr O’Neill’s unconscionable conduct claim against Mr Henry. The matters raised in this connection by Mr Murphy cannot be described individually or collectively as ‘highly unethical’ conduct, involving a ‘high degree of moral obloquy’ (the importance of these phrases in the context of unconscionable conduct claims is explained by Spigelman CJ in Attorney General of New South Wales v World Best Holdings Ltd (2005) 63 NSWLR 557 at 583).
70 Moreover, for the reasons that follow, Mr O’Neill is not entitled in these proceedings to recover any damages for the unlawful termination under any of the four heads outlined above at [58].
71 The Tribunal disallows Mr O’Neill’s claims under the first two heads (namely, the costs incurred in cleaning and renovating the Premises and installing new equipment in them and the cost of this new equipment) because these costs were incurred some months before, and were in no way related to, Mr Henry’s action in effecting the lockout.
72 The Tribunal recognises that Mr O’Neill might well be entitled to damages under the third head, reflecting the value of the goods to which he ceased to have access on account of the lockout. But the evidence tendered at the hearing fell short of establishing their value at the time of the lockout, let alone showing whether, and if so to what extent, Mr Henry might be entitled to a set-off representing the value of goods belonging to him that Mr O’Neill removed from the Premises. There must also be doubts as to whether the Tribunal’s jurisdiction with respect to retail leases extends to this aspect of the dispute between these two parties. It must suffice to record here that in this regard the Tribunal’s present decision falls short of resolving all the matters put into dispute by them.
73 The fourth head of damages was for loss of the profit (estimated at $350.00 per week) that Mr O’Neill claimed to have been deriving from the business. The Tribunal considers, however, that on the balance of probabilities Mr O’Neill had in fact closed down this business or was on the point of doing so. This finding is based on the nature and significance of the goods that he admitted removing from the Premises (see [63] above), coupled with the fact that his immediate reaction to the lockout on 30 January 2008 was confined to demanding access to his own goods (see [29]). It was not until 19 February, nearly three weeks later, that a claim of unlawful termination of the sublease was made on his behalf to Mr Henry (see [32]).
74 It follows from this finding that Mr Henry’s unlawful termination of the sublease did not inflict any loss of business profits upon Mr O’Neill. It may be added, as an alternative ground, that if all that a business can generate by way of revenue after paying its expenses are paid is a weekly wage of $350.00 drawn by a proprietor who works full time in it, it cannot be said to have made any genuine ‘profit’.
75 For the foregoing reasons, Mr O’Neill’s claim for damages against Mr Henry must fail.
Mr O’Neill’s claim against Mr and Mrs Dykes
76 Although a significant proportion of the evidence in this case concerned the involvement of Mr and Mrs Dykes in the dealings between Mr O’Neill and Mr Henry, the Tribunal is in a position to dispose of the case against them quite briefly.
77 The Tribunal accepts Mr Dykes’ evidence that, while he was aware that Mr O’Neill, whom he knew as ‘Jeff’, was operating a takeaway pizza business at the Premises and that this business differed materially from that previously conducted by Mr Henry, he assumed that Mr O’Neill was no more than a ‘manager’. He may well have known that Mr or Mrs O’Neill had become responsible for paying the rent, but this was quite compatible with his still believing that Mr O’Neill was just a manager.
78 The important point is, however, that even if Mr Dykes knew of and consented to the subletting of the Premises to Mr O’Neill, nothing has been established against him or Mrs Dykes that would justify any remedy being granted against them. This follows from the simple fact that the evidence did not show any involvement by them whatsoever in the lockout that occurred on 30 January 2008.
79 Mr Murphy contended that because Mr Dykes, being aware of Mr O’Neill’s situation, took no action to assist him but simply ‘sought to wipe his hands of the matter and deny any involvement’ with it, he should be held liable under section 34 of the RL Act for the damage sustained by Mr O’Neill.
80 The relevant parts of this section are as follows:-
34 Lessee to be compensated for disturbance
(1) A retail shop lease is taken to provide that if the lessor:…
(d) fails to take all reasonable steps to prevent or put a stop to anything that causes significant disruption of, or which has a significant adverse effect on, trading of the lessee in the shop and that is attributable to causes within the lessor’s control, …
and the lessor does not rectify the matter as soon as reasonably practicable after being requested in writing by the lessee to do so, the lessor is liable to pay the lessee reasonable compensation for any loss or damage (other than nominal damage) suffered by the lessee as a consequence.
81 This contention must fail because there is no basis on which Mr and Mrs Dykes could be held to have ‘control’ over the cause of the damage suffered by Mr O’Neill. They were not in a position to prevent the lockout nor could they do anything to compel Mr Henry to readmit Mr O’Neill into the Premises.
82 For the reason outlined above at [69], a further contention by Mr Murphy that the failure of Mr and Mrs Dykes to act in Mr O’Neill’s interests amounted to unconscionable conduct is also untenable.
83 For these reasons, Mr O’Neill’s claim for damages against Mr and Mrs Dykes must be dismissed.
Costs
84 The written submissions of all parties in this case included a claim for costs.
85 Under section 77A of the RL Act and section 88 of the ADT Act, the general rule in this Division is that each party pays his or her own costs. But the Tribunal may award costs if, taking into account matters listed in section 88(1A), it is satisfied that it is ‘fair’ to do so. The costs awarded may include the costs paid by parties to their legal representatives. They may also include out-of-pocket expenses that they incur, irrespective of whether they have engaged legal representation or have represented themselves. But they do not extend to the financial harm suffered by a self-represented party on account of having to devote labour and time to preparing for and appearing at a hearing.
86 The Tribunal considers it appropriate in this case to set out its provisional conclusions regarding costs. It stresses that these conclusions are provisional only. Directions set out below provide an opportunity for the parties to apply for them to be reconsidered.
87 Taking particularly into account the fact that Mr Henry has been held to have terminated the sublease without justification, the Tribunal’s provisional opinion is that he should not recover any costs from Mr O’Neill.
88 Taking particularly into account the fact that there was no evidence whatsoever to link Mr and Mrs Dykes with the lockout of Mr O’Neill from the Premises, the Tribunal’s provisional opinion is that Mr O’Neill should pay on a party-party basis the legal costs and the disbursements incurred by Mr and Mrs Dykes in the proceedings between these parties. It bases this opinion particularly on subparagraph (c) of section 88(1A) of the ADT Act. This states that a factor to be taken into account in determining whether it is ‘fair’ to award costs is ‘the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law’. In the Tribunal’s opinion, the claim against Mr and Mrs Dykes had ‘no tenable basis’.
The Tribunal’s orders
89 The Tribunal orders as follows:-
1. The Applicant’s claim against the First Respondent is dismissed.
2. The Applicant’s claim against the Second and Third Respondents is dismissed.
3. Unless within 21 days a party files and serves submissions showing why costs should be awarded, there will be no order as to costs in the proceedings between the Applicant and the First Respondent.
4. Unless within 21 days the Applicant files and serves submissions raising arguments to the contrary, the Applicant is to pay on a party-party basis the legal costs and the disbursements incurred by the Second and Third Respondents in the proceedings between these parties.
5. If submissions are filed by a party pursuant to Order 3 or Order 4, the opposing party or parties must file and serve submissions in response within a further 21 days. The Tribunal will determine the matter raised in the submissions without a hearing, pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.
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