O'Neill v Henry (RLD)

[2010] NSWADTAP 40

Appeal Panel - Internal

CITATION:	O'Neill v Henry (RLD) [2010] NSWADTAP 40
PARTIES:	APPELLANT Jeffrey Raymond O'Neill RESPONDENT Jamie Michael Raymond Henry
FILE NUMBER:	099066
HEARING DATES:	10 February 2010
SUBMISSIONS CLOSED:	10 February 2010
DATE OF DECISION:	9 June 2010
BEFORE:	O'Connor K - DCJ (President); Molloy G - Judicial Member; Weule B - Non-Judicial Member
CATCHWORDS:	Retail Leases – Appeal – Retail Tenancy Claim – Breach proven – No award of damages – Principles – Appeal allowed in part – Unconscionable Conduct Claim – Rejected – Relevant Considerations – Claim upheld – Damages – Not granted
DECISION UNDER APPEAL:	O'Neill v Henry [2009] NSWADT 254
FILE NUMBER UNDER APPEAL:	085214
DATE OF DECISION UNDER APPEAL:	09/30/2009
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994
CASES CITED:	Attorney General of New South Wales v World Best Holdings Ltd (2005) 63 NSWLR 557 Baltic Shipping Co v Dillon (1993) 176 CLR 344 Burns v M.A.N. Automotive (Aust) Pty Limited (1986) 161 CLR 653 Chaplin v Hicks [1911] 2 KB 796 Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 Cripps v. G & M Dawson Pty Ltd [2006] NSWCA 81 Czarnikow v Koufos [1969] 1 AC 350 Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145 Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185 Howe v Teefy (1927) 27 SR (NSW) 301 Jones v Schiffman (1971) 124 CLR 303 Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286 McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 O’Neill v Henry (No 2) [2009] NSWADT 294 O’Neill v Henry [2009] NSWADT 254 Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) 145 CLR 625 Robb Evans of Robb Evans & Associates v European Bank Ltd [2009] NSWCA 67 Robinson v Harman (1848) 1 Ex 850; 154 ER 363 Rucom v Multiplex [2010] NSWADT 1 Sovereign Motor Inns Pty Ltd v Bevillesta Pty Ltd (No 2) [2002] NSWSC 7 Tennant v Moukhlina (No 2) [2009] NSWADTAP 74 Trust Company of Australia Ltd v. Craig [2005] NSWADT 65 Wenham v Ella (1972) 127 CLR 454 Worsfold v. De Groede [2002] NSWADT 273
REPRESENTATION:	APPELLANT R Murphy, Patey and Murphy RESPONDENT No appearance
ORDERS:	1. Appeal allowed. 2. Leave granted to extend appeal to the merits. 3. In respect of the Retail Tenancy Claim, Respondent to pay the Appellant $6,320.00 by way of monetary compensation. 4. In respect of the Unconscionable Conduct Claim, Tribunal’s order of dismissal set aside. 5. Finding substituted that the Respondent engaged in unconscionable conduct within the meaning of s 62B of the Retail Leases Act. 6. The Appeal Panel declines to make any award of damages as a result of the unconscionable conduct. 7. Appellant to file and serve submissions as to costs within 14 days; Respondent to file and serve reply within a further 14 days. Decision to be made without further hearing, on the papers, as permitted by the Administrative Decisions Tribunal Act 1997, s 76.

1 These are joint reasons except for one issue. The difference of opinion is outlined in the course of the reasons that follow.

2 Mr O’Neill appeals against a decision of the Retail Leases Division of the Tribunal dismissing a combined retail tenancy and unconscionable conduct claim made by him under the Retail Leases Act 1994 (RL Act) against Mr Henry and others. See O’Neill v Henry [2009] NSWADT 254 (30 September 2009).

3 In the years 2003 to 2006 Mr Henry operated a pizza business (an ‘Eagle Boys’ franchise) from a shop at 65 King Street, Warners Bay (the Premises). He operated another restaurant, the ‘GKS Mongolian Grill’, at 71 King Street, three doors away from the Premises.

4 Mr Henry held a registered lease of the Premises from the owners, Mr and Mrs Dykes. (The Dykes owned a building with four shops having the street numbers 65, 67, 69 and 71. So Mr Henry was their tenant for two of them.)

5 The lease commenced on 1 April 2003, and was for an initial term of five years. Mr Henry closed down the business at No 65 towards the end of 2006. He continued to pay the rent (originally, $1,640.80, with an escalation formula) and other payments due to the owners under the lease.

6 Mr Henry and Mr O’Neill are cousins. In early 2007 Mr O’Neill expressed interest to Mr Henry in taking over the lease, and reopening the business. He had had some experience working in a pizza business operated by his mother.

7 Mr Henry and Mr O’Neill discussed Mr O’Neill’s proposal with Mr Dykes, who had been agreeable, though Mr Dykes’ evidence was that he had understood that he was agreeing to a new manager being installed. Mr O’Neill’s evidence was that Mr Dykes was content for no new lease to issue, and the question of having a new lease in the name of Mr O’Neill would be taken up upon expiry of the existing lease (expiry date, 31 March 2008).

8 Mr O’Neill was allowed in to do work on the Premises. He obtained Council development consent, issued 9 May 2007. It required the installation of a stronger exhaust fan and included other conditions relevant to a hot food business of this type. He registered a new business name. He took over responsibility for payment of rent and outgoings as from 1 April 2007. Mr Henry allowed him to use kitchen and other equipment that Mr Henry had installed. His evidence lists the works and improvements he made to the Premises, including the purchase of new equipment. He reopened for business on 27 June 2007.

9 Under the arrangement, he made his rent payments by cheque given to Mr Henry and drawn in favour of the Dykes or by making internet transfers direct to the Dykes’ bank account. The Dykes issued invoices showing the creditor as Mr Henry. The invoices were often handed directly to Mr O’Neill.

10 Mr Henry retained a key to the Premises. Under the agreement with Mr O’Neill, he retained access to the facilities there, especially the cool room for storage of foodstuffs needed for his restaurant at No 71.

11 Mr Henry brought the agreement to an end around 7 or 8 pm on 30 January 2008, by entering the Premises and changing the locks. He did so without any prior notice or warning to Mr O’Neill. As the Tribunal below put it at [27], he ‘discovered that some of the equipment was no longer there’. In his view, the removal of equipment, including equipment owned by him, confirmed his suspicion that Mr O’Neill was in the course of closing down the business. He formed the view that Mr O’Neill had ‘done a runner’. Mr O’Neill arrived at the Premises around 7 am on 31 January 2008 to find that he had been locked out.

12 Mr O’Neill consulted the local police and a chamber magistrate. He had a Notice of Demand served on Mr Henry on 31 January 2008. It attached a list of goods Mr O’Neill asserted were owned by him and remained inside the Premises. Through his solicitor, Mr O’Neill made a further formal demand on 19 February 2008. He asked Mr Henry to allow him access to the Premises to recover goods and equipment owned by him. Mr Henry failed to respond to either of the demands.

13 Mr O’Neill admits that he had prior to 30 January 2008 removed equipment from the Premises, which included items owned by Mr Henry. Mr O’Neill stated in evidence that he had moved those items to a storage shed in a storage unit owned by Mr Henry, and had done so with Mr Henry’s permission. Moreover, at hearing Mr Henry admitted that he had taken from the Premises two items owned by Mr O’Neill, and stored them elsewhere.

14 The above narrative provides an introduction to the issues that arise in this appeal.

Tribunal Proceedings

15 On 30 October 2008 Mr O’Neill lodged with the Tribunal a retail tenancy claim and an unconscionable conduct claim. He applied for various orders under the RL Act.

16 In the claims he named as parties Mr Henry and, as well, the owners and head lessors of the Premises, Mr and Mrs Dykes.

17 The only parties to the appeal are Mr O’Neill and Mr Henry.

The Hearing

18 The hearing took place at Belmont for one day on 16 March 2009. Mr Murphy, solicitor, appeared for Mr O’Neill. Mr Henry, and Mr and Mrs Dykes appeared in person. Mr Henry failed to comply with any directions to put on evidence. The result was that Mr O’Neill was placed at a disadvantage in not having any prior notice of what Mr Henry might say that day. Mr Henry was permitted to give evidence. The Tribunal noted that he had failed to comply with the direction, and stated that if it emerged that he had not given a proper opportunity to Mr O’Neill to respond, the Tribunal would deal with that problem (tspt, 68).

19 Mr O’Neill was cross-examined by Mr Henry. Mr Henry gave oral evidence and was cross-examined by Mr Murphy.

20 The Tribunal gave the parties the opportunity to file written submissions. Mr Murphy filed submissions on 18 June 2009. Mr Hollier, solicitor, filed submissions on 27 July 2009 on behalf of Mr Henry.

21 In its decision published 30 September 2009, cited above, the Tribunal dismissed Mr O’Neill’s claims against Mr and Mrs Dykes. Subsequently, in a second decision, it granted the Dykes’ application for their costs of the proceedings, and made an order against Mr O’Neill, O’Neill v Henry (No 2) [2009] NSWADT 294 (27 November 2009). There is no appeal by Mr O’Neill against the second decision.

22 His appeal is limited to those parts of the first decision that bear on the dismissal of his case against Mr Henry.

Tribunal Decision in respect of the Claims against Mr Henry

23 The Tribunal upheld Mr O’Neill’s contention that Mr Henry had unlawfully repudiated the lease. It found that, while Mr Henry had some basis for his concerns that Mr O’Neill might be about to ‘do a runner’, nevertheless he had acted unlawfully in locking Mr O’Neill out. Most importantly, the Tribunal found that Mr O’Neill was not in breach of his rental obligation. He had often been late with his payments; but he had brought his account up to date for the month ending 31 January with a payment made to the Dykes on 29 January.

24 Referring to Mr Henry’s assessment that Mr O’Neill had ‘done a runner’, the Tribunal stated (see [62]) that mere closure of the business at the Premises by a lessee, as may have taken place, did not of itself entitle a lessor to treat the lease as repudiated. It noted that Mr Henry had made no attempt after the lockout to contact Mr O’Neill and resolve the issues that he had raised in his notices.

25 The Tribunal did not uphold Mr O’Neill’s contention that Mr Henry’s conduct towards him amounted to ‘unconscionable conduct’ within the meaning of the RL Act. Mr O’Neill had claimed that Mr Henry had behaved unconscionably towards him, in allowing him to spend significant amounts on renovating the Premises and purchasing equipment; in failing after the lockout to allow Mr O’Neill to re-enter into possession and recover goods remaining there; in refusing to participate in mediation; and in other respects. The Tribunal considered that the matters raised in this connection by Mr Murphy could not be described individually or collectively as ‘highly unethical’ conduct, involving a ‘high degree of moral obloquy’, referring to the observations of Spigelman CJ, with whom Tobias JA agreed, in Attorney General of New South Wales v World Best Holdings Ltd (2005) 63 NSWLR 557 at 583.

26 The Tribunal decided, however, not to grant Mr O’Neill damages pursuant to s 72(1)(a), not being satisfied for various reasons that any of the four heads of claim were established. Accordingly it entered an order dismissing the applications. In our view, having found breach, the Tribunal should have, in accord with the principles set out below, made an award of nominal damages rather than entering an order of dismissal.

The Appeal

27 The appeal puts in issue the refusal to make an award of substantial damages in respect of the retail leases claim, and the decision dismissing the unconscionable conduct claim. At the appeal hearing, Mr Murphy, solicitor for Mr O’Neill, confined the appeal to the rejection of heads (1), (2) and (3) of the damages claim.

28 The appeal is made pursuant to the RL Act, s 77A, and is governed by the Administrative Decisions Tribunal Act 1997 (ADT Act), s 113 and related provisions. An appeal may be as of right in relation to a question of law, and, with the leave of the Appeal Panel, may be extended to the merits.

29 Mr Murphy filed an outline of submissions and at the appeal hearing handed up detailed submissions supplementing the outline of submissions, together with a transcript of the hearing before the Tribunal. Mr Henry did not file a notice in reply to the appeal, or attend at the appeal hearing. The Appeal Panel accepts Mr Murphy’s statement that the notice of appeal was served personally on Mr Henry. We are satisfied that Mr Henry had notice of these proceedings.

Damages: Relevant Principles

30 The proper measure of damages in contract is as stated in Robinson v Harman (1848) 1 Ex 850 at 855; 154 ER 363 at 365:

The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.

31 To justify an award of substantial damages the claimant must satisfy the court both as to the fact of damage and as to its amount: McGregor on Damages (17th ed. 2003) [8-001]; Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286 at 301, 307, 311-12; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80 per Mason CJ and Dawson J; at 99 per Brennan J; at 118 per Deane J and at 137 per Toohey J. Luna Park is a well-known illustration of a case where the plaintiff failed to prove substantial damages, and an award of nominal damages was entered.

32 The fact that the damages are difficult to calculate does not mean that only nominal damages can be awarded. The court must do the best it can on the material available to make the assessment: Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) 145 CLR 625 at 636 per Barwick CJ; Sovereign Motor Inns Pty Ltd v Bevillesta Pty Ltd (No 2) [2002] NSWSC 7.

33 However, in assessing damages for breach of contract the common law does not necessarily require compensation to be given for all the consequences of the breach. Rather, damages are awarded for those losses that fall within the rule in Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145; Robb Evans of Robb Evans & Associates v European Bank Ltd [2009] NSWCA 67 per Basten JA at [57]. Under the rule, the wronged party is compensated for those losses that arise naturally or fall within the reasonable contemplation of the parties. See further, Czarnikow v Koufos [1969] 1 AC 350; Wenham v Ella (1972) 127 CLR 454, 471-472; Burns v M.A.N. Automotive (Aust) Pty Limited (1986) 161 CLR 653, 658 per Gibbs CJ; 667 per Wilson, Deane & Dawson JJ, and Baltic Shipping Co v Dillon (1993) 176 CLR 344, 368.

34 If a commercial tenant cannot prove loss of profits because, for example, of a continuing breach by the landlord that affected to a significant extent the ability of the tenant to conduct the business at the anticipated level, the tenant may recover expenditure thrown away. See, for example, Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185, per Hill J at [53], [56], [58]–[59] (Gallop J concurring).

35 Where damages are awarded for a loss in relation to property, the normal measure is based on the market value of the property at the time of the wrong: McGregor on Damages [16-001].

The Present Case

36 In respect of his retail tenancy claim, Mr O’Neill’s ultimate application was for an award of damages with the following components: (1) costs incurred after entry into the lease in preparing the Premises for reopening, such as obtaining Council consents, costs of installation of new equipment and the like, $9,942.35 (receipts were provided for many of the items); (2) the cost of the new equipment, originally $8,088.89 (receipts were provided for many of the items); (3) the value of stock on hand, $6,320 (the subject of sworn evidence from Mr O’Neill); and (4) lost profits for the period between the lockout and the expiry of the lease (two months).

37 The Tribunal disallowed Heads (1) and (2) ‘because these costs were incurred some months before, and were in no way related to, Mr Henry’s action in effecting the lockout’: [71]. It will be seen that the Tribunal considered that the damage claimed was too remote. It did not make any comment on whether the proofs were adequate.

38 The Tribunal disallowed Head (3) for these reasons:

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.

39 As to Head 1. Further on at [73], in dealing with the loss of profits claim, the Tribunal made a finding that ‘on the balance of probabilities Mr O’Neill had in fact closed down this business or was on the point of doing so’. In our view, that finding stands in the way of any claim for recovery under Head 1. Had the business still been a going concern as at the date of the lockout, then it may be that Mr O’Neill could have argued that he had been deprived of the continuing benefit for the duration of the lease of a proportion of the set-up costs. In our view, the Tribunal did not err in rejecting Head 1.

40 As to Head 2. In our view, these are losses of a kind which naturally arise from an unlawful eviction. The affected items were part of the business. Mr O’Neill was denied the ability to remove them. Even if Mr O’Neill had ceased trading at the date of the lockout, he remained entitled to compensation for these items. We think the Tribunal misapplied the remoteness rule. A further question then arises, as to whether the losses were proven, and the measure to be applied. We turn to that issue later in these reasons.

41 As to Head 3. As we read the Tribunal’s reasons, it accepted that stock losses would ordinarily be compensable, and were not too remote. The Tribunal decided not to make an award, referring to three concerns: inadequacy of proof of current value; the possibility of Mr Henry being entitled to a set-off; and the extent of the Tribunal’s jurisdiction to deal with circumstances of the present type (as we understand it, a situation where there is a contention that an unlawful taking of property has occurred).

42 We do not share the Tribunal’s doubts as to jurisdiction so far as the circumstances of this case are concerned. The RL Act’s mediation and claims-resolution procedures address ‘retail tenancy disputes’. The term is defined in s 63(1) as:

retail tenancy dispute means any dispute concerning the liabilities or obligations (including any obligation to pay money) of a party or former party to a retail shop lease or former lease, being liabilities or obligations which arose under the lease or former lease or which arose in connection with the use or occupation of the retail shop to which the lease or former lease relates, and (without limiting the generality of the foregoing) includes a dispute about a security bond, but does not include a dispute of the kind referred to in section 19 (1) (b) or 31 (1) (b) as to the rent payable under a retail shop lease (where the rent is to be current market rent for the shop).

43 Disputes between lessors and lessees over property in equipment and the like, located at the Premises and used in the course of the business carried on under the lease, readily fit within the scope of a retail tenancy dispute as defined above.

44 The written submissions made to the Tribunal below on the respondent’s behalf referred to the items the subject of Heads 2 and 3 as ‘abandoned’. If they were abandoned the tenant’s claim would not, we agree, be sustainable. However, there is no finding by the Tribunal to that effect. There were attempts made by the appellant directly and through his solicitor to re-enter the Premises to recover possession. This is inconsistent with an act of abandonment. We agree with Mr O’Neill’s submission that any suggestion of a possible set-off should be disregarded in the absence of any counter claim of that kind.

45 In our view the appeal should be extended to the merits, with a view to reconsidering the claims under Head 2 and Head 3.

Reassessment of Heads 2 and 3

46 On both of these matters, Mr O’Neill’s submissions are: there was uncontested evidence as to the value of the goods, most of which were purchased within a relatively short time prior to the lockout; he had been denied access, by virtue of the lockout, to the goods, thus denying him an opportunity to have them valued; any alleged difficulty in having them valued should not be a bar to recovery, given that the courts have acknowledged that difficulty in quantifying damages is no bar to recovery. As to the last point, the submissions refer to Turner, Australian Commercial Law (23rd ed), 203 which cites Jones v Schiffman (1971) 124 CLR 303 at 308 per Menzies J; Chaplin v Hicks [1911] 2 KB 796; and Howe v Teefy (1927) 27 SR (NSW) 301.

47 We will begin with Head 3, and then turn to Head 2, where there is a difference of opinion.

48 Head 3. Mr O’Neill’s first affidavit filed in the proceedings referred to the loss of the ‘value of food and like items’ and said, as to their amount, ‘not yet ascertained’. At this point, there was no satisfactory evidence of loss. In his second affidavit (Ex B), he attached what he described as a ‘true copy of a list of food and other stock which was on the Premises at the time I was locked out’. He said ‘I have put the list together from my records and memory of what was in the Premises and have priced the stock and other items from purchase records and from my recollection of the costs thereof’. He claimed a total of $6,320. The main item was for drinks ($3,500).

49 He did not file any business records, receipts or other documentation supporting the stock claims. Mr O’Neill’s solicitor asked him at hearing to explain why he did not have any formal financial records and had not completed a tax return re the business. He said that he was waiting for these proceedings to come up, and that left in the shop was a drawer full of invoices that he would need to file tax returns (tspt, 16/03/09, 11.04).

50 This explanation was not rejected. It is a plausible explanation, and should be accepted. In our view, no serious issue as to present value arises. These are all items of a usual kind in a business of this type. There is a mix of perishable (e.g. food ingredients) and non-perishable items (e.g. bottled soft drinks). He was not challenged on these valuations. In our view, Mr O’Neill should be compensated in full for the items claimed under this head.

51 Head 2. Mr O’Neill’s proof is contained in his second affidavit (Ex B), at annexure ‘B’. They are all, in our view, items of a usual kind in a business of this type. He states at para 11 of his affidavit that the amounts he gives represent their ‘approximate value’. Receipts were provided for approximately $4,600 worth of the amount claimed.

52 Mr Henry disputed at hearing whether some of the equipment he had bought and allowed Mr O’Neill to use had wrongly been taken by Mr O’Neill. He also questioned Mr O’Neill as to the location of some of the items in annexure B. We note, in reference to one of the issues raised by Mr Murphy, that Mr O’Neill’s evidence was that he had placed certain large items owned by Mr Henry in a storage shed owned by Mr Henry. See further, Tribunal’s reasons at [27] and [63] as to the items found not to have been at the Premises on the night of the lockout. The items the subject of the Head 2 claim do not, in our opinion, overlap in any significant way with the items that had been removed.

53 There is a division of views on whether any damages should be awarded to Mr O’Neill in respect of these items. The amounts claimed by Mr O’Neill are supported by receipts. They show the purchase price of the various items, and these amounts are claimed.

54 President’s Opinion. As the subject items were ones used in the business, they would, I think, have lost much of their value by the time of the lockout. In my view, Mr O’Neill got the benefit of his expenditure during the entire period his business was a going concern. It was not ‘wasted expenditure’ in the way identified by cases such as Amann Aviation and McRae v Commonwealth Disposals Commission (1951) 84 CLR 377.

55 As noted earlier, the Tribunal found that Mr O’Neill had ceased to operate the business as at the date of the lockout. It is not appropriate for there to be an award compensating a tenant in these circumstances for the original price paid for the equipment. Such an award would deliver him a windfall exceeding his actual loss.

56 Subject to adequate proof, Mr O’Neill would, I consider, be entitled to the present value of those items. I do not consider it appropriate for me to attempt an estimate as to the likely value of used goods of this type. This is a matter, it seems to me, that could have been the subject of evidence from Mr O’Neill as a person with some experience in the industry. None was provided. I do not think I should hazard my own guess. It is likely, I suspect, that most of the items would have had little or no market value. So for different reasons to the Tribunal below, I would also not make any award in respect of Head 2.

57 My colleague, Judicial Member Molloy, has a different view. As the difference is one of law, and the judicial members are equally divided, my opinion, as President, must prevail. See ADT Act, s 78.

58 Judicial Member Molloy’s Opinion. The claim for loss of the “value of food and like items” is made by the owner/proprietor of the business (see Mr O’Neill’s second affidavit). It was not traversed by either respondent and Mr O’Neill was not cross-examined on the matter. Both Mr O’Neill and Mr Henry were in the same business and would be expected to know, or be able to express an educated opinion on, this issue. Thus, absent some disentitling factor, Mr O’Neill’s evidence ought to be accepted. It is unremarkable and within his knowledge. In my view this head of damage should be allowed in full.

The Unconscionable Conduct Claim

59 There are, essentially, two types of claims for damages that can be mounted under the RL Act. The first, and the most common, is a retail tenancy claim (ss 71, 72). The second, and the less common, is an unconscionable conduct claim (ss 71A, 72AA, 62B). In order to determine the latter it is necessary to invoke the provisions of the ADT Act, Schedule 2, Part 3B, Clause 4 and convene a special panel of members to determine that type of claim.

60 It is more often than not that litigants asserting unconscionable conduct also assert retail tenancy claims such that the formal application to this Tribunal is a combined retail tenancy/unconscionable conduct claim.

61 It has been the experience of this Tribunal that most combined claims do not result in an award of damages for unconscionable conduct that could not have been agitated as a retail tenancy claim. By this we mean that the damages as ultimately awarded by the Tribunal are awarded under the retail tenancy head as distinct from the unconscionable conduct head.

62 There is good reason for this – most claims for damages arise as a result of a breach of the lease contract. The insertion by the legislature of unconscionable conduct within the preview of this Tribunal was deliberate in that it created a field/head of damages that was peculiar to unconscionable conduct.

63 If damages for unconscionable conduct were the same as or not distinguishable from damages arising out of retail tenancy claims, then there would be no need for the special provisions made in the RL Act relating to unconscionable conduct. Thus it must follow that damages for unconscionable conduct must be damages that specifically flow from and are referable to the unconscionable conduct, as distinct from damages that flow from or are referable to retail tenancy claims.

64 In Worsfold v. De Groede [2002] NSWADT 273, the Tribunal (constituted by the President) dealt with an unconscionable conduct claim. It recited at [21]–[26] assertions of unconscionable conduct by the respondent personal to the applicant. At [38] the Tribunal referred to the way in which the applicant was “undermined by the respondent”, the way he “adopted a hostile attitude to her”, the way the applicant was “humiliated by his sending of an eviction notice that was without foundation”, the way that the applicant went back to the Premises “to do a final clean-up and found the locks changed” and the way the respondent threatened to shoot the applicant’s husband. The Tribunal found that the applicant “endured great anguish and has a deep sense of public humiliation within the environment of a small community”. Damages of $6,000.00 were awarded.

65 It seems to us that, not only does a finding of unconscionable conduct not necessarily result in an award of damages but a party seeking to assert unconscionable conduct must also particularise the damage that is said to flow from the unconscionable conduct (as distinct from damage that would flow from a retail tenancy claim). The party so asserting should provide sufficient particularity to allow the respondent to respond.

66 If a claim of unconscionable conduct is proven, the Tribunal may grant the relief permitted by s 72AA of the RL Act which provides:

(1) In proceedings for an unconscionable conduct claim lodged with the Tribunal under this Part, the Tribunal is empowered to make any one or more of the following orders that it considers appropriate:

(a) an order that a party to the proceedings pay money to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person,

(b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings.

(2) The Tribunal may make such ancillary orders as it considers necessary for the purpose of enabling an order under this section to have full effect.

(3) The Tribunal may impose such conditions as it considers appropriate when making an order under this section.

(4) The Tribunal may make an interim order under this section pending final determination of a claim, if it appears to the Tribunal desirable to do so.

67 If relief and/or damages are sought as a result of asserted unconscionable conduct, that relief/damages must be referable to the power of the Tribunal under s 72AA. In other words, the unconscionable conduct, if proven, must result in the relief/damages as set out in that section. It is now common practice at directions hearings to direct a party asserting unconscionable conduct to not only specifically plead and particularise the unconscionable conduct, but also particularise the relief/damages that are sought as a consequence of the unconscionable conduct. It is only by this means that the other party to the proceedings, and the Tribunal, can understand what is being asserted and what is being claimed as a consequence. It should not be left to the other party, nor to the Tribunal, to attempt to divine from the material the appropriate relief/damages.

68 In our view, leave should also be given to reconsider the unconscionable conduct claim. There were two instances, at least, of seriously unacceptable conduct. Mr Henry chose to effect a lockout in circumstances where Mr O’Neill’s payments of rent were up-to-date and not in arrears or default and without giving any warning or notice. There was a failure by Mr Henry to allow Mr O’Neill back into the Premises to recover stock and equipment. However, we do not have any evidence of damage in the nature of any pain and suffering, humiliation, distress or the like as a result of that unconscionable conduct.

69 It was also submitted that Mr Henry’s unexplained failure to engage in mediation amounted to unconscionable conduct. Mr O’Neill was thereby left with only one means through which he could seek vindication of his position, the filing of a claim in this Tribunal. We are inclined to the view, and without the benefit of any detailed submissions on the point, that failure to engage in mediation under either or both s 66 and s 74 may not fall within the sphere of unconscionable conduct, but may be a factor relevant to costs in appropriate circumstances. See, for example, Trust Company of Australia Ltd v. Craig [2005] NSWADT 65 at [17-20]; Cripps v. G & M Dawson Pty Ltd [2006] NSWCA 81, especially at [60]; Tennant v Moukhlina (No 2) [2009] NSWADTAP 74; and Rucom v Multiplex [2010] NSWADT 1.

70 The appellant foreshadowed an application for costs, in respect of both the appeal and the proceedings below so far as the claim against Mr Henry is concerned. The directions below deal with that matter.

Order

1. Appeal allowed.

2. Leave granted to extend appeal to the merits.

3. In respect of the Retail Tenancy Claim, Respondent to pay the Appellant $6,320.00 by way of monetary compensation.

4. In respect of the Unconscionable Conduct Claim, Tribunal’s order of dismissal set aside.

5. Finding substituted that the Respondent engaged in unconscionable conduct within the meaning of s 62B of the Retail Leases Act.

6. The Appeal Panel declines to make any award of damages as a result of the unconscionable conduct.

7. Appellant to file and serve submissions as to costs within 14 days; Respondent to file and serve reply within a further 14 days. Decision to be made without further hearing, on the papers, as permitted by the Administrative Decisions Tribunal Act 1997, s 76.