O3 Capital Pty Ltd v WY Properties Pty Ltd
[2016] WASCA 82
•25/05/16
O3 CAPITAL PTY LTD -v- WY PROPERTIES PTY LTD [2016] WASCA 82
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASCA 82 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:126/2015 | 15 MARCH 2016 | |
| Coram: | NEWNES JA MURPHY JA MITCHELL J | 25/05/16 | |
| 37 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed Matter remitted to State Administrative Tribunal for further consideration | ||
| A | |||
| PDF Version |
| Parties: | O3 CAPITAL PTY LTD WY PROPERTIES PTY LTD |
Catchwords: | Lease of retail shop Statutory claim by lessee for repayment of rent by lessor Lessor acting unconscionably in providing misleading disclosure statement Lessee relied on false information in disclosure statement Payment of lessee's rent by a third party Third party was guarantor Termination of lease Rental payments did not constitute payments under the guarantee Whether any pecuniary loss suffered by lessee If loss established then causation not disputed Funds received by landlord in respect of lessee's obligation to pay rent Whether lessee liable to reimburse or indemnify third party for rental payments Appeal on a question of law Relevant facts not found Further findings of primary fact required Matter remitted to State Administrative Tribunal for further consideration Common law Discussion of bases upon which, in principle, lessee might be liable at law to third party Whether an express or inferred agreement to loan Whether restitution at law Discussion of Falcke Questions as to whether third party forced benefit upon lessee behind its back Whether payments were a gift Whether lessee requested the benefit Whether implicit promise by lessee to indemnify or reimburse third party Whether agency created Whether retrospective ratification of agent's conduct Equity Discussion of bases upon which, in principle, lessee might be liable in equity to third party Where no express or implied request from debtor Whether third party subrogated to creditor's rights Discussion of In Re Cleadon Trust Ltd Whether acceptance and retention of a benefit Equitable estoppel Whether the equitable principle applies when the third party pays money directly to the debtor's creditor Whether debtor has used third party's money to pay its debt |
Legislation: | Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 6, s 15C, s 15F, s 16D, s 26 Commercial Tenancy (Retail Shops) Agreements Amendment Act 2011 (WA), s 29, sch 1 State Administrative Tribunal Act 2004 (WA), s 105 |
Case References: | Amann Aviation Pty Ltd v Commonwealth of Australia (1990) 22 FCR 527 Argyll Park Thoroughbreds Pty Ltd v Glen Pacific Pty Ltd (receiver and manager appointed) (1993) 11 ACSR 1 Australian Financial Services & Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; (2014) 253 CLR 560 B Liggett (Liverpool) Ltd v Barclays Bank Ltd [1928] 1 KB 48 Bailes v Modern Amusements Pty Ltd [1964] VR 436 Bank of England v Cutler [1908] 2 KB 208 Bannatyne v D & C MacIver [1906] 1 KB 103 Blackburn & District Benefit Building Society v Cunliffe Brooks & Co (1882) 22 Ch D 61 Brasher v O'Hehir [2005] NSWSC 1194 Brockway v Pando [2000] WASCA 192; (2000) 22 WAR 405 City Bank of Sydney v McLaughlin (1909) 9 CLR 615 Crantrave Ltd (in liq) v Lloyds Bank Plc (2000) QB 917 Cunliffe Brooks & Co v Blackburn Building Society (1884) 9 App Cas 857 Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492 David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 Eastern Shipping Co Ltd v Quah Beng Kee [1924] AC 177 Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 Fazio v Fazio [2012] WASCA 72 Hill v Ziymack (1908) 7 CLR 352 Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68 In Re Cleadon Trust Ltd [1939] 1 Ch 286 Israel v Foreshore Properties Pty Ltd (in liq) (1980) 30 ALR 631 Johnston v Arnaboldi [1990] 2 Qd R 138 Lourey v Legal Professional Complaints Committee [2012] WASCA 112 Lumbers v W Cook Builders Pty ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635 McLean Bros & Rigg Ltd v Grice (1906) 4 CLR 835 Mega-top Cargo Pty Ltd v Moneytech Services Pty Ltd [2015] NSWCA 402 Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361 Porter v Latec Finance (Queensland) Pty Ltd (1964) 111 CLR 177 Public Trustee v Schultz [1973] 1 NSWLR 564 Re Clune (1988) 14 ACLR 261 Re TVSN Ltd [2005] NSWSC 692 Rogers v Australia and New Zealand Banking Group Ltd [1985] WAR 304 S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637 Stewart v Atco Controls Pty Ltd (in liq) [2014] HCA 15; (2014) 252 CLR 307 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Wy Properties Pty Ltd and O3 Capital Pty Ltd [2014] WASAT 69 Wy Properties Pty Ltd v O3 Capital Pty Ltd [2015] WASC 268 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : O3 CAPITAL PTY LTD -v- WY PROPERTIES PTY LTD [2016] WASCA 82 CORAM : NEWNES JA
- MURPHY JA
MITCHELL J
- Appellant
AND
WY PROPERTIES PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : KENNETH MARTIN J
Citation : WY PROPERTIES PTY LTD -v- O3 CAPITAL PTY LTD [2015] WASC 268
File No : GDA 6 of 2014
Catchwords:
Lease of retail shop - Statutory claim by lessee for repayment of rent by lessor - Lessor acting unconscionably in providing misleading disclosure statement - Lessee relied on false information in disclosure statement - Payment of lessee's rent by a third party - Third party was guarantor - Termination of lease - Rental payments did not constitute payments under the guarantee - Whether any pecuniary loss suffered by lessee - If loss established then causation not disputed - Funds received by landlord in respect of lessee's obligation to pay rent - Whether lessee liable to reimburse or indemnify third party for rental payments
Appeal on a question of law - Relevant facts not found - Further findings of primary fact required - Matter remitted to State Administrative Tribunal for further consideration
Common law - Discussion of bases upon which, in principle, lessee might be liable at law to third party - Whether an express or inferred agreement to loan - Whether restitution at law - Discussion of Falcke - Questions as to whether third party forced benefit upon lessee behind its back - Whether payments were a gift - Whether lessee requested the benefit - Whether implicit promise by lessee to indemnify or reimburse third party - Whether agency created - Whether retrospective ratification of agent's conduct
Equity - Discussion of bases upon which, in principle, lessee might be liable in equity to third party - Where no express or implied request from debtor - Whether third party subrogated to creditor's rights - Discussion of In Re Cleadon Trust Ltd - Whether acceptance and retention of a benefit - Equitable estoppel - Whether the equitable principle applies when the third party pays money directly to the debtor's creditor - Whether debtor has used third party's money to pay its debt
Legislation:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 6, s 15C, s 15F, s 16D, s 26
Commercial Tenancy (Retail Shops) Agreements Amendment Act 2011 (WA), s 29, sch 1
State Administrative Tribunal Act 2004 (WA), s 105
Result:
Appeal allowed
Matter remitted to State Administrative Tribunal for further consideration
Category: A
Representation:
Counsel:
Appellant : Mr D H Solomon
Respondent : Mr C S Gough
Solicitors:
Appellant : Solomon Brothers
Respondent : Mills Oakley Lawyers
Case(s) referred to in judgment(s):
Amann Aviation Pty Ltd v Commonwealth of Australia (1990) 22 FCR 527
Argyll Park Thoroughbreds Pty Ltd v Glen Pacific Pty Ltd (receiver and manager appointed) (1993) 11 ACSR 1
Australian Financial Services & Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; (2014) 253 CLR 560
B Liggett (Liverpool) Ltd v Barclays Bank Ltd [1928] 1 KB 48
Bailes v Modern Amusements Pty Ltd [1964] VR 436
Bank of England v Cutler [1908] 2 KB 208
Bannatyne v D & C MacIver [1906] 1 KB 103
Blackburn & District Benefit Building Society v Cunliffe Brooks & Co (1882) 22 Ch D 61
Brasher v O'Hehir [2005] NSWSC 1194
Brockway v Pando [2000] WASCA 192; (2000) 22 WAR 405
City Bank of Sydney v McLaughlin (1909) 9 CLR 615
Crantrave Ltd (in liq) v Lloyds Bank Plc (2000) QB 917
Cunliffe Brooks & Co v Blackburn Building Society (1884) 9 App Cas 857
Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492
David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353
Eastern Shipping Co Ltd v Quah Beng Kee [1924] AC 177
Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234
Fazio v Fazio [2012] WASCA 72
Hill v Ziymack (1908) 7 CLR 352
Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68
In Re Cleadon Trust Ltd [1939] 1 Ch 286
Israel v Foreshore Properties Pty Ltd (in liq) (1980) 30 ALR 631
Johnston v Arnaboldi [1990] 2 Qd R 138
Lourey v Legal Professional Complaints Committee [2012] WASCA 112
Lumbers v W Cook Builders Pty ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635
McLean Bros & Rigg Ltd v Grice (1906) 4 CLR 835
Mega-top Cargo Pty Ltd v Moneytech Services Pty Ltd [2015] NSWCA 402
Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361
Porter v Latec Finance (Queensland) Pty Ltd (1964) 111 CLR 177
Public Trustee v Schultz [1973] 1 NSWLR 564
Re Clune (1988) 14 ACLR 261
Re TVSN Ltd [2005] NSWSC 692
Rogers v Australia and New Zealand Banking Group Ltd [1985] WAR 304
S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637
Stewart v Atco Controls Pty Ltd (in liq) [2014] HCA 15; (2014) 252 CLR 307
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Wy Properties Pty Ltd and O3 Capital Pty Ltd [2014] WASAT 69
Wy Properties Pty Ltd v O3 Capital Pty Ltd [2015] WASC 268
- REASONS OF THE COURT:
Introduction
1 This is an appeal against a decision of Kenneth Martin J in which his Honour allowed an appeal from a decision of Member Carey in the State Administrative Tribunal (Tribunal). Kenneth Martin J's reasons for judgment are recorded in WyProperties Pty Ltd v O3 Capital Pty Ltd.1 The Tribunal's decision is WyProperties Pty Ltd and O3 Capital Pty Ltd.2
2 In the proceedings in the Tribunal, WY Properties Pty Ltd (WY) claimed that it had suffered a pecuniary loss, including in relation to rent, for which it was entitled to compensation from its former landlord, O3 Capital Pty Ltd (O3), under the Commercial Tenancy (Retail Shops) Agreements Act1985 (WA) (Commercial Tenancy Act). The Tribunal found that O3 had made false statements prior to WY entering into the relevant lease, and that WY had relied on this information in entering into the lease. However, the Tribunal found that WY had suffered no loss as a result of the making of the false statements by O3 because, in effect, the rent under the lease had been paid not by WY, but by a related party.
3 On appeal, the primary judge held that the Tribunal had mischaracterised the nature of the funds received by O3 when it found that WY had not suffered any loss. His Honour made an order requiring payment by O3 to WY of $191,734.34 'by way of the repayment of all rental payments made under the lease' prior to its termination.3
4 O3 appeals that decision and seeks orders to the effect that the Tribunal's decision be reinstated.
5 For the reasons which follow, the appeal should be allowed, and the matter should be remitted to the Tribunal for further consideration in relation to the question of whether WY suffered loss.
Background
General background
6 WY was a company which had two directors, Ms Ping Yuan and her friend (Lin Wang).4 Ms Yuan was the wife of Mr Frank Luo.5 Mr Luo was not a director of WY but was the company manager of WY, and his duties included locating and securing premises for WY.6
7 In June 2011, WY as lessee, and O3 as lessor, entered into an agreement for the lease of a shop in Karratha.7 Mr Luo and Ms Yuan guaranteed WY's obligations under the lease.8 The premises were a 'retail shop' for the purposes of the Commercial Tenancy Act.9
8 At the time of entering into the lease, O3 provided to WY a disclosure statement which it was obliged to provide under s 6 of the Commercial Tenancy Act.10 In its disclosure statement O3 answered 'no' to certain questions concerning whether there were, in effect, any planning changes, or likely planning changes, affecting the premises of which O3 had been notified, and whether O3 itself had submitted to the local authority any proposed alterations.11 These negative answers were found to be false in that O3 knew of certain matters which had the potential to require the demolition of the premises.12
9 This false information was relied on by WY in entering into the lease.13
10 Payments were remitted to, and received by O3, as rent, over the duration of the lease.14 Payments in the period 17 August 2011 to July 2012 were made from a bank account in the name of 'at Rice Noodle Sushi'.15 That bank account was held by Mr Luo and Ms Yuan,16 under the business name 'at Rice Buffet K'.17 These rental payments to O3 were probably payments made by the partnership of Mr Luo and Ms Yuan (the partnership).18
11 The Tribunal found, and it is not disputed, that the payments to O3 were not made in discharge of Mr Luo's and Ms Yuan's liability as guarantors of WY's obligation under the lease.19 Further details of the payments are set out below.
12 According to the primary judge, and it appeared not to be in dispute, on 3 October 2012, WY emailed O3 asking for a refund of the monies that had been paid to O3. On 10 October 2012, O3 emailed WY terminating the lease and stating that O3 would seek a refund of monies paid under the lease from the local council.20 The lease was terminated before a restaurant was established at the premises.21
13 The Tribunal also found that any business which was to operate from the premises would not have been conducted by WY, but rather by the partnership or by Achmore Lodge Pty Ltd (Achmore).22 Achmore was a company that had established restaurants in other parts of Western Australia. Ms Yuan was the sole director of Achmore at all relevant times.23 The 'at Rice' business name was associated with business names held by Achmore.24 Neither Mr Luo and Ms Yuan, nor Achmore, have the status of a tenant under a retail shop lease.25
The lease payments
14 The true nature and full extent of the Tribunal's findings in relation to the lease payments were the subject of some debate in the appeal. O3 submitted, in effect, that the Tribunal's reasons should not be gone through with a 'fine-tooth comb'.26 Counsel for O3 also made submissions to the effect that the full scope and nature of the Tribunal's findings of fact, including implied findings of fact, were to be discerned from a consideration of the Tribunal's reasons read as a whole and where necessary, in the context of the underlying uncontroversial facts and evidence before the Tribunal.27
15 When the Tribunal's reasons are read as a whole, it would appear that the Tribunal expressly, or at least implicitly, found, or accepted as correct, the following matters of fact in [16] - [29] below.
16 The lease commenced with effect from 1 June 2011.28 Rent was $13,695.31 per month.29
17 By 15 August 2011, O3 had received $22,750 via First National Real Estate in respect of the first three months' rent.30 The balance then owing for the first three months of rent was $18,335.93.31
18 On 15 August 2011, Mr Conlon, on behalf of O3, emailed Mr Luo on behalf of WY.32 In his email, Mr Conlon provided details of the outstanding rent in respect of the past three month period, and attached invoices for rent, including future rent. The invoices disclosed details of O3's bank account into which the rental payments should be paid.
19 Mr Luo responded by email dated 17 August 2011 as follows:33
As request in your email, I have made the payment accordingly and our internet transfer record is attached for your reference. In reference to the tax invoice you sent to me, can you please change the addressee from:
WY Properties Pty Ltd
2A Glenvale Road
Glen Iris VIC 3146
to our trading business as below:
At Rice Buffet - Karratha
Unit 1, 1950 Balmoral Road
Karratha WA 6714
and resend the invoice through email to [email protected], I will then use this new invoice to make the monthly payment accordingly.
20 Mr Luo 'signed' the email 'Frank', under which the following words appeared:34
Frank Luo
Manager - At Rice Buffett - Karratha
2A Glenvale Road, Glen Iris VIC 3146
21 The Glen Iris address was the corporate address of WY.35
22 Mr Conlon re-issued invoices to WY's 'trading business' in accordance with Mr Luo's email dated 17 August 2011.
23 Counsel for O3 also contended, in our view correctly, that the Tribunal impliedly found or accepted that Mr Luo's email dated 17 August 2011 was sent with the authority of WY.36 Counsel for WY submitted,37 and counsel for O3 agreed,38 that the Tribunal found or accepted that Mr Luo was, in effect, the 'mind' of WY or its 'heart and mind'. That submission may also be accepted.39
24 The outstanding amount for rent of $18,335.93 was paid to O3 on 17 August 2011.40 In addition, over the next 11 months up to and including July 2012, monthly rent of $13,695.31 was paid to O3.41 These 12 payments between 17 August 2011 and July 2012 totalled $168,985.34. That amount, plus the $22,750 previously paid for rent, totalled $191,734.34.42
25 As noted earlier, the Tribunal found, in effect, that amounts in the period 17 August 2011 to July 2012, totalling $168,984.34 were paid by electronic transfer from an account held by Mr Luo and Ms Yuan, and were probably made by the partnership.
26 The amounts were paid in accordance with the amounts set out in Mr Conlon's email to WY dated 15 August 2011, and were paid into O3's bank account in accordance with the banking instructions provided by Mr Conlon on behalf of O3.43
27 Mr Luo and Ms Yuan did not pay the rental amounts in their capacity as guarantors under the guarantee. O3 made no demand under the guarantee. In the absence of such demand, Mr Luo and Ms Yuan were under no obligation to make payment under the guarantee, and in that sense, the payments were 'voluntary' payments.44 (In so finding, the Tribunal did not refer to the terms of the guarantee, or purport to undertake a process of construing the guarantee.)
28 At the time these payments were made, WY itself had no funds to make the payments.45 WY did not pay the rent out of its own money in the period August 2011 to July 2012.
29 The Tribunal found that any business which was to operate from the premises would have been conducted by either Achmore or a partnership comprising Mr Luo and Ms Yuan.46 O3 correctly contended that, in substance, this was a finding to the effect that as between WY and the partnership, each had that expectation, and shared that common understanding, prior to the payments that were made to O3.47
30 Finally, we should note that counsel for O3 submitted that there was no evidence that the rent payments were recorded as loans in WY's books.48 Although the primary judge accepted that proposition,49 there was no finding to that effect by the Tribunal.
The Commercial Tenancy Act
The Act as at June 2011
31 As at 1 June 2011, being the day on which the lease agreement was entered into, the Commercial Tenancy Act included the following provisions.
6. Disclosure
(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 contains false or misleading information, 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;
(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 the omission of the landlord to give a disclosure statement in accordance with subsection (4) or of the giving of falseor misleadinginformation by the landlord in the disclosure statement. (emphasis added)
15C. Unconscionable conduct of landlords
(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 -
…
(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.
15F. Powers of Tribunal relating to unconscionable conduct
(1) A landlord or tenant, or former landlord or tenant, under a retail shop lease or former retail shop lease who suffers loss or damage because of unconscionable conduct of another person that contravenes section 15C or 15D may recover that loss or damage by applying in writing to the Tribunal. (emphasis added)
…
26. Orders of Tribunal
(1) Without limiting any power to make an order that is conferred by the State Administrative Tribunal Act 2004 but subject to this Act the Tribunal may make -
(a) an order that requires a party to any matter before it to pay money to a person specified in the order;
(b) an order for a party to any matter before it to do, or refrain from doing, anything specified in the order; or
(c) an order dismissing any matter before it.
32 A number of amendments were made to the Commercial Tenancy Act by the Commercial Tenancy (Retail Shops) Agreements Amendment Act 2011 (WA) (Amendment Act).
33 The amendments included amendments to s 6(1) and s 15F and the introduction of a new section, s 16D. The amendments took effect on and from 1 January 2013.50
34 As amended, s 6(1)(b) of the Commercial Tenancy Act provides:
(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 -
…
(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.
15F. SAT's powers as to unconscionable conduct
(1) A landlord or tenant, or former landlord or tenant, under a retail shop lease or former retail shop lease who suffers, or is likely to suffer, loss or damage because of unconscionable conduct of another person that contravenes section 15C or 15D may apply in writing to the Tribunal for an order that the other person pay compensation in respect of the loss or damage, or for other appropriate relief. (the words of amendment are emphasised)
16D. SAT's powers as to misleading etc. conduct
(1) A party, or former party, under a retail shop lease or former retail shop lease who suffers, or is likely to suffer, loss or damage because of misleading or deceptive conduct of another party or former party to the lease may apply in writing to the Tribunal for an order that the other party, or former party, pay compensation in respect of the loss or damage, or for other appropriate relief.
(2) A misleading or deceptive conduct application is required to be lodged within 6 years after the alleged misleading or deceptive conduct occurred.
(3) Without limiting section 26, in proceedings in relation to a misleading or deceptive conduct application, the Tribunal may 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 specified person, 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.
(4) The Tribunal may make any ancillary orders that it considers necessary for the purpose of enabling an order under this section to have full effect.
(5) The Tribunal may impose any conditions that it considers appropriate when making an order under this section.
(6) The Tribunal may make an interim order under this section pending final determination of a misleading or deceptive conduct application, if the Tribunal considers it appropriate to do so.
(7) In this section -
specified, in relation to an order, means specified in the order.
38 Clause 4 of sch 1 deals with the application of the Act to 'existing retail shop leases'. An 'existing retail shop lease' is defined in cl 3 to mean, in effect, a retail shop lease entered into before the 1 January 2013 amendments. Clause 4 provides, relevantly:
4. Application of 1985 Act to existing retail shop lease
Despite the amendments effected by the 2011 amending Act -
…
(b) the following provisions continue to apply to, and in relation to, an existing retail shop lease -
(i) section 6 of this Act, as in force immediately before being amended by section 7 of the 2011 amending Act
40 There is no equivalent transitional provision in relation to the amendments effected by the Amendment Act to s 15F of the Commercial Tenancy Act.
The Tribunal proceedings
41 On 8 May 2013, WY lodged with the Tribunal an application seeking, amongst other things, an order for the payment of money to it by O3. In its amended application, statement of issues, facts and contentions,51 the orders sought by WY included an order that O3 pay WY 'the sum of $195,275.46 for loss, damages and or refund of monies paid'. Reference was made to s 6(1)(b), s 15C, and s 15F of the Commercial Tenancy Act. The sum of $195,275.46 comprised the claim for the repayment of rent of $191,734.34 plus certain other alleged expenses.
42 As noted above, the Tribunal made findings to the effect that O3 had given false information to WY before it entered into the lease, and that WY had relied upon that false information in entering into the lease. The Tribunal also found that WY's case based on alleged unconscionability had been made out,52 and held that if WY had suffered any losses, they would have been caused by O3's 'breaches'.53
43 Nevertheless, O3 contended before the Tribunal that WY had not suffered any loss in that:54
payments made in respect of rent were not made by Mr Luo and his wife in circumstances where [WY] was obliged to repay them, and [WY] otherwise suffered no loss[.]
44 The Tribunal found that WY had not suffered loss. The Tribunal said:55
I have also made mention of three businesses operated by Mr Luo and his wife, at least one of which is under the 'At Rice Buffet' name. Payments of rent for the premises were made from an 'At Rice Noodle and Sushi - Taree' account owned by them, without any demand from O3 arising from a default by [WY]. Without descending into the intricacies of the law of guarantees, these payments seem to have been entirely voluntary on Mr Luo and Ms Yuan's part, albeit, allegedly, on the basis that [WY] would repay them the money when it was in a position to do so.
…
The fact, as I have found it, that the proposed business was never going to be operated by [WY] means that the rent payments made by Mr Luo and Ms Yuan cannot be characterised as payments by the guarantors of [WY's] obligations under the lease. It follows that [WY] is unable to establish any losses sustained by it for which it is entitled to be compensated. Although it is unnecessary for me to determine the correct character of the payments, the evidence suggests that they are probably payments made by the partnership which would have operated the business, presumably following an assignment of the lease to the partners, as occurred in the case of the Geraldton business (to Achmore). (emphasis added)
45 Accordingly, WY's application was dismissed.56
The Supreme Court appeal to the primary judge
46 WY appealed from the decision of the Tribunal pursuant to s 105 of the StateAdministrative Tribunal Act 2004 (WA) (SAT Act). It was common ground that an appeal could only be brought on a question of law: s 105(2) of the SAT Act. There were four grounds of appeal. They were to the effect that the Tribunal erred in law:
1. in finding that because the relevant payments were not made by Ms Luo and Ms Yuan in their capacity as guarantors of the relevant lease, the making of the payments did not cause WY to suffer pecuniary loss within the meaning of the Commercial Tenancy Act;
2. in not finding that the making of the payments caused WY to suffer pecuniary loss within the meaning of the Commercial Tenancy Act
3. in not finding that the making of the payments occurred in circumstances that gave rise to a loan between WY and Mr Luo and Ms Yuan, and that the making of the payments thereby caused WY to suffer loss; and
4. in failing to consider alleged uncontroverted evidence by Mr Luo to the effect that upon the making of the payments, WY incurred a liability to Mr Luo and Ms Yuan and thereby suffered loss within the meaning of the Commercial Tenancy Act.
47 In relation to ground 4, WY referred to certain unchallenged evidence by Mr Luo in re-examination in connection with the payments made for the rent:57
And were there any arrangements in place or proposed as to whether or not [WY] would have any obligation in respect of that money? --- Respect - I don't understand what 'respect' mean. But we would pay on behalf of [WY] and then, [WY] got money, pay us back, that's all.
48 The evidence of Mr Luo referred to above appears to have been the basis for the Tribunal's observation that the money was paid by Mr Luo and Ms Yuan 'allegedly, on the basis that [WY] would repay them the money when it was in a position to do so'.58
49 The primary judge considered that the essential issue underlying all four grounds of appeal was a challenge to the finding that WY had failed to establish a 'pecuniary loss' for the purposes of making good an entitlement to monetary compensation against O3, as its former landlord.59 However, when dealing with the appeal, his Honour did not address separately each of WY's grounds of appeal.
Primary decision
50 The primary judge found that the Tribunal had erred in law in mischaracterising the rental payments.60 His Honour summarised his views as follows:61
In short, a substantial error (of law) by the learned member arose by essentially focusing on the wrong side of the rent transaction, ie, the payer of funds. He should instead have been focusing upon the recipient of rent, ie, [O3], rather than how [WY] had managed to obtain the discharge of its rental obligation.
It is of paramount importance here to understand that the funds received by [O3] are accepted to have been applied by [O3] against the liability of [WY] to effectively discharge the liability of [WY] to remit rent to [O3], under the obligations which bound [WY] by the lease. There can be no valid argument then that [O3] had received from a third party volunteer some sort of voluntary payment or donation, ie, from Mr Luo and Ms Yuan. It received the rent due to it by [WY] under a lease. That position is effectively misunderstood and misstated by the learned member at the first sentence of [89], where he refers to 'the rent payments made by Mr Luo and Ms Yuan'. Rent can only be paid by a lessee. In present circumstances the rental liability was that of [WY], not that of Mr Luo and Ms Yuan.
[The Tribunal's] reasons as regards loss under [89] - [90] reflect a fundamental error of law which require the appeal to be allowed as regards [WY]'s claim for loss and compensation by reference to claiming back from [O3] rent monies which it received over the duration of the lease.
…
[O3] did not receive any voluntary payment, as perhaps the last sentence of [81] of the reasons could be read to suggest. What was demonstrably received was the rent due from [WY]. The fact that the money had been remitted (in the circumstances remitted on behalf and to discharge the liability of [WY] as lessee) by Mr Luo and Ms Yuan, in law, does not detract from its underlying character as a rental payment received on behalf of the lessee and in discharge of the lessee's obligation to pay rent. (original emphasis)
51 In relation to the Tribunal's findings that the payments had not been made by Mr Luo and Ms Yuan in their capacity as guarantors of WY's obligations under the lease, his Honour said:62
Furthermore, a diverting excursion undertaken by the Tribunal towards considering whether Mr Luo and Ms Yuan had made these payments in their capacity as guarantors of [WY]'s lessee obligations under the lease, was another exercise in irrelevance. It is accepted (see ground 1) for the purposes of this appeal that the conclusion of the learned member (see [81] of his reasons) that the payments were not made in discharge of their obligation as guarantors of the lessee's obligations under the lease is to be accepted. So it is. But that conclusion does not emerge against or address the substantive issue of characterisation required in respect of monies received by [O3]. (emphasis added)
52 However, his Honour continued:63
In the present circumstances an evaluation of the relationship as between the lessee and parties remitting monies which upon receipt discharge the lessee's rental obligation is, strictly speaking, unnecessary. As far as the landlord is concerned it has received its rent. It is concerned with nothing more. The nature of fund raising undertaken by the lessee, in order to secure money to be paid to discharge its rental payment obligations is, essentially, another irrelevant distraction. The landlord should not be concerned (absent illegality). It is accepted that is not the position here. It is accepted that the monies were received as rent: see ts 52.
At a distance, drawing a conclusion that the monies paid by Mr Luo and Ms Yuan on [WY]'s behalf to discharge its rent liability to [O3] is hardly challenging. An absence of any books of account of [WY] showing a debtor/creditor relationship as between [WY] and Mr Luo and Ms Yuan, does not inhibit such a conclusion. But even if, say, wholly hypothetically, payment had been made by Mr Luo and Ms Yuan effectively by way of bestowing a gift benefit upon [WY] (by having its rental obligation to [O3] discharged), that hypothesis would still not detract from the proper characterisation of the funds received by [O3], in its hands, as rent. (emphasis added)
53 Accordingly, his Honour concluded that O3's misleading conduct caused WY pecuniary loss in the form of rental monies paid under the lease. The rental payments were 'wasted payments', for which WY was entitled to be compensated.64
54 The primary judge said that there were four main statutory remedies provided by the Commercial Tenancy Act: s 6(1)(b), s 15F(1), s 16D(1) and s 26(1)(a).65 Having found that WY suffered pecuniary loss as a result of O3's conduct, his Honour concluded that the appeal should be allowed and that O3 should pay WY $191,734.34 by way of the repayment of all rental payments made under the lease prior to its termination.66
55 His Honour's reference to s 16D(1) of the Commercial Tenancy Act is a reference to a provision that was introduced into the Act as part of a number of amendments made pursuant to the Amendment Act. As noted earlier, those amendments came into effect on 1 January 2013,67 after the events in question.
The appeal to this court
Grounds of appeal
56 O3's grounds of appeal are:68
1. The learned Judge erred in law:
1.1 at [57] and [60] in holding that the facts found by the Tribunal and referred to by his Honour at [54] - [56] and [59] were irrelevant to the question ('the Material Question') of whether the respondent ('WY Properties') suffered any loss through Mr Frank Luo ('Mr Luo') and Ms Ping Yuan ('Ms Yuan') making payments ('the Payments') to the appellant (O3 Capital') which were paid by Mr Luo and Ms Yuan and received by O3 Capital in satisfaction of the obligation of WY Properties to pay rent to O3 Capital; and
1.2 at [63] - [67] in holding that it was irrelevant to the Material Question whether WY Properties established that it was under a legal obligation to reimburse Mr Luo and Ms Yuan the amount of the Payments.
2. The learned Judge erred in fact and law in not holding that:-
2.1 WY Properties' entitlement to compensation depended on it establishing that it had suffered loss; and
2.2 by WY Properties establishing O3 Capital derived a benefit through Mr Luo and Ms Yuan making the Payments without WY Properties establishing that WY Properties was under a legal obligation to reimburse Mr Luo and Ms Yuan the amount of the Payments, WY Properties did not establish it suffered any loss by Mr Luo and Ms Yuan making the Payments or O3 Capital receiving the Payments.
57 WY's notice of contention is in the following terms:69
1. [WY] also seeks to support the judgment of His Honour on the basis that the relevant factual circumstances give rise to an obligation on the part of [WY] to indemnify Mr Luo and Ms Yuan in respect of the monies that were paid to [O3] in satisfaction of [WY]'s rental obligations.
2. The fact the monies that were paid were paid in discharge of rental obligations is obvious.
3. It is also obvious that [O3] received the payments as payments of rent.
4. Given Ms Yuan is a director of [WY] there can be no doubt that [WY] had notice of the relevant rental payments.
5. [WY] clearly adopted and accepted the rental payments that had been made in circumstances that give rise to circumstances that [WY] ought to have known that there was an expectation for the monies to be repaid.
Disposition
The grounds of appeal
58 O3 contends, and it is not disputed, that the relevant version of the Commercial Tenancy Act was the statute as it stood as at June 2011, prior to the amendments effected by the Amendment Act.70 This would appear to be correct in relation to s 6 (see [39] above). It is unnecessary for present purposes to consider whether the amendments made to s 15F apply to events prior to 1 January 2013 as, in the events which happened, they could have no material bearing upon the disposition of the matter in any event. The relevant provisions of the Commercial Tenancy Act are set out earlier.
59 By s 6(1)(b) of the Commercial Tenancy Act, on the findings made by the Tribunal concerning the provision of false information, WY was entitled to 'apply … to the Tribunal for an order that [O3] pay compensation to [WY] in respect of pecuniary loss suffered by [WY] as a result of' the provision of the false information. The orders that the Tribunal could make included the payment of money: s 26(1)(a) of the Commercial Tenancy Act.
60 Also, under s 15F(1) of the Commercial Tenancy Act, if WY could show that it had suffered 'loss or damage because of' the unconscionable conduct of O3, it could 'recover that loss or damage by applying … to the Tribunal'. By s 15F(3), if WY had established that it had suffered loss or damage because of O3's unconscionable conduct, the Tribunal could, without limiting s 26, make various orders, including an order that O3 pay money 'whether by way of debt, damages or restitution'.
61 Under both s 6(1)(b) and s 15F(1), WY was required to show that it had suffered loss and that the loss was caused by the relevant conduct of O3.
62 To the extent that WY had not paid its own money by way of rent to O3, the only way in which WY could establish pecuniary loss was, relevantly, to show that it had incurred a liability to Mr Luo and Ms Yuan in relation to the money they paid to O3 on account of rent. To the extent that his Honour found otherwise, his Honour, with respect, erred.
63 On the other hand, his Honour was plainly correct insofar as his Honour found71 that the Tribunal erred in law in considering that a finding that the moneys were not paid pursuant to the guarantors' obligations with respect to the lease precluded a finding that WY had suffered pecuniary loss.72 A pecuniary loss would occur if WY had an obligation to the partnership to indemnify it or reimburse it at law or in equity. Obligations at law might arise from an express or inferred agreement,73 or on the basis of a claim in restitution.
64 A relevant obligation could arise at law if, for example, there were an express agreement for a loan, or an inferred agreement for a loan. On the question of whether there was an agreement for loan (a matter raised by WY in argument in relation to ground 4 of the appeal to the primary judge, but not dealt with by the primary judge), Mr Luo's evidence, and the Tribunal's observations, referred to in [48] above, might potentially have raised questions of the kind considered in cases such as Bailes v Modern Amusements Pty Ltd74 and Argyll Park Thoroughbreds Pty Ltd v Glen Pacific Pty Ltd (receiver and manager appointed).75
65 Apart from agreement, depending on the circumstances, WY might alternatively be liable to the partnership at law in restitution, or in equity. The authorities referred to by WY and O3 in that regard are discussed later in these reasons.
66 In oral submissions, counsel for O3 accepted as a matter of principle that it did not follow that merely because Mr Luo and Ms Yuan did not pay O3 under the guarantee, WY suffered no pecuniary loss.76 O3's position on appeal was, nevertheless, that the Tribunal's express and implied findings of fact necessarily precluded any finding of a loan agreement (express or implied), and necessarily precluded any finding to the effect that WY was liable in restitution or in equity to the partnership.77 It will be necessary to return to this submission later in these reasons.
67 As stated above, insofar as his Honour said that it was irrelevant whether WY had any legal obligation to reimburse Mr Luo and Ms Yuan for the money paid to O3 on account of rent, his Honour, with respect, erred. The correct question to be determined was whether WY had incurred an obligation to the partnership in respect of the relevant payments. That question is not, with respect, answered by 'focusing upon the recipient of the rent',78 as his Honour had suggested. To this extent, grounds 1.2 and 2.2 are made out.
68 Ground 2.1 raises a question as to the proper construction of the judge's reasons. His Honour did hold that WY's entitlement to compensation depended upon it establishing a pecuniary loss. His Honour made a number of observations throughout the judgment which indicate that he understood that to be the ultimate question.79 Rather, as we would read his Honour's reasons, his Honour (with respect) erred in finding that in the determination of that question, it was irrelevant whether WY had incurred a legal obligation to Mr Luo and Ms Yuan in respect of the moneys paid by them on account of rent. We would dismiss ground 2.1.
69 Ground 1.1 raises the question of whether his Honour erred in rejecting, as irrelevant, the Tribunal's finding to the effect that any restaurant business to be conducted from the leased premises would be run by the partnership or Achmore. For the reasons discussed later, that matter could not be dismissed as plainly irrelevant to an assessment of whether there was any obligation on the part of WY to reimburse or indemnify the partnership for the payments made by the partnership to O3. We would uphold ground 1.1.
70 Before addressing the notice of contention, it is convenient to discuss a number of the relevant principles. What follows is not intended to be an exhaustive or comprehensive discussion of the topic in this area.
Restitution
71 In the context of a restitutionary claim at law, in Lumbers v W Cook Builders Pty Ltd (in liq),80 Gummow, Hayne, Crennan & Kiefel JJ referred with approval to the observations of Bowen LJ in Falcke v Scottish Imperial Insurance Co.81 Their Honours said:
[W]here one party … seeks recompense from another … for some service done or benefit conferred by the first party for or on the other, the bare fact of conferral of the benefit or provision of the service does not suffice to establish an entitlement to recovery. As Bowen LJ said in Falcke v Scottish Imperial Insurance Co:
'The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will.' (emphasis added)
The principle is not unqualified. Bowen LJ identified salvage in maritime law as one qualification. Other cases, including other cases of necessitous intervention, may now be seen as further qualifications to the principle but it is not necessary to examine in this case how extensive are those further qualifications or what is their content. (footnotes omitted, original emphasis)
72 Also, in Stewart v Atco Controls Pty Ltd (in liq),82 the High Court said:
The decision in Falcke … stands for the proposition that a stranger who carries out work or services, or otherwise confers a benefit on another, without a request, actual or implied, to do so, is not entitled to payment or compensation. In similar terms, in Lumbers v W Cook Builders Pty Ltd (in liq), by reference to Falcke, it was said that 'the bare fact of conferral of [a] benefit or provision of [a] service does not suffice to establish an entitlement to recovery.' (emphasis added) (footnote omitted)
73 On the other hand, where the third party makes a payment or confers a benefit at the express or implied request of the other party, the payment or benefit is not made or given 'behind the back' of the other party. In Israel v Foreshore Properties Pty Ltd (in liq),83 the High Court said that where a third party pays money under a guarantee which it has provided at the request of the debtor, or where the third party pays money at the request of, and for the benefit of, the debtor, the third party 'is entitled to an indemnity from those who made the request to pay or to act as surety'.
74 Accordingly, in the case of a voluntary payment by a plaintiff for the discharge of the defendant's debt at the express or implied request of the defendant, restitution at law has been seen to be grounded on an implicit promise by the defendant to indemnify or reimburse the plaintiff: Eastern Shipping Co Ltd v Quah Beng Kee;84Brasher v O'Hehir;85Amann Aviation Pty Ltd v Commonwealth of Australia;86Rogers v Australia and New Zealand Banking Group Ltd.87 A helpful discussion is contained in Mr Jackman SC's book 'The Varieties of Restitution'.88 We use the word 'voluntary' here in the sense of there being no legal obligation to pay, including, for example, under guarantee, rather than in the sense of gratuitously.
75 In Falcke, on the question of whether any request for payment could be implied, Cotton LJ said:89
I think that in a case of this sort, when money is paid in order to keep alive property which belongs to another, a request to make that payment might be implied from slight circumstances, but in my opinion there is no circumstance here in evidence from which such a request can be implied.
76 Bowen LJ in Falcke also said that the inference of a request 'will unhesitatingly be drawn in cases where the circumstances plainly lead to the conclusion that the owner of the saved property knew that the other party was laying out his money in the expectation of being repaid'.90 His Lordship was not, however, as we would understand it, purporting to circumscribe the circumstances from which a request, express or implied, might be inferred. Further, in a commercial context, it might (generally speaking) readily be inferred that a party laying out money for another person would have an expectation to be repaid, and that the other person, knowing of the payment, might be inferred to have knowledge of that fact.
77 In Bank of England v Cutler,91 Vaughan Williams LJ (albeit in dissent in the application of the principle) observed:
It is true the request need not be expressed in words, and that both the request and the promise of indemnity implied therefrom may be implied from conduct and circumstances, including the relation of the parties as one of the circumstances.
78 The question of whether there has been an express or implied request is a question of fact.92
Equity
79 Where there has been no express or implied request from the debtor whose debt to the creditor has been paid, equity may nevertheless recognise that the debtor is liable to the third party on the basis that the third party is subrogated to the creditor's rights.
80 The position in equity was examined in In Re Cleadon Trust Ltd.93 In that case, a holding company had guaranteed the debts of its subsidiary companies. A director of the holding company paid his own money to discharge certain debts of the subsidiary companies. The money was paid at the request of the secretary of the holding company in the expectation that the holding company would be liable to repay the money to him. The secretary of the holding company had no authority to make the request, or borrow funds for the holding company, and the board of the holding company never authorised the payments made by the director to discharge the debts of the subsidiary companies. The holding company, as guarantor, nevertheless obtained a benefit from the director's payments. The director claimed, in the winding up of the holding company, that the holding company was liable for the payments he had made. He was denied relief.
81 Clauson J (Scott LJ agreeing) discussed the equitable principle in the following terms.94 Suppose that B receives a request by A, who is not the agent of C, to advance money to C. As A is not the agent of C, the request is not that of C. B, in response to the request, in fact places money under the control of C (or C's agent). C, or an agent of C authorised to pay C's debts, then uses the money or procures the money to be used, in discharge of C's debts. His Lordship said:95
On these assumed facts a court of equity will treat B as entitled to be recouped by C a sum equal to the amount so used in or towards discharging C's debts.
82 His Lordship explained the principle in the following passage. It should be noted, however, that when reading this passage, if the nomenclature previously adopted by his Lordship were to remain consistent, the reference to 'A' in the passage should presumably be read as a reference to 'B'. His Lordship said:96
It is to be observed that the equity cannot operate against C … merely because C has in fact received a benefit from B's action in providing the money: that fact alone, as Falcke's case has settled (so far as this Court is concerned), would not set up an equity against C. The equity must, it would seem, arise from the fact that C, by himself or by a person authorised to act, in the matter of payment of C's debts, for C, has used the money so as to obtain a benefit for C. The benefit has not been an unsought benefit conferred on C behind his back. It is a benefit which C has obtained for himself by using (either himself or by his agent) A's money [sic - B's money] as his own. It is his conduct in so using A's money [sic - B's money] which makes it unconscientious that he should retain the benefit while refusing recognition of A's just claim [sic - B's just claim] to recoupment. (footnote omitted)
83 His Lordship continued:97
But there is no difficulty in recognising and enforcing against a man who has, by himself or his agent, used another's money to pay his own debt, an equity to refund to that other a sum equal to the money of that other which he has treated as his own.
84 Clauson LJ referred in this regard to a number of earlier authorities, including Bannatyne v D & C MacIver,98 which in turn had applied an earlier decision of Selborne LJ in Blackburn & District Benefit Building Society v CunliffeBrooks & Co.99 Both of those decisions were considered by the High Court (in a decision prior to Cleadon Trust) in City Bank of Sydney v McLaughlin.100
85 McLaughlin was a case in which the plaintiff, a solicitor, had been insane. In 1900, during the period of his insanity, he executed a power of attorney in favour of his wife. The wife mortgaged his property and pledged the title deeds to the defendant bank as security for further advances. Moneys consequently drawn on the solicitor's account by the wife with the bank were then used to discharge certain obligations of the solicitor and were otherwise prima facie to his benefit. The solicitor recovered his sanity in 1903 and continued to operate the relevant bank account. In 1907, some four years after he recovered his sanity, the solicitor applied to set aside the mortgage and to have the title deeds returned to him on the basis that he executed the power of attorney while he was, in fact, insane, and that the power of attorney was thereby void. The bank counterclaimed asking for an account, and for an order that the solicitor pay the bank the proper amount payable to them under the circumstances.
86 Griffith CJ and Barton J regarded Bannatyne as an application 'of the larger doctrine of equitable estoppel', and that the doctrine of equitable estoppel by ' acceptance and retention of a benefit' also applied to all cases where one party assumes to enter into a transaction as agent for another without the latter's authority.101 Their Honours said:102
Equity, as well as law, recognises that things are what they are. And if … the person for whom another assumes to act receives and keeps any benefit which may have resulted from the act done, we think that he must be taken to have adopted and ratified it. In general a man is not bound actively to repudiate or disaffirm an act done in his name but without his authority. But this is not the universal rule. The circumstances may be such that a man is bound by all rules of honesty not to be quiescent, but actively to dissent, when he knows that others have for his benefit put themselves in a position of disadvantage, from which, if he speaks or acts at once, they can extricate themselves, but from which, after a lapse of time, they can no longer escape. Under such circumstances mere inaction is convincing evidence of ratification or adoption.
87 In the particular context of agency, their Honours observed, in effect, that where a contract is made by a person purportedly as agent on behalf of a principal, but without the authority of the principal, similar considerations of the kind referred to in the passage above may lead to the conclusion that the principal has ratified the agent's authority to enter into the contract.103
88 In McLaughlin, the court considered certain payments made by the wife from the bank accounts. The first concerned the wife's payment from the account of £2,100 which had the effect of reinstating an amount which had apparently been obtained by the solicitor in breach of trust. The payment had apparently effectively avoided a claim against the solicitor for breach of trust. The second concern was a payment of £1,775 made by the wife pursuant to a deed of settlement with a former client of the solicitor, containing releases in favour of the solicitor. The former client had alleged, in effect, that the solicitor had overcharged him and the matter was settled by the payment of £1,775 to the former client.
89 Griffith CJ and Barton J did not regard the facts as strictly falling within the equitable doctrine to which they had earlier referred,104 in that, in strictness, the payments had not been made by the bank out of its own moneys (the account was apparently in credit).105 Nevertheless, they ordered an account as sought by the bank. In this regard, they considered that the payments were prima facie for the benefit of the solicitor. The solicitor, in the ensuing four years after recovering his sanity, had known of the payments, had accepted the benefit of them, and had taken no steps to reverse them, and (in relation to the second payment) the recipient of the payment could no longer be returned to his former position. They held that in those circumstances, if nothing more were shown on the taking of an account, the solicitor had, by his inaction, knowingly ratified the transactions and had affirmed his wife's authority to apply the money standing to his credit with the bank for those purposes.106
90 There was also a question as to whether the bank was entitled to retain the title deeds as security for the overdraft created and operated by the solicitor himself following his return to sanity. Although the mortgage was void as a conveyance, it did not follow that the contract made by the wife to give the bank the title deeds as security for advances made to her for the benefit of her solicitor husband, was incapable of ratification.107 Griffith CJ and Barton J said that an inquiry should be ordered as to whether the solicitor, with knowledge of the possession by the bank of the title deeds of the land, and of the bank's claim to retain the title deeds as security for any moneys advanced on the account, and without repudiating that claim, obtained advances from the bank on that footing.108
91 The Full Court of the Supreme Court of Queensland in Johnston v Arnaboldi109 applied the observations of Griffiths CJ and Barton J in McLaughlin concerning 'equitable estoppel'. Their Honours, moreover, said that Griffiths CJ and Barton J had decided McLaughlin's case in favour of the bank on the basis of equitable estoppel. That observation might, with respect, be open to question in that, on one reading of the reasons, the majority in McLaughlin's case ultimately decided in favour of the bank that there should be an account on the basis that prima facie the solicitor had ratified the agency of his wife at law.
92 Similar reasoning to that of the majority in McLaughlin, albeit not with reference to McLaughlin, was applied by Burt CJ in Rogers v Australia and New Zealand Banking Group Ltd.110 In that case, the plaintiffs, who were major shareholders of a mining exploration company, gave personal securities to the bank, including guarantees in respect of funds loaned by the bank to the company. The plaintiffs sought a declaration against the company to the effect that they should be exonerated from liability by the company paying the bank the balance due. They also sought an order to the effect that the company make payment and obtain the cancellation of the security. The company sought to resist the claim on the ground, amongst others, that it had never requested the plaintiffs to put up the securities. Burt CJ held, relevantly, that although there was no 'formal request' by the company that the plaintiffs should guarantee the loans from the bank to the company, the company knew what the plaintiffs intended to do and stood by and allowed them to do it. Further, the company thereafter took the benefit of what had been done, and that it was 'not now open' for the company to say that the debts were not guaranteed at its request.111 The finding, in the language of the majority in McLaughlin, was that the company stood by, knowing that the plaintiffs were placing themselves at a disadvantage for its benefit, without active dissent, during a time when the plaintiffs were still able to extricate themselves from the disadvantage (before execution of the guarantee). Also, the observations of Burt CJ in this regard are not dissimilar in character to the observations of Mason CJ and Wilson J some three years later in Walton's Stores (Interstate) Ltd v Maher.112 Burt CJ added that as a separate ground for his decision on this point, the company had, at a subsequent meeting of directors, ratified the arrangement in any event.113
93 O3's counsel submitted that the operation of the equitable principle as discussed in Cleadon Trust requires the third party to pay money directly to the debtor, which the debtor then uses to pay its creditor, and that the principle has no operation in circumstances where the third party pays the money directly to the debtor's creditor.114 We would not accept that proposition. In Cleadon Trust, Clauson LJ115 referred to the debtor 'using' the third party's money as his own. Scott LJ116 referred to the principle operating where the third party 'took action and used the [third party's] money for its own purposes, conscious … that it was the [third party's] money'. Sir Wilfred Greene MR referred to the decision in Bannatyne and an equity arising where the debtor has 'applied' the third party's money in payment of its debts.117 Whether money has been 'applied' or 'used' by the debtor in this context will be a question of fact.
94 In Cleadon Trust, Clauson LJ (with whom, relevantly, Scott LJ agreed) referred with evident approval to B Liggett (Liverpool) Ltd v Barclays Bank Ltd.118 On Clauson LJ's analysis, this case involved a payment directly from the third party to the debtor's creditors, which had been directed or authorised by the debtor.119 In that case, Mr Liggett (A) drew, without authority, cheques on the account of the company (Company C) with Barclays Bank (B Bank). The cheques, drawn in favour of Company C's business creditors, were honoured by B Bank, and the money 'provided by [B] bank' to Company C's creditors was used to pay Company C's business debts. Company C was liable to give B Bank credit for the moneys so paid, because Mr Liggett (A) had Company C's authority to pay its debts, even though he had no authority to draw cheques on Company C's account.
95 It is unnecessary to decide, for present purposes, the ambit of the circumstances from which the court may infer that the debtor has 'used' or 'applied' the third party's money to pay its debt. The equity would at least prima facie arise where the debtor authorises the payment in advance, or authorises the payment retrospectively by effectually adopting the payment in application to the satisfaction of the debt. See, for example, McLaughlin;120Brasher;121Hill v Ziymack;122Crantrave Ltd v Lloyds Bank Plc;123 cf Public Trustee v Schultz.124 In this context, the observations of Isaacs J in McLaughlin concerning what constitutes 'payment' by the debtor are pertinent. His Honour's observations on this particular point are generally consistent with the more general observations of Griffiths CJ and Barton J referred to earlier. Isaacs J said:125
The expression 'pays' involves some election on the part of the person charged either to apply the money or to treat it as applied to the satisfaction of his liabilities. The mere fact that a benefit is conferred on him does not suffice to make him chargeable.
…
Consequently we have, in such a case as the present, to see whether the respondent directly or indirectly has so conducted himself as to have assented to and adopted the actual application of the money which was made in his name, and therefore, in fact, to have 'paid' his obligations. … Unless there is something in the nature of adoption, the attempted payment is not really a payment, for the debtor might refuse to accept it, and insist on paying his debts himself, leaving the first person to get back his money as best he could.
Whether he did so conduct himself or not depends on the facts. Express assent is not necessary. Conduct, active or passive, may establish it. Silence, where there is a duty to speak, may be excellent evidence of assent.
96 Where the debtor has validly authorised (antecedently or retrospectively) the payment by the third party to its creditor, the money is in effect received by the debtor's creditor as the debtor's money: Porter v Latec Finance (Queensland) Pty Ltd;126Australian Financial Services and Leasing Pty Ltd v Hills IndustriesLtd.127 Conversely, the third party payer, in that circumstance, would generally have no claim itself on the payee, ie, the debtor's creditor: David Securities Pty Ltd v Commonwealth Bank of Australia;128Hills Industries Ltd.129
Agency
97 Further, insofar as the debtor's authorisation of the third party to make the payment creates a relationship of agency between the debtor (as principal) and third party (as agent), the third party will also have a restitutionary claim at law as agent for reimbursement: Re Clune;130Mega-top Cargo Pty Ltd v Moneytech Services Pty Ltd.131
98 Retrospective authorisation by way of ratification may be inferred by the principal's conduct, including by acquiescence with full knowledge.132 Ratification, unlike estoppel, does not, however, require proof of reliance or detriment: Australian Blue Metal Ltd v Hughes.133 Nevertheless, as the reasons of Griffiths CJ and Barton J in McLaughlin indicate, the same facts within an assumed agency context may give rise to an equitable estoppel or ratification at law.
99 Of course, where the transaction is effected by a person who does not purport to be acting on behalf of the principal, there is no scope for ratification of the agent's authority: McLean Bros & Rigg Ltd v Grice;134Howard Smith & Co Ltd v Varawa.135
Application to the present facts
100 In this case, insofar as the Tribunal found that WY and the partnership expected that the premises would be used as a restaurant business by the partnership (or Achmore), the Tribunal also presumably found that the expectation was that there would be an assignment of the lease for that purpose (or, perhaps, if that were permissible, a sublease).
101 Further, in this case, the Tribunal, expressly or implicitly, found or accepted the following facts:
(a) WY was the lessee;
(b) WY had no funds itself to pay the rent;
(c) WY itself did not make any lease payments directly to O3;
(d) WY sent to O3 the email dated 17 August 2011;
(e) O3 consequently resent invoices in accordance with WY's email of 17 August 2011, giving details of the amounts of the lease payments and the account into which the rental payments should be paid;
(f) the partnership paid the lease payments in the amounts, and into the account, as specified by O3;
(g) when planning approval was rejected, WY requested O3 to, in effect, repay to it the rental payments O3 had received.
102 The inference which would ordinarily be readily drawn from those facts is that WY provided the information as to the rental details, and the accounts into which the rent should be paid, to the partnership.
103 The further inference which might generally be drawn from the matters in [101] - [102] above is that WY, at least impliedly, requested the partnership to make the lease payments to O3.136
104 O3 in this appeal contended, in effect, that the last mentioned inference of fact, ie an implied request, was not drawn by the Tribunal; that such an inference was not open to be drawn by the Tribunal having regard to its findings of primary fact; and, moreover, the inference could not be drawn by this court (nor for that matter could it have been drawn by the primary court had it turned its mind to the issue) in an appeal on a question of law.
105 It is correct to say that the Tribunal did not make a finding of an implied request. That appears, at least, in part to be because the Tribunal considered that once it had found that Mr Luo and Ms Yuan had not made the payments as guarantors, WY could not prove that it had incurred a liability to the partnership and could thereby not prove that it had suffered any pecuniary loss. As noted earlier, the Tribunal erred in that respect.
106 On the question of whether a finding of an implied request was open to the Tribunal, O3 submitted that it was not. Two propositions were put. First, O3 submitted that the Tribunal found, in effect, that the partnership had requested WY to allow it to pay the rent and take over WY's obligations under the lease.137 This request was said to have been made on the basis that both WY and the partnership expected, and intended, that in due course the partnership (or Achmore) would operate a business from the premises. Secondly, and in this regard, O3 submitted that the email of 17 August 2011 was written not only on behalf of WY, but also on behalf of the partnership.138 As to the latter proposition, there was no finding to that effect by the Tribunal. As to the former proposition, we are not persuaded that on the Tribunal's reasons, properly construed, the Tribunal did make such a finding.
107 However, even if the partnership made a request of WY, the further inference in the circumstances might ordinarily be that WY had expressly or impliedly agreed to that request, and thereby authorised the partnership to pay the rent to O3 on its behalf, pending any assignment of the lease to the partnership (or Achmore). In that event, the payment could not be characterised as being 'an unsought payment conferred' on WY 'behind the back' of WY.139 Also, in a commercial setting such as this, it might, at least arguably, be thought unusual that the parties (WY and the partnership) intended that payments for rent made by the partnership in the expectation that it would obtain a right to use the premises for its business purposes, were to be treated effectively as a gift from the partnership to WY in the event that an assignment for lease did not materialise. On the other hand, if there were a request by WY that the partnership not make the payments to O3, that would be relevant to any claim in restitution.140
108 In the end, detailed findings of primary fact will need to be made, and the appropriate inferences drawn, before the ultimate finding can be made as to whether WY is liable to reimburse or indemnify the partnership for the rental payments made by O3. The finding to the effect that WY and the partnership expected that a restaurant business would be run by the partnership (or Achmore) from the premises might well be a relevant matter to be taken into account as part of the overall assessment of whether, in all the circumstances, WY came under a liability to reimburse or indemnify the partnership for the lease payments. Indeed, for the reasons given in [107] above, it might arguably assist WY in establishing that it authorised the partnership to pay the lease payments. But, on its own, the finding of expectation made by the Tribunal could not resolve or be determinative of the ultimate question. The Tribunal did not make sufficient findings of fact to allow it to decide the critical issue which it posed for determination, namely whether, in all the circumstances, WY was obliged to reimburse or indemnify Mr Luo and Ms Yuan for the rental payments made to O3.141
109 For the same reason, the notice of contention must be dismissed. Although WY's counsel stressed that it was indisputable that WY had sought recovery of the rental payments from O3, including by the commencement of proceedings in the Tribunal, that fact alone does not establish that WY came under a liability to the partnership. If, eg, the proper inference to be drawn from all the circumstances were to be that the payments prior to any claim for their recovery by WY, were made gratuitously by the partnership, WY would have been the beneficiary of a gift and would have suffered no loss.
110 The fact that WY ultimately claimed repayment of the rent, and the fact that the partnership made no claim on O3 in that regard, might provide some evidence of the intention of, or arrangements between, the parties (WY and the partnership) including whether, for example, the payments were initially made at the request of WY. But in themselves those facts could not, for present purposes, be conclusive as to whether WY was liable to Mr Luo and Ms Yuan at law or in equity for the payments made to O3.
111 Under s 105(2) of the SAT Act, an appeal could only be brought on a question of law. The question of law is the subject matter of the appeal.142 The primary judge could only deal with the questions of law identified in the grounds of appeal. He could not undertake his own inquiry into the question of whether WY was under a relevant obligation to reimburse Mr Luo and Ms Yuan. This court does not have the authority to undertake such an inquiry in deciding what the primary judge ought to have done.
Conclusion
112 The primary judge was correct to set aside the Tribunal's order insofar as his Honour found that the Tribunal's finding that Mr Luo and Ms Yuan did not pay the rental moneys as guarantors did not in itself address or determine the substantive issue of whether the payments properly characterised were made in circumstances giving rise to an obligation on the part of WY to reimburse or indemnify them.143 However, his Honour did not have a proper basis in an appeal on a question of law for requiring the 'repayment [by O3] of all rental payments made under the lease' prior to its termination.144
113 In the circumstances where the Tribunal has not found all the facts necessary to decide whether or not WY had established an obligation to reimburse or indemnify Mr Luo and Ms Yuan, the primary judge should have sent the matter back to the Tribunal for reconsideration under s 105(9)(c) of the SAT Act.
114 Section 105(9)(c) of the SAT Act provides that a matter may be returned for reconsideration 'with or without the hearing of further evidence'. The question of whether WY was liable to Mr Luo and Ms Yuan arose very late in the proceedings before the Tribunal.145 Given the manner in which the issue emerged during the course of the hearing before the Tribunal and the time that has passed since then, the receipt of further evidence should not be foreclosed. The further evidence should, however, be limited to evidence relevant to whether WY was under an obligation to reimburse or indemnify Mr Luo and Ms Yuan in respect of the rental payments. Also in the circumstances it is appropriate that the Tribunal reconsidering the matter should be constituted by the member who made the original decision.
Orders
115 For the reasons given above, the appeal should be allowed in respect of grounds 1.1, 1.2 and 2.2. The notice of contention should be dismissed.
116 Order 2 of the primary court dated 7 August 2015 should be set aside and there should be substituted an order that:
Paragraph 1 of the Order be set aside and the matter be sent back to the Tribunal constituted by the member who made the original decision for reconsideration in accordance with these reasons, with the hearing of such further evidence as to whether WY was under an obligation to reimburse or indemnify Mr Luo and Ms Yuan in respect of the rental payments which the Tribunal thinks fit to receive.
117 The parties should be heard as to consequential orders and as to the costs of the appeal.
1WyProperties Pty Ltd v O3 Capital Pty Ltd [2015] WASC 268 (primary reasons).
2WyProperties Pty Ltd and O3 Capital Pty Ltd [2014] WASAT 69 (Tribunal reasons).
3 Primary reasons [76].
4 Tribunal reasons [52].
5 Tribunal reasons [52].
6 Tribunal reasons [37], [49] - [50], [98].
7 Tribunal reasons [1]. According to the chronology in the appeal (WB 41), it appears that it was common ground that the term was for five years, commencing with effect from 1 June 2011.
8 Tribunal reasons [52].
9 Tribunal reasons [1].
10 Tribunal reasons [2].
11 Tribunal reasons [3].
12 Tribunal reasons [3], [4], [11], [32], [36].
13 Tribunal reasons [53] - [55].
14 Tribunal reasons [68], [72], [97]; GB 95.
15 Tribunal reasons [72], [81]; GB 47 - 58.
16 Tribunal reasons [72], [81], [82].
17 Implicit in Tribunal reasons [76] - [81]. See also GB 47 - 58, although GB 47 refers only to 'at Rice Buffet'.
18 Tribunal reasons [89].
19 Tribunal reasons [89].
20 Primary reasons [51].
21 Primary reasons [74].
22 Tribunal reasons [79], [82], [88].
23 Tribunal reasons [74].
24 Tribunal reasons [74]; GB 84 - 86.
25 Tribunal reasons [90].
26 Appeal ts 12.
27 Appeal ts 14 - 16, 18 - 19, 22, 32.
28 Appellant's chronology WB 41.
29 Appellant's email 15/08/11 GB 71 - 73; appellant's ledger GB 95.
30 GB 95.
31 GB 71 - 73; GB 95; see also, generally, Tribunal reasons [84].
32 Tribunal reasons [83]; GB 71 - 73.
33 Tribunal reasons [84], GB 71.
34 Tribunal reasons [85]; GB 71.
35 GB 76.
36 Appeal ts 15, 25.
37 Appeal ts 38, 41.
38 Appeal ts 48.
39 See Tribunal reasons [51], [53], [54].
40 GB 95.
41 GB 95.
42 GB 95.
43 Tribunal reasons [72] read with [84] - [90] and O3's general ledger GB 95.
44 Tribunal reasons [81].
45 Tribunal reasons [52]; see also O3's written submissions, par 6; WB 30.
46 Primary reasons [79].
47 Appeal ts 18, 19.
48 Appeal ts 47 - 48.
49 Primary reasons [67].
50 Western Australia, Government Gazette, No 219 (30 November 2012) 5773.
51 Dated 10 September 2013, BB 99 - 107.
52 Primary reasons [31] - [32]; Tribunal reasons [56] - [64].
53 Primary reasons [36] - [38]; Tribunal reasons [91] - [96].
54 Tribunal reasons [65(a)].
55 Tribunal reasons [81], [89].
56 Primary reasons [35].
57 ts 147; GB 42.
58 See Tribunal reasons [81].
59 Primary reasons [3].
60 Primary reasons [60] - [75].
61 Primary reasons [60] - [62], [64].
62 Primary reasons [63].
63 Primary reasons [66] - [67].
64 Primary reasons [75].
65 Primary reasons [18].
66 Primary reasons [76].
67 Western Australia, Government Gazette, No 219 (30 November 2012) 5773.
68 WB 6.
69 WB 34.
70 Appellant's submissions, par 10; WB 13.
71 Primary reasons [63],
72 Tribunal reasons [81], [89].
73 As to inferred agreements generally, see, for example, Fazio v Fazio [2012] WASCA 72.
74Bailes v Modern Amusements Pty Ltd [1964] VR 436.
75Argyll Park Thoroughbreds Pty Ltd v Glen Pacific Pty Ltd (receiver and manager appointed) (1993) 11 ACSR 1.
76 Appeal ts 11.
77 ts 11 - 12, 21, 27 - 28, 30, 34.
78 Primary reasons [60].
79 Primary reasons [3], [5], [18], [42], [61], [70], [75].
80Lumbers v W Cook Builders Pty ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635 [80], 663 - 664.
81Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234, 238.
82Stewart v Atco Controls Pty Ltd (in liq) [2014] HCA 15; (2014) 252 CLR 307 [47], 326.
83Israel v Foreshore Properties Pty Ltd (in liq) (1980) 30 ALR 631, 636.
84Eastern Shipping Co Ltd v Quah Beng Kee [1924] AC 177, 182 - 183.
85Brasher v O'Hehir [2005] NSWSC 1194 [36].
86Amann Aviation Pty Ltd v Commonwealth of Australia (1990) 22 FCR 527, 540.
87Rogers v Australia and New Zealand Banking Group Ltd [1985] WAR 304.
88 Jackman I M, The Varieties of Restitution (1998), 90 - 95.
89Falcke (241).
90Falcke (249).
91Bank of England v Cutler [1908] 2 KB 208, 221.
92Cutler (235).
93In Re Cleadon Trust Ltd [1939] 1 Ch 286, 322 - 324.
94Cleadon Trust (322 - 324).
95Cleadon Trust (323).
96Cleadon Trust (323 - 324).
97Cleadon Trust (324).
98Bannatyne v D & C MacIver [1906] 1 KB 103.
99Blackburn & District Benefit Building Society v Cunliffe Brooks & Co (1882) 22 Ch D 61, affirmed in Cunliffe Brooks & Co v Blackburn Building Society (1884) 9 App Cas 857.
100City Bank of Sydney v McLaughlin (1909) 9 CLR 615.
101McLaughlin (624 - 625).
102Bannatyne (625).
103McLaughlin (625 - 626).
104McLaughlin (627).
105McLaughlin (627).
106McLaughlin (627- 629); see also Isaacs J (636 - 637).
107McLaughlin (622).
108McLaughlin (630 - 631).
109Johnston v Arnaboldi [1990] 2 Qd R 138, 144 - 145.
110Rogers (313).
111Rogers (313).
112Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, 407 - 408, cf 462 - 463 (Gaudron J). See also S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637, 653 - 654.
113Rogers (313).
114 Appellant's submissions in reply to notice of contention, par 7; WB 38.
115Cleadon Trust (324).
116Cleadon Trust (316).
117Cleadon Trust (302).
118Cleadon Trust (326 - 327); B Liggett (Liverpool) Ltd v Barclays Bank Ltd [1928] 1 KB 48.
119Cleadon Trust (326 - 327).
120McLaughlin (632 - 633) (Isaacs J).
121Brasher [37].
122Hill v Ziymack (1908) 7 CLR 352, 364, 370.
123Crantrave Ltd (in liq) v Lloyds Bank Plc (2000) QB 917, 923 - 924.
124 cf Public Trustee v Schultz [1973] 1 NSWLR 564, 583.
125McLaughlin (632 - 633).
126Porter v Latec Finance (Queensland) Pty Ltd (1964) 111 CLR 177, 191 - 192.
127Australian Financial Services & Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; (2014) 253 CLR 560 [162] (Gageler J).
128David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353, 379 - 380.
129Hill Industries [100].
130Re Clune (1988) 14 ACLR 261, 266 (French J).
131Mega-top Cargo Pty Ltd v Moneytech Services Pty Ltd [2015] NSWCA 402 [48].
132McLaughlin (625 - 626); Brockway v Pando [2000] WASCA 192; (2000) 22 WAR 405 [117] - [118].
133Australian Blue Metal Ltd v Hughes (1962) NSWR904, 925.
134McLean Bros & Rigg Ltd v Grice (1906) 4 CLR 835, 857 (Griffiths CJ, Barton & O'Connor JJ agreeing).
135Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68, 82 - 83, 87.
136 cf Brasher where a request was implied in circumstances where a joint debtor provided 'payout' details to the plaintiff who then paid out the debt, and where there was no evidence that the joint debtor who had provided the 'payout' details believed that the plaintiff was really making a gift for the benefit of the debtors: Brasher [40]; Re TVSN Ltd [2005] NSWSC 692 [46] - [49].
137 Appeal ts 24 - 26.
138 Appeal ts 22.
139 Adopting the words of Clauson LJ in Cleadon Trust (324).
140 cf Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492 [191].
141 Tribunal reasons [65(a)].
142Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361 [53]; Lourey v Legal Professional Complaints Committee [2012] WASCA 112 [27].
143 Primary reasons [63].
144 Primary reasons [76].
145 Tribunal's reasons [69] - [73].
41
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3