Panache Salons Pty Ltd v Kent Street Pty Ltd

[2009] NSWADT 247

CITATION:	Panache Salons Pty Ltd v Kent Street Pty Ltd [2009] NSWADT 247
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Panache Salons Pty Limited REPSONDENT Kent Street Pty Ltd P.T. Limited Westfield Shopping Management Co Pty Limited
FILE NUMBER:	065213
HEARING DATES:	25 August 2009
DATE OF DECISION:	25 September 2009
BEFORE:	Higgins S - Judicial Member
CATCHWORDS:	Application to transfer proceedings
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Contracts Review Act 1980 Retail Leases Act 1994 Retail Leases Amendment Act 1998 Retail Leases Act 2005 Trade Practices Act 1974 (Cth)
CASES CITED:	Armstrong Jones Management Pty Ltd v Saies-Bond and Associates Pty Ltd (RLD) [2007] NSWADTAP 47 Attorney General of New South Wales v World Best Holdings Limited and Ors (2005) NSWLR 63 NSWLR 557 [2005] NSWCA 261 Keighery v Nodnarb Investments Pty Ltd [2005] NSWADT 241 at [7] Perpetual Trustees Victoria v Longobardi [2009] NSWSC 654 Sarker v World Best Holdings Ltd, World Best Holdings Ltd v Sarker [2006] NSWADT 241 Sarker v World Best Holdings Ltd, World Best Holdings Ltd v Sarker (No 3) [2004] NSWADT 119 Trust Company of Australia Limited (Trading as Stockland Property Management) v Skiwing Pty Ltd (Trading as Café Tiffany’s) [2006] NSWCA 185; 66 NSWLR 77
REPRESENTATION:	APPLICANT AF Fernon, barrister RESPONDENT M Deutsch, solicitor
ORDERS:	1.Panache’s application to transfer these proceedings to the Supreme Court pursuant to section 76A of the RLA is refused 2. This application and application no. 075135 is set down for further directions on 8 October 2009 at 10.30 am.

REASONS FOR DECISION

1 This is an application by Panache Salons Pty Limited (‘Panache’) for the transfer of these proceedings to the Supreme Court pursuant to section 76A of the Retail Leases Act 1994 (‘the RLA’). That section relevantly provides:

Section 76A – Removal of proceedings to the Supreme Court

(1) A party to proceedings before the Tribunal for an unconscionable conduct claim, or partly for an unconscionable conduct claim and partly a retail tenancy claim, may apply to the Tribunal to have the proceedings transferred to the Supreme Court.

(2) The Tribunal must transfer the proceedings if the Tribunal is satisfied that:

(a) the nature of the claim is such that it may more effectively and appropriately dealt with by the Supreme Court, and

(b) the interests of justice do not require the matter to be continued to be dealt with by the Tribunal.

2 There is no dispute that Panache has standing to make this application. It’s application for original decision, filed on 21 December 2006, is a combined application in that it’s claim is a retail tenancy claim under section 71 of the RLA and an unconscionable conduct claim under section 71A of that Act. The respondents in the proceedings are Kent Street Pty Ltd (‘Kent Street’), P.T. Limited and Westfield Shopping Centre (‘the respondents’).

3 Kent Street and P.T. Limited have strongly opposed the application for transfer on the basis that Panache has failed to establish the matters set out in paragraphs 76A(2)(a) and (b) of the RLA. They contend that the proceedings have been appropriately commenced in the Tribunal and as nothing of substance has changed, the interests of justice require it continue to be dealt with by the Tribunal.

4 Accordingly, the matters for determination are whether the two matters in paragraph 76A(2)(a) and (b) of the RLA are satisfied. It is accepted that both must be satisfied and if they are the Tribunal has no discretion and it must order the transfer of the proceedings.

5 For the reasons set out below, I am not satisfied that the ‘nature of [Panache’s] claim is such that it may more effectively and appropriately [be] dealt with by the Supreme Court’. On the contrary I find that there is no aspect of Panache’s overall claim that cannot be adequately dealt with by the Tribunal. In the event I am wrong in this conclusion I have also considered the question of where the interest of justice lies and I have found they lie with the proceedings continuing to be dealt with by the Tribunal.

6 On 7 December 2005, Panache, as lessee, entered into a lease with King Street and P.T. Limited, as co-lessors, for shop 2029 at Westfield Liverpool Shopping Centre. The term of the lease was for a period of 5½ years to 6 June 2011.

7 On 30 November 2006, in repudiation of the lease, Panache vacated the shop.

8 As mentioned above, on 21 December 2006, Panache commenced these proceeding in the Tribunal seeking orders against the respondents. Its claim was based on alleged pre-lease misrepresentations, made between 8 and 22 September 2005, by Stephen Robertson, an employee of the Westfield Shopping Centre which acts as the agent for the lessors, Kent Street and P.T. Limited.

9 On 2 August 2007, Kent Street and P.T. Limited filed an application for original decision (file no. 075135) seeking orders, under section 71 of the RLA, against Panache and the guarantors to the lease, Con Natsis (a director of Panache) and Allan Stuart Nicholson. As the application by Kent Street and P.T Limited is a retail tenancy claim, the Tribunal has no power to transfer these proceedings. However, Mr Fernon, counsel for Panache, indicated that in the event the Tribunal were to grant the application for transfer of Panache’s application it would undertake to make the appropriate application in the Supreme Court to have the Kent Street and P.T. Limited application also transferred. In my opinion, this is not a relevant consideration for the purpose of making a determination under section 76A of the RLA.

The nature of Panache’s claim

10 The application of section 76A(2)(a) of the RLA was considered by Judicial Member Fox in World Best Holdings Ltdv Sarker [2006] NSWADT 91 where at [17] the Judicial Member said:

‘17. … [in] order to fall within Section 76A a party must be able to demonstrate that there is an aspect to the dispute between the parties which the Tribunal has no power to resolve. That aspect could be the fact that there is a likelihood of an order for payment of more than the jurisdictional limit, or the actual possibility of the need for an order which the Tribunal has no such power to make (such as the rectification of a lease which is not consented to by the parties). Section 76A is not available in circumstances where nothing has been raised to indicate that the needs of the parties cannot be addressed with the perimeters of Sections 72, 72AA and 73. ....’

11 Mr Fernon, counsel for Panache contended that the true nature of Panache’s claim was that it:

(a) exceeded the monetary limit of the Tribunal’s jurisdiction; and

(b) it was more appropriately a claim under sections 51AC and 52 of the Trade Practices Act1974 (Cth) (‘TPA’).

12 In support of these contentions, Panache filed and served a draft Statement of Claim, which it proposed to file in the Supreme Court in the event the Tribunal ordered the proceedings to be transferred. The Statement of Claim also names Mr Natsis as a plaintiff and his claim, with one exception, is in similar terms to that of Panache.

13 Section 73(1) of the RLA sets out the monetary limit of the Tribunal. It relevantly provides:

Section 73 Monetary Limit on Tribunal’s jurisdiction

(1) The Tribunal has no jurisdiction to make an order or orders in respect of a particular retail tenancy claim or an unconscionable conduct claim if the total of:

(a) the amount or amounts (if any) to be paid, and
(b) the amount or amounts (if any) of money to be declared not to be due or owing, and

(c) …

under or by virtue of the orders or orders would exceed $400,000 …. whether on a balance of account or after set-off or otherwise.’ (italics added)

14 In its application for original decision, Panache sought an order ‘that the respondents pay [it] $400,000.’ That order being in regard to the loss and damage Panache alleges it has suffered as a result of the alleged contraventions, by the respondents (i.e. the lessors), of section 10 (pre-lease misrepresentations) and section 62B (unconscionable conduct) of the RLA. The amount claimed is within the monetary limit of the Tribunal’s jurisdiction.

15 In its draft Statement of Claim, Panache seeks damages for an amount of $708,866.45, which is particularised at paragraph 19 as follows:

‘(a) Capital Expenditure on the Premises of $156,220;

(b) Net trading losses of $203,646.45; and

(c) Lost profit from other business being Key Person time of $40,000.

(d) The Defendants have filed proceedings in the Administrative Decisions Tribunal (proceedings no. 075135) seeking unpaid rent from Panache, Con [Natsis] and Mr Allan Nicholson totalling $309,000. If the Defendants are successful in that claim, such sum is further damages Panache has suffered.’

16 The total amount claimed in (a), (b) and (c) above is within the monetary limit of the Tribunal’s jurisdiction. It is the additional amount claimed in (d) above which brings Panache’s claim outside the monetary limit of the Tribunal’s jurisdiction. This additional amount is the amount Kent Street and P.T. Limited allege Panache and the guarantors to the lease, Mr Natsis and Mr Nicholson, jointly and severely owe it as a result of Panache’s repudiation of the lease.

17 In my opinion, to use the words of Judicial Member Fox, Panache’s claim as set out in (d) above is ‘a mere colourable device’ so as to bring its claim outside the monetary jurisdiction of the Tribunal: see Keighery v Nodnarb Investments Pty Ltd [2005] NSWADT 241 at [7].

18 For the reasons set out below, in my opinion, the essence of Panache’s claim as pleaded in its draft Statement of Claim is a claim for damages arising from the alleged misleading representations and the alleged unconscionable conduct by the respondents and its seeks remedies in the form of orders for the payment of money for the loss it has suffered and other ancillary orders that will bring an end to any liability it had or may have under the terms of the lease. These ancillary orders if made will in effect defeat the claim of Kent Street and P.T. Limited. They are not orders of a monetary nature but orders going to Panache’s liability under the terms of the lease, or Kent Street and P.T. Limited’s entitlement to enforce the provision s of the lease.

19 Panache’s claim, as pleaded in its draft Statement of Claim, is based entirely on the same alleged pre-lease misrepresentations of Mr Robertson as are contained in this application for original decision.

20 As I have mentioned, in its application for original decision, Panache contends that these alleged pre-lease misrepresentations were a contravention of sections 10 and 62B of the RLA. It further contends that as a result of these contraventions it suffered loss and damage and the remedy it seeks is an order for the payment of money under sections 72 and 72AA of the RLA for the amount it alleges it has lost as a result of the contraventions. Panache’s draft Statement of Claim incorporates the same alleged contraventions of the RLA and remedies under sections 72 and 72AA of that Act. . However, in addition to these, and with primary emphasis, the Statement of Claim alleges that the pre-lease representations were also made in contravention of sections 52 and 51AC of the Trade Practices Act 1974 (‘TPA’). The remedies sought in respect to these contraventions are damages (i.e. an order for the payment of money) under sections 82 and ancillary orders under section 87 (including that the lease be set aside or not enforced) of the TPA.

21 The draft Statement of Claim also includes a claim by Mr Natsis pursuant to the Contracts Review Act 1980 (NSW) (‘CRA’).

22 It is not disputed that the Tribunal has no jurisdiction to deal with claims made pursuant to the TPA or CRA (see Trust Company of Australia Limited (Trading as Stockland Property Management) v Skiwing Pty Ltd (Trading as Café Tiffany’s) [2006] NSWCA 185; 66 NSWLR 77 and Armstrong Jones Management Pty Ltd v Saies-Bond and Associates Pty Ltd (RLD) [2007] NSWADTAP 47).

23 That the allegations of Panache as set out in its application for original decision may also come within the terms of the TPA was not disputed. What was disputed was whether Panache’s claim was such that ‘it may more effectively and appropriately [be] dealt with by the Supreme Court’.

24 Mr Fernon, contended that Panache’s claim would more effectively and appropriately be dealt with by the Supreme Court because Panache would have available to it the benefits of the relevant provisions of the TPA. In this regard he pointed to sections 51A and 52 of the TPA. The former provision relating to alleged representation as to future matters and deeming the person who made that representation to have had no reasonable grounds for making it, unless that person establishes the contrary and the latter requiring no proof of knowledge as to the falsity etc of a representation. Section 10 of the RLA on the other hand does require proof of knowledge. Mr Fernon also contended that section 51AC of the TPA is wider in its application to section 62B of the RLA and he cited Perpetual Trustees Victoria v Longobardi [2009] NSWSC 654 in support of this contention.

25 Mr Deutsch, solicitor on behalf of Kent Street and P.T. Limited, contended that there was no basis on which to make a finding that Panache’s claim would be more effectively and appropriately dealt with by the Supreme Court. In reliance on the abovementioned statement of Judicial Member Fox, he contended that there was no aspect of Panache’s claim which could not be dealt with by the Tribunal. In this regard he pointed to the legislative intent that, in the main, all retail lease disputes are to be heard and determined by the Tribunal and not any other court. He also pointed to the procedural advantages that are available to parties in proceedings before the Tribunal: see section 73 of the Administrative Decisions Tribunal Act 1997 (‘the ADT Act’).

26 The unconscionable conduct provisions were inserted into the RLA by the provisions of the Retail Leases Amendment Act 1998. Included in these provisions was section 76A, which at that time only made reference to unconscionable conduct claims. In Attorney General of New South Wales v World Best Holdings Limited & Ors [2005] NSWCA 261 at [12] Spigelman CJ pointed to the clear distinction Parliament had made within the RLA between a retail tenancy claim and an unconscionable conduct claim. At [14] the Chief Justice said that while section 76 of the RLA purported to remove from a court the jurisdiction to hear or determine retail tenancy claims or unconscionable conduct claims, where such claims had been lodged with the Tribunal, the newly inserted section 76A of the RLA provided that ‘only’ unconscionable conduct claims could be transferred to the Supreme Court.

27 Section 76A was amended by the provisions in the Retail Leases Amendment Act 2005, which came into effect on 1 January 2006. The amendment inserted the reference to ‘or partly for an unconscionable conduct claim and partly a retail tenancy claim’ (i.e. a combined claim). The purpose of this amendment was so as to give effect to what had been identified as an anomaly where proceedings involving an unconscionable conduct claim also included a retail leases claim: see Sarker (supra) at [6]. The fact that such combined claims are now expressly included does not, in my opinion, override the primary purpose of the section, namely the transfer of an unconscionable conduct claim where the requirements of that section are met. That is, the amendment was not intended to become a mechanism for the transfer of a retail lease claim (including a claim for compensation for misleading and deceptive conduct contrary to sections 10 and 62D of the RLA) where there is no basis to transfer the unconscionable conduct claim. The legislative intent has remained the same in that the applicant for transfer must demonstrate that the nature of its unconscionable conduct claim is one that may be more effectively and appropriately dealt with by the Supreme Court.

28 I have already stated Panache’s unconscionable conduct claim in these proceedings is founded on alleged pre-lease misrepresentations in contravention of section 62B of the RLA. In World Best Holdings (supra) at [22] the Chief Justice said that section 62B was modelled on section 51AC of the TPA and that the two sections contain the same list of relevant considerations. The scope of these provisions the Chief Justice went on to say remained to be determined by judicial decisions. In my opinion, the recent decision of McDougall J in Perpetual Trustees Victoria Ltd (supra) is an example of a decision relevant to the construction of section 51AC and arguably section 62B of the RLA. It is not a decision, as contended by Mr Fernon, which construes section 51AC of the TPA as being wider in its application to section 62B of the RLA: see Perpetual Trustees Victoria Ltd (supra) at [137].

29 In regard to the remedies sought by Panache it is draft Statement of Claim, as I have noted, these are in the nature of an order for the payment of money representing the amount of loss suffered as a result of the alleged contravening conduct and ancillary orders under section 87 of the TPA (including an order that the lease be set aside). The purpose of these ancillary orders is to bring to an end to any liability Panache has or may have under the terms of the lease. If made these ancillary orders would be a complete defence or response to the claim that has been made by Kent Street and P.T. Limited. The orders will only be available if Panache establishes that the alleged pre-lease misrepresentations were made in contravention of sections 51AC and 52 of the TPA and that it suffered loss and damage as a result thereof.

30 Although Panache’s application for original decision does not include relief in the form of any ancillary orders, sections 72 and 72AA of the RLA, in my opinion are sufficiently broad to cover these: see sub-sections 72(2) and 72AA(2) of the RLA and Sarker v World Best Holdings Ltd, World Best Holdings Ltd v Sarker(No 3) [2004] NSWADT 119. Why such orders have not been included in its application for original decision is difficult to understand. At the same, there would appear to be no prejudice in allowing for an appropriate amendment to its application.

31 Mr Fernon also argued that as an alleged contravention of section 62D (misrepresentations) of the RLA was not available to Panache it was appropriate for this aspect of its claim to be transferred to the Supreme Court as Panache could allege a contravention of the same nature under section 52 of the TPA. Section 62D was inserted into the RLA by the Retail Leases Amendment Act 2005. It also came into operation on 1 January 2006. However, it only applied to alleged misrepresentations made from that date. In this application, the alleged misrepresentations were made prior to the commencement of section 62D, in September 2005.

32 Even if section 62D had been in operation at the time the alleged misrepresentations were made, any claim made on the basis of a contravention of this section, as I have indicated, is a retail lease claim and is not by itself a claim that the Tribunal has power to transfer under section 76A. The thrust of Mr Fernon’s argument is not that section 62D was unavailable to Panache, but that a claim under section 52 of the TPA was more beneficial. A claim of this nature has at all times been available to Panache. However, it chose to bring its claim alleging a contravention of section 10 of the RLA, and consequently the Tribunal is bound to deal with its application in accordance with the provisions of that Act and the ADT Act. Again a claim involving an alleged contravention of section 10 is a retail lease claim and cannot, on its own, be transferred under section 76A. While in this application it forms part of a combined claim, in my opinion, this aspect of Panache’s claim can also be adequately dealt with by the Tribunal.

33 This leaves the claim of Mr Natsis as set out in the draft Statement of Claim. In my opinion, as Mr Natsis is not a party to the proceedings which are the subject of the transfer application, it is unnecessary to consider his claim any further. He is only a party to the application of Kent Street and P.T. Limited, which is a retail leases claim and cannot be the subject of an application under section 76A of the RLA. I note Mr Natsis has not responded to that claim. I also note that at all times Mr Natsis, as a guarantor to the lease, has had standing to bring an unconscionable conduct claim under section 71A of the RLA and if he does he has the same remedies that are available to Panache under section 72AA.

The interest of justice

34 In Sarker (supra) Judicial Member Fox found at [20] that where there was a related claim to the claim the subject of a transfer application and the related claim was not a claim the Tribunal had jurisdiction to transfer, the interest of justice indicated that both claims should be heard by the Tribunal.

35 The same issue arises in this application for transfer of Panache’s application, in that the related application of Kent Street and P.T. Limited cannot be transferred by an order of the Tribunal and it continues to be a matter for determination by the Tribunal. Accordingly as the applications are related and the interests of justice would be best served if the applications were heard in the same forum (i.e. the Tribunal) and at the same time.

36 In my opinion, having regard to the history of these application before the Tribunal there is even more reason to find that the interests of justice lie in both proceedings being dealt with by the Tribunal.

37 As I have noted Panache commenced its proceeding more that 2½ years ago and more than 3½ years since it entered the lease. For 2 years Kent Street and P.T. Limited’s application for original decision and that of Panache have been dealt with together. Evidence has been filed by both parties and by consent both applications were set down for hearing before a specially constituted panel for the purpose of hearing and determining Panache’s unconscionable conduct claim and the retail leases claim of Kent Street and P.T. Limited. That hearing was vacated, by consent, on 14 May 2009, and this application for transfer was foreshadowed. Panache, at that time had also instructed new legal representatives.

38 As Mr Deutsch pointed out if Panache’s application were to be transferred the evidential and other procedural advantages of bringing proceeding before the Tribunal would no longer apply. A consequence will be additional costs and further delays in resolving the retail tenancy dispute between the parties. Mr Deutsch submitted that a transfer could entail the filing and serving fresh evidence as the rules of evidence will apply and if this does occur then the costs incurred to date would be thrown away. No concessions were made that this would not be required.

39 In my opinion, the above are all relevant factors when considering where the interest of justice lays. In this application I find that they lay with this application and the related application of Kent Street and P.T. Limited continuing to be heard and determined by the Tribunal. In the event Mr Natsis were to file and serve an application for original decision this could also be dealt with together with the other applications as the various claims are all based on the same alleged facts.

Conclusion

40 Panache’s application to transfer these proceedings to the Supreme Court pursuant to section 76A of the RLA is refused on the basis it has failed to establish the matters set out in paragraphs 2(a) and (b) of that section.

41 This application and application no. 075135 is set down for further directions on 8 October 2009 at 10.30 am. For the purpose of these directions hearings the parties are encouraged to endeavour to formulate draft orders which will progress the matter to a hearing at an early date, including orders for the filing and serving of any amended or additional applications.