R & Z Mazzei Nominees Pty Ltd v Aegean Food Import Export Pty Ltd
[2006] VSC 210
•13 June 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 7235 of 2005
| R. & C. MAZZEI NOMINEES PTY LTD | Appellant |
| v | |
| AEGEAN FOOD IMPORT EXPORT PTY LTD | Respondent |
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JUDGE: | OSBORN J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 31 May 2006 | |
DATE OF JUDGMENT: | 13 June 2006 | |
CASE MAY BE CITED AS: | R. & C. MAZZEI NOMINEES PTY LTD v AEGEAN FOOD IMPORT EXPORT PTY LTD | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 210 | 1st Revision: 19 June 2006 |
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Appeal pursuant to s.148 of the Victorian Civil and Administrative Tribunal Act 1998 – Failure to comply with Retail Tenancies Reform Act 1998 s.8(1) – Consequences of failure to comply under Retail Tenancies Reform Act 1998 s.8(2) – Payment of rent under protest – Respondent claimed restitution for rent paid – Rent paid under compulsion – Tenant entitled to rent but landlord also entitled to cross-restitutionary claim for use and occupation – Appeal allowed in part – Matter remitted to Tribunal for determination of landlord’s cross-restitution claim.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr G.J. Parncutt | Comlaw |
| For the Respondent | Mr C.R. Northrop | GSM Lawyers |
HIS HONOUR:
This is an appeal brought by an appellant landlord ("the landlord") pursuant to s.148 of the Victorian Civil and Administrative Tribunal Act 1998 against part of a decision by a Deputy President of the Victorian Civil and Administrative Tribunal ("the Tribunal") pursuant to which the landlord was on, 11 July 2005, ordered to pay the respondent tenant ("the tenant") the sum of $161,243.45 together with interest thereon.
The amount in issue comprised the repayment of rental moneys previously paid by the tenant to the landlord.
The rental was paid in respect of shop premises at the Preston Market.
The tenant claimed restitution of the rental paid on two bases. First, a portion of the moneys was claimed on the basis that after 1 February 2003 rental was paid under compulsion. Second, the whole of the rentals paid after 5 November 2001 were claimed on the basis that there had been a total failure of consideration for such rentals.[1]
[1]This latter claim was not initially raised in the proceeding but formed the subject of amended points of claim.
The tenant made its claims for restitution in reliance upon s.8(2) of the Retail Tenancies Reform Act 1998 ("the 1998 Act")[2], contending that because of a continuing failure by the landlord to provide a disclosure statement in accordance with that sub-section, it was not liable under the Act to pay the rent.
[2]The relevant provisions have since been amended.
Section 8(1) of the 1998 Act imposed an obligation upon a landlord of retail premises to provide a "prospective tenant" of those premises with a disclosure statement containing stipulated information before a prospective tenant entered into a retail premises lease.
Sub-section 8(2) provided that if a tenant had not been given a disclosure statement in accordance with s.8(1):
"(a)the tenant may withhold payment of rent until the end of 7 days after the landlord gives the tenant a copy of the disclosure statement; and
(b)the tenant is not liable to pay the rent attributable to the period before the landlord gave the tenant a copy of the disclosure statement; and
(c)the tenant may give the landlord a written notice of termination at any time before the end of 7 days after the landlord gave the tenant a copy of the disclosure statement."
The proceeding has a troubled history. In the first instance the parties joined issue on the question whether the tenant was "a prospective tenant" within the meaning of s.8. Following a hearing in July 2004 the Deputy President felt obliged as a matter of comity to follow the decision of a County Court Judge sitting as a Vice President of the Tribunal in Khodr v Foo Qan Eng Holdings Pty Ltd ( No. 2)[3] to the effect that a "sitting tenant" could not be so regarded.
[3](2001) V ConvR 58-558
On appeal from the Deputy President's initial decision in this matter[4], Ashley J held that although the decision in Khodr was not wrong in the result its reasoning was to be rejected. His Honour concluded that the critical question was not whether a tenant was a "sitting tenant" or had actual possession, it was whether the new lease entered into on 27 September 2001 represented the exercise of an option granted by the pre-existing 1994 lease between the parties. If it did the tenant was not a "prospective tenant" in the relevant sense.
[4]Aegean Food Import Export Pty Ltd v R & C Mazzei Nominees Pty Ltd (2005) V ConvR 54-697
When the matter came back before the Deputy President[5], counsel for the tenant submitted that the first task was therefore to determine whether the 2001 lease represented the exercise of an option granted by the 1994 lease. In turn he referred to a number of indicia that the new lease was not the exercise of an option.
[5]Aegean Food Import Export Pty Ltd v R & C Mazzei Nominees Pty Ltd [2005] VCAT 2929
Counsel for the landlord submitted that the terms of the "deed of renewal of lease" entered into in 2001 estopped the tenant from denying the fact that it accepted the deed as being a renewal of lease. Alternatively it was submitted that the tenant was estopped by representation from so denying and in the further alternative was estopped in equity.
In the event the Tribunal rejected these arguments on behalf of the landlord based on estoppel and it was not contended before me that it erred in so doing although grounds 1, 2 and 3 of the notice of appeal purport to agitate these matters. I should perhaps add for the sake of completeness that I am satisfied the Tribunal was correct in its conclusions with regard to estoppel.
The Deputy President concluded further that the negotiations between the parties which produced the 2001 lease involved the process of acceptance by the landlord of a counter offer by the tenant and not the exercise of an option. Once again this conclusion was not challenged before me and in my view it was correct.
It was, however, further submitted on behalf of the landlord that it had two defences to the claim for restitution:
(a)it had changed its position in good faith and to its detriment in reliance upon the payment of the rental; and
(b)it had provided the tenant with good consideration for the rentals paid by way of use and occupation of the premises.[6]
[6]These defences were put with respect to the claim for restitution of the whole of the rentals paid which appears to have been treated by the landlord's representatives as subsuming the claim for moneys paid under compulsion.
The Deputy President dealt with both these contentions by reference to the decision by a single Judge of this Court on appeal in Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd[7] ("the Dog Depot case").
[7][2004] VSC 400
The Deputy President commenced his consideration of the first contention as follows:
"A defence of change of position based upon a lessor’s allowance of a tenant to remain in possession was relied upon in the Supreme Court in Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2004] VSC 400 on appeal from this Tribunal’s determination of a claim for the recovery of rental paid where no disclosure statement was given by a tenant who claimed to have paid those moneys under a mistake viz. lack of awareness with s 8 of the Retail Tenancies Reform Act 1998 removed the obligation to pay rent. In a case such as the present, at first blush it is not obvious how it can be said that the respondent ‘allowed’ Aegean to remain in possession. If there is no rental payable as my findings indicate, Aegean was perfectly entitled to remain in possession rent free and any attempt either by proceeding in a court or tribunal or the use of self-help to recover possession would have failed in a court or tribunal or been trespassory. How can the lessor’s position be better than these circumstances if Aegean in fact paid rental that it was not obliged to pay? The lessor respondent did not ‘permit’ Aegean to remain in possession, it was obliged to allow it to remain in possession. The defence as articulated on appeal in the Dog Depot case was that if rental had been withheld, the lessor would have asked why the rental was not being paid. Once told, said the lessor, a disclosure statement would have been provided. Kaye J declined to allow such a defence to be raised, first, because he was doubtful as to whether it had been relied upon at hearing and secondly because it called for impermissible inferences …"[8]
[8]Aegean Food Import Export Pty Ltd v R & C Mazzei Nominees Pty Ltd [2005] VCAT 2929 at [50]
He further stated with respect to the second contention:
"Similarly, the defence based upon consideration must fail. Aegean is entitled to possession of premises rent free under a lease governed by the Retail Tenancies Reform Act 1998 where the lessor being obliged by s.8 to deliver a disclosure statement has failed to do so. The lessor persists in its refusal despite a demand from the tenant for provision of the disclosure statement. Aegean is entitled to receive free what Parliament has determined in the circumstances it should receive free, namely the use and occupation of the demised premises in the circumstances described. In rejecting a similar defence in the Dog Depot case Kaye J referred to the joint judgment in the David Securities case which stated that the defence of consideration will be made out only if the plaintiff or applicant received good consideration for the payment which it was seeking to recover.[9] In David Securities a loan instrument provided for a borrower to pay 'withholding' tax charged to the bank upon the interest payments which it received. The High Court concluded that this provision in the loan agreement was void as contrary to s.281 of the Income Tax Assessment Act 1936. The majority of the Court accepted that the bank had given consideration for David Securities’ obligation to repay principal and interest but not the withholding tax amounts. At [32] of his judgment Kaye J said:
"In this case the position is similar. The tenant paid rental in satisfaction of an obligation which did not exist. The remainder of the lease, with all its attendant obligations and rights, remained intact, including the right of the tenant to use and occupation of the premises, free of an obligation to pay rent unless and until the landlord provided to it the disclosure statement required by s.8 of the Act."[10]
[9](1992) 175 CLR 353, 383
[10]Aegean Food Import Export Pty Ltd v R & C Mazzei Nominees Pty Ltd [2005] VCAT 2929 at [52]
The Deputy President was likewise satisfied of the positive aspects of the tenant's claim for restitution because:
"For the reasons already given, the lessor has received rental payments for which it has no title by virtue of its non-compliance with s.8 of the 1998 Act. Therefore Aegean has a superior claim to the moneys and they should be repaid to it."[11]
[11]Ibid at [61]
In turn the Deputy President concluded the alternative claim for restitution of rent paid under protest should succeed on the basis that a payer of money who pays under practical compulsion where there is no legal obligation to pay the money may recover the payments from the payee.
In reaching the conclusions which he did, the Deputy President had regard, as he was bound to do, to the reasoning of this Court on appeal in the first instance in the Dog Depot[12] case. However since the decision of the Tribunal, the decision in the Dog Depot case has been overturned in the Court of Appeal[13].
[12]Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2004] VSC 400
[13]Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd (2006) V ConvR 54-713
As a consequence the notice to appeal in the current proceeding was amended to raise the following question of law:
"Whether the intention of s.8 of the Retail Tenancies Reform Act 1998 (Vic) is to permit a tenant to receive free use and occupation of the demised premises upon non-compliance by the landlord with s.8 of the Retail Tenancies Reform Act 1998 (Vic)."
Although views might differ as to the fullness of the terms of this question, it is the issue agitated by it which is central to this appeal.
The Court of Appeal in the Dog Depot case held firstly that the learned Judge on appeal at first instance was correct to reject the landlord's claim that paragraph 8(2)(b) of the 1998 Act operated only where the lessee had withheld payment of rent under paragraph (a). As Kaye J had explained at first instance, the tenant is given the right by paragraph (a) to withhold payment of rent for a period of 7 days after the disclosure statement is served, whilst paragraph (b) relieves it from liability to pay the rent, but only up to the date when the statement is served on it.
This conclusion was not, however, decisive of the tenant's right to restitution in circumstances where a mutual mistake had been made as to the requirement for a disclosure statement.
As Nettle JA put it:
"Allowing, however, that the effect of the statute is that a tenant may withhold rent until after the disclosure statement is given, it is a separate question as to whether the lessor is precluded from receiving or retaining any consideration paid by the lessee for use and occupation of the demised premises. In terms, s.8(2) provides only that where a lessor does not comply with s.8(1) the lessee is not liable to pay rent. In effect it vitiates the tenant’s contractual obligation to pay rent as such in accordance with the covenant for rent. But in contradistinction to s.11 of the Act, which prohibits a lessor from requesting, receiving or retaining the payment of any key-money or any consideration for the goodwill of a business carried on at the demised premises, s.8(2) does not in terms prohibit a lessor from receiving or retaining the payment of an amount for use and occupation of the demised premises."[14]
[14]Ibid at [26]
Again as his Honour observed:
"There does not seem to be any statutory imperative for concluding that the tenant was intended to have the benefit of free use and occupation."[15]
[15]Ibid at [33]
Further, as he stated:
"… I do not consider that s.8(2) prohibits a lessor from receiving or retaining a reasonable satisfaction for use and occupation dehors the lessee’s express contractual obligation to pay rent. Accordingly, in my view, this is the sort of situation in which the restitutionary principles essayed in Pavey & Matthews Pty Ltd v Paul[16] may apply."[17]
[16](1987) 162 CLR 221 at 262
[17]Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd (2006) V ConvR 54-713 at [34]
Chernov JA encapsulated the critical issue as being whether in circumstances where the tenant was prima facie entitled to restitution the landlord could displace that prima facie entitlement.
His Honour analysed the effect of recent authority upon the principles governing a claim for money had and received, and concluded that:
"Although it may be said that the principles of restitutionary relief have not yet been exhaustively or definitely stated by the High Court (which is unsurprising given the nature of the remedy) there is, nevertheless, guidance that is apparent in the authorities to which I have referred as to when such relief is available and, in particular, what may constitute a good defence to a claim for money paid under a mistake. As I understand the cases, once a prima facie entitlement to restitution is made out by the payer, it is for the payee to show that it would not be unjust or unconscionable for it to retain the money if the payer is to be denied restitutionary relief. Thus, in those circumstances, it is for the respondent to demonstrate, for example, that it has given good consideration for the payment. Whether it had done so is to be judged from the perspective of the payer, in this case, the tenant. Moreover, in a context such as the present, it would also be relevant, I think, to consider whether the respondent has a "counter restitutionary" claim against the payer for use and occupation of the premises."[18]
[18]Ibid at [20]
Their Honours (with whom Ashley JA agreed) each concluded that it would not be unjust or unconscionable for the landlord to retain the money received by it in the circumstances of the case because:
(a)the tenant had received good consideration for the moneys paid namely exclusive possession of the premises;[19]
(b)the landlord had a counter restitutionary claim for use and occupation of the premises.[20]
[19]Ibid, Chernov JA at [21]; Nettle JA at [27]
[20]Ibid, Chernov JA at [22]; Nettle JA at [34]-[39]
Because of the significance which I believe attaches to the potential for a counter restitutionary claim for use and occupation of premises in the present case, I shall set out in some further detail aspects of the comprehensive analyses undertaken by their Honours. Chernov JA stated:
"The second, and additional, reason for my conclusion that it would not be unjust for the landlord to retain the money notwithstanding that it was paid under mistake is that I consider that the landlord has a sound claim against the tenant for use and occupation of the premises for the relevant period, in an amount broadly equal to the rent reserved under the lease. As is explained in Woodfall’s Laws of Landlord and Tenant[21], a restitutionary claim based on use and occupation arises where the respondent has been given permission by the claimant to occupy its land without there being any binding term as to payment. The essential elements of this cause of action were described in Australia Provincial Assurance Association Ltd v Rogers[22] and Zegir v Woop[23], in slightly different terms, namely, the existence of an agreement between the parties – express or implied – to the effect that the occupant/respondent will be the tenant of the claimant and shall pay for the occupation. In my view, there is no difference of substance between those tests. In any event, I think that each is made out in the present case, given the existence of the lease and lack of any suggestion by the tenant that there was an agreement that it was to occupy the premises rent free. And, in my view, there is no statutory prohibition against such a claim. It seems to me that, on its proper construction, s.8 of the Act is of a like character to that considered in Pavey[24], in that it merely renders the rent covenant void for the period in question. The section says nothing of the landlord’s rights at common law to compensation for use and occupation of the premises, and a prohibition depriving the landlord of such compensation cannot be implied into it. If Parliament intended to achieve that result it would have said so in terms in that section as it did, for example, in s.11 in relation to 'key-money' which specifically prohibits a lessor from, amongst other matters, retaining key-money that has been paid to it. And, as has been recognised in Pavey, the landlord could establish the amount of compensation to which it was entitled for use and occupation by relying on the rental provisions in the lease as evidence of what was fair and reasonable in that regard. It is true that, ordinarily, proof by the defendant of a demise under seal will provide a good defence to a claim for use and occupation, but as Sholl J explained in Specktorv Lees[25], the rule is predicated on the claimant being able to sue for rent on the covenant in the deed. In this case, although the lease was made under seal, as the tenant contended, the covenant to pay rent was void for the relevant period and, consequently, the ordinary rule of a deed being a good defence to a claim for use and occupation would not have operated."[26]
[21]Release 51, Vol.1 at 10.001. See also Australian Provincial Assurance Co. Ltd v Rogers (1943) 43 SR(NSW) 202; Zegir v Woop [1955] VL.R 394
[22](1943) 43 SR(NSW) 202
[23][1955] VLR 394
[24]See also Upjay Pty Ltd v MJK Pty Ltd (2001) 79 SASR 32, where the claimant succeeded on a quantum meruit claim based on unjust enrichment for services provided by it to the respondent in respect of real estate transactions notwithstanding that the relevant legislation said that a person, not registered as an agent, is not entitled to a commission or other consideration for services as an agent and that any commission paid to a person not entitled to receive it may be recovered from that person as a debt.
[25][1964] VR 10 at 18-19
[26]Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd (2006) V ConvR 54-713 at [22]
He had earlier observed with respect to the decision in Pavey:
"Pavey was not concerned with a claim for money that had been paid under a mistake. Nor did it deal, in terms, with what may amount to a good defence to a claim for restitution. The relevance of the case, for present purposes, lies in the court’s recognition that recovery can be had on a restitutionary basis even where the contract in question is rendered unenforceable by legislation. In that case, a builder claimed money as on a quantum meruit in respect of work done under a building contract that had been rendered unenforceable by legislation. The majority recognised that, notwithstanding the legislative provision, the builder could recover fair and reasonable compensation for its work, not under the contract, but on the basis of restitution or unjust enrichment arising from the owner’s acceptance of the benefits accruing to it from the builder’s performance of the unenforceable contract.[27] Deane J observed[28] that, although the legislation rendered the obligation to pay unenforceable, on its proper construction, it did not manifest the intention to deny the builder payment for the work done in the performance of a contract.[29] For reasons given later, it is of importance to note that his Honour also said[30] that, although the builder’s entitlement to recover fair compensation for its work was not based on the unenforceable contract, its terms could nevertheless be treated as evidence on what was the appropriate amount of compensation that should be ordered."[31]
[27]See Mason and Wilson JJ at 228 and Deane J at 262-264
[28]At 262
[29]In that respect, the legislation was different from that examined by the Queensland Court of Appeal in Marshall v Marshall [1999] 1 Qd R 173, where it was held that, on its proper construction, the Act disentitled the builder to any monetary compensation for the work carried out by it under the contract that was struck down by the legislation. Accordingly, it was there held that, in light of the terms of the legislation, the owner was entitled to recover the money that it had paid voluntarily to the builder under the mistaken belief that the builder was entitled to it.
[30]At 257
[31]Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd (2006) V ConvR 54-713 at [11]
Nettle JA analysed the authorities in further detail. His Honour did not consider that s.8(2) prohibited a lessor from obtaining reasonable satisfaction for use and occupation outside the lessee's express contractual obligation to pay rent for like reasons to those stated in Pavey.
In Pavey the High Court stated that there was no reason why an unlicensed builder, precluded by statute from recovery, should not bring proceedings on a common indebitatus assumpsit count, to recover fair and reasonable remuneration for work done which the owner accepted. Nettle JA observed that parity of reasoning implied there was no reason why a lessor who was precluded by s.8(2) from recovery should not bring proceedings to retain or recover reasonable compensation for use and occupation of demised premises. Textual differences between the wording of the relevant statutes were not in his view significant.
The substantive effect of each of the provisions precluding recovery is to render the express contractual obligation for payment unenforceable as in Upjay Pty Ltd v MJK Pty Ltd[32] a decision of the South Australian Full Court. There the Court held that an unregistered estate agent was still entitled to recover reasonable remuneration for his services although the relevant legislation went so far as to provide commission or other consideration could be recovered from an unregistered agent as a debt. Nettle JA observed, however, that it may be possible to distinguish the present case because it was concerned with the use of land. His Honour went on to examine the reasoning of Lord Atkinson in Attorney-General v De Keyser's Royal Hotel[33] and rejected the argument that because the respondent took occupation under an express agreement to pay rent and that obligation has been rendered unenforceable, it is not open to imply an agreement to pay for use and occupation of the demised premises. His Honour observed there was no reason in principle why an action for use and occupation of land should fail in like circumstances to those in which an action for work and labour done succeeded in Pavey and Upjay.
[32](2001) 79 SASR 32
[33][1920] AC 508 at 533
In Pavey the High Court held that the builder's action rested on unjust enrichment arising from the owner's acceptance of the benefits from the builder's performance of the unenforceable contract. Logically the same consideration should govern a lessor's claim to recover restitution arising from a tenant's acceptance of the benefits of use and occupation of the demised premises under an unenforceable lease. The existence of a lease demonstrates the use and occupation of the land was not intended as a gift and the claim for reasonable compensation for this use and occupation should be characterised as a claim dehors the contract.
His Honour then referred to Lane J's decision in Morris v Tarant[34] but concluded that, as Gummow J's analysis in Roxborough v Rothmans of Pall Mall[35] demonstrates, the categories of restitutionary remedies are not closed in Australia. Furthermore the doctrinal basis of the action for money had and received has now been removed from the "pikestaff" of implied contract and the notions of equity which Lord Mansfield in Moses v Macferlan[36] worked into the common law action for money had and received are now free to take effect.
[34][1971] 2 QB 143
[35](2001) 208 CLR 516 at 544 [74]
[36](1760) 2 Burr 1005 ; 97 ER 676
Ultimately his Honour concluded:
"The action for money had and received is by nature one of the most comprehensive of all common law counts and as such it represents the translation of equitable principles doctrines and proceedings into the trial of an action at law. Consistently with equitable principle, it affords a right to recover back at law money which ought not in conscience be kept. But for the same reason it affords no right to recover back moneys which in conscience the payee ought to keep.[37] A defendant is therefore entitled to raise by way of answer any matter or circumstance which shows that his or her receipt or retention of the payment or some part of it is not unjust.[38] As Gummow J put it:
"... By referring to the action as one in the nature of a bill in equity, Lord Mansfield was inviting attention to what would be required in the plaintiff's declaration. In Moses v Macferlan his Lordship emphasised:
'One great benefit, which arises to suitors from the nature of this action, is, that the plaintiff needs not state the special circumstances from which he concludes 'that, ex aequo & bono, the money received by the defendant, ought to be deemed as belonging to him:' he may declare generally, 'that the money was received to his use;' and make out his case, at the trial.' On the general issue, the defendant at trial was, as it later was put by this Court in David Securities: 'entitled to raise by way of answer any matter or circumstance which [showed] that his or her receipt (or retention) of the payment [was] not unjust'."[39]
Those observations must be read in conjunction with the warning that it is a mistake to treat restitution as a modern synonym for a refusal 'against conscience' to pay the money in question. It is clear enough that an action for money had and received may lie against a defendant who fails to account but who on any sensible understanding of the term has not been enriched and, equally, it is not a condition of an action for restitution on the basis of unjust enrichment that a plaintiff have been impoverished by or to the extent of the defendant’s enrichment. Furthermore, and despite the breadth of equitable principle, it remains that the scope of restitutionary remedies is informed, and to a large extent limited, by the categories of the decided cases.
But subject to those limitations, it is in accordance with principle, and it has been recognised in at least some of the authorities, that an entitlement to sue for 'counter restitution' is pro tanto an answer to a claim for restitution. It follows, at least to that extent, the appellant’s retention of the moneys paid as rent would not be unjust.[40] I conclude that the appellant is entitled to raise by way of answer to the tenant’s claim that the tenant has had the use and occupation of the demised premises and that in formulating his claim the tenant must allow for a reasonable satisfaction for the benefit of that use and occupation."[41]
[37]National Commercial Banking Corporation of Australia Ltd v Batty (1986) 160 CLR 251 at 268, per Gibbs CJ
[38]Davids Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379
[39](2001) 208 CLR 516 at 551[91], citations omitted
[40]Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 351; citing Davids Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 383
[41]Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd (2006) V ConvR 54-713 at [47]-[49]
Faced with the decision in the Court of Appeal Mr Northrop, who appeared for the tenant before me, did not seek to uphold the Tribunal's order for restitution of all rentals paid prior to the delivery of a disclosure statement (such moneys being claimed for a "total failure of consideration") presumably in part because prior to the end of 2002 it appears both parties proceeded under a mutual mistake as to the requirement for a disclosure statement.
Mr Northrop did, however, persist in the contention that the Tribunal's decision with respect to moneys paid under protest was correct in law. In summary he submitted:
(a)As at 1 February 2003 the tenant had expressly required the landlord to meet its obligation to provide a disclosure statement with respect to the 2001 lease.
(b)The tenant made such request in part in the context of disputes first as to the effect of collateral statements made at the time of the renewal of the lease and secondly as to obligations for outgoings. Both these issues were matters which might relevantly be informed by the content of a disclosure statement prepared in accordance with the Act.[42]
(c)The landlord refused to provide a disclosure statement but insisted on payment of the rent and threatened to re-enter the premises if rental was not paid.
(d)The rental payments were made under protest.
(e)The landlord persisted in refusing to provide a disclosure statement up until the decision now appealed.
(f)It was at all relevant times readily open to the landlord to provide a disclosure statement but it refused to do so.
(g)The landlord acted on the basis of a view of the law now not pursued on its behalf.
(h)This is not a situation of mutual mistake but one of a wilful refusal by the landlord to comply with the statute.
[42]The Schedule to the Retail Tenancies Reform Act 1998 required a disclosure statement to contain particulars of "Outgoings" and of " Additional Representations".
These submissions are supported by the Tribunal's findings that the payments were made under compulsion.
"The practical compulsion is to be found in the notice threatening re-entry served on 6 December 2002 and a diary note taken by Aegean’s solicitor, Mr Mangopolous on 12 February 2003 recording a continued threat of re-entry by the landlord. A letter of 20 February 2003 from the lessor’s solicitors reiterated a threat to re-enter and take possession. Mr Isaakidis, the principal of Aegean said at paragraph 17 of his witness statement that his company had paid rent despite not having a disclosure statement:
Because I thought that the landlord would take steps to end the lease such as by serving another default notice or taking possession, if rent was not paid. Mr Mazzei owns another shop in Preston Market and I know that on one occasion he changed the locks as the tenant was not paying the rent."[43]
[43]Aegean Food Import Export Pty Ltd v R & C Mazzei Nominees Pty Ltd [2005] VCAT 2929 at [64]
In my view the case is one which falls within the ambit of a claim for money had and received on the basis that the moneys were paid under compulsion in the relevant sense.[44]
[44]See In re Hooper and Grasses Contract [1949] VLR 269; Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd [1956] SR (NSW) 323; Mason v New South Wales (1959) 102 CLR 108
The question which then arises, as in the Dog Depot case, is whether the landlord has shown that despite this prima facie entitlement it would not be unjust or unconscionable for it to retain the rental moneys paid.
It is apparent when the Tribunal's decision is read as a whole that it addressed the position of the parties within the framework of a view of the tenant's statutory rights which was misconceived. The Deputy President took the view that:
"Aegean is entitled to receive free what Parliament has determined in the circumstances it should receive free, namely the use and occupation of the demised premises in the circumstances described."[45]
[45]Aegean Food Import Export Pty Ltd v R & C Mazzei Nominees Pty Ltd [2005] VCAT 2929 at [52]
In my view the circumstances before the Tribunal disclosed a clear basis for a cross-restitutionary claim of the type recognised and explained by Chernov and Nettle JJA in the Dog Depot case on appeal. The landlord has a cross-restitutionary claim pro tanto for the use and occupation of the premises.
Such a claim may not be equivalent to the full value of the rent claimed as paid under compulsion by the tenant. Matters which might potentially affect the assessment of fair and reasonable compensation include:
(a)evidence as to the state of repair of the premises during the period in issue (the Tribunal having already found that the landlord was in breach of its obligation to repair during this period);
(b)evidence that the renewal of the lease (despite being prepared by the tenant's solicitor) did not fully reflect market value by reason of factors such as misunderstanding as to responsibility for outgoings.
It can be seen that such matters potentially reflect detriment flowing to the tenant from a failure to provide a disclosure statement. In this sense the potential for restitution of moneys paid under protest may be impacted upon by reason of the failure to provide a disclosure statement.
Conclusion
The reality is that this matter was not considered by the Tribunal on a basis consistent with the proper construction of s.8 now authoritatively stated by the Court of Appeal and the consequential framework within which the claim for payment made under compulsion and a possible cross-restitutionary claim for use and occupation of the premises should be understood.
As Ashley JA observed on appeal in the Dog Depot case:
"It is often enough the case that arguments of a purely legal character, though founded on the same bedrock, are shaped in different ways as a matter progresses from trial through appeal. Provided, in an appeal comprehended by s.148(1) of the VCAT Act, that the question of law arose before the Tribunal, the variant argument must be addressed on the appeal. That said, it should be acknowledged that it must be cold comfort to the Tribunal, … let alone to the party which ultimately fails, that an appeal should succeed in this Court upon an argument which varies from that which was earlier advanced; whilst the multiplication of cost is surely undesirable."[46]
[46]Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd (2006) V ConvR 54-713 at [80]
In the circumstances the matter should be remitted for further hearing in accordance with law. The question which remains to be determined on such rehearing is, however, relatively constrained. The appeal should be allowed with respect to the Tribunal's decision based on a total failure of consideration with respect to all rentals paid, but the claim for moneys paid under compulsion should be remitted for further hearing in accordance with law solely in order that the landlord's cross-restitutionary entitlement to damages for use and occupation of the premises can be assessed and set off against the prima facie claim for moneys paid under compulsion which the tenant has established.
I will hear counsel as to the terms of the appropriate orders and as to the question of costs.
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