Risi Pty Ltd v Pin Oak Holdings Pty Ltd
[2017] VSCA 317
•3 November 2017
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2017 0017
| RISI PTY LTD (ACN 108 095 790) | Applicant |
| V | |
| PIN OAK HOLDINGS PTY LTD (ACN 066 304 710) | Respondent |
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| JUDGES: | TATE, SANTAMARIA and HANSEN JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 5 September 2017 |
| DATE OF JUDGMENT: | 3 November 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 317 |
| JUDGMENT APPEALED FROM: | [2016] VSC 773 (Croft J) |
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ADMINISTRATIVE LAW – Appeal on question of law – Primary judge allowed appeal against VCAT order that landlord execute new lease – Whether primary judge erred in concluding no evidence to support various VCAT findings – No evidence that premises closed for six months – Various findings based on erroneous primary finding as to duration of closure of premises – Vitiating error – Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 and SZQRW v Minister for Immigration and Citizenship (2012) 134 ALD 454 applied – Victorian Civil and Administrative Tribunal Act 1998 s 148(1).
LANDLORD AND TENANT – Retail lease – Landlord and tenant agreed on granting of new lease – Tenant closed business to carry out renovations on premises – Landlord failed to execute new lease – Tenant expended moneys on renovations during closure – VCAT ordered that landlord execute new lease – Primary judge ordered that landlord pay equitable compensation for moneys expended during closure.
EQUITY – Estoppel – Proprietary estoppel – Remedies – Equitable compensation ameliorated detrimental reliance upon promise – Donis v Donis (2007) 19 VR 577 discussed.
APPEALS – Practice and procedure – Availability of notice of contention procedure in appeal under Victorian Civil and Administrative Tribunal Act 1998 s 148(1) – Where matter addressed in notice of contention not raised before VCAT – Applicant not permitted to raise matter on appeal.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr M I Ravech | Salinger & Associates |
| For the Respondent | Mr J D McKay | Danaher Legal |
TATE JA
SANTAMARIA JA
HANSEN JA:
Introduction
The respondent (‘the landlord’) is the owner of a three-storey building in Moonee Ponds. It occupied the top floor and leased the ground floor to the applicant (‘the tenant’), which conducted a restaurant business there. The last option under the lease was to expire in November 2017. In September 2014, the tenant sought a new lease. The tenant executed a new lease that had been prepared by the landlord. The new lease was returned to the landlord, who failed to execute it. In the interim, the tenant took steps, which involved closing the restaurant, to upgrade the premises.
When the landlord refused to execute the new lease, the tenant applied to the Victorian Civil and Administrative Tribunal (‘the Tribunal’) for a declaration that it was entitled to the new lease on the bases that: (a) at law, it was a party to an agreement that was specifically enforceable; and (b) in equity, the landlord was estopped from denying its entitlement. The Tribunal dismissed the claim at law on the basis that the parties had not agreed the commencement date for the new lease. However, the Tribunal upheld the claim in equity. In doing so, it found that the landlord was aware that, between March 2015 and August 2015, the restaurant was closed and the front of it was shuttered. It found that the landlord must have been aware that, during that period, the tenant was receiving no income from the restaurant. The Tribunal ordered that the landlord execute the new lease.
The landlord appealed to this Court pursuant to s 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 (‘the Act’). A judge in the trial division allowed the appeal on the basis that there was no evidence to support the primary finding that the restaurant had been closed for the period of March 2015 to August 2015 and other findings that depended upon that primary finding. The Court set aside the orders of the Tribunal and, in substitution thereof, ordered that the landlord compensate the tenant for its expenditure on upgrading the restaurant.
The tenant has applied for leave to appeal the orders made by the judge in the trial division. For the reasons that follow, the application for leave should be granted but the appeal dismissed.
Factual background
The landlord is the owner of a three-storey building at 28–30 Young Street, Moonee Ponds. Part of the ground floor of this building is an area which is used by the tenant to conduct a restaurant business (‘the premises’). At all material times, Mr Lastrina was the director of the landlord and acted on its behalf. He was a businessman and had an office on one of the upper floors of the building. At all material times, Ms Tuminello was the director of the tenant and acted on its behalf.
When the tenant purchased the restaurant business conducted from the premises in 2004, a transfer of lease was executed by the former tenant, the landlord and the tenant. By the terms of that instrument, the tenant was entitled to two further terms of five years each, provided that it was only entitled to the second of these further terms if it remained in occupation of the premises for three consecutive years from the transfer date. Since that requirement was satisfied, the tenant was entitled to the original term, which expired on 23 November 2007, a further term which expired on 23 November 2012 and a further final term which will expire on 23 November 2017.
Sometime before September 2014, Mr Lastrina and Ms Tuminello agreed that the landlord would grant the tenant a new lease of the premises for an initial term of three years with two further option terms of five years each.
On 4 September 2014, the tenant’s solicitor, Mr Comito, emailed Mr Lastrina in the following terms:
Dear Sir,
We understand that you have agreed to grant a new lease for a period of three years with two further options of five years with a commencing rental of $4,828.95 plus GST plus outgoings with an increase of 3% yearly, the first increase to be effected November of this year.
We also confirm that the tenant will pay or reimburse 50% of water usage.
Regards
Tony Comito.
Later that same day, Mr Lastrina replied to Mr Comito with an email in the following terms:
Hello Tony
I confirm the amounts and conditions for a new lease as per your email.
Regards
Charlie Lastrina
Director
Pinoak Holding Pty Ltd [sic]
According to Ms Tuminello, the lease period was to commence on 1 November 2014. That is not stated in either of the emails. Further, Ms Tuminello did not give evidence of the conversation that she had with Mr Lastrina in which the agreement was struck. In the circumstances, the Tribunal was unable to determine whether this starting date was actually discussed or was simply an assumption that she made.
On 25 September 2014, Mr Comito emailed the landlord’s solicitors informing them that Ms Tuminello would guarantee the terms of the lease on behalf of the tenant, confirming that there were two car spaces included in the premises and stating that he would await receipt of the documentation.
On 14 October 2014, Mr Comito wrote to the landlord’s solicitors seeking an update on the progress of the lease documentation. Another email to the same effect was sent to the landlord’s solicitors on 27 October 2014.
On 27 October 2014, the landlord’s solicitors wrote to Mr Comito stating:
Lease is with client for approval. I anticipate it will be with you shortly.
On 1 December 2014, Mr Comito wrote to the landlord’s solicitors asking again for an update on the lease documentation. On the following day, the landlord’s solicitors sent the following email to Mr Comito:
Thanks for your email chasing the documents for the above.
I understood that our client was going to arrange execution of documents with your client directly. Documents had been sent to our clients some time ago.
If this has not occurred please let me know.
Sometime before 27 October 2014, the lease documents were prepared by the landlord’s solicitors and given to Mr Lastrina for approval. In early December 2014, having approved of the documents, Mr Lastrina attended the restaurant and handed Ms Tuminello two copies of a form of lease for execution, together with a disclosure statement. The lease stipulated a commencement date of 1 November 2014 and a commencing rental of $4,828.95 plus GST per calendar month. He asked her to take them to her solicitor and have them signed and returned, which she later did.
At the time that she received the lease documentation from Mr Lastrina, Ms Tuminello spoke briefly with him about the renovations that she proposed to carry out in the restaurant. She told him that, because of her extended tenure of the premises, she intended to tile the walls, move the bar and put in a new pizza oven as well as pull up and tile the floors and give the premises a ‘facelift’. Ms Tuminello said that Mr Lastrina approved of the renovations, although it was not suggested that Mr Lastrina was ever given a plan of what was proposed or that he gave any written consent to the work.
The Tribunal had found, and the parties did not dispute, that, if Ms Tuminello had not believed that she had the benefit of the lease that she had signed and returned, she would never have spent the money that she ultimately did on renovating the premises.[1]
[1]Risi Pty Ltd v Pin Oak Holdings Pty Ltd [2016] VCAT 1112 [31] (‘Tribunal’s reasons’).
On 18 February 2015, the tenant’s solicitors emailed the landlord’s solicitors noting that the lease and disclosure statement executed by the tenant had been forwarded to them on 9 December 2014 for execution by the landlord. They also asked when the executed documents would be returned.
Between March 2015 and August 2015, the tenant expended $114,613.36 on renovating the premises. The tenant contends that the restaurant remained closed for a period of four weeks, with the front being shuttered, while the renovations were carried out. Conversely, the landlord contends that the restaurant remained closed for a period of two weeks whilst the renovations were carried out.
As mentioned above, Mr Lastrina’s office was in the same building as the premises. He visited a few times while the works were in progress.
A dispute subsequently arose between the landlord and the tenant. The landlord claimed that the tenant had a month-to-month tenancy and gave the tenant a notice to vacate. The tenant claimed to be entitled to a lease for a fixed term of three years, expiring on 1 November 2017, together with two five-year option terms.
The Tribunal’s decision
By an application filed in the Tribunal on 3 March 2016, the tenant claimed that it was entitled to a three-year lease expiring on 1 November 2017 and to the benefit of two further options to renew for a term of five years each. The first ground of the claim was that it had entered into a specifically enforceable agreement for lease with the landlord. The second ground was that the landlord was estopped in equity from denying the tenant’s entitlement to the lease and option terms because the landlord had induced the tenant to assume that it had the benefit of the lease and option terms and the tenant had materially acted on that assumption to its detriment.
The application was heard by the Tribunal, constituted by Senior Member R. Walker, on 27 and 28 June 2016.
The Tribunal found that the tenant’s claim for a concluded agreement for lease was not made out because there was no evidence before it that the commencement date of 1 November 2014 had been agreed upon.
In considering the evidence before it, the Tribunal found:
Sometime before 21 August 2012, Miss Tuminello gave written notice to Mr Lastrina that she wished to exercise the [tenant’s] option to renew the lease for a further term of five years from 23 November 2012. Her written notice was acknowledged by Mr Lastrina in writing on 21 August 2012. The effect of this renewal was to create an entitlement to a further five year term which would expire on 23 November 2017.[2]
[2]Ibid [14].
In its reasons, the Tribunal said:
Between March 2015 and August 2015 the [tenant] expended $114,613.36 on renovating the Premises. During this period the restaurant remained closed and, according to Mr Lastrina, the front was shuttered.
There is a dispute as to Mr Lastrina’s knowledge of the extent of the renovations. I prefer Miss Tuminello’s evidence that she told him that she was going to tile the walls, move the bar and put in a new pizza oven as well as pull-up and tile the floors. He was also aware that the restaurant was closed for a considerable period of time during the renovations with the front being shuttered. Quite obviously, the restaurant was not open for business and the [tenant] was receiving no income from it. Mr Lastrina’s office was in the same building and he would have seen what was taking place.
…
I am satisfied that it would have been apparent to Mr Lastrina from what he was told and from what he saw, that the scope of work was to be substantial and as a businessman he must have known that it would cost the [tenant] a substantial amount of money to carry it out, both in terms of the cost of construction and the loss of income while the work was done.[3]
[3]Ibid [34]–[35], [37].
The first paragraph of this extract amounted to what was later described by the tenant as ‘the Closure Finding’. The second paragraph of this extract amounted to what the tenant described as ‘the Knowledge Finding’. The third paragraph was described by the tenant as ‘the Substantial Scope and Cost Finding’. The Tribunal found that the equitable estoppel claim was made out. To compensate the tenant fully for the inequitable situation created by the landlord, the Tribunal found that it was necessary to direct the landlord to execute the lease documents.
In considering the question of estoppel, the Tribunal said:
In the present case it is quite clear that, by;
(a) agreeing to grant a lease;
(b)providing Miss Tuminello with lease documents which he had approved of and which were in the agreed terms and asking her to sign and return them;
(c)receiving them back from her without any indication that he did not intend to execute them on behalf of the [landlord];
Mr Lastrina, who was at all times acting on behalf of the [landlord], induced Miss Tuminello, on behalf of the [tenant], to make an assumption namely, that the [tenant] had a lease of the Premises for the term set out in the lease document together with two five-year options.
Mr Lastrina became aware that Miss Tuminello believed that she had the benefit of the lease and knew that, on the faith of that assumption, she was causing the [tenant] to expend a large sum of money on extensive renovations to the Premises and to forego any income from the restaurant business for the period of the renovations.[4]
[4]Ibid [65]–[66].
In considering the appropriate remedy, the Tribunal said:
In the present case Miss Tuminello through her company, the [tenant], has been induced to temporarily close her business, deprive herself of income for several months and invest the money she was able to borrow in carrying out substantial renovations on the Premises. She also invested her time and effort since late 2014 in building up her business in the Premises. In doing so she has forgone the opportunity that she had to establish a business elsewhere and to invest her time and money in establishing a goodwill in premises where she had security of tenure.
In those circumstances, to simply award the [tenant] the cost of the renovations would be quite inadequate to compensate for the detriment that it has suffered by relying on the assumption induced by the [landlord]. Had she moved her business elsewhere, it is reasonable to suppose that she would have sought a lease upon terms similar to that which was sought by the party that negotiated to buy her own business from the [tenant], namely, an initial period of three years followed by two option periods of five years.
Further, when she expended the money on the Premises and went without several month’s income, she did so on the basis that she would have the agreed period in which to amortise that cost and expenditure. Any lesser period would be to her disadvantage because she would have less time in which to recover her investment than the [landlord] lead [sic] her to believe she would have.
For these reasons I think that to fully compensate the [tenant] for the inequitable situation that the [landlord] has created it is necessary to direct the [landlord] to grant the lease that it agreed to grant.[5]
[5]Ibid [79]–[82].
The first paragraph in the passage extracted above was later described by the tenant as ‘the Foregone Opportunity Finding’. On 4 July 2016, the Tribunal ordered, among other things, that the landlord ‘execute the lease documents that have been already executed’ on behalf of the tenant.
Grounds of appeal from the Tribunal
In the decision below, the Court identified the questions of law arising in, and the grounds of appeal from, the Tribunal’s decision. The grounds, which simply reformulated the various questions, were as follows:
1.VCAT erred by finding at paragraph 34 of its reasons dated 4 July 2016 (‘the Reasons’) that the restaurant (‘the Restaurant’) operated by the [tenant] from the leased premises at 28 to 30 Young Street, Moonee Ponds (‘the Premises’) remained closed and shuttered during the period from March to August 2015 (‘the Closure Finding’) when there was no evidence before VCAT to support this finding, and the finding was not therefore open to VCAT.
2.VCAT erred by finding at paragraph 35 of the Reasons that the [landlord’s] director, Charlie Lastrina (‘Lastrina’), was aware that the Restaurant was closed for a considerable period of time during the renovations (‘Renovations’) with the front being shuttered (‘the Knowledge Finding’), in circumstances where:
(a)There was no evidence before VCAT to support the Knowledge Finding, and the finding was not therefore open to VCAT; and/or
(b)Further or alternatively, the Knowledge Finding was evidently derived from, or influenced by, the Closure Finding; and
(c)The Closure Finding was not itself open to VCAT as there was no evidence before VCAT to support that finding; and
(d)The Closure Finding was accordingly an irrelevant consideration to which VCAT ought to have had no regard when making the relevant finding at paragraph 35.
3.VCAT erred by finding at paragraph 37 of the Reasons that it would have been apparent to Lastrina that the scope of the work for the Renovations was to be substantial and would cost a substantial amount of money to carry out, both in terms of the cost of construction and the loss of income while the work was done, in circumstances where:
(a)The finding was evidently derived from, or influenced by, the Closure Finding and/or the Knowledge Finding; and
(b)The Knowledge Finding and Closure Finding were not themselves open to VCAT as there was no evidence before VCAT to support those findings; and
(c)The Knowledge Finding and Closure Finding were accordingly irrelevant considerations to which VCAT ought to have had no regard when making the relevant finding at paragraph 37.
4.VCAT erred by finding at paragraph 66 of the Reasons that Lastrina knew the [tenant] was expending a large sum of money on extensive renovations to the Premises and was foregoing any income from the restaurant business for the period of the renovations, in circumstances where:
(a)The finding was evidently derived from, or influenced by, the Closure Finding and/or the Knowledge Finding; and
(b)The Knowledge Finding and Closure Finding were not themselves open to VCAT as there was no evidence before VCAT to support those findings; and
(c)The Knowledge Finding and Closure Finding were accordingly irrelevant considerations to which VCAT ought to have had no regard when making the relevant finding at paragraph 66.
5.VCAT erred by finding at paragraph 79 of the Reasons that the [tenant] had been induced to deprive herself of income for several months, in circumstances where:
(a)There was no evidence before VCAT to support that finding, and the finding was not therefore open to VCAT; and/or
(b)Further or alternatively, the finding was evidently derived from, or influenced by, the Closure Finding and/or the Knowledge Finding; and
(c)The Knowledge Finding and Closure Finding were not themselves open to VCAT as there was no evidence before VCAT to support those findings; and
(d)The Knowledge Finding and Closure Finding were accordingly irrelevant considerations to which VCAT ought to have had no regard when making the relevant finding at paragraph 79.
6.VCAT erred by finding at paragraph 79 of the Reasons that the [landlord] had forgone the opportunity to establish a business elsewhere and to invest time and money in establishing a goodwill in premises where the [tenant] had security of tenue [sic] (‘the Forgone Opportunity Finding’), in circumstances where:
(a)VCAT held at paragraph 14 of the Reasons that the [landlord] had renewed her existing lease until 23 November 2017, and the [tenant] therefore did not have the opportunity to vacate the Premises and establish a business elsewhere, as she was committed to remain at the Premises pursuant to a binding agreement for lease; and
(b)There was accordingly no evidence before VCAT to support the Forgone Opportunity Finding, and that finding was not therefore open to VCAT.
7.VCAT erred by finding at paragraph 81 of the Reasons that the [tenant] had gone without several months of income, in circumstances where:
(a)There was no evidence before VCAT to support that finding, and the finding was not therefore open to VCAT; and/or
(b)Further or alternatively, the finding was evidently derived from, or influenced by, the Closure Finding; and
(c)The Closure Finding was not itself open to VCAT as there was no evidence before VCAT to support that finding; and
(d)The Closure Finding was accordingly an irrelevant consideration to which VCAT ought to have had no regard when making the relevant finding at paragraph 81.
8.VCAT erred by finding at paragraph 82 of the Reasons that to fully compensate the [tenant] for the inequitable situation that the [landlord] had created it was necessary to direct the [landlord] to grant the lease that it agreed to grant, in circumstances where:
(a)The finding was evidently derived from, or influenced by, the Closure Finding and/or the Knowledge Finding; and
(b)The Knowledge Finding and Closure Finding were not themselves open to VCAT as there was no evidence before VCAT to support those findings; and
(c)The Knowledge Finding and Closure Finding were accordingly irrelevant considerations to which VCAT ought to have had no regard when making the relevant finding at paragraph 82; and/or
(d)Further or alternatively, the finding was evidently derived from, or influenced by, the Forgone Opportunity Finding; and
(e)The Foregone Opportunity Finding was not itself open to VCAT as there was no evidence before VCAT to support that finding; and
(f)The Foregone Opportunity Finding was accordingly an irrelevant consideration to which VCAT ought to have had no regard when making the relevant finding at paragraph 82; and/or
(g)Further or alternatively, an award of equitable compensation in the sum of $114,613.36 plus interest would have been sufficient to ameliorate any inequity to the [tenant] flowing from an unconscionable conduct by the [landlord].
Notice of contention
On 6 September 2016, the tenant filed a notice of contention in which it contended that the decision of the Tribunal should be affirmed on grounds other than those relied upon ‘by the Court [sic] below’. The tenant said that, by reason of the findings set out in its order,[6] the Tribunal should have found that there was:
(a) an agreement for lease under the provisions of Walsh v Lonsdale;[7] or
(b) alternatively, a lease entered into between the landlord and the tenant in accordance with the Electronic Transactions (Victoria) Act 2000.
[6]The reference must be to the reasons of the Tribunal; no findings are set out in its order.
[7](1882) 21 Ch D 9.
The tenant also contended that, if ‘the Knowledge Finding’ set out in paragraph 2 of the notice of appeal was not supported by the evidence, nevertheless ‘there was ample evidence from which the Tribunal could have found that the [landlord] knew that the [tenant] was undertaking substantial renovations and that the restaurant was closed for a considerable period of time during the renovations’.
Decision below
The primary judge upheld the first ground of appeal. He said that at no time during the Tribunal hearing had any witness given evidence that the premises ‘had been closed for the period of March to August 2015’.[8] He thus rejected the Closure Finding as mistaken in fact. He rejected a submission that this finding was not a vitiating error. Rather, he said that it was ‘of critical importance to the reasoning and conclusions that followed … [and] compromised the fairness of the hearing received by the [landlord]’.[9]
[8]Pin Oak Holdings Pty Ltd v Risi Pty Ltd [2016] VSC 773 [26] (‘Court’s reasons’).
[9]Ibid [28].
The primary judge upheld the second ground of appeal in respect of the finding that Mr Lastrina was aware that the restaurant was closed for a considerable period of time during the renovation, with the front being shuttered. The primary judge held that this finding, the Knowledge Finding, was closely based on the Closure Finding, namely that the restaurant remained closed and shuttered during the period of March 2015 to August 2015. In so far as there was no basis for the latter, there was no evidence of the former. He held that the Tribunal had misconstrued the evidence and ‘reached the erroneous conclusion that the Restaurant had been shut for a period that was grossly in excess of the actual period of closure thus affecting subsequent reasoning and findings, which are further grounds in the appeal.’[10]
[10]Ibid [34].
The primary judge upheld the third and fourth grounds of appeal. Whilst he accepted that, had the restaurant been closed for a lengthy period such as six months, the extended closure would have been obvious to Mr Lastrina and would have prompted inquiries by him with respect to the extent of the renovations and to the potential loss of income, his earlier findings foreclosed any such conclusions. There was simply no basis in the evidence before the Tribunal that supported there having been a closure to any such extent. Moreover, he considered that the other evidence given by Ms Tuminello could not have supported a conclusion that Mr Lastrina was aware, or should have been aware, that a major renovation of the premises was taking place. She had told Mr Lastrina that all she was going to do was a facelift and not a major renovation.
The primary judge upheld the fifth and seventh grounds of appeal. He held that there was simply no evidence that the tenant had been induced to deprive herself of income for several months. Any such finding could only have been based upon evidence of income lost due to a lengthy period of closure. The evidence did not permit any such finding to be made.
The primary judge upheld the sixth ground of appeal, which impeached the Foregone Opportunity Finding, namely that the tenant had foregone an opportunity of establishing a business elsewhere and investing her time and money in establishing a goodwill in premises where she had security of tenure. The events in question had occurred in 2014 (the agreement that there be a new lease) and 2015 (the closure of the premises). The only evidence was that the tenant had renewed its existing lease until 23 November 2017. The primary judge said:
Consequently the [tenant] did not have the opportunity to vacate the Premises and establish a business elsewhere. It follows on this basis that the [tenant] was committed to remain in occupation of the Premises pursuant to a binding agreement that would run until late November 2017.[11]
[11]Ibid [52].
The primary judge upheld the eighth ground of appeal. He held that the Tribunal’s findings that Mr Lastrina knew that the tenant was carrying out a substantial and costly renovation was derived from the two findings the subject of the first and second grounds of appeal, those findings being ‘irrelevant and erroneous considerations as they were entirely unsupported by evidence’.[12] The judge held that, while in some cases, the inequity created by detrimental reliance of a promisee could only be satisfied by making good the promise,[13] in the present case:
the [tenant’s] detrimental reliance could have been entirely ameliorated by an appropriate award of equitable compensation and interest which, in monetary terms, reflects the extent of the detriment suffered.[14]
[12]Ibid [57].
[13]The primary judge referred to Giumelli v Giumelli (1999) 196 CLR 101, 120–5 [34]–[48] (Gleeson CJ, McHugh, Gummow and Callinan JJ) and Donis v Donis (2007) 19 VR 577.
[14]Court’s reasons [59]. The primary judge referred to Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 333 ALR 384, 434–5 [217]–[218] (Nettle J). Before this Court, counsel for the landlord said that the case before the primary judge proceeded on the basis that the judge could either remit the matter to VCAT for determination or award compensation. Neither of the parties raised any issue with this approach in the application for leave to appeal.
The primary judge dismissed the notice of contention. He was inclined to accept submissions advanced on behalf of the landlord that the procedure was not available to a respondent to an appeal under s 148(1) of the Act. However, he concluded:
The Court has, on a number of occasions expressed some general but inconclusive views on whether a Notice of Contention may be used in proceedings such as the present. I would, in light of these decisions tend to the view advanced in the [landlord’s] submissions; but, as indicated below, I think the position is really beyond doubt given the language and structure of the Rules. However, given the substantive matters already addressed it is not necessary to address the issues raised by the [tenant] with respect to the Notice of Contention; the applicability of this procedural device, or with respect to any further substantive matters. Moreover, for the preceding reasons there was no evidence before the Tribunal which would support the grounds relied upon by the [tenant] as alternative grounds in this context.[15]
[15]Court’s reasons [68]. A footnote makes it clear that the reference to the ‘preceding reasons’ is a reference to the Court’s reasons [64].
Proposed grounds of appeal
In its application for leave to appeal dated 16 February 2017, the tenant proposed the following grounds of appeal:
Equitable estoppel
1.His Honour erred in concluding that there was no evidence to support the Tribunal’s finding that the Landlord’s director, Charlie Lastrina (Mr Lastrina) was aware that the restaurant business operated by the Tenant from the leased premises at 28 to 30 Young Street, Moonee Ponds (the Premises) was closed for a considerable period of time during the renovations (the Knowledge Finding).
2. Having found that:
(a)it was open to the Tribunal on the evidence to find that the Premises remained closed for renovation for a period of four weeks; and
(b)it was open to the Tribunal to find that Mr Lastrina’s office was in the same building as the Premises and he would have seen what was taking place,
his Honour ought to have concluded that there was evidence to support the Knowledge Finding and that it was open to the Tribunal to make that finding.
3.His Honour erred in concluding that there was no evidence to support the Tribunal’s finding that it would have been apparent to Mr Lastrina that the scope of work for the renovation was to be substantial and would cost a substantial amount of money to carry out, both in terms of the cost of construction and the loss of income while the work was done (the Substantial Scope and Cost Finding).
4. Having:
(a) found that:
(i)it was open to the Tribunal on the evidence to find that the Premises remained closed for renovation for a period of four weeks; and
(ii)it was open to the Tribunal to find that Mr Lastrina’s office was in the same building as the Premises and he would have seen what was taking place;
(b) before him, the Tribunal’s uncontested findings of fact that:
(i)the Tenant’s director, Maria Tuminello (Miss Tuminello) told Mr Lastrina that she was going to tile the walls, move the bar and put in a new pizza oven as well as pull-up and tile the floors;
(ii)Mr Lastrina visited the Premises a few times while the works were in progress; and
(iii) Mr Lastrina was a businessman,
his Honour ought to have concluded that there was evidence to support the Substantial Scope and Cost Finding and that it was open to the Tribunal to make that finding.
5.His Honour erred in concluding that since the Tenant was committed to remain in occupation of the Premises until 23 November 2017 under its existing lease, the Tribunal erred in finding that in reliance on the assumption induced by the Landlord, the Tenant forewent the opportunity to invest time and money in establishing a business in premises where the Tenant had security of tenure (the Foregone Opportunity Finding).
6.His Honour ought to have concluded that, notwithstanding the Tenant’s contractual commitment under its existing lease to remain in occupation of the Premises until 23 November 2017, the Foregone Opportunity Finding was still open because it was open to the Tribunal to infer, from its uncontested findings of fact, that the Tenant intended to carry on the business of a restaurant into the foreseeable future and, in the absence of the assumption induced by the Landlord, Miss Tuminello would have invested her time and money in establishing a business in alternative premises, where there was security of tenure, to enable the business to continue beyond the expiration of the lease of the Premises.
7.His Honour erred in concluding that the Tribunal’s finding, that the restaurant operated by the Tenant from the Premises remained closed for renovation during the period from March to August 2015 (the Closure Finding), was of critical importance to the reasoning and conclusions of the Tribunal and constituted a vitiating error.
8.His Honour ought to have found that there was no vitiating error or substantial wrong in the Tribunal’s reasoning and ultimate conclusion that to fully compensate the Tenant for the inequitable situation created by the Landlord, it was necessary to direct the Landlord to grant the New Lease.
Agreement for Lease
9. His Honour erred in concluding that:
(a) the Tenant could not rely upon the Notice of Contention; and
(b)there was, in any event, no evidence before the Tribunal to support the Tenant’s contention that the decision of the Tribunal should be affirmed on the ground that the Landlord and Tenant had entered into a concluded agreement for the New Lease.
10. His Honour ought to have concluded that:
(a) the Tenant could rely on the Notice of Contention; and
(b)on the evidence before the Tribunal, comprising email correspondence and a form of lease approved by Mr Lastrina that Miss Tuminello had signed and returned, there was a concluded agreement for the New Lease.
Contentions of the tenant
In its written submissions, the tenant said that, given that the primary judge had found that there was evidence to support that the restaurant had been closed for a period of four weeks and that Mr Lastrina’s office was in the same building, he ought to have concluded that it was reasonably open to the Tribunal to infer from those findings of fact the Knowledge Finding, namely that Mr Lastrina ‘was aware that the restaurant was closed for a considerable period of time during the renovations’. The tenant said that, given the uncontested findings of fact that Ms Tuminello had told Mr Lastrina that she was going to renovate the restaurant and that Mr Lastrina had visited the restaurant when the work was being carried out, the judge ought to have concluded that it was reasonably open to the Tribunal to infer, from those findings, that it would have been apparent to Mr Lastrina that the scope of work for the renovation was to be substantial and would cost a substantial amount of money to carry out, both in terms of the cost of construction and the loss of income while the work was done. In other words, the tenant said that, despite the error in the Closure Finding made by the Tribunal, the circumstances nevertheless supported the Substantial Scope and Cost Finding. The tenant also said that the primary judge should have held that it was open on the evidence for the Tribunal to infer that the tenant intended to carry on a restaurant business into the foreseeable future and that, in the absence of the assumption induced by the landlord, Ms Tuminello would have invested her time and money establishing a business in alternative premises, where there was security of tenure, to allow the business to continue beyond the expiration of the existing lease; that is, that there was support for the Foregone Opportunity Finding. Next, the tenant said that, even if the Knowledge Finding, the Substantial Scope and Cost Finding and the Foregone Opportunity Finding, or any of them, constituted errors of fact because they were informed by the Closure Finding, which was itself erroneous in fact, then the primary judge nonetheless erred in concluding that the Closure Finding was a vitiating error, which compromised the fairness of the hearing received by the landlord, because the Closure Finding was not critical to the Tribunal’s ultimate conclusion.
The tenant said that the Tribunal’s ultimate conclusion that the landlord be directed to grant a new lease was open to it as the landlord had given the tenant reason to believe that a new lease would be granted and that Mr Lastrina allowed Ms Tuminello to cause the tenant to undertake renovations to the restaurant and to forego any income from the restaurant business for the period of the renovations. Mr Lastrina was under a duty to correct Ms Tuminello’s mistaken assumption, but he did not do so and thereby caused the tenant to act to its detriment on the basis of the assumption that he had induced. The tenant said that the primary judge ought to have found that there was no vitiating error in the Tribunal’s reasoning and ultimate conclusion that, to compensate the tenant fully for the inequitable situation created by the landlord, it was necessary to direct the landlord to grant the new lease. The tenant referred to Donis v Donis.[16]
[16](2007) 19 VR 577.
Finally, the tenant said that the primary judge erred in holding that the tenant could not rely upon its notice of contention and that it was open to the Tribunal to find that the agreement for lease had been concluded.
Contentions of the landlord
In its written submissions, the landlord said that the Knowledge Finding was made by the Tribunal in the paragraph immediately following the Closure Finding and that the findings were closely interrelated.[17] The Tribunal’s finding that Mr Lastrina knew that the restaurant was ‘closed for a considerable period of time’ was a finding that Mr Lastrina knew that the restaurant was closed for about six months from March 2015 — a period that substantially exceeded the actual duration of the closure. Had the Tribunal appreciated the true duration of the closure, there would have been strong grounds for it to find that the period of closure was not significant and that Mr Lastrina did not have knowledge of any significant period of closure. Accordingly, the error was a vitiating error in that it could have ‘materially affected the decision’ of the Tribunal as to whether the knowledge element of estoppel had been made out. The landlord also said that the questions whether a two-week closure was a ‘considerable period’, and whether Mr Lastrina knew of the closure for that period, were questions for the Tribunal to consider in light of the evidence before it; they are not proper questions for consideration by the Court.
[17]Tribunal’s reasons [35].
In the same vein, the landlord said that the Substantial Scope and Cost Finding was part of a chain of reasoning that commenced with the erroneous Closure Finding. It was an inference drawn from an anterior finding of fact for which there was no evidence. As such, the landlord said that the Substantial Scope and Cost Finding was itself erroneous and vitiated the Tribunal’s decision in its entirety.
In relation to the Foregone Opportunity Finding, the landlord said that there was no evidence before the Tribunal that: (a) there was any person willing to take an assignment of the lease from the tenant at any time after March 2015; and (b) the tenant had the means to set up an alternative restaurant premises while meeting its obligations under the existing lease. The landlord said that, in any event, no loss of opportunity had occurred. It also said that an award of equitable compensation is sufficient to recompense the tenant in these circumstances.
As to the effect of the Closure Finding on the Tribunal’s reasoning and conclusions, the landlord said that the ‘pathway of reasoning’ encompassing the Closure Finding, the Knowledge Finding and the Substantial Scope and Cost Finding was sequential. The six-month period of closure which the Tribunal believed had occurred, and which the Tribunal believed Mr Lastrina had observed, was a decisive factor in determining his knowledge of the scale and cost of the renovations. The landlord said that, had the Tribunal appreciated the true duration of the closure, the outcome of the proceeding before it could well have been very different. The landlord also argued, in the alternative, that the Closure Finding was an irrelevant consideration that vitiated the Tribunal’s decision.
Finally, the landlord said that the primary judge did not decide finally whether the notice of contention procedure was applicable in the circumstances; the judge concluded that the ‘agreement to lease’ contention could not be upheld on appeal. There was a clear finding of the Tribunal that the parties had not agreed upon a commencement date for the new lease and that no concluded agreement had therefore arisen. The landlord also said that, in order to uphold the Tribunal’s decision on an alternative ground raised by way of notice of contention, the Court would have had to bypass this finding of fact which stood in the way of the alternative ground being accepted.
Analysis
The jurisdiction conferred by s 148 is confined to appeals on questions of law.[18] The existence and identification of a question of law is not merely a precondition to the right to appeal, but also the subject matter of the appeal itself.[19]
[18]Osland v Secretary to the Department of Justice (No 2) (2010) 241 CLR 320, 351 [71] (Hayne and Kiefel JJ).
[19]Ibid 333 [21] (French CJ, Gummow and Bell JJ), citing TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation (1988) 82 ALR 175, 178 (Gummow J).
In Osland v Secretary to the Department of Justice (No 2),[20] French CJ, Gummow and Bell JJ observed that s 148 of the Act confers ‘judicial power to examine for legal error what has been done in an administrative tribunal’.[21] It confers original, not appellate, jurisdiction; the proceedings are ‘in the nature of judicial review’.[22]
[20](2010) 241 CLR 320.
[21]Ibid 331–2 [18], citing Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) (2001) 207 CLR 72, 79 [15] (Gaudron, Gummow, Hayne and Callinan JJ).
[22]Ibid.
More recently, in Patsuris v Gippsland and Southern Rural Water Corporation,[23] Garde AJA (with whom Tate and Kyrou JJA agreed) said:
Section 148 does not confer a general right of appeal on the merits of a case. If no threshold question of law can be identified, the case is not suitable for the type of restricted appeal that s 148 provides.
The ‘question of law’ requirement in s 148 confers a limited capacity on the Court to review findings of fact made by a Tribunal member. The requirement in s 148 to state a question of law is germane to the capacity of the Court to review findings of fact made by a Tribunal member. The identification of a question of law is not merely a precondition to the exercise of a right to appeal, but the subject matter of the appeal itself. It is not sufficient for the parties to identify a point of law between them on appeal that was not raised before the Tribunal. In Transport Accident Commission v Hoffman, Young CJ and McGarvie J said of the predecessor provision to s 148:
How then is it to be construed? It is not to be construed as limited to an appeal from a decision of the Tribunal on a question of law. Nor is it to be construed as granting an appeal from any decision which involves a question of law. The via media we think is to construe the section as granting a right of appeal from any decision of a Tribunal on a question of law which is involved in the Tribunal's decision.[24]
[23](2016) 218 LGERA 167.
[24]Ibid 180 [43]–[44] (citations omitted).
In Commissioner of State Revenue v Frost,[25] Pagone J explained the policy considerations that underpin s 148 in the following terms:
The legislature has not provided an unqualified right of appeal from a decision of VCAT; on the contrary, the legislature has imposed two conditions upon the ability to appeal from decisions of VCAT: namely, the need for leave and the restriction of the subject matter of appeals to questions of law … The legislative policy is that VCAT decisions should not generally be disturbed where cases have been decided in that forum other than on questions of law and where there is something about the decision bearing upon the question of law which warrants a grant of leave to appeal.[26]
[25](2011) 83 ATR 832.
[26]Ibid 834 [5] (citations omitted).
It follows, as Mason J observed in Minister for Aboriginal Affairs v Peko-Wallsend Ltd,[27] that one must constantly bear in mind the limited role of a court reviewing the exercise of an administrative discretion.[28] Mason J continued:
It is not the function of the court to substitute its own decision for that of the administrator by exercising a discretion which the legislature has vested in the administrator. Its role is to set limits on the exercise of that discretion, and a decision made within those boundaries cannot be impugned.[29]
[27](1985) 162 CLR 24.
[28]Ibid 40.
[29]Ibid 40–1 (citation omitted).
In the present case, the landlord appealed to the trial division on the ground that there was no evidence to support the Closure Finding and, thus, the Knowledge Finding: ‘A tribunal that decides a question of fact when there is “no evidence” in support of the finding makes an error of law’.[30] As the primary judge recognised,[31] the application of this rule requires careful consideration in the case of a body, such as the Tribunal, that is not bound by the rules of evidence.[32] An error of law will be established only where there is no probative evidence to support a finding of fact.[33]
[30]Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390, 418 [91] (Hayne, Heydon, Crennan and Kiefel JJ), citing Lombardo v Federal Commissioner of Taxation (1979) 28 ALR 574, 578 (Bowen CJ); TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation (1988) 82 ALR 175, 187 (Gummow J).
[31]Court’s reasons [21].
[32]See s 98(1)(b) of the Act.
[33]Transport Accident Commission v Hoffman [1989] VR 197, 199 (Young CJ and McGarvie J); Roads Corporation v Dacakis [1995] 2 VR 508, 517, 520 (Batt J); S v Crimes Compensation Tribunal [1998] 1 VR 83, 90 (Phillips JA); ISPT Pty Ltd v Melbourne City Council (2008) 20 VR 447 (Warren CJ, Kellam JA and Osborn AJA).
A finding of fact that is unsupported by evidence will vitiate a decision if the error materially affected the decision. In Minister for Aboriginal Affairs v Peko-Wallsend Ltd,[34] Mason J (with whom Gibbs CJ and Dawson J agreed) said:
Not every consideration that a decision-maker is bound to take into account but fails to take into account will justify the court setting aside the impugned decision and ordering that the discretion be re-exercised according to law. A factor might be so insignificant that the failure to take it into account could not have materially affected the decision: see, eg, the various expressions in Baldwin & Francis Ltd v Patents Appeal Tribunal; Hanks v Minister of Housing and Local Government; Reg v Chief Registrar of Friendly Societies; Ex parte New Cross Building Society. A similar principle has been enunciated in cases where regard has been had to irrelevant considerations in the making of an administrative decision: Reg v Bishop of London; Reg v Rochdale Metropolitan Borough Council; Ex parte Cromer Ring Mill Ltd.[35]
[34](1986) 162 CLR 24.
[35]Ibid 40 (citations omitted). This principle has been applied to errors of law other than a failure to take into account a relevant consideration. See Lu v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 141 FCR 346 (natural justice); House v Defence Force Retirement and Death Benefits Authority (2011) 193 FCR 112 (misapplication of statutory test); Stead v State Government Insurance Commission (1986) 161 CLR 141 (natural justice); SZQRW v Minister for Immigration and Citizenship (2012) 134 ALD 454 (error of fact); SZRHL v Minister for Immigration and Citizenship (2013) 136 ALD 641 (misapprehension of facts); Minister for Immigration and Border Protection v Lesianawai (2014) 227 FCR 562, 581–2 [56]–[60] (jurisdictional error); Minister for Immigration and Border Protection v SZSRS (2014) 309 ALR 67 (evidence overlooked); VAAD v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 117 [77] (evidence overlooked); East Melbourne Group Inc v Minister for Planning (2008) 23 VR 605 fn 182 (unreasonableness).
In SZQRW v Minister for Immigration and Citizenship,[36] the Full Court of the Federal Court said:
In our view, the reviewer’s error did not amount to a failure to consider a claim, or an integer of a claim made by the appellant. It is plain that the reviewer considered, and rejected, the appellant’s claims and, in particular, the integer of those claims (of which the period of the alleged detention was but one part of the narrative) that his fear of persecution stemmed from the threats made to his brother whilst in the captivity of three kidnappers. Rather, the error made by the reviewer in this case is to be characterised in the same way as the error in the MZXSA, namely, as an instance of errant fact-finding which occurred in the course of considering the appellant’s claims, and which was relied on only in a peripheral way. In other words, this was an error in fact-finding which could not have materially affected the decision nor have deprived the appellant of the possibility of a successful outcome.
The error in this case is to be distinguished from that in VAAD. In VAAD, the Tribunal’s error went directly to a core element of the claim made by the visa applicant, namely, to have been preselected as a candidate for the UNP in a local provincial council election. The Full Court found that the error ‘had an adverse effect’ on the Tribunal’s assessment of the visa applicant’s credibility, that the error ‘tainted’ the further consideration of the evidence in the review, and ‘greatly influenced’ the Tribunal’s finding that the UNP support letter was fabricated. In other words, the error was such as to undermine the integrity of the review process. By contrast, the reviewer’s error in this case was relied on only in a peripheral way, did not obscure the reviewer’s understanding of the claims made by the appellant, and was an error which could have had no material influence on the reviewer’s conclusion.[37]
In the present case, the error of law was vitiating given that it was not possible to say that, if the error with respect to the Closure Finding had not been made (that is, the error that the restaurant was closed for approximately six months), the same decision would have been reached.
[36](2012) 134 ALD 454.
[37]Ibid 465 [56]–[57].
In the present case, the Tribunal found that the restaurant was closed between March 2015 and August 2015, during which period the tenant engaged in the renovation of the restaurant. The Tribunal found that, by reason of his office being in the same building, Mr Lastrina ‘was also aware that the restaurant was closed for a considerable period of time during the renovations with the front being shuttered. Quite obviously, the restaurant was not open for business and the [tenant] was receiving no income from it.’[38] But, there was no evidence to support the finding that the restaurant was closed for such a period and, for that reason, the finding that Mr Lastrina was aware that the restaurant was closed for ‘a considerable period of time’ was unsustainable. In her cross-examination, Ms Tuminello said that the restaurant was closed for two weeks in June.
[38]Tribunal’s reasons [35].
The finding that the restaurant was closed for six months is constantly repeated in the reasons of the Tribunal and used to support the other findings. For example, in the course of arriving at the Substantial Scope and Cost Finding, the Tribunal said that it was satisfied ‘that it would have been apparent to Mr Lastrina from what he was told and from what he saw, that the scope of work was to be substantial and as a businessman he must have known that it would cost [the tenant] a substantial amount of money to carry it out, both in terms of the cost of construction and the loss of income while the work was done’.[39] Similarly, when the question of the appropriate remedy was being discussed, the Tribunal alluded to a time ‘when [Ms Tuminello] expended the money on the Premises and went without several month’s [sic] income’.[40]
[39]Ibid [37] (emphasis added). There is a similar reference in the Tribunal’s reasons [66].
[40]Ibid [81].
In its written submissions, the tenant has sought to base the finding that Mr Lastrina knew that the restaurant was closed for a ‘considerable period of time’ upon (what it says is) the evidence that the restaurant was closed for ‘a period of four weeks’.[41] However, that was not the finding of fact by the Tribunal: the Closure Finding and the Knowledge Finding were all based on the mistaken view that the restaurant was closed over a six-month period. Mr Lastrina’s knowledge was a matter of fact that was for the Tribunal to find; this Court has no jurisdiction in the present appeal to correct that finding by the Tribunal.
[41]The tenant referred to the Court’s reasons [26]. In that paragraph, the primary judge refers to something that counsel for the tenant ‘accepted’, rather than to the evidence.
We also accept the submission of the landlord that, had the Tribunal appreciated the evidence as to the extent of the closure, there would have been strong grounds for a finding that the period of the closure was not ‘considerable’ and that Mr Lastrina could not have been aware that there was any such closure. The primary judge was correct to find that the Closure Finding ‘was of critical importance to the reasoning and conclusions that followed’ and that the error was a ‘vitiating error [that] compromised the fairness of the hearing received by’ the landlord.[42]
[42]Court’s reasons [28].
The Tribunal found that Mr Lastrina would have been aware that the scope of work for the renovation was to be substantial and would cost a substantial amount of money to carry out, both in terms of the cost of construction and the loss of income while the work was done.[43] The factual matters that the tenant now relies upon to justify the Tribunal’s Substantial Scope and Cost Finding, that Mr Lastrina was aware of the scope of the works and the associated expenses and loss of income, were not made by the Tribunal. Rather, the Tribunal relied upon the Closure Finding and the Knowledge Finding, each of which was unsupported by the evidence. We accept the submission of the landlord that the question for the Court is not whether the Tribunal ought to have made the Substantial Scope and Cost Finding even if it had correctly understood that the restaurant was closed only for two weeks or even four weeks. That is not the function of the Court. Instead, the question for the Court is whether the decision of the Tribunal was vitiated by the error which lay at the heart of the reasoning leading to the impugned finding. The finding was an inference drawn from an anterior finding of fact for which there was no evidence.
[43]In order to establish one or other of the forms of equitable estoppel, it is necessary to establish unconscionable conduct on the part of the defendant. An essential element is proof that a representor knew that the representee was relying upon the representation or promise. In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, Brennan J said (at 428):
In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff’s reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs. (emphases added)
For the foregoing reasons, we would reject the first four grounds of appeal, each of which is premised upon Mr Lastrina’s knowing, or being aware, of the restaurant being closed for a considerable period of time. In so far as the error was plainly a vitiating error, we would also reject grounds seven and eight.
We would also reject the submission of the tenant that the primary judge ought to have held that there was no vitiating error in the Tribunal’s reasoning and ultimate conclusion that, to compensate the tenant fully for the inequitable situation created by the landlord, it was necessary to direct the landlord to grant the new lease.
In Donis v Donis,[44] Nettle JA (with whom Maxwell ACJ and Ashley JA agreed) considered the principles of equitable estoppel in a case where, as in the present case, the expectation that was encouraged was the acquisition of an interest in property. He said:
In such cases the remedy relates to the understanding of the parties and the expectation that has been encouraged. Prima facie the estopped party can only fulfil his or her equitable obligation by making good the expectation which he or she has encouraged. The estopped party, having promised to confer a proprietary interest on the party entitled to the benefit of the estoppel and the latter, having acted upon the promise to his or her detriment, is bound in conscience to make good the expectation. It follows that the detrimental reliance that supports the estoppel need not constitute in any sense a consideration moving to the party bound. It is a unilateral element of the estoppel and not the price paid for it. [45]
[44](2007) 19 VR 577.
[45]Ibid 582–3 [19] (citations omitted).
However, Nettle JA went on to qualify what he described as the ‘prima facie position’ in the following terms:
The prima facie position will yield to individual circumstances. Principle and authority compel the view that where a plaintiff’s expectation or assumption is uncertain or extravagant or out of all proportion to the detriment which the plaintiff has suffered, the court should recognise that the claimant’s equity may be better satisfied in another and possibly more limited way. Thus, as was also said in Giumelli, before granting relief the court is required to consider all of the circumstances of the case, including the possible effects on third parties, and to avoid going beyond what is required for conscientious conduct or would do injustice to others. But that does not mean that the court is required to be ‘constitutionally parsimonious’ or that it is necessary for there to be substantial correspondence between expectation and the monetary value of the detriment suffered, or which but for the relief to be accorded would be suffered. The object of the exercise is to do equity and for that purpose ‘detriment’ is no narrow or technical concept. It need not consist of expenditure of money or other quantifiable financial disadvantage so long as it is something substantial. The requirement must be approached as part of a broad inquiry as to whether departure from a promise would be unconscionable in all the circumstances.[46]
[46]Ibid 583 [20] (citations omitted).
Nettle JA recounted the approach taken by the trial judge at first instance in Donis v Donis (No 2).[47] In considering the relief to be awarded to the promisee (the respondent on appeal), the trial judge adopted as a starting point the prima facie entitlement of the respondent to have the promise made good. Prima facie, this would have entitled the respondent to a one-quarter share of proceeds of the sale of property that had been promised to her. The trial judge then turned to consider all the circumstances of the case, including the bases of valuation of the property, the effect of a mortgage over the property and the allowance of interest. Taking into account these circumstances, the trial judge concluded that the full quarter share needed to be reduced to satisfy the equity that had arisen.[48] On appeal, Nettle JA saw no error in that approach.[49]
[47][2006] VSC 125.
[48]Ibid [65]–[73].
[49]Donis v Donis (2007) 19 VR 577, 583–5 [22]–[24].
In the present case, the Tribunal’s conclusion on relief was premised upon Mr Lastrina’s knowing, or being aware, of the restaurant being closed for a considerable period of time. As explained above, this was plainly a vitiating error. Moreover, the granting of a new lease for a period of three years with two further options of five years would have been out of all proportion to the detriment that the tenant had suffered in expending $114,613.36 on renovating the premises.[50] As the primary judge said, the tenant’s detrimental reliance could have been entirely ameliorated by an award of equitable compensation and interest.
[50]The tenant referred to the Court’s reasons [26]. As mentioned above, in that paragraph, the primary judge refers to something that counsel for the tenant ‘accepted’, rather than to the evidence.
As indicated above, the Tribunal found that, in reliance on the assumption induced by the landlord, the tenant forewent the opportunity to invest time and money in establishing a business in alternative premises where the tenant had security of tenure. The Tribunal used that finding to conclude that equitable compensation would not fully compensate the detriment suffered by the tenant. The primary judge held that the Tribunal erred in making that finding. While accepting that the tenant would not have engaged in expenditure in renovating the restaurant had Ms Tuminello known that the lease would not be renewed, the primary judge referred to the fact that the tenant was committed to remain in the premises until 23 November 2017 and that, as a result, it did not have the opportunity to vacate the premises and establish another business elsewhere. He further held that the payment of equitable compensation meant that the tenant had not been deprived, by reason of its expenditure on its existing restaurant, of the opportunity to renovate any such new premises when it had the opportunity to occupy them.[51]
[51]Court’s reasons [51]–[55].
However, the tenant now says that the obligation to remain in occupation under its present lease was an irrelevancy. It says that it was not thereby precluded, either from taking a lease of alternative premises and focussing its energies on a business conducted therefrom while the existing lease remained on foot, or, alternatively, assigning the existing lease to a third party whereupon it would have been free to vacate the restaurant.
In our opinion, there was no error in the reasoning of the primary judge. There was no evidence that there was any person willing to take an assignment of the existing lease; nor was there any evidence that the tenant had the means to set up an alternative restaurant while continuing to meet its obligations under the existing lease. The award of equitable compensation also restored the tenant’s ability to devote resources to any new restaurant business. The primary judge was correct in deciding that the tenant suffered no loss of opportunity.
Accordingly, we would also reject grounds five and six.
Agreement for lease
As also indicated above, the tenant sought to uphold the decision of the Tribunal by filing a notice of contention. The primary judge held that the procedure was not available in an application to the Court under s 148(1) of the Act and did not allow the tenant to rely upon it.[52]
[52]See Supreme Court (General Civil Procedure) Rules 2015 r 64.32(1)(b).
In its notice of contention, the tenant said that the decision of the Tribunal should be affirmed on the ground that, on the evidence before it, the Tribunal should have found that the parties had entered into an agreement for lease. The tenant said that the Tribunal’s finding that the parties had not agreed on a material term (the commencing date for the new lease) was itself wrong in law. The tenant referred to an email sent by the tenant to the landlord in September 2014 and lease documents that had been approved by the landlord and executed by the tenant in December 2014. It said that it was necessary to read these emails together, as well as the attachments, and that, if read in this way, they had resulted in a concluded agreement for a new lease of which there was a sufficient memorandum in writing to meet the requirements of s 126 of the Instruments Act 1958.[53] At first, the Court was inclined to have the tenant develop the point in a further written submission. However, counsel for the tenant frankly conceded that the point sought to be addressed in this Court in the notice of contention had not been raised before the Tribunal.[54] In the circumstances, this Court refused to permit the matter to be raised before it.[55] Thus, it became unnecessary to decide whether the notice of contention procedure, or something analogous to it, could be used by a respondent to an application under s 148(1) of the Act.
[53]The tenant referred to Harvey v Edwards Dunlop & Co Ltd (1927) 39 CLR 302, 307.
[54]Before the Tribunal, the tenant had argued that the sufficiency of the note or memorandum was to be found in the December email. It had not been contended that relevant sufficiency depended upon a linkage between the September email and the December email.
[55]See generally Vlahos Pty Ltd v Vlahos [2017] VSCA 166 [49].
Conclusion
For these reasons, the application for leave should be granted but the appeal dismissed.
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