Satchithanantham v Zeaiter Corporate Holdings Pty Ltd (RLD)

[2009] NSWADTAP 53

Appeal Panel - Internal

CITATION:	Satchithanantham v Zeaiter Corporate Holdings Pty Ltd (RLD) [2009] NSWADTAP 53
PARTIES:	APPELLANT Hemalathasothy Ranjini Satchithanantham RESPONDENT Zeaiter Corporate Holdings Pty Ltd
FILE NUMBER:	089048; 099022
HEARING DATES:	18 June 2009
SUBMISSIONS CLOSED:	3 August 2009
DATE OF DECISION:	25 September 2009
BEFORE:	O'Connor K - DCJ (President); Higgins S - Judicial Member; Weule B - Non-Judicial Member
CATCHWORDS:	Retail Leases - Lessee's Appeal - Fact Finding - Bias - Procedural Fairness - Costs Order - No Error - Appeal Dismissed - Lessor's Costs of Appeal - Granted
DECISION UNDER APPEAL:	Zeaiter Corporate Holdings Pty Ltd v Satchithanantham [2008] NSWADT 165; Zeaiter Corporate Holdings Pty Ltd v Satchithanantham (No 2) [2009] NSWADT 70
FILE NUMBER UNDER APPEAL:	055131
DATE OF DECISION UNDER APPEAL:	04/02/2009
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994 Retail Leases Amendment Act 2005
CASES CITED:	Attorney General of New South Wales v World Best Holdings Ltd (2005) 63 NSWLR 557 Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 Ebner v Official Trustee in Bankruptcy [2000] HCA 63; 205 CLR 337 Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 Zeaiter Corporate Holdings Pty Ltd v Satchithanantham (No 2) [2009] NSWADT 70 Zeaiter Corporate Holdings Pty Ltd v Satchithanantham [2008] NSWADT 165
REPRESENTATION:	T Satchithanantham, agent D Edwards, solicitor, Thurlow Fisher
ORDERS:	1. Appeal against primary decision dismissed. 2. Appeal against the Tribunal’s costs award dismissed. 3. Respondent’s application for its costs of the appeal granted. 4. Appellant to pay the respondent’s costs of the appeal, as agreed or as assessed.

REASONS FOR DECISION

1 In November 2004, Zeaiter Corporate Holdings Pty Ltd (Zeaiter) agreed to lease to the appellant, Mrs Hemalathasothy Ranjini Satchithanantham, the First Floor of a building at 53 Station Street, Wentworthville for use as a retail shop. (We will observe in the reasons that follow the convention followed in other decisions of referring to the appellant’s surname by the short form ‘Satchi’ which is acceptable to her, and to her representative, her husband.)

2 Mrs Satchi was allowed into possession of the premises on 15 January 2004 ahead of the execution of a formal lease. A statutory lease relationship came into existence at that point for the purposes of the Retail Leases Act 1994 (the RL Act), see s 8.

3 In Zeaiter’s opinion, Mrs Satchi subsequently defaulted in her obligations under the lease. Zeaiter repossessed the premises on 12 July 2004, and found a new tenant who entered into occupation on 1 December 2004, with rent to commence 15 February 2005. In February 2005 Zeaiter sued Mrs Satchi in the Local Court for recovery of the amount it considered due to it under the lease. Those proceedings were transferred to this Tribunal, and continued as a retail tenancy claim under the RL Act.

4 Mrs Satchi made a cross application in the form of a retail tenancy claim and an unconscionable conduct claim.

5 The claim and counter claims were heard by the Retail Leases Division of the Tribunal over four hearing days in September and October 2007. Submissions closed in March 2008. The Tribunal delivered its decision in June 2008: Zeaiter Corporate Holdings Pty Ltd v Satchithanantham [2008] NSWADT 165.

6 The Tribunal upheld Zeaiter’s claim, and ordered Mrs Satchi to pay it the sum of $70,187.78, comprising (a) a principal sum of $52,330.01 and (b) interest amounting to $17,857.77. The cross claim was dismissed. The Tribunal made the usual consequential order allowing for an application as to costs and setting a timetable.

7 Mrs Satchi immediately lodged a notice of appeal (File No 089048). The Appeal Panel directed the Tribunal below to dispose of the costs application, so that the appeal could dispose of all issues.

8 On 2 April 2009 the Tribunal delivered its decision on the costs application, and granted Zeaiter’s application for costs: Zeaiter Corporate Holdings Pty Ltd v Satchithanantham (No 2) [2009] NSWADT 70 (2 April 2009).

9 Mrs Satchi filed a further notice of appeal challenging the costs order (File No 099022).

10 Zeaiter applied at the appeal hearing for its costs of the appeal, and it has lodged submissions in support (1 July 2009), and Mrs Satchi has replied (3 August 2009).

11 This decision deals with the appeal against the Tribunal’s principal decision, the costs decision and the respondent’s application for its costs of the appeal.

(1) Appeal against the Primary Decision

12 Background: It is desirable now to give a fuller account of the background to this dispute. In November 2003, Mr Satchi entered into discussions with Zeaiter’s estate agent, Mr Khoury, to lease two floors of the building at Station Street, Wentworthville – the Ground Floor and the First Floor.

13 Mr and Mrs Satchi were allowed into occupation of the First Floor on 15 January 2004 with a view to setting up their business. Rent relief for one month was given. The plan was to connect the two floors via a staircase, with goods displayed for sale on the Ground Floor and the First Floor used for storage. Ultimately, there were two formal leases executed, one for the First Floor with Mrs Satchi named as the tenant, the other for the Ground Floor with Satchi and Satchi Pty Ltd named as tenant.

14 While the relationship between the parties as it pertained to the First Floor broke down in July 2004, the family company continued in occupation of the Ground Floor until 2007, when it was evicted for default.

15 Mrs Satchi is, to a significant degree, no more than a nominal party. Her husband, Mr Satchi, conducted the negotiations. While he appears in these proceedings as her agent, there is no relationship of detachment in relation to the issues in dispute. Mr Satchi’s primary contention is that there was only ever ‘one’ lease covering both floors.

16 He contends that during the negotiations he agreed to a rent of $1100 (plus GST) per month, not $1100 (plus GST) per week for the First Floor (being $4766.67). If this contention is correct, especially as to the agreed rent for the First Floor, it is clear that Mrs Satchi was wrongly evicted in July 2004, as she was not in default.

17 The basis for this contention is found in the documentation given to Mr Satchi in the lead-up to the grant of the lease. Mr Khoury’s documentation included a note of the terms of the negotiated agreement and a disclosure statement. Both referred to the rent as $1100 per month. On or about 22 January, Mr Zeaiter, the principal of the lessor, and the solicitor for Zeaiter, discovered what they considered to be an error. The Satchis’ solicitor was advised that the formal lease would show the intended rent, being $1100 (plus GST) per week. The parties proceeded to execute a formal lease dated 3 March 2004. It was declared to take effect on 15 April 2004. It set the rent at $1100 per week plus GST, producing the monthly total of $4766.67 plus GST.

18 The Tribunal rejected Mr Satchi’s contention as to the rent, and also as to there being one contract covering the two floors. It upheld Zeaiter’s debt claim. It accepted that Zeaiter was owed the following amounts by Mrs Satchi:

(i) as at the date of the lockout, 12 July 2004, the total amount that had become payable for rent and outgoings under the Registered Lease was $34,082.37, but that the payments actually made (including those for the security deposit) amounted only to $28,016.66

(ii) $39,972.30 for lost rent and outgoings between 12 July 2004 and 15 February 2005, when rent became due under the new lease

(iii) the amount of commission ($6,292.00) paid to its estate agent for reletting the Premises

(iv) interest at the rate of 4.5% on above amount of $52,330.01, being $2,354.85; and

(v) interest for the period 15 February 2005 to the date of the decision, 10 June 2008 (a period of 3 years and 3.5 months), at 9% per annum, being $15,502.92.

19 It rejected the cross application in its entirety. The Tribunal summarised the cross application as follows:

‘23 The principal ground on which Mrs Satchi opposed Zeaiter’s claim was a contention that, by virtue of events preceding the execution of the Registered Lease, the parties had already entered into a lease, binding upon both of them, under which the monthly rent was not $4,766.67 plus GST, but only $1,100 plus GST. In virtually all other respects, according to her, the terms of the lease between her and Zeaiter were those contained in the Registered Lease.

24 For these reasons, Mr Satchi argued, in his submissions on behalf of Mrs Satchi, that Zeaiter’s repossession of the Premises on 12 July 2004 was unlawful and that the Tribunal should make a declaration to this effect and should order that Zeaiter restore possession of the Premises to Mrs Satchi.

25 In addition, Mrs Satchi maintained by way of cross claim that Zeaiter, through its director Mr Zeaiter and an estate agent (Mr Tony Khoury) whom it had employed to find a tenant for the Premises, had engaged in conduct that was misleading or deceptive, within the meaning of sections 62C – 62E of the RLA, and in conduct that was unconscionable, within the meaning of section 62B(3).

26 In his submissions, Mr Satchi argued that by virtue of this conduct Zeaiter was liable to pay damages totalling $400,000.00 (which constitutes the upper limit of the Tribunal’s jurisdiction under the RL Act), together with interest and costs.

27 The factual matters on which these contentions were based will now be outlined.’

20 The Tribunal’s costs decision contains a useful summary of its view of the elements of the cross claim. We will refer first to the Tribunal’s general assessment of the claim as it related to the amount of the rent.

‘54 … This claim was sustainable if it could be held that as soon as she had executed the Draft Lease and taken possession of the premises, a lease providing for monthly rent of $1,100.00 plus GST was created. The principal reason why it was rejected in the principal decision was the Tribunal’s finding that Mr Satchi and Mr Khoury, in the course of their negotiations during November 2003, agreed that this amount was to be the weekly rent, not the monthly rent. To a significant extent, the Tribunal based this finding on its conclusion that Mr Satchi was a distinctly unsatisfactory witness. When however it is borne in mind that Mr Khoury was also an unreliable witness and that the Agreement prepared by Mr Khoury following the negotiations was utterly unhelpful on this question, Mr Satchi’s assertion that this was the rent agreed on, at least according to his understanding of the negotiations, is not wholly without credibility.

55 Having taken into account Mr Satchi’s later conduct – notably in not instructing Ms Karthikeyan [the Satchis’ solicitor at the time] to object to the increase in rent contained in the Registered Lease – the Tribunal came to the conclusion that Mr Khoury’s testimony on this issue was to be preferred.’

21 In relation to the other claims in the cross claim, the Tribunal did not think any tenable case had been presented. In the costs decision it summarised its position as follows:

‘51 The Tribunal agrees that the description ‘unmeritorious’ can properly be applied to Mrs Satchi’s unconscionable conduct claim. This claim was bound to fail because the only matter asserted by her against Zeaiter or its agents that might conceivably have constituted unconscionable conduct within the meaning of section 62B of the RL Act was the alleged threat of eviction conveyed by Mr Khoury [said to have occurred during the pre-lease negotiations when Zeaiter and Mr Khoury saw the error in its documentation as to the required rent]. Even if, contrary to the Tribunal’s finding, Mr Khoury did suggest that a refusal by her to pay the increased rent might lead to eviction, this would not have amounted to ‘undue influence or pressure’ or ‘unfair tactics’ by a lessor’s agent, within the meaning of section 62B(3)(d), because it could not have been characterised as ‘highly unethical’ conduct, involving ‘a high level of moral obloquy’. As the Tribunal said in the principal decision at [118], conduct falling short of this level of impropriety is not ‘unconscionable’ within section 62B: see Attorney General of New South Wales v World Best Holdings Ltd (2005) 63 NSWLR 557 at 583.

52 A further major defect in Mrs Satchi’s unconscionable conduct claim was that she adduced no material evidence in support of her assertion that Zeaiter’s behaviour caused her to sustain significant economic loss, let alone that this loss exceeded $500,000.00.

53 Mrs Satchi’s claim of misleading or deceptive conduct was also wholly lacking in merit. This is for the simple reason that, as already pointed out, she sought to rely on provisions of the RL Act that were not in force when the alleged conduct occurred.’

22 It was because of the Tribunal’s view that there was some basis for the claim as it related to the amount of the agreed rent that it did not order Mrs Satchi to pay the whole of Zeaiter’s costs.

23 The Appeal. A party may appeal, as of right, in relation to any ‘question of law’. The Appeal Panel may give leave for the appeal to extend to the merits. See Retail Leases Act 1994, s 77 and the Administrative Decisions Tribunal Act 1997 (the ADT Act), ss 112, 113.

24 Mr Satchi contends that the Tribunal erred in law, and has applied for leave for the appeal to be extended to the merits. Zeaiter in reply relies on the reasons given by the Tribunal. Further it contends that the appeal is entirely unmeritorious and has applied for its costs of the appeal.

25 The notice of appeal contains numerous grounds of appeal. Many of them simply challenge factual findings. The others simply raise for re-examination the various conclusions of the Tribunal on matters of law without giving any detailed explanation of the alleged error. They are expressed in a form that would suggest that Mr Satchi had some professional assistance in their preparation. The submissions filed by Mr Satchi on 20 April 2009, on the other hand, appear to have been prepared entirely by him. The appeal was heard on 18 June 2009.

Agreed Rent

26 Grounds of appeal 3, 4, 5, 6 and 7 put in issue the adequacy of the Tribunal’s fact finding process in relation to this issue. The Tribunal’s finding as to the amount of the rent agreed is the most critical one, and was determinative of many of the other issues.

27 The agent Mr Khoury’s evidence was that his instructions were to seek a tenant for the First Floor at a rent of about $57,000 per year. This amount translates, rounded, to $1100 per week. He was contacted by Mr Satchi (Mrs Satchi had no involvement in any of the negotiations) in November 2003. Mr Khoury’s evidence was that he and Mr Satchi reached agreement for a three year lease of the premises at an annual rent of $57,200 plus GST, payable in advance by monthly instalments, with the tenant to be Mrs Satchi.

28 Mr Khoury’s evidence is consistent with the terms of the Registered Lease executed 2 March 2004. This document nominated as lessee, Mrs Satchi, and she signed it. It stipulated the rent at $57,200 plus GST, and $4,766.67 per month.

29 Mr Satchi’s evidence was that the rent agreed was to be a monthly rent of $1100 plus GST and that the named lessee was to be two companies intended to be incorporated and owned by Mrs Satchi and her son, to be called Brightstar Pty Ltd and Satchi & Satchi Australia Pty Ltd.

30 Mr Satchi’s case is founded on documents given to Mr Satchi prior to entry into occupation (15 January 2004) and prior to execution of the Registered Lease. At the completion of the negotiations on or about 28 November 2003, Mr Khoury gave Mr Satchi a one-page document setting out the basic agreement, in which the rental was stated to be ‘$1100 + GST’, with no time period specified. It nominated as the lessee ‘Brightstar Properties & Holdings Australia’ and ‘Satchi & Satchi Australia’. It dealt with other basic points of agreement (see Tribunal reasons [37]). On 15 December 2003 the solicitors for Zeaiter (Olliffe & Co) sent the Satchis’ solicitors (Karthikeyan Solicitors) a disclosure statement and unexecuted memorandum of lease. Olliffe & Co based the documents on the summary contained in Mr Khoury’s one page note of the agreement. Both the disclosure statement and the memorandum of lease specified the rent as $13,200 per annum (i.e. $1100 per month) plus GST. Both documents named Mrs Satchi as the lessee. Mrs Satchi endorsed them, and the Satchis moved into occupation of the premises on 15 January 2004.

31 At some point in the period 13 to 22 January 2004 Olliffe & Co became aware that it had made an error in treating the figure of ‘$1100 plus GST’ as referring to a monthly payment. They wrote to Karthikeyan Solicitors on 22 January 2004 advising that there was an error, and that they had been informed that the rental was meant to be based on $1100 per week, plus GST.

32 As the Tribunal outlines in its reasons, during this period negotiations were also continuing for the lease of the Ground Floor. The result was a lease for three years commencing 1 March 2004, with an annual rent of $41,600 payable monthly in advance, the nominated lessee being Satchi & Satchi Pty Ltd. It was executed on or about 4 April 2004.

33 Mr Satchi asserted that, after being informed of the Olliffe & Co letter of 22 January 2004, he challenged Mr Khoury over what he saw as an improper change to rent. He explained his first payment on account of rent (27 January 2004) which was in the amount of $4,743.33, the monthly rent as stipulated in the Olliffe & Co letter of correction, on the basis that he felt locked in, as he had expended a considerable amount on a visit to India in the December-January period in acquiring stock, he had moved into occupation and he was negotiating to lease the Ground Floor.

34 On the other hand, Mr Khoury could not recall any conversation of protest on or around 22 January 2004. Ms Karthikeyan, solicitor, testified that between 22 January 2004 and 2 February 2004 she obtained further instructions concerning the First Floor lease from Mr and Mrs Satchi, and these did not include any instruction in relation to the amount of the rent stipulated in the Olliffe & Co letter of correction. In addition, by payments made on or about 7 January 2004 and on or about 14 February 2004, Mr Satchi paid an amount by way of security deposit that equalled two months’ rent calculated by reference to the amount of $4,473.33 plus GST. Another part of Mr Satchi’s case is that the security bond amount, stated in the one page document to be ‘2 months’, was to be two times the monthly amount of $1100 plus GST.

35 There was affidavit and oral evidence from Mr Khoury, Mr Olliffe, solicitor, Mr Satchi, Mrs Satchi, and Ms Karthikeyan, solicitor.

36 As to this, the critical aspect of the case, the Tribunal decided:

‘102 Mr Khoury’s recollection of the relevant conversations with Mr Satchi was incomplete (as he freely admitted) and not particularly reliable. If he had maintained a diary or some other written note of the contents of these conversations, he might well have been able to assist the Tribunal further. The Tribunal has no reason to believe, however, that he did not try to be truthful in testifying.

103 The Tribunal has distinctly stronger grounds for doubting both Mr Satchi’s veracity and his capacity to remember accurately the relevant conversations. This is chiefly for a combination of three reasons, namely, that his account of key events was highly implausible, that there were significant inconsistencies between different parts of his testimony and that in cross-examination he appeared more than once to want to avoid answering questions that sought to expose these inconsistencies.

104 His explanation for not questioning, either directly or through Karthikeyan Solicitors, the statement in Olliffe & Co’s letter of 22 January 2004 that the quoted rent was a weekly rent, not a monthly rent, was that he was fearful that Mr Khoury might put into effect an alleged threat of eviction. But his attempt to substantiate his vulnerability to this alleged threat by claiming to have spent substantial sums on renovation led him into (a) asserting at different times that widely differing amounts (ranging from $35,000 to $50,000) had been spent on renovation within a period of only three weeks (spanning the New Year holiday) since the day when (on his account) the previous tenant vacated the Premises and (b) providing, under pressure, an entirely unsatisfactory explanation for his failure to produce any invoices or other documents evidencing this expenditure. This claim was improbable for the further reason that $35,000 was an inordinate amount to spend on renovating premises that, on his own account, were intended for storage only.

105 The Tribunal also finds it hard to believe that if this threat had been made Mr Satchi, who throughout this litigation has endeavoured vigorously to enforce what he believes to be his entitlements and those of his wife, would have failed to mention it to Ms Karthikeyan. In fact, despite his persistent assertion that in November 2003 he and Mr Khoury had agreed that the rent should be $110 [sic] per month plus GST, he did not even suggest to her that Zeaiter might be bound to accept this rent, on the ground that it had been stipulated in a Draft Lease which Zeaiter’s solicitors had prepared and Mrs Satchi had signed. In the period between Ms Kathikeyan’s [sic] receipt of the letter of 22 January 2004 from Olliffe & Co and her reply dated 2 February 2004, Mr Satchi gave her instructions on a number of matters relating to the lease. But he did not even mention to her either (a) the alleged threat by Mr Khoury or (b) any belief on his part that the rent initially agreed upon between him and Mr Khoury was $110 [sic] per month plus GST.

106 The following aspects of his subsequent conduct suggest strongly that this initially agreed rent was in fact $110 [sic] per week (plus GST): (a) his making payments, on 27 January and 14 February 2004 respectively, that would bring the amounts already paid for rent and security deposit up to the level required under the Registered Lease; and (b) his indication to Mr Grey, as recorded in the agreement dated 3 June 2004 for the sale of the business conducted in the Premises, that the rent due was as stated in the Registered Lease.

107 Finally, it is noteworthy that his allegation, during cross-examination, that he understood Mr Khoury to have indicated on Zeaiter’s behalf that the increased rent would be sufficient for both the Premises and the ground floor premises was (a) inconsistent with his allegation of a threat of eviction, (b) also not mentioned by him to Ms Karthikeyan and (c) absent from his written evidence filed before the hearing.

108 For these reasons, the Tribunal does not accept parts of Mr Satchi’s evidence and prefers the evidence of Mr Khoury to that of Mr Satchi in those circumstances where a conflict between them exists.’

37 There are many statements by the higher courts relating to the standard to be observed by the trial body in making findings of fact. The Court of Appeal recently gave a compendious account of the relevant principles in Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 (15 May 2009) per McColl JA at [58] – [66] (Ipp JA, Bryson AJA agreeing) when allowing an appeal from an ex tempore judgment of the District Court. The following summary of the relevant principles is drawn from the judgment:

(a) It is essential for a judge to expose the reasoning by which a point critical to the contest between the parties is resolved, although a judge is not obliged to spell out every detail of the process of reasoning. The extent and content of reasons will depend upon the particular case under consideration and the matters in issue.

(b) The reasons must do justice to the issues posed by the parties’ cases, sufficient to enable the parties to identify the basis of the judge’s decision and the extent to which their arguments have been understood and accepted; the judge must ‘enter into’ the issues canvassed.

(c) The test for the extent to which reasons should deal with the evidence, is one of adequacy and the test is relative. Failure to refer to some of the evidence does not necessarily indicate that the judge has failed to discharge the duty.

(d) A judge should refer to evidence which is important or critical to the proper determination of the matter. Where such evidence is not referred to by the trial judge, an appellate court may infer that the trial judge overlooked the evidence or failed to give consideration to it. Where conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to.

(e) Where there is documentary material arguably supporting a party’s case, that material must be considered in the judge’s reasons in a satisfactory way.

(f) Bald conclusionary statements should be eschewed, so that it is inappropriate for a judge to merely set out the evidence adduced by each side and then assert that having seen and heard the witnesses he or she prefers or believes the evidence of the one and not the other.

(g) Where credit issues are involved it is necessary to explain why one witness’s evidence is preferred to another’s.

(h) The reasons actually stated are to be understood as recording the steps that were in fact taken in arriving at that result. Where it is apparent from a judgment that no analysis was made of evidence competing with evidence apparently accepted and no explanation is given in the judgment for rejecting it, it is apparent that the process of fact finding miscarried. This is because, so far as the reasons reveal, no examination was made of why the evidence which was accepted was to be preferred to that of other witnesses.

38 In our view, the Tribunal in this case clearly met these standards. Between paras [28] and [98] of its reasons it set out the conflicts in the evidence on the range of issues in dispute between the parties. We have, in these reasons, summarised the material relating to the most critical matter, the amount of the agreed rent. From paras [99] to [110] it set out its key findings in relation to the issues in dispute. We have set out most of that text above. It will be seen that the Tribunal explains why it found Mr Satchi’s evidence to lack credibility. The Tribunal dealt carefully with the evidence going to the most critical issue, that of the rent agreed, and related matters that were largely consequential on that finding – the amount of the security bond, the identity of the lessee party and the status of the Registered Lease.

39 In our view these conclusions dispose of the grounds of appeal 3, 4, 5, 6 and 7.

Whether Terms of Draft Lease Were Legally Binding and Preclude Reliance on the Terms of the Registered Lease

40 Moreover, in its examination of the case put by Mr Satchi, the Tribunal went beyond the propositions put to it by Mr Satchi, and canvassed two possible legal analyses of the circumstances – whether Zeaiter had become legally bound by the terms of the original documents (Mr Khoury’s note and the contents of the pre-lease disclosure statement forwarded by Olliffe & Co) as at 15 January 2004, the date of entry into occupation, with the result that the subsequent correcting correspondence and executed lease were immaterial; and whether an estoppel might be held to have arisen, precluding Zeaiter from denying that on or about 7 January 2004, an agreement for lease was created, embodying the terms of the Draft Lease. Grounds of appeal 8, 9, 10, 11, 12 and 19 go to the Tribunal’s conclusions on these issues.

41 The Tribunal said:

‘116 If the Tribunal thought Mr Satchi’s evidence on these matters to be credible, it might be inclined to accept this line of reasoning and conclude that an estoppel arose (though it would have to consider the significance of the evidence that on a number of matters not involving the rent to be paid the parties did not reach final agreement until Mrs Satchi executed the Registered Lease on 3 March 2004). But in its opinion, any reliance on the representation as to rent contained in the Draft Lease could not be held to have been reasonable on account of its finding that a distinctly higher rent was agreed upon in the negotiations during November 2003. Furthermore, the Tribunal has found that there was no credible evidence of substantial amounts being spent on renovation of the Premises during the relevant period.

117 The Tribunal cannot discern, in the lengthy, repetitive and often obscure submissions filed on Mrs Satchi’s behalf, any other line of argument that might provide grounds for concluding that the rent lawfully due under her lease of the Premises was as stated in the Draft Lease, not the Registered Lease.’

42 In our view, the case on these issues revolved entirely around the question of whether Mr Khoury’s note and the Draft Lease prepared by Olliffe & Co reflected the agreed terms.

43 The Tribunal, in effect, accepted that the gap in Mr Khoury’s note as to the time period to which the ‘$1100 plus GST’ attached was a time period of a week not a month, and that the documents generated by Olliffe & Co filled the gap in incorrectly when they treated the amount as a monthly amount. The Draft Lease did not correspond with the true position as to the meeting of the minds (or ‘consensus’) of the contracting parties as to rent.

44 Section 8(1) provides:

‘(1) For the purposes of this Act, a retail shop lease is considered to have been entered into when a person enters into possession of the retail shop as lessee under the lease or begins to pay rent as lessee under the lease (whichever happens first).’

45 In this instance, the position, based on the Tribunal’s findings, is that the parties entered into a lease on 15 January 2004, the agreed rent being $1100 per week plus GST, with the statement made in the Draft Lease reflecting an erroneous understanding of the agreed position.

46 Similarly, in our view, in light of the Tribunal’s findings, Mr Satchi had no tenable case for claiming an estoppel.

47 In our view, the Tribunal’s reasons in relation to this matter complied with the standards for adequacy of reasons to which we referred above.

Unconscionability

48 The Tribunal rejected the unconscionable conduct claim. Appeal Ground 3 goes to its conclusion in that regard. The Tribunal said:

‘118 Equally, the Tribunal cannot discern any grounds for ruling that the conduct of Zeaiter or of any of its agents was ‘unconscionable’ within the meaning of section 62B of the RL Act. It will be apparent from the foregoing account of events that the documentation prepared by Mr Khoury was most unsatisfactory, particularly on account of his crucial failure to indicate in the Agreement that the stated rent was a weekly, not a monthly, rent. It may be argued that since the Agreement was ambiguous as to the agreed rent, Olliffe & Co should have clarified this question before sending the Draft Lease to Karthikeyan Solicitors. But it is doubtful whether the actions of these agents may be attributed to Zeaiter for the purposes of determining whether Zeaiter’s conduct was ‘unconscionable’. More importantly, even if such attribution could be made, nothing done by Mr Khoury or by Olliffe & Co remotely qualifies as unconscionable conduct. None of their actions could by any stretch of the imagination be described as involving ‘a high degree of moral obloquy’ or as ‘highly unethical’ (see Attorney General of New South Wales v World Best Holdings Ltd (2005) 63 NSWLR 557 at 583).’

49 This is a case of a simple failure of exactness in a memorandum of an agreement. The agent proceeded to send his note to the solicitor for preparation of a Draft Lease and a Disclosure Statement. Unfortunately, the failure of exactness in the memorandum was compounded by a misinterpretation which favoured the lessee.

50 The solicitor moved to correct it quickly after the error was drawn to his attention by the principal of Zeaiter, Mr Zeaiter. The Tribunal was satisfied that the in principle agreement of the parties in November had been to pay a rent calculated in line with the corrected position.

51 We agree with the Tribunal that there is nothing in this set of circumstances that might fall within the provisions of the RL Act as to unconscionable conduct. Unconscionability involves an odiousness in conduct that involves more than what occurred here – an inadvertent omission, albeit as to a significant matter, that, once identified, was promptly drawn to attention.

Deceptive Conduct Provisions

52 Ground of appeal 14 goes to this issue. The Tribunal said:

‘120 As to Mrs Satchi’s reliance, in her cross claim, on the ‘misleading or deceptive conduct’ provisions (sections 62C – 62E) of the RL Act, it is sufficient to point out that, as argued by Mr Vincent in his submissions, these provisions are not applicable to conduct occurring before 1 January 2006, the date of commencement of the Retail Leases Amendment Act 2005. This is made clear in clause 33 of Schedule 3 of the RL Act.’

53 In our view, this conclusion is unassailable. The parties were engaged with each other from the commencement of negotiations in November 2003 to the time of the lock-out in July 2004. The substantive law during that period did not include ss 62C-62E.

Validity of Repossession on 12 July 2004

54 Grounds of appeal 15, 16 and 17 go to this issue. The relevant parts of the Tribunal’s decision are:

‘91 On 5 July 2004, on Mr Zeaiter’s instructions, Mr Khoury gave to Mr Satchi two notices threatening repossession of the Premises and the ground floor premises respectively unless the arrears of rent were paid by 5 pm on 12 July 2004. The notice relating to the Premises was incorrect in being addressed to ‘Satchi & Satchi Australia’ and in referring to eviction procedures against ‘your company’. Both notices were incorrectly dated 7 September 2004.

92 At some time after 5 pm on 12 July 2004, acting on instructions from Mr Zeaiter, Mr Khoury accepted from Mr Satchi a cheque for $4,000 for rent on the ground floor premises, but changed the locks on the Premises upstairs.

93 In a letter to Ray White dated 16 July 2004, Mr Satchi said that as a result of the lockout the business conducted on the ground floor was in difficulties. He promised to pay the arrears due on the Premises, but although the rent for the ground floor premises was kept up to date, no further payments were made in respect of the Registered Lease. …

121 The Tribunal accepts Zeaiter’s evidence showing that at the date of the lockout, 12 July 2004, the total amount that had become payable for rent and outgoings under the Registered Lease was $34,082.37, but that the payments actually made (including those for the security deposit) amounted only to $28,016.66. Since the last payment made was a payment of $1,800 on or about 16 June 2004, it is apparent that the condition stated for termination of the lease under clauses 12.1 and 12.2 of Annexure B (arrears over a period of not less than 14 days) had been satisfied. Although the notices of intended eviction served by Mr Khoury were defective in more than one respect (see [91] above), their meaning was clear enough.

122 The Tribunal accordingly holds that Zeaiter’s repossession of the Premises on 12 July 2004 was valid according to the terms of the Registered Lease.’

55 It followed from the Tribunal’s findings on the agreed rent issue that the Registered Lease properly stated the terms of the relationship between the parties as to that matter, and the ancillary matters of default, notice and repossession. The Tribunal sets out elsewhere in its decision the payments made by Mr Satchi on account of rent and outgoings, and the conclusions it drew, in line with the submissions of Zeaiter, are, in our view, in accord with the evidence.

Bias

56 Ground of appeal 2 goes to this question. The presiding member (Acting Judge and Deputy President Chesterman) noted in the Registry file when consideration was being given to him being listed in this matter that his wife was related to the principal of Olliffe & Co, Mr Tim Olliffe, a material witness. The ADT Act includes a Schedule 3 (Provisions relating to Members) made pursuant to s 18 which provides at cl 14:

‘ 14 Disclosure of pecuniary and other interests

(1) If a member is, or is to be, a member of the Tribunal as constituted for the purposes of proceedings and the member has or acquires an interest (pecuniary or otherwise) that could conflict with the proper performance of the functions of the member in relation to the proceedings:

(a) the member must disclose the nature of the interest to the parties to the proceedings, and

(b) the member must not take part in the proceedings or exercise any powers in relation to the making by the Tribunal of the decision to which the proceedings relate unless all of the parties to the proceedings consent to it.

(2) If the President becomes aware that a member is, or is to be, a member of the Tribunal as constituted for the purposes of proceedings and that the member has in relation to the proceedings an interest referred to in subclause (1):

(a) if the President considers that the member should not take part, or should not continue to take part, in the proceedings, the President is to give a direction to the member accordingly, or

(b) in any other case, the President is to cause the interest of the member to be disclosed to the parties to the proceedings where the interest has not already been disclosed under subclause (1).

(3) For the purposes of this clause, the expertise or experience of a member in relation to a class of matters in relation to which the Tribunal has jurisdiction does not constitute an interest that could conflict with the proper performance of the functions of the member.

(4) A failure to comply with this clause does not affect the validity of any decision made by the Tribunal.’

57 Ground 2 refers to this provision, and to a file note dated 4 July 2007 in the Registry file. In that note Acting Judge Chesterman, Deputy President and Divisional Head, Retail Leases Division, to whom the matter had been allocated, noted that he had ‘only just noticed references to Olliffe & Co, Solicitors.’ He noted that ‘Tim Olliffe, who is mentioned in the papers, is a relative of my wife [named] (nee Olliffe)’. The note was directed to a Judicial Member responsible for handling Directions Hearings in the Retail Leases Division, Ms Higgins, before whom the matter was listed the next day at 9.15 for a short Directions Hearing. Ms Higgins’ record of that hearing includes a note that she advised the parties of the Deputy President’s connection with Mr Olliffe, and that it was that his wife was a cousin of Mr Olliffe. She noted that the Deputy President considered that he had no conflict of interest, and noted, underlined, that there was ‘no objection’ from the parties. The record shows that Mr Satchi appeared on behalf of the respondent at that hearing. The ground of appeal fails to refer to these further matters.

58 In our view, there is no basis for objection, either by reference to the ordinary principles governing disqualification for bias (Ebner v Official Trustee in Bankruptcy [2000] HCA 63; 205 CLR 337) or the particular provisions of cl 14. In any event, as observed by Mr Edwards for Zeaiter, non-compliance with cl 14 does not affect the validity of any decision made by the Tribunal.

Procedural Fairness

59 Ground of appeal 18 goes to this issue. The contention is that the Tribunal ‘erred in procedural fairness in refusing the appellant’s many issues unreasonably during the cause of case management, interlocutory hearings and substantive hearings [sic]’. The ground continues:

‘In particular, tribunal was erred [sic] in ignoring respondent’s defaults as to the orders 1, 2, 4 made by the court on 11 October 2007 unreasonably against the rules. Tribunal records confirm that respondent was in default in filing both submissions, first on 17/12/07 and the reply on 7/3/08.’

60 The orders 1, 2 and 4 involved directions at the close of the four day hearing for filing and exchange of any further submissions once the transcript was received by the parties.

61 Notably, there is no identifiable procedural unfairness allegation going to the conduct of the hearing itself. The objection points to no prejudice or unfairness occasioned to Mr or Mrs Satchi by the alleged deviations from the timetable.

62 The appeal against the substantive decision must be dismissed.

(2) Appeal against Costs Decision

63 The grounds of appeal in the notice of appeal relating to the principal decision numbered 1, 20 and 21 go to the Tribunal’s decision in this regard. In addition there are 31 paragraphs in the separate notice of appeal that specifically concerned the costs decision. Many of the points repeat points made in the first notice of appeal.

64 Zeaiter in reply relies on the reasons given by the Tribunal.

65 The full terms of the Tribunal’s costs order (see Zeaiter Corporate Holdings Pty Ltd v Satchithanantham (No 2) [2009] NSWADT 70) were:

‘1. The order made on 9 August 2006 for payment of costs of the Applicant/Cross Respondent by the Respondent/Cross Applicant is to take effect as an order for immediate payment

2. The Respondent/Cross Applicant is to pay 80% of the balance of the Applicant/Cross Respondent’s costs of these proceedings on a party-party basis, as agreed or assessed.’

66 Order 2 is the main costs order. Order 1 has the following background. The hearing of Zeaiter’s application had originally been listed for two days, 9 and 10 August 2006. Mrs Satchi applied for an adjournment to enable her to add an unconscionable conduct claim to her cross application. The Tribunal ordered that she pay Zeaiter’s costs thrown away as a result of the adjournment. They were assessed as $5,912.00 including GST. On 31 August 2006, the Tribunal ordered that they be paid by monthly instalments of $100.00. Zeaiter informed the Tribunal below that there has only been one payment.

67 The basic rule is that each party in proceedings in the Retail Leases Division bears the party’s own costs (RL Act, s 77A; ADT Act, s 88). At the time the Tribunal heard this case, a costs order was only to be made if the Tribunal was satisfied that there were ‘special circumstances’ justifying an award (s 88(1)). The Tribunal upheld Zeaiter’s submission that the unconscionable conduct claim was unmeritorious. It did not regard Mr Satchi’s claim that the rent agreed was the lower amount as wholly unmeritorious. This was because it had a clear foundation in the conduct of the real estate agent in recording the wrong amount in the pre-lease negotiations. However, the Tribunal considered that the Satchis’ case was ‘very weak’ in comparison to Zeaiter’s case (see reasons at [56]). The Tribunal was not inclined therefore to award Zeaiter the whole of the costs of proceedings.

68 The Tribunal noted that Zeaiter had made an offer of compromise on 2 August 2006 which had not been accepted. The Tribunal’s ultimate order was more favourable to Zeaiter. Had the Satchis accepted the offer, Zeaiter would have avoided the costs subsequently incurred in defending the Satchis’ claim, and prosecuting their cross claim. Because of the lack of clarity as to whether the Satchis had been given a reasonable period in which to consider the offer, the Tribunal decided not to take the offer into account as a special circumstance. The factor which moved the Tribunal to make its order was the way in which Mr Satchi conducted the proceedings. It accepted submissions by Zeaiter that Mr Satchi had conducted the proceedings in an unreasonable way. The Tribunal referred to the events that led to the vacation of the two days of hearing set down for 9 and 10 August 2006, and the substantial failure of the Satchis to comply with the order made that day, whereby Mrs Satchi agreed to meet Zeaiter’s costs thrown away.

69 As to the further conduct of the proceedings, the Tribunal strongly endorsed Zeaiter’s submissions, essentially agreeing that they had been conducted in a prolix manner. Mr Satchi engaged, it held, in irrelevant and repetitive cross examination, failed to obey directions from the Tribunal seeking to contain this conduct, disrupted the resolution of this dispute by the filing of a separate application, in the name of Mrs Satchi, seeking damages from Zeaiter on grounds to do with Zeaiter’s procedural conduct in this litigation, giving rise to a further round of decisions, all negative, at first instance, the Appeal Panel and the Supreme Court. On the basis of these matters, the Tribunal considered that a substantial award of costs in favour of Zeaiter was appropriate.

70 The determination of costs by the Tribunal is a discretionary matter and a matter of practice and procedure: see Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [55]. A failure to award costs where there is an obvious special circumstance of significance favouring an award will constitute an error of law (Cripps illustrates this point), while the reverse would, equally, give rise to error.

71 In this instance, in our view, the Tribunal was entitled, as it did, to make a costs award in light of the way the case had been conducted.

72 The appeal against the costs decision is dismissed.

(3) Costs of the Appeal

73 Zeaiter applied for its costs of the appeal on the basis that the appeal was unmeritorious. At the close of argument at the hearing held 18 June 2009, the Appeal Panel gave directions to the parties for the filing of submissions on costs and decided that it was appropriate for the matter to be determined without convening a further hearing (see ADT Act, s 76).

74 Section 88 of the ADT Act has been amended, effective 1 January 2009. The Act retains the basic principle that parties are to bear their own costs of proceeding in the Tribunal. But the exception is now cast in the language of ‘fairness’ rather than ‘special circumstances’. Section 88(1A) provides:

‘(1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following [a series of factors are set out].’

75 Zeaiter has submitted that the appellant failed to set out any errors of law in the grounds of appeal, and that both appeals were doomed to failure. The submissions refer to some of the Tribunal’s rulings under the old s 88 test, and the decision of the Court of Appeal in Cripps. In reply, Mrs Satchi’s submissions (filed 3 August 2009) repeat various criticisms of the way the Tribunal dealt with the evidence in the proceedings before it.

76 The factors that are set out in the new s 88(1A) are:

‘(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as:

(i) failing to comply with an order or direction of the Tribunal without reasonable excuse, or

(ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or

(iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or

(iv) causing an adjournment, or

(v) attempting to deceive another party or the Tribunal, or

(vi) vexatiously conducting the proceedings,

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,

(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,

(d) the nature and complexity of the proceedings,

(e) any other matter that the Tribunal considers relevant.’

77 The only factual matter that assisted Mrs Satchi in resisting the debt claim made by Zeaiter was the note of the agreed rent made by the real estate agent. This was corrected by the agent’s client and by the solicitor for that client. The instrument of lease presented for execution stated the rent as contemplated by Zeaiter. Mrs Satchi entered into the lease, no doubt in line with the instructions of Mr Satchi. The Satchis had a solicitor acting for them during this period, and no objection was raised via the solicitor. The Tribunal dealt with the question of whether the agent’s note, or the registered lease, reflected the true position. In our view, its treatment of that subject was clear and convincing. This was a commercial dealing of some scale, involving for the Satchis, once the rents for the two floors were combined, a commitment of the order of $120,000 per year. In our view, it defies logic that a lessee would lightly commit to payment of rent in an amount that exceeded what they believed to be the true rent by an amount of about $40,000 per year, execute a formal lease to that effect with a solicitor assisting, and then contend that the lessee was not bound by the lease as executed.

78 We agree with Zeaiter’s submission. In our view, this was an unmeritorious appeal. We are satisfied that it is fair in the circumstances to order the appellant to pay the respondent’s costs of the appeal. The following factors in s 88(1A), (b) (unnecessary prolongation of legal proceedings), (c) (lack of tenability of the appeal) and (d) (the lack of complexity of the underlying debt claim made by the lessor) are present in this case.