Shree Sai Charan Pty Ltd v North Indian Flavour (Broadway) Pty Ltd and Bobby Singh
[2011] NSWADT 95
•05 May 2011
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Shree Sai Charan Pty Ltd v North Indian Flavour (Broadway) Pty Ltd and Bobby Singh [2011] NSWADT 95 Hearing dates: 25 March 2010 Decision date: 05 May 2011 Jurisdiction: Retail Leases Division Before: P H Molony, Judicial Member Decision: 1. The application is dismissed for want of jurisdiction.
2. The applicant shall pay the second respondents costs fixed at $6,050.00 inclusive of GST.
Catchwords: Retail leases - retail tenancy claim - unconscionable conduct claim - jurisdiction Legislation Cited: Administrative Decisions Tribunal Act 1997
Retail Leases Act 1994Cases Cited: Attorney-General of NSW v Worldbest Holdings Ltd (2005) NSWLR 557
Lyons Road Pty Ltd v The Owners Strata Plan 38722 (RLD) [2008] NSWADTAP 28
Parallel Lines International Pty Ltd v Video-drama Pty Ltd [2007] NSWADT 84
Taylor Farms (Aust) Pty Ltd v A Calkos Pty Ltd & Ord [1999] NSWSC 186Category: Separate question Parties: Shree Sai Charan Pty Ltd - Applicant
North Indian Flavour (Broadway) Pty Ltd - First Respondent
Bobby Singh - Second RespondentRepresentation: S. Sharma, (Agent) (Applicant)
R J Young, Counsel (Second Respondent)
File Number(s): 105150 Publication restriction: Nil
REASONS FOR DECISION
Introduction
This is a retail tenancy and unconscionable conduct claim made under the Retail Leases Act 1994 by Shree Sai Charan Pty Ltd (Shree), a former tenant of shop premises at Westfield, Bondi Junction. While originally made against the lessor, Perpetual Trustee Company Limited, as first respondent, the claim was subsequently amended by withdrawing as against Perpetual Trustees, and substituting North Indian Flavour (Broadway) Pty Ltd (NIF) as first respondent. NIF is the present lessee of the premises. The second respondent is Mr Bobby Singh, whom the Applicant also claims to be a present lessee
The retail tenancy alleges that the respondents (as present lessees) have converted Shree's equipment, fixtures and fittings at premises to their own use.
The unconscionable conduct claim made against the respondents asserts that they engaged in unconscionable conduct by -
Failing to make reasonable (or any) inquiries regarding Shree's interest in the equipment, fixtures and fittings and by electing to use it in a manner inconsistent with that interest.
Failing to communicate with Shree so as to enable them to use the premises without fitting out the premises themselves.
Refusing Shree access to the premises to remove the equipment, fixtures and fittings.
The Respondents assert that the Tribunal has no jurisdiction to hear Shree's claim because there is neither a retail tenancy claim nor an unconscionable conduct claim within the meaning of the Retail Leases Act 1994 . Mr Singh also denies that he is a lessee of the premises.
The issue of whether the Tribunal has jurisdiction to hear Shree's claim was set down for preliminary hearing before me on 25 March 2011.These reasons relate to the determination of that issue.
Mr Sharma, a director of Shree, appeared as its agent at the hearing. While there was no appearance by NIF, Mr Young, who appeared for Mr Singh, indicated that he had been requested to make his submissions on jurisdiction on behalf of both respondents.
Jurisdiction - The retail tenancy claim
Section 72 of the Act provides that the Tribunal has the power to make specified orders in "proceedings for a retail tenancy claim." Retail tenancy claim is relevantly defined in s 70(a) -
retail tenancy claim means any of the following:
(a) a claim in connection with a liability or obligation with which a retail tenancy dispute is concerned, being:
(i) a claim for payment of money (whether or not stated to be by way of debt, damages, restitution or refund),
(ii) a claim for relief from payment of a specified sum of money,
(iii) a claim for the doing of specified work or the provision of specified services,
(iv) a claim for the surrender of possession of specified premises,
(v) a claim for assignment of rights under a lease or for a declaration that a lessor is not entitled to withhold consent to an assignment of the rights of a lessee,
(vi) a claim for relief against forfeiture,
(vii) a claim regarding the rectification of the lease,
(viii) a claim regarding the invalidity of a lease for inconsistency with this Act or the regulations,
(ix) a claim for a declaration of the rights, obligations and liabilities of the parties under a lease,
(x) without limiting the generality of subparagraph (i), a claim for compensation under section 10, 34, 35 or 62E,
(xi) without limiting the generality of any other subparagraph, a claim with respect to the entitlement of a party or former party under a lease to receive payment of the whole or a part of a security bond,
Sections 63 relevantly provides -
party or former party to a retail shop lease or former retail shop lease includes a person who is a guarantor or covenant or under a lease or former lease.
retail tenancy dispute means any dispute concerning the liabilities or obligations (including any obligation to pay money) of a party or former party to a retail shop lease or former lease, being liabilities or obligations which arose under the lease or former lease or which arose in connection with the use or occupation of the retail shop to which the lease or former lease relates, and (without limiting the generality of the foregoing) includes a dispute about a security bond, but does not include a dispute of the kind referred to in section 19 (1) (b) or 31 (1) (b) as to the rent payable under a retail shop lease (where the rent is to be current market rent for the shop).
For the Tribunal to have power to make orders with respect to a retail tenancy claim, it is therefore necessary for the claim to be in connection with a liability or obligation with which a retail tenancy dispute is concerned. The respondents assert that Shree's retail tenancy claim is not concerned with such a liability or obligation, but is a claim in conversion as between strangers. They submit that the only connection between the respondents and Shree is that the respondents are alleged to be the present lessees of the premises, of which Shree is the former lessee, at which the equpment and fittings are said to be located. There is no relationship arising under a lease between them.
Mr Sharma accepted the characterisation of himself and the respondents as past and present lessees of the same premises. He submitted that the Tribunal had jurisdiction to hear Shree's retail tenancy claim because Shree is a former party to a lease, and its claim concerns liabilities or obligation which "arose in connection with the use or occupation of the retail shop to which the lease or former lease relate."
Mr Young, while denying that his client is a present tenant, relied on the decision of the Appeal Panel in Lyons Road Pty Ltd v The Owners Strata Plan 38722 (RLD) [2008] NSWADTAP 28 as authority for the proposition that s 70(a) does not extend to claims made by or against a person who is not a party to a lease or former lease. There the Appeal Panel said, at [78] -
"According to our interpretation of the phrase 'retail tenancy claim' as used in section 70(a), it does not extend to claims made by or against a person who is not a 'party' or 'former party' (taking account of the extended meaning given to these terms by section 63) to a retail shop lease or former lease. It must be confined to proceedings between persons who are parties or former parties to such a lease."
The nub of the problem confronting Shree in this case is to be found in the last sentence quoted above. The claim which Shree seeks to prosecute, as a retail tenancy dispute, relies on Shree's status as a former lessee and alleges conversion, not by the former lessor, but by the lessees under a subsequent lease with the lessor, to which Shree is not a party.
The Tribunal has previously held that it has jurisdiction to hear a claim for conversion brought by a lessee against a lessor as a retail tenancy claim, being one in connection with a retail tenancy dispute concerning the liabilities or obligations of a party or former party to a retail shop lease or former shop lease: Parallel Lines International Pty Ltd v Video-drama Pty Ltd [2007] NSWADT 84. There, the substance of the allegation was that the lessor had converted the lessee's goods following a lockout. The dispute arose in connection with the use and occupation of the premises under the lease, and the provisions of the lease that were said to justify the removal of the goods allegedly converted.
This is not the case here. If, as Shree alleges, both respondents are subsequent lessees, there is no contractual or other relationship between them and Shree. That they each are alleged to have a connection with the retail shop which Shree has leased in the past, is not sufficient to make Shree's claim in conversion against them a retail tenancy claim. This is so because they are not parties or former parties to the same lease: the claim against them does not arise in connection with Shree's occupation or use of the premises under its lease. It arises from their use and occupation of the premises under a subsequent lease, to which Shree is not a party. There is no requisite relationship between the respondents and Shree.
As a result I am satisfied that the Tribunal does not have jurisdiction to determine Shree's claim in conversion against the respondents.
Is Mr Singh a lessee?
Mr Singh denies this is the case, saying that NIF is the present lessee. NIF is a company of which his wife is a director and shareholder, in which he has no shareholding or position. This is verified by an ASIC search.
Mr Singh agrees that he assisted his wife when the business was being established, but did so to her assist her, and not as an employee, shareholder or officer of NIF.
Shree acknowledged that it bore the burden of proving that Mr Singh was a present lessee of the premise. Its only evidence going to this issue is to be found at pages 173, 174 and 176 of the exhibit to Mr Sharma's affidavit. It consists of -
Email advice to Mr Sharma from Chris Hickey, Mortgage Collection Manager of Circuit, dated 2 September 2010, that -
Bobby Singh, according to my file notes tried to make contact on 21/06/10.
He was looking to strike a deal. I advised I could not talk to him about your file.
Email advice to Mr Sharma from an Acceptance Officer of Service Finance Corporation, dated 2 September 2010, that Mr Sign hade made contact with them "around the 10 th June."
A copy email to Chris Hickey, dated 12 July 2010, which advised -
This is to advise that all the equipment belonging to your firm is stored in Westfield shopping centre if they are not removed by Wednesday you have to pay the storage rent to keep them there or the shopping centre will throw them in the bin.
Thankyou
Regards
Bony Singh Uppal
(new tenant (sic) in Shop 4020)
I agree with Mr Young's submission that this evidence does not demonstrate that Mr Bobby Singh is a lessee of the shop premises, or held himself out as such.
Given the conclusion I have reached that Mr Singh is not and has not been a lessee of the premises, the want of jurisdiction in the Tribunal to determine the 'retail tenancy claim' against him is even clearer.
Jurisdiction - the unconscionable conduct claims
Section 72AA of the Act provides that the Tribunal has the power to make specified orders in "proceedings for an unconscionable conduct claim." Unconscionable conduct claim is defined by s 70 to mean a claim for relief under section 62B.
Section 71A provides that -
A lessor or lessee, or former lessor or lessee, under a retail shop lease or former retail shop lease may lodge an unconscionable conduct claim with the Tribunal for determination of the claim.
Section 62B relevantly provides -
(1) A lessor must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable.
(2) A lessee must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable.
(3) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessor has contravened subsection (1) in connection with a retail shop lease, the Tribunal may have regard to:
(a) the relative strengths of the bargaining positions of the lessor and the lessee, and
(b) whether, as a result of conduct engaged in by the lessor, the lessee was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the lessor, and
(c) whether the lessee was able to understand any documents relating to the lease, and
(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessee or a person acting on behalf of the lessee by the lessor or a person acting on behalf of the lessor in relation to the lease, and
(e) the amount for which, and the circumstances under which, the lessee could have acquired an identical or equivalent lease from a person other than the lessor, and
(f) the extent to which the lessor's conduct towards the lessee was consistent with the lessor's conduct in similar transactions between the lessor and other like lessees, and
(g) the requirements of any applicable industry code, and
(h) the requirements of any other industry code, if the lessee acted on the reasonable belief that the lessor would comply with that code, and
(i) the extent to which the lessor unreasonably failed to disclose to the lessee:
(i) any intended conduct of the lessor that might affect the interests of the lessee, and
(ii) any risks to the lessee arising from the lessor's intended conduct (being risks that the lessor should have foreseen would not be apparent to the lessee), and
(j) the extent to which the lessor was willing to negotiate the terms and conditions of any lease with the lessee, and
(k) the extent to which the lessor and the lessee acted in good faith.
(4) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessee has contravened subsection (2) in connection with a retail shop lease, the Tribunal may have regard to:
(a) the relative strengths of the bargaining positions of the lessee and the lessor, and
(b) whether, as a result of conduct engaged in by the lessee, the lessor was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the lessee, and
(c) whether the lessor was able to understand any documents relating to the lease, and
(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessor or a person acting on behalf of the lessor by the lessee or a person acting on behalf of the lessee in relation to the lease, and
(e) the amount for which, and the circumstances under which, the lessor could have granted an identical or equivalent lease to a person other than the lessee, and
(f) the extent to which the lessee's conduct towards the lessor was consistent with the lessee's conduct in similar transactions between the lessee and other like lessors, and
(g) the requirements of any applicable industry code, and
(h) the requirements of any other industry code, if the lessor acted on the reasonable belief that the lessee would comply with that code, and
(i) the extent to which the lessee unreasonably failed to disclose to the lessor:
(i) any intended conduct of the lessee that might affect the interests of the lessor, and
(ii) any risks to the lessor arising from the lessee's intended conduct (being risks that the lessee should have foreseen would not be apparent to the lessor), and
(j) the extent to which the lessee was willing to negotiate the terms and conditions of any lease with the lessor, and
(k) the extent to which the lessee and the lessor acted in good faith.
(5) A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with a retail shop lease by reason only that the first-mentioned person institutes legal proceedings in relation to that lease or refers to arbitration a dispute or claim in relation to that lease.
(6) A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with a retail shop lease by reason only that the first-mentioned person fails to renew the lease or issue a new lease.
(7) For the purpose of determining whether a lessor has contravened subsection (1) or whether a lessee has contravened subsection (2):
(a) the Tribunal must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention, and
(b) the Tribunal may have regard to circumstances existing before the commencement of this section but not to conduct engaged in before that commencement.
(8) A lessor or lessee, or former lessor or lessee, who suffers loss or damage by reason of unconscionable conduct of another person that is in contravention of this section may recover the amount of the loss or damage by lodging a claim against the other person under section 71A.
(9) If the matter of such loss or damage arises in connection with a matter the subject of proceedings in the Tribunal, the Tribunal may proceed to decide it, and in so doing may award such sum as it thinks fit.
(10) In this section:
lessee or former lessee includes a person who is a guarantor or covenantor under a lease or former lease.
Both lessee and lessor are defined in s 3 -
lessee means the person who has the right to occupy a retail shop under a retail shop lease, and includes a sublessee and a lessee's or sublessee's heirs, executors, administrators and assigns.
lessor means the person who grants or proposes to grant the right to occupy a retail shop under a retail shop lease, and includes a sublessor and a lessor's or sublessor's heirs, executors, administrators and assigns.
The words "former lessee" and "former lessor" embrace the same definitions, but apply to persons to were lessors and lessee in the past.
Shree's position is that it is a former lessee under a lease of the premises which has suffered loss and damage as a result of the unconscionable conduct of the alleged present lessees, because they have converted its fittings, fixtures and equipment left on the premises to their own use. Shree argues that their conduct, which is conduct as a lessee of premises, is, in the circumstances, unconscionable. If its allegations are proved to be true, they could be regarded as reflecting unfair conduct of the high level of moral obloquy necessary to ground an unconscionable conduct claim: Attorney-General of NSW v Worldbest Holdings Ltd (2005) NSWLR 557. Shree maintains that, as result, its claim is an unconscionable conduct claim with respect to which the Tribunal has jurisdiction.
Both respondents submit that 62B has no application in the present circumstances as there is no lease to which both Shree and themselves are parties. Further, Mr Singh submits, that s 62B has no application to him because he is not a lessee.
It is to be noted that the prohibition against unconscionable conduct by lessors and lessees in ss (1) and (2) is of unconscionable conduct "in connection with a retail shop lease," and not the use or occupation of a retail shop, The non-exclusive examples of the types of conduct the Tribunal may have regard to in ss (3) and (4) are all concerned with conduct of lessors and lessees viz a viz each other. They do not include examples of the conduct of third parties or subsequent lessees. It should be noted, however, that those examples are expressly stated not to in any way limit the conduct to which the Tribunal has regard in deciding whether there has been unconscionable conduct. The words "in connection with" are to be given a wide interpretation, but must be interpreted in the particular statutory context in which they are used: Taylor Farms (Aust) Pty Ltd v A Calkos Pty Ltd & Ord [1999] NSWSC 186 at [36] per Kirby J. Here the statutory context is the Retail Leases Act 1994 . The connection required is between the conduct complained of on the part of a lessee or lessor and "a retail shop lease."
Sub-section (8) provides an indication that unconscionable conduct claims may not be limited to claims against parties to a lease when it provides that a, "lessor or lessee, or former lessor or lessee, who suffers loss or damage by reason of unconscionable conduct of another person that is in contravention of this section may recover the amount of the loss or damage by lodging a claim against the other person." The use of the words "the other person" indicates that an unconscionable conduct claim is not confined to a claim against a party to a lease. Such a claim must be made by a lessor or lessee (or former lessor and former lessee) and must be with respect to conduct engaged in, in connection with a retail shop lease. That requirement indicates that an unconscionable conduct claim so made should arise in connection with the retail shop lease to which the applicant lessor or lessee was a party, not some other retail shop lease. If that were not the case, the words "lessee" and "lessor" would not have been used in ss (1) and (2).
Implicit in Shree's submission is that in order to bring an unconscionable conduct claim all that is necessary is that a person, who is or was a lessor or lessor, allege unconscionable conduct against a person who happens to be a lessor or lessee, and that the unconscionable conduct is said to be in connection with the latter's retail shop lease. Thus, Shree asserts unconscionable conduct by the respondents as lessees under a retail shop lease that Shree is not a party to. The fact that Shree alleges that it suffered loss and damage as a result of unconscionable conduct by the respondents as lessees under a retail shop lease of premises, of which Shree is a former but unrelated lessee, is said to be enough to found an unconscionable conduct claim.
I do not accept this proposition. The unconscionable conduct provisions in sections 62A and 62B were introduced to the Act by the Retail Leases Amendment Act 1998 . Apart from the introduction of further amendments to s 62B by the inclusion of ss (10) by th e Retail Leases Amendment Act 2005 , it has remained in the same form since. The purpose of those provisions was to prohibit unconscionable conduct in dealings between lessors and lessees and former lessees and lessors. They provided a right to a lessor or lessee, or a former lessee or lessor, to seek a remedy for such conduct. They were not, on my reading of the provisions, designed to provide a right of action as between strangers, whose connection with each other is that they were, at different points in time, lessees of the same premises. Implicit in the provisions of the section is the requirement that the loss or damage suffered by a lessor or lessee (or former lessee or lessor) by reason of unconscionable conduct, being unconscionable conduct by a lessor or lessee in connection with a retail shop lease, is that the lessor or lessee (or former lessee or lessor) be or have been a party to the retail shop lease in question.
I am reinforced in this conclusion by the fact that the Retail Leases Act 1994 is intended to regulate the relationships between lessors and lessees (in their extended definitions) of retail shop premises, and provides for the Tribunal to act as a specialist Tribunal in the determination of disputes. The interpretation urged by Shree would see the Tribunal having jurisdiction to determine disputes between total strangers, with no connection whatsoever. While Shree asserts that there is a connection in that both it and the respondents are claimed to be lessee ' s of the same retail shop - albeit at different times - the unconscionable conduct prohibited by s 62 is conduct in connection with a retail shop lease, not in connection with retail shop premises.
It follows that the Tribunal has no jurisdiction to determine Shree's claim, as it is not an unconscionable conduct claim.
Conclusion
As a consequence the application is dismissed for want of jurisdiction.
Costs
Mr Singh sought an order that the Shree pay his costs for the whole of the proceedings in which Mr Young has represented him on a direct brief basis. Mr Singh asserts that Shree never had even an arguable case against him, as he was not and never has been a lessee or the premises.
Section 88 of the ADTA provides -
(1) Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section.
(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) 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.
(2) The Tribunal may:
(a) determine by whom and to what extent costs are to be paid, and
(b) order costs to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.
(3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs.
(4) In this section, costs includes:
(a) costs of or incidental to proceedings in the Tribunal, and
(b) the costs of or incidental to the proceedings giving rise to the application, as well as the costs of or incidental to the application.
Section 77A of the Retail Leases Act 1994 provides that -
The Tribunal may award costs under section 88 of the Administrative Decisions Tribun a l Act 1997 in respect of proceedings commenced by an application made under this Part.
Relevant to the claim for costs in this case is s88(1A)(c) of the Administrative Decisions Tribunal Act 1997 . As regards Mr Singh I have determined that there was no tenable basis for the claims made against him in both fact and law. As a result, Mr Singh has been put to the not inconsiderable costs of defending proceedings brought against him that were bound to fail. It is important to note that Shree commenced the proceedings alleging that Mr Singh was a lessee of the premises, and on the basis asserted that the Tribunal had jurisdiction to hear the claim against him. While I have found that the Tribunal does not have jurisdiction, even if it did, Shree's claim against Mr Singh was bound to fail, as it was unable to prove that he is a lessee of the premises. In those circumstances I think it fair that Shree pays Mr Singh's costs of the proceedings.
Mr Young asked me to fix the costs payable. He noted his costs at $11,000 for attendance at four directions hearings, the hearing of the preliminary issues, eight hours of conferences, settling Mr Singh's affidavit, reviewing correspondence and preparing submissions. The repeated appearances at directions hearing were as a result of difficulties Shree experienced in serving NIF.
In seeking those costs Mr Young acknowledged that costs are in the discretion of the Tribunal.
The view I take is that while it was clearly necessary for Mr Singh to be represented at the directions hearings, appearance by Counsel at the earlier directions hearing was not warranted, but is a consequence of the direct brief arrangements. Similarly, I do not think that eight hours of conferences properly allowable on a party/party basis in a matter of this sort. Four hours should have been sufficient.
Taking those matters into account I propose to order that Shree pay Mr Singh's costs fixed at $6,050.00 inclusive of GST,
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Decision last updated: 05 May 2011
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