Skiwing Pty Limited v Trust Company of Australia (Trading as Stockland Property Management

[2007] HCATrans 488

[2007] HCATrans 488

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S382 of 2006

B e t w e e n -

SKIWING PTY LIMITED

Applicant

and

TRUST COMPANY OF AUSTRALIA (TRADING AS STOCKLAND PROPERTY MANAGEMENT)

Respondent

Application for special leave to appeal

GUMMOW J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 31 AUGUST 2007, AT 3.02 PM

Copyright in the High Court of Australia

MR Z. STOJANSKI:   May it please the Court, I appear for the applicant.  (instructed by the applicant)

MR R.J.H. DARKE, SC:   May it please the Court, I appear with my learned friend, MR A.C. CASSELDEN, for the respondent.  (instructed by Raj Lawyers)

GUMMOW J:   Mr Stojanski, you seek leave to appear for Skiwing Proprietary Limited?

MR STOJANSKI:   Yes, your Honour.

GUMMOW J:   Let me just ask, is there any opposition to that course?

MR DARKE:   No opposition.

GUMMOW J:   All right.  Take a minute to get your papers out.

MR STOJANSKI:   Thank you.

GUMMOW J:   Now, we have had the benefit of some written submissions on both sides.  It is a very, what shall we say, legally complex matter.  Is there anything you want to add yourself to what has already been said in writing for you?

MR STOJANSKI:   Well, yes, I try to abbreviate on some points and take the panel to a few chapters of the story.

GUMMOW J:   I think it might be best if we heard first from Mr Darke and then you can respond to anything he says.

MR STOJANSKI:   As the Court wishes.

GUMMOW J:   Yes.  Yes, Mr Darke.

MR DARKE:   May it please the Court.  Your Honours, this is not a suitable case for a grant of special leave essentially because the appeal panel granted leave to extend the review to the merits, that is, the merits of the reviewable decision, and in the course of that merits review made findings of fact and on the basis of those findings of fact concluded that there was no breach of either the covenant for quiet enjoyment or any derogation from the grant.  The appeal to the Court of Appeal was limited to a question of law.  The Court of Appeal unanimously concluded that the factual finding was open to the appeal panel.

GUMMOW J:   Factual finding that what?

MR DARKE:   That is the finding at paragraph  246 at page 99 of the application book.  Your Honours will see the finding there is that Stockland may have:

expended energy and resources on seeking to reach agreement with an icon tenant that could otherwise have been expended on trying to fill vacancies.  But a conclusion along these lines falls well short  of the Tribunal’s finding that it intentionally sustained a high vacancy rate.

It was that finding at 246 which formed the basis of the appeal panel’s consideration of question of breach which your Honours will see at page 101 of the application book.

GUMMOW J:   Is the idea that that notion of intentionally bringing about the high vacancy, that that was a necessary element in the idea of breach of covenant?

MR DARKE:   That was the way in which the tribunal at first instance dealt with it.  The finding was an intentional sustaining of a high vacancy rate.  That is in paragraph 93 of the reasons on page 21.

GUMMOW J:   Yes.

MR DARKE:   So the appeal panel characterised the evidence in a different way, as found at paragraph  246.  Then your Honours will see at the foot of page 99 of the application book they then considered the question whether it was appropriate to grant leave for the appeal to extend to the merits, and that was done pursuant to section 113 of the Administrative Decisions Tribunal Act.  Then on page 101 of the application book at 255 and then down to the foot of the page at 258 there is reference to the applicable principles concerning substantial interference and the like, and at 258:

Applying these principles, it is our conclusion that Stockland’s conduct, characterised as we have said above at [246] –

that is the finding of fact I took your Honours to –

did not sufficiently interfere with Skiwing’s business to constitute a breach of either the covenant for quiet enjoyment or the covenant not to derogate from the grant.

That was made in addition to an alternative basis which appears at paragraph 254 at the top of the page.

GUMMOW J:   On another aspect of the case, do you support this proposition that adverse effect on proprietary rights is necessary?

MR DARKE:   Your Honours, we do not characterise what the Chief Justice said as drawing a clear distinction between proprietary versus contractual rights.  If I could take your Honours to the relevant paragraph of the judgment.

GUMMOW J:   No, that is not what I am asking you.  If the Chief Justice is to be understood as saying what Mr Tonking said in his written submissions, he is understood as saying, would that have been an error of law?

MR DARKE:   If he is understood as saying that, yes.  We would respectfully submit that that is not the way it should be understood.  What we think, with respect ‑ ‑ ‑

GUMMOW J:   But what significance would there then be for the knocking out of the factual finding about intention on the part of the first administrative hearing?

MR DARKE:   The aspect of the Chief Justice’s judgment about proprietary rights is independent of the other aspect of the judgment, namely, that there is a finding of fact open to the tribunal appeal panel in the course of a merits review and no error of law or question of law was articulated as to why the finding of fact or then the application of the facts involved any question of law, and that is found at paragraph 67 of the Chief Justice’s judgment.  So what appears at paragraph 69 is entirely obiter ‑ ‑ ‑

GUMMOW J:   It is introduced by the word “Furthermore” I suppose.

MR DARKE:   It is.

HEYDON J:   It ends with the words “this matter does not need to be determined”.

MR DARKE:   Yes, “even if I had been of a different opinion” and then “this matter does not need to be determined”.

GUMMOW J:   All right.

MR DARKE:   The other special leave matter also is a matter that was not necessary for the Court of Appeal to determine.

GUMMOW J:   Namely?

MR DARKE:   That is the one in paragraph 70 and 71, the point as to whether the covenants need to be read down by reference to ‑ ‑ ‑

HEYDON J:   The Court of Appeal said it was not necessary to determine the issue.

MR DARKE:   And did not do so.

GUMMOW J:   Very well.  Yes, thank you, Mr Darke.  Yes, Mr Stojanski, do you wish to respond to what has been said?

MR STOJANSKI:   Yes, your Honour.  May I start?  I am a little bit experienced but not that much, but I can start firstly, if I may, with our draft notice of appeal points, the grounds, which are located in page 162 of the application book.

GUMMOW J:   Yes.

MR STOJANSKI:   Firstly, may I start firstly with ground 3, which says:

The Court of Appeal erred, having found [70] that the Appellant’s challenge to the decision of the Appeal Panel that the covenants for quiet enjoyment and non-derogation must be read down by reference to express covenants in the lease (and relevantly by the Disclosure Statement required under the Retail Leases Act –

Firstly, the most important thing is the appeal panel and the Court of Appeal they misunderstood some sections of the Retail Leases Act which deals with the disclosure statement.  May I start first with I think – which is in the bundle with the authorities which I will be using – starts with section 10 of the Retail Leases Act.  Section 10 says:

The giving of a lessor’s disclosure statement to a prospective lessee under a retail shop lease is considered to be the making of a representation by the lessor to the lessee as to the information in the disclosure statement.

As everybody knows, in the lessor’s disclosure statement there was nothing said about the disclosure that Stockland was ready to start to do another second redevelopment or tenancy mix.  As one goes through the decision – everybody had the meeting somewhere in mid-June and that was decided that Stockland is going to proceed to do the shops up and do up the centre for the Olympics in year 2000.  That one can be found ‑ ‑ ‑

GUMMOW J:   Can I just say this, you have only a limited time to speak to us, so it would ‑ ‑ ‑

MR STOJANSKI:   I understand it is 20 minutes.  What I wanted to say is this, Stockland did not tell Skiwing or anybody else that they are going to do another relocation notice and, as Mr Donald he put it in his judgment, he said, giving just the basic general note for things going to happen does not mean that the covenant for quiet enjoyment and also for derogation from the grant will succeed.  Also, the Court of Appeal and the appeal panel apply the decisions in the Carpet Fashion Case.  Well, as even Justice Einstein in his decision he stipulated particularly, he said that the decision was based on that particular section 52 and has nothing to do with his decision which applying the Retail Leases Act. 

If one goes to the decision of Justice Einstein, which is in the bundle, then you will see that what his Honour said that only way he found in favour of the respondent was that in the lease of the Carpet Fashion there was a covenant which said that they can – actually I might take you to it.  It is at page 45 in the bundle under the Carpet Fashion in the authorities.  I know there are no page numbers, I am sorry, but ‑ ‑ ‑

HEYDON J:   Mr Stojanski, can I just ask you to go back to page 163, which is where you started from, your draft notice of appeal?

MR STOJANSKI:   Yes, sir.

HEYDON J:   Do you see ground 3 says:

The Court of Appeal erred, having found [70] –

The Court of Appeal made no finding in paragraph 70 at all.  Ground 2 says:

The Court of Appeal erred in holding at [69] –

The Court of Appeal did not hold that in paragraph 69 and ground 1 on page 162 said that:

The Court of Appeal erred in holding (at [60]) that the error of law of the Appeal Panel –

The appeal panel did not make any error of law.  These grounds are completely misconceived.

MR STOJANSKI:   Your Honour, may I put it this way.  What has really been probably put down like, as you are aware that I did not draft the notice of appeal, what the Court of Appeal and the appeal panel when they were deciding the applications of the proprietary rights and all the breaking of the covenants, then they put the wrong test ‑ ‑ ‑

HEYDON J:   They raised a question, they did not hold anything.  They said, “this matter does not need to be determined”.  They said nothing one way or the other on the question.

MR STOJANSKI:   The way the counsel put it in his submission that is – we think that it should have been determined because – see, the retail leases legislation is not just only New South Wales all the same, all try to copy each other and everything else.

HEYDON J:   That is not what ground 2 says.

MR STOJANSKI:   But I am just saying, your Honour ‑ ‑ ‑

MR DARKE:   I should say, if I may, your Honours, paragraph 55 of the Court of Appeal judgment, page 133, is the error.  It was ‑ ‑ ‑

HEYDON J:   Ground 1.

MR DARKE:   I think is intended to be encompassed by ground 1.

HEYDON J:   Ground 1, yes.

GUMMOW J:   Yes, go on.

MR STOJANSKI:   With respect, your Honour, also, if I may say this, that when the government was drafting up this legislation they stipulated which – and again I will take you to – that comes together in – that is a speech in the second reading by the Minister.  He talks about, in page 8 in these papers, the Hansard 10,891 he says:

I fully support the provision in this bill for compensation to businesses that are disrupted during their lease by plans for redevelopment, whether or not the proposed redevelopment proceeds.  Furthermore, this bill makes it a requirement that the lessor disclose information regarding the tenancy mix.  Last year I received representations from a distressed café owner ‑ ‑ ‑

GUMMOW J:   We can read that, Mr Stojanski.

MR STOJANSKI:   Yes.

GUMMOW J:   But I think you would be much better off trying to get to the heart of the matter as it is in this Court today.

MR STOJANSKI:   Yes, I understand.

GUMMOW J:   Can you go to the application book, page 135.  There are a lot of issues that have come up in this case, we know that, but ‑ ‑ ‑

MR STOJANSKI:   There is a lot.  Breach of covenants.

GUMMOW J:   If you would just go to paragraph 60 at the bottom of 134.

MR STOJANSKI:   “Mr Tonking submitted”?

GUMMOW J:   Yes.  And then go over to 135:

Nothing in the Tribunal’s reasons suggests . . . In this context it was, in my opinion, open to the Appeal Panel to overturn the finding of fact when it determined the matter on the merits.  Accordingly, the error identified in this appeal was of no practical significance.

So the critical thing was that, as the Court of Appeal saw it, it was open to the appeal panel to do what it did and redetermine the matter on the merits and take its own view of the facts as to the intention of Mr Darke’s client in acting as it did.

MR STOJANSKI:   Your Honour, but one must understand there was a letter of 12 April which said and now we are seeking ‑ ‑ ‑

GUMMOW J:   Yes, just a minute.  We do not normally get into disputes.  It just depends on an overturning of finding of fact.

MR STOJANSKI:   Well, what I am saying is that ‑ ‑ ‑

GUMMOW J:   Otherwise we would be sitting 24 hours a day 720 days a year.

MR STOJANSKI:   I understand that.  What I am saying, that the appeal panel and the Court of Appeal, they ask themselves the wrong question, like the Dibeek Case, to determine.....I mean, let common sense prevail.  You got all this two years – if somebody goes to paragraph 60 on the first decision – in my level there was empty shops for about two years.  I mean, do not tell me it is so hard to lease it in all this time, and deliberately – and spend the money.  And common sense, why did the people were getting rent reduction and everybody bar me?  He asked him in everything else, as your Honours, you must have read the judgment. 

He find out that this is – like I said, the appeal panel, for a start, the disclosure statement does not wipe out the – and also may I answer the question about the proprietary rights, which is – remember, your Honour, you asked Mr Darke here.  That is dealt in the bundle, in the document which I got it – I apologise.  Actually, I thought I was going to be not the next one but the one after so I was getting ready.  I apologise for that.  Yes, it is by Peter Butt, it is, Conveyancing and Property, and at page 495 he said:

“if the grant or demise be made for a particular purpose, the grantor or lessor comes under an obligation not to use the land retained by him in such a way as to render the land granted or demised unfit or materially less fit for the particular purpose for which the grant or demise was made”

Technically, I was running a coffee shop, right.  If you try to have empty shops, how can my business be economic?  Also the same thing was dealt in the Aussie Traveller and also by Justice Street in his decision in Gordon v Lidcombe Developments.

GUMMOW J:   Which is a case about a coffee shop.

MR STOJANSKI:   Yes, unfortunately, everything is a coffee shop, is it not?

GUMMOW J:   We know that.

MR STOJANSKI:   Yes, another coffee shop.  Also his Honour Justice Street in 1966 he said make the place uneconomic.  As you can see with all the empty shops my turnover in paragraph 60 in the first decision went from 550 down four years later around 237,000 and why was all that?  Because there was no traffic.  It is all there in the decision.  One of the other things is in the Aussie Traveller it is talking there about the lessor’s implied obligation and once I know your Honour, as you said before, you can read it, but that is the way – he said “the lessor contracted to give exclusive occupation” – the rights.....proprietary rights of the land and he said this mean that he has got “obligation in the nature of a promise not to disturb him in that occupation”. 

So it does not mean that that has to be a physical, any which way, and also, like I said, the most important thing is.....that why would everybody else get rent reduction.....complaining, things were not doing well.  Why are they.....spend the budget?  And also the most important thing is, which is in the section 34, which is 34(3), it said a retail lease – which.....except the Carpet Fashion they have applied the wrong principles, it said:

A retail shop lease may include a provision preventing or limiting a claim for compensation under the provisions implied by this section –

and the likelihood, it said:

Note.  A disclosure statement is an appropriate means of specifically drawing –

There was nothing in the disclosure statement saying that they are going to do that.  As we all have heard, the disclosure statement said nothing is going to happen, they just finish the renovation in 2000, which everybody else complain.  Also in that disclosure statement under section 11A they said, yes, we can do that, but there was a subject to the Retail Leases Act.  What the Retail Leases Act says in 34(3), it says down there, yes, okay, I cannot sue them for compensation, but I can because that was not drawn up for me.  So, I mean, I did not see how can the appeal panel and the Court of Appeal – as I read before from the legislation that was drawn up, they are saying, this is the aim, we try to do that, and the Court of Appeal and they do not follow the aim of the Parliament.  Also another thing is the Schedule 2 of the Retail Leases Act under tenancy mix here like, as we know, is nothing.  It says the tenancy mix, it said:

This arrangement applies as at the date of this statement but may be changed from time to time, subject to agreements or representations details of which are given in this Disclosure Statement.

So nothing was given, so how can then the Court of Appeal and the appeal panel say, okay, it is in there and we can downgrade it?  You cannot do that.  Even Justice Einstein said, he said, this case, he said, was not done under the Retail Leases Act because, apart from section 7 which overrides – even if like in the Carpet Fashion – I think it is 27.12 – they said they can do whatever technically – I use the word – they can do and they can get sued for damages.  My section 20 did not say that, and also we governed by the Retail Leases Act.  So, I mean, I cannot understand how can you apply that.  I will not be long, your Honour, sorry.  Also in there on the Carpet Fashion  his Honour in I think 197, page 848 he said:

Mention has been made of the fact that the parties elected to litigate the proceedings without relying upon this Act in any way.  For this reason the effect, if any, of section 7, upon a term providing for non-derogation from grant, whether express or implied, receives

no consideration in this judgment.  This is a matter which doubtless may fall for consideration on some other occasion in other proceedings.

I think in my opinion this is the occasion which, as we can see, which will apply – I was given three location notices, nothing was done.  As far as in the end actually I think one of the things cost me about $3,900 and the appeal panel said, you cannot even get this money.  So imagine if the landlord gives you every three months gives you a notice, you take them to court, you give them the money.  I mean, what is the aim of the Act?  The final thing is, this is my opinion, we are using cases and stuff which happen been 1996, 1910, Browne v Flower and so on.  In those days there was no retail leases legislation to protect the leases.  Nowadays, one, you still cannot get up, so I mean, who knows, something wrong somewhere.  I mean, that is all I can say.  Thank you.

GUMMOW J:   Yes, we do not need to hear you again, Mr Darke.

The Court has received written and oral submissions from the applicant as to why special leave should be granted.  Given the nature of the appeal to the New South Wales Court of Appeal and the holding by that court in paragraph 60 of its reasons that it had been open to the Appeal Panel to overturn a critical finding of fact by the Tribunal, there are insufficient prospects of success in this Court to warrant a grant of special leave.  Special leave must be refused with costs.

AT 3.30 PM THE MATTER WAS CONCLUDED