TIA Belau Pty Ltd and GPT Funds Management Ltd - [2008] WASAT 165

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)

CITATION: TIA BELAU PTY LTD and GPT FUNDS MANAGEMENT LTD [2008] WASAT 165

MEMBER: MR C RAYMOND (SENIOR MEMBER)

HEARD: 12 MAY 2008

DELIVERED : 21 JULY 2008

FILE NO/S: CC 1826 of 2007
CC 1827 of 2007
CC 1828 of 2007
CC 1843 of 2007

BETWEEN: TIA BELAU PTY LTD
Applicant
AND
GPT FUNDS MANAGEMENT LTD
Respondent

Catchwords:

Commercial tenancy - Application to dismiss proceeding under s 47 and s 48 of the State Administrative Tribunal Act 2004 (WA) - Claims made for breach of contract and unconscionable conduct - Proceedings alleged to be abuse of process by reason of concurrent proceeding in District Court and because various causes of complaint untenable - Whether proceedings before Tribunal incompetent - Application for stay

Legislation:

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 6, s 14, s 15D, s 15E, s 16, s 26, s 27

State Administrative Tribunal Act 2004 (WA), s 32, s 47, s 48, s49

Result:

Application for stay refused
Application for dismissal granted
Application for costs refused

Category: B

Representation:

Counsel:

Applicant: Mr U Uludong (Acting as Agent)
Respondent: Mr A Pullinger

Solicitors:

Applicant: N/A
Respondent: N/A

Case(s) referred to in decision(s):

About Holdings Pty Ltd and Bellbird Enterprises Pty Ltd (Unreported, WASC, Library No 960068, 14 February 1996)
Bovis Lendlease and Town of Cambridge [2007] WASAT 242
Pearce & Anor and Germain [2007] WASAT 291 (S)
Vasiliou v Australia's Country Homes Pty Ltd (1999) VSC 462

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The respondent (the landlord) applied to strike out or dismiss proceedings commenced against it by the applicant (the tenant) under the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA).
The Tribunal concluded that claims advanced by the tenant on the grounds of alleged unconscionable conduct were untenable. Other claims, for determination of the rental payable under the lease and for a contribution to fitout costs could not be advanced before the Tribunal because those matters were raised in District Court of Western Australia proceedings which were commenced prior to application being made before the Tribunal.
The Tribunal concluded that an application made by the tenant for a stay of the proceeding was without merit. Once it was determined that some claims could not be advanced before the Tribunal it was readily apparent that it would be inappropriate to allow any other claims to be advanced, resulting in a multiplicity of proceedings, arising from the same controversy.
The landlord applied for the costs of the proceedings. None of the claims made by the applicant had been advanced in a satisfactory form. Nevertheless, the Tribunal concluded that it might be possible to reframe all claims in an acceptable manner, other than the claims based on unconscionable conduct. The applicant did not have the benefit of legal representation and but for the provisions of s 27(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) the proceedings before the Tribunal could have continued. Further, the claims raised remain capable of being pursued in the District Court of Western Australia proceedings. In the circumstances, the Tribunal concluded that it would not be appropriate to award costs against the tenant.
The Tribunal accordingly made orders refusing the applicant's application for a stay of the proceedings, dismissing the proceedings and dismissing the respondent's application for costs.

The proceedings before the Tribunal

There are two applications before the Tribunal. The first is an application by the respondent (landlord) to strike out or dismiss the consolidated proceedings commenced against it by the applicant (tenant) in Matters No CC 1826 of 2007, CC 1827 of 2007, CC 1828 of 2007 and CC 1843 of 2007 with Matter No CC 1826 of 2007 being the lead proceedings. The application is brought under s 47 and s 48 of the State Administrative Tribunal Act 2004 (WA) (SAT Act). Reliance is also placed on the Tribunal's power to dismiss under s 26 of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (CTRSA Act). The second application is by the tenant for a stay of the proceedings. The Tribunal had originally intended that it should determine the strike out application and thereafter direct whether the stay application be determined on the documents or be referred to oral hearing as reflected in the Tribunal's directions made on 12 June 2006. In the result, the parties have completed the filing of submission in the stay application and it is convenient to deal with both applications. An order will issue directing that the stay application be determined on the documents.
The basis upon which the tenant advances its claims against the landlord is addressed in greater detail below. In summary, the application reflects that compensation is claimed for breach of s 6(1) of the CTRSA Act by failing to provide a disclosure statement, under s 14 of the CTRSA Act for inhibiting access and failing to prevent disruption to trade and arising from various questions referred to the Tribunal for determination under s 16 of the CTRSA Act. The questions referred raise issues relating to the validity of the lease, the amount of rent payable thereunder, an alleged entitlement to $30,000 by way of a fitout contribution, breach of a covenant for quiet enjoyment, and reference is also made to conduct which is alleged to be unconscionable. The tenant's statement of issues, facts and contentions attempts to advance some, but not all, of these claims, and those advanced do not appear to be advanced on entirely the same basis.
The applications, when filed, were accompanied by voluminous documentation, including transcripts from a royal commission, council minutes from meetings of the Town of Cambridge and a decision of the Tribunal in Bovis Lendlease and Town of Cambridge [2007] WASAT 242 (Bovis Lendlease), together with a 30‑page statement of the basis of claim, an agreement for lease, and correspondence between the parties. On a reading of the documentation, the Tribunal was not able to easily identify essential elements of the basis of each claim. In relation to all claims, there was no more than a general assertion that compensation was sought. No notice, which is a prerequisite to a claim for compensation under s 14 of the CTRSA Act could be identified. No conduct relevant to the grant of relief for unconscionable conduct, being conduct which must occur after 11 May 2007, could be identified. None of the claims were expressed in a logical manner.
Section 32(6) of the SAT Act requires that the Tribunal take measures that are reasonably practicable to ensure that the parties understand the nature of the assertions made and the legal implications of those assertions. Subsection 32(7) of the SAT Act requires that the Tribunal ensures that all relevant material is disclosed to enable it to determine all of the relevant facts in issue in a proceeding. Accordingly, in a case such as this, where the tenant is represented by a layperson, the Tribunal takes considerable care to point out difficulties that might exist with an application and endeavours to provide guidance of a general nature as to the way in which a claim must be advanced and of the type of evidence which it will be necessary to put before the Tribunal. At the first directions hearing on 4 December 2007, the Tribunal took much longer than the allocated time in order to apprise Mr Uludong, who appeared on behalf of the tenant, of the difficulties with the application. In short, notwithstanding the considerable latitude that the Tribunal allows lay parties, in the interests of arriving at a determination of the substantial merits of a dispute, the application was not in a form which the Tribunal could reasonably expect the landlord to answer. The Tribunal stressed the difficulties which exist in establishing some of the claims advanced, and in particular, in proving the amount of any loss suffered, and recommended that the tenant obtain legal assistance. The tenant was directed to file and serve a statement of issues, facts and contentions by 31 January 2008.
On 11 February 2008, the tenant filed its statement of issues, facts and contentions. The form in which it has been filed suggests that the tenant wishes to amend its claim, because it appears that not all the issues raised in the original application are being pursued, there being no apparent reference to some of the original issues in the statement of issues, facts and contentions. There is no reference to questions originally raised concerning the rental payable under the lease, or for breach of the covenant for quiet enjoyment. Once more, a voluminous set of documents was filed with the statement of issues, facts and contentions, most of which appear to duplicate documents already filed. The statement of issues, facts and contentions now raises only two main issues, under which a number of discrete subissues are stated. The first issue is whether the landlord has breached the terms of the lease in respect of each of the subissues thereafter raised. The first subissue is the alleged failure to provide a disclosure statement prior to signing the lease. The second subissue is based on an allegation that the tenant was required to use builders approved by a particular trade union to complete its fitout. The third subissue is the alleged reduction in the number of available car parks and reduction of access to the leased premises. The fourth subissue refers to an alleged failure to provide a $30,000 fit‑out contribution.
The second main issue is whether the landlord engaged in unconscionable conduct in respect of each of the subissues thereafter raised. The first subissue raised alleges a failure to negotiate in good faith with the applicant in respect of access issues. The second subissue alleges an unreasonable failure to disclose intended renovations to the shopping centre. The third subissue alleges that the landlord did not act in good faith in relation to a meeting which allegedly occurred between unnamed representatives of the tenant and the landlord's solicitor on 11 September 2007. There is also some reference made to the decision of this Tribunal handed down on 17 September 2007 in Bovis Lendlease. A fourth subissue alleges that the tenant was required to incur unreasonable fitout costs. A final and fifth subissue alleges that the landlord gave more favourable treatment to another tenant.
In the discussion of most of the subissues, reference is made to the provisions of s 14 of the CTRSA Act. Included in the documentation is a document headed "Section 14 Notice to a Landlord". It is dated 11 February 2008.
At a further directions hearing on 6 March 2007, following debate with the parties as to the acceptability of the form of the application read with the statement of issues, facts and contentions, it was directed that the matter be set down for the hearing of a strike out application on 12 May 2008. The landlord was directed to file a written outline of submissions in support of the application on or before 27 March 2008. The tenant was ordered to file a replying outline of submissions on or before 27 April 2008.
The landlord duly filed its submissions together with an affidavit from Mr Benjamin John Donovan, an articled clerk employed by the landlord's solicitor, who is assisting in the conduct of the matter under supervision "of the partnership". As the application is based on the proceedings constituting an abuse of process, not simply that there is a failure to establish a legal basis of claim, it is appropriate to have regard to that affidavit and the supporting documentation. Documentation hereafter referred to is either attached to the tenant's application and statement of issues, facts and contentions or Mr Donovan's affidavit. The affidavit discloses the existence of proceedings between his parties in the District Court of Western Australia.
The tenant failed to file any submissions and failed to attend the hearing on 12 May 2008. Late in the afternoon of 12 May 2008, the Tribunal received a facsimile advising of health difficulties experienced by Mrs Uludong and requesting a stay of the proceedings. That facsimile was treated as a stay application, and the Tribunal made directions to enable it to be determined. A medical report was subsequently filed on 4 June 2008 and reflects that Mrs Uludong was then suffering from a very high risk pregnancy and that it is imperative that her stress levels are minimised pending delivery of her child due on or about 5 October 2008. Submissions filed on behalf of the tenant on 26 June 2008 stress the inability of the tenant to reliably estimate costs or interpret trade figures without input from Mrs Uludong, who is described as Mr Uludong's business partner. That is apparently raised because Mr Uludong is aware of the criticism raised that no specific amount of compensation has been claimed, and in anticipation that an opportunity is likely to be provided to remedy this deficiency.
Background
The parties entered into an agreement to lease in respect of a proposed Shop 98 at the Floreat Forum Shopping Centre, which is undated but stamped. Bound with the agreement for lease is the proposed lease, which was to be signed by both parties and to be held by the landlord, who was authorised to complete it by the insertion of the commencement date, being either the end of the fitout period (after construction of the shopping centre) or the day on which the tenant commenced trading before the fitout period had ended. A disclosure statement and tenant guide was also bound with the documentation.
A notice of termination and reentry was served on the tenant on or about 5 September 2006, thereby bringing the lease to an end. The preamble to the notice reflects that the lease commenced on 23 December 2002.
The tenant never made any application for relief against forfeiture of the lease, and it is common cause that the lease was terminated by the notice of termination and reentry.
On 12 September 2006, the landlord commenced proceedings in the District Court of Western Australia in Matter No 1764 of 2006 against the tenant, Ms M Elliott (who the Tribunal understands is now Mrs Uludong), and Mr Uludong, as guarantors of the lease, for payment of an amount of $31,541.34 in arrear rental and other monies payable under the lease. On 9 October 2006, the tenant and Mr Uludong filed a joint defence to the District Court claim. The defence alleges that the lease was varied by a subsequent agreement. The terms of that subsequent agreement are not pleaded, but it is alleged that it varied the amounts which were payable in respect of rental and other charges under the lease. In the alternative, it is alleged that the landlord was required to pay the tenant the sum of $30,000 as a contribution to the cost of fitout. It is then further pleaded that the landlord failed to provide a disclosure statement before entering into the lease as required by s 6 of the CTRSA Act, and the tenant claimed a set‑off of any loss suffered as a result of such failure.

Breach of contract claims

Section 6 of the CTRSA Act claim

The landlord contends that it met its obligation to provide a disclosure statement before entering into the lease. The tenant might be able to argue that provision of a disclosure statement at the time of entering into an agreement for lease does not comply with the statutory obligation, but this claim is advanced as constituting a breach of the lease.
In addition, notwithstanding the Tribunal's prior explanations to Mr Uludong, there is no material statement made as to the basis upon which compensation should be awarded if the tenant establishes that no disclosure notice was given.
The claim is, in the above respect, deficient.
It is noted that the tenant refers, under this topic, to s 14 of the CTRSA Act which permits compensation to be awarded for an interference with or the failure to take steps to avoid interference with access or disruption to trading. The connection, if any, between the s 6 claim and any s 14 claim under the CTRSA Act is not discernible.

Trade Union approved builders

There is nothing stated to support a claim that the landlord was in breach of the lease. Indeed, reference is made to an express term of the agreement for lease that the tenant was to ensure that its workmen (presumably engaged to complete the fitout) would comply with any agreement between the landlord's representative and any trade union.
No basis of claim is established, nor is any loss claimed.

Reduction of number of available car parks and access to premises

There are a number of discrete allegations or statements of what appeared in the Town council minutes during April 2001 and references to the Bovis Lendlease decision. How this decision establishes a breach of the lease is not clear. There is an oblique reference to s 14 of the CTRSA Act, but apart from an attempt to recite the provisions of the CTRSA Act, no specific allegations are made as to what the landlord did or did not do. No specific loss is alleged.

$30,000 fitout contribution

The facts are barely stated in two short paragraphs, but it can be inferred that it is alleged there was an obligation under the lease for the landlord to pay a contribution as alleged. One of the paragraphs refers to a $25,000 cost to obtain representation against the claim in the District Court. How that matter is connected with the obligation to pay a fitout contribution is not clear.
To the extent that there remains any reliance on a claim made under s 14 of the CTRSA Act, presumably on the basis that the legislation provides that the lease is taken to include its provisions, it is apparent from the notice to landlord referred to above, which appears in the tenant's documents, that notice was only given on or about 11 February 2008. That notice refers within its body to a "notice" provided to the landlord on 26 July 2006 in terms which indicate that some reference was then made to restricted access and car parking. No notice dated 26 July 2006 appears to be included in the tenant's documents, although, given the voluminous documentation provided and the fact that documents are not in chronological order, it is possible that it has been missed. In any event, nowhere is there any reference to the landlord being required to rectify the matters the subject of complaint, and having failed to do so within such time as is reasonably practicable as required by s 14 of the CTRSA Act. Compensation is only payable in such circumstances.
The tenants claim is now less clear than when it started. At the outset, it was apparent that the application included a claim for compensation under s 14 of the CTRSA Act. There is now no separate claim under that heading, but instead, there is simply a reference to the statutory provision, in the context of discussion of other claims.

Unconscionable conduct claim

The amendments to the CTRSA Act which provided the Tribunal with jurisdiction to deal with unconscionable conduct claims commenced operation on 11 May 2007. Section 15D of the CTRSA Act relating to unconscionable conduct of landlords expressly provides that the Tribunal may not have regard to conduct engaged in before commencement (s 15D(3)).
As the lease was terminated in September 2006, it is evident that the conduct relied on in relation to the alleged failure to negotiate in good faith with regard to access, to unreasonably fail to disclose intended renovations, and requiring the tenant to incur unreasonable fitout costs is conduct to which the Tribunal cannot have regard.

There is no conduct on which the tenant is entitled to rely as constituting unconscionable conduct while the lease was extant. Thereafter, it is stated, in support of the allegation that the landlord did not act in good faith, that a meeting occurred on 11 September 2007. It is stated that the landlord was not willing to negotiate "any of our points" and that it was said that the tenants "were wasting out [sic] time".
Section 15E of the CTRSA Act expressly provides that a person is not to be taken to engage in unconscionable conduct only because the person institutes legal proceedings in relation to the lease or refers a dispute or claim in relation to the lease to arbitration. It follows that the failure to countenance any settlement cannot constitute unconscionable conduct.
It is then further alleged that the landlord gave more favourable treatment to another tenant. It is in this context that it appears to be suggested that the Bovis Lendlease case has some relevance. That relevance is not readily appreciated from a reading of the case. Bovis Lendlease commenced the proceedings because the Town refused to grant a change of use from "Shop" (video store - as operated by the tenant) to "Office" so that the premises could be used to operate a bank. The Tribunal rejected arguments which were put forward by the Town to the effect that the change of use would impact on vehicular and pedestrian movement. In any event, it is not apparent how the landlord's dealings with a subsequent tenant in the same premises could constitute unconscionable conduct in relation to this tenant.
There is again a mere reference made to the statutory provisions of s 14 of the CTRSA Act and the comments made above apply equally.

Abuse of process

The landlord also contends that the proceedings are an abuse of process because of the concurrent proceedings in the District Court.
Section 27 of the CTRSA Act makes it plain that, where it provides for the reference of a question to the Tribunal and the question is one that a Court also has jurisdiction to determine, proceedings may be instituted to determine the question either before the Court, or by way of a reference to the Tribunal, but not both. Subsection 27(2) makes provision for a matter which is before the Court being referred to the Tribunal if either the parties agree, or the Court, of its own motion or on the application of a party, so directs.
In the District Court proceedings, the effect of an agreement varying the terms of the lease was raised as a defence to the claim for rental. On its face, that appears to relate to the claim raised in the original application concerning the rental payable. The issue raised in relation to the $30,000 contribution to the cost of fitout is common to both proceedings. These are matters which clearly constitute questions which can be referred to the Tribunal or in relation to which the District Court has jurisdiction.
A claim under s 6 of the CTRSA Act is strictly speaking not a question which is referred to the Tribunal. Questions arising under a lease may be referred to the Tribunal under s 16 of the CTRSA Act. It is not necessary for the Tribunal to now determine the true construction of s 27 of the CTRSA Act and whether the reference to "a question" must be construed as only a question capable of being referred under s 16 thereof. On the face of it, such an interpretation seems unlikely because there is no apparent logical reason as to why questions referred under s 16 of the CTRSA Act should be subject to the s 27 regime and that other disputes referrable to the Tribunal other than under s 16 of the CTRSA Act, should not be. The clear intent is to ensure that a dispute be dealt with either in the Court or in the Tribunal. In About Holdings Pty Ltd and Bellbird Enterprises Pty Ltd (Unreported, WASC, Library No 960068, 14 February 1996) the Full Bench of the Supreme Court held that once the relevant proceedings had been commenced in the Tribunal, in that case, subsequent proceedings commenced in the Supreme Court relating to the same question were a nullity.
Accordingly, to the extent that the proceedings in the Tribunal raise the same questions concerning the rental payable under the lease and the fitout claim, such claims are invalid and cannot be advanced before the Tribunal. Whatever argument there may be concerning the application of s 27 of the CTRSA Act to the claim under s 6 thereof, it is generally undesirable that there should be concurrent proceedings in the Court and the Tribunal.

Leave to amend and the stay application

It is necessary to consider whether an opportunity should be afforded to the tenant to amend all or some of its claims. Consideration must necessarily be given to how any such leave should interrelate with the stay application.
The Tribunal considers that the claim based on unconscionable conduct is misconceived and is not capable of being rectified. That claim should therefore be dismissed under s 47 of the SAT Act without any opportunity to amend it. The claims in respect of rental payable under the lease and in respect of the payment of a fitout contribution cannot be lawfully pursued before the Tribunal, those matters being included in the questions which fall to be determined in the District Court proceedings.
It may well be that all other claims are capable of being presented in an acceptable form. However, assuming, without deciding, that such claims do not offend against s 27(1) of the CTRSA Act and could therefore be the subject of separate proceedings before the Tribunal, it is nevertheless, not desirable that there should be a multiplicity of proceedings arising out of the same controversy. If the Tribunal was dealing with these other claims alone, it might be appropriate to afford the tenant an opportunity to file a substituted application and a substituted statement of issues, facts and contentions. But, there is little point in doing so, when other claims, arising from the same controversy, cannot be dealt with before the Tribunal.
In these circumstances, the stay application has little to no relevance. In any event, the Tribunal considers that the application is without merit.
The difficulty in properly formulating the claim does not appear to be due to any deficiency in factual knowledge. It is about taking the facts which are known, because presumably all of those facts are to be found within the documentation filed by the tenant, or otherwise in the tenant's possession, and formulating the claims in a coherent and logical way based on those facts. There is nothing inherently difficult in identifying either the statutory provisions or the provisions of the lease, on which reliance is placed, and alleging clearly how the landlord is alleged to have breached those provisions. The case for a stay on the basis that Mrs Uludong's input is necessary to estimate costs or interpret trade figures is simply not convincing. The tenant's accounts should speak for themselves and any interpretation of them is the task of an appropriate expert witness. It seems more likely that the case will not turn on any interpretation of accounts but on an assessment of the causative factors resulting in changes in the financial performance of the tenant. It is patently clear to the Tribunal that to advance these claims properly, the tenant needs to engage a solicitor.
The Tribunal therefore concludes that all other claims should be dismissed under s 48(1) on the basis that it would unnecessarily disadvantage the landlord to have to deal with the same controversy in two separate proceedings. Further, if it was necessary for the Tribunal to determine the issue, it would regard the proper construction of s 27 of the CTRSA Act as applying to any matter before the Court which is capable of being dealt with by the Tribunal and in that event, all claims would fall to be dismissed as being misconceived under s 47(1) of the SAT Act.

Costs

The landlord has applied for the costs of the proceedings in the strike out application. The Tribunal will regard that in the circumstances as including all costs incurred, including costs in respect of the stay application. The principles to be applied in respect of applications for costs in proceedings under the CTRSA Act are set out in the decision of Deputy President Judge Chaney in Pearce & Anor and Germain [2007] WASAT 291 (S) (Pearce). The Tribunal has qualified the principles expressed in Vasiliou v Australia's Country Homes Pty Ltd (1999) VSC 462 on which the respondent relies: see Pearce at [24]. As there indicated, the Tribunal accepts that costs might be awarded in a case where it is necessary to defend an obviously unmeritorious claim. However, where there is a genuine dispute between the parties to a lease, their respective rights are unclear and one or both seek determination of their rights in the Tribunal, the starting point remains that each party should expect to pay their own costs.
Although it was recognised in Pearce at [22] that costs may be awarded where a party has acted unreasonably, that, in the view of the Tribunal, is not the position here. The tenant has done its best and put considerable effort in attempting to state its case. It is not acting unreasonably.
There are some claims which the tenant might be able to properly advance in the future. That can be done either in the District Court proceedings by raising all additional issues by way of an amended defence and counterclaim or, by applying to the District Court for the proceedings to be transferred to this Tribunal and by commencing fresh proceedings in the Tribunal properly particularising each claim in an acceptable form. Leave to commence fresh proceedings will be required of a judicial member under s 49 of the SAT Act.

Orders

For the above reasons, the Tribunal orders as follows:
1.The application for a stay of the proceedings be determined on the documents.
2.The application for a stay of the proceedings is dismissed.
3.The proceedings are dismissed:
(a)in relation to the claims based on unconscionable conduct, for the determination of the rental payable under the lease and for contribution to fitout costs, under s 47(1) of the State Administrative Tribunal Act 2004 (WA);
(b)in relation to all other claims under s 48(1) of the State Administrative Tribunal Act 2005 (WA).
4.The respondent's application for the costs of the proceedings is dismissed.

I certify that this and the preceding [51] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR C RAYMOND, SENIOR MEMBER