Trust Company of Australia Ltd (Stockland Property Management Ltd) v Skiwing Pty Ltd trading as Café Tiffany's
[2005] NSWADTAP 9
•03/11/2005
Set aside by Appeal:
Set aside by appeal in part on 13 July 2006 and 9 October 2006: Trust Company of Australia Limited (trading as Stockland Property Management) v Skiwing Pty Ltd (trading as Cafe Tiffany's) [2006 NSWCA185 and Skiwing Pty Ltd v Trust Company of Australia ((trading as Stockland Property Management) [2006] NSWCA 276
Appeal Panel - Internal
CITATION: Trust Company of Australia Ltd (Stockland Property Management Ltd) v Skiwing Pty Ltd trading as Café Tiffany's [2005] NSWADTAP 9 PARTIES: APPELLANT
Trust Company of Australia Ltd (Stockland Property Management Ltd)
RESPONDENT
Skiwing Pty Ltd trading as Café Tiffany'sFILE NUMBER: 049023 HEARING DATES: 29-30 November 2004 SUBMISSIONS CLOSED: 11/30/2004 DATE OF DECISION:
03/11/2005DECISION UNDER APPEAL:
Skiwing Pty Ltd trading as Café Tiffany's v Trust Company of Australia Ltd (No 3) [2004] NSWADT 94BEFORE: Chesterman M - ADCJ (Deputy President); Molloy GB - Judicial Member; Weule B - Non Judicial Member CATCHWORDS: jurisdiction - statutory interpretation MATTER FOR DECISION: Principal matter FILE NUMBER UNDER APPEAL: 035036, 035053, 035066 DATE OF DECISION UNDER APPEAL: 05/20/2004 LEGISLATION CITED: Anti-Discrimination Act 1977
Commonwealth Constitution
Consumer Claims Tribunal Act 1974
Conveyancing Act 1919
Fair Trading Act 1987
Fair Trading Tribunal Act 1998
Home Building Act 1989
Racial Discrimination Act 1975 (Cth)
Suiters Fund Act 1951
Trade Practices Act 1974 (Cth)CASES CITED: Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309Alexander v Cambridge Credit Corporation (1987) 9 NSWLR 310Australian Postal Commission v Dao (No 2) (1986) 6 NSWLR 497Blackler v Felpure Pty Ltd [1999] NSWSC 958Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245Carpet Fashion Pty Ltd v Forma Holdings Pty Ltd [2003] NSWSC 460Carpet Fashion Pty Ltd v Forma Holdings Pty Ltd [2004] NSWCA 150Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64Daulia Ltd v Four Millbank Nominees Ltd [1978] 1 Ch 231Eddie Azzi Australia Pty Ltd v Citadin Pty Ltd [2001] NSWADT 79Ewins v Buderim Imports Pty Ltd (1987) 76 ALR 157Federal Commissioner of Taxation v Munro (1920) 38 CLR 153Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145Hamilton v Consumer Claims Tribunal [1999] NSWSC 847Harvey v Victims Compensation Tribunal [2001] NSWSC 604Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185Hilton Hotels (Australia) Pty Ltd v Sunrise Resources (Australia) Pty Ltd [2000] NSWSC 46Huddart Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51Kazas & Associates Pty Ltd v Multiplex (Mountain Street) Pty Ltd [2002] NSWSC 840Kinna v National Australia Bank Ltd (1988) 81 ALR 410Kollias v Monzo Pty Ltd [2003] NSWADT 275Le Mesurier v Connor (1929) 42 CLR 481Lend Lease Development Pty Ltd v Zemlicka (1985) 3 NSWLR 207Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd (1998) 153 ALR 198Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1New York Boutique Pty Ltd v Lend Lease Property Management Australia Pty Ltd [2001] NSWADT 55R v Davison (1954) 90 CLR 353R v Kirby; Ex parte Boilermakers Society of Australia (1956) 94 CLR 254R v Trade Practices Tribunal; ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361Rola Co (Australia) Pty Ltd v Commonwealth (1944) 69 CLR 185Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue [2001] HCA 49Sellars v Adelaide Petroleum NL (1994) 179 CLR 332Shell Company of Australia Ltd v Federal Commissioner of Taxation [1931] AC 275Skiwing Pty Ltd trading as Café Tiffany's v Trust Company of Australia Ltd (No 3) [2004] NSWADT 94State Rail Authority NSW v Consumer Claims Tribunal (1988) 14 NSWLR 473Taylor Farms (Australia) Pty Ltd v A Calkos Pty Ltd [1999] NSWSC 186Wilcox v Richardson (1997) 43 NSWLR 4World Best Holdings Ltd v Sarker [2004] NSWSC 935 REPRESENTATION: APPELLANT
P Briscoe, QC
M Allars, barrister
RESPONDENT
A Tonking, barristerORDERS: 1. The appeal is allowed. ; 2. Orders 1 and 2 of the Tribunal, awarding damages to the Respondent to the appeal in the relocation or disturbance of trading claim and the balcony claim respectively, are set aside.; 3. The Respondent's applications in each of these two claims is to be reconsidered by the Tribunal in so far as they rely on any alleged breach of s 52 of the Trade Practices Act 1974 (Cth).; 4. The Respondent's application in the relocation or disturbance of trading claim is to be reconsidered by the Tribunal in so far as it relies on any alleged breach of s 34 of the Retail Leases Act 1994.; 5. The following questions relating to the Tribunal's reconsideration of these aspects of Skiwing's claims are to be determined by the Appeal Panel at a hearing to be arranged by the Registry: -(a) How the Tribunal should be constituted.(b) Whether and if so under what conditions the parties should be permitted to adduce further evidence.(c) Any other procedural issues requiring determination.; 6. The costs of this appeal are reserved.
REASONS FOR DECISION
Introduction
1 This is an appeal against the decision of the Tribunal, constituted by Judicial Member Donald, in Skiwing Pty Ltd trading as Café Tiffany’s v Trust Company of Australia Ltd (No 3) [2004] NSWADT 94. The decision dealt with three separate applications brought by Skiwing Pty Ltd trading as Café Tiffany’s, the present Respondent (hereafter ‘Skiwing’). Each of them was brought against the Appellant, Trust Co of Australia Ltd (Stockland Property Management Ltd) (hereafter ‘Stockland’).
2 Skiwing was successful in two of its three applications and obtained an award of damages in respect of each of these two. The claims made by Skiwing in these applications are referred to in the Tribunal’s reasons as the ‘balcony claim’ (file 035036) and the ‘relocation or disturbance of trading claim’ (file 035066). The present appeal by Stockland alleges a number of errors of law in the reasoning on which these two awards were based.
3 In an Amended Notice of Contention filed in the appeal, Skiwing challenged the Tribunal’s dismissal of its third application. The Tribunal labelled this claim the ‘tables and chairs claim’ (file 035053).
4 The Amended Notice of Contention also included submissions disputing the Tribunal’s rejection of some grounds that it had put forward in the balcony claim. It contained a further assertion of importance: namely, that the Tribunal erred in law in rejecting Skiwing’s claims for damages in so far as they were based on alleged breaches by Stockland of s 52 of the Trade Practices Act 1974 (Cth). The ground on which the Tribunal so decided was that it lacked jurisdiction to hear a claim relying on this provision.
Factual background
5 In 1993, Skiwing entered into a lease of a café called Café Tiffany’s in the Imperial Arcade, Sydney (‘the Arcade’), from Stockland, its owner. The lease was governed by the Retail Leases Act 1994 (hereafter ‘the RL Act’). The Arcade is a large retail shopping centre. It is adjacent to the Pitt Street Shopping Mall, which the Tribunal described as ‘one of the nation’s busiest shopping precincts’.
6 Café Tiffany’s was Shop C19 on the Castlereagh Street level (one level above Pitt Street), with an area of 154 sq m. It was bounded by windows looking out over an awning to the Mall and by an interior shop front to the Arcade. Escalators linking the Castlereagh Street level with the Pitt Street level and the Mall were adjacent to the Café.
7 In 1998, Skiwing asked Stockland to consider a proposal for a balcony to be erected on the awning over the Mall. Stockland advised Mr Zoran Stojanoski, the proprietor of Skiwing, that it was agreeable to this proposal. It actually included the proposal in a development application to the Sydney City Council. It is not clear, however, whether Stockland notified Skiwing that it had taken this step.
8 Early in 1999, the Council advised Stockland that although such balconies were ‘very contentious’ in the Pitt Street Mall, ‘a case might be made for this use’ if major structural and design issues were addressed. Thereupon, Stockland removed the balcony proposal from its development application. It did not advise Skiwing that it had done this.
9 The Tribunal found, however, that despite the Council’s concerns about the proposal, its consent was by no means unlikely, provided that these concerns were addressed. The Tribunal stated (Skiwing Pty Ltd trading as Café Tiffany’s v Trust Company of Australia Ltd (No 3) [2004] NSWADT 94 at [53]): -
10 In mid-1999, following notification to all its tenants, Stockland commenced renovations in the Arcade. Although scheduled for completion in October 1999, the renovations were not finished until August 2000. Skiwing co-operated as requested, providing regular access through the Café for aspects of the work.
There is a balcony development over the Mall at 135 Pitt St. in the Glasshouse building as part of a restaurant…. There is no reason to believe that a properly designed and complying balcony could not enhance the Imperial Arcade and connect it further with the Mall. Council’s own policy specifically contemplates balconies in Pitt St. Mall.
11 Around the middle of 1999, in lieu of a rent reduction on account of this disruption, Stockland granted permission to Skiwing to place tables and chairs on the Pitt Street level, visible from the Mall. This was done between October and December 1999 and again between October 2000 and March 2001.
12 During 1999, the parties conducted negotiations for a new lease of the Café for a term of seven years. A draft lease, together with a lessor’s and a lessee’s disclosure statement, was presented to Skiwing in September 1999. After taking legal advice, it executed the lease (hereafter referred to as ‘the Lease’) in December 1999. Stockland executed it in March 2000. It commenced on 1 May 2000.
13 Neither the Lease, the disclosure statements nor any accompanying representations referred to the balcony proposal, the current renovations or any proposed future renovations by Stockland. The lessor’s disclosure statement, dated 17 September 1999, stated that ‘no significant physical changes or developments were planned for the centre’ at that time. The lessee’s disclosure statement, dated 24 September 1999, contained an acknowledgment that the lessor ‘may sometimes do things… that may have a temporary or permanent adverse effect on the Lessee’s business (such as tenancy mix changes, carrying out Centre improvements, alteration… etc)’, in which event the lessor ‘will not be required to compensate or give notice to the Lessee unless required to do so by the Lease or Retail Leases Legislation’.
14 Under the Lease, Skiwing was required to refurbish the café. It did so, apparently to the satisfaction of Stockland.
15 In August 2000, Skiwing secured a restaurant liquor licence. It chose not to incur the expense of applying for a ‘drink or dine’ licence, which allows 30% of patrons to be served liquor without food, until the balcony had been erected.
16 Also in August 2000, Stockland advised Skiwing that it was not pursuing the balcony proposal with the Council. Mr Stojanoski then suggested to Stockland’s Development Manager, Mr Corbett, that Skiwing should pursue the matter itself.
17 In a hand-written memorandum faxed on 12 January 2001 to Skiwing (‘the Corbett letter’), Mr Corbett wrote as follows:
18 Mr Stojanoski said that he understood this letter to mean that when approval was obtained he would discuss the cost of building the balcony with Stockland, and that he would meet that cost himself if Stockland did not agree to contribute.
Further to our discussions, I confirm that Stockland have no objection to you pursuing Sydney City Council to obtain approval to utilize the awning outside your shop for open air catering. The restrictions we place on you pursuing this approval are:
Please keep Centre Management informed of your progress through this development…
1) The same consultants we used for the refurbishment program are to be used…
2) All plans are to be approved by Stockland prior to submission to Council.
3) All costs are to be at your expense.
4) It may be possible to arrange a Lease structure for the new floor area incorporating the costs however this should be discussed when it is established the project is viable.
19 During 2001, Mr Stojanoski encountered considerable difficulty in trying to obtain plans for the balcony from the consultants specified in the Corbett letter. After hearing of these difficulties, Mr Corbett suggested an alternative draftsman. Mr Stojanoski then approached a further drafting firm, Victor Burysek, and also engaged a structural engineer. In October 2001, having received plans from Mr Burysek, Skiwing instructed him to commence the process of lodging them with the Council.
20 The evidence showed that as at August 2001, Stockland remained aware that Skiwing was pursuing the balcony application and remained willing to give it consideration.
21 In addition, Stockland, by a letter dated 26 October 2001, granted permission once more for Skiwing to put tables and chairs at the Pitt Street level between 3 November and 22 December 2001. Skiwing did not, however, put out any tables and chairs during this period.
22 Early in 2001, Stockland had commenced a review of the Arcade’s market position. It decided to try to attract a major or ‘icon’ tenant, with a view to establishing a new tenant mix for the youth market. Having failed by the middle of the year to attract McDonalds as an icon tenant, it reached an in-principle agreement with General Pants at some time in September or October 2001.
23 This agreement required Stockland to obtain vacant possession of seven tenanted premises, of which two were already vacant. The remaining five included Café Tiffany’s.
24 Accordingly, on 23 October 2001, Stockland served on Skiwing, along with five other tenants, the first of three ‘relocation notices’. These were documents, purportedly relying on clause 20 of the Lease and s 34A of the RL Act, requiring Skiwing to move its business to specified alternative premises. In this first notice, the alternative premises specified were two shops on the Pitt Street level, separated by a corridor, and with a floor area totalling 66 sq m.
25 Having taken legal advice, Skiwing disputed the validity of this first notice. Stockland conceded that, by virtue of a number of deficiencies, the notice was ineffective under the lease and the RL Act to compel Skiwing to relocate. It served the second notice on 30 November 2001 and the third notice (which was stated to be conditional on the second notice not being accepted) on 1 March 2002.
26 In the second notice, the alternative premises specified were two shops on the Gallery level (that is, the level above the Pitt Street level). They were again separated by a corridor and had a floor area totalling 124 sq m. The third notice specified a shop on the Gallery level with a floor area of 120 sq m. It will be recalled that the floor area of the premises leased to Skiwing was 154 sq m.
27 Having again taken legal advice, Skiwing asserted that the second and third notices were also deficient. Its grounds for so asserting are outlined below.
28 Although not conceding that either of these notices was invalid, Stockland withdrew the third notice on 27 March 2002. In so doing, it alleged that it had suffered ‘irreparable delay’ to its redevelopment timetable because Skiwing, along with other tenants, had disputed the notice. Then in a letter dated 12 April 2002 to all the tenants in the Arcade, Stockland advised that it would ‘not be proceeding with the development’.
29 In consequence of receiving the first relocation notice on 23 October 2001, Skiwing ceased to pursue its application to the Council regarding the balcony. In a letter dated 4 April 2002 to Skiwing, Stockland stated that ‘we will not consider the extension of the premises to include the construction of a balcony over the Pitt Street Mall’.
30 In the same letter, Stockland also advised that it would no longer consent to tables and chairs being put out at the Pitt Street level.
31 As from the beginning of 2001, a significant proportion of the shops in the Arcade were vacant for significant periods. At least nine shops (about 30%) of the shops on the Castlereagh Street level were unoccupied during that year. A high vacancy rate continued until the end of 2002, as was starkly demonstrated to the Tribunal by a video showing many empty shops with covered windows. The Tribunal’s judgment contains, at [69], a table listing the relevant shops within the Arcade and the periods during which they were vacant.
32 The evidence showed that as from January 2001 Skiwing suffered a significant downturn in trade. In its judgment at [149], the Tribunal described this downturn as ‘greater than any downturn due to generally prevailing factors’.
33 The evidence (some of it confidential) showed also that on account of the high vacancy rates Stockland had granted rent concessions for significant periods during 2001-2002 to a number of Arcade tenants, on both the Castlereagh and Pitt Street levels. But it denied a request for rent concessions made on these grounds by Skiwing in a letter to it dated 12 June 2002.
The relief claimed by Skiwing
34 In the balcony claim, Skiwing sought damages for the loss of a commercial opportunity to derive business profits through extending its business to the proposed balcony. The claim included also the amount of the expenses that Skiwing incurred in pursuing its application to the Council for approval of the balcony. The Tribunal upheld this claim.
35 In the relocation or disturbance of trading claim, Skiwing sought damages for impairment of the value of its business and for loss of profits, resulting in each case from (a) the diversion of its management effort between October 2001 and March 2002 into contesting the validity of the three relocation notices and (b) Stockland’s adoption of a policy of maintaining a high vacancy rate in the Arcade between January 2001 and April 2002, in furtherance of its plans to find a new icon tenant and use this tenant to attract a new tenancy mix. The claim included also the amount of the legal expenses that Skiwing incurred in opposing the relocation notices. The Tribunal upheld this claim.
36 In the tables and chairs claim, Skiwing sought an order under s 72(1)(c) of the RL Act that Stockland should permit the placement of tables and chairs or an award of damages to compensate it for loss of revenue. The Tribunal rejected this claim.
37 Before considering each of these three claims in turn, we will address the question, raised by Skiwing in its Amended Notice of Contention, whether the Tribunal was correct in holding that it lacked jurisdiction to determine Skiwing’s contention that Stockland had engaged in breaches of s 52 of the Trade Practices Act 1974 (Cth).
The Tribunal’s jurisdiction under s 52 of the Trade Practices Act 1974 (Cth)
38 In its judgment at [5 – 19], the Tribunal set out its reasons for having rejected, at the commencement of the hearing, a contention by Skiwing that it possessed jurisdiction to award damages for a breach of s 52 of the Trade Practices Act 1974 (Cth) (hereafter ‘the TP Act’). This section, which falls within Division 1 of Part V of the TP Act, provides in subsection (1) that
39 Section 86(2) of the TP Act states: -
A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
40 At [15], the Tribunal, citing State Rail Authority NSW v Consumer Claims Tribunal (1988) 14 NSWLR 473 and what it described as ‘the long line of cases applying that case to similar tribunals’, ruled that, ‘as constituted for purposes of the Retail Leases Act jurisdiction’, it was ‘a court’. But it concluded that for other reasons 86(2) of the TP Act did not invest it with jurisdiction under s 52.
The several courts of the States are invested with federal jurisdiction within the limits of their several jurisdictions, whether those limits are as to locality, subject-matter or otherwise, … with respect to any matter arising under …Division 1, 1A or 1AA of Part V in respect of which a civil proceeding is instituted by a person other than the Minister or the Commission.
41 It set out these reasons as follows (at [15]): -
42 Earlier in its judgment, at [6], it referred to two decisions of the Tribunal arriving at a similar conclusion. These were (a) Kollias v Monzo Pty Ltd [2003] NSWADT 275, in which the Tribunal held that it lacked jurisdiction to entertain any claim for relief in so far as it was based on a provision of the TP Act, and (b) New York Boutique Pty Ltd v Lend Lease Property Management Australia Pty Ltd [2001] NSWADT 55, in which it held that unconscionability claims could only be brought to it under Part 7A of the RL Act (which at that time had not been proclaimed) and not under s 51AC of the TP Act.
… I consider it is a court for retail leases claims with only a limited and defined jurisdiction that does not at present include a general statutory jurisdiction in respect of misleading and deceptive conduct arising under the Trade Practices Act . The Retail Leases Act contains its own regime relating to misrepresentations under ss.10, 11, the Disclosure Statement system and other provisions. It contains in Part 7A its own specific enactment of the unconscionability regime also found in the federal Trade Practices Act but the NSW Parliament has not included the general misleading and deceptive claims causes of action from the same Act. Its jurisdiction under s.17 of the ADT Act contemplates express conferral of authority directly on the Tribunal by other enactments rather than general investiture of the kind in s. 86.
43 In this appeal, we have had the benefit of fully developed submissions on this issue from counsel on both sides. As far as we are aware, this is the first time that the matter has been argued before an Appeal Panel of the Tribunal. We shall set out at some length the arguments presented to us, along with some further considerations arising from our own researches.
Skiwing’s arguments regarding jurisdiction
44 The key elements in the argument advanced by Mr Tonking, counsel for Skiwing, can be summarised as follows (with some elaboration of the authorities on which he relied).
45 Relevant provisions of the Trade Practices Act. Section 86(2) confers jurisdiction on ‘the several courts of the States’ with respect to any matter arising under Division 1 of Part V of the TP Act (in which s 52 is to be found), in cases where a civil proceeding is instituted by a person other than the Minister or the Commission.
46 In order to take account of the fact that the statutes governing numerous State ‘courts’ confine the ambit of their jurisdiction in a number of different ways, s 86(2) of the TP Act provides that this federal jurisdiction is conferred ‘within the limits of their several jurisdictions, whether those limits are as to locality, subject-matter or otherwise’.
47 A further instance of recognition of the limits of the jurisdiction of State ‘courts’ appears in s 86(3). This provides: -
48 Under s 82 of the TP Act (which falls within Part VI), damages may be recovered for loss or damage resulting from the contravention of any provision of Part V. Section 75B(2)(a), which is also within Part VI, makes it clear that the ‘courts’ which may award such damage are those ‘courts’ on which jurisdiction has been conferred by s 86(2). It does so by stating that
Nothing in subsection (2) shall be taken to enable an inferior court of a State or Territory to grant a remedy other than a remedy of a kind that the court is able to grant under the law of that State or Territory.
49 Section 86A(1) of the TP Act provides that where in civil proceedings in the Federal Court a matter has arisen for determination under (inter alia) Division 1 of Part V, the Federal Court may transfer this matter, along with any other matter for determination in the proceedings, to a ‘court’ of a State or Territory. Under s 86A(2), however, it must not order such a transfer unless (i) the ‘court’ to which the transfer is made has the power to grant the remedies sought in the Federal Court and (ii) it is in the interests of justice that the transfer is made.
(2) In this Part, unless the contrary intention appears:
(a) a reference to the Court in relation to a matter is a reference to any court having jurisdiction in the matter;…
50 Two decisions of the Federal Court, Ewins v Buderim Imports Pty Ltd (1987) 76 ALR 157 and Kinna v National Australia Bank Ltd (1988) 81 ALR 410, provide guidance on the interpretation of s 86(3) and s 86A(2). They have established that, so long as a State ‘court’ to which the Federal Court is contemplating the transfer of a matter under Part V has the power under the law of the relevant State to grant remedies of the kind sought in the Federal Court, the transfer cannot be resisted on the ground that the particular remedies that are sought arise under provisions of the TP Act itself, which is a law of the Commonwealth.
51 It follows that a State court or tribunal may make an award of damages under s 82 of the TP Act for a contravention of s 52 so long as three conditions are satisfied. These are
52 Skiwing’s submission was that, with regard to this Tribunal’s exercise of its jurisdiction under the RL Act, each of these three conditions is satisfied. Its arguments to this effect will now be outlined.
(a) that it has power, under State law, to grant the remedy of damages,
(b) that it is in fact included within the phrase ‘the several courts of the States’ in s 86(2) and
(c) that such an award lies ‘within the limits of’ its jurisdiction as to ‘location, subject matter or otherwise’.
53 Power to award damages. In the exercise of this jurisdiction in relation to a retail tenancy claim (such as the claim in these proceedings), the types of orders that the Tribunal may make include ‘an order that a party to the proceedings pay money to a person specified in the order, whether by way of debt, damages or restitution…’ (s 72(1)(a)). Accordingly, an award of damages is a remedy ‘of the kind’ that the Tribunal may grant under State law. This is the case even though the term ‘damages’ does not appear in the definition of a ‘retail tenancy claim’ in s 70(a). Instead the reference, in sub-paragraph (i), is to claims for ‘the payment of a specified sum of money’.
54 The Tribunal’s status as a ‘court’. In each of three cases decided in New South Wales, a tribunal whose functions and procedures were similar, in relevant respects, to those of this Tribunal in the exercise of its retail leases jurisdiction was held to be a ‘court’.
55 First, in State Rail Authority NSW v Consumer Claims Tribunal (1988) 14 NSWLR 473, the Court of Appeal held that the Consumer Claims Tribunal (‘the CCT’) was a ‘court’ and accordingly could hear and determine a ‘consumer claim’ brought against the State Rail Authority. By virtue of a number of provisions in the legislation governing the Authority, the Court was satisfied that it could sue and be sued in ‘the ordinary courts of the land’. Hope JA, with whom Samuels and Clarke JJA agreed, held that the CCT fell within this category. It exercised judicial power and possessed ‘a jurisdiction which can, within its prescribed limits, be regarded as a jurisdiction of a court to resolve issues arising under contracts for the supply of goods or services’ ((1988) 14 NSWLR 473 at 479).
56 In so deciding, Hope JA took account of a number of factors, including the following:
57 Hope JA referred also to a number of countervailing factors. These were that
(a) provisions in the CCT’s governing legislation (the Consumer Claims Tribunal Act 1974, ss 17 and 20) which conferred jurisdiction upon it to hear and determine any ‘consumer claim’ referred to it and stated that, with limited exceptions, its decisions should be final and binding upon the parties and not subject to appeal;
(b) the fact that any ‘consumer claim’, as defined in s 4(1) of this Act, necessarily arose out of a contract for the provisions of goods and/or services; and
(c) the obligations imposed on the CCT to resolve consumer claims in accordance with the general law and on the basis of the evidence put before it, and to keep a record of the issues in dispute and its decision on those issues.
58 At 478, Hope JA indicated that the test to be applied was that contained in the judgment of Kitto J in R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 374-375. Omitting the final sentence, the passage that he quoted from this judgment is as follows: -
He held however that despite these factors the CCT did not in any sense dispense ‘palm tree justice’. Its discretion under s 23(2) was not different in kind from the discretion often exercised by ‘ordinary’ courts in deciding what alternative forms of available relief should be granted.
(i) the CCT was not bound by the rules of evidence;
(ii) it could inform itself in such manner as it thought fit;
(iii) its procedures were informal in a number of respects;
(iv) it could not enforce its own orders, though its orders were enforceable, as claims for money, through the Court of Petty Sessions (Local Court); and
(v) it was directed by s 23(2) of the Act to make orders that were ‘fair and equitable’ between the parties (save where it dismissed a claim or ordered that a party be relieved from an obligation to pay money).
59 The second case in this line of authority was Harvey v Victims Compensation Tribunal [2001] NSWSC 604. Here Dowd J cited the State Rail Authority case in ruling at [19], without detailed discussion, that the Victims Compensation Tribunal was ‘an Inferior Court for the purposes of [the Supreme Court’s] consideration, and for the application of the principles of judicial review’.
Thus a judicial power involves, as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those person or classes of persons. In other words, the process to be followed must generally be an inquiry concerning the law as it is and the facts as they are, followed by an application of the law as determined to the facts as determined; and the end to be reached must be an act which, so long as it stands, entitles and obliges the person between whom it intervenes, to observance of the rights and obligations that the application of law to facts has shown to exist.
60 Thirdly, in Woodcrest Homes Pty Ltd v Fair Trading Tribunal [2002] NSWSC 552 at [15 – 16], Bell J held as follows in relation to the Fair Trading Tribunal: -
61 In Skiwing’s submission, there is no relevant difference between the jurisdictions of the three tribunals considered in these cases and the jurisdiction of this Tribunal, at least so far as retail leases are concerned. The Tribunal’s jurisdiction over such cases, which forms part of its jurisdiction to make ‘original decisions’, is conferred by Parts 7A and 8 of the RL Act, in the manner contemplated by s 37 of the ADT Act.
15 The Tribunal is given jurisdiction to hear and determine building claims pursuant to s 89B of the Home Building Act 1989. Section 89C(1)(a) of that Act provides that the Tribunal may make an order:
16 The Tribunal has been vested with the power to determine disputes between citizens settling for the future the existence of rights and obligations. It approaches the determination of claims before it by ascertaining the law and applying it to the facts as it finds them to be. Its determinations are immune from traditional forms of review pursuant to s 60 of the [ Fair Trading Tribunal Act 1998]. These factors indicate that the Tribunal is exercising judicial power and is properly characterised as a court: see R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Limited (1970) 123 CLR 361 at 374-375 per Kitto J: see also State Rail Authority v Consumer Claims Tribunal & Ors (1988) 14 NSWLR 473 at 478 per Hope JA (with whom Samuels and Clarke JJA agreed) finding that the Consumer Claims Tribunal is a court exercising judicial power.
“That one party to the proceedings pay money to another party or to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by any specified person.”
62 It might be thought that since the Tribunal, in its jurisdiction to review ‘reviewable decisions’ (conferred pursuant to s 38 of the ADT Act), exercises non-judicial power, it cannot be a ‘court’ within the meaning of a provision of a Commonwealth statute such as s 86(2) of the TP Act. This proposition could be thought to follow from fundamental principles as to separation of powers embodied in Chapter III of the Australian Constitution.
63 There is however clear High Court authority to the effect that a ‘court of a State’ in which federal jurisdiction has been vested pursuant to s 77(iii) of the Constitution may exercise non-judicial power, side by side with the judicial power by virtue of which it has the status of ‘a court of a State’. The strict principle requiring that a court created by Commonwealth legislation under s 71 cannot exercise non-judicial power (see eg R v Kirby; Ex parte Boilermakers Society of Australia (1956) 94 CLR 254) does not apply to State courts in which federal jurisdiction is vested. Instead, as laid down in Le Mesurier v Connor (1929) 42 CLR 481, the Commonwealth, in so vesting jurisdiction, must ‘take the State court as it finds it’.
64 Accordingly, in Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at 27, in the course of considering some of the implications of the vesting of federal jurisdiction in the Supreme Court of Victoria, Gleeson CJ said simply: ‘State courts may exercise non-judicial power’. A similar statement appears in the judgment of Gaudron, Gummow and Hayne JJ at 39.
65 It follows from the above reasoning that this Tribunal, at least in its exercise of its jurisdiction to make ‘original decisions’ conferred by the RL Act, is one of ‘the several courts of the States’ within the meaning of s 86(2) of the TP Act.
66 The limits of the Tribunal’s jurisdiction under the RL Act. The starting-point of Skiwing’s submissions under this heading was the definition of a ‘retail tenancy claim’ in s 70 of the RL Act. This definition includes, in paragraph (a), ‘any claim in connection with a liability or obligation with which a retail tenancy dispute is concerned’, so long as the claim falls within one of ten ensuing sub-paragraphs. In s 63, ‘retail tenancy dispute’ is defined widely as meaning
67 Under s 11(2) of the ADT Act, the Tribunal has ‘such functions as are conferred or imposed on it under this or any other Act or law’. Even if the term ‘Act’ is confined to Acts of the Parliament of New South Wales, the term ‘law’ is wide enough to include a Commonwealth Act, such as the TP Act. Indeed, since rules of the common law are not ‘conferred or imposed on’ a court or tribunal, this is the only likely meaning of ‘law’ in this subsection. Accordingly, just as the Tribunal inevitably applies rules of the common law in exercising its jurisdiction under the RL Act, it must also, in Skiwing’s submission, apply any relevant Commonwealth legislation.
… 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.
68 Furthermore, in the exercise of any jurisdiction to make original decisions conferred on the Tribunal by ‘an enactment’, it acts, as is stated in s 37 of the ADT Act, as the ‘primary decision-maker’. In the particular case of jurisdiction under the RL Act, its status as the preferred decision-maker is confirmed by provisions of the RL Act (ss 75 and 76) providing for the transfer of proceedings to it from any court in which they have been commenced. In determining whether such a transfer should be made, the court is indeed required by s 76(2) to ‘have regard to the general principle that retail tenancy disputes should be dealt with by the Tribunal rather than by a court’.
69 The upshot of all these considerations is that ‘the limits of’ the Tribunal’s jurisdiction under the RL Act with regard to ‘subject matter’ – to quote again the terminology of s 86(2) of the TP Act – are not defined by the RL Act and the ADT Act in such a way as to exclude the vesting of jurisdiction with respect to any matter arising under s 52 of the TP Act (or indeed under any other provision of the TP Act mentioned in s 86(2)). In fact, both the wording of the relevant provisions of the RL Act and the ADT Act and the policy underlying these provisions indicate the contrary. The Tribunal, as ‘primary decision-maker’ for claims arising in connection with a ‘retail tenancy dispute’, is obliged to apply all relevant ‘laws’, including any statutory provisions enacted by the Commonwealth that are applicable in their terms to the claim.
70 It is relevant here that by virtue of s 109 of the Constitution, Commonwealth legislation overrides that of a State, to the extent of any inconsistency. Provided that none of the conditions set out in s 86 itself prevents the vesting of jurisdiction under the TP Act on a ‘court of a State’, the provisions of the State’s own legislation cannot prevent this occurring.
71 A different conclusion obtains so far as s 42 of the Fair Trading Act 1987 is concerned. This is the provision in New South Wales legislation that applies the terminology of s 52 of the TP Act to situations that for constitutional reasons cannot be covered by s 52. In Taylor Farms (Australia) Pty Ltd v A Calkos Pty Ltd [1999] NSWSC 186, the Supreme Court held that the Commercial Tribunal, which was the predecessor to this Tribunal in determining claims under the RL Act, lacked jurisdiction to hear claims for damages under s 42.
72 A key element in this decision was, however, that while statutory provisions existed expressly conferring such jurisdiction upon the District Court and the Local Court, no such provision conferred it on the Commercial Tribunal. The absence of an express provision to this effect was of major significance in the reasoning adopted by the Court.
73 This legislative approach to the matter in New South Wales is in sharp contrast with the broad terminology of s 86(2) of the TP Act, vesting jurisdiction under the relevant provisions (including s 52) of the TP Act on ‘the several courts’ of all the States.
74 The only relevant limitations on the Tribunal’s jurisdiction to make an award of damages under the TP Act in a retail leases matter are
75 Subject only to this limitation, the Tribunal, in Skiwing’s submission, has jurisdiction in an appropriately framed case under the RL Act to award damages under s 82 of the TP Act for a breach of s 52 of this Act, despite its earlier decisions to the contrary.
In two cases noted above, Ewins v Buderim Imports Pty Ltd (1987) 76 ALR 157 and Kinna v National Australia Bank Ltd (1988) 81 ALR 410, it was held that the ‘limits’ on jurisdiction contemplated in s 86(2) of the TP Act include a limit of this nature. The upper limit on any award of damages by the Tribunal in a retail leases case is $300,000 (see RL Act, s 73).
(a) that all of the requirements defining its jurisdiction under the RL Act are satisfied (for example, that the case does indeed concern a ‘retail shop lease’) and
(b) that the award cannot exceed the monetary limit stipulated in the State laws governing it.
Stockland’s arguments regarding jurisdiction
76 In their written and oral submissions on behalf of Stockland, Mr Biscoe QC and Ms Allars contested the characterisation of this Tribunal as a ‘court’ falling within s 86(2) of the TP Act.
77 In support, they relied principally on two aspects of the Tribunal’s powers and functions. These were (a) that it lacks the power to enforce its own decisions and (b) that in its jurisdiction to review ‘reviewable decisions’ (conferred pursuant to s 38 of the ADT Act), it exercises non-judicial power. We will outline Stockland’s arguments on each of these two matters in turn, again elaborating on some of the authorities cited to us.
78 Absence of power to enforce judgments. The significance of this issue in determining whether a decision-making body is a court exercising judicial power receives particular emphasis in two High Court decisions.
79 In the earlier of these, Huddart Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 357, Griffith CJ defined ‘judicial power’, as used in s 71 of the Constitution, as the power possessed by every sovereign authority to ‘decide controversies between its subjects, or between itself and its subjects’. He then said: -
80 More recently, in Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245, the High Court considered the constitutional validity of ss 25ZAA, 25ZAB and s5ZAC of the Racial Discrimination Act 1975 (Cth). Under these sections, determinations of the Human Rights and Equal Opportunity Commission (‘the Commission’), which according to s 25Z(2) of this Act were not binding and conclusive between any of the parties, were to be registered in the Federal Court. On registration, they would be enforceable as an order of this Court, subject only to a right of the respondent to seek review by the Court within a period of 28 days. If review proceedings were instituted, the Court could make such orders as it thought fit, including an order confirming the determination. The Commission was not constituted in the manner required by s 72 of the Constitution for a court established by legislation of the Commonwealth.
The exercise of this power does not begin until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action.
81 The High Court held that the challenged provisions were invalid because they purported to provide for the exercise of judicial power by a body (the Commission) which had been established by Commonwealth legislation but did not comply with the requirements of s 72 of the Constitution. The Court treated the existence or non-existence of a power to enforce decisions as a factor of major significance in determining whether a decision-making body exercised judicial power.
82 In a joint judgment, Mason CJ, Brennan and Toohey JJ said at 256 that ‘this has sometimes been seen as an essential element in the exercise of judicial power’. In support, they cited dicta of Latham CJ in Rola Co (Australia) Pty Ltd v Commonwealth (1944) 69 CLR 185 at 199. They then pointed out, however, that in R v Davison (1954) 90 CLR 353 at 368, Dixon CJ and McTiernan J expressed the opinion that ‘the enforcement of a judgment or judicial decree by the court itself cannot be a necessary attribute of a court exercising judicial power’. The conclusion drawn on this matter in this judgment in Brandy (at 257) was to the effect that the existence of a power to enforce decisions is ‘not an exclusive test of the exercise of judicial power’.
83 In another joint judgment in Brandy, Deane, Dawson, Gaudron and McHugh JJ described at 268 ‘the enforceability of decisions given in the exercise of judicial power’ as ‘one aspect of judicial power which may serve to characterise a function as judicial when it is otherwise equivocal’. At 269, however, having considered various authorities including Huddart Parker, Rola and Davison, they concluded that ‘it is not essential to the exercise of judicial power that the tribunal be called upon to exercise its own decision’.
84 It is clear from the ADT Act that the Tribunal has no power to enforce its own decisions. Instead, orders for the payment of money are enforceable in the following way. Section 82 of the ADT Act provides for the Registrar to certify any amount ordered to be paid by the Tribunal (s 82(1)) and in the certificate to identify the person liable to pay it (s 82(2)). When a certificate so given is filed in the registry of a court having jurisdiction to give judgment for the same amount as has been certified, the certificate ‘operates as such a judgment’ (s 82(3)). A party to the proceedings may apply to the Tribunal for a review of the amount certified by the Registrar (s 82(4)). A separate section (s 82A) provides that any ‘civil or other penalty’ ordered to be paid by the Tribunal to be registered as a judgment debt in a court of competent jurisdiction and to be enforceable accordingly.
85 The Tribunal’s exercise of non-judicial power in its review jurisdiction. In Stockland’s submission, it is beyond question that the Tribunal, when exercising jurisdiction conferred pursuant to s 38 of the ADT Act to review the merits of a ‘reviewable decision’ of an ‘administrator’, exercises non-judicial power. Sufficient authority appears in a High Court decision to this effect relating to the Board of Review that had been established to review decisions of the Commissioner of Taxation (Federal Commissioner of Taxation v Munro (1920) 38 CLR 153, affirmed by the Privy Council in Shell Company of Australia Ltd v Federal Commissioner of Taxation [1931] AC 275).
86 This prominent feature of the Tribunal’s functions, coupled with its lack of power to enforce its own decisions, necessarily produces the result that the Tribunal is not a ‘court’ for the purposes of s 86(2) of the ADT Act.
87 Lack of power to grant remedies available under the TP Act. In the written submission on Stockland’s behalf, it was also argued that the Tribunal lacked the power to grant the remedies set out in ss 80, 82 and 87 of the TP Act. The first of these sections provides for injunctions to be granted. The second, as indicated above, provides for awards of damages. The third lists a number of remedies, including (by way of example) variation of contracts.
88 In Stockland’s submission, remedies of this nature are not to be found in s 72 of the RL Act, where the range of orders available to the Tribunal in retail tenancy claims is set out. The effect of s 86(3), as interpreted in Ewins v Buderim Imports Pty Ltd (1987) 76 ALR 157 (see [50] above), is therefore that these remedies under the TP Act could not be granted by the Tribunal even if it had jurisdiction under this Act.
The Appeal Panel’s conclusions on jurisdiction
89 Our decision on this matter is that, in the exercise of the jurisdiction conferred on it by the Retail Leases Act 1994, the Tribunal does indeed possess jurisdiction to award damages under s 82 of the Trade Practices Act 1974 (Cth) for breaches of s 52 of that Act. In broad terms, we accept the arguments to this effect advanced on Skiwing’s behalf by Mr Tonking.
90 On the first and the third of the three matters (outlined at [51] above) to which these arguments were chiefly addressed, we need only add a few short comments.
91 As to the first of them, we agree that the limitation imposed by s 86(3) of the TP Act on any grant of jurisdiction under this Act to the Tribunal does not apply to the awarding of damages under s 82 in retail leases cases, because an award of damages is a ‘kind of remedy’ that the Tribunal can grant in this context. This is established by s 72(1)(a) of the TP Act, with regard to retail tenancy claims, and s 72AA(1), with regard to unconscionable conduct claims.
92 We reject the submission by Stockland to the contrary. We do not need to determine the correctness of its accompanying submission that the Tribunal would have no power to award remedies under s 80 or s 87 of the TP Act.
93 As to the third of the three matters identified by Mr Tonking, we agree that, except only with regard to the maximum sum that may be awarded by the Tribunal, the awarding of damages under s 82 of the TP Act lies within the limits of its jurisdiction under the RL Act. The words ‘within the limits of their several jurisdictions… as to… subject matter’ in s 86(2) of the TP Act do not preclude the vesting of federal jurisdiction upon it to this extent.
94 We accept Mr Tonking’s argument that this consequence flows both from the language of relevant provisions of the RL Act and the ADT Act and from the underlying policy consideration that the Tribunal should be the preferred decision-maker in retail leases cases. The different situation arising with regard to s 42 of the Fair Trading Act 1987 can be accounted for by contrasting the broad grant of jurisdiction made by s 86(2) of the TP Act with the methodology adopted in State legislation conferring jurisdiction under s 42. This methodology is one of identifying individually those bodies other than the Supreme Court (which of course possesses unfettered jurisdiction) on which jurisdiction to hear claims based on the section is conferred (see Taylor Farms (Australia) Pty Ltd v A Calkos Pty Ltd [1999] NSWSC 186 at [20 – 22]; Kollias v Monzo Pty Ltd [2003] NSWADT 275 at [9]).
95 We turn now to the second of the three matters addressed by Mr Tonking, namely, whether the Tribunal falls within the phrase ‘the several courts of the States’ in s 86(2) of the TP Act. While agreeing with him that it does, we think that the matter requires consideration to a greater extent than it received in the submissions.
96 We point out first that the key phrase in s 86(2) – ‘the several courts of the States’ – is very broad. Subject only to the specific matters arising elsewhere in s 86(2) and in s 86(3) that we have just canvassed, the subsection imposes no limitation, express or implied, on the range of State courts on which jurisdiction is to be conferred.
97 In our opinion, the case of State Rail Authority NSW v Consumer Claims Tribunal (1988) 14 NSWLR 473 and the two later Supreme Court decisions applying it provide a sound basis for holding that the Tribunal, if its operations were confined solely to the exercise of its jurisdiction under the RL Act, would clearly be a ‘court’, exercising judicial power.
98 This conclusion receives further support from another Supreme Court case to which Mr Tonking did not refer. In Hamilton v Consumer Claims Tribunal [1999] NSWSC 847 at [2], Davies AJ held that the Consumer Claims Tribunal was ‘an inferior court, not an administrative tribunal’. A consequence of this, which he outlined at [2 – 4], was that at common law the grounds on which relief by way of prerogative writ could be granted in relation to a decision reached by it were distinctly narrower than if it were an administrative tribunal.
99 In so viewing this line of authority, we differ from the contentions raised by Stockland based on the means by which decisions of this Tribunal are enforced. As noted above at [57], Hope JA in the State Rail Authority case took account of the fact that the orders of the Consumer Claims Tribunal (‘the CCT’) were enforced, as claims for money, through the Court of Petty Sessions (Local Court). But the CCT’s lack of power to enforce its own decisions did not prevent him from holding that the CCT was a ‘court’. The procedures whereby this Tribunal’s orders for the payment of money are enforced under ss 82 and 82A of the ADT Act (see [84] above) seem to us to be equivalent in all material respects to those applying at that time to the CCT’s judgments.
100 Furthermore, we consider that, contrary to the submission on Stockland’s behalf, the High Court’s decision in Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 lends support to, rather than detracts from, the proposition that this Tribunal is a ‘court’. The High Court held there that the sections of the Racial Discrimination Act 1975 (Cth) whereby the Commission’s determinations – which were declared elsewhere in the Act not to be binding – were to be registered in and enforced through the Federal Court had the effect of conferring judicial power on a body which but for those provisions could not be characterised as a ‘court’.
101 Under this scheme for registration and enforcement, the respondent in a determination had a right to seek its review by the Federal Court, which was empowered to set it aside and make such other order as it thought fit. To this significant extent, the Commission’s determination lacked binding authority. Enforcement according to its terms was not ‘automatic’. Yet the High Court held that in establishing this scheme, the relevant sections of the Racial Discrimination Act purported to confer judicial power on the Commission.
102 By contrast, the procedure for enforcement of an order of this Tribunal requiring the payment of money enables the successful party, simply through obtaining the Registrar’s certificate and registering it in an appropriate court, to achieve the result that the order operates as a judgment of the court. The only ways in which the unsuccessful party can challenge these steps are by seeking review by the Registrar of the amount certified or by appealing to an Appeal Panel or to the Supreme Court. In contrast to the situation to which the ruling in Brandy related, there is no process of judicial review of the merits of the Tribunal’s order between the time when its decision is handed down and the time when it becomes enforceable as a judgment of a court.
103 This procedure for enforcement of the Tribunal’s orders through registration as a judgment debt does not apply to orders other than for the payment of money, such as an order under s 72(1)(c)(ii) of the RL Act that a party to proceedings under this Act surrender possession of premises to another person. It may well be that the only mode of enforcement of an order of this nature involves a report by the Tribunal to the Supreme Court that the non-complying party has engaged in conduct that, if the Tribunal were a court, would constitute contempt of that court (see ADT Act, s 131(1)(j)). But what is important for present purposes is that the kind of order by the Tribunal with which these proceedings are concerned – namely, an award of damages – is expressly made enforceable through the process of registration set out in s 82.
104 An important question that remains unanswered in the analysis so far is whether the wide-ranging jurisdiction conferred on the Tribunal to review the merits of administrative decisions has the effect of preventing its being characterised as a ‘court’, despite the conclusion reached above (at [97]) that in its exercise of jurisdiction under the RL Act it should be so characterised. The submission on behalf of Stockland drew attention to the Tribunal’s merits review jurisdiction, but did not develop any argument based on it, other than to assert that in this context the Tribunal exercises ‘administrative power’.
105 The existence of this jurisdiction, coupled with the words ‘Administrative Decisions’ in the Tribunal’s name, is probably sufficient to explain the labels ‘quasi-judicial body’ and ‘quasi-judicial tribunal’ given to it in a recent decision of the Supreme Court determining an appeal from a Tribunal decision under the RL Act (World Best Holdings Ltd v Sarker [2004] NSWSC 935 at [8] and [24]). Similarly, the Victorian Civil and Administrative Tribunal, which like this Tribunal has jurisdiction to determine civil claims within a number of specified categories and a merits review jurisdiction, was recently described in the High Court as an ‘administrative tribunal’: see Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue [2001] HCA 49 at [15], [29], [36], [52]. In the latter case, however, the particular jurisdiction of the Victorian tribunal being considered by the Court was one of administrative review. In neither of these cases was the status of the tribunal concerned raised specifically for determination.
106 On the issue of characterisation of a body which, like this Tribunal, is a hybrid in the sense that it has jurisdiction both to determine civil claims and to engage in merits review of administrative decisions, we have obtained further assistance from two cases. These are Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 (this case was in fact referred to in Stockland’s submissions, but did not provide the basis for any specific argument put to us) and Australian Postal Commission v Dao (No 2) (1986) 6 NSWLR 497.
107 In Kable, the issue for determination by the High Court was the constitutional validity of New South Wales legislation authorising the Supreme Court to order the detention in prison of one named person (the appellant) if it was satisfied on reasonable grounds that he was ‘more likely than not to commit a serious act violence’ and that it was ‘appropriate’ for him to be held in custody, ‘for the protection of a particular person or persons or the community generally’. By majority, the High Court held this legislation to be invalid, principally on the ground that the exercise of the jurisdiction that it conferred upon the Supreme Court was incompatible with the integrity, independence and impartiality of this Court, being a court of a State on which federal jurisdiction had been conferred under Chapter III of the Constitution.
108 In each of the High Court’s judgments, there was discussion of the circumstances in which a court of a State on which such jurisdiction had been conferred could also exercise non-judicial power. The principle stated was that the exercise of non-judicial power by such courts was permissible provided that it was not ‘repugnant to or inconsistent with the exercise by those courts of the judicial power of the Commonwealth’ (Gaudron J at 106; see too Brennan CJ, dissenting, at 67; Dawson J, dissenting, at 84; Toohey J at 96; McHugh J at 109-110; Gummow J at 132).
109 At 67, Brennan CJ, dissenting, commented further that it would have been ‘surprising’ if the Constitution had prohibited the conferment of non-judicial power on State courts. He pointed out that such a prohibition ‘would have destroyed the State laws investing mining warden’s courts, licensing courts and planning courts – to take only some instances – with extensive administrative powers’.
110 At 117, an observation by McHugh J to similar effect is of immediate relevance to the issue before us. He said that
111 As we see it, the significance of this dictum for present purposes is its clear indication that a hybrid body, such as this Tribunal, which is created by State law and which to a significant degree exercises both judicial power (in determining civil claims) and non-judicial power (in conducting reviews of the merits of administrative decisions) may be a ‘court’ on which federal jurisdiction may be conferred. It does not say, however, that the body necessarily will be a court. In the case of the Supreme Court, that characterisation would be unquestionable even if, as McHugh J hypothesised, a merits review jurisdiction were conferred upon it.
… a State can invest its Supreme Court with a jurisdiction similar to that which is presently exercised in the federal sphere by the Administrative Appeals Tribunal. The Supreme Court would not lose its identity as the Supreme Court of the State merely because it was given a jurisdiction similar to that of that Tribunal.
112 Further guidance as to whether the same characterisation should be applied in the present context to this Tribunal may in our view be found in the second of the two cases referred to above, namely Australian Postal Commission v Dao (No 2) (1986) 6 NSWLR 497. Here the Court of Appeal was required, amongst other things, to determine whether the Equal Opportunity Tribunal (‘the EOT’) was a ‘court’ within the meaning of the Suitors Fund Act 1951. (That Tribunal, it may be noted, was subsequently abolished. The jurisdiction that it possessed to hear civil claims under the Anti-Discrimination Act 1977 is now exercised by the Equal Opportunity Division of this Tribunal.)
113 The Court of Appeal in Dao (No 2) expressly refrained from determining whether the EOT was a ‘court’ for the purpose of conferral of federal jurisdiction. It defined its task as that of deciding instead whether the EOT was ‘a “court” for the rather special and limited purposes of the Suitors Fund Act’ (see Kirby P, with whom Samuels JA agreed, at 513). It indicated that these two questions overlapped with each other, but were not the same question. Its conclusion was that the EOT was indeed a ‘court’ within the meaning of this Act.
114 Kirby P stated, at 514, that the Court’s approach in reaching this decision was to ‘look to the nature of the body and in the context of the Suitors Fund Act, seek to derive the legislative meaning’. McHugh JA, at 515, elaborated at greater length the proposition that the word ‘court’, when used in different statutes, may have different meanings: -
115 These dicta from Dao (No 2) clearly allow for the possibility that a single body which exercises both judicial power and non-judicial power may be a ‘court’ as defined in one statute, State or Commonwealth, but not a ‘court’ for the purposes of another statute. What matters is solely whether, having regard to the language and purpose of the statute under consideration, the body falls within the definition of ‘court’ contained in that statute.
Statutory interpretation may not be a creative art; but it has at least ceased to be a mechanical task. The Court’s function is to give effect to the purpose of the [ Suitors Fund Act ]. That function can not be performed by isolating the word “court” and asking whether the constitution and procedures of the [EOT] come within the supposed essence of that term. English nouns do not have the fixed meaning of scientific symbols. Dictionaries and decisions on the word “court” in other contexts are guides not determinants. The meaning of a statutory word or phrase is best ascertained when considered in its context and with the author’s purpose in mind.
In ordinary usage the word “court” has many meanings: … Legal usage also gives the word many meanings. Thus a “court” may refer to a body exercising judicial power as in the Constitution, Ch III, or to a body exercising non-judicial power such as the Coroners court or to a court of petty sessions hearing committal proceedings…. There is no a priori reason which prevents a body which determines rights and is presided over by a District Court judge from being a “court” even though it is not called a court and has lay members. Function and purposes, not labels, should be our guides.
116 It is therefore possible, in our opinion, to conclude (a) that this Tribunal is a ‘court’ within the meaning of s 86(2) of the TP Act, while also concluding (b) that it might not also be a ‘court’ within the meaning of a statute whose subject matter was the review of administrative decision-making. The conundrum that a hybrid body such as this Tribunal might be both a ‘court’ and not a ‘court’ is capable of satisfactory explanation along these lines.
117 We do not need to decide whether the latter of these two conclusions – conclusion (b) – is correct. It could, however, be held to be established by the propositions that
118 Our task is to determine, with reference specifically to the Tribunal’s exercise of jurisdiction under the RL Act, conclusion (a) is correct. Leaving aside the two specific issues arising from s 86(2) and s 86(3) on which we have already set out our views (see [91] and [93] above), its correctness appears to us to depend upon two propositions. These are
(i) the Tribunal, in carrying out its functions with regard to administrative decision-making, engages solely in merits review, exercising non-judicial power only and
(ii) the intention of the hypothetical statute was to exclude from its definition of ‘court’ any authority whose role in relation to administrative decision-making was limited in this way.
119 We consider that these two propositions are sufficiently established by the authorities and the reasoning that we have outlined. Accordingly, the Tribunal does, in our judgment, possess jurisdiction to award damages, in a retail leases case, for a breach of s 52 of the Trade Practices Act 1974 (Cth) or of any other provision of Division 1 of Part V of that Act.
(i) that in performing the functions conferred on it by the RL Act, the Tribunal exercises judicial power and
(ii) the implicit intent of s 86(2), interpreted with regard to its context, is to include within the broad phrase ‘the several courts of the States’ any State body exercising judicial power whose jurisdiction includes one or more subject matters – such as that of retail leasing – to which the provisions in Division 1 of Part V of the TP Act might be relevant.
120 By way of explanation of our divergence from the Tribunal’s earlier decisions to the contrary in New York Boutique Pty Ltd v Lend Lease Property Management Australia Pty Ltd [2001] NSWADT 55 and Kollias v Monzo Pty Ltd [2003] NSWADT 275, we should point out that we have had the benefit of distinctly more thorough submissions on this issue than would appear to have been offered in either of those cases.
121 In the present case, the Tribunal concluded that it lacked jurisdiction to award damages for breaches of s 52 of the TP Act before the parties went into evidence. It follows that the parties may then have decided not to lead evidence that they would have put before the Tribunal if it had reached the opposite conclusion. For this reason, we are not now in a position to determine the orders that should be made to dispose finally of these proceedings. This is the case even though the parties in their submissions explored to some extent what should occur if we disagreed with the Tribunal on the matter of jurisdiction.
122 We consider instead that, in relation to each of the two claims that Skiwing has brought relying (in part) on the TP Act, there should be further consideration by the Tribunal. In addition, the parties should have the opportunity to argue that the Tribunal must receive further evidence before ruling on any entitlement of Skiwing to relief under this Act. In our orders, set out at the end of this judgment, we outline the procedure to be adopted in order to bring this about.
The balcony claim
123 The Tribunal’s reasoning. The Tribunal stated at [51] that Skiwing formulated the balcony claim on four bases: -
124 The Tribunal’s conclusion that the claim should succeed was based on its acceptance of a modified version of the first of these grounds. It rejected the other three grounds.
1. Stockland has agreed to the construction of the balcony, if approved by the City Council, and has breached that agreement.
2. Under s. 133B(2) of the Conveyancing Act 1919 NSW, Stockland could not deny consent to the balcony, being an improvement to the premises, except on reasonable grounds.
3. Stockland is estopped from preventing Skiwing proceeding with the balcony.
4. Stockland is liable under s.10 of the Retail Leases Act for misrepresentation concerning the balcony.
125 The reasoning by which the Tribunal held Stockland to be liable in damages for breach of contract was outlined as follows in paras [54], [55] and [59 – 61] of its judgment: -
126 At [165 – 170], the Tribunal addressed the question of damages. It held at [165] that there was some likelihood of the Council agreeing to the balcony proposal, but that it was ‘more difficult to assess the likelihood of Skiwing achieving agreement with Stockland’. It stated that it would be ‘premature’ to assess the extent to which s 133B(2) of the Conveyancing Act 1919 (this provision is discussed below) or ‘other principles such as unconscionability and the duty to act fairly’ would limit Stockland’s right to refuse to agree.
54 In my view the evidence establishes that there was an agreement for commercially valuable consideration that, following the decision of Stockland not to have kept a balcony in the original development application, Skiwing had the approval of Stockland to pursue such an application itself including informing the Council that it had the consent of the building owner to the application. The value to Stockland was having its tenant incur the time and cost in seeking an approval which could be of long term value to the Arcade. That agreement was not subject to termination by Stockland and Skiwing remained entitled to seek development approval if it chose.
55 However Stockland had equally clearly not yet finally agreed to proceed with a balcony if approval was granted or to the terms on which it would agree to extend the Skiwing Lease beyond the currently delineated premises to incorporate what would be an adjacent area if constructed. Any expectation Skiwing may have had covering the ultimate construction and use of a balcony has no basis in law or in equity but remains a commercial expectation only. There would be significant matters to consider, including engineering of structural support, cost and safety. As noted, the Corbett letter had stated: -
59 Nevertheless, I consider the relocation notices from Stockland and its subsequent advice that it would not consent to a balcony, were a repudiation by Stockland of its agreement that Skiwing could proceed to obtain Council’s approval. That conduct stripped the ground from under the approval application and purported to pre-judge the outcome of the negotiation that would follow any approval. As noted above, Stockland may well have been constrained in refusing consent to an approved proposal if Skiwing bore the cost.
It may be possible to arrange a Lease structure for the new floor area incorporating the costs however this should be discussed when it is established the project is viable.
60 As a result of the repudiation, Skiwing ceased to pursue an important opportunity to equip its business with an approval to expand its trading area for the remaining 5 years of its Lease, including as a basis for amending its liquor licence to the more valuable ‘drink or dine’ licence process. It lost a valuable commercial opportunity.
61 It might be argued that the appropriate remedy would be to declare that the agreement has been wrongly repudiated and that Skiwing remains entitled to continue with its application but since 2 ½ years have now passed, and with the parties in continuing and bitter dispute, that is unlikely to provide a real basis for redress. Accordingly I will consider whether there is a basis for an award of damages.
127 At [167 – 168], the Tribunal outlined in these terms the ‘guiding principles’ established by the High Court in Sellars v Adelaide Petroleum NL (1994) 179 CLR 332: -
128 At [169], the Tribunal held that there had indeed been a ‘real and significant chance’ that Skiwing would succeed in obtaining the approval of both the Council and Stockland, though it was ‘not necessarily more likely than not’ that this would occur. It referred again to s 133B(2) of the Conveyancing Act and to Stockland’s obligation not to behave unconscionably.
The essence of the principles is that where there is a real lost opportunity I am required to make an assessment of the evidence I do have of the value of ultimate success and to discount that by reference to the factors standing in the way of success being achieved. Any real lost commercial opportunity will be compensated; a mere negligible opportunity will not. The chances of success does not have to be over 50% or to be more likely than not.
129 At [171], relying on expert evidence as the increase in value that construction of the balcony would have brought to Skiwing’s business and applying a discount of 50% to reflect the fact that it was a possibility only, the Tribunal awarded damages of $50,000 to Skiwing for loss of the opportunity to expand its business. It awarded a further $3,000 as reimbursement for Skiwing’s expenses in pursuing the application to the Council. It also awarded interest at District Court rates as from 23 June 2003.
130 In the appeal, Mr Biscoe QC, counsel for Stockland, argued in written and oral submissions that this reasoning of the Tribunal was vitiated by seven errors of law. As will be apparent, his arguments related almost exclusively to the award of damages totalling $50,000 for the loss of a commercial opportunity, not to the award of $3,000. We shall discuss each of these alleged errors in turn.
131 No binding contract. Mr Biscoe submitted first that, for two separate reasons, no binding contract relating to the balcony proposal arose out of the dealings between the parties.
132 The first of these reasons was that the Corbett letter, being the only document providing evidence of a promise by Stockland, evinced no intention that the arrangement between the parties should constitute a binding contract. The text of this letter is set out above at [17].
133 Mr Biscoe relied here on dicta of Mahoney JA in Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 326. These are to the effect that, in determining whether a contract had been created by informal means, it is useful to consider three things:
134 With regard to the second requirement, he submitted, the consensus between Stockland and Skiwing was incapable of forming a binding contract, because the clause in the Corbett letter (paragraph (2)) giving Stockland a power of veto over any plans prepared by Skiwing rendered the arrangement too uncertain to be legally enforceable.
Mr Biscoe contended that the second and third of these requirements were not satisfied.
(a) whether the parties had reached a consensus;
(b) if so, whether this consensus was capable of forming a binding contract; and
(c) if so, whether the parties intended that this consensus should constitute a binding contract.
135 With regard to the third requirement, Mr Biscoe submitted that there was no intention that this consensus should create a binding contract, because the language of contract was not used. Instead, the Corbett letter merely stated that, subject to certain restrictions, Stockland would raise no objection to Skiwing’s pursuing the proposal with the Council. The subsequent conduct of Stockland in suggesting an alternative consultant and remaining willing until August 2001 to consider the proposal being prepared by Skiwing (see [19 – 20] above) did no more than to confirm the existing non-contractual arrangement. It did not constitute evidence that a contract had been created.
136 The second reason put forward by Mr Biscoe for saying that no contract was created was that no consideration was advanced by Skiwing in return for Stockland’s statement that it would not raise any objection to Stockland’s submitting a revised proposal to the Council. Stockland’s insistence that Skiwing should bear the costs of doing this was an ‘obvious’ ingredient of the arrangement between them, and did not amount to a promise given in exchange for another promise. There was in fact no promise by Skiwing to do anything in relation to the balcony.
137 In response, Mr Tonking, counsel for Skiwing, argued that these contentions by Mr Biscoe took no account of the significant fact that at the time of the Corbett letter Stockland and Skiwing were already in contractual relations with each other, by virtue of being parties to the Lease. It was therefore wrong to infer that the consensus set out in the letter was not intended to create a binding contract. The terms of this contract were not unduly uncertain. They were to the effect that Stockland would keep open the matter of the balcony until it had been resubmitted to the Council. Stockland would not pre-empt the issue, but would suspend judgment. Furthermore, as pointed out in the Tribunal’s reasons, Skiwing’s expenditure of time and money in preparing and submitting an application constituted adequate consideration because the balcony, if ultimately constructed, would be of benefit to Stockland.
138 Mr Tonking cited to us the judgment of Heydon JA in the Court of Appeal in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, as authority for the proposition that the conduct of Stockland after the Corbett letter was sent could constitute evidence that the letter itself was intended to give rise to a binding contract. Mr Tonking did not specify any particular passage or passages. But the judgment clearly states, at 163-164, the general principle that evidence of ‘post-contractual conduct’ may be adduced on the issue of whether a contract has been formed. It also applies this principle, at 179-182, in determining the appeal.
139 We have found this a very difficult issue to resolve. Our conclusions, in short, are these. We agree with Mr Biscoe that no binding contract arose out of the Corbett letter. As we see it, there are instead two possible outcomes of the sending of that letter. One is that the letter had no impact at all on the legal relations between the parties. The other is that it communicated an offer which, if accepted, would have given rise to a contract.
140 We do not need to choose finally between these two alternatives. The reason is that, as explained below, Skiwing’s claim for damages for the alleged breach by Stockland of a contract arising out of the Corbett letter must in our view fail on the ground that Skiwing failed to establish that it suffered any damage on account of the alleged breach.
141 The first alternative: no contract and no contractual offer. The strongest consideration in support of the first alternative – that is, that the Corbett letter neither gave rise to a contract nor communicated a contractual offer – is the degree of vagueness and uncertainty in the terms of the letter. While stating that there was ‘no objection’ to Skiwing’s seeking Council approval for the balcony proposal, the letter preserved for Stockland an unqualified power of veto over any plans to be submitted. It expressly suggested that the project might not be ‘viable’, then added that even if it did prove viable there was still only a possibility that a lease structure for the new floor area could be arranged.
142 Furthermore, important issues were not dealt with at all. For instance, no provision was made for the eventuality, which later materialised, that Stockland might want to exercise its powers under the Lease and the RL Act to require the relocation of Skiwing’s business. The question whether Stockland did or did not promise to refrain from exercising these powers during the term of the alleged contract was not addressed. Nor indeed was it made clear whether, and if so on what conditions, any agreement arising from the letter could be terminated by Stockland.
143 For these reasons, there are strong grounds for concluding that the content of what Stockland promised in the Corbett letter was so insubstantial and so ill-defined that no contractual offer capable of acceptance was communicated.
144 The second alternative: no contract, but a contractual offer. The alternative view – that a contractual offer was communicated – is supported by the following considerations. As Mr Tonking argued, the letter should be presumed to have conveyed an intention to create legal relations because the parties were already contractually bound to each other by the Lease. The offer made by Stockland was that it would not object to Skiwing’s ‘pursuing Sydney City Council to obtain approval’ for erection of a balcony so long as the conditions set out in paragraphs (1) – (3) of the letter were satisfied. Skiwing was not bound to ‘pursue’ this approval. It could, if it wished, ignore the offer entirely. But if it accepted the offer by submitting an application to the Council in compliance with these conditions, Stockland would be bound by its promise not to raise any objection.
145 We do not agree, however, with Mr Tonking’s submission, supported by the reference to ‘pre-judgment’ in the Tribunal’s judgment at [59], that the terms of the agreement contemplated in the Corbett letter included a promise by Stockland to suspend judgment on whether construction of the balcony should go ahead until Council approval had been obtained and it had examined the plans on which this approval was based. As Mr Biscoe argued, implying a term of this nature, which potentially had the effect of significantly restricting Stockland’s freedom of action with respect to the Arcade as a whole, would go beyond what considerations of ‘business efficacy’ would require. At most, Stockland promised to give consideration to creating a ‘lease structure’ for the new floor area if the project proved ‘viable’.
221 Breach of s 34A. The Tribunal’s initial conclusion regarding s 34A of the RL Act was that the second and third relocation notices were invalid. It based this decision on three grounds, which are summarised at [204] above. In the written submissions, lengthy arguments were made on both sides regarding the correctness of this decision. At the hearing, the matter received rather less attention.
222 In our view, this conclusion by the Tribunal was correct. Our reasons, in brief, are as follows.
223 We do not agree with the first ground relied on by the Tribunal. This was that the notices did not involve a ‘genuine proposal’ for ‘refurbishment, redevelopment or extension’ within s 34A(a), but instead were aimed at replacing an existing tenant with a preferred major tenant.
224 The Tribunal, in upholding this ground, relied on the interpretation of these phrases within s 34A set out in Eddie Azzi Australia Pty Ltd v Citadin Pty Ltd [2001] NSWADT 79 at [95 – 97]. The crucial proposition in these paragraphs is that there can be no such ‘genuine proposal’ where what the lessor seeks to do is to incorporate the leased premises into a parcel with other premises in order to achieve a preferable return.
225 We endorse, however, Mr Biscoe’s submission that this statement of principle is at odds with the judgment of Bryson J in Blackler v Felpure Pty Ltd [1999] NSWSC 958. In construing the phrase ‘genuine proposal’ in s 35 of the RL Act (this provision provides for demolition of leased premises in terms similar to s 34A), Bryson J stated that the lessor may use the power conferred by the section to terminate the lease ‘with a view to its own advantage’. This of itself does not prevent a proposal for demolition from being ‘genuine’.
226 On the other hand, we agree with the Tribunal’s ruling regarding the second alleged ground of invalidity. This was that none of the premises offered to Skiwing in substitution were an ‘alternative shop’ within the meaning of s 34A(b). The differences in floor area and layout (see [24] and [26] above) were sufficient to support its finding that there was no ‘commercial similarity’ to the existing premises. We agree that some similarity along these lines is an implicit requirement of the subsection. On this issue, Stockland has failed to satisfy us that the Tribunal was in error.
227 This ruling regarding the requirements of s 34A(b), and indeed of clause 20 of the Lease, is sufficient to support a conclusion that, for the purposes of determining this appeal, we should not disturb the Tribunal’s determination that the second and third relocation notices were invalid.
228 The Tribunal went on to hold, at [121], that for Stockland to seek to rely on the invalid notices in order to relocate the business of the Lessee was ‘a straightforward breach of the provisions of the Lease’. It then said: ‘A breach of lease entitles a claim for redress’. Elsewhere in its judgment – for example, at [111] and [149] – it treated Stockland’s ‘breach’ of s 34A, without more, as a potential basis for awarding ‘redress’ in the form of damages.
229 In our view, this misstates the effect of non-compliance with s 34A. If in the exercise of a power conferred in a retail shop lease, a lessor issues a relocation notice purporting to comply with s 34A, but which does not in fact comply, the result is that the lessee’s business ‘cannot be required’ to be relocated. If the lessor nonetheless attempts to compel the lessee to vacate the premises, the lessee may assert in an appropriate forum, such as this Tribunal, that the lessor has no rightful claim to possession and may, if necessary, obtain an order prohibiting the lessor making any further attempt of this nature.
230 A further consequence may be, as we have already mentioned, that the lessor cannot rely on s 34A to defend a claim that, through measures that it has adopted in order to relocate the tenant, it has breached the covenant for quiet enjoyment and/or the covenant not to derogate from its grant.
231 We see, however, no reason why the serving of a notice which has no legal effect should, without more, confer on the recipient lessee a right to claim damages from the lessor. Any such right must have some other basis, such as the breach of one or other of these covenants. This ruling has two significant consequences.
232 First, we consider that the Tribunal’s awards of damages, in so far as they are based on the ‘disruption’ of Skiwing’s business or the ‘diversion of management effort’ which it found (at [95]) to have been caused by the service of invalid relocation notices, cannot be supported.
233 Secondly, the Tribunal’s award of damages totalling $3,918 to reimburse Skiwing for its legal expenses in opposing the relocation notices must be set aside. We agree with Mr Biscoe that there is no general principle that a party incurring legal costs in order to contest successfully the validity of a document served upon it that purports to affect its legal rights or obligations may recover those costs from the party that served the document.
234 The finding that Stockland intentionally sustained a high vacancy rate. In concluding that Skiwing was entitled to damages in the relocation or disturbance of trading claim the Tribunal did not, however, rely solely on the invalidity of the relocation notices. Its award of damages was based also on a finding that Stockland intentionally sustained a high vacancy rate for a substantial period, as part of its strategy of obtaining a new icon tenant and repositioning the Arcade to a new youth market.
235 A major plank of Stockland’s argument in this appeal was its contention that there was no probative evidence to support this finding. We accept its submission, based on authorities such as Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, that if this is indeed the case, the Tribunal erred in law in making the finding.
236 In disputing this issue, both Mr Biscoe and Mr Tonking referred principally to evidence given to the Tribunal by Mr Doherty, who was employed by Stockland as the Centre Manager of the Arcade between April 2001 and December 2003.
237 Mr Doherty did not deny (see Transcript, 4 March 2004, p 78, line 30 to p 79, line 22) that between February 2001 and the middle of 2002 there was a ‘high vacancy level’, indeed ‘one of the highest’ for a shopping mall in the vicinity at that time. In terms of numbers of shops, he estimated the vacancy rate at 28%. In terms of lettable area, the percentage, he said, was lower, because a number of the vacant shops were relatively small.
238 Mr Doherty gave some explanations for this vacancy rate: for example, that some tenants under-estimated the effect of the downturn in trade after the Sydney Olympics and that a number of leases happened to expire at the same time without any renewal being sought by the tenant or desired by Stockland (Transcript, 3 March 2004, 117, lines 23-45; 4 March 2004, 79, lines 28-38).
239 Mr Doherty stated also that the sending of relocation notices to other tenants in addition to Skiwing did not in fact result in a significant number of vacancies (Transcript, 3 March 2004, 119, lines 1-12). Mr Biscoe pointed out, without dissent from Mr Tonking, that after the service of relocation notices upon six tenants, only one shop became vacant.
240 The issue of whether this vacancy rate was the outcome of a deliberate policy adopted by Stockland was raised with Mr Doherty in a question by Mr Donald, the Tribunal Member conducting the hearing. Specifically (see Transcript, 4 March 2004, 20, lines 21-32), Mr Donald asked whether Stockland ‘began letting on a long-term basis’ as from June 2002, because the plan for McDonalds or General Pants to become an icon tenant had then ‘lapsed’. Mr Doherty’s reply (at lines 34-41) was that Stockland ‘always’ had that intention and that it had ‘continued to look for long-term tenants even from June-July 2001’, but that it was ‘more successful in doing that from June 2002’.
241 In seeking to rebut this, Mr Tonking relied on the letter, dated 12 April 2002, that Mr Doherty sent to all tenants to announce that there would be no further redevelopment of the Arcade. It included this sentence: ‘We are now seeking tenants for all vacant premises in the Arcade’ (emphasis added).
242 Mr Doherty testified also that throughout the period in question Stockland wished to find tenants to fill the vacancies (see for example Transcript, 3 March 2004, 116, lines 33-45). He also outlined the steps that were taken: for example, preparing lists of potential tenants and engaging a real estate agency (see Transcript, 3 March 2004, 116, lines 35-46; 4 March 2004, p 79, line 49 to p 80, line 14). On the other hand, Mr Doherty conceded that during the period of vacancies Stockland underspent its advertising budget by a factor of about 33% (see Transcript, 4 March 2004, 68, lines 6-16).
243 None of these answers by Mr Doherty was challenged and the issue of whether there was a deliberate policy of encouraging vacancies was not put to Mr Doherty at any other part of his oral evidence. There was no suggestion in the Tribunal’s judgment that Mr Doherty was an unreliable witness, even though Skiwing made a submission to this effect.
244 After careful consideration, we have come to the conclusion that we must uphold Stockland’s arguments on this matter. In our opinion, there is no evidence of significance to support the finding, made by the Tribunal at [93], that Stockland’s ‘commercial course to reposition its Arcade’ involved ‘intending to sustain a high vacancy rate for a substantial period’.
245 We also discern no evidence to support the more specific finding, at [112], that there occurred a ‘process of issuing the notices, seeking to enforce them and sustaining a high vacancy rate as part of that’ (emphasis added). As we have just pointed out, and as indeed Mr Tonking conceded, the issue of the relocation notices to Skiwing and other tenants contributed only marginally, if at all, to the vacancy rate.
246 It may well be that during 2001 Stockland, in pursuit of what it saw as long-term goals that would benefit both itself and its tenants, 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.
247 Was Stockland therefore in breach? In the light of these conclusions, we must now consider whether the Tribunal’s ruling that Stockland breached the covenant for quiet enjoyment and/or the covenant not to derogate from its grant is sustainable. Clearly, it is not sustainable on the grounds on which the Tribunal relied, because an important element of these was the finding that we have just held to have had no evidentiary basis.
248 Having discerned the Tribunal’s error of law in making this finding and relying on it in deciding that Stockland was in breach of these covenants, we must now consider whether it is appropriate for us to grant leave for this appeal to extend to the merits of the issues arising, or to remit the case to the Tribunal for determination of these issues.
249 In our judgment, the former course is preferable. The transcript of oral testimony and the documentary evidence admitted at the hearing provide sufficient material for us to make a determination. It is undesirable to expose the parties to the costs of a further hearing on this particular issue.
250 As we indicated at [219] above, the case of Carpet Fashion Pty Ltd v Forma Holdings Pty Ltd [2003] NSWSC 460 (Supreme Court); [2004] NSWCA 150 Court of Appeal) provides authority for this proposition: both the covenant against derogation from the lessor’s grant and the covenant for quiet enjoyment must be read down so as not to prohibit conduct by Stockland that would be permitted under clause 20 of the Lease or under any provision within the disclosure statements that was not contradicted in the Lease.
251 The formulation given by Einstein J in the Supreme Court, at [169], is in these terms: ‘the implied covenant of a lessor not to derogate from the grant of a lease is subject to any relevant agreement between lessor and lessee, whether in the lease itself or otherwise’. That this principle extends to other implied covenants appears from the following statement by Kirby P (with whom Hope and Samuels JJA agreed) in Lend Lease Development Pty Ltd v Zemlicka (1985) 3 NSWLR 207 at 218: -
252 In the present context, clause 20 of the Lease is not relevant. But a clause in the lessee’s disclosure statement (see [13] above) requires consideration. The relevant parts are as follows:
It is both consistent with principle and authority of long standing that parties can, by specific agreement, modify or vary covenants that will otherwise be implied from the relationship of lessor and lessee.
253 At [119], the Tribunal dealt with this issue as follows: -
… [the Lessor] may sometimes do things… that may have a temporary or permanent adverse effect on the Lessee’s business (such as tenancy mix changes, carrying out Centre improvements, alteration… etc)’ and the Lessor will not be required to compensate or give notice to the Lessee unless required to do so by the Lease or Retail Leases Legislation.
254 In our view, the distinctly different characterisation that we have given, at [246] above, to Stockland’s conduct with regard to vacancies does fall within this provision in the lessee’s disclosure statement. This is enough of itself to rule out the conclusion that this conduct amounted to a breach of either or both of the implied covenants.
Nor do I think the terms of the Disclosure Statements set out above which reserve to the Lessor the right to vary the tenant mix operate to protect a lessor in circumstances where it sustains a high vacancy rate while implementing a strategy over more than a year to change that mix. Those were disclosures of change of occupancy, not sustained vacancy and removal of the tenant from its long established premises.
255 We consider further that Stockland’s conduct, as so characterised, may not have caused ‘substantial interference’ to Skiwing’s business such as may amount to breach of either covenant. In the Carpet Fashion case at [167], Einstein J said this of the covenant not to derogate: -
256 As authority, his Honour cited the judgment of Palmer J in Kazas & Associates Pty Ltd v Multiplex (Mountain Street) Pty Ltd [2002] NSWSC 840 at [73]. What Palmer J said there appears to us to give a broader range of operation to the covenant: -
None of the tests propounded require a plaintiff lessee to establish that the premises were rendered totally unfit for their intended use. The question is whether, having regard to all the circumstances, the interference with the lessee’s use was so ‘substantial’ or ‘material’ that it is to be regarded as rendering the premises unfit for their particular use.
257 We must also take account of the observation of Handley JA in Wilcox v Richardson (1997) 43 NSWLR 4, cited by the Tribunal at [115], that a claim of derogation from grant ‘has rarely succeeded and only in extreme circumstances’.
It is clear that none of the tests propounded require the lessee to establish that the premises will be rendered totally unfit for their intended use so that the lessee has no remedy if the lessor can show that, despite the interference, the lessee’s business can still be carried on by some expedient or another, however inefficiently or uneconomically. But whether the interference is “substantial” or “material”, whether it warrants an injunction or only a remedy in damages, and whether it is reasonable or unreasonable for the purpose of determining the terms of discretionary relief, are all questions of fact and degree decided on the basis of an overall impression derived from the totality of the evidence.
258 Applying these principles, it is our conclusion that Stockland’s conduct, characterised as we have said above at [246], 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. This ruling is made in addition to our ruling that these covenants did not extend to Stockland’s conduct anyway because it fell within the scope of conduct permitted by the lessee’s disclosure statement.
259 For all these reasons, we must set aside the Tribunal’s award of damages under various heads in relation to the relocation or disturbance of trading claim.
260 Claims based on s 52 of the TP Act. In his written submission to us, Mr Tonking referred to the existence, in the original version of the relocation or disturbance of trading claim, of assertions that Stockland had engaged in misleading and deceptive conduct. These included assertions that
261 This is yet another issue which, for reasons already given, must be reconsidered by the Tribunal. The parties should have the opportunity to argue that the Tribunal must receive further evidence before ruling on Skiwing’s claim of entitlement to relief under the TP Act.
Evidence and submissions in support of these assertions were not put to the Tribunal because it determined that it had no jurisdiction under the TP Act at the commencement of the hearing.
(a) Stockland’s conduct between October 2001 and March 2002 implied that it wished to carry out a major renovation of the Arcade;
(b) Stockland thereby created a state of uncertainty in Skiwing regarding the continuance of its tenancy; and
(c) it ultimately decided, however, not to proceed with the renovation.
262 Claim based on s 34 of the RL Act. In its judgment at [125 – 131], the Tribunal gave consideration to Skiwing’s claim that Stockland’s conduct in maintaining a high vacancy rate and in seeking to relocate Skiwing constituted a breach of s 34 of the RL Act. Stated briefly, this section entitles a lessee, if certain conditions are fulfilled, to compensation from a lessor when the lessor’s conduct has inhibited the flow of customers to the premises or caused significant disruption to the lessee’s business.
263 The Tribunal decided ‘not to entertain this claim’, because in its view there were other grounds entitling Skiwing to compensation and because Stockland had not had an opportunity to bring forward evidence relating to it. The claim had been included in Skiwing’s original application to the Tribunal, but had been omitted from later versions. It had been reinstated only after the parties had closed their cases, on account of the Tribunal’s decision that it had no jurisdiction under the TP Act.
264 In its Amended Notice of Contention, Skiwing alleged that the Tribunal had erred in not entertaining the claim based on s 34. The matter received no specific attention in the appeal hearing.
265 In our view, this aspect of the case should now be dealt with in the same manner as Skiwing’s claims under the TP Act.
The tables and chairs claim
266 It will be recalled that in this claim, Skiwing sought
267 In its judgment at [45 – 50], the Tribunal rejected the claim, on the ground that on the three occasions (in October of each of the three years 1999, 2000 and 2001) when Stockland had given consent for this to occur, its consent was not intended by either party to be for the duration of the lease then subsisting. In particular, the consent given in October 2001 was clearly expressed to last only until 22 December 2001. The Tribunal noted also that, even on Skiwing’s own showing, the consent for which it argued was terminable on reasonable notice.
(i) an order under s 72(1)(c) of the RL Act that Stockland should permit it to place tables and chairs on the Pitt Street level of the Arcade, or
(ii) an award of damages to compensate it for loss of revenue on account of being forbidden to do so.
268 In this appeal, Mr Tonking argued in his written submission that this interpretation of the dealings between the parties was incorrect, because the initial consent, given in October 1999, was in lieu of a rent reduction on account of disruption caused by the Arcade renovation then occurring. Skiwing’s written request in fact commenced with the words: ‘While I am waiting for the balcony to be constructed, instead of giving me a rent reduction…’. But the balcony was never constructed and no rent reduction was ever given.
269 Mr Tonking did not add to this submission at the hearing. The matter was not addressed by Mr Biscoe.
270 In our judgment, these arguments by Mr Tonking are insufficient to support his contention that an agreement extending for the duration of the lease (whether or not terminable on reasonable notice) was concluded. We see no error in this part of the Tribunal’s judgment.
Concluding observations
271 Our principal orders in this appeal are that, for the foregoing reasons, the appeal must be allowed and Orders 1 and 2 of the Tribunal, awarding damages to Skiwing in the relocation or disturbance of trading claim and the balcony claim respectively, must be set aside.
272 In view of our decision that the Tribunal possesses jurisdiction to award damages, in a retail leases case, for a breach of s 52 of the Trade Practices Act 1974 (Cth) or of any other provision of Division 1 of Part V of that Act, we order that Skiwing’s applications in each of these two claims must be reconsidered by the Tribunal in so far as they rely on any alleged breach of that section.
273 We also order that Skiwing’s application in the relocation or disturbance of trading claim must be reconsidered by the Tribunal in so far as it relies on any alleged breach of s 34 of the Retail Leases Act 1994.
274 We further order that the following questions relating to the Tribunal’s reconsideration of these aspects of Skiwing’s claims should be determined by the Appeal Panel at a hearing to be arranged by the Registry: -
275 The costs of this appeal are reserved.
(a) How the Tribunal should be constituted.
(b) Whether and if so under what conditions the parties should be permitted to adduce further evidence.
(c) Any other procedural issues requiring determination.
276 In a separate judgment (Skiwing Pty Ltd trading as Café Tiffany’s v Trust Company of Australia Ltd (No 4) [2004] NSWADT 162), the Tribunal made an order for costs at first instance in Skiwing’s favour. Stockland has appealed against that decision. As has been indicated to the parties, Stockland’s appeal against the costs order will be determined following the resolution of the present appeal.
277 In conclusion, we consider it unfortunate that this judgment leaves a number of issues undetermined and contemplates further hearings. Under s 74 of the RL Act, the Tribunal is obliged to use its best endeavours to bring about a settlement of any retail tenancy dispute before it. At this stage, we can do little more than to suggest that, since a number of the legal and factual issues dividing the parties have in fact been determined, they should attempt once again to settle the remaining issues, so as to avoid the expenditure of yet more time and money.
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