Wy Properties Pty Ltd v O3 Capital Pty Ltd
[2015] WASC 268
•24 JULY 2015
WY PROPERTIES PTY LTD -v- O3 CAPITAL PTY LTD [2015] WASC 268
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 268 | |
| Case No: | GDA:6/2014 | 27 MAY 2015 | |
| Coram: | KENNETH MARTIN J | 24/07/15 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Leave to appeal granted Appeal allowed as regards rental payment monies ordered to be repaid | ||
| B | |||
| PDF Version |
| Parties: | WY PROPERTIES PTY LTD O3 CAPITAL PTY LTD |
Catchwords: | Appeal from the State Administrative Tribunal Need for leave to appeal Need to identify question of law Retail shop Misleading disclosure statement Lease entered for the purpose of establishing Chinese restaurant Inability to obtain planning permission for proposed restaurant due to nondisclosed land resumption issues Reliance upon misleading statement proven Reliance by entry into of five-year lease Lease subsequently terminated by landlord Rent paid over time prior to termination Claim by tenant for repayment of rent as wasted expenditure Claim for repayment refused by landlord Statutory unconscionable conduct also established Lessee failed to recover due to inability to prove loss Rental payments received by landlord were remitted by director of lessee and another Monies remitted to landlord tendered in discharge of lessee's obligation to pay rent Funds received in discharge of lessee's liability for rent |
Legislation: | Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) |
Case References: | Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361 Rowland v Divall [1923] 2 KB 500; (1923) 129 LT 757 The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2008) 39 WAR 1 WY Properties Pty Ltd and O3 Capital Pty Ltd [2014] WASAT 69 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Appellant
AND
O3 CAPITAL PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : STATE ADMINISTRATIVE TRIBUNAL OF WESTERN AUSTRALIA
Coram : MR T CAREY (MEMBER)
Citation : WY PROPERTIES PTY LTD and O3 CAPITAL PTY LTD [2014] WASAT 69
File No : CC 558 of 2013
Catchwords:
Appeal from the State Administrative Tribunal - Need for leave to appeal - Need to identify question of law - Retail shop - Misleading disclosure statement - Lease entered for the purpose of establishing Chinese restaurant - Inability to obtain planning permission for proposed restaurant due to nondisclosed land resumption issues - Reliance upon misleading statement proven - Reliance by entry into of five-year lease - Lease subsequently terminated by landlord - Rent paid over time prior to termination - Claim by tenant for repayment of rent as wasted expenditure - Claim for repayment refused by landlord - Statutory unconscionable conduct also established - Lessee failed to recover due to inability to prove loss - Rental payments received by landlord were remitted by director of lessee and another - Monies remitted to landlord tendered in discharge of lessee's obligation to pay rent - Funds received in discharge of lessee's liability for rent
Legislation:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)
Result:
Leave to appeal granted
Appeal allowed as regards rental payment monies ordered to be repaid
Category: B
Representation:
Counsel:
Appellant : Mr C S Gough
Respondent : Mr D H Solomon
Solicitors:
Appellant : Mills Oakley Lawyers
Respondent : Solomon Brothers
Case(s) referred to in judgment(s):
Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259
Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361
Rowland v Divall [1923] 2 KB 500; (1923) 129 LT 757
The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2008) 39 WAR 1
WY Properties Pty Ltd and O3 Capital Pty Ltd [2014] WASAT 69
- KENNETH MARTIN J:
Introduction
1 By an appeal notice filed 9 July 2014 the appellant, pursuant to s 105 of the State Administrative Tribunal Act 2004 (WA) (the SAT Act), seeks leave to appeal on four grounds alleging errors of law against an adverse decision of the State Administrative Tribunal (the Tribunal) of 11 June 2014: Wy Properties Pty Ltd and O3 Capital Pty Ltd [2014] WASAT 69 (Mr T Carey (Member)).
2 To the extent that it is necessary, the appellant also applies for an extension of time to bring the appeal. That issue arises in somewhat trivial and unnecessarily diverting circumstances concerning the unavailability of an official transcript of proceedings before the Tribunal in order to meet the requirements of O 65 r 10(1)(f) of the Rules of the Supreme Court 1971 (WA) (RSC) and the provision of an 'unauthorised' transcript by the appellant endeavouring to meet its appeal filing deadline. The official transcript emerged and was filed later. During the course of the hearing I indicated that, to the extent an extension of time was required in order to file the appeal and advance the appellant's grounds, that I would grant an extension of time in order to allow the true issue to be confronted (see ts 14).
Overview
3 The essential issue underlying all four grounds of appeal concerns a challenge against the appellant's failure before the Tribunal to establish a 'pecuniary loss' - for the purposes of making good an entitlement to monetary compensation against the respondent, as its former landlord.
4 The basis for the appellant's claim to compensation from the respondent was statutory. It was advanced before the tribunal in circumstances where the appellant and the respondent's acknowledged lessor/lessee relationship under a five-year lease was governed by the provisions of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (the CTRSA Act).
5 In short, the appellant was claiming back all rental payments made to the respondent as its landlord, in the period prior to the landlord's termination of the lease, as, in effect, wasted money. The appellant was also pursuing another $4,000 or so of other so-called wasted expenditure for travel, accommodation and the like. But those claims were rejected. They are a misconceived and an irrelevant distraction. The sole focus of the evaluation that follows on the appeal concerns the overwhelmingly predominant component of the appellant's monetary loss claim; namely, for its wasted rental payments for $168,984.34.
6 That claim arises in circumstances where in June 2011 the appellant had entered into a written lease of premises at Karratha which were owned by the respondent. Its rental payments were governed by that five-year lease. The lease had been entered, as Member Carey said, 'with a view to operating a Chinese restaurant from the premises' [1].
7 The appellant, as is required, had been provided with a disclosure statement under the provisions of s 6 of the CTRSA Act.
8 The disclosure statement contained false or misleading information by negative answers responding to questions about any changes affecting the leased premises - a shopping centre building - which had been notified by statutory or local authorities, or alterations proposed or approved concerning the lease premises.
9 There was actually a disclosable issue concerning proposed changes to the Shire of Roebourne Town Planning Scheme No 8, which had been notified to the respondent in November 2010. They concerned a possible encroachment to the property where the premises were situated by the construction of a road and a development approval - the end consequence of which, if implemented, would be to require demolition of the premises.
10 Member Carey noted:
[The appellant] seeks recovery of all monies paid under the lease, and other expenses associated with negotiating the lease and establishing the business to be run from the premises, on the basis that it would not have entered into the lease had either question been answered correctly. [The appellant] also relies upon the unconscionability provisions of the [CTRSA] Act' [5].
Statutory compensation/loss provisions
11 I divert at this point to note that there are a variety of statutory remedies open to an injured tenant as provided by the CTRSA Act.
12 Section 6(1)(b) allows a tenant to apply to the Tribunal in writing for an order that the landlord:
[P]ay compensation to the tenant in respect of pecuniary loss suffered by the tenant as a result of -
...
(iii) the giving of false or misleading information by the landlord in the disclosure statement.
13 Furthermore, pursuant to s 15F of the CTRSA Act, where unconscionable conduct is established by either the landlord or tenant, then by s 15F(1), the injured party under a retail shop lease, in those circumstances of proven unconscionable conduct, may apply to the Tribunal where it 'suffers, or is likely to suffer, loss or damage because of unconscionable conduct ... for an order that the other person pay compensation in respect of the loss or damage, or for other appropriate relief'.
14 Beyond that, a party who suffers, or is likely to suffer, loss or damage because of misleading or deceptive conduct by a party to a retail shop lease can apply to the Tribunal 'for an order that [that party] pay compensation in respect of the loss or damage, or for other appropriate relief': s 16D(1).
15 I do note s 16D(3)(a), entitling the Tribunal to make an order '(a) an order that a party to the proceedings pay money to a specified person, whether by way of debt, damages or restitution, or refund any money paid by a specified person'.
16 Section 16D(3) is expressed to be without limit to s 26 of the CTRSA Act.
17 Lastly, s 26(1)(a) provides:
Without limiting any power to make an order that is conferred by the State Administrative Tribunal Act 2004 but subject to this Act the Tribunal may make -
(a) an order that requires a party to any matter before it to pay money to a person specified in the order; or
…
18 There was no argument put before me that the statutory financial redress open either via s 6(1)(b), s 15F(1), s 16D(1) or s 26(1)(a) were not fully alive and available to be deployed by the Tribunal had the appellant made out a case for compensation in respect of it suffering monetary loss or damage. However, at the end, the Tribunal found that the appellant failed to show loss in that respect.
Aspects of Tribunal's reasons
19 It is convenient to approach the Tribunal's reasons noting a convenient distillation of key issues found at [7].
20 As will be seen by reference to five issues there stated - the appellant succeeded in respect of all issues save for an ultimately terminal failure to show loss - to meet issue 5(a). I will set out the five issues from [7] of the reasons whilst also adding, by reference to his following reasons, the end result given in respect of each issue by Member Carey.
21 Issue 1 was stated in these terms:
1. Was the negative answer given to the first question false or misleading, in light of [the respondent's] notification concerning the proposed amendment of the Scheme?
22 By reference to [9] - [32] of Member Carey's reasons, he concluded that a negative answer provided by the respondent to the first question asked under the disclosure statement, was false or misleading.
23 Accordingly the appellant met that aspect of its case and there is no challenge to that finding on this appeal.
24 Issue 2 as formulated in [7] of the Tribunal's reasons was in these terms:
2. Was the negative answer given to the second question false or misleading, in light of [the respondent's] development approval?
25 Again, the Tribunal was satisfied the existence of the development approval required an affirmative answer to the second question and therefore the answer which had been given by the respondent was false: see [33] - [36]. There is no challenge to that conclusion before this Court.
26 As formulated, issue 3 was in terms:
3. If the answer to either or both of the first two questions is 'yes', did [the appellant] rely upon the incorrect answer or answers?
27 As expressed under [37] - [55] of the reasons, Member Carey was ultimately satisfied that there had been reliance by the appellant upon the erroneous answers provided in the disclosure statement by the respondent.
28 It is clear from an assessment of the Tribunal's reasons that the factual conclusion reached in the end as regards alleged reliance, was that the appellant would not have proceeded with its lease with the respondent, had it been made properly aware of the true factual position concerning the possibility of a significant encroachment in the future of a new road and, as well, that there was an approved development application obtained by the respondent in respect of the affected land.
29 Like the position in respect of the earlier answers by the learned Member on the previous questions - there is no challenge (nor could there be) to the reliance conclusion of fact that was reached in this third aspect of the reasons.
30 I will return to those reliance reasons in some greater detail later in my reasons - because they are relevant to the understanding of the issue of pecuniary loss - which, as seen below, is essentially the only live issue now in dispute under the appellant's four proposed grounds of appeal
31 Issue 4 was in these terms:
4. In all the circumstances, is the case for liability based on alleged unconscionability made out?
32 Again this issue was ultimately answered by the Tribunal in the affirmative: see [56] - [64] of the learned member's reasons.
33 Since they bear upon the question of pecuniary loss subsequently to be assessed I mention quickly [63] - [64] of this aspect of the reasons concerning the findings as to unconscionability against the respondent. They were as follows:
The bottom line, arising from [the respondent's] deliberations about the proposed Scheme amendments, is that if the amendments were adopted, [the respondent] would in all likelihood sell Lot 1950. If not, its express intention was to get on with the project the subject of the Development Application. In the event of the latter, the evidence strongly supports [the appellant's] claim that there would be no suitable alternative premises available to [the appellant] during construction. Either way, it was incumbent upon [the respondent] to inform [the appellant] about both possibilities, either one of which would have constituted a strong disincentive to a prospective tenant before commencement of its tenure. The factor appearing as s 15C(2)(i) of the [CTRSA] Act might well have been drafted with this case in mind.
I find [the respondent's] conduct identified in this section of these reasons to constitute unconscionable conduct for the purposes of s 15C(1) of the [CTRSA] Act. (emphasis added)
34 Issue 5 as posed under [7] of the learned Tribunal member's reasons had two components. It was framed:
5. In relation to the question of loss:
(a) Has [the appellant] suffered any, and if so what, losses?
(b) If so, are the identified losses attributable to [the respondent's] breaches or to [the appellant's] own conduct?
36 As regards issue 5(b) at [91] - [96] of the reasons the Tribunal answered this issue in the negative.
37 As regards issue 5(b), member Carey said:
(1) Despite the concurrence of the delay occasioned by Mr Luo [the appellant] as a factor contributing to the end result that the business failed to open, the proven breaches of the [CTRSA] Act continued to operate as the primary causes, given that [the appellant] would not have entered the lease had they not been committed and proper disclosure given.
(2) [The appellant] had a right, as tenant, to act, in relation to its leasehold interest, as it saw fit, provided it did not breach the lease. In the absence of information that delay might put its proposed development at risk, it was entitled to delay the making of the planning application.
(3) Despite receiving information that the Shire amendment affecting Lot 1950 was becoming more likely, [the respondent] gave no notice to [the appellant] of this, and, rather, gave indications to the opposite effect. It does [the respondent] no credit in this proceeding to claim that [the appellant] contributed to its own demise by failing to take steps which, in retrospect, might have salvaged its position to some extent, when [the respondent], with its superior knowledge, failed to inform [the appellant] that the demise of the premises it was leasing was becoming ever more likely. (emphasis added)
38 Again there was no relevant challenge to the conclusions reached by the Tribunal in addressing issue 5(b), in the context of this appeal.
The four grounds of appeal
39 It is accepted by the parties that the constraints of s 105 of the SAT Act are such that there can only be an appeal from a decision of the Tribunal, if this court gives leave to appeal. Furthermore, any appeal can only be validly brought on a question of law. The law in this respect is now more than well-established: see Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361.
40 I turn then to four grounds of appeal raised by the appellant. Compressed to their essence, they each contend for an error of law upon the basis of the Tribunal finding against the appellant (albeit finding in favour of the appellant in respect of almost all other relevant respects - as regards false statements in a disclosure statement, misleading as well as unconscionable conduct, and then, reliance by the appellant upon such statements or conduct by entering into the five-year lease with the respondent for the premises).
41 It is only really necessary for me to recite ground 2 of the appellant's grounds which contended:
The Tribunal erred in law in not finding that the making of the Relevant Payments caused the appellant to suffer loss and/or pecuniary loss and/or damage (as those terms are used in the Commercial Tenancy (Retail Shops) Agreements Act 1985).
42 Essentially then, the fundamental underlying error of law, as was contended for on the application for leave to appeal by the appellant, challenges the conclusion by the Tribunal as regards loss not being established by the appellant (and I am assessing that issue of loss only in the context of rental payments received by the respondent, notwithstanding the wider term in ground 2 'Relevant Payments'.
43 There is a need for some greater clarity and specificity as regards the term 'Relevant Payments' (defined under ground 1 by reference to [69] of the learned member's reasons). The overwhelming component of that claim was in respect of the rent received by the landlord from the commencement of the tenancy until the end of July 2012 plus a further amount of rent of $22,750.
44 There was a distinct other amount claimed in respect of so-called 'expenses' of the appellant which was specifically addressed by the learned member (distinctly to the claim in respect of the recovery of rent payments) under [66] and [97] - [99] of his reasons. Those reasons and the underlying factual conclusions (see particularly [98] last sentence, and [99] second sentence), on my assessment, present insurmountable obstacles to any challenge as regards expenses other than rent. The Tribunal's conclusions concerning those expenses were essentially reached upon a factual analysis of the deficiencies in the evidence adduced by the appellant through Mr Frank Luo. From a quantitative perspective they are of an uneconomic order, around some $4,000. Hence, they form only a minor and distracting aspect upon this application for leave to appeal. By their character they were expenses which (unlike rent) were never paid over to and received by the respondent landlord. Such expenses are conceptually different in legal character to the more substantive claim for the rent - claimed under the subject matter of the heading 'Relevant Payments', and towards which I am exclusively concerned from this point.
45 From the necessary perspective of showing an error of law, as required by s 105(2) of the SAT Act, rental payments received by the respondent present, from a perspective of their required evaluation as the subject matter of a claim for pecuniary loss and compensation by the appellant, as conceptually unique. A 'claiming back' of the rental payments that were received by the landlord respondent, throws up for evaluation a confined and proper question as to the correct legal characterisation of such monies as received in the hands of the landlord. In my view, this issue does raise an arguable question of law.
46 I now turn directly back to the reasons of Member Carey concerning loss - where the appellant ultimately failed.
47 As I mentioned, it will be convenient to introduce those reasons by elaborating upon some of the earlier (unchallenged) findings concerning reliance favouring the appellant and to be found at [37] - [55] of the learned member's reasons.
The respondent's written submissions of 9 December 2014
48 The respondent filed lengthy written submissions. Significant components of them were directed at legal issues concerning the need for leave to appeal and reminding me of the need for the detection of an error of law and warning against over-zealous judicial review: see the reference to Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259, 272.
49 Technical objections were then directed at the character of each of the grounds of appeal on the basis that they did not truly raise an error of law.
50 For reasons which I will explain the misdirected focus of the learned member upon the character of the party remitting the monies ultimately received by the respondent (in discharge of the rental obligations of the appellant) was indeed an error of law by fundamentally mischaracterising the nature of the funds which were received. That error led the learned member to conclude that the appellant had suffered no pecuniary loss entitling it to compensation - being essentially the only basis upon which its claim was defeated. In my assessment the errors involved in reaching that conclusion were essentially characterisation errors falling within the remit of this court to correct as errors of law.
Six underlying key facts
51 Before commencing that assessment, however, it is convenient to collect and restate six fundamental underlying facts which are uncontroversial upon this appeal. They are as follows:
(1) it is not controversial that in the period before 1 June 2011 the appellant's agent, Mr Frank Luo, had been seeking premises at a shopping centre in Karratha for the purposes of a longer term establishment of a Chinese restaurant;
(2) on 1 June 2011, the appellant and the respondent enter into a lease agreement with a five-year term in respect of the appellant's leasing of Unit 1, Lot 1950 for a period of five years;
(3) payments were then remitted to and received by the respondent as rent, over the duration of the lease;
(4) on 29 March 2012, the appellant lodged an application to develop a buffet Chinese restaurant on Lot 1950;
(5) on 3 October 2012, the appellant emailed the respondent asking for a refund of monies paid under the lease; and
(6) on 10 October 2012, the respondent emailed the appellant terminating the lease, stating they would seek a refund (of monies paid under the lease) from the local council.
Why the appellant lost by failing to show it had suffered any relevant financial loss before the Tribunal
52 As now seen, it was the Tribunal's negative answer to the question posed under issue 5(a) which was the one critical deficiency in the appellant's case, as assessed by the Tribunal. To understand why involves a close evaluation of [65] - [90] of the learned member's reasons. As mentioned, I will also at places incorporate some of the allied conclusions (favourable to the appellant) under the 'reliance' aspects of his reasons since they interact with and bear upon the issue of loss.
53 At [65] Member Carey said:
[The respondent] raises two primary grounds to refute the necessary nexus between the conduct in breach of the [CTRSA] Act and any pecuniary losses sought. They are:
a) payments made in respect of rent were not made by Mr Luo and his wife in circumstances where [the appellant] was obliged to repay them, and [the appellant] otherwise suffered no loss; and
b) [a ground relating to the appellant's delay in applying for planning approval, which as has been seen was resolved favourably to the appellant].
- See also [66] concerning the respondent's reimbursement of expenses other than the claim in respect of rental payments.
54 The culmination of Member Carey's reasons in this section - leading ultimately to the failure of the appellant's claim for its rent payments back from its landlord - is found at [89] - [90]. The reasons, in effect, see the learned member accepting the respondent's submission, made by reference to the party or parties conducting other businesses of a like kind to the Chinese restaurant proposal, that the appellant had not suffered any loss: see [72].
55 It is convenient to commence by reference to one factual conclusion stated by the learned member. He said:
The totality of the evidence has led me to find, on the balance of probabilities, that any business to operate from the premises would not have been conducted by [the appellant], but by either Achmore or the partnership comprising Mr Luo and Ms Yuan [79].
56 So much can be accepted. Indeed in circumstances where the appellant can only seek leave to appeal upon the basis of showing an error of law it is simply not open now to challenge that factual finding.
57 Nevertheless, in my view, the finding is irrelevant to the crucial issue requiring a determination as regards financial loss. What might have happened one way or the other in the future concerning the actual identity of the operator of a Chinese restaurant once established, in my view, is neither here nor there as regards rental payments made under a lease before the restaurant is established. A more critical determining factor, which was not at issue, is the existence of the binding lease agreement in the relevant period, as between the appellant as lessee and the respondent as lessor.
58 Necessarily arising from that lessor/lessee relationship is the core obligation of the appellant (tenant) to pay rent. What might happen in the future as regards uses of the leased premises under arrangements for a Chinese Restaurant by way of further negotiation, assignment, sub-letting, etc, poses simply irrelevant conjecture about the future. They were not considerations at all relevantly bearing upon the context of this claim by this appellant (lessee) to get back all rental payments received by this landlord - on the basis that, had the lessee been given the proper disclosure information, and not been subjected to misleading or unconscionable conduct, it would not then have relied upon that erroneous information and then not signed up to a five-year lease, as it did (which leasing commitment bound and exposed it to paying rent to the respondent).
59 The Tribunal ended this section of the reasons adversely to the appellant, as regards loss, in the following terms:
The fact, as I have found it, that the proposed business was never going to be operated by [the appellant] means that the rent payments made by Mr Luo and Ms Yuan [Ms Yuan being identified at [52] as Mr Luo's wife and a director and guarantor of the lease. Mr Luo is not a director but along with his wife was a guarantor: see also [51]] cannot be characterised as payments by the guarantors of [the appellant's] obligations under the lease. It follows that [the appellant] is unable to establish any losses sustained by it for which it is entitled to be compensated. Although it is unnecessary for me to determine the correct character of the payments, the evidence suggests that they are probably payments made by the partnership which would have operated the business, presumably following an assignment of the lease to the partners, as occurred in the case of the Geraldton business (to Achmore).
On an application for compensation by [the appellant], it is not competent, by amendment or otherwise, for this Tribunal to reconcile the apparent disconnect between, on the one hand, the applicant, and, on the other, another party incurring expense as a result of conduct in breach of the [CTRSA] Act, in circumstances where the paying party does not have the status of a tenant under a retail shop lease [89] - [90].
60 In short, a substantial error (of law) by the learned member arose by essentially focusing on the wrong side of the rent transaction, ie, the payer of funds. He should instead have been focusing upon the recipient of rent, ie, the respondent, rather than how the appellant had managed to obtain the discharge of its rental obligation.
61 It is of paramount importance here to understand that the funds received by the respondent are accepted to have been applied by the respondent against the liability of the appellant to effectively discharge the liability of the appellant to remit rent to the respondent, under the obligations which bound the appellant by the lease. There can be no valid argument then that the respondent had received from a third party volunteer some sort of voluntary payment or donation, ie, from Mr Luo and Ms Yuan. It received the rent due to it by the appellant under a lease. That position is effectively misunderstood and misstated by the learned member at the first sentence of [89], where he refers to 'the rent payments made by Mr Luo and Ms Yuan'. Rent can only be paid by a lessee. In present circumstances the rental liability was that of the appellant, not that of Mr Luo and Ms Yuan.
62 These reasons as regards loss under [89] - [90] reflect a fundamental error of law which require the appeal to be allowed as regards the appellant's claim for loss and compensation by reference to claiming back from the respondent rent monies which it received over the duration of the lease.
63 Furthermore, a diverting excursion undertaken by the Tribunal towards considering whether Mr Luo and Ms Yuan had made these payments in their capacity as guarantors of the appellant's lessee obligations under the lease, was another exercise in irrelevance. It is accepted (see ground 1) for the purposes of this appeal that the conclusion of the learned member (see [81] of his reasons) that the payments were not made in discharge of their obligation as guarantors of the lessee's obligations under the lease is to be accepted. So it is. But that conclusion does not emerge against or address the substantive issue of characterisation required in respect of monies received by the respondent.
64 The respondent did not receive any voluntary payment, as perhaps the last sentence of [81] of the reasons could be read to suggest. What was demonstrably received was the rent due from the appellant. The fact that the money had been remitted (in the circumstances remitted on behalf and to discharge the liability of the appellant as lessee) by Mr Luo and Ms Yuan, in law, does not detract from its underlying character as a rental payment received on behalf of the lessee and in discharge of the lessee's obligation to pay rent.
65 Accepting their guarantees had not been called by the respondent, it still remains easy to see, from a commercial perspective, why a director of the lessee who is a guarantor (Ms Yuan) and her husband Mr Luo (who is not a director but is a guarantor and who had acted as agent for the appellant in finding the Karratha premises) would wish to see that the rental obligation of a primary lessee obligor in the position of the appellant is discharged - in order to circumvent a possible future prospect of their guarantee obligations being factually called upon. See, for instance, the observations by Owen J in The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2008) 39 WAR 1 [9463] - [9488].
66 In the present circumstances an evaluation of the relationship as between the lessee and parties remitting monies which upon receipt discharge the lessee's rental obligation is, strictly speaking, unnecessary. As far as the landlord is concerned it has received its rent. It is concerned with nothing more. The nature of fund raising undertaken by the lessee, in order to secure money to be paid to discharge its rental payment obligations is, essentially, another irrelevant distraction. The landlord should not be concerned (absent illegality). It is accepted that is not the position here. It is accepted that the monies were received as rent: see ts 52.
67 At a distance, drawing a conclusion that the monies paid by Mr Luo and Ms Yuan on the appellant's behalf to discharge its rent liability to the respondent is hardly challenging. An absence of any books of account of the appellant showing a debtor/creditor relationship as between the appellant and Mr Luo and Ms Yuan, does not inhibit such a conclusion. But even if, say, wholly hypothetically, payment had been made by Mr Luo and Ms Yuan effectively by way of bestowing a gift benefit upon the appellant (by having its rental obligation to the respondent discharged), that hypothesis would still not detract from the proper characterisation of the funds received by the respondent, in its hands, as rent.
68 The key question then is whether by any of the statutory provisions in play from the CTRSA Act as earlier mentioned, the appellant could claim back these rental monies as its loss, damage or compensation? That was the correct question to be posed and which regrettably was not focused upon given the way other irrelevant and distracting considerations assembled, effectively by way of diversion against a proper focus upon the true question concerning loss.
69 The error of law into which the learned member fell is also demonstrable under [90] of the reasons, where the concluding focus upon paying entities (rather than the recipient party) confirms error. If, say, the appellant and its directors had gone to their bank and organised a bank cheque which was presented to the respondent in discharge of the appellant's rental obligation - clearly then the paying party would have been the bank. Nevertheless that would not have detracted from the character of the ultimate payment as a rental payment.
70 The question then is whether any of the statutory provisions which I earlier identified under the CTRSA Act allowed the recovery of the rental payment? Or, in other words, did the appellant suffer pecuniary loss?
71 Clearly, in my view, the answer to that question must be 'Yes'. That affirmative conclusion logically follows from the (unchallenged on this appeal) findings reached as regards reliance in section 3 of the learned member's reasons. In the reliance section of his reasons the learned member had said:
[The appellant's] case on reliance is quite simple. Mr Luo, who is not a director of [the appellant] but was responsible for locating and securing premises for it, says that [the appellant] would not have proceeded with the lease had he been made aware of one or both of the following:
• the possibility that there might be a significant encroachment on Lot 1950 in the form of a new road; and
• that [the respondent] had an approved development application affecting Lot 1950 [37].
72 Those propositions were accepted.
73 The learned member then concluded his reasons as regards reliance, in terms:
I cannot accept that [the appellant's] case on reliance fails because no evidence of the directors of [the appellant] was adduced. Mr Luo was the agent of [the appellant] for the purposes of the pre-lease negotiations, and, in the context of a small private company such as [the appellant], where the directors are Mr Luo's wife and a friend who speaks little English, Mr Luo's actual authority regarding the conduct of the negotiations and formulation of recommendations to [the appellant] is accepted as being comprehensive. In particular, I am satisfied that any view Mr Luo adopted that [the appellant] should not enter the proposed lease would be accepted by the directors. I am further satisfied that had the correct answers to the first and second questions in the disclosure statement been given, Mr Luo would have recommended that [the appellant] not proceed with the lease, and it would have followed his recommendation [53]. (emphasis added)
74 Given those conclusions as to reliance (factual conclusions which are now unassailable), it is necessary to proceed from the position that, but for the statutory wrongs which the appellant established as being suffered, the appellant would never have entered the lease it did with the respondent. Had that not happened, it would not have incurred any obligation to remit, and then subsequently remit, rental payments, as happened. The lease was ultimately terminated before a restaurant was established at the premises.
75 In all those circumstances, from a perspective of showing an entitlement to compensation based upon the sustaining of pecuniary loss, it is proper, in my view, to characterise the rental payments received by the respondent, as wasted payments, for which the appellant is entitled to be compensated. Under unassailable factual findings reached by the Tribunal, the appellant would not have incurred rental liabilities with the respondent had it not been subjected to the statutory wrongs it proved. Even though it had the benefit of exclusive possession of the premises in the period of the lease, prior to it being terminated, that is a different benefit and is legally irrelevant: see Rowland v Divall [1923] 2 KB 500; (1923) 129 LT 757. The exercise upon which Mr Frank Luo, for the appellant, had embarked for the purposes of there being established in due course a Chinese restaurant, was wholly undermined. This arose as a result of statutory wrongs to which it was exposed. In those circumstances, the appellant is entitled to be compensated for the effectively wasted rental payments consequently received by the respondent. Those rental payments must be disgorged by payment of $191,734.34 to the appellant.
Conclusion
76 I allow all grounds of the appeal (which essentially go to that same legal issue best encapsulated under ground 2) and allow the appeal. On that basis I would order that the respondent pay the appellant the amount of $191,734.34 by way of the repayment of all rental payments made under the lease prior to the lease being terminated. I will hear the parties as to the question of interest and as to costs. Costs, of course, should prima facie follow the event of the appellant's success on this appeal.
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