Yao & Anor v Cambooya Properties Pty Ltd [2004] NSWADT 55

CITATION: Yao & Anor v Cambooya Properties Pty Ltd [2004] NSWADT 55 DIVISION: Retail Leases Division APPLICANT PARTIES: Wei Ming Yao & Jain Mei Qian RESPONDENT Cambooya Properties Pty Ltd FILE NUMBER: 035081 HEARING DATES: 24/11/2003 SUBMISSIONS CLOSED: 03/05/2004 DATE OF DECISION: 03/18/2004

BEFORE: Chesterman M - ADCJ (Deputy President); Fairweather R - Member; Harrison B - Member APPLICATION: Claim for declaration of rights, obligations and liabilities under a lease - Damages - Unconscionability MATTER FOR DECISION: Principal matter LEGISLATION CITED : Retail Leases Act 1994 Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060 Bragg v Alam [1981] 1 NSWLR 668 Butcher v Lachlan Elder Realty; Harkins v Butcher [2002] NSWCA 237 CASES CITED: Harries v Bryant (1827) 4 Russ 89; 38 ER 738 Leads Plus Pty Ltd v Kowho Intercontinental Pty Ltd [2000] NSWSC 459 Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407; 66 ALJR 399 Olsson v Dyson (1969) 120 CLR 365 Tessari v Bais Pty Ltd (1992) 60 SASR 59 APPLICANT REPRESENTATION: D Gasic, barrister RESPONDENT R Bellamy, barrister ORDERS: 1. Application dismissed; 2. Liberty to apply within 28 days to argue costs.If no application within that time, no order for costs

The nature of the Applicants' claims 1 In this matter, the Applicant Lessees claim remedies against the Respondent Lessor on the following basis. They allege that ISPT Pty Ltd ('ISPT'), the Respondent's predecessor in title to the leased premises, refused to grant a new lease to them even though they had sufficiently indicated to ISPT's agent, Mr Michael Ryan, that they wished to exercise a valid option of renewal for three years contained in an existing lease. They allege further that in the circumstances of the case the Respondent, as successor in title to ISPT, is amenable to the same or similar remedies as might be obtained by them against ISPT. 2 The lease in question ('the Lease') was of retail shop premises at Shop 1, 63-79 Parramatta Road, Silverwater ('the premises'). The business carried on in the premises was that of a cafeteria. The Lease was governed by the Retail Leases Act 1994 ('the Act'). 3 The remedies that the Applicants seek are: (a) a declaration under s 72(f)(iii) of the Act that they validly exercised the option to renew the Lease; (b) an order under s 72(c)(i) or (iv) that the Respondent grant them a new lease for the term of three years specified in the clause conferring the option; and (c) an award of damages under s 72(1)(a) (for breach of contract) or s 72AA(1)(a) (for unconscionable conduct) to compensate them for the loss of goodwill of the business and/or its value. The earlier dealings involving the parties and their predecessors 4 The Lease was originally granted by Pendal Nominees Pty Ltd, a previous owner of the premises, to Thomas Laming and Yvonne Laming for the period from 1 September 1990 to 31 August 1998. During 1995, it was assigned to Barry Enterprises Pty Ltd. 5 As part of this transaction assigning the Lease, a new clause 24 was added to Schedule 2. It was headed 'Option to Renew' and, so far as relevant, provided as follows:- 24. If: (a) a period or periods commencing after the term of this Lease is or are specified or deemed to be specified in the Reference Schedule (the period, if any, which commences immediately after the term of this Lease being hereinafter referred to as "the Option Term"); and (b) the Lessee, at any time not later than 90 days prior to the last day of the term of this Lease, gives the Lessor notice in writing of his desire to take a lease of the Premises for the Option Term; and (c) on the date of such notice and on the last day of the term of this Lease there is no unwaived and unremedied breach of any of the Lessee's obligations under this Lease; then the Lessor at the Lessee's cost, shall grant to the Lessee a lease (hereinafter referred to as "the Option Lease") for such Option Term… 6 In a Reference Schedule, also added to the Lease as part of the assignment to Barry Enterprises Pty Ltd, the following passage appeared under a heading 'Clause 24: Option Terms':- 1st Option Term: Four (4) years commencing on 1 September 1998 and terminating on 31 August 2002. 2nd Option Term: Three (3) years commencing on 1 September 2002 and terminating on 31 August 2005. 7 On 17 April 1997, Barry Enterprises Pty Ltd assigned the Lease to Con Mitrokas and Georgia Mitrokas. On some date between April 1997 and February 2000, Pendal Nominees Pty Ltd sold the premises to ISPT. 8 On or about 14 February 2000, Mr and Ms Mitrokas exercised their option to renew under Clause 24 and were granted a lease by ISPT for the 1st Option Term, from 1 September 1998 to 31 August 2002. This lease was registered. An Amendment Schedule in the new agreement of lease included a substituted Reference Schedule, which under the heading 'Clause 22 (sic): Option Term' included the words '1 further term of 3 years (1/9/2002 – 31/8/2005)'. 9 On 14 June 2000, the Applicants purchased the cafeteria business carried on at the premises from Mr and Ms Mitrokas. According to Mr Wei Ming Yao, the First Applicant, they took over conduct of the business on 4 August 2000. 10 There was some delay in completing the formalities of assigning the Lease to the Applicants. Ultimately, the outgoing and incoming lessees and ISPT, the lessor, executed a Deed of Assignment and Consent to Assignment to Lease. It is dated 11 April 2001. 11 In purchasing the business and obtaining the assignment of the Lease, the Applicants retained Mr Lawrence Lai, of Lai & Co, Lawyers, to act on their behalf. Mr Lai's firm acted for them in these proceedings. 12 During July 2000, Mr Michael Ryan, a property manager employed by Knight Frank, became the agent responsible to ISPT for management of the complex in which the premises are situated. They constitute the only shop in the complex, which otherwise consists of warehouses and offices. Mr Ryan has experience over about 30 years in the management of commercial property. The Applicants' claim that they had validly exercised the option to renew 13 According to clause 24 of the Lease, if the Applicants were to exercise their option to renew the Lease that had been assigned to them, they were obliged to give written notice to ISPT by 3 June 2000, this being 90 days before the expiry of the Lease on 31 August 2000. They tendered no evidence, however, of having complied with the obligation to give the notice in written form and thereby implicitly acknowledged that they had failed to comply with it. 14 In consequence, on 2 August 2002 they received a letter of that date from Mr Ryan stating that the option had not been exercised, that ISPT did not intend to renew the Lease and that the Lease was terminated as of 2 February 2003. A second letter of the same date advised that ISPT was putting the premises on the market for sale. In a letter of reply to Mr Ryan dated 18 August 2002, the Applicants stated that, as they had told Mr Ryan 'several times in March, April and June', they wanted to renew the lease, but they were not aware until 2 August that they should have sent him a letter to that effect. 15 The premises were transferred by ISPT to the Respondent on or about 12 December 2002. The transfer was registered. Mr Ryan continued to act in the capacity of managing agent. 16 Despite these developments, the Applicants have remained in possession and have paid rent, which has been accepted by the Respondent. 17 The principal basis of their claims in these proceedings was that in the course of a number of conversations with Mr Yao between December 2001 and early June 2002, Mr Ryan, in the capacity of an agent of ISPT, was orally notified of their desire to exercise the option and waived the requirement that the notice be in writing. 18 Mr Yao and Mr Ryan gave evidence, both written and oral, as to the content of conversations that they had during this period. Their accounts were in sharp conflict on the crucial issue of whether Mr Ryan said anything that might constitute such a waiver. 19 A further ingredient of the Applicants' claim was that, as Mr Ryan knew or should have realised, Mr Yao, who represented himself and his fellow-lessee in dealings with ISPT, did not speak English well, having migrated from China in 1989, had not been educated in Australia and had no prior experience in commercial property transactions. Mr Yao's account of his conversations with Mr Ryan 20 According to Mr Yao, all the conversations with Mr Ryan occurred in or near the premises. 21 The first was on a morning in December 2001. He said to Mr Ryan: 'I want to exercise the option to renew the lease.' Mr Ryan replied: 'I know, I know, I will fix it.' Mr Yao then complained that the water in a swimming pool near the premises had become smelly because the pump was not working. 22 The second conversation was in the middle of March 2002. Mr Yao said to Mr Ryan that he wanted to renew his lease, as he knew that it came to an end the following August. Mr Ryan replied that he would go back to his office, adding 'I will fix it for you'. They then discussed other matters, such as the fact that the shop sometimes became unduly hot and that according to Mr Ryan there were plans to carry out alterations to it. 23 Thirdly, towards the end of April 2002, Mr Yao called out to Mr Ryan, who was passing near the premises with his assistant, Mr Eugene Chew. He said to Mr Ryan that his lease would expire soon and that he wanted to renew it. Mr Ryan said that he knew about it and would fix it. 24 There were, according to Mr Yao, at least two more occasions, during May or early June 2002, where he asked Mr Ryan about renewal of the lease and again received the reply that he need not worry as Mr Ryan would 'fix it'. 25 In cross-examination, Mr Yao said that in fact he had had a conversation with Mr Ryan about renewal of the lease 'at least ten times'. 26 Mr Yao testified also that he was reassured by the fact that, in apparent response to his complaints about the swimming pool and the excessive heat in the premises, the swimming pool was drained of water and contractors came to the shop to prepare quotations for the proposed alterations. He referred also to the hot water system being fixed immediately after he had complained about a breakdown to Mr Ryan. He said also that throughout this period he found Mr Ryan to be very friendly and believed him to be honest. Mr Ryan's account of his conversations with Mr Yao 27 According to Mr Ryan's affidavit, between March and July 2002 Mr Yao spoke to him on several occasions about exercising the option. He could not recall the precise dates or details. In all of them, Mr Yao said that his lease was about to end and asked when he could sign a new lease. In reply, Mr Ryan said that he should speak to his solicitor about this matter. 28 In his affidavit, Mr Ryan denied having indicated to Mr Yao (a) that he would arrange an exercise of the option clause or would exercise it on Mr Yao's behalf, (b) that, in response to Mr Yao's inquiries about exercise of the option or a new lease, he would 'fix it', (c) that he would arrange a new lease for Mr Yao, (d) that the option could be exercised orally, or (e) that Mr Yao had in fact exercised it. 29 In examination in chief, Mr Ryan indicated that towards the end of 2001 the property investment manager of ISPT instructed him to make the complex, of which the premises formed part, ready for sale during the following year and for that reason not to do anything to encourage the exercise of options of renewal of leases. Mr Ryan testified that to say to Mr Yao, when asked about renewal of the Lease, that he should consult his solicitor seemed to him at the time to be an appropriate way of fulfilling the latter instruction. He rejected Mr Yao's statement that conversations on this topic occurred as many as ten times. He indicated also that he realised that, seen from Mr Yao's point of view, the refusal by ISPT to renew the lease was 'not fair'. 30 In cross-examination, Mr Ryan qualified his written testimony in two significant respects. First, he agreed that the first of the relevant conversations with Mr Yao might have occurred in December 2001, not March 2002. Secondly, he said that he 'would have' told – rather than that he actually did tell – Mr Yao to see his solicitor about exercise of the option, because this was his 'standard practice' in such a situation. 31 Mr Ryan also said that towards the end of his conversations with Mr Yao he 'became resigned to' the fact that Mr Yao was 'not going to go about it' (i.e., renewing the lease) in 'the right way'. He acknowledged that for this reason what he saw as his duty to ISPT – which in his view prevented him from advising Mr Yao to give notice in writing – appeared to be in conflict with his obligation under the Code of Conduct of the Real Estate Institute of New South Wales to act honestly and fairly towards all parties in negotiations or in a transaction. He said that he considered this to be a difficult issue, which, as he put it, 'I had to resolve… within myself'. Our findings regarding the conversations between Mr Yao and Mr Ryan 32 As will have become apparent, there is a crucial conflict of testimony between these two witnesses. In resolving these proceedings, it is highly desirable, if not essential, that we indicate which version of the conversations between them is to be preferred. 33 For a number of reasons that were pressed upon us by Mr Bellamy, counsel for the Respondent, our conclusion is that Mr Ryan's account must be accepted in preference to that of Mr Yao. 34 The principal reasons for this are (a) that Mr Yao's evidence regarding the conversations was open to challenge on a number of significant matters and (b) that he failed, without any explanation, to tender corroborative evidence which, on the face of it, would not have been difficult for him to obtain. 35 One basis on which Mr Yao's evidence in the proceedings was open to challenge was that, on two important points, it contradicted statements that he had made both in the letter to Mr Ryan dated 18 August 2002 and under the heading 'complaint' in the Applicants' application, filed in November 2002, for mediation of the present dispute. These mediation proceedings named Mr Ryan as the 'other party', not ISPT or the Respondent. 36 First, in both of these statements, Mr Yao gave March 2002 as the time of his first conversation with Mr Ryan. He made no mention of an earlier conversation in December 2001. 37 Secondly, in the letter of August 2002 he did not allege that Mr Ryan had used phrases such as 'I will fix it' when asked about renewal of the lease. In the application for mediation, the phrase that he attributed to Mr Ryan in the conversation of March 2002 was 'I will check it', not 'I will fix it'. 38 In cross-examination, Mr Yao could not adequately explain these discrepancies between his earlier statements and his written and oral evidence in these proceedings. In relation to the complaint in the application for mediation, for instance, he said only that it was only a 'preliminary preparation' and that he had had only a short time to prepare it. Mr Yao also provided no good reason for having done nothing more than continuing to rely on Mr Ryan to attend to exercise of the option even though on every occasion when he raised the matter with Mr Ryan – in his evidence, on as many as ten occasions – it was made it clear to him that nothing had been done. 39 When Mr Yao was asked why he was not aware that the Applicants needed to give a written notice if they wished to exercise the option, his answers were again unconvincing. 40 The context in which this question was first put was as follows. He said that when he signed the agreement to purchase the business from Mr and Ms Mitrokas his solicitor, Mr Lai, explained to him, amongst other things, that if he wished to renew the lease the option had to be exercised during 2002. He said also that at that time he realised the importance of exercising the option at the appropriate time. He denied, however, that Mr Lai told him that the option had to be exercised in writing. 41 Mr Bellamy then asked him by what means he thought he would exercise the option. He replied that he did not believe writing to be essential, because 'many friends' of his, who were small business owners, exercised their options of renewal by orally informing the owner or the agent. They were not required, he said, to give a written notice. 42 Later in his evidence, however, Mr Yao said that he was not told about these matters by his friends until after he had received the letter of 2 August 2002, informing him that the option had not been exercised and that the Lease was terminated as of 2 February 2003. 43 At the end of re-examination, Mr Yao offered a further explanation for not having asked Mr Lai how to exercise the option. This was that he knew through experience that the situation was similar to the renewal of a residential lease, which (he said) could be done orally. 44 Mr Bellamy challenged Mr Yao's statement that Mr Lai had not given him any advice on how to exercise the option. Mr Bellamy argued that this was unlikely, for the following reasons. In Mr Lai's invoice to the Applicants for acting on the purchase of the business, one item in the list of professional services was 'peruse and advise on lease, terms negotiation'. The total amount of fees charged for professional services was $1,100. There were other related matters on which Mr Lai clearly did provide assistance and advice. Mr Yao told him at the time that he had difficulty reading legal documents in English. 45 So far as corroborative evidence is concerned, Mr Bellamy argued that Mr Lai, whose firm was instructed by the Applicants in these proceedings, could have given evidence about the advice that he had given to Mr Yao, but was not called as a witness. The response of Mr Gasic, counsel for the Applicants, was that Mr Yao's solicitor in these proceedings was Mr Beng Koo, not Mr Lai. 46 Mr Bellamy added that there was similarly no corroborative testimony from Mr Yao's co-lessee, the Second Applicant. Mr Gasic's response was that the Second Applicant, Mrs Yao, had not been present at any of the relevant conversations. 47 Mr Gasic submitted that Mr Ryan's evidence of having advised Mr Yao repeatedly to consult a solicitor was wholly improbable. This was because Mr Yao, who fully appreciated that obtaining a renewal was of crucial importance for his livelihood, would not, after receiving such advice, have simply continued to go back to Mr Ryan with further requests to do what was necessary to exercise the option. This conduct of Mr Yao was, however, entirely consistent with Mr Ryan's having repeatedly promised to 'fix' the matter for him, given also that Mr Ryan had been quick and efficient in dealing with other requests by Mr Yao and had thereby, to his knowledge, come to be trusted by Mr Yao. 48 In assessing these competing arguments, we take due account of the fact that Mr Yao does not have a good command of English. He in fact gave evidence through an interpreter, though at times it was apparent that he understood questions, at least partially, before they were translated for him. 49 It is indeed possible that on account of these difficulties with English Mr Yao crucially misunderstood what Mr Ryan said to him. He may have believed that Mr Ryan was offering to 'fix it' for him when Mr Ryan was actually telling him to 'see a solicitor'. But we make no finding to this effect. 50 Our conclusion on credibility, as indicated above, is that Mr Yao's evidence was unsatisfactory in a number of ways. By contrast, although the evidence of Mr Ryan was not entirely free of contradiction or inconsistency, he appeared to us to be a generally truthful and reliable witness. 51 We do not attach any importance to the Applicants' failure to call the Second Applicant as a witness. But their failure to call Mr Lai was not satisfactorily explained. The Tribunal's records of these proceedings do show, as Mr Gasic said, that at least at the hearing the Applicants instructed Mr Koo. But they also show that the solicitor named in their Application, filed in the Tribunal on 12 September 2003, was Mr Lawrence Lai, of Lai & Co, Lawyers, that in subsequent correspondence, including some very recent letters, Mr Lai is described on the letterhead as the principal of this firm and that Mr Koo is an associate of the firm. The prima facie inference, in no way dispelled by Mr Gasic, is that Mr Lai could have been called as a witness. 52 Primarily on account of preferring Mr Ryan's evidence to that of Mr Yao, we make the following important findings. In the conversations that they had, commencing in December 2001 or March 2002 (we do not need to choose between these two dates) and concluding in May or early June 2002, Mr Ryan did not at any stage say to Mr Yao that he would 'fix' or otherwise attend to exercise of the Applicants' option to renew the Lease. On the occasions when Mr Yao expressed a desire to exercise the option, Mr Ryan's response was to suggest that he consult a solicitor. Towards the end of this period, Mr Ryan was aware that Mr Yao appeared unlikely to take the requisite step of giving notice in writing. Mr Ryan did not, however, advise Mr Yao to take this step, on account of having received instructions from ISPT, his principal, to do nothing to encourage the exercise of the option to renew. 53 Our task now is to consider whether, in the light of these findings, any basis exists for granting any or all of the remedies sought by the Applicants. We will consider in turn the written submissions (none were made orally) by counsel for each of the parties. The Applicants' submissions 54 The Applicants claimed that the alleged statements by Mr Ryan, in his capacity as an agent of ISPT, to Mr Yao constituted a waiver of the requirement that notice of exercise of the option should be in writing. We have found, however, that Mr Ryan did not make the statements alleged by them. But he did refrain from drawing Mr Yao's attention to this requirement, even though before the date for exercise of the option he came to suspect that Mr Yao would fail to comply with it. 55 It could not be argued – and indeed Mr Gasic did not seek to argue – that any such conduct on Mr Ryan's part constituted a waiver, on behalf of his principal, of the requirement of written notice. 56 An alternative ground of relief put forward by the Applicants was, however, that the Respondent, through its agent Mr Ryan, had engaged in unconscionable conduct within the statutory definition in s 62B of the Act. 57 The relevant provisions of s 62B are as follows:- 62B Unconscionable conduct in retail shop lease transactions (1) A lessor must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable. (2) …… (3) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessor has contravened subsection (1) in connection with a retail shop lease, the Tribunal may have regard to: (a) the relative strengths of the bargaining positions of the lessor and the lessee, and (b) whether, as a result of conduct engaged in by the lessor, the lessee was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the lessor, and (c) whether the lessee was able to understand any documents relating to the lease, and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessee or a person acting on behalf of the lessee by the lessor or a person acting on behalf of the lessor in relation to the lease, and (e) the amount for which, and the circumstances under which, the lessee could have acquired an identical or equivalent lease from a person other than the lessor, and (f) the extent to which the lessor's conduct towards the lessee was consistent with the lessor's conduct in similar transactions between the lessor and other like lessees, and (g) the requirements of any applicable industry code, and (h) the requirements of any other industry code, if the lessee acted on the reasonable belief that the lessor would comply with that code, and (i) the extent to which the lessor unreasonably failed to disclose to the lessee: (i) any intended conduct of the lessor that might affect the interests of the lessee, and (ii) any risks to the lessee arising from the lessor's intended conduct (being risks that the lessor should have foreseen would not be apparent to the lessee), and (j) the extent to which the lessor was willing to negotiate the terms and conditions of any lease with the lessee, and (k) the extent to which the lessor and the lessee acted in good faith. (4) ….. (6) A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with a retail shop lease by reason only that the first-mentioned person fails to renew the lease or issue a new lease. 58 Mr Gasic argued that, in the list of factors set out in subsection (3) of s 62B, the following were applicable to the case: (a), (c), (d) and (g). The relevance of (a), (c) and (g) is clear enough from the foregoing outline of the facts. With reference to subparagraph (d) (and, it might be said, to subparagraph (k) also), Mr Gasic stated as follows:- It is submitted that when the Applicant [i.e., Mr Yao] approached the Respondent's agent about his intention, it was incumbent on [the agent] to advise him that the option needed to be exercised in writing and not verbally. The failure to advise of the proper means of exercising the option was an unfair tactic used against the Applicant. It is submitted that such advice is not legal advice. 59 Mr Gasic argued further that in a case, such as the present, where a lessee sought relief from the adverse consequences of having failed to exercise an option of renewal, it was recognised that unconscionable conduct by the lessor or an agent of the lessor would provide adequate grounds. In support of this proposition, he cited the following passage from the judgment of Young J in Leads Plus Pty Ltd v Kowho Intercontinental Pty Ltd [2000] NSWSC 459 at [22], [24]:- 22 The cases on relief against forfeiture generally have been far more sympathetic to a plaintiff whose misfortune has come about as a result of accident or surprise rather than one that has come about through negligence. Indeed the view that was taken in the 19th century commencing with the attitude of Lord Eldon and which is still much in vogue in England today is, as Sir John Leach MR put it in Harries v Bryant (1827) 4 Russ 89, 91; 38 ER 738: "Ignorance is considered to be wilful, where a person neglects the means of information, which ordinary prudence would suggest; and accident is not unavoidable, which reasonable diligence might have prevented." 24 Apart from pure accident or surprise, the Court only gives relief in this sort of case, even on the most benign view of the law towards a plaintiff, where there are exceptional circumstances which are connected with the existence of unconscionable conduct. The clearest case of unconscionable conduct is where the grantor of an option (the lessor) deliberately avoids the proper attempts of the lessee to exercise the option; see, for instance, Bragg v Alam [1981] 1 NSWLR 668. However, unconscionable conduct may take other forms. It is not necessary that the conduct involve some fault on the part of the landlord, though normally that will be the case. There will be some cases where it will be unconscionable for the landlord to take advantage of a small mistake on the part of a tenant to obtain a windfall. 60 The final component in Mr Gasic's argument was the proposition that although Mr Ryan was the agent of ISPT, not the Respondent, at the time of his dealings with Mr Yao, the Respondent's title to the premises was subject to an equity that had arisen in the Applicants' favour by virtue of these dealings. 61 In this connection, Mr Gasic relied first on the following matters. The Respondent has deprived the Applicants of the right to occupy the premises for the period proposed under the option, while continuing to accept rent from them. It has continued to retain Mr Ryan as its agent, from which the inference arises that it had constructive knowledge of the Applicants' equity. This equity is of the type known as 'proprietary estoppel' or 'estoppel by acquiescence'. Mr Gasic cited several authorities on this type of estoppel, notably a passage in the judgment of Kitto J in Olsson v Dyson (1969) 120 CLR 365 at 378. 62 In the alternative, Mr Gasic submitted that 'evidence of representations and conduct of a predecessor in title is admissible against the successor in title'. In support of this proposition, he relied on Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060 and Butcher v Lachlan Elder Realty; Harkins v Butcher [2002] NSWCA 237. 63 He also argued that the covenant containing the option of renewal of the lease 'touched and concerned' the land (he referred here to Leros Pty Ltd v Terara Pty Ltd (1992) 66 ALJR 399 at 402, and to Tessari v Bais Pty Ltd (1992) 60 SASR 59 at 69) and that therefore any damages, including those arising from unconscionable conduct) that 'flow from' the covenant would also 'touch and concern' the land. The covenant and any such damages, he claimed, would therefore 'bind the Respondent as successor in title'. The Respondent's submissions 64 Mr Bellamy focused a number of his arguments on the fact that the Respondent was no more than a successor in title to ISPT, which was the lessor at the time of the relevant conduct of Mr Ryan, its agent. 65 He conceded that a claim made pursuant to s 72 of the Act – that is, a retail tenancy claim – could conceivably extend to a successor in title. But he maintained that, if Mr Yao's version of his conversations with Mr Ryan was rejected, no such claim could arise even against ISPT, since such a claim was based on an assertion that Mr Ryan had waived the requirement of written notice. 66 In response to Mr Gasic's submission that the Respondent, through Mr Ryan as agent, had engaged in unconscionable conduct, Mr Bellamy pointed to the terms of s 72AA of the Act. This lists two types of order that the Tribunal can make pursuant to a finding of unconscionable conduct: (a) an order for the payment of money, including by way of damages, and (b) an order that a specified sum is not due or owing by a party to the proceedings to a specified person, or that a party is not entitled to a refund of any money paid to another party. 67 Mr Bellamy maintained that any claim for damages under s 72AA, pursuant to a finding of unconscionable conduct under s 62B, could not 'flow with the land' so as to 'expose the successor in title'. Here any loss suffered by the Applicants (which was not admitted) arose while ISTP, the Respondent's predecessor in title, was the owner of the premises. It followed from this consideration alone that the Applicants' claim, in so far as it was based on unconscionable conduct or any related ground, such as estoppel or relief against forfeiture, must fail. 68 After referring to the Leads Plus case, Mr Bellamy noted that 'the failure of the Applicant[s] was wilful, and one where the means to obtain information was neglected – it was not one of accident which reasonable diligence might have prevented'. These factors are referred to more than once in the judgment of Young J. It is sufficient to quote just one instance ([2000] NSWSC 459 at [23]):- 23 Whichever way one looks at it, in the instant case there was not pure accident or surprise. The tenant did not look at the lease until just before the last day the option could be exercised, and at the very least slack office procedures were the reason why the option was not exercised in time. These are matters involving failure to act with reasonable diligence or prudence rather than pure accident or surprise. Our conclusions 69 The premise underlying Mr Gasic's submissions in relation to unconscionable conduct was that Mr Ryan had made the statements alleged by the Applicants. We have found that he did not make these statements. 70 We have made instead the following findings, at [52] above:- On the occasions when Mr Yao expressed a desire to exercise the option, Mr Ryan's response was to suggest that he consult a solicitor. Towards the end of this period, Mr Ryan was aware that Mr Yao appeared unlikely to take the requisite step of giving notice in writing. Mr Ryan did not, however, advise Mr Yao to take this step, on account of having received instructions from ISPT, his principal, to do nothing to encourage the exercise of the option to renew. 71 We must now consider whether this conduct by Mr Ryan might be held unconscionable, within the terms of s 62B of the Act. The dicta quoted above from Leads Plus Pty Ltd v Kowho Intercontinental Pty Ltd [2000] NSWSC 459 provide some guidance. This is not a case where, to quote Young J at [24], the lessor 'deliberately avoids the proper attempts of the lessee to exercise the option' or other 'exceptional circumstances' of a similar nature are apparent. Also, no fault can be attributed to the landlord (though, as Young J indicated, a landlord's conduct in this context can be held unconscionable even when no fault is present). At its highest, the present case might fall within his Honour's dictum, at [24], that 'there will be some cases where it will be unconscionable for the landlord to take advantage of a small mistake on the part of a tenant to obtain a windfall'. 72 In determining this, the presence of some of the factors listed in s 62B(3) is of course significant for the Applicants' case. They were clearly in a weaker bargaining position than the Respondent (see subparagraph (a)) and they were not fully able to understand the documents relating to the lease (see subparagraph (c)). Mr Ryan was bound under an applicable industry code, the Code of Conduct of the Real Estate Institute of New South Wales, to act honestly and fairly towards all the parties (see subparagraph (g)). 73 We do not consider, however, that the conduct of Mr Ryan, as we have determined it, constituted unfair tactics (see subparagraph (d)) or showed a lack of good faith (see subparagraph (k)). He did not mislead Mr Yao or give him unsound advice. If his suggestion – that Mr Yao should see a solicitor – had been acted upon, Mr Yao would have been advised that the option had to be exercised in writing and would most likely have taken the necessary steps. Having regard to Mr Ryan's duties to ISPT, we cannot say that he acted unfairly or in bad faith vis-à-vis Mr Yao in not taking it upon himself to provide this advice. 74 We agree instead with the submission of Mr Bellamy that the primary reason for the Applicant's failure to exercise the option falls within the following dictum of Young J in Leads Plus, at [23]: 'These are matters involving failure to act with reasonable diligence or prudence rather than pure accident or surprise.' 75 For these reasons, we have concluded that the Applicants have failed to establish that Mr Ryan engaged in unconscionable conduct within the meaning of the Act. We have held earlier, at [55], that the statements that he made to Mr Yao did not constitute a waiver, on behalf of his principal, of the requirement of written notice. 76 These conclusions are sufficient to dispose of the case in the Respondent's favour. But we should indicate that, even if the Applicants had succeeded in proving unconscionable conduct by Mr Ryan and/or a waiver of the requirement of written notice, we doubt very much whether they would have been entitled to relief against the Respondent. 77 The authorities cited by Mr Gasic in this connection are set out above at [61 – 63]. They do not, in our opinion, establish the proposition on which this part of the Applicants' case depends. 78 We do not differ from his submission that the covenant containing the option of renewal of the lease 'touched and concerned' the land and therefore would have bound the Respondent, as successor in title to ISPT. But the issue here is quite a different one. It is whether alleged entitlements or equities of the Applicants arising out of a waiver by ISPT of the requirement of written notice, or out of unconscionable insistence on this requirement by ISPT, should be held enforceable against the Respondent. 79 We agree also that evidence of the representations and conduct of a predecessor in title may be admissible against the successor in title. Having examined the two authorities cited by Mr Gasic, we find that only Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060 actually addresses the issue. It is clear from the relevant passage, at [139], that the Supreme Court was referring specifically to admissions by a predecessor in title in the context of determining whether a resulting trust existed and was binding upon the successor. Again, this is a very different situation to that of the present case. 80 In so far as Mr Gasic relied on the principles of 'proprietary estoppel' or 'estoppel by acquiescence', his argument depended, as he indicated, on it being inferred that the Respondent had constructive knowledge of the Applicants' equity when it acquired title to the premises. But the only matters that he could identify as a basis for this inference were that the Respondent continued (a) to accept rent from the Applicants and (b) to retain Mr Ryan as its agent. We note that the Applicants did not lodge a caveat to protect their claim nor, so far as the evidence shows, did they take any other step to put the Respondent on notice of this claim or of the factual basis on which they asserted it. The matters relied upon by Mr Gasic are, in our opinion, clearly inadequate to justify an inference that the Respondent had constructive notice of any equity of the Applicants. 81 For the foregoing reasons, the Applicants' claims for relief must be dismissed. 82 The parties have liberty to apply within 28 days to argue costs. If no application is made within that time, there will be no order for costs.