Vuong v Ladikos [2011] NSWADT 104

Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Vuong v Ladikos [2011] NSWADT 104 Hearing dates: 1 April 2011 Decision date: 17 May 2011 Jurisdiction: Retail Leases Division Before: D Patten, Deputy President Decision: 1. Application for summary dismissal pursuant to s 72 of the Administrative Decisions Tribunal Act 1997 dismissed. 2. No order as to costs of proceedings on 1 April 2011. 3. Case listed for Directions on 9 June 2011 at 10.00am. Catchwords: Summary dismissal - principles applicable - silence capable of constituting unconscionable conduct Legislation Cited: Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994 Cases Cited: Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 General Steel Industries Inc. v Commissioner for Railways (N.S.W.) [1964] 123 CLR 125 Hillier v Goodfellow (1988) V ConvR 54 - 310 Leads Plus Pty Ltd v Kowho Intercontinental Pty Ltd (2000) 10 BPR 18085 Legione v Hateley (1983) 152 CLR 406 Texts Cited: K R Handley - Estoppel by Conduct and Election Category: Interlocutory applications Parties: Anh Nghi Vuong (Applicant) Terry Ladikos (First Respondent) Dimitra Ladikos (Second Respondent) Representation: Ms K Pham, Viet-Aust Lawyers (Applicant) Mr J Jordan, Jordan Djundja Lawyers (Respondent) File Number(s): 115035

REasons for decision 1On 1 April 2011, for reasons then given, I dismissed the applicant's application for urgent interim relief. At the same time, I heard an application by the respondents to dismiss the proceedings as misconceived or lacking in substance, upon which application I reserved my decision. 2The application relies solely on a claim that the respondents engaged in unconscionable conduct within s 62B of the Retail Leases Act 1994 (the Act). Such conduct if proved in the circumstances of this case could lead to an award of damages under s 72AA of the Act. 3The evidence before me for the purposes of the application may be summarised as follows: * For about 6 years the applicant has occupied as lessee premises known as 25A Morts Road, Mortdale (the premises). * In the premises the applicant has conducted the business of a restaurant serving Vietnamese style food. * The applicant's recent occupation of the premises has been pursuant to a lease granted by the respondents for a term of 3 years from 1January 2008 registered AE186463N (the lease). * The lease constituted a retail shop lease within s 3 of the Act. * The lease contained an option for renewal for a further term of 3 years exercisable by notice in writing given to the lessor not less than 6 months before the expiration of the term i.e. before 30 June 2010. * In June 2010 the applicant orally informed the respondents' managing agent that he intended to exercise the option for renewal. * On 1 October 2010 the applicant's solicitors, Viet-Aust Lawyers wrote to Jordan Djundja Lawyers the following letter, omitting formal parts: RE: LADIKOS LEASE TO VUONG PREMISES: SHOP 25A MORTS ROAD, MORTDALE NSW BUSINESS: RESTAURANT We refer to the above matter and understand that you act for the landlords, TERRY LADIKOS and DIMITRA LADIKOS. We advise that we act for the current tenant. We are instructed to advise that our client wishes to exercise his option to renew of lease. Kindly prepare a lease and forward it to our office for execution at your early convenience. If you have any queries, kindly contact Colin Nguyen. * Messrs Jordan Djundja replied by letter dated 6 October 2010: RE: LADIKOS LEASE TO VUONG PROPERTY: 25A MORTS ROAD, MORTDALE Thank you for your letter of 1 October 2010. We have forwarded the letter to our client for their instructions. In the meantime we note that the outgoings are still in arrears. Your client should immediately make arrangements to pay the outstanding outgoings. We understand that our client has paid outgoings (council rates) and your client has not repaid our client for those outgoings contrary to his obligations under the Lease. We understand that your client has been in contact with the managing agent about the amount of outgoings outstanding. Please advise your client to pay these outgoings immediately. * Viet-Aust Lawyers wrote a further letter to Messrs Jordan Djundja dated 8 November 2010: RE: LADIKOS LEASE TO VUONG PREMISES: SHOP 25A MORTS ROAD, MORTDALE NSW BUSINESS: RESTAURANT We refer to the above matter and are instructed to seek for your client's consent to grant a new lease with terms of 3x3 and rental payments shall cover all rent and outgoing if any. On the current lease, our client found it was hard to keep on track with out-going pay separately. He would much appreciate if your client agrees to account for any outgoing shall be included in rental payments. Kindly consult with your client and reply to us as soon as possible. If you have any queries, kindly contact Colin Nguyen. * The applicant received no further communication from the respondents or anyone on their behalf until on or about 1 March 2011 he received a letter from the respondents' agent, Raine & Horne Kogarah: Re: Notice to Vacate 25A Morts Road Mortdale NSW 2223 We hereby enclose Notice to Vacate. We note that the lease terminated on 31 December 2010 and you did not exercise the option in accordance with the lease. As much, you are to vacate the premises pursuant to the Notice to Vacate with one (1) month of today's date. We thank you for your tenancy and will calculate the amount outstanding pursuant to your obligations under the lease and will contact you further with respect of part or all of the security bond. * By contract dated 26 February 2011 the respondents sold the premises to H and K Andmanokos for the sum of $700,000 with vacant possession. 4The jurisdiction to dismiss proceedings which I am asked to exercise derives from s 73(5)(g)(ii) of the Administrative Decisions Tribunal Act 1997 (ADTA) which provides: (5) The Tribunal: (g) may dismiss at any stage any proceedings before it in any of the following circumstances: ... (ii) if the Tribunal considers that the proceedings are frivolous or vexatious or otherwise misconceived or lacking in substance, 5In my opinion the jurisdiction is to be exercised in accordance with the principles discussed by Barwick CJ in General Steel Industries Inc. v Commissioner for Railways (N.S.W.) [1964] 123 CLR 125. I refer in particular to the following passages from p 129 and following (omitting citations): There is no need for me to discuss in any detail the various decisions, some of which were given in cases in which the inherent jurisdiction of a court was invoked and others in cases in which counterpart rules to Order 26, r. 18, were the suggested source of authority to deal summarily with the claim in question. It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow them" (the pleadings) "to stand would involve useless expense". At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or "so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument"; "so to speak apparent at a glance". As I have said, some of these expressions occur in cases in which the inherent jurisdiction was invoked and others in cases founded on statutory rules of court but although the material available to the court in either type of case may be different the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same. Dixon J. (as he then was) sums up a number of authorities in Dey v. Victorian Railways Commissioners where he says: "A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process." Although I can agree with Latham C.J. in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed. 6The question is therefore whether taking the evidence of the applicant at its highest there is a triable issue of unconscionable conduct by the respondents. 7As to what may constitute unconscionable conduct, the Tribunal is guided by the non-exhaustive list of factors set forth in subsection (3) of s 62B of the Act: (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. 8In Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557, Spigelman CJ at para 121 cautioned against too ready a conclusion of unconscionability: Even if the concept of unconscionability in s 62B of the Retail Leases Act is not confined by equitable doctrine, as the decisions under s 51AC of the Trade Practices Act (Cth) suggest, restraint in decision-making remains appropriate. Unconscionability is a concept which requires a high level of moral obloquy. If it were to be applied as if it were equivalent to what was "fair" or "just", it could transform commercial relationships in a manner which the Minister expressly stated was not the intention of the legislation. The principle of "unconscionability" would not be a doctrine of occasional application, when the circumstances are highly unethical, it would be transformed into the first and easiest port of call when any dispute about a retail lease arises. 9In support of his submissions, Mr Jordan for the respondents referred to the decision of Young J in Leads Plus Pty Ltd v Kowho Intercontinental Pty Ltd (2000) 10 BPR 18085. He submitted that it was binding authority in support of the relief he seeks. 10Leads Plus was a case where a lessee exercised an option one or two days late, the issue being whether the Court should grant interim injunctive relief allowing the plaintiff to remain in the premises pending trial. Young J tentatively concluded after referring to Legione v Hateley (1983) 152 CLR 406 and Hillier v Goodfellow (1988) V ConvR 54 - 310 that equity has jurisdiction to grant relief against forfeiture in respect of the failure of a lessee to exercise an option within time, time being of the essence, but only after a finding of unconscionable conduct. In the result his Honour declined to grant relief. 11However the question before me is different from the issue before Young J. I have already dismissed the application for interlocutory relief and have only to consider whether the applicant's claim of unconscionable conduct which may only sound in damages is so obviously untenable that it is bound to fail. 12Although at para 30 Young J said that "there is no duty on a landlord to notify a tenant that the tenant has not exercised its option in time" he did so in the context of an argument that the landlord was estopped from claiming that the option was not duly exercised. 13It seems to me that in this case there is no basis for the applicant to seek either relief against forfeiture or a finding that the respondents are estopped from contending that the option was not exercised in a timely manner. The Tribunal has no jurisdiction in any event to give relevant relief. But as I understand the applicant's case, it is put on the basis that unconscionable conduct was constituted by the failure of the respondents to notify the applicant promptly that the option had not been lawfully exercised and thereby give him a much longer period to reorganise or relocate his business. 14There are many examples in the law where silence by a party gives rise to legal consequences. See K R Handley Estoppel by Conduct and Election at page 49 and following. In this case in my opinion the silence of the respondents in failing to provide a substantial reply to the applicant's letter of 1 October 2010 is capable of constituting conduct falling within s 62B(3)(i) of the Act and an absence of good faith within s 62(B)(3)(k). It is also capable of constituting unlawful unconscionable conduct within s 62(B)(2). That being so I am unable to conclude that the applicant's claim is so obviously untenable that it is bound to fail. 15The application for summary dismissal will be dismissed. As each party has been partly successful in the matters argued on 1 April 2011, there should be no order as to costs. The formal orders of the Tribunal are: 1. Application for summary dismissal pursuant to s 72 of the Administrative Decisions Tribunal Act 1997 dismissed. 2. No order as to costs of proceedings on 1 April 2011. 3. Case listed for Directions on 9 June 2011 at 10.00am. I hereby certify that this is a true and accurate record of the reasons for decision of the Administrative Decisions Tribunal. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 May 2011