Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Mark Mittag v Lauren Elizabeth Beggs and Alexander John Fawns [2014] NSWCATCD 101 Decision date: 23 January 2014 Before: K Rickards, Senior Member Decision: 1 The respondents are to pay the applicant the sum of $2,835.67 within 28 days from the date of this order. 2 There is no order as to costs. Catchwords: Lease Disclosure Statements; Estoppel Legislation Cited: Civil and Administrative Tribunal Act 2013 Retail Leases Act 1994 Category: Principal judgment Parties: Mark Mittag (Applicant) Lauren Elizabeth Beggs and Alexander John Fawns (Respondent) File Number(s): COM 14/02029 reasons for decision APPLICATION 1These proceedings were commenced in the Administrative Decisions Tribunal of New South Wales ("ADT") by the applicant lessor, claiming payment by the respondent lessees of outstanding rent and outgoings pursuant to a retail lease. 2Initial orders were made for the filing and serving of evidence by the parties. Further orders were then made by me on 30 September 2013 for the filing and service by the parties of any further affidavits or submissions, following which the proceedings were to be determined "on the papers" after 18 November 2013. 3The Civil and Administrative Tribunal of New South Wales ("NCAT") was established by legislation to commence operation on 1 January 2014, and subsumed the ADT as well as a number of other tribunals. Pursuant to the provisions of section 7 of Schedule 1 to the Civil and Administrative Tribunal Act 2013 these proceedings are now deemed to have been commenced in NCAT. 4The premises which are the subject of these proceedings are described within the registered lease as "Ground floor shop premises at 12 Shelly Beach Road, East Ballina". The content of the lease which has been supplied to the Tribunal as part of the applicant's evidence is somewhat sparse; it merely comprises a standard form front page followed by an execution page, a "Lessor's disclosure statement" and a "Lessee's disclosure statement". There are no other contents or components of the lease. 5In addition to the lease, a number of other documents were simply attached to the filed application. These documents comprised: the required mediation certificate; an email from the applicant's present agent Mr Elks to the applicant dated 15 July 2013; a document entitled "Tenancy Ledger" prepared by Mr Elks; a letter from Mr Elks to the applicant dated 14 February 2013; a letter from the applicant's previous agents Wal Murray & Co to the applicant dated 23 January 2013, and; a letter from Mr Elks to the respondents dated 15 February 2013 advising of termination of lease. 6The balance of the documentary evidence provided by the applicant comprised of his affidavit sworn 23 August 2013 and affidavits from Mr Elks sworn 13 August 2013, 26 August 2013 and 14 October 2013. Attached to this last affidavit of Mr Elks by paper clip and without any particular identifying marks were other documents: a copy of a letter from Somerville Laundry Lomax Solicitors to the respondents dated 22 June 2011 advising of sale of the premises to the applicant; a copy of the Certificate of Title for the subject premises which shows the applicant as owner and registration of two leases to the respondents for the shop premises which are the subject of these proceedings and for adjoining residential premises, and; printouts of ledger reports issued by the previous agents Wal Murray & Co and from Mr Elks. 7The respondents have filed two affidavits, both sworn by each of them on 12 November 2013. Attached to one of these affidavits is a list of what is said to be payments of rent effected by the respondents pursuant to the subject retail lease. The Claim 8The applicant claims "rent and outgoings outstanding by the lessees to the date 17 February 2013 of the amount of $5,326.72" as well as "recovery of outstanding rent from 18 February 2013 to 14 August 2013 to the amount of $7,439.51". 9The respondents do not deny that they owe payment in some amount to the applicant but say that they were unable to obtain proper advice or details from the respondent or his agents as to the amounts claimed as payable until the applicant's affidavit material was filed in these proceedings. The respondents effectively concede that rent is due and payable as disclosed within the ledger supplied by Mr Elks; otherwise, no admission is made in relation to the other components of the applicant's claim. 10As has been briefly referred to above, the state of the evidence in these proceedings, particularly the evidence supplied on the part of the applicant, is somewhat vague. In addition, some of the evidence is contradictory and does not assist the applicant's claim, as is set out and discussed below. 11Having considered all of the evidence, relevant observations and findings of fact are set out below. Relevant Observations and Factual Findings 12The respondents entered into a retail lease agreement with the previous owner of the premises, with the term of the lease to commence on 4 November 2010 and to terminate on 3 November 2014. There was no option to renew. By reason of the provisions of section 16 of Retail Leases Act 1994, the term of this lease was deemed to extend to 3 November 2015; however, given the nature and extent of the applicant's claim as well as the findings below in relation to other issues in these proceedings, this statutory extension of term is irrelevant and of no effect. 13Within the part of the lease which is headed "Lessor disclosure statement", the rent payable for the premises is stated to be $1,289.26 per month plus GST. 14As indicated above, the actual form and content of the lease is unusual, to say the least. It has no clauses or provisions at all other than those which are contained within the standard form disclosure statements which are required from lessors and lessees pursuant to the provisions of the Retail Leases Act 1994. 15To add to the overall lack of clarity within the lease document, there are a number of items set out in the "Lessor disclosure statement" within a schedule entitled "Outgoings to be paid by the Lessee" as follows: * Land tax $10,500.00 * Local Government rates and charges $2,660.00 * Insurance $3,377.00 * Water, sewerage and drainage rates and charges $3,289.00 16Within the same schedule, there is another column entitled "Formula for apportionment of outgoings if the lessee is not liable for the total amount"; placed in the column adjacent is the figure "50%". 17Pausing at this point, one might reasonably interpret the above material to mean that the respondent lessees would be responsible to pay 50% of the amounts listed for the items in paragraph 15 above. However, this understanding is contradicted by the next provision within the "Lessor's disclosure statement" which states: * Outgoings to be paid by the lessor: * Council rates, land tax, comprehensive insurance. 18It can be seen that this section of the disclosure statement expressly places responsibility for payment of all council rates, land tax and comprehensive insurance upon the lessor. This means that the only outgoings remaining as payable by the lessee are "water, sewerage and drainage rates and charges" in an annual amount of $3,289.00. 19Within the affidavit material there is quite some attention given by the applicant and by the respondents to various discussions said to have taken place between them, many of which do not appear relevant to determination of the issues in these proceedings. There are also bald statements of opinion as to each other's behaviour which are irrelevant and of no weight. There is some material relating to the course of events in late 2012 and early 2013 when the respondents had fallen behind in payments said to be due under the lease, which refers to quite intense discussions involving the parties, the applicant's previous agent Wal Murray & Co and his present agent Mr Elkin culminating in arrangements being made to clear any arrears of rent or outgoings which were then due and payable. 20Mr Elks took over management of the premises from 17 January 2013. He then sent a letter to the applicant dated 14 February 2013 as follows: "Dear Marc and Megan See letter attached from Wal Murray with the rental position up to the 17/01/2013. We took over the management from that date and so far have received rental payments totalling $1050.00, with an amount being paid direct to you of $300 for total payments of $1350. The outstanding rent and outgoings would be represented as follows: Rent due as at 17/1 $2674.80 Rates due to 17/1 $1634.14 Insurance due to 17/1 $449.69 Rent due 17/1 to 17/2 (30 days) $1403.65 Outgoings17/1 to 17/2 $814.44 Total $6976.72 Less payments 17/1 to 17/2 $1350.00 Total Outstanding $5626.72 300.00 Spoilage $5326.72 Yours Faithfully Robert W Elks" 21Mr Elks also met with the respondents on the same day that the above letter was sent to the applicant. Following those discussions, and presumably following a discussion which Mr Elks subsequently had with the applicant, a letter was then sent on the following day, 15 February 2013, to the respondents: "Dear Alex and Lauren, Thank you for your time yesterday and discussions relevant to your financial position. We, as managing agents have been instructed by the owners, to terminate your lease as you have requested effective Sunday 4pm Sunday 17th February 2013. We wish you well for the future, and understand that all outstanding rent and outgoing monies will be paid in the near future. Yours Faithfully Robert W Elks" 22The meaning and effect of the above letter from the applicant's agent is clear. It stated to the respondents that the lease was now to be treated as terminated as and from 4 pm on Sunday 17 February 2013 with no ongoing obligations from either party to the other, and that all outstanding rent and outgoings were to be paid up to and including that day. 23The respondents concede that an amount remains payable for rent and outgoings pursuant to the terms of the subject lease agreement. 24At paragraph 19 of their joint affidavit sworn on 12 November 2013 the respondents assert that final figures to assist them in ascertaining the extent of their indebtedness were not supplied to them as requested and that, for that reason, final payment has not been made. The respondents also say that: "In relation to outstanding rent from vacating premises to 14 August 2013 when a new tenant moved in, it was said to, and assumed by, both Alexander and Lauren on numerous occasions by Mittag, that they would not pursue rent for the remainder of the lease after shop closure. Mittag just wanted us out and we were of the opinion that the business was finished." Findings 25There is no evidence at all from the applicant as to what steps were reasonably taken by him to attempt to locate another suitable tenant for the premises after 17 February 2013 and over the ensuing period until the date exactly 6 months later when a new lease commenced with a new tenant. There is accordingly an apparent failure to mitigate loss which has not been explained. However, in the circumstances of this matter and given the findings within this decision as to other issues, this apparent failure to mitigate can be put aside. 26What is clearly conveyed by the letter from Mr Elks to the respondents on 15 February 2013 and which was reasonably understood by the respondents to be the case, was that the respondents' lease with the applicant was being treated by the applicant as terminated as and from 17 February 2013, and that the respondents would no longer have any right to occupy the premises but that they would no longer bear any responsibility for rent or outgoings. 27Exactly which outgoings had in the past been properly paid by the respondents or which remained as payable by them as at the date of termination of the lease is entirely unclear, given the contents of the lease and in particular the "Lessor's disclosure statement" referred to above. 28In relation to outgoings, section 11 of the Retail Lease Act 1994 gives a lessee the right to terminate a lease on the ground that a disclosure statement is incomplete or contains information that is materially false or misleading, but provides no other remedy. However, the state of the "Lessor disclosure statement" which forms part of the subject lease is such that no clear understanding can be reached as to exactly what and how much is payable by the respondents toward any outgoing other than water, sewerage and drainage rates. The respondents do not concede that any particular amount presently remains outstanding and payable for outgoings. The applicant has failed to discharge the onus of proving the basis upon which the claims for payment of these outgoings by the respondents have been made, as well as the actual amounts involved. 29The only outgoing which escapes the difficulty described above is the claim for outgoings of $814.44; this can reasonably be seen as quite different to the claims for "rates" and "insurance" made by the applicant. The terms of the "Lessor disclosure statement" indicate that the lessee is responsible for 50% of this sum, presumably because the water, sewerage or drainage rates were payable in respect of both the residence and the shop premises. Accordingly, it is appropriate to allow a sum of $407.22 for this item as payable by the respondents. 30In relation to unpaid rent, there is no dispute that: the amount of $4,078.45 was payable up to and including 17 February 2013; the respondents subsequently paid a sum of $1,350.00 to the applicant or to his agent, or; there should be a further allowance of $300.00 in the respondent's favour for what is described as "wastage". 31Accordingly, taking all of the foregoing figures into account, an amount of $2,835.67 is assessed as due and payable in respect of rent and outgoings up to and including 17 February 2013. 32In relation to the claim made by the applicant for rent beyond 17 February 2013, he is prevented from doing so by reason of promissory estoppel. 33A summary of the nature and effect of promissory estoppel was outlined and adopted by the Tribunal in Lewkovitz v Dover [2012] NSWADT 227 as follows: (56)The principle of promissory estoppel can conveniently be explained by quoting from [12.230] of Young, Croft, Smith, On Equity: "Promissory estoppel in its present incarnation can be traced back to Central London Property Trust Ltd v High Trees House Ltd ([1947] 1 KB 130), a case which resulted in a doctrine referred to as 'High Trees' estoppel. In High Trees, a landlord told a tenant that, during the course of the war, his rent would be reduced. The landlord company later went into receivership, and the receiver, noting that reduced rent had been paid for about five years, demanded the arrears. The landlord was found to be estopped from claiming the arrears. Typically, High Trees promissory estoppel was applied when a person who made the promise or representation, contrary to their contractual rights, later tried to insist on contractual performance, and the other party said 'but you assured me that I did not have to' ..." 34The words or actions which constitute such a promissory estoppel need not be entirely unambiguous; they are sufficient if it is clear that the conduct of the applicant in the present case, in seeking payment of rent or outgoings after the date specified by him as the date of termination of the subject lease, involves a departure from the assumption that clearly arises from his statements or behaviour. A useful discussion of this test and the relevant authorities was had by the ADT when considering both promissory estoppel, and its "relative" conventional estoppel, in Chronopoulos v Carossel Pty Ltd [2010] NSWADT 191: 36 The Applicant relied on two important decisions. Firstly, a decision by Brereton J in Waterman v. Gerling Australia Insurance Company Pty Limited [2005] NSWSC 1066. There is no need to refer to the details of this case. Counsel relied on a number of nominated paragraphs of His Honour's decision, but making the point that the Applicant was not relying on pre-contractual agreements. At [78] His Honour stated that an "estoppel by convention depends upon an assumption adopted by the parties as the conventional basis of their relationship" and called in aid the decision of the High Court in Con-Stan Industries of Australia Pty Limited v. Norwich Winterthur Insurance (Australia) Ltd (1986) 160CLR226 at 244 where their Honours Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ said: "... Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted upon a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying". 37 At [83] His Honour referred to the "substantial overlap between many of the species of estoppel" and stated that in "conventional estoppel it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship of that mutual assumption. It is inherent in the idea of a mutually agreed or assumed convention the each party knew or intended that the other act on that basis. And it seems that a conventional estoppel will not arise unless departure from the assumption will occasion detriment to the plaintiff". 38 At [84] His Honour thought that there was "no reason why a mutual assumption as to the state of affairs made by two contracting parties arising out from their conduct after the contract is made should in this respect be any different a position from a unilateral assumption made by one party but known to or encouraged or acquiesced in by the other". 39 And, importantly, at [87] he said that there is "no conventional estoppel unless the parties have in fact adopted the alleged assumption as the conventional basis of their relationship ...". At [91] he said: "I do not overlook the requirement that a representation or assumption founding an estoppel be "clear and unequivocal": though this has usually been recognised in the field of equitable promissory or proprietary estoppel ... the requirement that a representation - or assumption - must be clear if it is to bound an estoppel in pais or a promissory estoppel, does not mean that it must be express, and a sufficiently clear representation - or assumption - may properly be implied from words, conduct or even silence, and it is not necessary that a representation - or assumption -be clear in its entirety, it sufficing that so much of it as is necessary to found the propounded estoppel satisfies the requirements ... (and later) ... the requirement that a party should not be estopped on an ambiguity does not mean that the precise terms of the assumption or representation which founds the claimed estoppel must be entirely or unequivocally clear: an estoppel can arise even though the precise terms of the assumption or representation may be difficult to ascertain, as long as it is clear that there was an assumption, and the scope of the assumption, though its full extent may be uncertain, is at least sufficient that it can be said that the defendant's conduct would involve a departure from it". 40 At [92] His Honour referred to the speech of Lord Denning MR in Amalgamated Investment and Property Co Ltd (in liq) v. Texas Commerce International Bank Ltd [1982] QB 84 at 121: "... There is no need to inquire whether their particular interpretation is correct or not - or whether they were mistaken or not - or whether they had in mind the original terms or not. Suffice it that they have, by their course of dealing, put their own interpretation on their contact, and cannot be allowed to go back on it". 35The terms of the letter sent by the applicant's agent on 15 February 2013, in the context of the dealings and communications between the parties before and after that date, make it clear that the applicant communicated to the respondents that he would not be seeking payment of rent or outgoings beyond 17 February 2013 and that the respondents thereafter proceeded upon such basis in vacating the premises. Accordingly, the Applicant is precluded from any claim for rent or outgoings beyond 17 February 2013. 36As a result of the above findings, an order is made that the respondents are to pay the applicant the sum of $2,835.67. There is no order to be made as to costs. (signed) Kim Rickards Senior Member Civil and Administrative Tribunal of New South Wales 23 January 2014 I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. 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: 04 September 2014