Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Philip Shayer v Byron Bay Retirement Villages Pty Ltd [2014] NSWCATCD 160 Hearing dates: 1 April 2014 Decision date: 26 August 2014 Before: D Bluth, Senior Member Decision: 1Application of the respondent for dismissal of the Amended Application for Original Decision. Catchwords: Retail lease; application for dismissal of claim as misconceived or lacking in substance. Legislation Cited: Retail Leases Act 1974 Civil and Administrative Tribunal Act 2013 Cases Cited: State Electricity Commission of Victoria v Rabel (1998) I VR 102 Towie v State of Victoria (2008) 19 VR 640 Texts Cited: None Category: Principal judgment Parties: Philip Shayer t/as Beaches Coffee Shack (applicant) Bryon Bay Retirement Villages Pty Ltd t/as Beaches of Byron (respondent) Representation: None None File Number(s): COM 14/00472 Publication restriction: Unrestricted reasons for decision APPLICATION 1This dispute arises out of an arrangement between the applicant, Philip Shayer trading as Beaches Coffee Shack and the respondent, Byron Bay Retirement Villages Pty Ltd. The arrangement is based on a written agreement between the parties, not dated but operative from 21 December 2012 (Agreement) that is between Wylie Thompson and the applicant referred to in the Agreement as the Partners trading as Wylies and the respondent. Subsequently to the Agreement Mr Wylie appears to have disappeared and did not take part in the conduct of the business and is not taking part in this dispute. Notwithstanding there appears to be no formal assignment of the interests of Mr Wylie in the Agreement for the purposes of this dispute and hearing I will ignore Mr Wylie and treat the applicant as fully entitled to prosecute his interests. 2The Agreement states that it: "Is for the take over, management/operation and development for the sole use of and by "the Partners", the existing business known as the café and shop premises adjoining the offices at the forefront of the Caravan park also known as Beaches of Byron at 5-37 Broken Head Road, Byron Bay NSW 2481 or for the purposes of this contract "the Park" upon the terms set out below" : 3The Agreement then sets out the arrangements between the parties in relation to the conduct of the business of the café and shop premises and in particular setting out the conduct being each of the parties to the Agreement to each other. Clauses 1-4 of the Agreement state as follows: 1. As of 6.00 am on 21 December 2012, the Partners shall formally take responsibility of the above mentioned premises in a thoughtful and timely manner and begin operation of the current existing business above mentioned with the intention of development and improvements as below mentioned with the goodwill and spirit of its discussions with the café's former owner and the park managers, and upon the conditions as set out by this and any future agreements made between "the Partners" and "the Park". 2. That "the Partners" shall maintain the current business style and operation, understood to be a coffee shop, café with café seating, convenience store and take away facilities with open hours of operation to suit the needs of "the Park" the general public -(words general public are deleted) and as the Partners see fit to generate sufficient income to allow for the future success thereof. It is also understood that the café/shop premises is suitably licensed (licensed meaning, formally approved by the Byron shire council) to do so. 3. An agreed rental of $400.00 per week after a rent free period of 6 months from 21 December 2012 is paid by "the Partners" to whomever "the Park" elect on the below mentioned terms. 4. A condition of this contract, that a more formalised lease agreement is offered by "the Park" at 12 months from the date of this agreement, upon the further condition of their having been mutual satisfaction of the above terms having been met by both parties in a commercially acceptable and reasonable manner. 4Unfortunately notwithstanding the express good intentions in the Agreement, relations between the parties deteriorated significantly such that the applicant on 31 October 2013 filed an Amended Application for Original Decision in the Administrative Decisions Tribunal (as it then was) (the Original Application). 5In the Original Application the applicant seeks the following orders for: "An order for compensation payable to the applicant by way of damages in the sum of $400,000.00 for loss of profit and costs incurred as a result of the respondent's breaches of contractual, statutory and equitable obligations, and breaches of legislation and/or obligations arising under the Retail Tenancies Act (SIC) and other relevant legislation including the Australian Consumer Law and WorkSafe/WorkCover legislation and regulations." The aforesaid damages are claimed to the amount of the jurisdictional limit being $400,000.00 on the basis of loss of profit being reasonably estimated profits of $72,000.00 per annum for 4½ years (the remaining term of the lease from time of repudiation by the Respondent) based on the takings and outgoings of the business from commencement of the lease from 21 December 2012 to its termination by the applicant giving notice of repudiation of essential terms of the lease on 22 July 2013. The total quantum is inclusive of reasonably anticipated growth in the business because of improvements foregone by reason of the repudiation by the respondent. The full term of the lease and exercise of the renewal option would have been the full term of five years had the respondent met its statutory, contractual and equitable obligations under the lease. The applicant also claims as part of the total quantum the following losses and such other losses as may be established or varied and further particulars established by accountant's reports to be provided for proceedings: (1) Loss of stock from spoilage estimated at $748.00 as at Monday 3 June 2013. (2) Loss of profit standing at $1,300.00 as at Monday 3 June 2013 inclusive and at $250.00 per weekday and $350.00 per weekend day in the current "off" season. (3) Loss of value and goodwill of the business including transfer of the lease of an unspecified amount that the tribunal may find appropriate in all the circumstances based on fair valuation but currently estimated conservatively at $45,000.00. (4) The applicant also seeks that he be separately compensated for his reasonable costs in dealing with this dispute and in bringing this application." 6The applicant then sets out following the orders sought in the Original Application seven Grounds/Particulars raising issues from unconscionable conduct in Ground 1, through to breach of equitable rights under the lease, in Ground 7. 7The dispute between the parties appears to have followed a tortured process between the applicant and the respondent including issues not just the substance of the dispute but also regarding representation and appearances before the Tribunal, the filing of affidavits and summonses for appearance and response/non-response to production. The respondent at a Directions Hearing inferred that it would seek to file an application for the Original Application to be dismissed. The respondent subsequently filed an application seeking that the Tribunal order dismissal under s 55 of the Civil and Administrative Tribunal Act 2013 NSW (NCAT Act) [Dismissal Application]. 8The Dismissal Application of the respondent under s 55 came before the Tribunal for Hearing on 1 April 2014. The respondent was represented by Mr B Le Plastrier of counsel instructed by Lynch Andrews Lawyers of Brisbane. The applicant was selfrepresented but had a retired Victorian barrister assist him as a McKenzie's friend. 9There is no doubt that the dispute between the parties is a retail tenancy claim under s 70 of the Retail Leases Act 1974 (RLA) which prior to 1 January 2014 was litigated in the Administrative Decisions Tribunal but now since that date is litigated in the Consumer and Commercial Division of the NSW Civil and Administrative Court. As noted the application by the respondent is an application under s 55 of NCAT Act. That section states: Section 55 Dismissal of Proceedings 1. A Tribunal may dismiss at any stage any proceedings before it in any of the following circumstances: (a) If the applicant or appellant (or, if there is more than one applicant or appellant, each applicant or appellant) withdraws the application or appeal to which the proceedings relate. (b) If the Tribunal considers that the proceedings are frivolous or vexatious or otherwise misconceived or lacking in substance; (c) If the applicant or appellant (or, if there is more than one applicant or appellant, each applicant or appellant) has failed to appear in the proceedings; (d) If the Tribunal considers that there has been a want of prosecution of the proceedings. 10In the Dismissal Application, the respondent refers to s 55 of the NCAT Act generally but at the hearing Mr Le Plaistier specified that the application being made was under s 55(b). At the end of the Hearing I asked for written submissions from both parties. In the written submissions the respondent confirmed that it bases the Dismissal Application on the latter words in subsection (b) 'otherwise misconceived or lacking in substance' and not based on the earlier part of the subsection that the Original Application is "frivolous or vexatious". 11A Dismissal Application is a very serious matter. By this Dismissal Application the Tribunal is asked to strike out nearly all of the Grounds/Particulars in the Original Application. To do so would then leave the applicant with no remedy for the alleged breaches of the Agreement. The question to be asked then is who bears the onus of making out that the Original Application is so misconceived or lacking in substance such to allow the Tribunal to strike it down under s 55(b)? 12Unfortunately, neither party referred the Tribunal to any judicial consideration on the matter to assist the Tribunal. Nevertheless the Tribunal has looked at cases to seek assistance. A similar section to s 55 is found in the Victorian equivalent of the NCAT Act being s 75 of the Civil and Administrative Tribunal Act 1998. That section states: At any time the Tribunal may make an order summarily dismissing or striking out all, or any part, of a proceeding that, in its opinion: (a) is frivolous, vexatious, misconceived or lacking in substance; or (b) is otherwise an abuse of process. 13In the Victorian Supreme Court decision of Towie v State of Victoria (2008) 19 VR 640, the Court held [paragraphs 29 and 30] the following: "29. It is clear that a high threshold must be met before the VCAT can exercise its powers under s75 of the VCAT Act to summarily dismiss or strike out all, or any part, of a proceeding, and that the VCAT should only exercise its power with great care. 30. In Forrester, Kaye J held, after considering Rabel, that the respondent to a complaint has an onus of showing "that the complaint is undoubtedly hopeless". The High Court has held that "the power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried..."." 14In the case of State Electricity Commission of Victoria v Rabel (1998) I VR 102, section 44(c)(1) of the Equal Opportunity Act 1984 in similar wording to s55(b) was considered. In that case His Honour Ormiston JA said [at 5]: "A complaint could not be dismissed under s44(c) or its successor unless it was clear beyond doubt that the complaint was lacking in substance, that is, that the complainant had no arguable case which should be allowed to be resolved at a full hearing." 15Ormiston JA [at 110] said: "For this purpose I cannot accept that Parliament intended a lesser test than has been imposed by the courts, nor can I accept that the power to dismiss should be exercised upon the basis that the claim "presents no more than a remote possibility of merit" if that expression means anything other than that the complainant has no reasonable prospects of success at a preliminary stage there is simply no argument that some lesser form (?) of insubstantiality can be relied upon to terminate a complaint. The complaint is either wholly bad, that is undoubtedly shown to be hopeless, or it must be allowed to proceed to an ordinary Tribunal hearing. Whatever test may be acceptable at other stages of the administrative process or during the conduct of an ordinary Tribunal hearing, a complaint cannot be dismissed under s44(c) or its successor unless it is clear beyond doubt that the complaint is lacking in substance, that is, that the complainant has no arguable case which should be allowed to be resolved at a full hearing." 16The respondent's Dismissal Application is for certain nominated Particulars in the Original Application to be dismissed. I propose to deal with each of the nominated Particulars in detail under the various particulars/grounds as set out in the application. I note that the Dismissal Application refers to the Application for Original Decision filed on 4 October 2013 but I take this to mean in fact the Amended Application for Original Decision filed on 31 October 2013 which I have called the Original Application. 17In the written submissions from Counsel for the respondent, Mr Le Plastrier it is apparent that the overriding submission in the first instance is that the Original Application be dismissed because the amount claimed by the applicant is $400,000.00 and that on the best calculations of the respondent based on the expected earnings as projected on the figures provided by the applicant the maximum amount that could be claimed is $324,000.00. Further Mr Le Plastrier says that "the evidence upon which the claim was $72,000.00 p.a. is poor". The rest of this overriding submission cavills with the actual accounting of the applicant with respect to expected and actual losses. 18The next part of the respondent's Dismissal Application seeks to remove a number of Particulars from the Grounds. The first Ground is headed "Unconscionable, Misleading & Deceptive Conduct". There are four Particulars there and the respondent seeks to dismiss only one, namely paragraph 1.2. This Particular states as follows: "1.2 Making false representations of the suitability of the premises "as is" for operation as a café and take-away food business to the general public without revealing that there were major safety and water proofing faults in the awning attached to the premises including decay and missing or defective water proofing/flashing of windows and door openings thereto, and defects in other parts of the respondent's premises not under lease to Beaches Coffee Shack causing regular flooding of the premises in rain." 19The respondent's submission in seeking to have this Particular dismissed is set out in paragraphs 7 - 9 as follows: "Paragraph 7 - (The Evidence).. establishes that Mr Shayer's case is a "no transaction" case. In other words, Mr Shayer would not have entered into the lease if it were not for the alleged misrepresentations about electricity charges and the permitted use. This is also clear from ground 1 which alleges that Mr Shayer was induced by (the respondent) to enter into the lease. The measure of loss is therefore tortious. However, the measure of loss articulated in the claim is contractual. Paragraph 8 - There is disconnect between the measure of loss and the cause of action in ground 1. Paragraph 9 - Ground 1 does not contain any articulation of losses measured in the tortious way. Ground 1 is incompetent." 20Firstly, the Particulars in Ground 1 allege the making by the respondent of certain representations to the applicant which are false. Ultimately, it is for the applicant to prove the making of these representations and the falsity of them as well as proving the damages that flow. Whether the measure of damages is tortious or contractual is a matter of submissions at the actual hearing but should not be a matter that needs to be ventilated in connection with a Dismissal Application that goes to being misconceived or lacking in substance. 21I note in passing Particular 1.4 of the Particulars of Ground 1 which was not the basis of any application from the respondent for dismissal. Particular 1.4 appears to be germane to the actual dispute between the parties. Paragraph 1.4 states as follows: "The applicant contends that the respondent engaged in unconscionable conduct by engaging in misleading and deceptive conduct inducing the applicant to enter into the lease "that had no term regarding payment for electricity, after having proposed payment for all electricity as a term of the lease contract, but failing to obtain the agreement of the applicant to such a provision, but despite this, then insisting upon payment for electricity as an implied term of the lease, and then terminating supply of electricity on 28 May 2013 on the basis of an alleged failure by the applicant to make payment for electricity allegedly owed over a term of the contract." 22Ground 2 of the Original Application is headed "Unconscionable Conduct by Unreasonable and Deceptive Conduct". This details a number of complaints about the conduct of the respondent in relation to the electricity account, the charging of electricity, the metering of the account and the general conduct of the respondent relating to the electricity. The respondent seeks dismissal of these Particulars 2.1 - 2.4 on the basis that the Ground is misconceived and there is no basis for the alleged breach by the respondent. The applicant counters this claim in its written submissions at paragraph 11(a) as follows: "The applicant submits the conduct complained of is capable of finding a claim for breach of contract by unconscionable conduct. The reference to proof is relevant in that the respondent alleges (on affidavit) to have had proof of accuracy of its electricity metering that was requested by the respondent, but failed to supply any such proof during the course of the contractual dispute prior to repudiation or in the course of this dispute. The only alleged proof that has been provided substantially post dates the dispute period. The applicant had notified the respondent that proof at the time was considered essential for continuation of the lease on satisfactory terms." 23Ground 3 is headed "Unconscionable Failure to Respond to Notice of Legislative Obligations" and relates to the conduct of the respondent's conduct with respect to the supply of electricity and in particular lack of attention to the safety requirements under the relevant legislation. While the actual ground may be inelegantly pleaded that is not a reason of itself to agree to the Dismissal Application put forward by the respondent. It is a matter for the applicant to prove its case and any damages flowing from the alleged breaches. 24Ground 4 relates to the alleged failure of the respondent to deal appropriately as landlord with consent sought by the applicant to transfer the lease the subject of the Agreement. The fulsome submission from the respondent in support of the applicant's interest in the Agreement Application to have the Particulars of Ground 4 (4.1 - 4.2) dismissed seeks to challenge the evidence from the applicant relating to the quantum of potential loss as a result of the alleged failure of the respondent to comply with its obligations to consider appropriately the transfer of lease. The fact that there may be inconsistencies in the evidence thus far from the applicant relating to potential loss for the failure of the transaction to proceed does not of itself equate to the fact that this ground is misconceived or lacking in substance. Even on the respondent's worst case scenario as put in is submissions, a $20,000.00 loss should not be considered as lacking in substance. There is no actual submission by the respondent as to why the Tribunal should consider this ground as misconceived or insubstantial other than cavilling with the evidence of the applicant thus far. 25Ground 5 relates to breach of statutory rights as expressed. Particulars 5.1 to 5.2 relate to issues of a safe work environment with respect to the provision of electricity to the premises by the respondent. The respondent seeks dismissal of these Particulars and submits there is a disconnect between the allegations of unsafe work space in the premises and a claim for damages. In response the applicant alleges a claim under s36 of the RLA on the basis that the premises, due to the lack of being safely inhabitable were not able to be used for a period of time and consequently the applicant suffered loss. 26Ground 6 relates to breaches by the respondent of the right to quiet enjoyment of the leased premises. In the Particulars the applicant asserts that "on more than one occasion the respondent landlord's manager acted aggressively and in an abusive and threatening manner to the applicant over payment for electricity allegedly owed and over missing materials taken by the respondent's staff..." The submission from the respondent on this matter is that "Ground 6 is itself both irrelevant to any loss (no damages are sought for assault) and outside the jurisdiction of the Tribunal, because the Tribunal has no jurisdiction to hear assault claims." In response to this submission the Tribunal notes that Ground 6 is not an assault claim per sé but a claim that the conduct of the respondent through its agents breached the applicant's right of quiet enjoyment the alleged assault being part of the evidence but not forming the basis of a claim. The Tribunal further notes that it is not unusual in retail tenancy claims that issues of abuse and threatening behaviour are raised in connection with alleged conduct of landlords that is claimed to be unconscionable.. 27Ground 7 relates to a claim for breach of equitable rights under the lease. The claims here appear to relate again to the respondent's dealing as landlord on the question of assignment. The Dismissal Application asks the Tribunal to dismiss the Particulars in Ground 7. While perhaps inelegantly pleaded the respondent should realise that pursuant to s 39 of the RLA Act the landlord has obligations imposed when asked to consent to an assignment of a lease. The alleged conduct of the respondent in failing to deal appropriately with the application by the applicant for an assignment could be viewed as unconscionable and or in breach of s 39 of the RLA and if found so, could give rise to a claim for damages provided certain conditions required in s 39 are met. 28In the written submissions from the applicant in response to the Dismissal Application, the applicant states (at p6): "The applicant submits that the respondent forcefully asserts that the basis for the claim is not clear. The applicant has provided accounts from an accounting firm and based on these its claim provides its clear per day profit estimate figures for week days and weekends in the off-season [sic]. Furthermore, by modifying the premises to attract passing trade with the general public, in advertising it was the applicant's intention to avoid seasonal ups and downs related to caravan park trade and the applicant notes that this had started to happen. The applicant submits that if there is any uncertainty in these figures then the appropriate remedy is not striking out of proceedings but the provision of further expert evidence that the applicant is willing to supply if required, and/or will supply in the event of providing further quantification of losses because of planning changes. The applicant submits that the application for strike out is unjustified and an attempt to wear the applicant down." 29The Tribunal supports the submission from the applicant. Even if the figures claimed by the applicant are imprecise this cannot of itself be a reason to dismiss the proceedings as being in the words of Section 55(b) "misconceived or lacking in substance". On any basis, the Tribunal is of the view that a claim of $324,000.00 cannot be lacking in substance. The submissions by the respondent in support of a dismissal do not deal with how a claim of $324,000.00 is lacking in substance. 30Rather, in the submissions from the respondent, there is an admission that there may be damages owing to the applicant, and, the main issue being whether the measure of damages is tortious or contractual. As noted the Tribunal must consider an application for dismissal to consider whether the original application was misconceived or lacking in substance. An argument as to whether damages are tortious or contractual would suggest that rather than the application being misconceived or lacking in substance, there is a real issue to be tried and it is a matter of evidence as to whether or not the allegations can be proved and then a matter of submissions with respect to the nature of the damages and loss. 31In reviewing the Dismissal Application, the Tribunal is not persuaded that the Original Application as set out in its Grounds and Particulars is so misconceived and lacking in substance that the applicant has no arguable case which should not be allowed to be resolved at a full hearing [per Ormiston JA in State Electricity Commission of Victoria v Rabel as cited in paragraph 15 of these Reasons. 32The germane claim in the Original Application is the dispute over whether the applicant is liable to pay for electricity to the premises [Particulars 1.4 of Ground 1]. To determine this issue the Tribunal will be required to construe the Agreement between the parties which on the face of it does not specifically state that electricity charges is to the account of the applicant and payable by the applicant. What flowed from this original dispute between the parties contemplates issues of repudiation of the Agreement on both sides, damages and consequential losses claimed. Grounds 3 to 7 inclusive amplify this dispute between the parties over electricity payments and the subsequent actions and consequences resulting in a claim for damages. 33The respondent has not discharged the onus to convince the Tribunal that the Original Application should be dismissed or dismiss as much of it so as to render it unlitigable. The issues are real issues between the parties whether the conduct of the respondent in not consenting to an assignment of lease is a live issue as to conduct and any damages flowing if proven. The claim for loss of quite enjoyment is a live issue between the parties. The dispute of liability for the electricity is a live issue. In any event whether some of the Particulars in the Original Application are poorly expressed or drafted, the Tribunal believes that the Grounds therein are not lacking in substance and ultimately should be tried to ascertain whether or not the claims can be maintained and what damages flow. The Original Application is neither misconceived nor lacking in substance. 34Accordingly I dismiss the Dismissal Application. 35I award costs of the Application for Dismissal and the Hearing to the applicant. 36Having dismissed the Application for Dismissal, I believe that the dispute between the parties should be heard as expeditiously as possible. Consequently liability to restore to the Directions List is granted to each of the parties. D Bluth Senior Member Civil and Administrative Tribunal of New South Wales 26 August 2014 ********** 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: 17 October 2014