Le v Gallego [2017] NSWCATAP 58

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Le v Gallego [2017] NSWCATAP 58 Hearing dates: 11 October 2016 Date of orders: 15 March 2017 Decision date: 15 March 2017 Jurisdiction: Appeal Panel Before: P Callaghan SC, Principal Member D Robertson, Senior Member Decision: 1. Leave to appeal refused 2. Appeal dismissed Catchwords: CONTRACTS – Retail Leases – no written agreement – whether evidence disclosed an objective intention to enter into a lease Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Retail Leases Act 1994 (NSW) Cases Cited: Collins v Urban [2014] NSWCATAP 17 Streat v Fantastic Holdings [2011] NSWSC 1097 Category: Principal judgment Parties: Le Thi Thu Le (Appellant) Walther Gallego (Respondent) Representation: Solicitors: C Owens (Appellant) H Papadopoulos (Respondent) File Number(s): AP 16/30173 Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal Jurisdiction: Consumer & Commercial Division Date of Decision: 30 May 2016 Before: D Bluth, Senior Member File Number(s): COM 15/67872

REASONS FOR DECISION 1. The appellant in this appeal (Ms Le) was the applicant in proceedings against three parties in the Consumer and Commercial Division of the Tribunal. On 26 July 2011 Ms Le entered into a contract to purchase a property at Redfern. The purchase was completed on 15 January 2014. As described in the decision under appeal, the property "consisted of a combined retail premises downstairs and a residential flat upstairs, not formally separated". 2. The respondent to this appeal, Mr Gallego, entered into occupation of the property (or part of the property) on 13 April 2013, that is before completion of the sale to Ms Le. 3. The second and third respondents to the original application were the vendor, Mr Bytago and the vendor's agent, Mr Go. No orders were made against them and they are not parties to the appeal. 4. Without formally making an order, the Tribunal stated at paragraph 27 of the decision under appeal that it could not find any obligation by Mr Bytago to pay any money to Ms Le, nor was there any relationship between Ms Le and Mr Go, so that the claim against the second and third respondents should be dismissed. 5. It is not in dispute that on 24 February 2014 Mr Gallego entered into a residential tenancy agreement with Ms Le in respect of the residential portion of the premises. 6. Ms Le asserts that prior to that date Mr Gallego had been in occupation of the entire premises and was liable to Ms Le for rent in respect of the premises from 15 January 2014, the date Ms Le acquired ownership of the premises, until 23 February 2014. 7. Ms Le also sought orders in relation to moneys that were said to have been paid by Mr Gallego to the former owner by way of bond. 8. The Tribunal determined that Ms Le had not established that prior to 24 February 2014 Mr Gallego had entered into a lease or agreement to lease either the commercial or the residential parts of the premises, with Ms Le or with the previous owner. The Tribunal Member dismissed Ms Le's claim against Mr Gallego for rent and made no order in respect of the moneys that had been paid to the previous owner. The Tribunal ordered Mr Gallego to pay Ms Le a rental bond in respect of the residential part of the premises in the amount of $1,600.00 being four weeks rent. 9. It appears that that money has been paid and no issue concerning that order is raised by the appeal. 10. By her Notice of Appeal Ms Le sought orders: 1. For the payment of rent for the period 14 January to 24 February 2014 in the amount of $5,265 or alternatively $4,592.25; 2. For compensation in respect of a fire door and a vanity which Ms Le alleges had been removed from the premises or otherwise lost by Mr Gallego. 1. At the hearing of the appeal Mr Owens, solicitor for Ms Le, acknowledged that the second order sought had not been one that was pursued in the proceedings under appeal and he did not press any claim for such an order in the appeal. 2. At the hearing of the appeal Mr Gallego was represented by Mr Papadopoulos as agent for Ms Koh of KL International Lawyers who was sitting beside him at the bar table. Mr Gallego was at the back of the hearing room with an interpreter. 3. Pursuant to s80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) Ms Le may appeal as of right on a question of law and with the leave of the Appeal Panel on other grounds. 4. As this appeal is brought from a decision of the Consumer and Commercial Division of the Tribunal, by virtue of clause 12(1) of Schedule 4 to the Civil and Administrative Tribunal Act, leave to appeal may only be granted under s80(2)(b): If the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 1. In Collins v Urban [2014] NSWCATAP 17 the meaning of "substantial miscarriage of justice" was summarized at [71] and [79] as follows: "[71]. . . [I]t can be seen that the concept of a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred. . . . [79] In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result . . . it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred." 1. The principles to be applied by an Appeal Panel in determining whether or not leave to appeal should be granted are set out in the decision of the Appeal Panel in Collins v Urban at [84]: "The general principles derived from these cases can be summarised as follows: (1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; (2) Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed." 1. Mr Owens accepted that no question of law was raised by the appeal and that the appeal had to proceed by way of application for leave to appeal. 2. Ms Le sought leave to appeal on each of the grounds listed in clause 12 of Schedule 4, that is, that the decision was not fair and equitable, that the decision was against the weight of the evidence and that significant new evidence is now available that was not reasonably available at the time of the initial decision. 3. The "new evidence" relied upon comprises an email from Mr Gallego to Ms Le dated 14 January 2014, attaching additional proposed terms for a residential tenancy agreement and other documents, and an email from Mr Nick Cheun, solicitor, apparently acting on behalf of Mr Gallego, to Citystruct Real Estate, Ms Le's property manager, dated 7 February 2014. 4. Mr Owens stated that this material had been tendered at the hearing of residential tenancy proceedings between Ms Le and Mr Gallego and that Ms Le assumed that it would have been before the Tribunal in the retail tenancy proceedings as well. 5. The Tribunal decision and the documents put forward on the appeal establish the following chronology from which the background to the original application and appeal will become apparent. 6. On 26 July 2011 Ms Le purchased the Redfern premises from Mr Bytago subject to a lease expiring on 30 June 2012. 7. On 13 April 2013 Mr Gallego entered into occupation of the whole or part of the premises and paid Mr Go on behalf of Mr Bytago the sum of $3,000. Mr Go signed a receipt which stated: "Received from Walther Gallego the sum of $3,000. Being for deposit for Commercial Lease of Property *** Redfern 2016. Subject to final agreement it's a Refundable Deposit". 1. In the course of 2013, negotiations concerning a lease by Mr Bytago to Mr Gallego or his company, La Finca Restaurant, which was incorporated on 1 July 2013, were undertaken between Mr Gallego and Mr Go. At some point a document referred to by the Tribunal Member as "Heads of Agreement" was provided to Mr Gallego. That document in fact is a form of offer of terms for a lease over the premises which was expressly stated to be "subject to lessor's approval and lease contract". 2. At some point Mr Bytago or his representatives prepared a form of lease over the premises between Mr Bytago as lessor and La Finca Restaurant Pty Ltd as lessee. 3. On 15 October 2013 Ms Le lodged a caveat over the property. 4. On 15 January 2014 Ms Le settled the purchase of the premises. On the same day, Eric Fung & Co, solicitors for Ms Le, sent a letter to "the Tenant(s)", at the address of the property, directing payment of "all future rents" to Ms Le or at her direction. 5. On 21 February 2014 residential tenancy proceedings brought by Ms Le against Mr Gallego were dismissed on the basis that the Tribunal did not have jurisdiction. 6. On 24 February 2014 Ms Le and Mr Gallego entered into a residential tenancy agreement in respect of the residential part of the property. 7. On 26 February 2014 Ms Le entered into a retail lease of the commercial part of the property to a third party. 8. The proceedings below were, apparently with the agreement of the parties, determined on the papers, that is without formal hearing. 9. Ms Le's case (on the appeal as below) hinges upon the question whether Mr Gallego entered into a lease with Mr Bytago (Ms Le's predecessor in title) with respect to the whole or part of the premises. 10. Apart from the documentary evidence referred to above, Mr Gallego provided an affidavit stating (as summarised by the Tribunal Member in the decision under appeal) "that he never used the downstairs retail premises of the property, he never opened a restaurant in the property, he never signed a retail lease with the applicant and he does not owe the applicant any money". 11. It was apparent from the documents which the appellant sought to tender by way of new evidence that Mr Gallego had asserted that he had been undertaking a substantial renovation of the premises and had incurred costs in respect of which he was entitled to reimbursement or set off against any obligation to pay rent for the premises. 12. Although it was not before us on the hearing of the appeal, Ms Le also tendered a building report which indicated that the works completed by Mr Gallego by way of renovation of the premises were not carried out in a tradesmanlike manner and that the bathroom of the residential flat may have to be completely rebuilt. 13. Ms Le's case, before the Tribunal and on the appeal, relied on the provisions of s8 of the Retail Leases Act 1994 (NSW) which is as follows: For the purposes of this Act, a retail shop lease is considered to have been entered into when a person enters into possession of the retail shop as lessee under the lease or begins to pay rent as lessee under the lease (whichever happens first). (2) However, if both parties execute the lease before the lessee enters into possession under the lease or begins to pay rent under the lease, the lease is considered. 1. Ms Le also relied upon the decision of Pembroke J in Streat v Fantastic Holdings [2011] NSWSC 1097 as authority for the proposition that the question whether parties are bound to a lease in the absence of a written document is: "resolved by ascertaining the objective intention of the parties as to disclosed in the correspondence and communications viewed in the light of the subject matter and the surrounding circumstances" (at [11]). 1. That proposition is not controversial. The issue before the Tribunal was whether the "objective intention of the parties as disclosed in their correspondence and communications" indicated that Mr Gallego and the former owner, Mr Bytago, had entered into a lease. 2. Both at common law (or more precisely in equity) and pursuant to the Retail Leases Act, a lease may come into effect when a person enters into occupation of premises regardless that no written lease has been executed. However the mere entry into occupation is not sufficient, it is necessary that, viewed objectively, the parties have manifested an intention to enter into a lease. 3. The Tribunal Member determined that, on the evidence, no lease between Mr Gallego and Mr Bytago either of the commercial area or of the residential area had come into effect. The Tribunal Member expressed his reasons for that finding in paragraph 25 of his decision as follows: "There is no signed lease with anybody and the negotiations are too vague to imply that any form of lease was accepted by the parties as governing the lease arrangement." 1. Mr Owens submitted that this finding was not just and equitable and was against the weight of evidence. 2. He pointed to the facts: 1. That Mr Gallego had entered into occupation of the premises (or at least part of the premises); 2. There was an unsigned form of lease in respect of the property; 3. Mr Gallego had paid $3,000 to Mr Go on behalf of Mr Bytago on 13 April 2013 by way of deposit in respect of a commercial lease of the property; 4. as demonstrating that the parties had objectively manifested the intention to enter into a lease in respect of the premises. 1. We note that Mr Gallego did not acknowledge that he had entered into occupation of the commercial part of the premises. The evidence before the Tribunal Member was equivocal in that, although Mr Gallego's affidavit stated that he "never used" the commercial space and "never opened a restaurant" in the premises, he did not explicitly state that he never occupied the commercial area. Mr Papadopoulos stated at the appeal hearing that Mr Gallego had only every used the commercial area for the storage of materials brought to the site for use in the renovation of the upstairs area. It seems to be tolerably clear that Mr Gallego had some sort of occupation of the whole of the premises commencing in April 2013 but the quality of that occupation in terms of use and exclusivity of possession is not clear, except to the extent that the evidence indicates that the premises were uninhabitable, the commercial section totally and the residential section subject to renovation work which Mr Gallego was doing.