Civil and Administrative Tribunal New South Wales Medium Neutral Citation: NS Admin Pty Ltd v Singh [2019] NSWCATAP 69 Hearing dates: 14 February 2019 with subsequent written submissions received on 21 and 27 February 2019. Date of orders: 26 March 2019 Decision date: 26 March 2019 Jurisdiction: Appeal Panel Before: P Durack SC, Senior Member D Robertson, Senior Member Decision: (1) To the extent that leave to appeal is applied for such leave is refused. (2) The appeal is allowed in part. (3) Set aside Order 2 of the orders made by the Tribunal on 24 August 2018 and in substitution order that NS Admin Pty Ltd must pay Uttam Singh and Suman Lata Singh the sum of $60,860.26 within 7 days. (4) The appeal is otherwise dismissed. (5) Within 14 days of this decision, the respondents are to file and serve their written submissions concerning costs. (6) Within 14 days thereafter, the appellant is to file and serve its written submissions concerning costs. (7) Within 7 days thereafter, the respondents are to file and serve any written submissions in reply. Catchwords: LEASES AND TENANCIES – retail and commercial tenancies legislation - retail shop lease – water ingress – breach of covenant of quiet enjoyment – proof of loss – hearsay evidence in expert's report - leasing next door premises to a competitor – alleged unconscionable conduct by lessor–– no error of law – no appellable error of fact Legislation Cited: Civil and Administrative Tribunal Act 2013 Civil and Administrative Tribunal Rules 2014 Retail Leases Act 1994 Cases Cited: Advance Fitness v Bondi Diggers [1999] NSWSC 264 Collins v Urban [2014] NSWCATAP 10 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; 174 CLR 64 Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 Lam v Ausintel Investments Australia Pty Ltd (1990) 97 ALR Martins Camera Corner Pty Ltd v Hotel Mayfair Ltd [1976] 2 NSWLR 15 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 NB2 Pty Ltd v P.T. Ltd [2018] NSWCA 10 Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 Texts Cited: Nil Category: Principal judgment Parties: NS Admin Pty Ltd (Appellant) Buttam Singh & Suman Lata Singh t/as Deevan Groceries and Indian Takeway (Respondent) Representation: Counsel: JB Pearson (Appellant) F Berglund (Respondent) Solicitors: Fortis Law Group (Appellant) File Number(s): AP18/49157 Publication restriction: None Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer & Commercial Division Citation: N/A Date of Decision: 24 August 2018 Before: D Goldstein – Senior Member File Number(s): COM 18/00387 reasons for decision Summary 1. The appellant, NS Admin Pty Ltd, was the landlord of the respondents, Mr and Ms Singh, under a retail lease of a grocery and takeaway food store in western Sydney. The store specialised in the sale of Indian foods. 2. The Tribunal at first instance declared the lease to be terminated as from 26 August 2018. This was an order sought by the respondents and consented to by the appellant. In addition, the Tribunal ordered that the appellant pay the respondents the sum of $62,630.26. This amount was made up of various components, including an amount of $1,770.00 in respect of cleaning costs. 3. The money awarded to the respondents was a consequence of two problems that the respondents had experienced during their occupancy of the store. 4. The first problem was rain water leaking into the premises through the roof. The second problem was the emergence of a direct competitor next door to their premises selling the same goods as the respondents. This competitor obtained a lease from the appellant some twenty three months after the commencement of the respondents' lease. 5. By the appeal, the appellant sought to reduce the award by a total of $43,105.26. This reduction was made up of two sums – first, the sum of $15,236.09 in respect of a finding of unconscionable conduct by the appellant concerning the emergence of the competitor. Secondly, the sum of $27,869.17 in respect of the leaking roof. 6. The appellant needs an extension of time in which to appeal. The appeal was out of time by a considerable period – nearly two months. Ultimately, it emerged that the appellant had made a flawed attempt to lodge the appeal within time. We have decided to grant an extension of time. 7. We have decided that the appeal should be allowed inrespect of the award for cleaning costs and otherwise dismissed. To the extent that leave to appeal was sought, such leave should be refused. 8. Our reasons for these decisions are set out below. Background 1. The leased premises were one of four shops in a row owned by the appellant in a complex of other shops. 2. The retail lease was entered into on 26 August 2015 for a term of five years, with an option to renew for a further five years. Under the lease the respondents were required to use the premises as an "Indian Supermarket/Take Away Shop". 3. The statutory disclosure statement required from the appellant was sent to the respondents by email on 22 July 2015. It contained contradictory statements about exclusivity of use. Amongst the "Key Disclosure Items", on the first page of the disclosure statement, it was clearly stated that the lease did not provide the lessee with exclusivity in relation to the permitted use of the premises (item 8). On the other hand, on the second page, it said that the permitted use of "Retail store or as otherwise agreed" was exclusive to the lessee. 4. The lease itself did not provide for exclusivity of use in favour of the respondents. 5. On various occasions from June 2016, during rain events, water leaked into the premises through the roof and ceiling. In a witness statement, Ms Singh gave considerable evidence about the water ingress and the serious disruption that this caused. She also gave evidence about the failure of the appellant to take any effective steps to rectify this problem despite notification and requests from the respondents. Her evidence about these matters was uncontradicted. It was not until 20 December 2017 that the appellant replaced the roof of the premises. 6. At the hearing at first instance, the appellant conceded that the respondents should have an abatement of 50% of the rent in respect of the period from January 2017 to March 2018 because of the rain water ingress problem. This amounted to the sum of $8,880 and was one of the components of the total money award made by the Tribunal. 7. Before the Tribunal at first instance the disputed items of loss and their quantification in respect of the water ingress issue were: 1. $6,025.81 in respect of damaged stock. This was identified as the Category 1 loss. 2. $17,643.19 in respect of lost profit on lost sales in the catering arm of the business. This was described as the Category 2 loss. 3. The amount of $2,430.17 in respect of lost profit on lost sales of takeaway hot food. This was described as the Category 3 loss. 4. The amount of $13,300.00 in respect of cleaning costs. This was described as the Category 4 loss. 1. Each of these amounts was identified and explained in one of two expert accountant reports, dated 24 January 2018, presented by the respondents. These were provided by their accountant, Mr Haddad. 2. The Tribunal upheld the claim for each of these amounts except as to the quantum of the claim for cleaning costs. The Tribunal awarded an amount of $1,770.00 in respect of this claim. In doing so, the Tribunal rejected Mr Haddad's evidence on this topic and based the award upon other information. 3. As to the unconscionable conduct claim, in July 2017, a shop known as "Meena Bazaar" opened next door to the respondents' premises. It sold the same groceries as those sold by the respondents. 4. The Tribunal found that the operation of Meena Bazaar had an adverse effect on the profitability of the respondents' business. The appeal right 1. The appellant has a right of appeal on any question of law, otherwise it must obtain leave to appeal: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act). 2. This is an appeal from the Consumer and Commercial Division of the Tribunal. Hence, the grant of leave to appeal is regulated by cl 12 of Schedule 4 of the NCAT Act, which provides: 12 Limitations on internal appeals against Division decisions (1) An Appeal Panel may grant leave under section 80 (2) (b) of this Act for an internal appeal against a Division decision only 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 applying this clause, we adopt the approach set out by the Appeal Panel in Collins v Urban [2014] NSWCATAP 17 as follows: [81] 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,…. Grounds of appeal 1. As will be seen, Mr Pearson, who appeared for the appellant, clarified and to some extent both expanded and narrowed the grounds of appeal in oral submissions. There was no objection from the respondents to this but we made provision to allow the respondents to provide some further written submissions after the hearing of the appeal to deal with these new aspects. 2. Mr Pearson indicated that the appellant relied, principally, on the ground of appeal which challenged the finding of unconscionable conduct. 3. The Notice of Appeal set out four broad grounds of appeal as follows: 1. The member erred in finding that the applicant (respondent) breached the covenant for quite enjoyment of the premises by reason of failure to repair the roof of the premises in his findings at paragraph 53 of the member's decision; 2. The member erred by admitting into evidence and giving weight to the report of Mr Haddad of Latitude Accountants dated 24 January 2018 as set out in paragraph 58 of the member's decision;' 3 The member erred in accepting Mr Haddad's evidence as determinative evidence of loss and in the member's findings at paragraph 53, 55 and 90 of the member's decision; 4. The member erred in finding that the applicant (respondent) acted unconscionably as set out in paragraph 79 and 80 of the member's decision. 1. No error of law was identified in the Notice of Appeal. Leave to appeal was sought on the grounds that the decision was not fair and equitable or that the decision was against the weight of evidence. 2. With respect to the ground that the decision was not fair and equitable it was said in the Notice of Appeal: 1. The decision was not fair and equitable in that the member allowed into evidence and apportioned significant weight to the report of Mr Haddad of Latitude Accountants. 2. The decision regarding findings of unconscionable conduct was against the weight of evidence. 3. The decision regarding findings of damages was unsupported by admissible or satisfactory evidence. 4. The decision gave little or no weight to the evidence of the applicant (respondent). 1. In oral submissions, Mr Pearson indicated: 1. With respect to Ground 1, the appellant contended that the Tribunal had erred in law by applying the wrong test as to what was necessary to establish a breach of the covenant of quiet enjoyment. 2. As to Grounds 2 and 3, the appellant relied upon the same ground, namely that the Tribunal had erred in law in concluding that causation of loss had been established but without evidence to support that finding. Later, in the course of his submissions, Mr Pearson indicated that the appellant also contended that, even if there was some evidence, the finding of causation of loss was not reasonably open or was against the weight of the evidence, which he accepted raised alleged errors of fact, not errors of law. 3. As to Ground 4 (the principal ground relied upon), the appellant contended that the Tribunal erred in law by applying the wrong test as to what amounted to unconscionable conduct. Later in the course of oral submissions, Mr Pearson contended that the conclusion that there had been unconscionable conduct was not reasonably open on the facts, which he accepted raised an alleged error of fact. Application for an extension of time 1. The appeal was instituted by lodging the Notice of Appeal on 15 November 2018. That was 55 days out of time. The date of the decision and the date notice of the decision was received by the appellant was 24 August 2018. An appeal was required to be lodged within 28 days of 24 August 2018, namely by 21 September 2018: Rule 25(4)(c) of the Civil and Administrative Tribunal Rules 2014. We disagree with the appellant's submission that there was a short delay in bringing the appeal. There was a considerable delay. 2. As things stood at the commencement of the hearing of the appeal, no evidence had been provided to the Tribunal explaining the delay. In written submissions the appellant had said, in unspecific terms, that the Notice of Appeal had been filed out of time because it had attempted to file the document in the incorrect registry and that upon discovering the mistake it was rectified without delay. 3. Following an exchange with the Appeal Panel about an inadequate explanation, Mr Pearson produced a signed statement from Ms Hallasso, a solicitor with Fortis Law Group, the firm which acted for the appellant, dated 13 February 2019. 4. In her statement, Ms Hallasso said that the appellant attempted to lodge the documents commencing the appeal in the wrong registry, being the NSW Civil and Administrative Tribunal, Consumer and Commercial Division, Sydney Registry by email on 21 September 2018. She did not annex that email, but instead, annexed a copy of an email received by the appellant from that Division on 21 September 2018. This was an email sent to Mr Sam Johnson, the Chief Executive Officer of the appellant. It said it was an automated response and referred the reader to important information set out in the email. 5. Amongst that information was the statement that your email had been received and would be answered shortly and that the Tribunal did not currently accept filing of applications by email unless this has been specifically directed by the Tribunal. 6. Also annexed to Ms Hallasso's statement was an email from Mr Johnson to Mr Pierre Safi sent on 23 October 2018. This email forwarded to Mr Safi the email from the CCD Division of the Tribunal dated 21 September 2018 to which we have just referred. Mr Safi is a partner in Fortis Law Group. 7. In her statement, Ms Hallasso said that she was instructed that upon knowledge that the appellant had lodged the Notice of Appeal in the incorrect registry, the appellant immediately took steps to personally lodge the documents with the Appeals Registry. 8. Following exchanges with the Appeal Panel about continuing problems with the explanation for the delay, Mr Pearson sought to call some oral evidence from Mr Safi. We came to permit him to do so. 9. In his oral evidence Mr Safi said he had a number of matters in which his firm acted for the appellant and as a consequence he was regularly in communication with Mr Johnson. He said Mr Johnson forwarded to him the email from the CCD Division on 23 October 2018 after he enquired whether Mr Johnson had heard anything further from the Tribunal about the appeal. Mr Safi said he did not read the 21 September 2018 email carefully enough and did not notice the statement that the Tribunal did not accept filing of applications by email. He assumed Mr Johnson would hear back from the Tribunal about the appeal. However, when more time passed without hearing anything, he enquired again of Mr Johnson. Mr Johnson told him he had not heard anything. Accordingly, Mr Safi decided to call the Appeal Registry himself, which he did and discovered that the Notice of Appeal had not been lodged with the Appeal Registry. He then told Mr Johnson to immediately lodge the Notice of Appeal in the Appeal Registry. 10. Ms Berglund, who appeared for the respondents, cross examined Mr Safi, briefly. She did not challenge the content of Mr Safi's evidence. We accept Mr Safi's evidence as to what occurred. 11. It is regrettable that a full account of the circumstances concerning the delay in lodging the Notice of Appeal was not given by affidavit or witness statement prior to the hearing of the appeal. 12. The application for an extension of time needs to be assessed according to the approach set out in Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 at [18] – [22]. 13. In that case, the Appeal Panel said that the time limit should generally be strictly enforced, but exceptions should be made where the interests of justice so required (at [21]). The Appeal Panel in Jackson went on to say (at [22]): 22. The considerations that will generally be relevant to the Appeal Panel's consideration of whether to grant an extension of time in which to lodge a Notice of Appeal include: (1) The discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the appellant – Gallo v Dawson[2990] HCA 30, 93 ALR 479 at [2], Nanschild v Pratt [2011] NSSWCA 85 at [38]; (2) The discretion is to be exercised in the light of the fact that the respondent (to the appeal) has already obtained a decision in its favour and, once the period for appeal has expired, can be thought of as having a "vested right" to retain the benefit of that decision – Jackamarra v Krakouer (1998) 195 CLR 516 at [4], Nanschild v Pratt [2001] NSWCA 85 at [39] and, in particular, where the right of appeal has gone (because of the expiration of the appeal period) the time for appealing should not be extended unless the proposed appeal has some prospects of success – Jackamarra at [7]; (3) Generally, in an application for an extension of time to appeal the Appeal Panel will be required to consider: (a) The length of the delay; (b) The reason for the delay; (c) The appellant's prospects of success, that is usually whether the applicant has a fairly arguable case; and (d) The extent of any prejudice suffered by the respondent (to the appeal) - Tomko v Palasty (No 2) (2007) 71 NSWLR 61 at [55] (per Basten JA) but not also [14], Nanschild v Pratt [2011] NSWCA 85 at [39] to [42]; and (4) It may be appropriate to go further into the merits of an appeal if the explanation for the delay is less than satisfactory or if the opponent has a substantial case of prejudice and, in such a case, it may be relevant whether the appellant seeking an extension of time can show that his or her case has more substantial merit than merely being fairly arguable – Tomko v Palasty (No 2) (2007) 71 NSWLR 61 at [14] (per Hodgson JA, Ipp JA agreeing at [17]) and Molyneux v Chief Commissioner of State Revenue [2012] NSWADTAP 53 at [58] – [59]. 1. In addition to a submission that refusal of an extension would work an injustice to the appellant because its appeal was meritorious, Mr Pearson, in oral submissions, relied upon what he said was the lack of prejudice to the respondent should an extension be granted. 2. We gave the respondent an opportunity to provide written submissions about the new evidence the appellant presented at the hearing about the extension of time. We have considered those submissions. In those submissions the respondents maintained the position that the delay was excessive and inadequately explained. They submitted that the prejudice was the prolonging of proceedings determined in their favour and that they had not received any payment in accordance with the order made in their favour. 3. Despite enquiry at the hearing of the appeal, no explanation was or has been supplied by the appellant for not paying the amount ordered to be paid. There has been no stay of that order (Order 2). As unsatisfactory as this is, we are unable to conclude that the delay in lodging the appeal is connected to this default. 4. In our view, in due course, the delay was adequately explained, albeit that the explanation did not reflect well on Mr Safi and Mr Johnson. Importantly, we accept that, within time, the appellant had decided to appeal and had, albeit involving error, taken the step to lodge the appeal. In so concluding, we infer from all the evidence that the email to the CCD Division of the Tribunal on 21 September 2018 did attach a notice of appeal. 5. Given this explanation, the limited prejudice to the respondents, and because we have not come to the view that the grounds of appeal lacked any merit, we have decided to grant the appellant an extension of time until 15 November 2018 in which to lodge the appeal. The Tribunal's decision in more detail (a) Damages for breach of the covenant for quiet enjoyment. 1. The covenant for quiet enjoyment in the lease was in the following terms (cl 18(l)): And the lessor doth hereby covenant with the lessees that they, paying the rent hereby reserved, and performing the covenants herein before on their part contained, shall and may peaceably possess and enjoy the demised premises for the term hereby granted, without any interruption or disturbance from the lessor or any other person or persons lawfully claiming by, from, or under them. 1. The Tribunal concluded that the appellant had breached the covenant for quiet enjoyment in the lease by its failure to repair the roof in all the circumstances. 2. The Tribunal referred to the respondents' uncontradicted evidence of water leaking from the roof of the premises through the ceiling and into the premises. It also referred to the evidence from the appellant, which confirmed that the respondents had complained about the water ingress and that the complaints occurred after there was heavy rain (at [32]). The Tribunal also referred to the appellant's replacement of the roof in December 2017 (at [33]). 3. After referring to various authorities, including the decision in Martins Camera Corner Pty Ltd v Hotel Mayfair Ltd [1976] 2 NSWLR 15, the Tribunal concluded (at [38]): I find that there is sufficient evidence adduced by the [respondents] in exhibits A and B to persuade me that the [appellant] breached the covenant for quiet enjoyment by reason of its failure to repair the roof of the premises in circumstances where the applicants were making continual complaints to the respondents' agent of water leaking through the roof and ceiling of the premises. I further find that on evidence adduced by the applicants in Exhibits A and B that there was a substantial interference of their quiet enjoyment caused by the respondents' failure to repair the roof of the premises. 1. Exhibits A and B were two witness statements from Ms Singh served before the hearing. 2. As to damages for breach of the covenant for quiet enjoyment, so far as relevant to the appeal, the Tribunal reasoned: 1. After referring to the evidence of Ms Singh in paragraph 22 of Exhibit A, the Tribunal concluded that her evidence established a causal link with the loss claimed: at [50]. 2. There was sufficient evidence to support the claim for damaged stock based upon Ms Singh's evidence about loss of stock and the expert accountant's consideration of the loss claim and the invoices supporting the claim: at [52]. (b) The unconscionability claim 1. As to the respondents' claim for a contravention of s 62B of the Retail Leases Act 1994 (RLA), the Tribunal's reasons, so far as relevant to the appeal, included: 1. It noted the appellant's submission that the respondents were not granted exclusivity: at [67]. 2. None of the matters set out in s 62B(3)(a) - (h) were present on the facts: at [68]. 3. The matter in s 62B(3)(i)(1) was present on the facts but the failure was not particularly significant since it only occurred in July 2017, some years after the commencement of the lease: at [68]. 4. Reference to a number of authorities on the meaning of unconscionable conduct. As to the "moral" element of unconscionability, the Tribunal said that it would adopt the approach outlined by Allsop P in Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389: at [72]. 5. As to such moral element, it made the following findings (at [76]): 1. Meena Bazaar was situated next door to the respondents' premises; 2. The appellant owns the premises leased to the respondents and to Meena Bazaar; 3. The premises leased to the respondents and Meena Bazaar were part of a four shop block owned by the appellant; 4. The premises in which Meena Bazaar was situated were previously a coffee shop; 5. Meena Bazaar opened in July 2017; 6. Meena Bazaar sells the same items and groceries as sold by the respondents; and 7. The appellant did not disclose to the respondents that it was allowing the premises next door to sell the same items and groceries as sold by the respondents. 1. On a careful reading of the disclosure statement the respondents could not have formed the view that it was unequivocally clear that they had an exclusive right to use the premises as a retail store, although the position was unclear because of the contradictions contained in the disclosure statement. 2. It concluded that: [78] The next issue that I must determine is whether the respondent engaged in unconscionable conduct by reason of the material findings of fact that I have made in [76]. Having regard to these findings of fact, I make a further finding that the respondent as owner of 4 shops in a row was able to give exclusivity of use to any of the lessee's within its 4 shop bloc, so far as the 4 shop bloc was concerned. I further find that the applicants' case is quite clearly that the respondent failed to give them exclusive use, within the 4 shop bloc, so far as it was within its power to do so. [79] In my view the respondent's conduct in leasing the shop premises next door to the applicants and allowing those premises to be used for selling the same items of groceries as the applicants, was unconscionable. Alternatively, since the evidence is not particularly clear, if the respondent allowed the lessee of the shop premises next door to the applicants to change the use of the premises from a coffee shop to a use where items and groceries the same as those in the applicants' premises could be sold, I find such conduct to be unconscionable. [80] The reasons for making the findings of unconscionable conduct are that I find that the respondent must have known that the impact of its conduct would adversely impact the applicants' business as run from the premises and its earnings derived from that business. I find that such conduct fits many of the descriptions of unconscionable conduct referred to in the authorities referred to above. The respondents conduct was in my view clearly 'unfair and unreasonable'. I also find that the respondent's conduct was 'irreconcilable with what was right or reasonable' insofar as the respondent must have known that its conduct was highly likely to have had an adverse financial impact on the applicants. It is this conduct which would constitute the 'moral tainting' referred to by Allsop in Tonto Home Loans Australia Pty Ltd v Tavares. 1. As to damages for unconscionable conduct, the Tribunal reasoned, relevantly to the appeal: 1. It was apparent from Mr Haddad's second report that the respondents' had advised Mr Haddad that by reason of the appellant's conduct they had sustained two categories of loss - loss of revenue and loss of goodwill: at [85]. 2. As the report was the only report the Tribunal had regarding financial loss on this issue, the Tribunal should give it weight despite the fact that it relied upon a number of unproved assumptions. The Tribunal accepted that because the assumptions had not been made good in evidence, or investigated by Mr Haddad, there existed the possibility that Mr Haddad's figures may be erroneous. In the circumstances, the Tribunal concluded that it should apply a discount of 15% to Mr Haddad's estimates of loss; at [90]. In support of this approach, the Tribunal referred to Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; 174 CLR 64 at [31]. 3. Taking this approach, the Tribunal assessed the loss at $17,924.81 (being Mr Haddad's figure for the period from July 2017 to June 2018) less 15%, namely the amount of $15,236.09: at [92] – [93]. The Tribunal found that there was no need to assess losses beyond June 2018 or the loss of goodwill claim because the parties were agreed that the lease would come to an end in August 2018: at [93]. There is no challenge to these latter findings. 1. It is clear from a reading of Mr Haddad's second report that Mr Haddad relied upon "data" supplied by the respondents setting out actual monthly revenue figures for the periods July to September 2016 (before the competitor commenced) and for July to September 2017 (after the competitor commenced): at [20] – [22] of the report. A comparison of these figures showed a decrease in gross revenue of 27.19% in the 2017 period coinciding with the operation of the competitor. Consideration – unconscionability, Ground 4 of the appeal – applying the wrong test/conclusion not reasonably open 1. We deal with the grounds of appeal in the order in which they were addressed by Mr Pearson in oral submissions. 2. Section 62B of the RLA, relevantly, provides: 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. ….. (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. …. (7) For the purpose of determining whether a lessor has contravened subsection (1) or whether a lessee has contravened subsection (2): (a) the Tribunal must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention, and (b) the Tribunal may have regard to circumstances existing before the commencement of this section but not to conduct engaged in before that commencement. (8) A lessor or lessee, or former lessor or lessee, who suffers loss or damage by reason of unconscionable conduct of another person that is in contravention of this section may recover the amount of the loss or damage by lodging a claim against the other person under section 71A. (9) If the matter of such loss or damage arises in connection with a matter the subject of proceedings in the Tribunal, the Tribunal may proceed to decide it, and in so doing may award such sum as it thinks fit. (10) In this section: lessee or former lessee includes a person who is a guarantor or covenantor under a lease or former lease. 1. Section 72AA of the RTA, relevantly, provides: 72AA Powers of Tribunal relating to unconscionable conduct claims (1) In proceedings for an unconscionable conduct claim lodged with the Tribunal under this Part, the Tribunal is empowered to make any one or more of the following orders that it considers appropriate: (a) an order that a party to the proceedings pay money to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person, …. 1. Mr Pearson said that the appellant did not take issue with any of the Tribunal's findings of primary fact. 2. It was submitted, however, that to find that leasing the neighbouring premises to a competitor amounted to unconscionable conduct without a finding of some form of mala fides or ulterior motive was akin to inserting, retrospectively, into the lease agreement an exclusivity clause. It was also submitted that the appellant had no contractual obligation to prefer the commercial interest of the respondents over its own interests and that, for example, if Meena Bazaar was the only prospective tenant for the property the effect of the conclusion was that the appellant would have to leave the premises unoccupied until it could find a non-competing business. 3. Mr Pearson relied upon the decision of the Court of Appeal in NB2 Pty Ltd v P.T. Ltd [2018] NSWCA 10, in particular, the passage from the judgment of Macfarlan JA at [75] concerning a claim of misleading, deceptive or unconscionable conduct by a landlord in failing to disclose to a prospective tenant its knowledge of the intentions of a competing retailer. In that passage His Honour rejects the complaint by the tenant in circumstances where the landlord did not represent, or promise, the tenant that it would be the only relevant retailer. In doing so, His Honour referred to the observations of Gleeson CJ in Lam v Ausintel Investments Australia Pty Ltd (1990) 97 ALR 458 at 475 and to the reasons of French CJ and Kiefel J in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [21]. 4. However, the remarks of Macfarlan JA concerned a very different case from the present, namely an assessment as to whether there had been unlawful conduct by silence in the course of contractual negotiations. Furthermore, the Tribunal in this case made it clear that it attributed little significance to the failure to inform the respondents in July 2017 about what was to occur in the premises next door: at [68]. 5. The respondents submitted that it had not been shown that the Tribunal applied the wrong test. On the contrary, the Tribunal correctly identified the applicable law, including that the conduct in issue must demonstrate a high level of moral obloquy. 6. We agree with the respondents in this regard. It is not of assistance to simply argue, as the appellant does, that the Tribunal must have applied the wrong test because if the correct test had been applied the Tribunal would have found that the conduct was not unconscionable. 7. So far as error of fact is concerned, the respondents submitted: 1. The Tribunal's findings were reasonably available on the facts. 2. In truth, the appellant was endeavouring to have a second go at the case and to do so in circumstances where it had not led any evidence against the case of unconscionable conduct. 3. The appellant's contentions did not meet any of the criteria for leave to appeal set out in Collins v Urban [2014] NSWCATAP 10 at [84]. 4. At its highest, the appellant's case is that the primary decision maker was arguably wrong in the conclusion arrived at. 5. The appellant had not met the preconditions for the grant of leave to appeal in cl 12(1) of Schedule 4. In this regard, the decision was based squarely on the evidence before the Tribunal and careful consideration was given by the Tribunal to that evidence. 1. The appellant does not point to any plain error in the fact-finding process or to any finding that was unreasonably arrived at or clearly mistaken. There was no suggestion that the fact-finding process was unorthodox or proceeded in a way that was likely to produce an unfair result. 2. The Tribunal's conclusion about unconscionability was an evaluative judgment. It was a conclusion upon which minds might well differ. However, we are not persuaded it was a conclusion that was beyond the legitimate choice of the Tribunal or that it was more than arguably wrong or resulted in an injustice that was reasonably clear. 3. The facts concerning the claim were of very limited compass. There was no specific evidence from the respondents as to their expectations at the time of taking the lease and as to the source of those expectations. The lease did not give them the right to exclusivity. On the other hand, there was no evidence from the appellant about a subject that was peculiarly within their knowledge, namely how they came to permit Meena Bazaar to operate next door to the respondents and as to their commercial options in that regard. Accordingly, there was no evidence from which the Tribunal could conclude that it was clear that the appellant would have been acting against its own commercial interest had it refused to allow the Meena Bazaar to operate next door to the respondents. 4. In addition, understandably, it was of significance to the Tribunal that the context was a small setting of only four shops in a row, that the respondents were operating a speciality Indian food store, that the competitor would be selling the very same speciality items and that the appellant must have known that the new business would adversely impact the respondents. 5. In view of our conclusions, we refuse the appellant leave to appeal on these grounds. Grounds 2 and 3 – Causation of loss 1. Focussing particularly on the Category 1, 2 and 3 losses, the appellant submitted that the Tribunal found causation of loss in the absence of any evidence linking the water ingress with the particular losses claimed. It was submitted that whilst there was lay evidence from Ms Singh in general terms about damage to stock and disruption to the business, including to the catering arm, there was no evidence to the effect that the losses claimed were the specific consequences of the water ingress. Rather, all that the Tribunal was presented with were assumptions as to those aspects set out in Mr Haddad's first report. 2. Whilst better proof might have been supplied, we do not accept this submission. In our opinion, it is sufficiently apparent from Mr Haddad's report that he based his calculation of losses upon instructions from the respondents as to the specific details making up the losses. This amounts to hearsay evidence sourced from the respondents as to the specific items that were affected by the water ingress. As Mr Pearson, correctly, conceded, the Tribunal was not bound by the rules of evidence. 3. Mr Pearson submitted that such evidence should have been given no weight but not by reason of any error of law. 4. In making this submission, it was not suggested that there was any specific material that was against relying upon such evidence such as aspects of the cross-examination of Ms Singh or other documentary evidence. Nor was it suggested that it was unfair to the appellant to rely upon such evidence. In this regard, we note that the appellant did have the opportunity to cross examine Ms Singh at the hearing before the Tribunal Member and proceeded to do so on, at least, one issue: see reasons at [75]. We also note that Mr Haddad's report was provided well before the hearing giving the appellant the opportunity to examine with the respondents such material as there was bearing upon the existence of these losses. 5. For these reasons, so far as the application for leave to appeal on these grounds in respect of the Category 1, 2 and 3 losses is concerned, we are not satisfied that the appellant may have suffered a substantial miscarriage of justice. Accordingly, leave to appeal on these grounds is refused. 6. However, we think that the appellant's appeal in respect of the Category 4 losses should be upheld because of an error of law. This is because, as the appellant submits, there was no evidence that the respondents suffered any pecuniary loss at all for cleaning costs. On the contrary, such evidence as there was suggested that the clean-up work was done by the respondents themselves rather than incur a financial outlay: see Ms Singh's witness statement dated 1 January 2018 at [21] and [22] and the absence of any invoice(s) for the work carried out. Instead Mr Haddad did a calculation based upon time sheets and the Tribunal worked from historic cleaning costs (at [55]). Ground 1 – Breach of covenant of quiet enjoyment 1. In oral submissions, Mr Pearson indicated that his argument was that the Tribunal erred in law by applying the wrong test, namely a test that did not include the ingredient that the act or omission be deliberate or negligent in the sense that the resulting interference was reasonably foreseeable. In this regard, Mr Pearson pointed to the absence of any express reference to these ingredients when the Tribunal came to explain its conclusion about breach: at [38]. (We have also had regard to the appellant's reply submissions on this point provided after the appeal hearing). 2. We disagree with the appellant's submission. 3. As the appellant accepts, the Tribunal set out the correct test, including the requirement that the relevant act or omission be deliberate or negligent, in paragraph 35 of the reasons when referring to the decision of Austin J in Advance Fitness v Bondi Diggers [1999] NSWSC 264. 4. In the circumstances, we would be slow to conclude that the Tribunal had applied the wrong test when it had set out the correct test shortly before it applied the law to the facts. 5. We think it is clear enough that the Tribunal applied the correct test including these requirements. This is because it referred to the "failure" by the appellant to repair the roof in response to the "continual complaints" from the respondents: see first sentence of [38]. These are aspects of negligence by the lessor. They are distinct from the separate issue concerning substantial interference in respect of which the Tribunal made an additional finding: see the last sentence of [38]. Costs 1. Both parties applied for costs and both said in their written submissions that they agreed that these could be dealt with on the papers in the light of the decision on the appeal. Accordingly, we make the directions below for this to occur bearing in mind the respondents' substantial success on the appeal. Orders 1. For these reasons, we make the following orders: 1. To the extent that leave to appeal is applied for such leave is refused. 2. The appeal is allowed in part. 3. Set aside Order 2 of the orders made by the Tribunal on 24 August 2018 and in substitution order that NS Admin Pty Ltd must pay Uttam Singh and Suman Lata Singh the sum of $60,860.26 within 7 days. 4. The appeal is otherwise dismissed. 5. Within 14 days of this decision, the respondents are to file and serve their written submissions concerning costs. 6. Within 14 days thereafter, the appellant is to file and serve its written submissions concerning costs. 7. Within 7 days thereafter, the respondents are to file and serve any written submissions in reply. ********** 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: 26 March 2019