Civil and Administrative Tribunal New South Wales Medium Neutral Citation: D'Annunzio v North Sydney Council [2020] NSWCATAP 66 Hearing dates: 26 March 2020 Date of orders: 22 April 2020 Decision date: 22 April 2020 Jurisdiction: Appeal Panel Before: L Pearson, Principal Member Dr J Lucy, Senior Member Decision: (1) Leave to appeal is refused. (2) The appeal is dismissed. Catchwords: APPEAL – Retail leases – Claim of misleading or deceptive conduct - Whether Tribunal erred in its construction of the word "road" in the lessor's disclosure statement – Whether the Tribunal's findings were against the weight of evidence Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Retail Leases Act 1994 (NSW) Cases Cited: BHP Billiton Ltd v Dunning [2013] NSWCA 421 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 Collins v Urban [2014] NSWCATAP 17 Jones v Dunkel (1959) 101 CLR 298 Miller and Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193 Texts Cited: Macquarie Dictionary Category: Principal judgment Parties: Carlo D'Annunzio (Appellant) North Sydney Council (Respondent) Representation: Counsel: D Eardley (Appellant) Solicitors: Praxis Lawyers (Appellant) Hunt & Hunt Lawyers (Respondent) File Number(s): AP 20/01855 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 16 December 2019 Before: G Ulman, Senior Member File Number(s): COM 18/41110 REASONS FOR DECISION 1. The appellant is a former lessee under a retail shop lease. He brought proceedings against the lessor claiming that it engaged in misleading and deceptive conduct in circumstances where it failed to inform him of a development application affecting a neighbouring property and causing obstructions in a walkway next to the retail shop, before he entered into the lease. 2. The Tribunal dismissed the lessee's application. 3. The lessee argued, on appeal, that the Tribunal erred in interpreting the lessor's disclosure statement that no works were planned to surrounding roads as not applying to works affecting the adjacent pedestrian walkway; and that the Tribunal's decision that the Council was not obliged to disclose the works was against the weight of evidence. 4. For the reasons which follow, we have dismissed the appeal. Background 1. North Sydney Council ("the Council") owned a retail shop at Neutral Bay ("the retail shop"). 2. The retail shop is located in a building on the main road at Neutral Bay. Adjacent to the retail shop is a walkway, which separates the building in which the shop is located from the next building (which we will refer to in these reasons as "the neighbouring building" or "the neighbouring property"). The walkway runs from the main road through to a shopping centre and car park at the rear of the buildings. The entrance to the retail shop is from the walkway. 3. On 31 August 2015, a development application was lodged with the Council in respect of the neighbouring building. The Council approved the development application on 29 February 2016. 4. On 22 June 2016, Mr D'Annunzio entered into a contract to purchase a cafeteria business which had been conducted from the retail shop premises. The contract was subject to a special condition providing for completion to be conditional upon the Council's consent to the granting of a new lease for the premises substantially on the same terms as the vendor's lease. 5. The Council provided Mr D'Annunzio with a lessor disclosure statement on 15 August 2016. A lessor is required to give a lessee a disclosure statement for a lease at least seven days before a retail lease is entered into, and it is to be in the prescribed form (Retail Leases Act 1994 (NSW), s 11(1)(a)). 6. Question 17.1 in the lessor's disclosure statement, as contained in Sch 2 to the Retail Leases Act, is: "Are there any alteration works, planned or known to the lessor at this point in time, to the premises or building/centre, including surrounding roads, during the term or any further term or terms?" The Council checked the "No" box in response to this question. 7. Item 29, headed "Acknowledgements by lessor," includes a statement that, by signing the disclosure statement, the lessor confirms and acknowledges that, the lessor has not knowingly withheld information which is likely to have an impact on the lessee's proposed business. The disclosure statement was signed by the lessor's authorised representative or agent, making this acknowledgement. 8. The Council granted Mr D'Annunzio a new lease of the premises for three years commencing on 1 September 2016. Mr D'Annunzio commenced trading from the premises in September 2016. ' 9. Work commenced on the neighbouring building in November or December 2016. As a result, access to the walkway was at times restricted and scaffolding was erected in the walkway. There was dust and noise from the works and a reduction in foot traffic passing the premises. Mr D'Annunzio's business was adversely affected as a result of the works. 10. On 5 February 2018, the Council terminated the lease due to Mr D'Annunzio's failure to pay rent. 11. Mr D'Annunzio applied to the Tribunal, claiming that the Council had breached ss 10 and 62D of the Retail Leases Act. Section 10(1) of the Retail Leases Act provides, broadly, that a party to a retail shop lease is entitled to compensation from the other party where the injured party entered into the lease as a result of the other party's knowingly false or misleading statement or representation. Section 62D prohibits a party to a retail shop lease from engaging in conduct that it is misleading or deceptive. 12. Mr D'Annunzio claimed that the Council made a pre-lease misrepresentation by failing to disclose the existence of the development application for the neighbouring building when answering questions in the lessor's disclosure statement. In the alternative, he said that the Council's failure to inform him of the works to be undertaken, and to remain silent, was misleading and deceptive conduct. 13. The Council also applied to the Tribunal, claiming unpaid rent and damages for loss of rent from the termination date to the end of the lease. 14. The Tribunal heard the two applications together. 15. The Tribunal rejected Mr D'Annunzio's submission that the Council's response to question 17.1 on the disclosure statement was misleading. Mr D'Annunzio submitted that, when question 17.1 asked whether alteration works to "surrounding roads" were planned or known, the question applied to surrounding walkways, as the walkway was a "road." The Tribunal considered that the walkway was a pedestrian pathway only and not a road, so that the Council's negative response to the question was correct. 16. As to item 29 of the disclosure statement, the Tribunal indicated that Mr D'Annunzio had not explained how the Council's acknowledgements were misleading. It found that they were not. 17. The Tribunal rejected the claim that the Council had breached s 10 of the Retail Leases Act because there was no evidence that the Council had knowingly withheld information from Mr D'Annunzio about the development application. It also found that the Council had not made a misrepresentation by silence (in breach of s 62D of the Retail Leases Act). It found that there was nothing in the development application to suggest that any of the work on the neighbouring property would take place in the walkway or that the Council had approved the work extending to the walkway. 18. It dismissed Mr D'Annunzio's claim. 19. The Council's claim was partially successful. There is no appeal from the Tribunal's decision in relation to that claim. Grounds of appeal 1. A document annexed to the Notice of Appeal identified eleven grounds of appeal. At the hearing, counsel for Mr D'Annunzio, Mr Eardley, helpfully informed the Tribunal that his client relied upon two grounds: 1. That the Tribunal erred in finding that the word "road" in the disclosure statement did not apply to the walkway, and in so doing applied a narrow and exclusionary meaning to the word "road." The Tribunal should instead have found that the word "road" can include pedestrian usage. 2. That the Tribunal erred in finding that the Council did not have a duty to disclose building works in the neighbouring building and that it did not engage in misleading and deceptive conduct. Nature of appeal 1. A party may appeal as of right on any question of law or with the leave of the Appeal Panel, on any other grounds (Civil and Administrative Tribunal Act 2013 (NSW) ("NCAT Act"), s 80(2)(b)). 2. In respect of grounds which do not raise a question of law, where an appellant is appealing from the Consumer and Commercial Division of the Tribunal (as here), the appellant must satisfy the Appeal Panel that leave to appeal should be granted under cl 12 of Sch 4 to the NCAT Act. Clause 12(1) of Sch 4 provides that the Appeal Panel may only grant leave under s 80(2)(b): "if 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. Mr D'Annunzio claims that, insofar as his grounds do not raise an error of law, he suffered a substantial miscarriage of justice because the Tribunal's decision was not fair and equitable and because it was against the weight of evidence. Did the Tribunal err in finding that the walkway was not a "road"? 1. Mr Eardley submitted that the first ground raises both an error of law and an error of fact. He did not explain the basis for this submission. 2. Mr Hearnden, for the Council, submitted that this ground, as expressed in the Notice of Appeal, did not identify an error of law or an error of fact. He also submitted that the ordinary meaning of a word in legislation, such as "road," was a question of fact, relying upon Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 395. 3. Mr D'Annunzio's first ground of appeal does not, in our view, raise a question of law, because it concerns the questions of whether the Tribunal correctly determined the ordinary meaning of a word, and whether it was correct to find that the walkway was not a "road" on the facts. Accordingly, Mr D'Annunzio requires leave to appeal on this ground. 4. In order to be granted leave to appeal, an applicant for leave 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]; Collins v Urban [2014] NSWCATAP 17 at [84]. 5. Mr D'Annunzio submitted that the Tribunal should have interpreted the disclosure statement (which is contained in Sch 2 to the Retail Leases Act) broadly, so as to include a walkway. He relied upon extrinsic material, including a second reading speech to the bill which became the Retail Leases Act, which indicated that the Act was intended as a commercial lessee protective measure. Even if the Tribunal is entitled to have regard to this material when construing the word "road," a legislative purpose of protecting lessees does not warrant construing words in the Act beyond their natural meaning. As Gleeson CJ, Gummow, Hayne and Heydon JJ observed in Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193 at 206 [30], "[n]o particular theory or 'rule' of statutory interpretation, including that of 'purposive' construction, can obviate the need for close attention to the text" of legislation. 6. The Tribunal's finding that the ordinary meaning of the word "road" does not include a pedestrian walkway was open to it. In our view, this finding was correct. It was consistent with the Macquarie Dictionary definition, which the Tribunal cited, being "the track on which vehicles, etc., pass, as opposed to the pavement." 7. There was no error in the Tribunal's factual finding that the walkway was not a road. As the Tribunal found, there was no evidence that vehicles used the walkway. The parties provided the Appeal Panel with an agreed version of the transcript, after the hearing. This records that, in response to the Tribunal member's question, "Do cars go along there", Mr Eardley said: "No, but it doesn't necessarily mean there are cars to be a carriageway or a road." This is a concession that cars did not use the walkway. Mr Eardley was not able to inform the Tribunal whether or not the walkway was a gazetted or designated road. 8. Mr Eardley took us, at the appeal hearing, to a photograph of a "Road closed" sign in the walkway which was before the Tribunal. He conceded that there was no evidence that the Council erected the sign and that, in all probability, it was put there by the persons working on the neighbouring property. The placement of a "Road closed" sign in a walkway does not affect the question of whether the walkway is, in fact, a road. 9. We are not persuaded that Mr D'Annunzio has demonstrated an injustice that is reasonably clear, a factual error that was unreasonably arrived at and clearly mistaken or any other basis for the grant of leave on this ground (see Collins v Urban [2014] NSWCATAP 17 at [84]). Nor do we consider that he may have suffered a substantial miscarriage of justice because the Tribunal's decision was not fair and equitable or against the weight of evidence (NCAT Act, Sch 4, cl 12(1)). Accordingly, we refuse leave to appeal on this ground. 10. If we are wrong and this ground does raise a question of law, we do not consider that the Tribunal made an error of law, for reasons given above. 11. This ground is dismissed. Did the Tribunal err in finding that the Council did not have a duty to disclose building works? 1. Mr D'Annunzio argues that the Tribunal made an error in finding that the Council did not have a duty to disclose the building works. He requires leave to appeal on this ground because it does not raise an error of law. 2. Mr Eardley submitted that the Tribunal should have given more weight to certain evidence, including the evidence of the Council's witness, Mr Kerridge, that if he had known about the development application, and that it would have an impact on Mr D'Annunzio's business, he would have included it in the disclosure statement. Mr Kerridge was, at the relevant time, a senior property manager with Colliers International, the Council's managing agent. 3. The agreed transcript shows that Mr Kerridge was asked whether he would advise his client to make a disclosure about proposed disruptions to the walkway in the disclosure statement, if he was aware that there would be complete closures of a walkway at times, and obstructions due to building works next door at other times. Mr Kerridge replied: "Yes, I would as long as I knew what times it was and what impact that may have on the proposed lessee." 4. The evidence of Mr Kerridge does not assist Mr D'Annunzio, because the Tribunal found that the development application did not indicate that any of the work on the neighbouring property would take place in the walkway or that the Council had approved the work extending to the walkway. In other words, the Tribunal found that there was no factual basis for the premise of the question to Mr Kerridge (implicitly, that the Council knew that the walkway would be affected by the building works). 5. Mr Eardley submitted that the Tribunal applied the incorrect test by asking whether there is a duty to disclose and should, instead, have asked whether there was a reasonable expectation of disclosure. He relied upon Miller and Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [20], where French CJ and Kiefel J said at [20]: "In commercial dealings between individuals or individual entities, characterisation of conduct will be undertaken by reference to its circumstances and context. Silence may be a circumstance to be considered. The knowledge of the person to whom the conduct is directed may be relevant. Also relevant, as in the present case, may be the existence of common assumptions and practices established between the parties or prevailing in the particular profession, trade or industry in which they carry on business. The judgment which looks to a reasonable expectation of disclosure as an aid to characterising non-disclosure as misleading or deceptive is objective. It is a practical approach to the application of the prohibition in s 52." (footnotes omitted) 1. Mr D'Annunzio had not established, through evidence, "the existence of common assumptions and practices established between the parties or prevailing in the particular profession, trade or industry in which they carry on business." Mr Eardley submitted that Mr Kerridge gave evidence "that it was usual practice for a disclosure statement to include references to Development Applications that might affect the relevant property." Even if that were an accurate summary of his evidence, the Tribunal found that the development application did not, on its terms, affect the walkway. In these circumstances, the Tribunal was not required to consider whether there was "a reasonable expectation of disclosure." The Tribunal did not err in asking itself whether the Council had a duty of disclosure. 2. Mr Eardley also submitted that the Tribunal was asked to draw an inference in accordance with Jones v Dunkel (1959) 101 CLR 298 from the Council's failure to call any of its officers that the Council officers' evidence would not have assisted the Council's case, and erroneously failed to do so. We do not consider that there was a proper basis for drawing a Jones v Dunkel inference in the circumstances of this case. As the Council submitted, the issues in the case crystallised as being: 1. whether there ought to have been disclosure under question 17.1 of the disclosure statement; and 2. whether the Council knew, or ought to have known, that the works were likely to have affected Mr Annunzio's business. 1. As the Council also submitted, the first of these issues raised an issue of construction which did not call for a witness from the Council and the second raised an evidentiary issue on which no evidence was called by Mr D'Annunzio requiring a response by the Council. 2. The Tribunal resolved the issue of whether the Council knew, or ought to have known, that the works were likely to have affected Mr D'Annunzio's business, by reference to the development application. It found that the terms of the development application made plain that the work was restricted to the neighbouring property and was to be done in a manner so as not to affect the amenity of adjoining land users. We have reviewed the development application and note that it provides, in E2, that all public footways adjacent to the site must be maintained in a safe condition and with no obstructions caused to the said footways. It also provides, in E13, that building materials must not be placed on Council's footpaths. Mr D'Annunzio did not lead any evidence to the effect that Council officers knew that the development would affect the use of the walkway. 3. In our opinion, Mr D'Annunzio has not demonstrated that he may have suffered a substantial miscarriage of justice because the Tribunal's decision was not fair and equitable or because it was against the weight of evidence. On the contrary, the Tribunal's decision appears to us to be consistent with the evidence, taken as a whole. 4. For these reasons, we refuse leave to appeal on this ground. 5. If, contrary to our view, this ground raises a question of law, we do not consider the Tribunal to have made any error of law, for the reasons given above. Orders 1. We make the following orders: 1. Leave to appeal is refused. 2. The appeal is dismissed. **********​​​​​​​ 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: 22 April 2020