Ian Turner and Lyn Turner trading as Classic Gourmet Sausages v Leda Commercial Properties Pty Limited [1999] ACTSC 78 (19 July 1999)

Last Updated: 6 October 1999

IAN TURNER and LYN TURNER trading as CLASSIC GOURMET SAUSAGES v LEDA COMMERCIAL PROPERTIES PTY LIMITED

[1999] ACTSC 78 (19 July 1999)

CATCHWORDS

APPEAL - from ACT Tenancy Tribunal - dismissal of application to strike out notice of dispute - whether error of law - whether test for "reasonable cause of action" properly applied - whether claim of "harsh and oppressive conduct" properly rejected - whether denial of natural justice - ss 6(1)(b), 36, 54, 58(1) Tenancy Tribunal Act 1994 (ACT) - s 139 Magistrates Court (Civil Jurisdiction) Act 1982 (ACT)

LEASE - for fixed term - converted to monthly tenancy by lessor - whether bank guarantee under fixed term lease applicable to monthly tenancy

WORDS AND PHRASES - "reasonable cause of action", "harsh and oppressive conduct"

Tenancy Tribunal Act 1994 (ACT), ss 6(1)(b), 36, 54, 58(1)

Magistrates Court (Civil Jurisdiction) Act 1982 (ACT), s 139

General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, applied

Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365, applied

Leda Commercial Properties Pty Ltd v DHK Retailers Pty Ltd [1992] ACTSC 113; (1992) 111 FLR 81, applied

Gold v Proprietors - Units Plan No 52 [1992] ACTSC 102; (1992) 110 FLR 356, applied

Paramasivam v Flynn [1998] SCACT 10, 2 March 1998, applied

Agius v Arrow Freightways Pty Ltd [1965] AR (NSW) 77, referred to

Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371, referred to

R v Portus; Ex p. City of Perth [1973] HCA 64; (1973) 129 CLR 312, referred to

No. SCA 2 of 1999

Judge: Higgins J

Supreme Court of the ACT

Date: 19 July 1999

IN THE SUPREME COURT OF THE )

) No. SCA 2 of 1999

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: IAN TURNER and LYN TURNER trading as CLASSIC GOURMET SAUSAGES

Appellants

AND: LEDA COMMERCIAL PROPERTIES PTY LIMITED

(ACN 008 613 447)

Respondent

ORDER

Judge: Higgins J

Date: 19 July 1999

Place: Canberra

THE COURT ORDERS THAT:

1. The appeal be dismissed.

1. This is an appeal from a decision of the Tenancy Tribunal (the Tribunal) constituted by President Somes.

2. The decision in question was made on 17 December 1998. It dismissed an application on behalf of the appellants which had sought, initially, interim orders preventing the respondent, as landlord of premises, from resuming possession of those premises.

3. It is necessary to refer to the history of the dispute.

4. On 7 December 1994 a sublease was entered into between the respondent and Classic Gourmet Sausages Pty Ltd (the lessee). The sublease was for a term of five years from 1 September 1994. Rent reserved was initially $39,900 or 1% of gross receipts (as defined by clause 18.02 thereof) - whichever was the greater sum. The appellants executed the sublease as guarantors of the obligations undertaken by the lessee. The reference schedule to the sublease referred to a "Bank Guarantee (clause 21): $15,661.49 initially".

5. Clause 21, an additional clause, provided:

"The Lessee shall on or before signing this Lease arrange for the issue by a bank of an irrevocable guarantee in favour of the Lessor for an amount equal to $15,661.49 and will immediately at the request of the Lessor provide a replacement bank guarantee for an amount equal to the aggregate of one-quarter of the Annual Rent for any Lease Year and the Lessee's Contribution to Outgoings for that Lease Year (calculated in accordance with clause 4.12). Each bank guarantee must contain terms and conditions that are acceptable to the Lessor."

6. It is not entirely clear to me what "terms and conditions" the parties had agreed to include in any bank guarantee as a result of their adherence to this clause but neither party has addressed any argument or evidence to that question. Accordingly, I will not consider that issue further.

7. Pursuant to clause 18.02 the annual rent for the demised premises (shop 71B) was expressed as an increasing minimum rent or 1% of gross receipts, whichever was the greater.

8. The appellants have not complained that the annual rent has been incorrectly calculated or demanded by the respondent. I will, therefore, assume that it has been correctly charged from time to time.

9. On 7 August 1997 the respondent gave notice to the lessee of "Conversion to Monthly Tenancy". The notice complained of default in payment of rent and other outgoings totalling $4,672.80. It relied upon clause 15.04.

10. That clause, relevantly, provided:

"15.04 DEFINITION OF DEFAULT - It is a breach of a fundamental and essential term of this lease if the Lessee is in default in any of the following circumstances [text as modified]:

15.04.1 Rent in arrears - if the rent hereby reserved ...shall be unpaid for the space of seven (7) days after the same shall have become due..."

11. "Default" is defined similarly in relation to any other monies due to the respondent remaining unpaid for not less than seven days.

12. The relevance of the definition of the term "default" is that, pursuant to clause 15.06, various remedies are made available to the respondent if the lessee becomes "in default".

13. Those remedies are determination [of the sublease] by re-entry (clause 15.06.1), determination by notice (clause 15.06.2) and conversion to monthly tenancy (clause 15.06.3).

14. The respondent, on 7 August 1997, purported to give notice of the exercise of the remedy provided for under clause 15.06.3. That provision allowed the respondent, on default by the lessee:

"by notice in writing to the Lessee [to] elect to convert the unexpired portion of the term of this Lease into a tenancy from month to month in which event this Lease shall be determined as from the giving of such notice and thereafter the Lessee shall hold the Demised Premises from the lessor as Lessee from month to month at a monthly rent equal to the aggregate of the monthly instalments on account of the rent the Outgoings and the Air Conditioning Costs payable hereunder at the date of giving such notice (such rent being payable monthly in advance) but otherwise on the terms and conditions of this Lease so far as they can be applied to a monthly tenancy."

15. That remedy, however, subject to any law to the contrary, was not to be exercised by the respondent until prior notice of the default relied upon had been given to the lessee and:

"...the default has continued for a period of fourteen (14) days after the Lessor has given notice in writing to the Lessee requiring the Lessee to rectify such default."

16. Correspondence referred to by Mr Gregory Joseph Adcock in his affidavit of 11 November 1998, details previous defaults in the timely payment of rent. Those defaults are not, of course, relied upon in the notice of 7 August 1997. Such a history would, however, be relevant to the exercise of any discretion to give relief from forfeiture of the sublease in consequence of further unremedied default, and as to whether the respondent's conduct in declining to waive subsequent default was reasonable.

17. The rent due on 1 July 1997 had been demanded by letter dated 11 July 1997. The lessee did not dispute that the default continued up until 7 August 1997.

18. Presumably it was remedied after that date but, by then, the respondent had exercised its right to convert the term, granted by the sublease, to a monthly tenancy.

19. There were further defaults in payment of rent for October 1997 and for subsequent months up to and including 1 January 1998. By 28 January 1998, the respondent had demanded payment of arrears of rent totalling $19,477.15. Again, that default was not disputed.

20. The respondent then recovered $11,500 by calling upon the bank guarantee provided by the lessee under clause 21. Nearly $8,000 arrears of rent still remained outstanding.

21. The respondent then gave notice dated 10 February 1998, pursuant to the Forfeiture of Leases Act 1901 (ACT). The reason for doing so is not clear. Section 1 of that Act does require notice pursuant to the Act if a lessor desires to exercise a right of re-entry or of forfeiture for breach of a covenant. However, subs (6) excepts from the scope of that section:

"(a)...any lease or tenancy for a term of one year or less..."

22. Nevertheless, nothing turns on whether the notice actually given was necessary or not. The notice required not only payment of arrears of rent but also reinstatement of the bank guarantee provided for by clause 21. In each case, remedy of those breaches was required within seven days.

23. The same day, the respondent made a separate demand for payment of arrears of rent then standing at $12,599.95, as well as for the reinstatement of the bank guarantee.

24. Representatives of the respondent and the lessee met on 16 February 1998. A transcript of their conversation is annexed to Mr Adcock's affidavit. Mr Adcock represented the respondent. He told the appellants in clear terms that the respondent wanted arrears of rent paid and the bank guarantee restored. There was also reference to a dispute concerning trading in breach of the permitted sublease usage and "spruiking". Those matters were not relied upon, however, to support the respondent's decision to convert or terminate the sublease.

25. The respondent did, however, agree to extend the period for compliance with these notices until 20 February 1998.

26. It appears that, on 18 February 1998, Mr Turner advised that he could not arrange the further bank guarantee. On 19 February 1998, Mr Adcock wrote declining, on behalf of the respondent, to waive the demand for it. Termination of the sublease was clearly contemplated by the respondent.

27. On 27 February 1998, the Tenancy Tribunal resolved an outstanding dispute between the respondent and the lessee concerning the permitted range of usage of the premises by the lessee. There is no reliance on any breach by the lessee of the usage restrictions of the sublease in these proceedings.

28. To forestall termination, the appellants filed a Notice of Dispute on 27 February 1998 (but dated 3 March 1998). The appellants made application under it to the Tenancy Tribunal for interim orders to stay re-entry. That application was refused by President Burns on 5 March 1998.

29. On 6 March 1998, the respondent gave Notice of Re-entry pursuant to, and in purported exercise of, its powers under clause 15.06. There were two defaults cited: arrears of rent then alleged to be $12,833.43 and the failure to reinstate the bank guarantee.

30. The Notice of Dispute, however, was not dismissed. The claim for relief was based on the ground that:

"The landlord has engaged in unconscionable conduct as described in the Tenancy Tribunal (Amendment) Act 1997 - in particular sections 36(1)(d) and (f)."

31. After the refusal of interim orders, the respondent applied to dismiss the application. The lessee was not a party to either the Notice of Dispute or the application to dismiss it, though neither the appellants, the respondent, nor the Tribunal appeared to notice this egregious omission.

32. By notice dated 30 March 1998, the respondent gave notice to the lessee that, pursuant to clause 15.09.05(b) of the sublease, it had seized, and proposed to sell, all the lessee's fixtures, fittings, plant, equipment and stock-in-trade to recover arrears of rent then alleged to be $13,587.11.

33. However, the sale of those items could not be effected. No bids were received. The lessee was "locked out" as from 6 March 1998 and the premises relet to "Bruce's Gourmet Sausages". Presumably, the items seized were retained by the respondent and transferred to the new tenant.

34. On 23 September 1998, the appellants gave notice of further particulars of the dispute. By then, the respondent's application to dismiss the original notice had been listed for hearing on 1 December 1998. The allegations made in that notice were addressed by Mr Adcock in his affidavit of 11 November 1998.

35. The claim for relief was based on the following grounds:

* that the respondent refused to give the applicants time in which to pay arrears of rent;

* that the respondent re-entered the premises on 6 March 1998 without adequate warning;

* that the conduct of the respondent was harsh and oppressive and unconscionable in that:

a) the applicants were willing, and had offered, to pay off arrears on terms similar to terms which the respondent had granted to other tenants of the shopping centre in similar cases;

b)(i) the applicants were forced to sell off existing stock at reduced prices and thereby incurred a trading loss on that stock of approximately $10,000;

b)(ii) the applicants were unable to remove from their premises their fittings, including coolroom, coolroom panels, cabinets, roller doors, counters, signage and décor and other trade fittings whose combined value exceeded $10,000;

b)(iii) the applicants were unable to relocate the business to alternative premises and thereby lost the goodwill of the business; and

b)(iv) the respondent subsequently leased premises, including the fittings, being cabinets, counter, roller doors, signage and décor and other fittings and has received rent for them.

36. Before considering the proceedings before President Somes, it should be noted that, in dismissing the application for interim relief, President Burns had made it clear that, if the appellants wished to make out a case for relief on the grounds of harsh, unconscionable or unfairly discriminatory treatment, some evidence supporting those allegations would be required.

37. On Friday, 23 October 1998, the matter came before President Burns again. Mr Arthur of counsel appeared for the appellants. Mr Purnell SC appeared for the respondent. Mr Purnell sought to agitate the application to dismiss the Notice of Dispute.

38. Mr Arthur responded that the affidavit in support of that application had been made and delivered only the previous day. He sought an adjournment. One of the matters Mr Arthur referred to as warranting opposition to Mr Purnell's application was referred to in the following terms:

"MR ARTHUR: I am instructed that the applicant is aware of other matters or other tenants who have been given time in which to pay off their arrears of rent.

THE PRESIDENT: And who are they?

MR ARTHUR: I do not have instructions as to those particular persons at this stage.

THE PRESIDENT: Well this matter has been going since March this year. I would have thought that the lawyers acting on behalf of the applicant would have been instructed with such basic material at this time."

39. Mr Purnell SC, once the President had indicated that he would, nevertheless, grant the adjournment, handed up to the President an offer to the lessee, dated 14 October, which he described as "magnanimous". That offer had been addressed to the Legal Aid Office and, whatever its terms were, it drew from the President the comment that:

"Mr Arthur I really fail to see how you are going to go past an offer like that."

"....It may well be that the respondent, if the respondent is ultimately successful on its application, would have very good grounds for complaint about the conduct of this matter by the Legal Aid Office. But again, that is a matter which will depend upon the evidence and may not even fall for me to determine..."

40. The likelihood of an issue as to credibility was raised. The President referred to adverse findings he made concerning Mr Turner's credibility on a previous occasion. Mr Arthur then stated: "It would certainly be our preference that another member of the Tribunal hear the matter".

41. The President did not, however, offer to disqualify himself "...unless I am advised by you [Mr Arthur] in direct terms that Mr Turner will be providing in (sic) evidence in relation to this matter and that it is likely - that that is the application to dismiss and it is likely that his credibility will be put in issue."

42. Mr Arthur told the President that Mr Turner intended to file an affidavit but it was not then known if his credibility would be challenged. The matter was adjourned to 1 December 1998. At that stage, the appellants had not withdrawn their application for President Burns to disqualify himself, nor had President Burns finally refused such an application.

43. As it happened, Mr Turner filed an affidavit dated 19 November 1998. It addressed the previous affidavit evidence filed by the respondent. It concentrated heavily upon other instances, of which Mr Turner said he was aware, where other tenants had been permitted to remain in occupation though equally or more seriously in breach of lease conditions than the lessee. He characterised the choice of the respondent to proceed against the lessee as "harsh and oppressive". He blamed the inability to pay rent on legal costs incurred in the lessee's previous unsuccessful application to the Tribunal concerning the usage clause. He expressed the opinion that the lessee would have remedied at least the bank guarantee breach in three to six months. He also complained that the respondent had caused him hardship and ruined his livelihood.

44. On 25 November 1998, the matter again came before President Burns. Mr Brennan, then appearing for the respondent, sought leave to file affidavit evidence in reply to that of Mr Turner.

45. President Burns reminded Mr Brennan that the application under consideration was that of the respondent to strike out the notice of dispute.

46. In that context President Burns commented:

"...I foresee difficulties in your present application to strike out and, in my opinion, the matter would be better dealt with by obtaining a hearing date and directions being given with respect to either the filing of affidavits or the provision of the names of those witnesses whom the applicant proposes to call by way of subpoena, so that you will then be prepared and even there may be some directions given for the applicant to file an affidavit in which he sets out what he understands to be the evidence that will be given by these witnesses, so that the respondent will be in a position to know what it is that these witnesses are to say within the understanding of the applicant and then they can meet that if they can. But, as I said, it is entirely a matter for the respondent whether the respondent continues with its present application."

47. Mr Brennan insisted both on seeking leave to file further affidavits and in proceeding with the strike-out application.

48. President Burns granted leave and then asked Mr Farrell, appearing for the appellants:

"Mr Farrell, from the applicants' point of view, is the matter ready to proceed on 1 December, in terms of the application to dismiss?

MR FARRELL: Yes, I believe so."

49. When the matter came before the Tribunal on 1 December 1998 it was presided over by President Somes. The appellants were represented by Mr Gates, solicitor. Mr Purnell SC represented the respondent. The respondent had advised the appellants that it had decided not to file any further affidavits.

50. Mr Purnell SC made it clear that the respondent wished to proceed with its strike-out application. He had prepared a written submission. Mr Gates was asked about his "situation". He responded:

"At this stage, Mr President we do not propose to make any submissions."

51. There had been some extra-curial material. On 27 October 1998, the appellants had written, over Mr Turner's signature, to the Deputy Registrar of the Tribunal complaining of President Burns' "attacks on my (sic) credibility" and "perceived bias" and suggested that the President "intended to intimidate my legal advisors and myself (sic)".

52. There had also been letters written on 2 September 1998 by the National Federation of Independent Business Inc (NFIB) complaining, on behalf of Mr Turner, of "discrimination". It provided signed statements from four tenants or ex-tenants of the respondent, including one who had been actually ordered by the respondent to remain in occupation though owing $80,000 in arrears of rent and outgoings.

53. That material was sent directly to "The President" of the Tribunal on 7 December 1998. That was after the hearing on 1 December 1998. It does not appear that any application was made to President Somes for permission to provide that material. Nor is it clear to me that the respondent was made aware of it. However, in the result, it seems to me that no consequence follows from this apparent irregularity.

54. At the hearing on 1 December 1998, Mr Purnell SC took President Somes through the material filed and his submissions on behalf of the appellants. Mr Gates did, in fact, make submissions. He relied primarily on the matters contained in Mr Turner's affidavit of 19 November 1998.

55. Mr Gates made it quite clear that the appellants' case was based on discriminatory conduct but that the witnesses to it were not free to give evidence unless on subpoena.

56. President Somes noted that there was, as a result, no evidence, other than that which had been referred to in the material then before him, which could be relied upon.

57. On 17 December 1998, President Somes handed down a decision acceding to the respondent's application to strike out the Notice of Dispute for reasons then published.

58. In those reasons, the learned President noted that, although it was well-known before 1 December 1998 that the witnesses the appellant wished to rely upon would not attend and give evidence save on subpoena, no such subpoenas had been sought or issued.

59. President Somes further noted that, by virtue of s 54 of the Tenancy Tribunal Act 1994, s 139 of the Magistrates Court (Civil Jurisdiction) Act 1982 applied.

60. That latter section would permit a magistrate to stay or dismiss an application if:

"(a) no reasonable cause of action is disclosed; or

(b) the proceedings are -

(i) frivolous or vexatious; or

(ii) an abuse of the process of the court..."

61. Thus, President Somes concluded, the Tribunal could grant similar relief. He then reviewed the relevant history of the matter.

62. The learned President found the claim that the respondent failed to give the lessee a reasonable time to make up arrears of rent to be "without merit". The claim to lack of adequate notice before re-entry was also "without merit". As to the allegation of harsh and oppressive conduct, the learned President stated:

"I have considered these items carefully in light of the evidence before me and cannot see how the tenants would ever be able to sustain such a position. I can only deal with this application on the evidence before me and in my view the tenants had every opportunity at the hearing to produce any evidence which they wished to produce in order to resist the application put before the Tribunal by the landlord."

63. If that indicated that, on a strike-out application, which was, in essence, an application for summary judgment, the appellants were obliged to bring forward all admissible evidence necessary to support their claim, then that would have been an error.

64. The essential principle is that propounded by the High Court in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125. If the court asked to dismiss the action is satisfied that, on no view of the case put forward by the responding party, be it the alleged cause of action or defence, that party has a seriously arguable case, then the action or defence, as the case may be, should be struck out.

65. In Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365, Master Allen (SC NSW) sounded a note of caution. A court should not too readily conclude that there is no cause of action on a view as to the law which may be, itself, open to argument. It is not the same as a "no case" application. Such an application can only be made on the basis that the evidence adduced to support a plaintiff's claim has been accepted to the extent that all inferences reasonably open favouring the plaintiff have been drawn, yet, even on that basis, the plaintiff must fail. A strike-out application against a plaintiff assumes that all reasonably available evidence has been called, heard and accepted, with all reasonable inferences favourable to the plaintiff being drawn. Evidence is "reasonably available" if it appears open to the plaintiff to call it. If, notwithstanding that, no seriously arguable case can be perceived, judgment for the defendant should follow: see Leda Commercial Properties Pty Ltd v DHK Retailers Pty Ltd [1992] ACTSC 113; (1992) 111 FLR 81 and Gold v Proprietors - Units Plan No 52 [1992] ACTSC 102; (1992) 110 FLR 356.

66. These principles are well-known. It would be surprising if President Somes overlooked them.

67. The next paragraph of the learned President's reasons indicates that he did not:

"Having considered all of the material before me at the hearing on the 1^st of December 1998 I am satisfied that in effect no reasonable cause of action has been disclosed. It is clear in relation to summary judgments or summary dismissals of actions that before a court or tribunal would take such a step that a court or tribunal must be satisfied that the claim which it is intended to dismiss is without merit."

68. It is clear that the learned President recognised and noted that the term "cause of action" was not entirely apt. The claim was a statutory one for relief under the Tenancy Tribunal Act (supra). However, the same principles are undoubtedly relevant when summary disposition of an application is under consideration.

69. The second point is that "without merit" is to be taken as a synonym for "hopeless": see Paramasivam v Flynn [1998] SCACT 10, 2 March 1998, Gallop J, or "not seriously arguable": see General Steel (supra).

70. Thus, it appears to me that the learned President applied the correct test.

71. Thus construed, the learned President is to be taken to have found that, on the material before him, assuming all facts asserted by the appellants had been found favourably to them, and all evidence available or pointed to as reasonably likely to be available, had been called, the appellants still had no seriously arguable claim for relief. Those assumptions could, however, only arise from the material actually adduced before the learned President. That included any material adduced by the respondent in so far as it gave rise to inferences favourable to the appellants, unless it unarguably contradicted assertions made by, or on behalf of, the appellants.

Appellants' case before the Tribunal

72. The parties were in agreement that the sublease was a "lease" to which the Tenancy Tribunal Act 1994 applied. The appellants did not dispute that the lessee was in default by reason of arrears of rent and other payments deemed to be rent. They conceded that the lessee had not provided a bank guarantee as required by clause 21 of the sublease.

73. Before the Tribunal it had not been contended that clause 21 was inapplicable to the monthly tenancy then in operation. That was not a submission which had been urged upon the learned President. In any event, as the breach of covenant to pay rent and other monies was admitted, the addition of that ground, even if erroneously, would not have affected the availability of remedies otherwise available to the respondent. It may have affected the form of relief had the learned President considered there had been a case for it.

74. In essence, the appellant's claim was that referred to in s 6(1)(b) of the Tenancy Tribunal Act, namely:

"a claim by a party to a lease that another party to the lease has engaged in harsh and oppressive conduct towards the first mentioned party (whether that conduct is unconscionable or not);"

75. Such a claim attracts the provisions of s 36:

"(1) Without limiting the matters to which the Tribunal may have regard for the purposes of making an order in relation to a dispute referred to in paragraph 6(1)(b), the Tribunal may have regard to any of the following matters:

(a) the relative strengths of the bargaining positions of the owner and the tenant;

(b) whether, as a result of conduct engaged in by the owner, the tenant was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the owner;

(c) whether the tenant was able to understand any document relating to the lease;

(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the tenant or a person acting on behalf of the tenant by the owner or a person acting on behalf of the owner in relation to the lease;

(e) the circumstances under which the tenant could have acquired a lease on identical terms over similar premises from a person other than the owner;

(f) the extent to which the owner's conduct towards the tenant was consistent with the owner's conduct in similar lease transactions between the owner and other like tenants;

(g) the requirements of the Code;

(h) the extent to which the owner unreasonably failed to disclose to the tenant -

(i) any intended conduct of the owner that might affect the interests of the tenant; and

(ii) any risks to the tenant arising from the owner's intended conduct (being risks that the owner should have foreseen would not be apparent to the tenant);

(j) the extent to which the owner and the tenant acted in good faith.

(2) An owner is not to be taken, for the purposes of this section, to have engaged in harsh, oppressive or unconscionable conduct by reason only of the referral of a dispute to the Tribunal.

(3) In the application of subsection (1) -

(a) the Tribunal shall 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."

76. The appellants do not contend that all of those matters are relevant. Some of them are not in dispute. Clearly, the respondent had at all times, the stronger bargaining position (s 36(1)(a)). Subparagraphs (b) to (e) are not relied on, though (d) was referred to. Subparagraph 36(1)(f) is, to some extent, relied upon by each party.

77. The lessee's primary submission, put forward by the appellants, was that other tenants similarly or even more egregiously in default were not subjected to forfeiture of their tenancies. Thus, it was suggested, the lessee's eviction was "harsh and oppressive", particularly as the turnover of its business was good and, therefore, prospects for "trading out" of debt were reasonable.

78. It is to that latter question that the bank guarantee is relevant. A lessor comforted by such a guarantee might the more readily be expected to allow time for rental arrears to be made up. The prior history of default, even if only as a result of the ill-fated previous Tribunal applications made by, or on behalf of, the lessee, had led to the lessee's bankers being unwilling to reinstate the previous guarantee. It is, however, relevant to note that, but for the call upon that guarantee, the arrears of rent would have been greater by $11,500 plus interest.

79. If the Tribunal considered a ground had been established for the grant of relief, it could, under s 54, make a wide range of orders, including variation of the lease, reinstatement of possession or compensation. Those powers would, of course, be required to be exercised judicially.

The bank guarantee

80. The first submission of Mr Killalea, for the appellants, which was raised for the first time on the hearing of this appeal, was that the requirement for a bank guarantee was only applicable to a lease for a fixed term. Clause 21 required a guarantee of three months' rent at the then current rate.

81. It is true that a monthly tenancy is one for a series of successive terms of only one month. However, it continues automatically from month to month until determined by due notice. Such notice might well be, or exceed, three months. Further, as occurred here, a landlord might well decide not to exercise a right to determine a lease even though the tenant is in arrears. It was not contended that to require a tenant to guarantee three months' rent to a landlord was itself "harsh" and "oppressive".

82. I consider that clause 21 was applicable to the monthly tenancy which arose on breach of the covenant to pay rent and other monies.

83. The contention to the contrary is, to my mind, quite unmeritorious.

Discriminatory conduct (s 36(1)(f))

84. I would assume for the purpose of this submission, that, given the opportunity, the appellants might have summoned witnesses and adduced evidence that other tenants in default had been permitted to remain as tenants despite such default. Mr Killalea, as his second submission, contended that such discriminatory treatment breached s 36 (1).

85. However, it has to be borne in mind that discriminatory treatment, even if proved, does not, of itself, amount to "harsh and oppressive" conduct against a particular tenant. It is merely a factor in considering whether a particular tenant has been treated harshly and oppressively.

86. It would defy commercial reality if a landlord, having granted a generous indulgence to one tenant, was then bound, at risk of a claim for relief under s 6(1)(b), to grant the same generous indulgence to every other tenant. A landlord might, reasonably, not wish to lose a particular business because of its attraction to shoppers who then patronise other tenants of that landlord rather than the premises of some other landlord, but feel less strongly about another. I note that this sublease has a turnover based rent. If such leases were a standard form used by the lessor, as I would expect, the economic interest of a landlord in such a result would be obvious.

87. Nevertheless, treating one tenant less favourably than others, even if falling short of infringing that tenant's legal and equitable rights, might still be "harsh and oppressive". That might be so, for example, if the less favourable treatment was engaged in for a collateral and improper purpose. If the discrimination was to silence a critic, make way for a more attractive business or for some purpose not reasonably connected with giving a tenant a fair opportunity to earn a livelihood, then that discrimination may be "harsh and oppressive". There was no evidence in this case from which the existence of such a collateral or improper motive could have been inferred.

88. What is "harsh and oppressive" is not capable of exhaustive definition. It requires a judgment applying commonsense and `a sense of justice' to the particular situation: see eg. Agius v Arrow Freightways Pty Ltd [1965] AR (NSW) 77; Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371. It is a determination which must be made judicially: see R v Portus; Ex p. City of Perth [1973] HCA 64; (1973) 129 CLR 312.

89. Having regard to the numerous occasions upon which the lessee had been in default, the unkept promises it had made to remedy breaches and avoid future breaches, the fact that its impecuniousity was not due to any fault on the part of the respondent, that the respondent extended time for the remedy of breaches time and time again and that there appeared to be no reasonable prospect that the lessee would remedy its breaches of covenant within a reasonable time, it cannot, I think, be said to be arguable that the respondent had acted harshly and oppressively in determining this lessee's monthly tenancy, even if other tenants may, in the past, have been given greater indulgence for objectively more serious breaches of their lease obligations. To these considerations must be added the incapacity of the lessee to provide a satisfactory guarantee of the kind referred to in clause 21. That consideration renders a claim for relief even more unarguable than if the breaches of covenant had been confined to arrears of rent. If the lessee's bankers were not prepared to extend further credit to the lessee or the appellants, why should the respondent be expected to do so ?

Undue influence/pressure on other tenants (s 36(1)(d))

90. Mr Killalea further relied on s 36(1)(d) of the Tenancy Tribunal Act to support a submission that the respondent had, by binding third parties to "commercial in-confidence" agreements, exerted undue influence or pressure which is, somehow, relevant to the present application.

91. To my mind, this provision refers to conduct affecting the tenant, not unrelated parties. The alleged conduct in this case related only to the appellants' ability to bring evidence to support their case as to discrimination. That conduct, however, even if it was to be characterised as "undue influence" or "pressure" or "unfair tactics", is of no effect assuming that the appellants had summoned the allegedly reluctant witnesses to give evidence. The Tribunal could then have decided to compel the giving of the evidence if it considered it lawful and proper to do so.

92. Those "commercial in-confidence" arrangements were not relevant to the existence or not of the lessee's default, nor to the reasonableness or otherwise of the respondent's conduct in seeking to have those defaults remedied, nor to the reasonableness or otherwise of the steps taken to terminate the sublease or to seize and dispose of stock and fittings.

The fairness of the process

93. Mr Killalea finally submitted that the Tribunal had failed to afford natural justice to the appellants.

94. As I understood those submissions, two points were made.

95. First, that President Burns was, in fact, part heard in that he had already decided the respondent's application unfavourably to it. Thus, it was not open to President Somes to embark upon the hearing of the matter.

96. Second, that Magistrate Somes had unfairly prevented the appellants from calling further evidence to support their case as to discrimination even though they sought no adjournment to do so and had failed, by 1 December 1998, notwithstanding previous opportunities, to do so.

97. To my mind there is no substance in any of these contentions.

98. President Burns quite clearly indicated that he was not embarking upon any part of the substantive hearing of the respondent's application. His comment that, at the time, he had, absent any argument or full opportunity to look at the relevant factual material, a view that the respondent might have difficulty with its application, is neither a final view nor even a significant indication of any view.

99. In any event, given the strenuous efforts of the appellants to disqualify President Burns from hearing the strike-out application, it hardly lies in their mouths to complain that President Burns should have insisted on hearing the matter rather than President Somes.

100. As to the second contention, the appellants were represented at the hearing of the strike-out application, as they had been at previous hearings. It is no answer to suggest that their representation was inadequate or lacked competence.

101. I consider there is much validity in the view expressed by President Burns during proceedings on 5 March 1998, addressing an unqualified agent representing the appellants, that is:

"When you or [name] come over here representing somebody, I expect you, when you stand up there like that, to be in a position to provide me with the assistance and with the evidence which is required in order to establish a case. It is no excuse to say I am not a lawyer, because when you stand there taking that role you are taking on the responsibility of knowing how to run a case before a tribunal. Now, in that regard I see no reason why your client should be advantaged by having somebody appearing for him who does not know what they are doing as opposed to somebody who comes over with an experienced solicitor and who also fails to produce appropriate material but does not have that same excuse."

102. Of course, to ensure that justice is done, so far as it can, a court or tribunal will attempt to assist an unrepresented litigant and to make allowances for the unqualified or inexperienced advocate. However, that cannot be at the expense of inflicting injustice upon the opposing party.

103. In any event, even if the solicitor representing the appellants did not understand what was happening, there is nothing to suggest that he did not put the relevant submission that, in effect, the Tribunal should not be satisfied that the case was legally and factually hopeless. It was never necessary to establish as a fact that other tenants had been treated more favourably. The only issue was whether, even if it was so, that created a seriously arguable case for some relief being afforded the lessee in the circumstances.

104. In my view, this appeal raises no issue capable of supporting an appeal under s 58(1) of the Tenancy Tribunal Act.

105. The appeal is dismissed. I will hear the parties as to costs.

I certify that the preceding one hundred and five (105) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Higgins.

Associate:

Date: 19 July 1999

Counsel for the Appellants: Mr R Killalea

Solicitor for the Appellants: Howes Powrie Rowe

Counsel for the Respondent: Mr F J Purnell SC

Solicitor for the Respondent: Mallesons Stephen Jaques

Date of Hearing: 19 May 1999

Date of Judgment: 19 July 1999