Sarah Lin v State Rail Authority of NSW [2006] FCAFC 42 (22 March 2006)

Last Updated: 19 April 2006

FEDERAL COURT OF AUSTRALIA

Sarah Lin v State Rail Authority of NSW [2006] FCAFC 42

CONTRACTS – whether offer and acceptance of lease – no special circumstances or principles arising for consideration


Trade Practices Act 1974 (Cth) ss 51AC and 82
Retail Leases Act 1994 (NSW) ss 6(1)(a) 34 and 62


Lin v State Rail Authority of New South Wales (2005) FCA 1137























SARAH LIN v STATE RAIL AUTHORITY OF NSW

NSD 1503 OF 2005



HEEREY, DOWSETT and CONTI JJ
22 MARCH 2006
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1503 OF 2005

BETWEEN:	SARAH LIN APPELLANT
AND:	STATE RAIL AUTHORITY OF NSW RESPONDENT
JUDGE:	HEEREY, DOWSETT and CONTI JJ
DATE OF ORDER:	22 MARCH 2006
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. The appellant pay the respondent’s costs of the appeal.















Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1503 OF 2005

BETWEEN:	SARAH LIN APPELLANT
AND:	STATE RAIL AUTHORITY OF NSW RESPONDENT

JUDGE:	HEEREY, DOWSETT and CONTI JJ
DATE:	22 MARCH 2006
PLACE:	SYDNEY

REASONS FOR JUDGMENT

Background to the proceedings and to the present Full Court appeal

1 The appellant (‘Ms Lin’) formerly occupied premises of the State Rail Authority of New South Wales (‘State Rail’) as lessee, in which she apparently conducted a kiosk, bookstall and small supermarket. Her occupation commenced on the basis of a monthly tenancy evidenced by a written instrument signed on 10 October 1998, and which continued for some years. Ms Lin’s occupation of the premises was terminated on 9 April 2003 for non-payment of rent. That termination occurred in the context of her having withheld from acceptance of an offer of State Rail to her for a new tenure of those premises, being an offer made earlier in June 2002.

2 That offer of State Rail was contained in a letter from real estate agents acting on behalf of State Rail, which included the following qualification:

‘Please note that this constitutes an offer to lease only, and is subject to our client’s final acceptance and approval. No contractual relationship shall be deemed to have been created as a result of this offer and no lease will be deemed to be entered into until such time as our client’s final acceptance is received, all lease documentation has been signed, and all moneys due and payable up to the date of signing of the lease have been paid.’

The offer was never accepted by Ms Lin. However Ms Lin adopted the position that the State Rail letter so operated as to bring about the situation whereby a new or renewed tenure of the premises had been put in place, or the existing tenure somehow extended commensurately, for the term or period of time the subject of the offer.

3 The appellant commenced proceedings in this Court on 1 October 2003 against State Rail for relief by way of an application purportedly based upon ss 51AC and 82 of the Trade Practices Act 1974 (Cth) (‘TP Act’) and ss 34 and 62 of the Retail Leases Act 1994 (NSW) (‘RL Act’) by reason of ‘unreasonable attitude/conduct towards an outsider’ and ‘cheating and bullying behaviour towards the bookstall’. The basis of the claims thus made was particularised in the application filed by the appellant literally as follows:

‘(1) SRA knew PFSS [Peter’s Four Square Supermarket] has breached its lease for 13 years but never imposed any punishment while closed the bookstall’s shop for a few month’s rent arrears. SRA knew the full content of clause 23 of memorandum S078957 but purposefully kept silence and never condemned PFSS’ illegitimacy in selling cigarettes, small chocolate bars and small bottle of drinks etc. At one stage SRA even openly declared it would not implement the lease with PFSS and refused to take the bookstall’s financial situation and my personal suffering into consideration. Although SRA and its solicitor each issued an "one month notice" dated on 18 Dec 2002 and 19 Dec 1002 to Wasada Pty Ltd but purposefully discarded it.

(2) SRA knew North Sydney Newsagency has illegally sold its newspapers and magazines through PFSS for 13 years and knew its free ride caused the bookstall’s enormous economic loss and created constant conflict between shops and confusion in the community. SRA did not accept the bookstall’s repeated plea to oust the newsagency, in contrast SRA closed the bookstall’s shop.

(3) SRA purposefully delayed the transfer of the dry cleaners shop and hold the bookstall at the geographically disadvantaged location. It resulted in the bookstall’s enormous economic loss and its exposure to PFSS’ attack.’

4 Upon that footing, the appellant asserted that ‘SRA’s unreasonable and unlawful conduct resulted in the bookstall’s enormous economic loss and put an individual through an unseen torture in a civilised country’, and further that ‘[a]ccording to Trade Practices Act 1974 s 82 SRA is subject to compensation’. Some seven breaches of the RL Act were particularised in the application, and compensation of $1 million dollars was claimed. Moreover the following further orders were sought:

‘(1) SRA pay the compensation immediately.

(2) North Sydney Newsagency withdraw from railway immediately.

(3) PFSS operates within its lease.

(4) the bookstall return to its original shop – inside the ticket office building that has been vacant since May 2002.’

5 A judge of this Court (Wilcox J) granted the SRA application to strike-out the application on 13 November 2003. In relation to the first claim, based on the TP Act, his Honour held that the same should fail for the reason that s 51AC of the TP Act did not bind the SRA, irrespective of whether SRA carries on a business. In relation to the second claim, based on the RL Act, his Honour found that this Court had no jurisdiction to entertain the same, ‘... at least in the absence of an arguably proper claim in federal jurisdiction’. The appellant lodged an appeal against the decision of Wilcox J.

The initial Full Federal Court proceedings and their outcome

6 On 6 August 2004, a Full Federal Court (Finn, Mansfield and Gyles JJ) confirmed the conclusion of the primary judge that this Court did not have jurisdiction to entertain Ms Lin’s claim, in so far as the same was framed upon the basis of the TP Act. However the Full Court allowed the appeal in relation to issues which purportedly or conceivably arose in relation to RL Act, and ordered that the matter be remitted to the primary judge for determination in that regard, observing that ‘... it will be for the judge at first instance to determine whether it is appropriate to have the proceedings transferred to a State Court’ for reasons which included the following:

‘17. As to the first of these, and consistent with what has been said above about periodic tenancies, it cannot be said that there is not a real question to be tried as to whether s 6(1)(a) applies to a lease for an indefinite period which, in retrospect, had a term of about four and a half years and which was "founded on the continuing will of both landlord and tenant that the tenancy shall persist": Hammersmith and Fulham London Borough Council v Monk [1991] UKHL 6; [1992] 1 AC 478 at 492. The lease, arguably, was not one for a fixed term whether for less than six months or otherwise, though it was capable, in fact, of being determined within that period. Its duration did not depend on the exercise of rights to extend. Rather, it depended on the exercise of a power to determine what otherwise was of indefinite duration. It is arguable, furthermore, that the Act’s provision dealing with termination of a retail shop lease does not apply to a periodic tenancy: s 44(5) of the Act.

18. The second issue depends on whether the Retail Leases Act was in terms which made it capable of being picked up and applied by this Court under s 79 of the Judiciary Act 1903 (Cth): Murphy v Overton Investments Pty Ltd [2001] FCA 500; (2001) 182 ALR 138. The Act is a source both of rights and remedies. While it clearly envisages that "retail tenancy disputes": see s 63(ii); should ordinarily be resolved by the Administrative Decisions Tribunal: see Division 3, esp ss 72, 75 and 76; it acknowledges (inter alia) that if a claim has previously been lodged with the Tribunal and has been "dismissed for want of jurisdiction", it may later be raised in civil proceedings before a court: s 76(1)(a). In the present matter a claim by Ms Lin was dismissed by the Tribunal for want of jurisdiction. This Court, in consequence, has jurisdiction to entertain the claim: Murphy, above.’

7 Following to the remission of the proceedings back to Wilcox J at first instance, his Honour answered in the affirmative on 5 August 2005 the following issue as a preliminary question (Lin v State Rail Authority of New South Wales (2005) FCA 1137):

‘Whether, in all the circumstances, the lease between the parties in respect of the commercial premises on platform no. 1 at Waverton Railway Station falls within the exclusion of section 6(1)(a) of the Retail Leases Act 1994 (NSW).’

Section 6(1)(a) of the RL Act reads as follows:

‘6. (1) This Act does not apply to any of the following leases of retail shops:

(a) leases for a terms of less than 6 months without any right for the lessee to extend the lease (whether by means of an option to extend or renew the lease or otherwise), and for this purpose a provision for holding over by the lessee at the end of the term of the lease is not considered to confer a right on the lessee to extend the lease if it operates effectively at the discretion of the lessor.’

8 It followed, so his Honour concluded, that the appellant’s claim for relief against State Rail should fail. In reaching that conclusion, his Honour reasoned as follows (inter alia):

‘Ms Lin had the benefit of a holding-over clause, which would confer an expectation that she might be able to continue in occupation of the demised premises after the expiration of the term of one month. However, this expectation arose out of an agreement for holding-over from month to month. Such a holding-over means either party can terminate the tenancy by giving one months´ notice to the other party.

It is not necessary, for present purposes, to discuss the form or expiry date of the required notice. It is sufficient to say that either party - that, of course, includes the lessor - could, at any time, have brought the tenancy to an end by giving one months´ notice. State Rail could have terminated the lease before Ms Lin had been in occupation of the premises for six months.

Section 6(1)(a) of the Act poses a practical test. The test is the right of the lessee to extend the lease. That means a legal right. It is not sufficient, as Ms Lin seems to think, that there was a possibility of an extension beyond six months. In order to avoid the exclusion of s 6(1)(a), she needs to show there was a legal right. The paragraph makes plain that a provision for holding-over is not enough to confer a right, for the purposes of the paragraph, `if it operates effectively at the discretion of the lessor´. The right to extend beyond six months effectively operates at the lessor´s discretion in a case where the lessor can prevent the continuation.

The word `effectively´ is important. It requires the reader to look at the practical position. So it is necessary, in the present case, to ask whether State Rail could have prevented the lease from extending beyond six months from the date when Ms Lin first went into occupation. There can be only one answer to a question posed in those terms: `yes´. It seems to me both elements of para (a) are satisfied in the present case.’

9 In our opinion in terms of the general law as to the lease and the termination of leasing of property, his Honour’s reasoning was plainly correct in terms of principle.

The grounds of Ms Lin’s further Full Court appeal and the subsequent further Full Court proceedings

10 Ms Lin appealed to the Full Court on 25 August 2005 against the whole of the further judgment of Wilcox J, the grounds of appeal including the following:

‘On 05 August 2005 Wilcox J dismissed the application of the Appellant for the reason that the lease of the Appellant falls into the exclusion of s 6(1)(a) of Retail Leases Act 1994 and the Act does not apply to the Respondent. However, Wilcox J had misinterpreted the section by examining whether the Respondent had the right to terminate the lease before 6 months and overlooked the meaning of offering renewal of the lease...’

After setting out the terms, relevantly, of s 6 of the RL Act, the purported grounds of appeal continued thereafter as follows:

‘It is clear, a lease does not fall into the exclusion of the above section simply being for a term less than 6 months. Only when a lease being for a term less than 6 month and the lessee had no any right to extend the lease, the lease is excluded from the application of the Act. In the above section the right of lessee to extend the lease is referred to varied means of extending the lease eg. option, renewal or otherwise. Under the section it is important to identify the means of extending the lease and determine the right of a lessee. In June 2002 the Respondent offered the renewal of the lease. Therefore, the means for the Appellant to extend the lease existed. Consequently, the Appellant had the right to extend the lease and the lease of the Appellant does not fall into s 6(1)(a) of the Retail Leases Act. As a result, the decision of Wilcox J to classify the lease of the Appellant into the exclusion of s 6(1)(a) of Retail Leases Act presents a question of law. The Appellant requests the Court set the judgment aside.’

11 The appellant provided a written outline of her submissions on the further appeal and did not seek to add materially or significantly thereto, in the context of her brief and politely expressed oral address to the Full Court. In the result, the substance of her submissions on this further appeal did not vary materially from what she had submitted to Wilcox J at first instance, as appears from her concluding encapsulation of the present submissions reproduced below:

‘The key in this matter is whether the offer of the Respondent in June 2002 is relevant and sufficient to prove the right of the Appellant to extend the lease. By the concept in contract law and the example of option provided in s 6(1)(a) of Retail Leases Act an offer is relevant and sufficient to prove the right of lessee to extend the lease. As a result, the offer of the Respondent in June 2002 proves the right of the Appellant to extend the lease. Therefore, the lease of the Appellant does not fall into the exclusion of s 6(1)(a) of the Retail Leases Act 1994. The judgment of Wilcox made on 05 August 2005 is misleading and presents important questions of law. The Appellant requests the Full Court set it aside.’

12 The written submissions of State Rail included the following:

‘5. The Appellant’s submissions do not so much speak against the reasoning of Wilcox J. but rather restate arguments ventilated and rejected by the Court below. Much attention is devoted by Ms Lin in her Outline of Submission to State Rail’s offer of a new lease made on 14 June 2002... State Rail understands the submission as suggesting that an offer confers a right to extend the lease under s 6(1)(a). Wilcox J... did not need to consider this theoretical argument insofar as he found, as an undisputed fact, that the offer was not accepted and its mere existence signified nothing in terms of s 6(1)(a) of the Act. Ms Lin argues, in para. 7 of her Outline of Submissions, that "if an offer is not accepted it does not affect the right of the lessee to extend the lease as the offer had already taken place". Although its meaning is capable of interpretation, State Rail interprets this submission as asserting that the existence of the offer, albeit unaccepted, constitutes a right to extend because it conferred an entitlement upon Ms Lin to accept the offer and hence extend the lease.

6. First, had the offer been accepted, the existing lease would not have been extended but, rather, replaced by a new lease. Secondly the ‘right’ which s 6(1)(a) concerns itself with is not a right that exists beyond the terms of the lease (ie in a fresh offer made by the Lessor) but a right that is contained within the lease itself. That was not the case here.

Conclusions

13 We are unable to distil any error of law or fact in the reasons for judgment of the primary judge the subject of the present appeal. His Honour correctly identified the critical touchstone for determination of the issue purportedly arising at the instance of the (present) appellant as to whether the lease is excluded from the operation of the RL Act, that being whether State Rail could have prevented the lease from extending beyond six months from the date when Ms Lin first went into occupation. That approach had been previously adopted by the Full Court in these proceedings. The primary judge was rightly satisfied that as State Rail could have prevented Ms Lin from extending her occupation of the subject premises for more than six months, that occupation was excluded from the operation of the RL Act.

14 Moreover the appellant’s case did not seek or purport to come to issue, at any rate adequately, with the reasoning of the primary judge, but rather to pursue an untenable case seemingly to the effect that the existence of an offer of a lease or a removal of an existing lease, for instance as here purportedly subsisted on the part of State Rail in favour of Ms Lin, operates per se as a grant of a right of removal or extension of that lease so purportedly offered, and thus effect any extension to the existing term of a purportedly subsisting leasehold estate, whatever that might be. State Rail is correct in its contention that s 6(1)(a) of the RL Act is concerned, not with a right that exists beyond the terms of a lease, but a right comprised within the lease itself.

15 The appeal must therefore be dismissed.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court

Associate:

Dated: 22 March 2006

Appellant appeared in person
Counsel for the Respondent:	Mr G Sirtes
Solicitor for the Respondent:	Henry Davis York
Date of Hearing:	14 February 2006
Date of Judgment:	22 March 2006