[Home] [Databases] [WorldLII] [Search] [Feedback] Victorian Civil and Administrative Tribunal Decisions

You are here: 

Kiwi Munchies Pty Ltd v Nikolitsis (Retail Tenancies) [2006]  VCAT 929  (29 May 2006)

Last Updated: 29 May 2006

VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL

CIVIL DIVISION

APPLICANT	Kiwi Munchies Pty Ltd (ACN 089 212 779)
RESPONDENT	Nick Nikolitsis
WHERE HELD	Melbourne
BEFORE	M.F. Macnamara, Deputy President
HEARING TYPE	Hearing
DATE OF HEARING	30 March and 11 April 2006; 18, 19 and 22 May 2006
DATE OF ORDER	29 May 2006
CITATION	[2006]  VCAT 929

ORDER

1 Within 14 days of this day the parties must bring in short minutes to give effect to these reasons.
2 Adjourned to further hearing 20 June 2006 at 9.30 am at 55 King Street, Melbourne (estimated duration one hour).

REASONS

BACKGROUND

1 Kiwi Munchies Pty Ltd the applicant in this proceeding is a company based in New South Wales which specialises in selling specifically New Zealand products in Australia such as proprietary food and beverage brands popular in New Zealand but not generally marketed in Australia as well as Polynesian items such as Lava Lavas and Tahitian Drums.
2 Kiwi Munchies Pty Ltd entered into a lease commencing 1 November 1999 whereby it took a one year leasehold interest in premises described as 63 Springs Road, Clayton South from Mr Nick Nikolitsis who is respondent in this proceeding. It seems that while the parties signed the schedule to the form of commercial lease published by the Real Estate Institute of Victoria, the document signed consisted only of the schedule and none of the standard ‘boilerplate’ clauses which are the operative provisions of the lease, seems to have been attached to the document which the parties signed. The parties entered into a further lease, this time with a commencement date of 1 November 2001. This document included the full set of operative and ‘boilerplate’ clauses provided in the REIV form of commercial lease. It granted an option to renew for a further term of one year and permitted the premises to be used for ‘mixed business: retail’. It appears that no disclosure statement was given to the tenant at the time that the lease was signed. It also seems that the option to renew under the 2001 lease was never exercised.
3 At the time of these events the Company Secretary of Kiwi Munchies Pty Ltd was Mrs Anastasia Ualesi who is resident in New South Wales. More recently and following a serious illness to which I will make reference presently, Mrs Ualesi sold her interests in the company to her sister, Ms Sophia Parastatidis.
4 In late 2004 Kiwi Munchies was still in possession of the leased premises. Clause 3(c) of the 2001 lease provided as follows:

(i) If the Lessee remains in occupation of the Premises after the expiration of the Term, without objection by the Lessor, then as from the expiration of the Term, the Lessee shall be deemed to be a tenant from month to month on the same covenants and conditions, so far as they are applicable to a monthly tenancy, as are contained in this Lease.

(ii) Unless otherwise agreed, the monthly rental shall be the same as that payable immediately prior to the expiration of the Term but the Lessor shall have the right to increase the monthly rent upon one month’s notice in writing.

(iii) The tenancy may be determined by either party on the expiration of one month’s prior notice in writing which may be given to expire at any time.

5 Presumably therefore Kiwi Munchies’ occupancy of the premises in 2004 was in pursuance of this over-holding sub-clause.
6 In late 2004 Mrs Ualesi the effective controller of Kiwi Munchies was ill and hospitalised for extensive periods for treatment of cancer of the thyroid gland and gallbladder. Managing agents Wilson Pride Clayton drew a document styled ‘Notice to Remedy’ addressed to Kiwi Munchies Pty Ltd C/- Anastasia Parastatidis, 1 Melville Street, Ashbury, 2193 NSW. The notice commenced:

TAKE NOTICE that you as Lessee under a Lease dated 1st November, 2001, hold the premises situated at 63 Springs Road, Clayton South, Vic, 3169, as Lessee and are using the premises as a Mixed Business; Retail, have made default such default consisting of non-payment of rent, rates and outgoings to the Lessors in accordance with Clause 1 of the said Lease.

7 The notice warned that if the alleged breaches were not remedied, the landlord might ‘forfeit’ the lease. The default alleged was that ‘gross rental’ due for the period from 1 September 2004 to 1 December 2004 inclusive of Goods and Services Tax in the sum of $3,148.20 remained unpaid. This amount was characterised as ‘rent arrears’. The notice included lines for arrears of water rates, council rates, insurance premiums, and body corporate fees but each such line was blank. The notice also claimed penalty interest in the sum of $78.70 and ‘agents cost’ of $250.
8 Mr Con Stefanidis who is a director of W.P. Clayton Pty Ltd, trading as Century 21 Wilson Pride Clayton, says that he caused this notice to be sent by registered post to the demised premises on 5 November 2004 and to the address shown on the notice at Ashbury and to facsimile number 0297979160. At this time due to the illness of Mrs Ualesi she was unable to give full or at times any attention to the business of Kiwi Munchies Pty Ltd. She says that she was a necessary signatory for cheques drawn on the company’s account, hence in many respects the company was wholly or partially paralysed due to her illness. The company’s shop at the premises traded from Thursday to Sunday. As it was however, there seems to be some doubt as to precisely when the business traded. It seems that it was closed during some of its usual trading hours around this time. Due to Mrs Ualesi’s absence and illness she was unable to provide particulars of exactly what the situation was at that time. Trading at these premises was under the control of employees and at times Mrs Ualesi’s now ex-husband. The document dated 5 November, according to Mrs Ualesi ‘came to her attention’ on 26 November 2004. Since she was ill and hospitalised around this time I did not understand her to be able to say when or if the notice arrived either at the demised premises or at the address in Ashbury which it appears is the address at which her sister, Ms Sophia Parastatidis carries on a legal practice known as ‘KM Legal’. It is clear however that by one means or another the notice must have arrived at one of these locations for it to come to Mrs Ualesi’s attention on 26 November. Mrs Ualesi (corresponding in her maiden name, Parastatidis) sent a facsimile transmission to Mr Stefanidis which read as follows:

Dear Con Stefanidis,

I have received your notice and I have noted the contents of that letter.

Unfortunately, I have not been available for some time, as I have been seriously ill. Due to my illness we will be unable to continue with our business at 63A Springs Road, Clayton South.

We intend to hand back the keys and vacate the premises at our earliest convenience. At this stage, we believe that this will be around Xmas.

We anticipate paying the rent that is due.

We thank you for all your assistance over the years. We regrettably leave the premises.

Regards,

Anastasia Parastatidis

26 November 2004

9 Mr Stefanidis responded by facsimile transmission of 29 November 2004 acknowledging receipt of Mrs Ualesi’s facsimile and continuing:

We are sorry to hear of your illness and hope you are feeling better.

Our office has received instructions from the landlord to RE-ENTER and take possession of the property on Friday 3rd December, 2004.

Please provide our office with all your keys prior to that date in order for you to avoid lock smith costs.

Also can you please make arrangements for payment of all outstanding amounts at the earliest to avoid further Penalty Interest.

Thanks,

CON STEFANIDIS,
Director

10 Mrs Ualesi said she was infuriated by this letter which she felt trivialised her life threatening illness. She responded by facsimile transmitted on 2 December 2004 addressed to Mr Stefanidis:

We refer to your facsimile dated 29 November 2004, purporting to give notice of the Landlord’s intention to re-enter and take possession of the premises at 64A Springs Clayton South.

Please be advised that in our view this notice is defective simply because:

a. We are not the tenants of the said premises and;

b. Insufficient notice has been given contravening section 16(4) of the Retail Tenancies Reform Act 1998.

We therefore put you on notice that any attempt by the landlord to rely on this defective notice will constitute trespass and we will take measures, legal if necessary, to protect our interest.

We had hoped to depart on amicable terms. We trust that given our long relationship with the landlord and the circumstances at hand that this is still an option.

Yours faithfully,

Anastasia Ualesi

11 The statement that ‘we are not tenants of the said premises’ refers to the fact that the heading to Mr Stefanidis’ facsimile transmission of 29 November refers to ‘PPTY: [viz property] 64A Springs Road, Clayton South’ which is not the correct address of the demised premises.
12 Mrs Ualesi and her then husband arrived in Melbourne from Sydney on 4 December 2004. The purpose of their visit she said was:

To arrange the transportation of the plant and equipment in the shop to the local auction house ... this plant and equipment was to be auctioned on Monday in Melbourne.

13 They were unable to gain access to the shop because the locks had been changed. They saw a Notice of Re-entry on the window of the shop. This notice began with a recital that ‘Kiwi Munchies’ (no reference to Pty Ltd) of ‘1 Melville Street, Ashbury, 2193 New South Wales’. The notice referred to the lease but incorrectly described the lessor as ‘T & A Enizles’. The notice was signed by Wilson Pride on behalf of Mr Nikolitsis and was dated 3 December 2004.
14 An attempt by the Ualesis to obtain police intervention in the dispute was unsuccessful.
15 Mr Nikolitsis refused a request by Mrs Ualesi to remove Kiwi Munchies’ property from the premises. He demanded a bank cheque for the amounts that he said were owing by Kiwi Munchies.
16 The Ualesis had to return to Sydney. According to Mrs Ualesi the staff of the shop were asked to come and help with the removal and the auction planned for Monday morning in Melbourne. Mr Stefanidis sent Mrs Ualesi (referred to in the facsimile as ‘Parastatidis’ a facsimile on 7 December stating inter alia:

The landlord is quite happy to give you access to the property in order for you to remove your goods upon you making prior payment (amount listed below) only by Bank Cheque to our office’.

17 The amount demanded was $2,791.64. This included the amounts demanded in the Notice to Remedy, together with $246.40 ‘locksmith account’ less the amount of bond held by the agent, namely $931.66. The letter continued:

The landlord has allowed another 10 days for you to make payment of ‘total amount due’ in full before commencing the procedure of removing your goods from the premises to storage, advertising and then placing them to Auction rooms to recover his losses. Please note, that this procedure will only incur more cost.

18 Mrs Ualesi then referred matters to her legal practitioner sister, Ms Parastatidis. Ms Parastatidis on the letterhead of her practice ‘KM Legal’ wrote to Mr Stefanidis stating that all correspondence should be directed to her and concluding ‘please provide us with a copy of that [re-entry] Notice ...’
19 Mr Stefanidis says that on 6 December he had gone to the premises to make an inventory of the property which was left there. He found the items partially packed, completed his inventory and took a number of photographs. The window behind which the Notice of Re-entry had been fixed was smeared. In attempting to clear the window he noticed the errors in the notice or at least the incorrect identification of the lessor. He says he prepared a revised notice which bore the same date, namely 3 December and replaced the original notice with the corrected notice. He says he put the original incorrect notice in his file. Inadvertently he furnished this notice to Ms Parastatidis in response to her letter, forwarding it to her under cover of a fax dated 17 December. Shortly after these events, that is, in early 2005, Mr Nikolitsis engaged his present solicitors. Attempts to resolve the disputes arising between the parties out of these events by mediation arranged by the Small Business Commissioner proved fruitless. A proceeding commenced by Kiwi Munchies Pty Ltd in the local court at Burwood, New South Wales, was stayed for lack of jurisdiction. Kiwi Munchies Pty Ltd commenced this proceeding in the Tribunal on 19 October 2005. Mrs Ualesi has sold her interest in Kiwi Munchies to Ms Parastatidis.

KIWI MUNCHIES’ CLAIM

20 At the hearing before me Ms Parastatidis on behalf of her company sought the following relief:

a. Damages in the sum of $55,000 for conversion of plant and equipment and stock.

b. Refund of Goods and Services Tax paid in the sum of $4,770. Goods and Services Tax paid which Kiwi Munchies says should be refunded together with interest in the sum of $2,608.19.

c. $61,493.60 rent paid under mistake or $78 stamp duty on commercial lease.

COUNTERCLAIM

21 Ms Lardner of Counsel appeared on behalf of Mr Nikolitsis. On behalf of her client she sought by way of counterclaim $2,862 unpaid rent, $424.25 interest on unpaid rent to 2 February 2006 and re-instatement costs of $1,980. She also sought to recover locksmith costs of $246.40 and costs of the document styled ‘Notice to Remedy’ in the sum of $250.

CONCLUSION CLAIMS

22 The basis for the claim to recover rent paid is that by reason either of Section 8 of the Retail Tenancies Reform Act 1998 which deals with prospective tenants or Section 17 which deals with renewal of leases, the landlord was obliged to furnish a disclosure statement to Kiwi Munchies prior to the signature of the 2001 lease. Where there is an obligation to furnish such disclosure statement and it is not furnished, then Section 8(2)(b) or Section 17(2)(b) of the Retail Leases Act 2003 gives the tenant a defence against any claim for rent by the landlord. Both paragraphs state where the disclosure statement is not given ‘the tenant is not liable to pay rent attributable to the period before the landlord gives the tenant a copy of the disclosure statement’. Kiwi Munchies said that it was unaware of its defence to the claim and hence paid all of the rent under the 2001 under a mistake of fact. It should be able to recover such rent.
23 This claim must fail. In Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6 the Court of Appeal ruled against such claim. The Court reached this conclusion for two reasons, first, because it considered that a tenant in the circumstances described received good consideration for the rent that it paid based upon the exclusive possession to the relevant premises [2006] VSCA 6, [21] per Chernov JA and secondly because the Court concluded that a landlord in these circumstances would have a countervailing restitutionary claim equivalent to the contractual rent reserved for the use and occupation of the premises [2006] VSCA 6, [22]. The claim for the refund of rent is therefore dismissed.
24 Next I consider the claim for the recovery of Goods and Services Tax paid to the landlord. Kiwi Munchies says that the landlord is not registered for the payment of Goods and Services Tax and so the payment which it made for the tax was a payment for which there was a total failure of consideration and hence was recoverable. The landlord sought to resist this claim on two bases. First, he said that in fact he had remitted the Goods and Services Tax to the Commissioner of Taxation and secondly, he said that in any event, the tenant Kiwi Munchies had suffered no loss by reason of the payment because it had received an input credit against its own Goods and Services Tax liability.
25 I can deal with and reject the landlord’s second contention at the outset. Where a claim is made for damages proof that no loss is in fact incurred would generally be an effective answer to a claim. Where the claim is for money had and received, the situation is otherwise. In Commissioner of State Revenue v Royal Insurance Australia Limited (1994) 182 CLR 51, 75, 78 the High Court of Australia said that a plaintiff seeking to recover moneys had and received is not defeated merely because it is proven that he recouped his payment from his own customers by passing an invalid tax on. This approach was re-endorsed by the High Court in Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516. In Rothmans’ case retailers were held entitled to recover a portion of the price that they had paid to wholesalers for tobacco products which represented a state licence fee imposed by the State of New South Wales where that licence fee was found to be an invalid duty of excise. The majority of the Court held that ‘that there had been a failure of a distinct and severable part of the consideration for the purchase of goods, so that there was a total failure of that consideration’ hence the moneys were recoverable. The 1999 lease it will be recalled was in ‘skeleton’ form, that is, it had no ‘boilerplate’ provisions at all. There was no provision to render the tenant liable to indemnify Mr Nikolitsis for any Goods and Services Tax which might be charged to him upon his supply of the premises to Kiwi Munchies. In the absence of an express clause requiring a tenant to provide such indemnity there is no basis for a landlord to seek to pass it on to the tenant Orti-Tullo v Sadek [2001] NSWSC 855, [24] per Bryson J.
26 The 2001 lease included a GST pass-through clause which I quote below, however for such a clause to operate there must be actual liability for the tax.
27 It follows in my view that unless Goods and Services Tax was properly chargeable upon the supply constituted by the lease of these premises, Kiwi Munchies would have a good claim to recover the Goods and Services Tax paid. This conclusion follows from the terms of Clause 3(n) of the lease which is the ‘GST pass through’ clause. The obligation which it imposed on the tenant was as follows:

... if GST is levied or becomes payable upon

(i) any moneys payable by the lessor or the lessee under this lease; or

(ii) any goods, services or other things supplied by the Lessor to the Lessee under this lease,

then the lessee must pay to the lessor on demand the GST so levied.

28 It would follow that even under the 2001 lease Mr Nikolitsis would have no right to demand Goods and Services Tax indemnity from Kiwi Munchies unless the tax was actually levied in accordance with the sub-clause. Similarly in my view if Mr Nikolitsis or some associated entity of his officiously and without liability paid Goods and Services Tax upon the supply of the premises to Kiwi Munchies, Mr Nikolitsis would have no entitlement to demand an indemnity from Kiwi Munchies.
29 The initial rent reserved by the 2001 lease was less than $1,000 a month. This would create a turnover for the entire year of $12,000 a year. Under the relevant legislation A New Tax System (Goods and Services Tax) Act 1999, Section 9-5 a supply is only a taxable supply if it is made by someone who is registered or required to be registered. Clause 23-5 of the Act requires a person carrying on an enterprise to be registered if that person’s annual turnover meets the registration turnover threshold which Section 23-15 sets at $50,000. The evidence was that Mr Nikolitsis as an individual was not registered for Goods and Services Tax and would not be required to be registered for such tax if his sole turnover from supplies of goods and services was the rent receivable on these premises. According to Mr Nikolitsis’ son, Chris Nikolitsis, his father and his mother were registered as a partnership for the purpose of Goods and Services Tax and that the partnership accounted to the Commissioner of Taxation for the Goods and Services Tax collected from Kiwi Munchies through the filing of Business Activity Statements in accordance with the relevant legislation. He said ‘the property at 63A Springs Road is the only commercial property owned by my parents and is the only property for which my father collected GST on the rental income’. Mrs Ualesi says that on 9 October 2005 she caused to be carried out a title search for the demised premises. The search she said disclosed that Mr Nikolitsis was the sole proprietor of the premises and had been since 1976. Section 184-5 of the GST statute states inter alia:

(i) For the avoidance of doubt, a supply, ... made by or on behalf of a partner of a partnership in his or her capacity as a partner:

(a) is taken to be a supply ... made by the partnership; and

(b) is not taken to be a supply ... made by that partner or any other partner of the partnership.

In the circumstances I am not satisfied that the supply of these premises would be a taxable supply under the GST legislation if it was made by Mr Nikolitsis as an individual and not as a member of a partnership. There is no evidence that Mr Nikolitsis as an individual would meet the taxable threshold laid down by the GST Act to require him to be registered for the payment of the tax. The fact that Mr Nikolitsis is shown as the sole lessor in the lease agreement and appears to be the sole registered proprietor under the Transfer of Land Act both militate against the view that in supplying these premises to Kiwi Munchies he was acting as a partner of the partnership that he has with his wife. The witness statement of Mr Nick Nikolitsis was prepared no doubt with legal assistance and in light of the issues that I have just been describing. Significantly it fails to make a direct statement that the demised premises are partnership assets. It would be possible I suppose for a partnership asset to be held legally in the name of one of the partners but beneficially and in equity on trust for all or both of the partners as tenants in common. If this were the case one would expect Mr Nikolitsis to say so directly in his witness statement in which he claims to be familiar with his father’s financial affairs and the father’s partnership with his mother. The closest that the statement comes to dealing with this issue is the statement at paragraph 7:

The property at 63A Springs Road is the only commercial property owned by my parents and is the only property for which my father collected GST on the rental income.

30 In the absence of a direct statement to the contrary I find that these demised premises were supplied by Mr Nikolitsis as an individual and not as a partner and therefore, the supply was not a taxable supply. There was a total failure of consideration for the payment which Kiwi Munchies was not, having regards to the terms of Clause 3(n) of the lease, obliged to make. In accordance with the principles in Roxborough’s case, Kiwi Munchies is entitled to recover the amount of those GST payments.
31 Ms Lardner submitted that even with a turnover below $50,000 it was open to Mr Nikolitsis to have registered for the Goods and Services Tax. So much may be accepted; however in fact he was not so registered. The ‘supply’ under the 2001 Act was taxable under the GST system only if Mr Nikolitsis was registered or required to be registered, A New Tax System (Goods and Services Tax) Act 1999, Section 9-5(d). I should also note a submission made by Ms Parastatidis that Kiwi Munchies was not bound by Clause 3(n) of the 2001 lease. She referred to the schedule to the lease which identified the outgoings payable by Kiwi Munchies as tenant by reference to Clause 1(b) of the lease which is the ordinary outgoings provision. She did not explain precisely how this inappropriate cross-reference could destroy the operative effect of Clause 3(n). I reject her submission on this point.
32 Ms Lardner sought to distinguish the Royal Insurance case based upon its facts. Doubtless the decision was given in a different context. In my view however, it and Roxborough’s case show that a person may be successful in recovering under a money count, even where it has been compensated or indemnified for its outlay from either source, assuming that the ability of Kiwi Munchies to obtain an input credit on its own GST returns amounts to such indemnity. She also referred to passages in the judgment of Nettle JA in Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6 [47] and [48]. In those passages His Honour stressed that the claim for moneys had and received would succeed only where the moneys in equity and good conscience should be paid to the plaintiff or applicant. As a matter of equity and good conscience, Mr Lardner submitted it would be wrong to enable Kiwi Munchies to obtain a refund of the GST moneys paid where it had had the benefit of the input credit. She also referred to a passage in the judgment of Mason CJ in the Royal Insurance case where he appeared to contemplate that someone who had ‘passed on’ an invalid levy might hold the amounts recovered on a constructive trust for the person to whom the invalid levy was passed on (as was the case in the Royal Insurance case). In my view none of this points away from Kiwi Munchies’ success in the present case. Clearly the concept of equity and good conscience raises a difficult issue. What may seem equitable and conscientious to one mind may seem quite different to another. I do not take Nettle JA in the passage relied upon to be saying that these are matters entirely of ‘palm tree justice’. If it were as simple as that it is difficult to see why the High Court would have rejected the ‘passing on’ defence in both the Royal Insurance case and Roxborough’s case. In the present instance the situation appears to be that Kiwi Munchies was levied with Goods and Services Tax under the 1999 lease when there was no basis at all for the levy to be passed on to it and under the 2001 lease where the lessor was neither registered nor required to be registered for the payment of Goods and Services Tax, hence there was no taxable supply. In those circumstances it does not seem to me that it is contrary to equity and good conscience for Kiwi Munchies to recover the money which it was wrongly required to pay. Once this is done there may well be a requirement for one or both of the parties in this proceeding to approach the Commissioner of Taxation to have his or its liability for Goods and Services Tax adjusted. Of course in almost every piece of commercial litigation this must be so. Where for instance a bank makes recovery against a guarantor for a loan which it has written off and obtained a deduction against income tax liability for, the deduction must be revisited to the extent that recovery is made. I am unpersuaded therefore by the ‘passing on’ defence.
33 Next I turn to the claim by Kiwi Munchies for damages for conversion. It says that in refusing to deliver up its plant and equipment and stock in December 2004 Mr Nikolitsis converted these items and should be liable to pay damages. No question has been raised as to the authority of Mr Stefanidis on behalf of Mr Nikolitsis to take the action which he did, namely to lock the items into the premises and to refuse to deliver them up without payment of the amounts claimed by Mr Nikolitsis.
34 In imposing this condition on the return of the goods and threatening that they would be sold otherwise, Mr Stefanidis appeared to be purporting to exercise a right of distress on behalf of his principal. Section 12 of the Landlord and Tenant Act 1958 provides as follows:

It is hereby declared that on the thirteenth day of August One thousand nine hundred and forty-eight distress for rent was abolished

35 The right that Mr Stefanidis was purporting to exercise on behalf of his principal, Mr Nikolitis, therefore, has not existed in Victoria for over 50 years. It is staggering the number of estate agents and solicitors who seem to be ignorant of this fact. It follows that whether the lock-out of 3 December 2004 was properly made or not, Mr Nikolitsis and his agent had no right to detain Kiwi Munchies’ stock and plant and equipment.
36 According to Professor Fleming:

Conversion may be defined as an intentional exercise of control over a chattel which so seriously interferes with the right of another to control it that the intermeddler may justly be required to pay its full value.

Fleming, The Law of Torts (9th Edition) 60-1

37 Merely being in possession of another person’s goods did not amount to conversion. Spakman v Foster (1883) 11 QBD 99. Where however the true owner demands return of his goods and is refused, there is a conversion. Spakman’s case (1883) 11 QBD 99, 101 per Grove J; Howard E. Perry & Co Ltd v British Railways Board [1980] 1 WLR 1375. Here Kiwi Munchies demanded return of its property and Mr Nikolitsis’ agent, Mr Stefanidis, refused to return it except upon a condition that the law would not countenance. The tort of conversion is made out.
38 There was some debate as to whether there had been a subsequent unconditional offer to return the goods made by Mr Nikolitsis. Certainly there were discussions and offers and there were disputes as to matters such as the cost of cartage to New South Wales and so on. In the end none of these things matters:

As has been perceptively observed, the action in effect forces an involuntary purchase on the converter; it permits the plaintiff to say to him ‘you have bought yourself something’.

Fleming op cit 61

39 Since Mr Nikolitsis converted these items Kiwi Munchies is entitled to insist that he pay for them whether or not now or at some earlier date he offered unconditionally to return them.
40 Ms Lardner submitted on behalf of Mr Nikolitsis:

... an unequivocal demand for return of the goods is required in the absence of possession being unlawfully acquired or the detainer having wrongfully disposed of the goods. There has been no evidence adduced that the tenant made demand for the goods. Access to the premises was sought following re-entry however it is submitted that that is something different to an unequivocal demand for the goods.

She referred to Brown v Mackenzie (1871) 10 SCR (NSW) 302; Barclays Mercantile Business Finance Limited v Sibec Developments Ltd [1993] 2 All ER 195, 199. Ms Lardner did not contend that a demand for delivering up of the goods needed to be in writing. The narrative of events that I have given shows that in December 2004 Mrs Ualesi sought access to the premises to remove the goods, according to her evidence so that they could be sent to an auction house. The responses made by Mr Stefanidis demonstrate the conversation which led to Mr Stefanidis’ letter were demands for access to remove the goods not for Kiwi Munchies to resume possession of the real estate. Mrs Ualesi’s earlier correspondence shows that Kiwi Munchies was seeking to pack up and leave not seeking to stay on. It follows that the distinction sought to be made in this submission is a distinction without a difference. Moreover, the premise that Mr Nikolitsis’ agent came into possession of the stock, fixtures and fittings lawfully is incorrect. As I explain below Kiwi Munchies’ eviction was tresspassory. According to Stephen CJ in Brown v Mackenzie relied upon by Ms Lardner, no demand is necessary where the taking of the goods is itself tresspassory (1871) 10 SCR 302, 304. Moreover, Millett J (as he then was) in the Barclays Mercantile case relied upon by Ms Lardner recognised that the assertion of a lien that does not exist may in itself amount to conversion [1993] 2 All ER 195, 199 citing Clerk and Lindsell on Torts (16th Ed 1989) 1234. The assertion of a non-existent right to levy distress is in substance the claiming of a non-existent lien.
41 Ms Lardner submitted that, if contrary to her primary submission, I found that there had been a conversion, the proper remedy would be to order the return of the goods or perhaps more accurately order that the applicant be at liberty to collect and remove the goods from their present location at its own expense. The offer made on 29 April 2005 failed to resolve the dispute as to the goods because Kiwi Munchies demanded that Mr Nikolitsis meet the freight charges to remove these items to its premises in New South Wales. Ms Lardner referred me to the following passage in the 9th edition of Professor Fleming’s work on torts:

After some hesitation, the Courts eventually assumed a discretionary power, on application by the defendant, to order that restoration be accepted with nominal damages, and costs, but they will only so intervene to stay proceedings which they regard as an abuse of process.

42 Ms Lardner did not suggest that the present proceeding was an abuse of process. Assuming I have a discretion to order return in lieu of damages I would decline to do so for a number of reasons. First, as Ms Parastitidis correctly observed, since a substantial portion of the converted items was stock, what was being offered for return over five months after the initial conversion was substantially less valuable than what had been converted. Secondly, it is now over a year later. Mr Hart, the valuer engaged by Mr Nikolitsis said that in January this year he observed deterioration by way of scraping and rust in some of the major refrigerator items. It remains a possibility that some or all of this deterioration has taken place during the period of detention and while these items have been in storage in the sub-optimal environment of a backyard garage. The photographs attached to Mr Stefanidis’ statement seemed to show the items generally in good condition. Thirdly, as to items of plant, Mr Hart observed that a number of items are now of lesser re-sale value because of continued influx of inexpensive new goods from China. This process has accelerated he said in the last couple of years. Again, this may be a reason why the goods are now substantially less valuable than they were at the time of the conversion. Finally, Parliament changed the law of landlord and tenant in 1948 to prevent the very thing that has happened here. The present has been a protracted and extremely costly dispute both as to the parties’ resources and those of the Tribunal. Mr Nikolitsis should in my view bear the consequences of his wrongdoing.
43 The next question is the measure of damages which should be payable by Mr Nikolitsis for the conversion. The measure of damages for conversion is the value of the goods as at the date of conversion Fleming op cit 76.
44 Mrs Ualesi says that Kiwi Munchies forwarded an inventory of converted items to Mr Stefanidis under cover of a letter dated 4 January 2005. These items were valued at $54,412.60 and this forms the basis for Kiwi Munchies’ claim. The items are now located in a garage at the back of the subject premises. On 23 January 2006 Mr Stephen J. Hart, a Director of Commercial Valuations and Auctions Pty Ltd attended these premises at the request of Mr Nikolitsis junior to value these items. He provided a valuation which concluded ‘in our opinion all items valued on an Auction Realisation – Fair Market basis would be in the vicinity of $6,386.’ He commented that there were ‘a large number of odds and ends which had negligible, if any, commercial value and would be sold to market stall holders on a speculative basis.’ He said that the shop fittings ‘seemed to be very basic if not home made’. He said that:

Boxes containing key rings, videos, CDs and nick naks would be sold as job lots for trash and treasure vendors who offer very low prices. Our nominal value is $5 per CD will depend on artist, song titles, condition of covers, whether or not they are pirated versions etc. They may be worth far less.

45 As previously noted Mr Stefanidis says he made an inventory of these items on 6 December. The inventory produced by Mrs Ualesi was she said, made by her ex-husband and perhaps a Kiwi Munchies employee by reference to the computerised accounting system on the premises. She does not have access to that system but the prices allocated to stock items were the prices shown in the computerised system. Mrs Ualesi was unable to give any details as to the precise time and circumstances in which the stock take was carried out. It will be recalled that in the later months of 2004 she was desperately ill in hospital and unable to give her attention to the business affairs of Kiwi Munchies.
46 Mr Hart said that he was not qualified to value Polynesian specialty items. His experience is in the valuation of shop fittings and plant for the hospitality industry. He said he concentrated on matters that were within his expertise such as refrigeration units and did not open all the boxes which it now appears contained Polynesian specialty items and clothing items.
47 In Furness v Adrium Industries Pty Ltd [1996] 1 VR 668 the Full Court of the Supreme Court considered an appeal by a factory owner which had been held liable for damages for conversion of a stock of an importer and a wholesaler against (inter alia) the measure of damage applied by the trial Judge. He awarded what he found to be the wholesale price of the goods being the price which the plaintiff could have sold the goods for to wholesale customers. The appeal on this point was successful. Ormiston JA said:

Where a wholesale seller of goods is deprived of a part of his unsold stock by an act of conversion the damages recoverable by it should ordinarily be assessed by calculating the cost of replacing that stock at the date of conversion, if that is ascertainable.

[1996] 1 VR 668, 678

48 The trial Judge had fallen into error by awarding the value for which the plaintiff could sell the goods not the price he would have to pay to replace them. Here the matter remains quite uncertain. Mrs Ualesi says that the prices in Kiwi Munchies’ inventory are derived from its computerised accounting system. It was common ground that the values ascribed to stock items were therefore retail value. That basis of valuation is inconsistent with the principles enunciated by the Full Court in Furness v Adrium.
49 Mr Hart conceded that his auction realisation value (fair value) valuation was lower than replacement value. Auction realisation is a price that may be obtained for a ‘forced’ sale. An importer or a wholesaler could not necessarily expect to pick up the stock or plant which it required at a realisation auction. There might be no auction at the time that the replacements are needed to enable a victim of conversion to go out and buy replacement items. According to Mr Hart auction realisation (fair value) was a slightly higher basis of valuation than auction realisation. Auction realisation assumed that each relevant item had to be sold on the day. His basis of valuation however allowed for the possibility that an item may be passed in and re-offered either later the same day or in a subsequent auction.
50 Ms Parastitidis cross-examined Mr Hart at great length over two days. She called his expertise into question, criticised his failure to value all the items which were offered to him, suggested that there were supplementary and other enquiries that he could and should have made in performance of his obligations to the Tribunal as an independent expert. She suggested that he was a ‘biased’ witness because he wished to sell the items of plant and equipment which he had valued and therefore wanted to curry favour with Mr Nikolitsis by returning a low valuation. Whilst Mr Hart was offered as an expert witness his statement and valuation report were not in the form customarily required for expert testimony. There was no curriculum vitae attached. Mr Hart said that he had been involved in equipment valuations for 25 years. His academic qualifications in this regard however were limited to a short-term ‘TAFE’ course run by the Sydney Institute of TAFE in 2003. He was unable under cross-examination to nominate any of the ‘subjects’ which he completed in the course of this study. Contrarywise I was not made aware of any more extensive course of academic study at any institution which a valuer of plant and equipment would normally be expected to have completed.
51 Despite the attacks in cross-examination I accept Mr Hart as a witness of truth who did his best to give a fair assessment of value to the items which he did value. He quite rightly disclaimed expertise to value certain specialist items such as the Polynesian items and sporting memorabilia.
52 In the end I am left with a most unsatisfactory situation as to valuation evidence. I generally accept the valuation assessments made by Mr Hart as to plant and equipment. I do not have the advantage of expert valuation for Polynesian specialty items or other items of stock which are the subject of the claim. The values advanced by Kiwi Munchies being retail values are inappropriate for reasons already explained. The situation as to sporting memorabilia is even more unsatisfactory. In its claim Kiwi Munchies seeks damages of $5,000 for a boxing glove autographed by the well known Australian boxer, Jeff Fenech. I have no credible evidence as to the realism of this valuation. I have a photograph of a boxing glove but no evidence that it really is autographed by Jeff Fenech apart from its description as such on a valuation list propounded by the applicant.
53 Ms Parastitidis took Mr Hart in cross-examination through the applicant’s list of plant and equipment. Whilst there was some uncertainty as to the identification of items because of the different approaches to listing adopted there was a surprising amount of correspondence between the two lists. Most or all of the items could be identified in photographs taken by Mr Stefanidis or Mr Hart. The total valuation which he gave for plant and equipment was $6,049. Given that there may have been some deterioration in the items in the period of 12 months and that on Mr Hart’s own evidence, re-sale values has tended to slip in the last couple of years. I believe I should round this item up to $7,500. Because of a lack of evidence as to sporting memorabilia such as the boxing glove said to have been autographed by Jeff Fenech I make no allowance for such item. The stock items represent a more difficult issue. As previously noted the retail valuations apparently taken from the cash register system are inappropriate. Mr Hart purported to value some of the items but ultimately acknowledged a lack of expertise so to do. When he was asked to perform the same line by line function with regard to the stock items as set out in inventory in the applicant’s material he declined to do so. The total valuation ascribed by the applicant is $14,445.60. Beyond the evidence of Mrs Ualesi that these values came from the cash register this value is not otherwise vouched for in any way. In her cross-examination of Mr Hart, Ms Parastitidis was at pains to express the specialty nature of these stock items, for instance, they included cans of soft drink which were not generally purchasable in Australia and were imported as a specialty item from New Zealand. Mr Hart’s approach was to deal with them in the same way as he would an equivalent number of cans of locally produced Coca Cola. The specialty nature of the items of course cuts in at least two directions. First, it puts these items in a different and potentially more valuable class than items of stock generally available in Australia. On the other hand since these are specialty items they appeal to a necessarily far more limited market. There was some dispute as to how long Kiwi Munchies outlet in New South Wales continued to trade such that it might have been an avenue for disposal of the stock items. In the end it does not matter because retail value is not the appropriate measure on any view. In the circumstances and doing the best I can, I believe I should allow an amount of $5,000 in total for the stock items. In the result therefore, the applicant is entitled to recover damages for conversion in the sum of $12,500 for the plant and equipment and stock items.
54 Next I turn to the claim for the refund of stamp duty. It was not contended as I understood it that the stamp duty paid to the landlord or the landlord’s agent for the 1999 lease had not been expended. Rather the contention was that since there were no operative clauses this lease was void and hence the moneys should be refunded as upon total failure of consideration. It may be conceded that a null or void document is not liable to any stamp duty O’Donohue v Comptroller of Stamps [1969] VR 431.
55 In the circumstances where parties execute a document styled ‘lease’ with a lease term and rent reserved the law would imply a demise and a covenant for quiet enjoyment. The 1999 ‘lease’ was not void. The claim for refund of stamp duty fails.
56 Turning then to the counterclaim.
57 There may be room to debate whether for disclosure purposes Section 8 or Section 17 of the Retail Tenancies Reform Act applied to the formation of the 2001 lease. If Kiwi Munchies was to be regarded as a ‘prospective tenant’ then it would be Section 8. If the process was to be regarded as one of renewal then Section 17 would be the relevant provision. Whichever section it is, Sub-section (2) in both sections precludes Mr Nikolitsis from recovering any rental under the lease because no disclosure statement was ever given. The claim therefore cannot succeed as a claim for rent.
58 The Court of Appeal’s decision in Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6 indicates an amount equal to the sums which could otherwise have been claimed for rent may be recovered on a quasi contractual basis as moneys owing for use and occupation of the demised premises. What might otherwise have been claimed as rent therefore is recoverable under another guise, not under the covenants of the lease but under the law of restitution. Clause 1(w) of the lease gives the landlord, Mr Nikolitsis, a right to recover interest at the rate of 2% above the rate published from time to time under the Penalty Interests Rate Act 1983 ‘on any rental or other moneys which are due and payable under the covenants of this lease’ (my emphasis). Since the amounts that might otherwise have been recoverable as rent are recoverable in the restitutionary claim for use and occupation they are not amounts recoverable under the covenants of the lease. The interest clause has no application. In so far as Mr Nikolitsis’ claims for interest on rental moneys, that claim must fail simply because there is no rental outstanding. Similarly the claim for items such as locksmiths’ costs and the managing agent’s costs of preparation of default notices, must also fail. These amounts might otherwise have been claimable under Clause 1(x)(iii) of the lease which obliged Kiwi Munchies as tenant to pay:

All reasonable costs and expenses which the lessor may expend or incur as a consequence of any default by the lessee in the performance of the covenants contained in this lease or under or in the exercise or enforcement or attempted exercise or enforcement of any power, authority or remedy contained or implied in this lease.

59 Since there was no rent payable there was no default. The re-entry was trespassory. Clause 3(d)(i) gave the lessor, Mr Nikolitsis a right to re-enter without notice and forfeit the lease if:

The lessee fails to pay rental or any other moneys payable by the lessee to the lessor under this lease for a period of 14 days after any of the days in which they ought to have been paid.

60 For reasons already explained there was no rental payable under the lease and the claim for use and occupation is a claim in restitution and not under the lease, therefore, the re-entry aside from being tortious was not in exercise of any power under the lease. The claim for enforcement costs of notices and locksmiths must therefore also fail.
61 The amount which might otherwise have been claimable as arrears of rent is recoverable for Mr Nikolitsis as a charge for use and occupation of the premises in accordance with the Dog Depot case. Ms Parastatidis said there was no evidence of the reasonableness of the amount claimed in this restitutionary claim. It was however at a rate agreed to by Kiwi Munchies. This fact is an admission that it was a reasonable charge. Any interest which might be claimable could be claimed only under the Fair Trading Act, Section 108 and in accordance with the rates published under the Penalty Interest Rates Act 1983. The interest clause in the lease as explained can play no role because these amounts are not owing under the covenants of the lease.
62 The counterclaim made for the costs of reinstatement must also fail. The sum of $1780 was sought as the cost of repairing the premises upon the removal of some of the tenant’s fixtures. Kiwi Munchies was not given the opportunity to attend to these matters itself. It was wrongfully evicted. It would be wrong to hold it liable for these costs in these costs in those circumstances.
63 I should note some submissions made by Ms Parastitidis. She submitted that at the time of Kiwi Munchies’ eviction it was a tenant by estoppel. She also submitted that in light of Mr Nikolitsis’ failure to serve the notice required by the Retail Tenancies Reform Act relative to the exercise of the option to renew contained within the 2001 lease her company’s contractual term under that lease was statutorily extended. All this led to a submission that in the circumstances the Tribunal lacked jurisdiction. Assuming without deciding that any of these matters took the proceeding outside the Tribunal’s jurisdiction under the Retail Leases Act 2003 Part 10 it would fall within the Tribunal’s general landlord and tenant jurisdiction under the Fair Trading Act 1999, Sections 107 and 108 Zeus and Ra Pty Ltd v Nicolaou (2003) 6 VR 686. The jurisdictional challenge therefore fails.

FINAL RELIEF

64 Given that Mr Nikolitsis may need to re-visit the issue of interest claims for reasons already given and there may be a question as to whether the amounts ordered to be paid on claim and counterclaim should be set off against one another, I will not pronounce final orders as the parties desire to argue the question of costs once my substantive determination has been published. Accordingly, I will direct that the parties bring in short minutes with effect to my orders.

COSTS

65 I have heard some submissions as to costs from the respondent. Ms Parastitidis reserved her position on costs pending the publication of the substantive adjudication. Ms Lardner reserved the right to make further submissions on costs. Accordingly I will reserve the question of costs.

MFM:RB