Dr N Kalokerinos Pty Ltd v Jain

1. [1]

   WARD P: I agree with Adamson JA.

2. [2]

   ADAMSON JA: Dr N Kalokerinos Pty Ltd (the applicant, or DNK) seeks leave to appeal against orders made by Campbell J (the primary judge) in the Common Law Division of the Supreme Court (the Court below), dismissing its appeal from a decision of the Appeal Panel of the NSW Civil and Administrative Tribunal (NCAT). Leave to appeal is required under s 101(2)(r) of the Supreme Court Act 1970 (NSW) as the sum in issue does not amount to $100,000.

3. [3]

   The applicant also needs an extension of time as the primary judge made substantive orders on 23 August 2024 although costs orders were not made until 6 November 2024. As the applicant seeks leave to appeal against the substantive orders, the material date is 23 August 2024. The applicant’s notice of intention to appeal was filed on 4 December 2024, which was outside the 28 day period allowed. Furthermore, it was ineffective as leave to appeal is required. The applicant’s summons for leave to appeal was ultimately filed on 5 February 2025, over five months after the material date. The question of whether time ought be extended will be addressed in the context of whether leave ought be granted.

Introduction

1. [4]

   At the relevant time, the applicant was the lessor of commercial premises at Shellharbour which were leased by Abhishek Jain (the respondent). On 24 November 2021, the applicant served a notice of termination of lease on Mr Jain, citing various breaches including failure to pay rent and outgoings. The applicant purported to terminate the lease on 13 December 2021 by exercising its right of re-entry.

2. [5]

   This precipitated Mr Jain’s application to NCAT, filed on 20 December 2021, in which he alleged that DNK’s termination was unlawful and amounted to a repudiation of the lease, which Mr Jain alleged that he had accepted. Mr Jain relied on the Retail and Other Commercial Leases (COVID-19) Regulation 2021 (NSW), which was in force between 1 December 2021 and 12 January 2022 (the Regulation). This Regulation applied when the applicant purported to re-enter the premises and terminate the lease. On 18 January 2022, the applicant also filed an application in NCAT, claiming damages for breach of the lease. These two applications were heard together.

The Regulation

1. [6]

   The regulation-making power in s 87 of the Retail Leases Act 1994 (NSW) relevantly provided:

2. [7]

   The Regulation applied to the exercise or enforcement of rights, defined as “prescribed action” for a “prescribed breach” of an impacted lease. A “prescribed breach” is one that occurred during the “prescribed period”, which cl 3 defines as the period from 13 July 2021 to 13 January 2022: cl 5 of the Regulation. The failure to pay rent fell within the definition of prescribed breach in cl 3. The right of re-entry and the eviction of a lessee fell within the definition of prescribed action in cl 3.

3. [8]

   Pursuant to cl 6, the Regulation applied if, at any time during the prescribed period, a lessee was an “impacted lessee”. Clause 4(1) defined “impacted lessee” as being a lessee who qualifies for specified COVID-19-related grants or payments and whose turnover for the 2020-2021 financial year was less than $50 million.

4. [9]

   Clause 3 defined “impacted lease” as being “a commercial lease to which an impacted lessee is a party.”

5. [10]

   Clause 6A provided:

6. [11]

   During the prescribed period, the lessor of an impacted lease is not permitted to increase rent: cl 6B. The lessor is also prohibited from taking prescribed action against an impacted lessee in respect of a prescribed breach unless, relevantly, the matter has been referred for mediation which has failed to resolve the dispute: cl 6C(1)(a). Clause 6C(2) provides:

7. [12]

   There are also duties imposed to renegotiate the lease in some circumstances: cl 6D. Clause 6D(5) provides:

Other relevant statutory provisions

1. [13]

   The functions of NCAT under the Retail Leases Act are allocated to the Consumer and Commercial Division of NCAT: Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act), Sch 4, cl 3(1).

2. [14]

   Section 3 of the NCAT Act sets out its objects, which include, in (d):

3. [15]

   Section 36(1) of the NCAT Act identifies the guiding principle for the Act and procedural rules, in their application to proceedings in NCAT to be “to facilitate the just, quick and cheap resolution of the real issues in the proceedings.”

4. [16]

   Section 38 of the NCAT Act provides in part:

5. [17]

   Section 53(1) of the NCAT Act empowers NCAT to make any amendment to any document filed in connection with the proceedings that it considers to be necessary in the interests of justice.

6. [18]

   Section 80(2)(b) provides that an internal appeal (for example, from a Senior Member to the Appeal Panel) may be made “as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds.” Section 80(3) provides:

7. [19]

   However, cl 12(1)(a) of Sch 4 of the NCAT Act limits the Appeal Panel’s power to grant leave under s 80(2)(b) for an internal appeal against a Division decision to circumstances where it is satisfied that the appellant “may have suffered a substantial miscarriage of justice because … the decision of the Tribunal under appeal was not fair and equitable”.

8. [20]

   Section 83(1) of the NCAT Act relevantly provides that a party to an internal appeal “may, with the leave of the Supreme Court, appeal on a question of law to the Court against any decision made by the Tribunal in the proceedings.” The relevant decision of the Tribunal for the purposes of s 83(1) is the decision of the Appeal Panel and thus the question of law must arise from the Appeal Panel’s decision: Dokas v Gallagher (No 2) [2024] NSWCA 236 at [1] and [59] (Kirk JA and Griffiths AJA).

Background to the proceedings in the Court below

1. [21]

   The following matters were common ground:

   1. (1)

      The dispute arose in the second wave of COVID-19.

   2. (2)

      DNK did not at any time make a request for information from Mr Jain under cl 6A(2)(b) of the Regulation.

   3. (3)

      Mr Jain did not, at any time prior to the service of his points of claim (see below), ever provide to DNK the information referred to in cl 6A(1) of the Regulation.

   4. (4)

      No mediation between DNK and Mr Jain had taken place before the lease had terminated (either because of DNK’s re-entry on 13 December 2021 or as a result of Mr Jain’s acceptance on 20 December 2021 of DNK’s repudiation).

   5. (5)

      The parties did not make any agreement under cl 6C(2) of the Regulation.

   6. (6)

      Although DNK purported to terminate the lease for various breaches, ultimately the only breach relied on was the failure to pay rent as no valid notice under s 129(1) of the Conveyancing Act 1919 (NSW) had been given.

   7. (7)

      The parties could not contract out of the Regulation, which applied of its own force.

   8. (8)

      At no time did DNK apply for leave to withdraw the admission made in its points of defence.

2. [22]

   On 24 March 2022, after their evidence had been filed, the parties were directed to file points of claim and defences in each of the applications.

3. [23]

   In his points of claim dated 9 May 2022 and filed on 11 May 2022 in NCAT, Mr Jain relevantly alleged:

4. [24]

   In its defence to points of claim dated 14 July 2022 and filed on 21 July 2022, the applicant, relevantly, alleged:

5. [25]

   The hearing in NCAT was conducted by Senior Member Bluth on 23 and 24 August and 23 September 2022.

6. [26]

   In their written closing submissions, the parties addressed the effect of the admission made in DNK’s defence. Mr Jain submitted that DNK had admitted that he was an impacted lessee in its defence. In response, DNK submitted that Mr Jain had adduced no evidence that he was an impacted lessee. It said further:

7. [27]

   Mr Jain said in written submissions in reply:

8. [28]

   In reply, DNK said:

9. [29]

   Senior Member Bluth noted at [40] of his reasons:

10. [30]

    The crucial finding (for present purposes) appears as follows:

11. [31]

    On this basis, NCAT found that the applicant’s purported termination of the lease was valid and it was entitled to arrears of rent amounting to $60,025.34 plus interest from Mr Jain.

12. [32]

    The finding that Mr Jain was not an impacted lessee was made despite the applicant’s admission in paragraph 2 of its points of defence that he was. Further, the evidence given by Mr Jain in cross-examination was not inconsistent with his being an impacted lessee since cl 4(1)(a) of the Regulation is fulfilled when a person qualifies for one of three grants or payments. Thus, a person who is not in receipt of any of the specified grants or payments but who qualifies is nonetheless an impacted lessee.

13. [33]

    On 10 January 2023, Mr Jain filed a notice of appeal against the decision of NCAT. The following notation was made following directions made on 1 February 2023:

14. [34]

    Of present relevance, the Appeal Panel identified the following issue as arising for determination:

15. [35]

    Further, the Appeal Panel relevantly accepted that Mr Jain had an appeal as of right on the following ground of appeal because it was a question of law: “whether the Tribunal constructively failed to exercise jurisdiction by not addressing a material issue, namely the admission that Mr Jain was an impacted lessee in the DNK defence”.

16. [36]

    In the alternative, the Appeal Panel found that, even if that question were not a question of law, it would have granted leave to appeal under s 80(2)(b) of the NCAT Act as the Appeal Panel “would have been satisfied that Mr Jain may have suffered a substantial miscarriage of justice on the basis that the decision of the Tribunal under appeal was not fair and equitable within cl 12(1)(a) of Sch 4 of the NCAT Act.”

17. [37]

    The Appeal Panel relevantly found that Mr Jain was an impacted lessee. It addressed the provisions relating to pleadings in the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and s 191 of the Evidence Act 1995 (NSW). It considered that an admission in points of defence in NCAT could not be equated with an admission in a pleading filed in the District or Supreme Courts. Further, the Appeal Panel noted that the rules of evidence do not apply in NCAT hearings. However, it found as follows:

18. [38]

    The Appeal Panel relevantly found that there was no requirement in cl 6A for an impacted lessee to give information to the lessor unless it was requested by the lessor. It found that the applicant had taken prescribed action against Mr Jain (by re-entering the premises), in breach of the prohibition under cl 6C. On this basis, it found the purported termination of the lease to be unlawful. The Appeal Panel also substantially reduced the sum for which Mr Jain was liable to the applicant from $60,025.34 to $18,318.25.

19. [39]

    The applicant appealed to the Court below against the decision of the Appeal Panel on three grounds. As the second ground is not pressed (as was ultimately conceded orally by Mr Mack, who appeared with Mr Vuu for the applicant), it is only necessary to consider the first and third grounds, which were as follows:

20. [40]

    The primary judge relevantly upheld the Appeal Panel’s decision for the reasons it gave. His Honour found, at [62], that the Appeal Panel was not saying that DNK’s admission in its points of defence that Mr Jain was an impacted lessee was an agreed fact under s 191 of the Evidence Act. Rather, it considered that the admission had an analogous effect.

21. [41]

    His Honour went on to say, in what was clearly obiter:

Whether leave ought be granted

1. [42]

   In order to obtain leave to appeal, the applicant must show that there is an issue of principle, a question of public importance or a reasonably clear injustice going beyond something which is merely arguable: see the authorities referred to in PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 at [6] (Bell P and Simpson AJA).

2. [43]

   This Court (Basten JA, Tobias AJA agreeing) confirmed in Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164, that s 58 of the Civil Procedure Act 2005 (NSW), which requires the Court to act in accordance with “the dictates of justice”, applies to leave applications, as does s 60 of the Civil Procedure Act which provides:

3. [44]

   The applicant, by draft notice of appeal, seeks leave to appeal on the following grounds which are, in substance, as follows:

   1. (1)

      alleged error in finding that the Regulation did not impose an obligation on a lessee to provide a lessor with a statement or evidence that he was an “impacted lessee” within the meaning of the Regulation; and

   2. (2)

      alleged error in finding that the respondent was an “impacted lessee” on the basis of an admission on the pleadings.

4. [45]

   Proposed ground (1) broadly corresponds with ground 1 in the Court below and proposed ground (2) broadly corresponds with ground 3 in the Court below. Ground 2 in the Court below is not pressed in this Court.

5. [46]

   The application in this Court turns in part on the true construction of the Regulation which sought to ameliorate the adverse financial effects on commercial lessees of the COVID-19 pandemic by providing a moratorium on enforcement of leases by lessors against “impacted lessees”. I consider these grounds to raise questions of public importance: the first raises the question of the true construction of the Regulation and the second concerns the effect of an admission in pleadings or quasi-pleadings. Accordingly, I consider that leave ought be granted on both grounds. I also consider that an extension of time ought be granted on the same basis. Mr Krochmalik, who appeared with Dr Lim for the respondent, did not identify any prejudice that would be suffered if such an extension were granted.

Ground 1: alleged error in the construction of the Regulation

1. [47]

   In the Court below, the applicant submitted that if Mr Jain wished to qualify as an “impacted lessee”, he was obliged to notify the lessor of his status under cl 6A in order to enliven the protections in cll 6B, 6C and 6D. The primary judge accepted Mr Jain’s submissions that, although he, as lessee, had an obligation to inform the lessor that he was an impacted lessee, this obligation only arose when the lessor requested it. In that event, the lessee had a reasonable time within which to provide it: J [26]-[27], [37]-[38].

2. [48]

   This ground raises two questions of construction: (1) what is the lessee’s obligation to notify the lessor that he claims to be an impacted lessee; and (2) when does it arise. The first question is answered by cl 6A(1). It provides that an impacted lessee must give the lessor certain information – namely, a statement to the effect that the lessee is an impacted lessee, together with evidence of that fact that the lessee is an impacted lessee (the information). The second question is answered by cl 6A(2) and (3). While a lessee may give the information to the lessor before or as soon as practicable after a prescribed breach occurs (cl 6A(2)(a)), a lessee is only required to give the information within a reasonable time after the lessor has requested it (cl 6A(2)(b)). In turn, the lessor may request it anytime as long as it is reasonably required and not requested more than once a fortnight: cl 6A(3).

3. [49]

   I reject the submission made by Mr Mack that the word “may” in cl 6A(2)(a) ought be read as “must”. There is good reason to attribute to Parliament the intention to use words advisedly. Where “may” and “must” are used in close proximity, dealing with the same subject matter, the distinction between the ordinary meaning of each becomes even more marked: see the discussion in Coffs Harbour and District Local Aboriginal Land Council v Lynwood [2017] NSWCA 317 at [8]-[10] (Basten JA, Simpson JA agreeing).

4. [50]

   The applicant submitted that it was “never open” to the applicant to make a request under cl 6A(2)(b) because it “never knew” that Mr Jain was, or was purporting to be, an impacted lessee. I reject this submission. Clause 6A(3), when read with cl 6A(1), is plain in its terms: it entitles a lessor to request the information “at any time if the information is reasonably required”. When the applicant was considering exercising its right of re-entry on the basis of breach, it was important for it to know whether Mr Jain was, or was not, an impacted lessee. If he was the former, the applicant could go ahead with its proposed enforcement action. However, if he was the latter, the applicant was prohibited from taking that step and was required to submit to mediation. Thus, the applicant had a right under cl 6A(3) to request the information from Mr Jain and Mr Jain had an obligation under cl 6A(2)(b) to provide it within a reasonable time. If DNK failed to request the information from Mr Jain before taking prescribed action (such as re-entry), it took the risk that Mr Jain was, in fact, an impacted lessee, with the consequence that the prescribed action would constitute a breach of the Regulation and be, therefore, unlawful.

5. [51]

   It is also significant that cl 6C makes no mention of cl 6A. Had it been the intention of the legislature, cl 6C of the Regulation could have provided that a lessor must not take prescribed action against a lessee who has provided information under cl 6A(1). However, there is no such provision. The absence of such a provision is a strong textual indication that the prohibition against prescribed action was intended to apply with respect to impacted lessees, irrespective of whether information had been provided by them to the lessor. The wording of cl 6C is to be contrasted with the wording of cl 6D, which deems the lessor to have complied with cl 6D if the lessee, relevantly, does not comply with cl 6A (provision of information on request of the lessor). This is also another powerful textual indication that the prohibition in cl 6C against prescribed action by the lessor does not depend on the lessee’s compliance with cl 6A.

6. [52]

   I reject DNK’s submission that this result is “manifestly absurd or unreasonable”. I consider the wording of the Regulation to be unambiguous on this point. The Regulation reflects a clear legislative choice to impose the onus on the lessor to request the information and receive it from the lessee in order to ascertain whether the lessor is prohibited from taking prescribed action and is obliged to mediate or renegotiate the lease. While the effect of the Regulation was to impose a temporary moratorium on the usual rights of enforcement of lessors, it is plain that this was its intention, in the circumstances which applied during relatively short periods during the COVID-19 pandemic.

7. [53]

   This conclusion is fortified by a consideration of the legislative history of the Regulation. The version of the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW), which was in force between 3 July 2020 and 23 October 2020, relevantly provided, in cl 7:

8. [54]

   In this version, the impacted lessee had a positive obligation to give a statement and evidence to the lessor and failure by the lessee to comply with that obligation resulted in the lessor being freed from the prohibition in cl 7(1). The difference in wording between this earlier version and the Regulation which applied in the present case also demonstrates a clear legislative choice to put the onus on the lessor to request a statement and information and also to ascertain as a matter of fact whether the lessee was, or was not, an impacted lessee. This amendment shows that the intention of the Regulation in the form which applies in the present case was designed to protect impacted lessees, in accordance with the terms of the regulation-making power in s 87 of the Retail Leases Act.

9. [55]

   No error in the primary judge’s reasoning with respect to this ground or the result has been made out.

Ground 2: alleged error in finding that Mr Jain was an impacted lessee

1. [56]

   The Appeal Panel found that Mr Jain was an impacted lessee on the basis of the applicant’s admission in its points of defence. It acknowledged that, under s 38(2) of the NCAT Act, it was not bound by the rules of evidence but considered that it could treat the applicant’s admission in the pleadings as akin to an agreed fact pursuant to s 191 of the Evidence Act that Mr Jain was an impacted lessee from 13 August 2021 to 13 December 2021.

2. [57]

   The primary judge considered the evidence that was before his Honour from the Appeal Panel (which did not include the transcript of the evidence before NCAT) and said:

3. [58]

   Ultimately, at J [68], the primary judge rejected the challenge to the finding that Mr Jain was an impacted lessee on the basis that no error of law had been established.

4. [59]

   Mr Mack submitted that “generally admits" was not a “hardcore admission” and could not be taken as effective to admit the paragraphs referred to, including because NCAT was not a court of strict pleading. Further, he submitted that it was significant that the points of claim and defence were ordered to be filed after the evidence had already been filed and served. Mr Mack also submitted that Mr Jain could not be an impacted lessee until he told DNK that he was and provided information to prove it, either before, or as soon as practicable after, a prescribed breach.

5. [60]

   I reject these submissions. The last submission conflates two concepts: first, whether Mr Jain was an impacted lessee; and, second, whether Mr Jain was obliged to notify DNK that he was an impacted lessee and the consequences of his not doing so. The second concept is the subject of ground 1 which has been addressed above. The first concept is a question of fact which may be established by evidence or admitted by DNK. It is not affected by whether Mr Jain has informed DNK of his status as an impacted lessee or DNK’s state of mind as to whether Mr Jain is an impacted lessee.

6. [61]

   Paragraph 2 of the points of defence filed by the applicant in NCAT indicated to Mr Jain and to NCAT that it admitted that Mr Jain was an impacted lessee (as alleged in paragraph 11 of Mr Jain’s points of claim). The basis for this admission was that Mr Jain had received the 2021 Covid-19 Business Grant (paragraph 9 of the points of claim) and that his business had a turnover for the 2020-2021 financial year of less than $50 million (paragraph 10 of the points of claim). Accordingly, those facts were not in issue in the proceedings. Mr Jain and NCAT could rely on that admission unless and until the applicant sought, and was granted, leave to withdraw it. The effect of the admission in the points of defence was that Mr Jain was entitled to be found to be an impacted lessee irrespective of whether he adduced any evidence regarding that matter.

7. [62]

   Under s 53(1) of the NCAT Act, the applicant could have applied to amend its points of defence to withdraw the admission in paragraph 2 of its points of defence. As referred to above, it was common ground that it did not.

8. [63]

   NCAT is not a court of strict pleading and is entitled, with some qualifications, to determine its own procedure, subject to the requirements of natural justice. However, the points of claim and points of defence filed in NCAT in a case such as the present serve a similar function to pleadings in litigation. Importantly, this includes identifying both the issues and the case the other party has to meet to accord natural justice. The points of claim put the applicant on notice of the way of which Mr Jain was putting his case and the material facts on which he relied (including that he claimed to be an impacted lessee because he had received the 2021 Covid-19 Business Grant and that his business had a turnover for the 2020-2021 financial year of less than $50 million).

9. [64]

   When filing its defence, the applicant had a choice whether to:

   1. (1)

      admit these allegations (thereby indicating that they were not in dispute and need not be proved);

   2. (2)

      not admit the allegations (thereby indicating that Mr Jain would have to prove them); or

   3. (3)

      deny the allegations (thereby indicating that the applicant disputed them and intended to challenge them positively in its defence).

10. [65]

    Because the applicant admitted these allegations, they were no longer in dispute and Mr Jain was not required to prove them. Also, the applicant was not, as a matter of natural justice, entitled to contradict its admissions unless NCAT had granted it leave to withdraw them or it was plain that the parties had decided to abandon the points of claim and defence entirely: see Dare v Pulham (1982) 148 CLR 658 at 664; [1982] HCA 70 (Murphy, Wilson, Brennan, Deane and Dawson JJ). There is no basis for a suggestion that either of these possibilities occurred in the present case.

11. [66]

    An admission on the pleadings, or quasi-pleadings such as the points of claim and points of defence in NCAT, is not the same as an agreed fact under s 191 of the Evidence Act. However, its effect is analogous. An “agreed fact” is defined as meaning a fact that the parties have agreed is not, for the purposes of the proceedings, to be disputed: s 191(1). Unless the Court gives leave, evidence is not required to prove an agreed fact and evidence cannot be adduced to qualify or contradict it: s 191(2). There are formal requirements for agreed facts: s 191(3).

12. [67]

    An admission on pleadings is binding unless leave is granted to withdraw it. An agreed fact cannot be contradicted by other evidence. These types of formal agreement or admission are to be distinguished from an informal admission which comprises part of the evidence before the tribunal of fact and which must, therefore, be weighed together with all relevant evidence as a whole: see the discussion in The Nominal Defendant v Gabriel (2007) 71 NSWLR 150; [2007] NSWCA 52 at [103]-[113] (Campbell JA, Hodgson JA agreeing). A formal admission, such as one made in a pleading or by an agreed fact, cannot be resiled from, without leave, in part because of its potent effect on procedural fairness. The opposing party is entitled to rely on a formal admission and conduct its case accordingly: this is fundamental to the adversarial system and to procedural fairness.

13. [68]

    It is apparent from the primary judge’s reasons that his Honour had regard to what evidence there was as to whether Mr Jain was an impacted lessee. To some extent, the primary judge was obliged to glean this from the reasons of NCAT and the Appeal Panel since the evidence was not before him. This task was unnecessary, having regard to the admission, on which his Honour principally relied. Nonetheless, it does not make his Honour’s conclusion – that Mr Jain’s status as an impacted lessee was established by the applicant’s admission – legally erroneous. The passage was plainly dicta.

14. [69]

    For the reasons set out above, ground 2 has not been made out.

Costs

1. [70]

   I discern no reason why costs ought not follow the event in accordance with the general rule: UCPR, r 42.1.

Proposed orders

1. [71]

   For the reasons given above, I propose the following orders:

   1. (1)

      Extend the time within which the applicant is to file a summons for leave to appeal to 5 February 2025.

   2. (2)

      Direct the applicant to file a notice of appeal in the form of the draft notice of appeal within 7 days.

   3. (3)

      Grant leave to appeal.

   4. (4)

      Dismiss the appeal.

   5. (5)

      Order the appellant to pay the respondent’s costs of the appeal.

2. [72]

   PRICE AJA: I agree with Adamson JA.