Armstrong Jones Management Pty Ltd v Saies-Bond & Associates Pty Ltd (RLD)

[2007] NSWADTAP 47

Appeal Panel - Internal

CITATION:	Armstrong Jones Management Pty Ltd v Saies-Bond & Associates Pty Ltd (RLD) [2007] NSWADTAP 47
PARTIES:	APPELLANT Armstrong Jones Management Pty Ltd RESPONDENT Saies-Bond & Associates Pty Ltd
FILE NUMBER:	069075
HEARING DATES:	26 and 27 March 2007
SUBMISSIONS CLOSED:	27 March 2007
DATE OF DECISION:	6 September 2007
BEFORE:	O'Connor K - DCJ (President); Molloy GB - Judicial Member; O'Neill A - Non Judicial Member
CATCHWORDS:	Retail Leases - Termination of Lease for Non-Payment - Pre-Lease Misrepresentation - Interpretation of section 10 - Authority - Reliance - Omission of Representation for Pre-Lease Disclosure Statement - Interpretation of section 11 - Estoppel - Unconscionable Conduct - Scope of Relief - Mitigation of Damages - Retail Leases Act 1994, ss 10, 11, 62B, 72.
MATTER FOR DECISION:	Principal matter
FILE NUMBER UNDER APPEAL:	055169, 065015
DATE OF DECISION UNDER APPEAL:	11/13/2006
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994 Trade Practices Act 1974 (Cth)
CASES CITED:	Armstrong Jones Management Pty Ltd v Saies-Bond & Associates Pty Ltd [2006] NSWADT 323 Lloyd v Veterinary Surgeons Investigating Committee (2005) 64 NSWLR 245 Lamson Store Service Co Ltd v Russell Wilkins & Son Ltd (1906) 4 CLR 672 Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 Trust Company of Australia Ltd (Stockland Property Management Ltd) v Skiwing Pty Ltd trading as Café Tiffany’s [2005] NSWADTAP 9 Trust Company of Australia Limited (trading as Stockland Property Management) v Skiwing Pty Ltd (trading as Café Tiffany’s) [2006] NSWCA 185; 66 NSWLR 77 Holmes v Jones (1907) 4 CLR 1692 Golden Harvest (Australia) P/L v Paing P/L & ors [2002] NSWADTAP 40 Golden Harvest (Aust) P/L v Paing P/L & ors [2004] NSWCA 85 McKeand v Thomas [2006] NSWSC 1028 Bruce Harvey and Anor v State of New South Wales [2006] NSWSC 1436 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Bruce v Cole (1998) 45 NSWLR 163 Vetter v Lake Macquarie City Council (2001) 202 CLR 439 Potts v Miller (1940) 64 CLR 282 Gould v Vaggelas (1984) 157 CLR 215 Smith v. Chadwick (1884) 9 App Cas 187 Watson v Foxman (1995) 49 NSWLR 315 Rogers v Wentworth (1986) 7 NSWLR 88 Xin v Zakos [2002] NSWADT 189 FAI General Insurance Co Ltd v RAIA Insurance Brokers Ltd (1992) 108 ALR 479 Samaha & Anor v Corbett Court Pty Ltd; Corbett Court Pty Ltd v Samaha & Anor [2006] NSWSC 1441 Attorney General of New South Wales v World Best Holdings Ltd (2005) 63 NSWLR 557 Toteff v Antonas (1952) 87 CLR 647 Marks v GIO Australia Holdings Ltd [1998] HCA 69, (1998) 196 CLR 494 Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 O’Neill v Medical Benefits Fund of Australia Ltd (2002) 122 FCR 455
REPRESENTATION:	APPELLANT M Henry of counsel instructed by C Pagent, solicitor, Corrs Chambers Westgarth RESPONDENT V R W Gray of counsel
ORDERS:	1. Appeal allowed.; 2. Orders under appeal set aside.; 3. In substitution the following orders are made:; (A) Proceedings 055169; (1) Applicant/Lessor’s retail tenancy claim upheld. ; (2) Lessee to pay the Lessor damages in an amount to be determined.; (B) Proceedings 065015; (1) Applicant/Lessee’s retail tenancy claim dismissed.; (2) Applicant/Lessee’s unconscionable conduct claim dismissed.; 4. Damages. As to the determination of the amount of damages under Order 3(A)(2), the Applicant/Lessor to file and serve draft minutes of order and any submissions within 7 days. The Respondent/Lessee to file any submissions in reply within 7 days. Tribunal to proceed to make the order on the papers under s 76 of the Administrative Decisions Tribunal Act 1997 unless Tribunal decides otherwise following application by a party.; 5. Costs. Applicant/Lessor shall file and serve any submissions within 14 days after entry of the final order under Order 3(A)(2). The Respondent/Lessee shall file any submissions within a further 14 days. Tribunal to make any order on the papers under s 76 of the Administrative Decisions Tribunal Act 1997 unless Tribunal decides otherwise following application by a party. If there be no application for costs filed in accordance with this Order, no order for costs.

1 This is an appeal by the lessor against orders of the Retail Leases Division of the Tribunal (the Tribunal) made under the Retail Leases Act 1994 (RL Act): see Armstrong Jones Management Pty Ltd v Saies-Bond & Associates Pty Ltd [2006] NSWADT 323. The Tribunal dealt with three applications: (1) a retail tenancy claim brought by the lessor against the lessee; (2) a retail tenancy claim and (3) an unconscionable conduct claim brought, in response, by the lessee against the lessor. The Tribunal dismissed the lessor’s retail tenancy claim. The Tribunal upheld the lessee’s retail tenancy claim and unconscionable conduct claim.

2 The Tribunal made one monetary order, which had the effect of restoring the lessee to the position it was in prior to entry into the lease – an order requiring the lessor to refund to the lessee the amount of the security bond (plus interest). The lessor is Armstrong Jones Management Pty Ltd as trustee for the ING Retail Property Fund Australia, and the lessee is Saies-Bond & Associates Pty Ltd. In these reasons they will be referred to as ‘AJM’ and ‘S-B’.

3 Section 77 of the RL Act provides that:

‘A party to any proceedings in which the Tribunal makes an order or other decision under this Act may appeal to an Appeal Panel of the Tribunal under Part 1 of Chapter 7 of the Administrative Decisions Tribunal Act 1997 .’

4 Under Part 1 of Chapter 7 of the Administrative Decisions Tribunal Act 1997 (the ADT Act) an appeal may be made in relation to a ‘question of law’, and, with the leave of the Appeal Panel, may extend to the merits: ADT Act, ss 112, 113. It is not necessary that an error of law be demonstrated before consideration can be given to extending the appeal to the merits: Lloyd v Veterinary Surgeons Investigating Committee (2005) 64 NSWLR 245.

Summary

5 The lessor, AJM, has, in its notice of appeal, enumerated a number of matters that it regards as errors of law in the reasons of the Tribunal. It applied for leave to extend the appeal to the merits. It applied for orders to be made, disposing of the proceedings in the Tribunal in the terms of its original claim. In its claim AJM had sought an order in the amount of $321,310.67. We will explain the components of this amount later in these reasons.

6 The lessee, S-B, was a small retailer in furniture. The shopping centre was designed to be, and promoted as, a specialist ‘bulk goods’ furniture centre. S-B succeeded in proving that a representation made in the pre-lease negotiations by a letting agent, Mr Antony Draper, was false, and was made knowing that it was false. The Tribunal was satisfied that Mr Draper was acting under the authority of AJM in making the representation. Mr Draper was found to have told Ms Jocelyn Bond (Ms Bond), S-B’s director and alter ego, that Harvey Norman was a prospective tenant. He had told her this when explaining who would be the major, or anchor, tenants of the centre. The representation went to a matter of obvious materiality to an incoming tenant in the position of S-B. The Tribunal found that Ms Bond had relied on this representation in deciding to take up a lease.

7 These findings led the Tribunal to uphold the retail tenancy claim lodged by S-B, on the ground that a contravention of s 10(1) of the RL Act had been proven. This provision will be examined more closely later in these reasons. These findings also led the Tribunal to uphold S-B’s unconscionable conduct claim.

8 There was no dispute that S-B, during the period of its occupancy of the premises under the lease, made no payments either in respect of rent or outgoings. S-B had given a bank guarantee for the security bond on entry into the lease. AJM called up the bond. The Tribunal saw the order against AJM that it refund the bond as achieving the result that the parties were restored to the financial position they were in prior to entry into the lease. The Tribunal expressly rejected S-B’s claims for damages for other losses incurred by it, on the ground that S-B had failed to produce adequate evidence of those losses.

9 AJM does not in this appeal contest the Tribunal’s finding as to what Mr Draper said. It denies that it is liable for what he said, principally on the ground that Mr Draper was not acting under its authority. If he was acting under its authority in making the representation, it contests the Tribunal’s finding that Ms Bond relied upon it. Alternatively, if Ms Bond did rely on it to her detriment, AJM submits that S-B was barred by conduct from relying on the representation.

10 The Tribunal accepted the case put by S-B to a degree. There were difficulties from day one in the performance of the centre. It underperformed and many tenants fell into arrears. Ms Bond was not alone in her concerns. The Tribunal concluded that a number of statements made by Mr Draper and certain conduct by the centre manager, CB Richard Ellis, had been unfair.

11 Nonetheless, the Tribunal was satisfied that none of the representations or items of conduct, viewed separately or together, passed the threshold from ‘unfair’ to ‘unconscionable’, with the one exception of the representation that contravened s 10(1). Had the Tribunal been able to deal with the part of S-B’s claim based on Federal Trade Practices Act 1974 (Trade Practices Act) grounds, the Tribunal may well have found additional contraventions. That was not possible, for reasons explained below.

12 AJM also contests the approach taken by the Tribunal to the determination of relief. It submits that S-B should, at the least, compensate AJM for the benefit it did receive from its occupation of the premises and the loss suffered by AJM.

13 In its reasons, the Tribunal said that had AJM’s claim succeeded it would have reduced the amount of any award by $60,000 because of AJM’s failure to mitigate the damage it suffered because of S-B’s repudiation of the lease. AJM’s appeal contested this conclusion.

14 It will be seen from these reasons that the Appeal Panel has upheld AJM’s appeal. While rejecting many of AJM’s points of appeal, the Appeal Panel has concluded that S-B was estopped from relying on the misrepresentation, and, for that reason, both of its claims fail.

15 In relation to the question of relief, the appeal against the Tribunal’s finding that AJM failed to mitigate its damage is not disturbed.

16 The result, therefore, is that the appeal should be extended to the merits, and an order be entered substantially in the terms sought by AJM reduced by $60,000. There may be a need for some adjustments to the primary amount claimed by AJM.

Background

17 The shopping centre under notice is called ‘Style at Home’. It is located on a former industrial site in Alexandria. The centre developer, PDP O’Riordan Pty Ltd (PDP), acquired the site in 2002. PDP proceeded to construct the centre and put in place the arrangements to market and lease shops in the centre. It engaged McKenzie Hall Pty Ltd to do the marketing and letting work. Mr Antony Draper was a director of McKenzie Hall, and was the main agent on site. On 25 May 2004, PDP sold the site to AJM as trustee for ING.

18 S-B’s business ‘Coco Interiors’ specialised in the retailing of Balinese style furniture and accessories. S-B, through its director, Ms Bond, first made contact with Mr Draper on 12 July 2004. Ms Bond was keen to find a new location for her business, as she had been required to vacate a shop at Neutral Bay because it was part of a site required for a supermarket redevelopment. She had to give up that shop by the end of August 2004.

19 Within a few days of commencing discussions with Mr Draper, Ms Bond expressed interest in taking up space. Mr Draper provided her with promotional documents, plans of the centre and documents required under the RL ACT such as the lessor’s disclosure statement. He provided her with a document purporting to be an agreement to lease. S-B was permitted to enter into occupation on 26 August 2004, with the grand opening of the centre scheduled for 5 October 2004. (Ultimately the opening was delayed to 15 October 2004.) A formal Lease was executed and registered. The Lease commenced on 5 October 2004. S-B met the security bond requirement by way of a director’s guarantee in the amount of $40,695, the equivalent of three months rent, outgoings and promotion levy. The Lease fixed the rent at $118,800 per annum ($9,900 per month) subject to review. There were also payments required in respect of contribution to outgoings and the promotions levy. There was a four-month rent-free period. Accordingly rent became due and payable on 5 February 2005.

20 AJM’s Case: S-B made no payments under the Lease. After giving S-B several notices in respect of its default in payment and in not adhering to the core opening hours, on 18 August 2005 AJM called up the security bond. On 5 September 2005 AJM terminated the lease by locking S-B out without giving any specific notice of this proposed action.

21 On ordinary principles S-B’s conduct was in breach of the lease; and AJM lawfully repudiated the lease. Consequently, on ordinary principles AJM would be entitled to ‘loss of bargain’ damages. The measure of damages is the full amount of the rent (and other payments due to the lessor under the lease) for the whole term less the sum which a court may think the lessor is likely to derive during what would have been the residue of the term: Lamson Store Service Co Ltd v Russell Wilkins & Son Ltd (1906) 4 CLR 672 per Griffith CJ; see also, Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17. The lessor’s compensation may be discounted to take account of the accelerated payment provided by a damages award.

22 AJM’s damages claim seeks to apply these principles. For the period to 5 September 2005, AJM sought the total amount unpaid under the lease, covering rent, outgoings and promotional levy, offsetted the security bond, and included interest at 9% per annum (and not allowing for GST) i.e. $57,341.23. For the period the shop remained vacant, 5 September 2005 to 15 May 2006, the claim sought the full amount due under the lease (rent, outgoings, promotional levy), i.e. $94,389.32 plus an allowance for interest of $2,962.15, i.e. $97,352.16. The cut-off date, 15 May 2006, was the first day of hearing before the Tribunal. The shop had not been re-let as at that time.

23 For the period 16 May 2006 to the end of the lease, 4 October 2009, the amount claimed was calculated by deducting from the payments agreed under the lease an expected rent fixed at $80,000 per annum. The figure of $80,000 is based on market offers received prior to the commencement of the Tribunal hearing. The total amount lost was therefore $137,017.98 (within which was included an amount in respect of the difference in connection with the promotion levy). The following losses were also claimed: leasing incentive (3 months) for replacement tenant, $20,000, leasing fee (12%) on reletting, $9,600. In both instances the base-line figure is $80,000, being the estimate of future market rent.

24 S-B’s Case: S-B denied liability. In January 2006 it filed an application in the nature of a cross claim. The application comprised a retail tenancy claim (see s 70) and an unconscionable conduct claim (see ss 71A and s 62B). It applied for orders relieving it of any liability under the contract, restoring it to the financial position it was in before entering into the lease, awarding it damages for losses suffered and seeking declarations that various forms of conduct were unlawful.

25 The retail tenancy claim particularised numerous alleged representations and items of misconduct - by Mr Draper in the negotiation phase, and, after the centre commenced operating, by the centre manager, CB Richard Ellis. The unconscionable conduct claim relied on that conduct and on some other conduct that may not have involved breaches of the law sufficient to justify a retail tenancy claim, but were unfair to a degree that justified a finding of unconscionability.

26 S-B did put in issue in its retail tenancy claim the issue of whether AJM had engaged in ‘misleading or deceptive conduct’ in breach of s 52 of the Trade Practices Act. Section 52(1) provides that ‘[a] corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’. This is a less exacting standard than either s 10(1) (no requirement under s 52, for example, to prove the state of mind of the corporation) or s 62B of the RL Act.

27 The Tribunal heard the evidence on 15, 16, 23, 24 May and 21 June 2006. At that point the Tribunal considered that it had jurisdiction to entertain a s 52 claim, following its decision in Trust Company of Australia Ltd (Stockland Property Management Ltd) v Skiwing Pty Ltd trading as Café Tiffany’s [2005] NSWADTAP 9 (11 March 2005).

28 On 13 July 2006 the Court of Appeal ruled that the Tribunal did not have jurisdiction to apply Federal law: Trust Company of Australia Limited (trading as Stockland Property Management) v Skiwing Pty Ltd (trading as Café Tiffany’s) [2006] NSWCA 185; 66 NSWLR 77. As a consequence, the parties were given until 11 August 2006 to file any further submissions. (An amendment to the RL Act that commenced on 1 January 2006, subsequent to the events in issue in this case, now confers by State law a jurisdiction equivalent to the Trade Practices Act s 52 jurisdiction: see RL Act, ss 62C, 62D and 62E.)

Relevant Statutory Provisions

29 Section 10 of the RL Act provides:

‘ 10 Right to compensation for pre-lease misrepresentations

(1) A party to a retail shop lease is liable to pay another party to the lease (the injured party) reasonable compensation for damage suffered by the injured party that is attributable to the injured party’s entering into the lease as a result of a false or misleading statement or representation made by the party, or any person acting under the party’s authority, with knowledge that it was false or misleading.

(2) The giving of a lessor’s disclosure statement to a prospective lessee under a retail shop lease is considered to be the making of a representation by the lessor to the lessee as to the information in the disclosure statement.

(2A) The making of a representation by a prospective lessee in a lessee’s disclosure statement given to a prospective lessor under a retail shop lease that the prospective lessee has sought independent advice, or as to statements or representations relied on by the prospective lessee in entering the lease, is considered to be the making of a representation by a lessee to the lessor.

(3) This section extends to apply to a statement or representation made before the commencement of this section.’

30 Section 62B(1) of the RL Act provides:

‘(1) A lessor must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable.’

31 Mr Draper agreed that he did make a representation that Harvey Norman was a prospective tenant. But he said that he had also made it clear that he was speaking of Harvey Norman as owner of the Joyce Mayne franchise. Joyce Mayne did take up space as a major tenant. The other major tenants of the centre were Bing Lee, The Good Guys and Oz Design. The shop offered to S-B was adjacent to the shop ultimately occupied by Joyce Mayne.

32 The Tribunal preferred Ms Bond’s evidence as to what she was told. That finding is not contested. The evidence is dealt with in greater detail later in these reasons in connection with other contentions raised by the appeal. As noted earlier, the Tribunal found satisfied all elements for a finding of contravention required by s 10(1).

33 As noted earlier, the Tribunal was satisfied that S-B had established a number of instances of conduct on the part of AJM which were ‘unfair’. These included other representations made by Mr Draper which were misleading, and various items of conduct on the part of the centre manager, CB Richard Ellis. These matters were considered to be ‘relevant’ to the assessment of whether AJM had contravened the lessor’s obligation not to engage in unconscionable conduct (s 62B). Ultimately, the Tribunal found that none of these items of conduct together or individually constituted unconscionable conduct, with the exception of the misrepresentation that Harvey Norman was a prospective tenant.

34 The Tribunal saw the making of a false representation by a letting agent as a type of ‘unfair tactics’.The Tribunal highlighted the following factor in the non-exclusive check-list of factors in s 62B to be taken into account in considering whether there has been unconscionable conduct:

‘(3) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessor has contravened subsection (1) in connection with a retail shop lease, the Tribunal may have regard to: …
(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessee or a person acting on behalf of the lessee by the lessor or a person acting on behalf of the lessor in relation to the lease, and …’

35 At common law the principal remedy for misrepresentation inducing entry into a contract is rescission. In addition the innocent party may be entitled to an award of damages where the representation is negligent or fraudulent. After some debate in the courts, the measure of damages for fraudulent or negligent misrepresentation has been settled to be the tort measure.

36 While the Tribunal’s orders did not include one of rescission, its orders achieved the same result (dismissal of lessor’s claim founded on the contract, and ordering the lessor to refund the one payment made by the tenant). The power to order a refund is one of the orders the Tribunal can make when determining a retail tenancy dispute: see s 72(1)(a) (retail tenancy claims); s 72AA(1)(a) (unconscionable conduct claims). As noted earlier, it was not prepared to grant S-B’s application for a further order in damages to compensate for lost opportunity, as the evidence was insufficient.

The Grounds of Appeal

37 AJM’s notice of appeal sets out 20 grounds under the question of law section and reiterated eight of those grounds under the merits section as they raised, in its opinion, mixed questions of law and fact. Of the 20 grounds, those numbered 16, 19 and 20 are consequential. They do not identify any separate question of law. Ground 8 was not pressed.

38 Mr Henry for the appellant agreed that the remaining 16 grounds could be divided, we think, into the following five categories.

(1) Authority . Mr Draper was not a person ‘acting under the AJM’s authority’, and therefore AJM was not liable for that conduct. Grounds 1, 2.

(2) Reliance. If Mr Draper was a person acting under the authority of AJM, there was no evidence (or there was insufficient evidence to satisfy the onus of proof lying on S-B) that S-B relied upon the representation. Alternatively, S-B was estopped by its conduct from now relying on the representation. Grounds 3, 4, 5, 6, 7, 9, 12.

(3) Unconscionable Conduct. The Tribunal’s finding that conduct of Mr Draper necessarily meant that the AJM had engaged in ‘deemed unconscionable conduct’ involved a misconstruction of the unconscionable conduct provisions of the RL Act. Grounds 17 and 18.

(4) Relief. The Tribunal’s power to make orders is confined to the making of an order for ‘reasonable compensation’ under s 10(1), and it had no power to make orders dismissing outright AJM’s claim. Grounds 13, 14, 15.

(5) Mitigation. S-B had not satisfied the evidentiary standard for proof of mitigation of damage. Consequently the Tribunal was wrong to include in its assessment of the appropriate final order a discount of $60,000 on the basis that AJM had failed to mitigate its loss in its attempts to find a replacement tenant following on from S-B’s early termination of the lease. Grounds 10 and 11.

39 The difficulties that surround the establishment of a contravention of s 10(1) are reflected in the following statement of the Appeal Panel in Golden Harvest (Australia) P/L v Paing P/L & ors [2002] NSWADTAP 40 (cited with approval by the Court of Appeal in Golden Harvest (Aust) P/L v Paing P/L & ors [2004] NSWCA 85, at para [45] per Bryson JA):

‘[32] The terms of section 10 of the Retail Leases Act 1994 are reminiscent of the interpretation and application given to section 52 Trade Practices Act 1974 with respect to statements and representations as to future matters and matters of intention before the introduction of section 51A. The terms of section 10 require demonstration, as a condition of liability, that the representor knew that a statement or representation was false or misleading. Where the statement or representation goes to a future fact or matter or is a statement of intention, we are of the view that the representor will not be liable unless the representor knew that the statement was false or misleading at the time it was made. That is to say, it must be shown that the representor had no intention of making good the representation or was aware of circumstances which would prevent the making good of the representation: [authorities cited].’

40 As noted above, Ms Bond placed in issue several statements made to her. Several of them were found proven, and were considered to be misleading and unfair. However she failed in all but the instance of the ‘Harvey Norman’ representation to satisfy the Tribunal of the final requirement, that Mr Draper knew that the statement was false or misleading at the time it was made.

(1) ‘Authority’

41 The appellant disputes the finding that Mr Draper was an agent of AJM at the time of the representation. A representation to which liability may attach by virtue of s 10(1) may be ‘made by the party, or any person acting under the party’s authority’.

42 The Tribunal set out in greater detail the factual circumstances relating to the nature of the business relationships at [14]-[20] of its reasons, and its legal analysis of the ‘authority’ issue at [66]-[70], as follows:

‘ The approach adopted to finding tenants for the Centre

14 During 2002, the site on which the Centre is established was purchased from Cadbury Schweppes Australia Pty Ltd by PDP (O’Riordan) Pty Ltd (‘PDP’). The owner of PDP was a property developer called Charter Hall Holdings Pty Ltd (‘Charter Hall’). Charter Hall then carried out substantial alterations and renovations in order to create Style at home as a new retail shopping centre. These works continued, as outlined below, until late 2004.

15 By an agreement dated 2 August 2002, PDP appointed McKenzie Hall as the exclusive leasing agent to find tenants for the Centre. McKenzie Hall describes itself on its web site as ‘a small specialist, property management, leasing and consultancy company specialising in the bulky retail goods sector of the property investment market’.

16 McKenzie Hall, in its agreement with PDP, undertook to assign Mr Antony Draper, one of its directors, as the ‘key person’ acting on its behalf for the duration of McKenzie Hall’s appointment as the exclusive leasing agent. The agreement provided that McKenzie Hall could introduce prospective tenants to PDP, but that PDP was free to accept or reject them and McKenzie Hall could only bind PDP to a lease with PDP’s written consent.

17 In an affidavit dared [sic] 12 May 2006, Mr Draper outlined the steps that he took in carrying out McKenzie Hall’s obligations under the agreement. Having familiarised himself with the nature of Charter Hall’s plans for the site, he started looking for tenants early in 2003. Once he had identified someone as a possible tenant, his practice was to arrange a meeting in order to provide information about the Centre and to discuss that person’s particular needs. If the person continued to show interest, the discussions would move to such matters as the size and location of the premises required and the rent that he or she would be prepared to pay. Mr Draper would give the prospective tenant a Lease Deal Summary Approval Sheet setting out the basic terms on which Charter Hall would be prepared to grant a lease. Often, the recipient would alter those terms and submit the revised document to Charter Hall, through Mr Draper, by way of counter offer. Charter Hall would either accept the revised terms or negotiate further, using much the same process. When the terms were agreed, Mr Draper would give the prospective tenant a formal disclosure statement and drafts of an agreement for lease and a lease.

18 In or about October 2003, Charter Hall arranged for brochures to be printed describing the proposed new centre. Having seen a copy of this document, Mr Draper asked Charter Hall to consider some changes to it, as he thought that some phrases in it might mislead prospective tenants. Having taken legal advice, Charter Hall revised the brochure. Brochures in three different sizes were then printed. The largest of them contained the most detail. It was Mr Draper’s practice to give one of the brochures to prospective tenants, also indicating to them whether the current floor plans, which were being revised from time to time, differed in any material respect from what was depicted in the brochure.

19 On 25 May 2004, PDP sold the property on which the Centre was situated to Armstrong Jones.

20 The Centre opened on 16 October 2004 – i.e., eleven days after the date of commencement of the lease – in circumstances described below.

…

The Tribunal’s assessment of the evidence on these matters

66 Whether Armstrong Jones was bound by any representations that Mr Draper made. It is convenient here to consider a submission by Mr Henry, counsel for Armstrong Jones, to the effect that even if Mr Draper did make some material misrepresentations to Ms Bond in the course of negotiating the lease, they could not form the basis of any claim by Saies-Bond against Armstrong Jones because Mr Draper was not an agent of Armstrong Jones at the relevant time.

67 In so submitting, Mr Henry relied on the following matters: (a) it was PDP, not Armstrong Jones, that engaged McKenzie Hall, with Mr Draper as the ‘key person’, to find tenants for the Centre; (b) Mr Anthony Bertoldi, who is a director and the chief executive officer of Armstrong Jones, said in cross-examination that the ‘presentations’ that were made to Saies-Bond were made on behalf of Charter Hall, not ING or Armstrong Jones; and (c) that Armstrong Jones was not a party to the leasing agreement and did not acquire from PDP any entitlements or obligations arising under it, either by novation or by transfer.

68 The Tribunal considers, however, that countervailing arguments advanced by Mr Stephen Spring, agent for Saies-Bond, must prevail. Mr Spring relied on (a) Ms Bond’s evidence, mentioned above, that at her first meeting with Mr Draper he said that ING was the landlord; (b) the description of the roles of Armstrong Jones, ING and PDP in the disclosure statement received by Ms Bond on 29 July 2004; (c) an acknowledgment by Mr Draper in cross-examination that in the disclosure statement ING would seem to have been offering the leased premises to Saies-Bond; (d) the proposition that lessors of premises that have just been redeveloped should not be permitted to avoid liability for pre-lease misrepresentations by arguing that they were made solely on behalf of the developer; and (e) what he described as ‘enough agency law to reject this argument’.

69 The Tribunal takes into account also the fact that the sale of the property from PDP to Armstrong Jones took place in May 2004, before any of the relevant conversations between Mr Draper and Ms Bond.

70 Its conclusion is that during July and August 2004 Mr Draper had ostensible authority, and possibly also actual authority, to make representations as the agent of Armstrong Jones to Saies-Bond, a prospective tenant of the Centre, regarding all matters of potential relevance to any leasing agreement being negotiated with Saies-Bond.’

43 AJM in its appeal submissions compared the text of para [70] with the following text at para [324], emphasising the last sentence, a passage which appears under the heading ‘S-B’s unconscionable conduct claim’.

‘324 In this instance, as with many of the other acts and omissions involved in the relevant findings of the Tribunal, the conduct relied on by Saies-Bond was that of an individual who, while acting as Armstrong Jones’s agent for the purpose of establishing or managing the Centre, was not employed by Armstrong Jones [sic] The relationship between Mr Draper and Armstrong Jones is outlined above at [14 – 18]. It is clear that, except with respect to his limited role as an agent, initially appointed by Charter Hall, to find tenants for the Centre, his professional activities were independent of Armstrong Jones. There is no evidence to suggest that Armstrong Jones authorised or ratified his making the representation to Ms Bond regarding Harvey Norman.’

44 AJM submits that this conclusion was at odds with the conclusion at para [70]. By finding at [324] that there is ‘no evidence’ of authorisation or ratification, then it was not open to the Tribunal to find that Mr Draper possessed ‘ostensible authority’ from AJM. AJM submitted that the Tribunal misapplied the relevant principles. In any case, AJM submitted that s 10(1), properly construed, only applies to representations made by agents who have the actual authority of the lessor. If that is so, then no contravention could arise, in light of the finding at [324].

45 The question for the Tribunal where s 10(1) is raised, and the representation was made by someone other than the lessor, is whether the other person was ‘acting under [the lessor’s] authority’. The Tribunal chose to cast its factual finding in the traditional language of principal-agency law. The appellant’s submissions have proceeded to dissect the Tribunal’s reasoning by reference to the same language.

46 While it is understandable that lawyers might analyse the relationships in issue by reference to the familiar concepts of agency law, that is not, we think, strictly made necessary by the terms of s 10(1). The section simply asks whether any third person acted under the relevant party’s ‘authority’. ‘Authority’ is not defined in the Act. Of the definitions of authority in the leading dictionaries the following capture, we think, the connotation relevant to the present circumstances:

Oxford English Dictionary Online (2007) :

2. a. Derived or delegated power; conferred right or title; authorization.

b. with inf. Conferred right to do something.

Macquarie Dictionary (1981):

1. the right to determine, adjudicate, or otherwise settle issues or disputes; the right to control, command or determine

2. a person or body with such rights.

47 The Tribunal is simply required therefore to make a finding as to whether a party to the lease alleged to have engaged in the false or misleading representation, in this instance the lessor, had delegated or conferred an ‘authority’ on the representor, here Mr Draper, by its conduct. The classifications of agent’s authority found in the law of agency are helpful in making this assessment but not determinative.

48 As it did before the Tribunal, AJM placed great store in the contractual arrangements under which it purchased the centre. The vendor, PDP, committed itself to delivering a fully tenanted shopping centre for the opening. As far as AJM was concerned, the responsibility for dealing with tenants and complying with the statutory obligations governing the pre-lease process lay with PDP and its agent, McKenzie Hall, and practically in this instance Mr Draper. As far as AJM was concerned it had no legal connection to Mr Draper.

49 In our view, it will rarely be of any importance whether there are contractual terms in the sale document under which the lessor acquired the shopping centre which give the vendor a continuing obligation in relation to finding tenants for the centre.

50 The crucial issue is whether the alleged principal has conducted itself in a way that could reasonably be found to involve a conferral of authority on the representor to make representations binding on it as principal. It is unnecessary on this occasion, we think, to engage in an elaborate examination of this issue.

51 AJM once it became owner of the premises on 25 May 2004 was the only entity capable of entering into a lease. In that capacity it bore responsibility under the RL Act for such obligations under the RL Act as rendering disclosure statements and permitting entry into occupancy of the premises, the latter being the critical act leading to the creation of a statutory lease under the RL Act.

52 Mr Henry referred to the fact that some of the preliminary documents such as the disclosure statement and the agreement for lease were in the name of the previous owner, PDP. He pressed the view, rejected by the Tribunal, that Mr Draper’s principal was PDP and that any representation he made was made on behalf of PDP. As he had before the Tribunal, he referred to the fact that the sale agreement included a promise by PDP to deliver to AJM a fully tenanted shopping centre. In our view there was sufficient evidence for the Tribunal to conclude that AJM took the benefit of Mr Draper’s activities in all these regards. It was well aware of Mr Draper’s role on the site. A prospective lessee would have assumed, reasonably, that Mr Draper was acting with, and under, the authority of the lessor.

53 There was nothing done by AJM to disabuse prospective lessees in this regard. In our view, its conduct conferred ‘authority’ on Mr Draper to make representations of the kind that a letting agent might usually make with a view to procuring tenants for its premises. A potential lessee is entitled, we think, to regard a person:

- who is a professional letting agent

- is the person with whom the lessee must deal, and

- is on a site owned by the lessor without restriction

as a person in whom the lessor has vested authority to make representations on behalf of the lessor.

54 These circumstances more than justify the conclusion reached by the Tribunal at para [70], albeit using the traditional common law language of ostensible authority rather than simply speaking of ‘authority’ within the meaning of s 10(1).

55 Much was made by AJM of the last sentence of para [324] of the Tribunal’s reasons: ‘There is no evidence to suggest that AJM authorised or ratified his making the representation to Ms Bond regarding Harvey Norman.’

56 This statement was made in the course of a discussion as to whether AJM had engaged in unconscionable conduct. Evidence that a lessor had directly authorised the making of a false representation would, of course, count heavily against a lessor when making an assessment of whether the lessor had engaged in unconscionable conduct. That is all this sentence is about. It cannot, fairly, be read in combination (or conflated) with the earlier discussion at para [70], where the s 10(1) point is under notice, so as to produce the conclusion that the Tribunal found that Mr Draper had ‘ostensible’ authority to make representations on behalf of AJM. The language of para [70] is looser and simply locates Mr Draper somewhere along the spectrum of agency law between ‘ostensible’ authority and ‘actual’ authority. In our view there was no need in this case to be any more precise than that.

57 We were referred in argument to two recent Supreme Court cases dealing with apparent authority: McKeand v Thomas [2006] NSWSC 1028 (Campbell J); and Bruce Harvey and Anor v State of New South Wales [2006] NSWSC 1436 (Johnson J). These cases bear the similarity to the present case that there was never any direct contact between the representee and the alleged principal. In both, the alleged principal was found not to have acted in a way which conferred express, implied or apparent authority on the representor. (In McKeand, there was also an examination of conduct on the part of the alleged principal that might have involved ratification.)

58 In Bruce Harvey there was ample evidence to suggest to a person in the position of the representee that the representor, despite what he said, might not have had the authority of his alleged principal. In McKeand the Court was satisfied, having regard to a variety of factors, that the spouse of the representee had not conferred ostensible authority on the representor to encumber her land with an easement. These factors included the recency of the representor’s marriage, the history of his spouse’s sole ownership of the affected land which pre-dated the marriage, the fact that these matters were known to the representee, and most importantly, the absence of any relevant conduct by the spouse.

59 However here there are no markers of the kind of unconventionality present in these cases that might have put a person in the position of Ms Bond on notice. To the contrary, the only person capable of granting a lease (AJM) allowed a person to operate on site, and allowed that person to make the representations on subjects that fell within the normal compass of the role of a letting agent to persons with whom it might enter into a legal relationship.

(2) ‘Reliance’

60 Fact-Finding Process: AJM’s submission is that the Tribunal erred in its findings of fact. It did not have sufficient regard to a number of factors: in particular, Ms Bond’s failure to refer to the representations as material in the lessee’s disclosure statement; her receipt of independent advice before completing the statement; and her failure to take any action on the misrepresentation until many months after she moved into occupation of the premises.

61 It is well established that appellate bodies should not lightly interfere with the finding of facts made by trial courts or tribunals which have had the advantage of having all the evidence fully ventilated before them, hearing from the witnesses and hearing their cross-examination.

62 There is no error of law if there is probative evidence for a finding of fact. This is so even though the evidence may be thought to be weak or the weighing of the evidence unconvincing. See generally Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 156-157; Bruce v Cole (1998) 45 NSWLR 163 at 188.2-189.5 and Skiwing (above) at [52]-[53] per Spigelman CJ.

63 The question whether there is evidence of a particular fact is a question of law. But where there is evidence of the fact, the question whether that evidence ought to be accepted in whole or in part, or ought to be accepted as sufficient to establish the fact is itself a question of fact and not a question of law: see Azzopardi at 155 per Glass JA, citing relevant authorities.

64 Whether facts as found answer a statutory description or satisfy statutory criteria will very frequently be exclusively a question of law: Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at 450 per Gleeson CJ, Gummow, Callinan JJ, citing relevant authorities. Their Honours also noted that when a statute uses words according to their common understanding (for example, ‘insulting’) or where the question posed is largely one of degree upon which different minds may take different views, then the question may simply be one of fact and involve no question of law.

65 Proof of Reliance: The parties agreed that the following statements drawn from the law developed in connection with the tort of deceit were applicable in cases arising under s 10.

66 The usual principle is the plaintiffs have the onus of proving that the representations they complain of were material, and that they were induced to act on them: Holmes v Jones (1907) 4 CLR 1692 per Isaacs J at 1710. Depending on the circumstances of the case, the onus may be a heavy one to show that the representation, even though false, was an operative one: Potts v Miller (1940) 64 CLR 282 at 296 per Dixon J.

67 Equally the representation may be of a kind where, in the circumstances of the case, it is reasonable to infer that it would have been an operative one. This point is made in Gould v Vaggelas (1984) 157 CLR 215 at 238 per Wilson J:

‘At the same time, one can readily understand why it is in cases of deceit that a tribunal whose duty it is to find the facts may require a defendant to make some answer to the case that is put against him. Such cases are of a kind where in the general experience of mankind the facts speak for themselves. Where a plaintiff shows that a defendant has made false statements to him intending thereby to induce him to enter into a contract and those statements are of such a nature as would be likely to provide such inducement and the plaintiff did in fact enter into that contract and thereby suffered damage and nothing more appears, common sense would demand the conclusion that the false representations played at least some part in inducing the plaintiff to enter into the contract. However, it is open to the defendant to obstruct the drawing of that natural inference of fact by showing that there were other relevant circumstances. Examples commonly given of such circumstances are that the plaintiff not only actually knew the true facts but knew them to be the truth or that the plaintiff either by his words or conduct disavowed any reliance on the fraudulent representations. It is entirely accurate to speak of an onus resting on a defendant to draw attention to the presence of circumstances such as those I have described in order to show that the inference of the fact of inducement which would ordinarily be drawn from the fraudulent making of a false statement calculated to induce a person to enter into a contract followed by entry into that contract should not in all the circumstances be drawn. But it is no more than an evidentiary onus – an obligation to point to the existence of circumstances which tend to rebut the inference which would ordinarily be drawn from the primary facts. When all the facts are in, the fact-finding tribunal must determine whether or not it is satisfied on the balance of probabilities that the misrepresentations in question contributed to the plaintiff's entry into the contract. The onus to show that they did is a condition precedent to relief and rests at all times on the plaintiff.’

68 To similar effect, see Brennan J at 250-251:

‘An inference of inducement may be drawn when a party enters into a contract after a material representation has been made to him, but it is no more than an inference of fact and it is settled law that such an inference may be rebutted by the facts of the case: Holmes v. Jones (1907) 4 CLR 1692, at pp 1707,1711; Smith v. Chadwick (1884) 9 App Cas 187, at p 196. The tribunal of fact may infer that such a material misrepresentation induced the representee to enter into the contract and the fact that there were other inducements to him to do so does not necessarily preclude the drawing of that inference. The relevant question for the tribunal of fact to answer on all the evidence is whether the misrepresentation alone, or with or notwithstanding other things that accompanied it, was a real inducement, or one of the real inducements to the plaintiff to do whatever caused his loss …’.

69 AJM also drew attention to the statement of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319, dealing with a claim under the Trade Practices Act asserting that certain spoken words constituted misleading and deceptive conduct. His Honour referred to the frailties of human memory, the danger of reconstruction and the effect that subsequently intervening disputes and litigation may have. He referred to the plaintiff’s obligation to prove to the reasonable satisfaction of the court each element of the cause of action, and the particular difficulties of proof that surround spoken words. He referred to the value of some reliable contemporaneous record or other satisfactory corroboration.

70 Pre-Lease Documentation: In the course of the negotiations, Mr Draper provided S-B with documentation such as the shopping centre lay-out and promotional material. When she indicated interest in principle he provided her with a lease advice summary. On 29 July he provided her with the Lessor Disclosure Statement required under s 11 of the Act. In turn on 4 August 2004 S-B provided him with the Lessee Disclosure Statement required under s 11 of the Act.

71 Part 2 of the RL Act is headed ‘Before the lease is entered into’. There are ten sections in the Part. The section headings convey their purpose: copy of lease and retail tenancy guide to be provided at negotiation stage (s 9); right to compensation for pre-lease misrepresentations (s 10); lessor’s disclosure statement (s 11); lessee’s disclosure statement (s 11A); lessee not required to pay undisclosed contributions (s 12); costs before fit-out (s 13); tenancy fit-out statement or guide (s 13); key-money and lease preparation expenses prohibited (s 14); lease documentation (s 15); minimum 5 year term (s 16).

72 AJM’s submissions drew attention to the disclosure statement regime. Section 11(1) provides that a ‘disclosure statement is a statement in writing that contains information, and is accompanied by the material, that is contained in or required to complete or accompany the form of disclosure statement set out in the prescribed form’. Sections 11(2) and (3) deal with the consequences that flow if a lessee is given a false or misleading disclosure statement:

‘(2) If a lessee was not given a disclosure statement as required by subsection (1) or if the disclosure statement that was given to the lessee was incomplete or contained information that at the time it was given was materially false or misleading, the lessee may terminate the lease by notice in writing to the lessor at any time within 6 months after the lease was entered into, unless subsection (3) prevents termination.

(3) The lessee cannot terminate the lease under this section on the ground that the disclosure statement is incomplete or contains information that is materially false or misleading if:

(a) the lessor has acted honestly and reasonably and ought reasonably to be excused for the failure concerned, and

(b) the lessee is in substantially as good a position as the lessee would have been if the failure had not occurred.’

73 The prescribed form for the lessor disclosure statement starts with the following warning to lessees:

‘ Advice to lessees

1 Before signing agreements to a lease or leases, lessees should ensure they fully understand the documents.

2 If there is any doubt, lessees should seek independent legal advice.’

74 The lessor is then required to provide information as to many matters. The list includes a heading ‘Details as to agreements or representations’, followed by the words:

‘Give details of any agreements between lessor and lessee, or representations made by lessor or lessee including those relating to exclusivity or limitations on competing uses.’

75 Mr Draper only referred in the lessor’s disclosure statements to agreements that he had obtained from the lessee. They went to such matters as fit-out and payment of the lessor’s legal costs and disbursements in relation to the lease. He made no mention of any representations, even though in the nature of his work he necessarily would make many representations designed, at the least, to influence a prospective tenant to take up space.

76 The final part of Part 1 is headed ‘Appendix to Part 1 of Schedule 2’. It begins as follows:

‘ Information for the lessee to consider when entering into a retail shop lease

Before signing a lease:

You should have detailed discussions with the lessor/agent and also seek advice from business associations, your solicitor and your accountant. Also consult your local Council about any regulations, permitted use or development applications affecting the shop.

Information on these topics is included in the retail tenancy guide.

Ensure that all agreements arrived at with the lessor are included in the lease. Documentation is critical to avoiding and managing disputes about the lease.’

77 It then has the following headings: ‘Rent – be clear about the following issues:’; ‘Lease establishment – check:’; ‘The premises – you need to be sure that:’; ‘Outgoings and expenses – you need to understand:’; ‘Outgoings and expenses – you need to understand:’; ‘When you want to sell the business’; and ends with the heading ‘General’.

78 Relevantly, under the heading ‘Lease establishment – check:’ appear the words:

‘Whether statements you have relied on in agreeing to the lease have been documented in the Lessee’s Disclosure Statement, so as to avoid disagreements later.’
And under the heading ‘General’ appear the following:
‘Check with your accountant the most tax effective way to structure the payment of rent, fit-out costs and GST.

Make sure that all negotiated agreements are written into the lease.

Inspect the property and take notes and photographs prior to moving in.

Section 11A of the Retail Leases Act 1994 requires a lessee’s disclosure statement to be provided to the lessor within 7 days (or any agreed further period) of the lessee receiving the lessor’s disclosure statement. The lessee may be liable to a penalty for an offence under that Act if the lessee’s disclosure statement is not provided.’

79 The lessee’s disclosure statement is Part 2 of the prescribed form for the lessor’s disclosure statement. It is not a freestanding document. The lessee is to sign off in respect of the matters listed in Part 2 and return that Part signed, and the whole document within 7 days.

80 The Part 2 statement contains six points to which the lessee is to address. Points 3, 5 and 6 are relevant to this case. Point 3 requests the lessee to state whether it sought ‘independent advice’ in respect of the ‘commercial terms contained in the lessor’s disclosure statement and the obligations contained in the proposed retail shop lease’.

81 At points 5 and 6 the subject of pre-lease representations is dealt with:

‘5. In entering into the retail shop lease, the lessee has relied on the following statements or representations made by the lessor and the lessor’s agents:

[BLANK SPACE]

Note. Matters such as agreements or representations relating to exclusivity or limitations on competing uses, sales or customer traffic should be detailed.

6. Apart from the statements or representations set out above, no other promises or representations, warranties or undertakings (other than those contained in the lease) have been made by the lessor to the lessee in respect of the premises or the business to be carried out on the premises.’

We note that courts have usually given the words ‘in respect of’ or ‘with respect to’ a very wide connotation: see, for example, Rogers v Wentworth (1986) 7 NSWLR 88 at 92 per Young J.

82 Independent Advice: Ms Bond sought independent advice from a solicitor, Ms Maria Mico, on 2 August 2004, received the advice on 3 August 2004 (see ts. 23 May 2006, pp 39-40, 44) and signed Part 2 on 4 August 2004 and returned the document to Mr Draper. S-B marked point 3 so as to indicate that it had received independent advice. S-B did not show any representations or agreements in the blank space at point 5, this notwithstanding the clear warning given under the heading ‘Lease establishment – check:’ set out above.

83 As to this matter AJM drew attention to the statement of Brennan J in Gould v Vaggelas at 251, following on from the statement of general principles quoted above:

‘A more difficult question is whether the inference of inducement should have been drawn in the light of the independent advice given to Mrs Gould …’.

84 Ms Bond’s Evidence: At p 58, transcript of hearing 23 May 2006, the issue of reliance on the Harvey Norman representation was raised:

‘Q. Do you agree with this, that you would have entered into the lease and the agreement for lease whether or not Harvey Norman was a tenant?

A. No, having Harvey Norman there with the amount of advertising they do was critical. Because I was already taking a much bigger shop than I ever planned to.’

85 The issue of what was said by Mr Draper in relation to Harvey Norman on 16 July was canvassed at p 61:19 and following:

‘Q. You knew when you signed this lease that Harvey Norman may or may not be a tenant during the term of your lease, didn’t you?

A. No, I was told Harvey Norman was the tenant going in upstairs and that they were taking 3000 square metres. There wasn’t any choice about it may or may not, I said, “Who’s going in?” and I got writing when Tony told me who it was. I put in little notes.

Q. You made no note on the lease document, did you, that said Harvey Norman must be a tenant during the term of this lease?

A. No, I didn’t have to because it was already a tenant in the centre. All those people that had signed up were already tenants.

Q. I suggest to you that you knew--

HIS HONOUR: Q. Is that your evidence that Harvey Norman was a tenant, that they actually moved in?

A. No. I’d been told that they were signed up.

HIS HONOUR: Do be careful of your terminology. Even the terminology “signed up”, as Mr Henry has pointed out, can mean different things. It can indicate an intention to take a lease, it can indicate they’ve signed a disclosure statement, it can mean signed a lease, it can mean signed an agreement for lease.

A. Right.

Q. I must say this is going over the same ground though I understand why. But I’m just requesting that you’re precise in your terminology in answering some of these questions because some of that terminology is crucial.

A. Okay. What I’m meaning is that I asked who was going in as tenants, who’d signed up, and Tony Draper gave me the list that everybody’s got a copy of. Almost the first one was Harvey Norman 3000 square metres. Then I carried on writing.

Q. When you say gave you a list, he gave you a document or he listed them?

A. No, sorry, verbally and I made the notes.

Q. Please be precise.

A. Okay, I’m sorry about that.

Q. That’s a very important difference, isn’t it? So your evidence is, as you said in your affidavit and in cross-examination, that you were told that Harvey Norman would be a tenant and I repeat the phrase “signed up” doesn’t add very much to that unless you can define what you mean by “signed up”. “Signed up” can be just a metaphor for saying you understood that they had agreed to come in, that there were negotiations taking place or it can mean more than that.

A. Right. For me I believed that all of those people that he gave me the names of were going to be moving in. That’s what it meant to me. It didn’t mean that it was a preliminary signing up of anything.

HENRY: Q. Ms Bond, the names to which you’re referring, are these the names recorded at exhibit 1 page 8, your hand note of a conversation?

A. Yes, that’s right.

Q. That’s a handwritten note of a conversation you say you had with Mr Draper on 16 July 2004. Do you agree?

A. Yes, that’s right.

Q. You signed the disclosure statement on 4 August 2004, do you agree?

A. Yes.

Q. Some weeks after you’d had the conversation with Mr Draper that is the subject of your hand note. Do you agree?

A. Ah hmm.

Q. You then signed the lease and the agreement for lease over a month after you had had the conversation with Mr Draper.

A. Right.

Q. Do you agree?

A. Yes.

Q. When you signed the lease and the agreement for lease you fully understood that the names of the prospective tenants that Mr Draper had provided you with on 16 July 2004 was nothing more than a list of possible tenants at the centre. Isn’t that right?

A. No, not at all. If they were - if that had been put to me--

Q. You’ve answered the question.

A. No, I would like to say because I was only given the choice of one shop.

HENRY: Would your Honour mind just--

HIS HONOUR: Q. Just a moment. You knew the names of the prospective tenants were only possible tenants and you say not at all is your answer to that.

163 In our view there was ample material before the Tribunal to enable it to make the finding it did. Any reasonable assessment would conclude, we consider, that AJM did very little to fill the vacancy in the months that followed.

164 As to the estimation of the amount, the Tribunal, we think, did the best it could with the material available to it: see further O’Neill v Medical Benefits Fund and FAI General Insurance Co Ltd v RAIA Insurance Brokers Ltd (1992) 108 ALR 479, 508. It was clear that there was dubiousness on both sides as to the estimate provided by Mr Burdekin as to the continuing rental potential of the space. Instead the Tribunal was guided, as we see it, by the contemporary letters of offer furnished by AJM which showed that the market considered an amount in the range of $80,000 p.a. to be the right price.

(6) Leave to Extend to Merits, and Possible Orders

165 The application for leave to extend to the merits is granted, with a view to making final orders in substitution for those made by the Tribunal.

166 In our view AJM’s claim must be upheld and S-B’s claims dismissed. AJM is entitled to an order for damages broadly along the lines that it has sought. The Tribunal’s ruling on the duty to mitigate should stand.

167 The appropriate course is for AJM to prepare draft minutes of order based on the following observations.

168 As to Period 1 (the period of occupation): AJM is entitled to be compensated for the forgone rent, and other payments by way of outgoings, the promotions levy and the GST. The methods of calculation provided to the Tribunal at hearing on 21 June 2006 and in the document handed up at the hearing before the Appeal Panel appear to be appropriate. The principal sum appears to be satisfactory.

169 As to Period 2 (5 September 2005 to 15 May 2006): There should be a deduction, reflecting the failure to mitigate. This deduction is $60,000.00, as assessed by the Tribunal, and with which we agree. The principal sum should be reduced by that figure.

170 As to Period 3 (16 May 2006 to 4 October 2009): The principal sum, based on the difference between an estimated future rent of $80,000 and the amount agreed under the lease, is satisfactory.

171 We have left out of account, so far, the amount claimed by way of interest. We note that the interest claimed (9%) is based on the scheduled Court rate. We would benefit from short submissions on whether the 9% should simply be attached to the final amount of the order, and apply henceforth; or whether it is appropriate to have it operate in the stepped way proposed as from the time of the first default.

172 We accept that the costs of reletting are claimable under ordinary principles, and those costs might include agent’s commission and a rent-free period allowed to the new tenant. However, actual expenses of this kind had not been incurred at the time of hearing; and we have not located any further evidence on this matter. The lessor may wish to make further submissions as to whether the amounts claimed ($9,600 and $20,000 respectively) are pressed, and supply any relevant evidence.

173 We also note that no consideration has been given to a discount for accelerated compensation. The order is being made approximately two years before the lease would otherwise have expired, and perhaps some discount should be included to take account of the fact.

174 We will not enter a final order as to damages immediately.

Orders

1. Appeal allowed.

2. Orders under appeal set aside.

3. In substitution the following orders are made:

(A) Proceedings 055169

(1) Applicant/Lessor’s retail tenancy claim upheld.

(2) Lessee to pay the Lessor damages in an amount to be determined.

(B) Proceedings 065015

(1) Applicant/Lessee’s retail tenancy claim dismissed.

(2) Applicant/Lessee’s unconscionable conduct claim dismissed.

4. Damages. As to the determination of the amount of damages under Order 3(A)(2), the Applicant/Lessor to file and serve draft minutes of order and any submissions within 7 days. The Respondent/Lessee to file any submissions in reply within 7 days. Tribunal to proceed to make the order on the papers under s 76 of the Administrative Decisions Tribunal Act 1997 unless Tribunal decides otherwise following application by a party.

5. Costs. Applicant/Lessor shall file and serve any submissions within 14 days after entry of the final order under Order 3(A)(2). The Respondent/Lessee shall file any submissions within a further 14 days. Tribunal to make any order on the papers under s 76 of the Administrative Decisions Tribunal Act 1997 unless Tribunal decides otherwise following application by a party. If there be no application for costs filed in accordance with this Order, no order for costs.