Coventry Village Pty Ltd as Trustee for the Coventry Square Unit Trust v Gourmet and Allied Foods Pty Ltd

[2021] WADC 40

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   COVENTRY VILLAGE PTY LTD as Trustee for THE COVENTRY SQUARE UNIT TRUST -v- GOURMET AND ALLIED FOODS PTY LTD [2021] WADC 40

CORAM:   LEVY DCJ

HEARD:   20-28 JULY 2020

DELIVERED          :   7 MAY 2021

FILE NO/S:   CIV 2135 of 2017

BETWEEN:   COVENTRY VILLAGE PTY LTD as Trustee for THE COVENTRY SQUARE UNIT TRUST

Plaintiff

AND

GOURMET AND ALLIED FOODS PTY LTD

First Defendant

SIMON BARRY SATTERTHWAITE

Second Defendant

GOURMET AND ALLIED FOODS PTY LTD

Plaintiff by counterclaim

COVENTRY VILLAGE PTY LTD

SIMON BARRY SATTERTHWAITE

Defendant by counterclaim

Catchwords:

Breach of lease agreement - Repudiation and termination of lease - Whether acknowledgement of debt created new agreement - Mitigation of loss - Damages under terms of lease

Trade practices - Australian Consumer Law - Misleading or deceptive conduct - Whether lessee induced to enter into lease by false representations made by agent of lessor - Future matters - Whether a Trust can make a representation - Whether liability for false representation made by former trustee assigned to subsequent trustee - Whether representation material - Whether express terms of lease negated reliance upon earlier representations - Unconscionable conduct - Damages

Legislation:

Australian Consumer Law, s 18, s 21, s 29, s 30, s 34 of Sch 2
Limitations Act 2005 (WA), s 81
Trade Practices Act 1974 (Cth), s 51AB, s 52, s 53, s 55A, s 82
Trustees Act 1962 (WA), s 10, s 70

Result:

Plaintiff's claim against First Defendant and Second Defendant allowed
Defendants counterclaim dismissed

Representation:

Counsel:

Plaintiff	:	Ms M J Watson
First Defendant	:	In person
Second Defendant	:	In person
Plaintiff by counterclaim	:	In person
Defendant by counterclaim	:	In person

Solicitors:

Plaintiff	:	Melanie Watson
First Defendant	:	Not applicable
Second Defendant	:	Not applicable
Plaintiff by counterclaim	:	In person
Defendant by counterclaim	:	Melanie Watson & In person

Case(s) referred to in decision(s):

AGC Industries Pty Ltd v Karara Mining Ltd [2019] WASC 140

Ali v Twiyo Trading Trust [2018] QCATA 67

Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153

Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304

Chapman v Luminis (No 4) [2001] FCA 1106; (2001) 123 FCR 62

Clark Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367

Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 169 CLR 594

Coventry Village Pty Ltd v R-Australia Group Pty Ltd [No 2] [2016] WADC 99

Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158

Houghton v Arms [2006] HCA 59; (2006) 225 CLR 553

James Hardie Industries NV v Australian Securities and Investments Commission [2010] NSWCA 332

Jenyns v Public Curator [1953] HCA 2; (1953) 90 CLR 113

Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44

Luxer Holdings Pty Ltd v Glentham Pty Ltd [2007] WASCA 209

Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494

Oraka Pty Ltd v Leda Holdings Ltd [1997] FCA 297; (1997) ATPR 41-558

Pappas v Soulac Pty Ltd [1983] FCA 3; (1983) 50 ALR 231

Pegrum v Fatharly (1996) 14 WAR 92

Petera Pty Ltd v EAJ Pty Ltd [1985] FCA 277; (1985) 7 FCR 375

Pritchard v Racecage Pty Ltd [1997] FCA 27; (1997) 72 FCR 203

Raffles Corporation Pty Ltd v Cech [2001] QSC 129

Re Ku Ring Gai Co Operative Building Society (No 12) Ltd [1978] FCA 50; (1978) 36 FLR 134

RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2010] WASCA 128

Rosebridge Nominees Pty Ltd v Commonwealth Bank of Australia [No 6] [2014] WASC 203

Serventy v Commonwealth Bank Of Australia [No 2] [2016] WASCA 223

Shevill v The Builders Licensing Board (1982) 149 CLR 620

Sternberg v The Queen [1953] HCA 15; (1953) 88 CLR 646

Sykes v Reserve Bank of Australia (1998) 88 FCR 511

Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389

Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd [2005] WASCA 174

Watson v Foxman (1995) 49 NSWLR 315

LEVY DCJ:

Part 1: An overview of the case

1. The plaintiff, Coventry Village Pty Ltd, as trustee for the Coventry Square Unit Trust (the Trust), operated a shopping centre known as Coventry Village.  The defendants, Gourmet and Allied Foods Pty Ltd as first defendant and Simon Barry Satterthwaite (Mr Satterthwaite) as second defendant, operated a business at Coventry Village from a shop leased from the plaintiff (Shop 248).  The plaintiff's claim relates to a lease agreement made between the parties for Shop 248 (the Lease).  The Lease for Shop 248 was made in 2011 and commenced on 1 March 2012.[1]  The Lease was to run for a period of five years, expiring on 28 February 2017.  The plaintiff claims that the defendants breached the Lease by failing to pay debts due and payable pursuant to the Lease.

   [1] Exhibit 10, Lease made between the plaintiff and the defendants in relation to Shop 248, page 41.

2. The plaintiff claims against the first defendant as lessee and second defendant as guarantor and indemnifier for the debt due under the Lease for Shop 248 as at the date of termination, as well as damages for the moneys that would have been payable under the Lease from the date of repudiation of the Lease to the date of its expiration, less moneys received from others for the use of Shop 248 during that period.  The plaintiff also claims interest on the debt and damages at 16% per annum in accordance with the terms of the Lease.

3. The plaintiff also claims it is entitled to be indemnified by the defendants for all loss, damage, costs and or expenses suffered or incurred by the plaintiff by reason of the first defendant's breach of the Lease.  This includes a claim for the cost of cleaning, clearing and making good Shop 248 in readiness for use and occupation by other lessees.

4. The defendants admit part of the debt owed, but claim that a subsequent agreement made between the parties terminated the Lease for Shop 248 and subsumed the balance of the debt claimed by the plaintiff and barred the plaintiff from any future claims against the defendants (the New Agreement).

5. There is no dispute that on 12 April 2013 the parties signed a document titled 'Acknowledgement of Debt'.[2]  Nor is there any dispute that at the time of the signing of the Acknowledgement of Debt the defendants owed the plaintiff the sum of $74,039.75, a component of which included unpaid rent and outgoings owed by the defendants to the plaintiff pursuant to the Lease.[3]  The issue in relation to the plaintiff's claim centres upon whether the parties, as asserted by the defendants, had in effect created a new agreement whereby they agreed that the Lease would be terminated and that all past and future debts under the Lease would be subsumed in the New Agreement.  The defendants contend that the Acknowledgement of Debt was part of, and formalised, the New Agreement which took effect on 12 April 2013.

   [2] Exhibit 11.

   [3] ts 132, Satterthwaite.

6. The defendants have also, as pleaded, brought a counterclaim against the plaintiff.  (As is discussed below, during the hearing a further issue was raised as to whether the defendants were in fact counterclaiming against the original trustee, Coventry Square Pty Ltd, not the plaintiff).  Nonetheless, the pleaded counterclaim alleges that the Trust made various representations to the defendants that induced them to enter into the Lease.  The defendants claim that various oral and written representations made by the plaintiff were false.  The oral representations are statements allegedly made by the Trust's agents or representatives to the defendants.  The written representations were made in a brochure provided to them (the Brochure Representations) and in an email (the Preleasing Representation).  The defendants claim the plaintiff, in making the false representations, breached various provisions of the Trade Practices Act 1974 (Cth) (the TPA) or, alternatively, the Competition and Consumer Act 2010 (Cth) known as the Australian Consumer Law (ACL).[4]

   [4] Substituted Defence of the First and Second Defendants and Counterclaim of the First and Second Defendants dated 14 November 2019 (Defence and Counterclaim) par 31.

7. The defendants claim that, in reliance upon the various false representations, they entered into the Lease at the shopping centre which led them to suffer loss and damage.  The loss and damage pleaded by the defendants includes trading losses as well as claims for other moneys either lost or owed to third parties.

8. The plaintiff denies the counterclaim and raises multiple issues in defence to the counterclaim.  They include:

   (a)The defendants' counterclaim is bad in law in that it alleges that 'the Trust' made the representations,[5] but a trust cannot, by law, make a representation.

   (b)Save for one representation, (about a microbrewery), the representations were not made as alleged.

   (c)In relation to the representation with respect to the microbrewery, there were reasonable grounds for making the representation, being a representation with respect to a future matter.[6]

   (d)Furthermore, if the other representations were made, they were not made by the plaintiff or its agents or representatives (given that they were allegedly made before the plaintiff became trustee of the Trust).

   (e)If the representations were made, they were not relied upon by the defendants.

   [5] Substituted Defence of the First and Second Defendants and Counterclaim of the First and Second Defendants dated 14 November 2019 (Defence and Counterclaim) pars 22, 23, 24, 25, 31 and 33.

   [6] TPA s 51(A).

Part 2: The Parties

The plaintiff - Coventry Village Pty Ltd

1. As noted at [1] above, the plaintiff, as trustee for the Trust, operated a shopping centre known as Coventry Village. The shopping centre, which was also originally known as Coventry Square Markets, is located on land situated at 243 ‑ 53 Walter Road, Morley, Western Australia. The centre started trading in about November 2011.[7]

   [7] ts 96, Holtham.

2. Prior to the plaintiff becoming trustee of the Trust, the trustee of the Trust was Coventry Square WA Pty Ltd.  The plaintiff became trustee of the Trust on 15 October 2012.[8]

   [8] Exhibit 5, Deed of Variation of Coventry Unit Trust.

3. On 8 February 2013, the plaintiff became the registered proprietor of the land upon which the shopping centre is located.

4. The plaintiff's directors relevantly included:

   •Jay Daniel Poland, a director of Coventry Village from the date of its registration as a company on 2 October 2012.[9]

   •Gregory Poland, also a director from the date of its registration as a company until he ceased being a director in 2016.[10]

   •Jennifer Poland, who was also a signatory to the Lease.

   •Michael Brooksby Holtham, one of the original purchasers of the land upon which the shopping centre was developed.  He was involved in redeveloping the site from about late 2010 to early 2011.[11]

   [9] Exhibit 1, ASIC summary extract relating to Coventry Village Pty Ltd and ts 182, J D Poland.

   [10] ts 182, J Poland.

   [11] ts 96, Holtham.

5. The plaintiff also employed other people involved in the planning and development of the site.  This included James (Jim) William Sheridan.  Mr Sheridan acted as a sales or marketing assistant to Mr Jay Poland.  It was his job to help promote and 'sell' leases to prospective tenants of the shopping centre.

The defendants - Gourmet and Allied Foods and Barry Simon Satterthwaite (also known as Sam Satterthwaite)

1. Gourmet and Allied Foods Pty Ltd is a company incorporated under the Corporations Act 2001 (Cth). From 2009 Mr Satterthwaite was the sole director of that company.[12]

   [12] ts 154, Satterthwaite.

2. By 2010 Mr Satterthwaite was experienced in business.  He started operating businesses in the early 1990s.[13]  Mr Satterthwaite kept up‑to‑date with business practices and opportunities.  He subscribed to a service known as Business News Daily which provided information about business in Australia.  He had subscribed to the service and read its news releases since the late 1990s.[14]

   [13] ts 445, Satterthwaite.

   [14] ts 445, Satterthwaite - he also had started operating businesses in the early 1990s.

3. By the middle of 2010 Mr Satterthwaite was involved in a number of businesses.  Gourmet and Allied Foods, of which Mr Satterthwaite was a director and had been since about 25 July 2008, was already trading under the business name Perth Online Gourmet.[15]  Perth Online Gourmet was a gourmet produce business selling meat, seafood, poultry and game, as well as other gourmet products.[16]

   [15] ts 305, Satterthwaite.

   [16] ts 292, Satterthwaite.

4. Mr Satterthwaite was also involved with two other franchise businesses.  One was a business called Mrs Fields.  Mrs Fields is an American franchise that sells coffee, cookies and toasties and the like.[17]  The other was New Zealand Natural, a business that sold take‑away ice‑cream confectionary.[18]  Mr Satterthwaite had previously sold business franchises.

   [17] ts 293, Satterthwaite.

   [18] ts 206, Satterthwaite.

5. Gourmet and Allied Foods held the Western Australian master franchise for New Zealand Natural.[19]  Mr Satterthwaite was also the area developer in Western Australia for Mrs Fields.[20]  In that role, it was his job to find and source new locations and new franchisees to help grow the brand in Western Australia.[21]

   [19] ts 132, Satterthwaite.

   [20] ts 132 and ts 306, Satterthwaite.

   [21] ts 482 Benefield.

6. Mr Satterthwaite's job involved selling and developing franchises under the two brands.  His role was not necessarily to operate the franchises from shops.[22]

   [22] ts 124 - ts 125.

Part 3: The plaintiff's claim for the debt due under the Lease for Shop 248

The defendants' initial interest in the shopping centre

1. Sometime in 2010, when the shopping centre was in its early stages of development, Mr Satterthwaite identified it as a place that potentially suited his business interests.  Those interests included both developing or offering a new business operating a combined Mrs Fields and New Zealand Natural franchise, as well as a separate shop from which he could operate a retail outlet for Perth Online Gourmet.  He was also initially interested in developing a restaurant at the centre, but that did not proceed.[23]

   [23] ts 306, Satterthwaite.

2. Consequently, the defendants were interested in leasing two separate premises at the shopping centre.  The defendants identified two shops as being suitable for their needs.  Shop 248 was suitable for the combined Mrs Fields and New Zealand Natural franchise.  Shop 193 was suitable for Perth Online Gourmet's retail outlet.

3. Prior to agreeing to take the Lease, Mr Satterthwaite did his own research about the proposed shopping centre development.  He read a number of articles about it and spoke to other people about it.[24]  He also had access to lawyers at the time.  He also attended the development site, and on his evidence, spoke to representatives of the plaintiff about the development.

The meeting with Mr Sheridan at the shopping centre site in July or August 2010

[24] ts 446, Satterthwaite.

1. According to Mr Satterthwaite, in July or August 2010, he and his mother-in-law, Mrs Valerie Toms, met with Mr Sheridan at what was then the development site for Coventry Square Markets.

2. In his evidence, Mr Satterthwaite said that at this first meeting with Mr Sheridan he told Mr Sheridan about his interest in leasing two shops.

3. According to Mr Satterthwaite, he informed Mr Sheridan that he was the master franchisor for New Zealand Natural and also the area developer for Mrs Fields.  He told Mr Sheridan that both of these franchises relied on foot traffic and impulse buying.  He told Mr Sheridan that high foot traffic was essential for these business to be viable.  He said that he explained that these sorts of franchises were typically owner operated businesses, and although he did not then have a franchisee, he was going to advertise to find one.

4. Mr Satterthwaite also said that he informed Mr Sheridan that before he could commit to a lease he would need to find a franchisee.

5. According to Mr Satterthwaite, at the first meeting he had with Mr Sheridan, Mr Sheridan made various representations to him about Coventry Square Markets and specifically Shop 248. The defendants claim that the representations were false and misleading and ultimately induced them to enter into the Lease. This issue and the alleged representations are considered in detail at [164] - [423] below.

6. Mr Satterthwaite's intention at that stage was to have a dual franchise involving both New Zealand Natural and Mrs Fields.  In order for Mr Satterthwaite to get approval to develop a Mrs Fields franchise in Western Australia, he was required to put a proposal to the master franchisor in Australia, Mr Andrew Benefield.  The same process was followed with respect to New Zealand Natural.  He put a proposal to both New Zealand Natural and Mrs Fields.  They both agreed to his proposal to develop a dual franchise involving both businesses.

7. The plaintiff provided disclosure statements to the defendants in relation to the proposed tenancies of Shop 248[25] and Shop 193.[26]  Both of the disclosure statements were dated 27 July 2010 and were signed by Mr Jay Poland as one of the plaintiff's directors.  They were also signed and acknowledged by the second defendant on 16 August 2010.

   [25] Exhibit 28, Disclosure Statement relating to Shop 248.

   [26] Exhibit 29, Disclosure Statement relating to Shop 193.

8. The disclosure statements in relation to both Shop 248 and Shop 193 disclosed, amongst other things, that the retail classifications of the current tenants included: 'Shops, fresh produce, eateries and microbrewery/tavern'.[27]

   [27] Exhibit 28, part A; Exhibit 29, part A.

9. In his evidence, Mr Satterthwaite acknowledged that he received the disclosure statements.

10. According to Mr Satterthwaite, in order to successfully advertise and sell the Mrs Fields/New Zealand Natural combination franchise, it was essential that he had a lease of suitable premises in place before he could advertise to sell the franchise.  Consequently, to facilitate this process, he signed the Agreement for Lease of Shop 248.  This enabled him to proceed to advertise to secure a franchisee.[28]

    [28] ts 306, Satterthwaite.

11. The parties entered into a deed of agreement for lease in relation to Shop 248 dated 16 August 2010 (Agreement for Lease).[29]  Pursuant to the Agreement for Lease, the defendants agreed to take a lease of Shop 248 at the shopping centre, then known as Coventry Square Markets.

The Lease (Shop 248)

[29] Exhibit 9, Agreement for Lease in relation to Shop 248, Coventry Square Markets.

1. The parties subsequently entered into the Lease for Shop 248 for a term of five years, commencing on 1 March 2012 and expiring on 28 February 2017 (Lease for Shop 248).[30]  Mr Satterthwaite signed the Lease on behalf of the first defendant, and personally as guarantor for the first defendant.  The Lease was signed by two of the plaintiff's directors, Mr Gregory Poland and Mr Jay Poland.

   [30] Exhibit 10, Lease for Shop 248.

2. Mr Satterthwaite acknowledged that he signed the lease, but said that he believed it would not be enforced against him.[31]  According to Mr Satterthwaite, there was some underlying understanding or agreement that it would not be enforced if he were unable to secure a tenant.  Mr Satterthwaite also said that the plaintiff knew that he intended to assign the Lease to the new franchisee.

   [31] ts 295, Satterthwaite.

3. It is of note that the defendants did not plead that there was any underlying agreement or underlying term of the Lease, nor that the Lease was conditional upon the defendants finding a franchisee for Shop 248 and assigning the Lease to the new franchisee.  Nor did Mr Satterthwaite apply to amend his pleadings to add this as part of his defence.  In any event, whatever Mr Satterthwaite's beliefs were about whether the Lease was conditional or whether it would be enforced by the plaintiff, there is no doubt that it was enforced.  Nor does any of the surrounding evidence in the case support Mr Satterthwaite's contentions or belief that it was conditional.  Mr Satterthwaite's beliefs were, at best, wishful thinking.

1. At around the same time as entering into the Lease Shop for 248, the parties also entered in a lease for Shop 193.  Again Mr Satterthwaite signed the Lease on behalf of the first defendant and personally as guarantor for the first defendant.  Again the Lease for Shop 193 was signed by two of the plaintiff's directors, this time Ms Jennifer Poland and Mr Jay Poland.

The terms of the Lease (Shop 248)

1. The terms of the Lease, which are not in dispute between the parties, included:

   (i)the first defendant would pay rent to the plaintiff being $62,400 per annum plus GST;[32]

   (ii)the rent was payable by equal monthly payments of $5,200 plus GST, in advance on the first day of each month;[33]

   (iii)interest was set at 16% per annum on any monies [sic] owing from the due date of payment and payable upon demand to the plaintiff;[34]

   (iv)the first defendant would be deemed to be in default if the rent or other outgoings remained unpaid for seven days, entitling the plaintiff to terminate the lease by re-entering and taking possession of the premises;[35]

   (v)the first defendant agreed to indemnify the plaintiff for, amongst other things, any loss, damage, costs or expenses suffered or incurred by the plaintiff by reason of the first defendant's breach of the Lease for Shop 248 and against any action or demand instituted or made against the plaintiff in relation to the Lease for Shop 248;[36] and

   (vi)the second defendant guaranteed the payment of the rent and other obligations of the first defendant under the lease.[37]

Shop 248 - The Mrs Fields and New Zealand Natural Franchise co‑franchise

[32] Exhibit 10, Lease for Shop 248, cl 1.1 and item 5 of the Schedule.

[33] Exhibit 10, Lease Shop 248, cl 3.1 and item 7 of the Schedule.

[34] Exhibit 10, Lease Shop 248, cl 3.3.

[35] Exhibit 10, Lease Shop 248, cl 5.2.

[36] Exhibit 10, Lease Shop 248, cl 3.4, cl 3.44, cl 5.2 and cl 8.

[37] Exhibit 10, Lease for Shop 248, cl 8.

1. Having secured the Lease for Shop 248, Mr Satterthwaite put together a marketing package and advertised to find a franchisee for the dual Mrs Fields and New Zealand Natural franchise.  Ultimately he found a franchisee, Mr Victor Tombak.

2. Mr Tombak and his wife migrated to Australia from Lithuania.  Mr Tombak had been a publisher in Lithuania.  In about December 2011 the dual franchise was sold to Mr Tombak.  According to Mr Satterthwaite, Mr Tombak was experienced in business, albeit in the area of publishing.  Mr Tombak invested a lot of money in the business, but lost a lot of it within a very short space of time.

3. According to Mr Satterthwaite, when the franchise was sold to Mr Tombak he was told that the lease for Shop 248 would be in his name, which was normal practice.  Mr John Moyes, the development manager for both Mrs Fields and New Zealand Natural, also spoke to Mr Tombak's accountant.  The Lease however, was in the defendants' names.

4. Mr Tombak was provided with some training before commencing to trade from Shop 248.  He underwent the training that every new franchisee was required to undergo.  It was provided by Mrs Fields and New Zealand Natural.  The training was of about two or three week's duration.  Mr Tombak was also provided support from others, including Mr Moyes who attended Shop 248 during the first week of trading and subsequently, sometimes twice a week.

5. Mr Tombak operated the dual Mrs Fields and New Zealand Natural franchise from February 2012 until about June 2012.  It was Mr Satterthwaite's intention that Mr Tombak would be assigned the Lease.  This did not eventuate.  The franchise did not trade as well as expected and Mr Tombak refused to have the Lease assigned to him.  Mr Satterthwaite, having signed the Lease on behalf of the first defendant and as guarantor, was stuck with the Lease.

6. By March 2012 Mr Tombak was already encountering problems associated with running the franchise.  According to Mr Satterthwaite, a significant issue for the franchise situated at Shop 248 was that the business model relied significantly on foot traffic through the centre, but this did not eventuate.[38]  The plaintiff suggests that there were other reasons as to why the franchise failed, namely Mr Tombak's inexperience and failure to open the business seven days a week.

   [38] ts 164, Satterthwaite.

7. Mr Jay Poland said that although the centre had spent a lot of money on advertising, the Mrs Fields and New Zealand Natural business at Shop 248 was not opening every day.  Consequently, the plaintiff left a note for the franchisee operating the Mrs Fields and New Zealand Natural business urging them to open more frequently (see exhibit 43).  The document is dated 29 January 2013.

8. Whatever the cause of Mr Tombak's problems, in June 2012 Mr Satterthwaite terminated the franchise agreement with Mr Tombak due to lack of payment from him.  Mr Tombak relinquished the franchise.  Gourmet and Allied Foods, under the guidance of Mr Satterthwaite as the master franchisor, then took over the running of the dual franchise from Shop 248 with a view to reselling the franchise.[39]

   [39] ts 306, Satterthwaite.

9. In December 2012 and January 2013 Mr Satterthwaite engaged Mr Spadacini as franchisee of the dual franchise operated from Shop 248 for a trial period.  Mr Spadacini did not ultimately purchase the franchise.

10. In February 2013 the defendants once again took over the franchise and continued to trade from Shop 248.

11. By about by 31 March 2013 the dual Mrs Fields and New Zealand Natural franchise at Shop 248 ceased trading altogether.[40]

Shop 193 - Perth Online Gourmet

[40] ts 125, Satterthwaite.

1. By March 2013, Perth Online Gourmet, which was trading from Shop 193, was also having business difficulties.

2. Shop 193 was a bigger development than Shop 248.  Perth Online Gourmet, which operated from Shop 193, opened in April 2012.  According to Mr Satterthwaite, prior to entering into the lease for Shop 193, the plaintiff represented to the defendants (through Mr Sheridan) that their business would be the sixth and final meat or flesh shop operating at Coventry Square Markets.  This was, according to Mr Satterthwaite, a significant factor that caused him to the sign the lease for Shop 193.  This issue is further discussed at [55], [247] - [251] and [388] - [391] below.

3. Mr Satterthwaite said that shortly after Perth Online Gourmet commenced trading from Shop 193, one of the fruit and vegetable shops at the centre closed.  This was followed by another shop's closure soon after.  The centre was left with only one fruit and vegetable shop.  According to Mr Satterthwaite, that business was most likely the main source of foot traffic to the centre.  However, that shop had a budget clientele.  This had a negative impact on Mr Satterthwaite's business.  This was in the period between April and June 2012.

4. Like the Mrs Fields and New Zealand Natural dual franchise, Perth Online Gourmet situated at Shop 193 also struggled.  Mr Jay Poland formed the view that, so far as the Perth Online Gourmet business was concerned, it was set up badly.  He said that it was very difficult to get inside Shop 193.  In addition, he said that the stock levels within the shop were not great and he considered that the product was too expensive for the area.[41]

   [41] ts 570, J Poland.

5. Mr Satterthwaite claimed that he had 'signed up for a quality markets development' and instead the centre was a 'disaster'.[42]

   [42] ts 297, Satterthwaite.

6. According to Mr Satterthwaite, in this period of time an additional five shops selling 'flesh' opened, making a total of 11 operators.[43]  There was only one fruit and vegetable shop.  Mr Satterthwaite suggested that the mix was totally wrong, and it made it impossible for his business to survive.

   [43] ts 297 Satterthwaite.

7. According to Mr Satterthwaite, in about June or July 2012, he spoke to Mr Gregory Poland.  Mr Gregory Poland advised him that the centre needed a supermarket.[44]  This prompted him to first approach IGA and then Foodworks Farmer Jack's.  Neither of these supermarket chains were interested.  Mr Satterthwaite found Mr Gregory Poland to be very supportive at this time.

   [44] ts 297, Satterthwaite.

8. In early March 2013, Mr Satterthwaite said he discussed his options with Mr Gregory Poland.  As already noted above, the defendants had difficulties with both businesses, one operating from Shop 248 and the other from Shop 193.  The defendants contend that these discussions ultimately led to the creation of the New Agreement.[45] This issue is further discussed at [86] - [135] below.

The Acknowledgement of Debt

[45] ts 125 - ts 134, Satterthwaite.

1. On 12 April 2013, the parties entered into an Acknowledgement of Debt[46] in the following terms:

   I, Simon Barry Satterthwaite, of 20 Sutherland Avenue,, Western Australia, acknowledged that gourmet and Allied foods Pty Ltd and myself in my own right oh Coventry Village Pty Ltd SEVETY [sic] FOUR THOUSAND,, THIRTY NINE DOLLARS AND SEVENTY FIVE CENTS ($74,039.75) to date.

   I have agreed to pay Coventry Village Pty Ltd this amount within TWO (2) years, with interest at E IG HT (8%) per cent [sic] per annum to be paid each month. If I failed to pay the interest on the first day of each month, I acknowledge that the entire amount becomes due and payable.

   [46] Exhibit 11 - Acknowledgement of Debt.

2. Pursuant to the Acknowledgement of Debt, the first and second defendants acknowledged that, as at 12 April 2013, the sum of $74,039.75 was owed to the plaintiff with respect to Shops 248 and 193.  The Acknowledgement of Debt also included terms whereby the defendants agreed to pay this amount within two years with interest at 8% per annum payable each month.  It is of note that the Lease stipulated interest at a rate of 16%.  However, given that the defendants did not comply with the terms of the Acknowledgement of Debt, and the entire amount became due and payable upon default, the applicable interest rate in relation to all moneys owed by the defendants to the plaintiff reverted to that set by the terms of the Lease, namely 16%.

3. The defendants concede that by 12 April 2013, of the $74,039.75 the subject of the Acknowledgement of Debt, approximately $29,000 was owed by them to the plaintiff in relation to Shop 248 alone.[47]  None of the money that the defendants acknowledge they owed to the plaintiff, including interest due, has ever been paid by the defendants.[48]  Nonetheless, the defendants claim that the Acknowledgment of Debt was part of the New Agreement.

The assignment of the lease for Shop 193 to Coventry Fresh Pty Ltd - 1 May 2013

[47] ts 133, Satterthwaite.

[48] ts 77, J Poland.

1. Although the plaintiff's claim relates to the debt claimed with respect to the Lease for Shop 248 only, since the defendants claim that it formed part of the New Agreement, it is necessary to set out the circumstances in which the assignment of the lease for Shop 193 occurred. The relevance of the assignment of the lease for Shop 193 is also further considered at [111] - [125] below in the context of whether it formed part of a new agreement.

2. Shortly after the Acknowledgment of Debt came into effect on 12 April 2013, the lease on Shop 193 was assigned to Coventry Fresh Pty Ltd (Coventry Fresh).

3. Mr Satterthwaite brought in an independent fruit and vegetable operator, Mr Sandeep Singh, to operate from Shop 193.  Mr Singh's core business was quality fruit and vegetables.[49]  Mr Satterthwaite registered Coventry Fresh as a company.  It was agreed between Coventry Village as lessor and Gourmet and Allied Foods Pty Ltd as assignor that the lease for Shop 193 be assigned to Coventry Fresh Pty Ltd.  The business at Shop 193 was operated by Mr Singh.  The date of the assignment was 1 May 2013.  Mr Satterthwaite was guarantor of the assignment of the lease of Shop 193 to Coventry Fresh.

   [49] ts 125, Satterthwaite.

4. Following the assignment, the rent for Shop 193 was also reduced.  This reduction was in accordance with the plaintiff's practice of offering a period of reduced rent to new tenants.  The rent for Shop 193 was $189,280.00 per annum plus GST.[50]

The plaintiff's termination of the Lease and repossession of Shop 248

[50] Exhibit 12, Assignment of Lease of Shop 193.

1. The plaintiff called Michael Brooksby Holtham in proof of the debt owed by the defendants.  Mr Holtham was a Director of Coventry Village.  He was also one of the original purchasers of the land upon which the shopping centre was developed and was involved in the redevelopment of the site.  From about late 2010 to early 2011 he was regularly onsite at the redevelopment.

2. Mr Holtham interacted with tenants, discussed their plans for the fit-outs of their shops, as well as discussing with them other facilities at the centre.  He continued in that role once tenants moved in.[51]  The centre started trading about November 2011.[52]

   [51] ts 95, Holtham.

   [52] ts 96, Holtham.

3. Each month Coventry Village generated invoices relating to rent and other outgoings that were payable by the tenants.  These invoices were hand delivered to each tenant's letterbox at the centre.[53]  This practice was not disputed by the defendants.[54]

   [53] ts 96, Holtham.

   [54] ts 160, Satterthwaite.

4. The relevant statements and tax invoices were provided to Gourmet and Allied Foods for the period of October 2012 to July 2013 by either Coventry Village Pty Ltd or by Coventry Square WA Pty Ltd.[55]

   [55] ts 100; Exhibits 18.1 and 18.2.

5. The relevant statements and tax invoices for the period July 2013 to October 2013 were issued by Coventry Village Pty Ltd and provided to Gourmet and Allied Foods Pty Ltd.

6. Mr Jay Poland's evidence corroborated the evidence of Mr Holtham.  He said that his understanding was that the invoices were provided to the defendants in relation to Shop 248 for the preceding three or four months.  This was done, in accordance with the plaintiff's practice, by placing the invoices in tenant's letterboxes located outside the centre management office.

7. The plaintiff claims that, as at 1 October 2013, the sum of $57,874.54 inclusive of GST was due and payable by the defendants on the lease for Shop 248.[56]  This is made up of unpaid rent as at the date of termination, together with unpaid electricity and unpaid interest.[57] As already noted at [60] above, no part of the amount outstanding has been paid by the defendants.[58]

   [56] Exhibits 18.1, 18.2 and 19 being the relevant invoices identified by Michael Brooksby Holtham.

   [57] See Plaintiff's Further Amended Particulars of Damages Pursuant to r 45C(4) of the District Court Rules, dated 20 July 2020.

   [58] ts 102; Exhibit 19.

8. On 3 October 2013, the plaintiff terminated the lease by giving written notice to the first defendant (the Notice of Termination[59]).  The Notice of Termination was dated 3 October 2013.  The notice was signed by Mr Jay Poland on behalf of Coventry Village.  By the Notice of Termination, the plaintiff informed the first defendant that it was in default of the Lease for Shop 248, the rent being unpaid for more than seven days, and that the Lease was thereby terminated.

   [59] Exhibit 13, Notice of Termination.

9. The plaintiff also entered the premises and re-took possession of Shop 248, as well as demanding payment of the outstanding amount of $57,874.54 payable within seven days.[60]  The plaintiff submits it was entitled to do this pursuant to cl 5.2 of the Lease and the common law. The defendants to not contend otherwise.

Mitigation of loss by the plaintiff by releasing Shop 248 - 'making good' Shop 248

[60] Exhibit 13 - Notice of Termination.

1. Having terminated the Lease and repossessed Shop 248, the plaintiff sought to mitigate its loss by re-leasing Shop 248 to another business.  Before that could be done however, the plaintiff had to 'make good' Shop 248 so that new tenants could move in under a fresh lease.  According to Mr Jay Poland, the defendants left Shop 248 in a state that required significant work to be done to repair and make good the premises for the next tenant.[61]  To do this, the plaintiff says the work it had to undertake included:

   •Removing all the equipment and property that had been left in Shop 248 by the first defendant;

   •Make good the premises after equipment that the defendants had leased from a supply company called Silver Chef, had been removed;

   •Strip back Shop 248 and repair the premises for the new tenants.[62]

The plaintiff's evidence - repairs and work carried out to 'make good' Shop 248

[61] ts 83.

[62] ts 78, J Poland.

1. Mr Jay Poland gave evidence of the work undertaken by the plaintiff, or carried out at its behest, to 'make good' Shop 248.  Mr Jay Poland had been involved in retail leasing for 13 years.  According to him, the work and repairs to Shop 248 involved external contractors.  Mr Jay Poland said 'there would have been external plumbers and electricians'.[63]  According to Mr Jay Poland, the contractors would have been at the markets doing work on a range of premises at the centre and would have invoiced the plaintiff for the hours of work undertaken specifically in relation to Shop 248.[64]

   [63] ts 78, J Poland.

   [64] ts 78, J Poland.

2. No specific invoices or documents were tendered or referred to during the evidence of Mr Jay Poland.  No invoices were provided by the plaintiffs in relation to any of the work the plaintiff says was carried out on Shop 248 after the plaintiff repossessed it.

3. Mr Jay Poland could not give an exact date of when the work was done.[65]

   [65] ts 82.

4. Mr Jay Poland provided an opinion that the work to 'make good' Shop 248, before the new tenant 'Happy Herb' went in, would have been:

   •Demolition work - $800 - $1,000;

   •Patching walls and painting - $1,000;

   •Electrical and plumbing - $1,500;

   •A 'bunch of other works'[66] - $1,200 to $1,500;

   •Gyprock - $1,000 - $1,200;

   •Removing cabinetry - $600 - $700;

   •Removal of signage - $500.

   [66] ts 79, J Poland.

5. Mr Jay Poland estimated that the works required to be undertaken by the plaintiff, based upon his experience, was approximately $6,000 - $7,000, but the plaintiff was only claiming a conservative figure of $4,850.[67]

Mr Satterthwaite's evidence about 'making good' Shop 248

[67] ts 82, J Poland.

1. Mr Satterthwaite accepted that cooking equipment leased from a company called Silver Chef was still in Shop 248 after April 2013.  The equipment had been taken over by Mr Tombak as the franchisee when he commenced to operate from the shop.  According to Mr Satterthwaite, Mr Tombak was supposed to also take over the Lease for Shop 248, but never did.  Mr Satterthwaite also conceded that the fact that the equipment was still in the shop meant that the premises could not be used by any future tenants until it had been removed.[68]

   [68] ts 135, Satterthwaite.

2. According to Mr Satterthwaite, although he had not completely removed all of the equipment and 'made good' the premises, he had done some of the work himself.  This included removing cabinetry and tiling.  He said that the plumbing was left as well as downlights.  The Silver Chef equipment still in place in Shop 248 included three large pieces of equipment including an ice cream freezer.  Mr Satterthwaite conceded that some work needed to be done on Shop 248 to make it completely good for a new tenant.[69]

Plaintiff mitigated its loss - releasing Shop 248 to other tenants

[69] ts 138, Satterthwaite.

1. After Shop 248 was 'made good', the plaintiff leased it out to a succession of tenants.

2. Between 4 October 2013 and 1 October 2014 Shop 248 was leased to TM & KW Pty Ltd and Timothy Paul Martin trading as 'Happy Herb'.[70]  The plaintiff received $24,570 in income from 'Happy Herb'.[71]

   [70] Exhibit 14, Lease agreement for Shop 248 with Happy Herb.

   [71] ts 105 - ts 106; Exhibit 20.

3. The fresh lease of Shop 248 to 'Happy Herb' did not last.

4. On 1 June 2016, the plaintiff further mitigated its loss by re-leasing Shop 248 to a business called 'Big Mama'.[72]  The plaintiff received income from 'Big Mama' for Shop 248 after 'Happy Herb' moved out in the sum of $14,033.[73]

The defendants' defence - the New Agreement

[72] Exhibit 17.

[73] ts 107; Exhibit 22 (see ts 108).

1. As already noted, there is no dispute that on 12 April 2013 the parties signed a document titled Acknowledgement of Debt.  By that document, the defendants acknowledged, and continue to acknowledge:

   (a)that as at the date of signing, they owed the plaintiff the sum of $74,039.75;[74] and

   (b)that approximately $29,000, which formed part of the acknowledged debt of $74,039.75, was owed by them to the plaintiff pursuant to the Lease for Shop 248.[75]

   [74] Exhibit 11, Acknowledgement of Debt.

   [75] ts 132 - ts 133, Satterthwaite.

2. However, despite the Acknowledgement of Debt, the defendants claim that as at 12 April 2013 the parties had created a new overriding agreement whereby the Lease for Shop 248 was terminated and the debt relating to it subsumed in the New Agreement.

3. The terms of the New Agreement, as claimed by the defendants at trial, not only changed from what was pleaded, but also changed twice during the hearing.

The New Agreement - the defendants' pleaded defence

1. As pleaded, the defendants' defence to the plaintiff's claim was:[76]

   14.By an agreement made 12 April 2013 the Plaintiff and Defendants agreed as follows:

   (a)by mutual agreement the leases of shops 193 and 248 would be terminated:

   (b)in full satisfaction of any claim for rent and/or any moneys owing under the terms of the Lease [for shop 248] and the lease of shop 193 by the First and Second Defendants, the first Defendant entered into an acknowledgement of debt to the Plaintiff in the sum of $74,039.75;

   (c)as a result, and subject to the counterclaim set out below, all claims that the Plaintiff may have had against the First and Second Defendants are subsumed in the terms of the acknowledgment of debt.

   [76] Amended Statement of Claim dated 28 October 2019, par 14.

2. As pleaded, the 'agreement made 12 April 2013' was unequivocally identified as the Acknowledgement of Debt.

The New Agreement - the defence run by the defendants at trial

1. Despite the pleadings, the defence run at trial was somewhat different.

2. First, whereas the pleadings alleged that the New Agreement (constituted by the Acknowledgment of Debt) was made on 12 April 2013, during the trial the defendants contended that in fact the New Agreement was not confined to the Acknowledgment of Debt, but was partly in writing and partly oral.  The oral part of the New Agreement, according to the defendants, arose from discussions between the plaintiff (represented by Mr Gregory Poland) and the defendants (represented by Mr Satterthwaite) in either February or March 2013.[77]  The defendants allege that the plaintiff expressly agreed to terminate the Lease of Shop 248.  Consequently, the defendants submit that the written component of the New Agreement, namely the Acknowledgement of Debt signed by the parties on 12 April 2013, needs to be considered in light of the oral terms of the agreement.

   [77] ts 130 and ts 132, Satterthwaite.

3. Given the way the defence was run during the hearing as outlined above, and that the plaintiff had the opportunity to cross-examine the second defendant about this issue, the defendants were given leave to amend their defence accordingly.[78]  Consequently, as further amended, the defendants' defence to the plaintiff's claim became:

   14.By an agreement partly in writing and partly oral and concluded on 12 April 2013 the Plaintiff and Defendants agreed as follows:

   (a)by mutual agreement the leases of shops 193 and 248 would be terminated:

   (b)in full satisfaction of any claim for rent/or any moneys owing under the terms of the Lease and the lease of shop 193 by the First and Second Defendants, the First Defendant entered into an acknowledgment of debt to the Plaintiff in the sum of $74,039.75;

   (c)as a result, and subject to the counterclaim set out below, all claims that the Plaintiff may have had against the First and Second Defendants are subsumed in the terms of the acknowledgment of debt.

   (Emphasis added)

   [78] ts 733 - ts 734.

4. Having amended the defendants' case as set out at [93] above, in closing submissions Mr Satterthwaite further asserted that in fact the New Agreement was not only partly in writing and partly oral and concluded on 12 April 2013, but that the New Agreement also included that the plaintiff and defendants agreed that the Lease of Shop 193 would be assigned and the Lease of Shop 248 would be terminated (emphasis added).

5. There is no doubt that the Lease for Shop 193 was indeed assigned by the defendants (see [61] - [64] above), but the defendants claim that the assignment was part of the broader New Agreement made between the parties.

The New Agreement - Mr Satterthwaite's evidence about the oral part of the New Agreement

1. The defendants' defence to the plaintiff's claim relies almost entirely upon the evidence of Mr Satterthwaite.  According to Mr Satterthwaite, in February or March 2013 he had discussions with Mr Gregory Poland.  By that time both the combined New Zealand Natural and Mrs Fields franchise operating from Shop 248 and Perth Online Gourmet operating from Shop 193 were suffering from financial difficulties.[79]  At the time, Mr Gregory Poland was very keen on the idea of bringing in a supermarket or grocery store into the centre.  Mr Satterthwaite said this led to discussions between him and Mr Gregory Poland.

   [79] Jay Poland said, in relation to Shop 248, that the New Zealand Natural/Mrs Fields franchise operated for about three months.  It did not trade every day.  The frequency with which it traded became less and less.  Invoices and charges payable were not paid.

2. Mr Satterthwaite said the discussions were 'comprehensive conversations'.[80]  The defendants allege that Mr Gregory Poland, on behalf of the plaintiff, expressly agreed to terminate the Lease of Shop 248.  Some of the things that Mr Satterthwaite claims Mr Gregory Poland said to him included 'he'd do [Mr Satterthwaite] a deal and that deal would be that he'd stop the lease, or sort the lease I think he might have said, going forward.  The - you know, the back debt as the back debt, it stays, I think or words to that effect';[81] and 'the lease in relation to shop 248 would be terminated going forward'.[82]

   [80] ts 125, Satterthwaite.

   [81] ts 132, Satterthwaite.

   [82] ts 132, Satterthwaite.

3. Later, in cross-examination Mr Satterthwaite said that the actual oral agreement between himself and Mr Gregory Poland was made outside Shop 248 at about the beginning of March 2013.[83]  Although Mr Satterthwaite could not remember the precise words used by Mr Gregory Poland, to the best of his recollection, Mr Gregory Poland said 'this is going nowhere' and 'why don't we just closed this and - and focus on shop 193'[84] and 'I'll sort the lease'[85]or something similar.  This was, as Mr Satterthwaite saw it, because Mr Gregory Poland was very keen to see a good fruit and vegetable offer go in.  Nothing was apparently said by Mr Gregory Poland about the defendants' responsibilities under the Lease for Shop 248 or making the premises good for a new tenant.[86]

   [83] ts 168, Satterthwaite.

   [84] ts 168, Satterthwaite.

   [85] ts 169, Satterthwaite.

   [86] ts 171, Satterthwaite.

4. Counsel for the plaintiff, in cross-examination, put to Mr Satterthwaite that this was the first time in these proceedings that he was suggesting that the New Agreement had been formed between himself and Mr Gregory Poland in the terms that he was now suggesting.  Mr Satterthwaite agreed that, with respect to these proceedings, it was the first occasion that he had raised this issue.  However, he said that he had previously raised this issue in affidavits he had filed in the Magistrates Court relating to the plaintiff's action against him in debt recovery with respect to the lease for Shop 193.  These affidavits were not tendered in these proceedings.

5. Mr Satterthwaite claimed that that this was the reason the Acknowledgement of Debt was drawn up, although he also accepted that as written, the Acknowledgement of Debt made no mention about the termination of the Lease for Shop 248.

6. Mr Satterthwaite said that his clear understanding was that once he signed the Acknowledgement of Debt, the Lease for Shop 248 was terminated.  Although he did not specifically deny that invoices might have been forwarded to him in relation to the Lease for Shop 248 after he had signed the Acknowledgement of Debt, he said he never received them, and in any event the Lease had been terminated.[87]

   [87] ts 132, Satterthwaite.

7. Mr Satterthwaite said that the first he knew about the debt, following the Acknowledgement of Debt, was when he received an email from a representative of the plaintiff in October 2013.  Despite receiving the email, he did not query the claim for payment.

8. Mr Satterthwaite also accepted that at the time of the signing of the Acknowledgement of Debt the defendants owed the plaintiff approximately $29,000 in relation to the Lease for Shop 248, but claimed that it was understood between the parties that the defendants would not be liable for any further rent or outgoings after that date.[88]

   [88] ts 132, Satterthwaite.

9. According to Mr Satterthwaite, despite the creation of the New Agreement, the plaintiff commenced litigation against the defendants in the Magistrates Court.

10. The defendants subsequently filed a counterclaim seeking damages in the amount of $1,042.607.30 or alternatively $685,873.30[89] causing the matters to be transferred the District Court.

The plaintiff's case in relation to the defendants' defence based upon the New Agreement

[89] Defendants' counterclaim.

1. The plaintiff relied on two witnesses to refute the defendants' defence based upon the New Agreement.  They were Mr Jay Poland and Mr Holtham.

Mr Jay Daniel Poland's evidence - the Acknowledgment of Debt and whether a New Agreement was created

1. As already noted at [12] above, Mr Jay Poland was one of the plaintiff's directors and had been since the date of its registration as a company on 2 October 2012.[90]  He was still a director at the time of the hearing.  Mr Gregory Poland was also a director from the time of the registration of the plaintiff as a company, but ceased being a director in 2016.[91]

   [90] Exhibit 1 - ASIC summary extract relating to Coventry Village Pty Ltd; ts 182, J D Poland.

   [91] ts 182, J D Poland.

2. Mr Gregory Poland did not give evidence at the trial.

The New Agreement and the Acknowledgment of Debt

1. With respect to Mr Satterthwaite's assertion that Mr Gregory Poland had agreed to certain terms on behalf of the plaintiff, Mr Jay Poland said Mr Gregory Poland was not permitted to make unilateral decisions on its behalf.  The plaintiff's practice was that it always required two directors to sign off on any decisions.  This was a practice that had always been in place and was consistently employed by the plaintiff.  Decisions were always made by the board following discussions with a number of its members.  Issues would be discussed by the directors, usually Mr Holtham, Mr Gregory Poland and himself.  There were also other board members including Ms Jennifer Poland and Ms Katie Poland.  Significant decisions, such as this, required a meeting of most of the directors.  This did not occur with respect to any suggestion that the New Agreement had been formed.

2. Mr Jay Poland disputed the defendants' claim that:

   (a)the Acknowledgement of Debt was only a part of the New Agreement; or

   (b)that there was an agreement to terminate the Lease for Shop 248; or

   (c)he Acknowledgment of Debt was made in full and final settlement for any claims in relation to Shops 248 and 193.

3. Mr Jay Poland said that the purpose of the Acknowledgement of Debt was to ensure that all parties knew what the debt was before any assignment of Shop 193.[92]  It was never intended to be made in full and final settlement of any claims for Shop 248 or Shop 193.  Furthermore, Mr Jay Poland said that if the parties' intention was that the Acknowledgement of Debt agreement was in 'full and final settlement', he would have included such words in the terms of the deed.[93]  No such words were included in the document.

Michael Brooksby Holtham - the Acknowledgment of Debt and whether a New Agreement was created

[92] ts 64, J Poland.

[93] ts 64, J Poland.

1. Like Mr Jay Poland, Mr Holtham was also adamant that the Acknowledgement of Debt (exhibit 11), did not, and was not intended to, incorporate a termination of the defendants' Lease on Shop 248.  According to Mr Holtham, although the Acknowledgement of Debt in the sum of $74,039.75 incorporated money owed by the defendants on Shop 248 as well as Shop 193, it was made so that the defendants' lease on Shop 193 could be assigned.[94]

   [94] ts 109 and ts 110, Holtham.

2. Mr Holtham did not quarrel with the proposition that although the defendants vacated Shop 248 on 31 March 2013, the Notice of Termination was not given until six months later.  Mr Holtham explained that the delay was simply to give the defendants time to pay the outstanding money owing.[95]

   [95] ts 111, Holtham.

3. Mr Holtham also agreed that the notice of termination for Shop 248 was given at about the same time as the notice of termination was given to Coventry Fresh at Shop 193.[96]

   [96] ts 112.

4. It was suggested to Mr Holtham that the money was not paid by the defendants because the defendants had vacated Shop 248 some six months earlier and therefore did not receive the invoices.  Alternatively, it was suggested to him that the delay would reasonably have caused the defendants to think that the Lease had been terminated.[97]  In response, Mr Holtham said that a tenant's obligation under the Lease did not cease because he leaves the premises, and that they still were bound by their contractual obligations.[98]

Email chain between Mr Satterthwaite and Jennifer Poland in early November 2012[99]

[97] ts 112.

[98] ts 113.

[99] Exhibit 24.

1. On 5 November 2012, when the defendants were seeking to assign the Lease for shop 248 to a Mr Frank Spadacini, Mr Satterthwaite sent an email to Ms Jennifer Poland, a representative of the plaintiff, in the following terms:

   Can you please confirm that this agreement removes me a guarantee [sic]?

2. On 5 November 2012, in response to the email, Ms Jennifer Poland wrote:

   My instructions are that you are to remain as guarantor.

3. On the same day, Mr Satterthwaite responded to Ms Jennifer Poland's email as follows:

   This is not correct.

   It was agreed with Jay and Jim at the beginning that the franchise was to be sold and the lease assigned to whoever bought the franchise.

4. It is clear that Mr Satterthwaite was, in this exchange of emails, seeking to clarify any issues that he perceived existed in negotiations between the plaintiff and defendants. The further relevance of this email trail is discussed at [3278] - [333] below.

The defendants' submission as to the New Agreement

1. According to Mr Satterthwaite, the New Agreement, which included the assignment of the lease for Shop 193 and termination of the Lease in relation to Shop 248, came about following various discussions between himself and Mr Gregory Poland whereby the underlying purpose of the agreement was to enable the defendants to focus on Shop 193 including bringing a supermarket into the centre.  This was all, according to Mr Satterthwaite, in the context of discussing an IGA or some other supermarket being brought into the centre.

The plaintiff's submissions as to whether a New Agreement was created

1. First, the plaintiff points to the fact that the New Agreement was not pleaded by the defendants, nor was it raised before the trial.  This, the plaintiff submits, is because Mr Satterthwaite's evidence on this issue was of recent invention to overcome a deficiency in the defendants' case.[100]

   [100] ts 682, counsel for the plaintiff's closing submissions.

2. Secondly, the plaintiff submits that the assignment of the lease for Shop 193, which did take place, was inconsistent with the claim originally pleaded by the defendants.[101]  The plaintiff submits that the claimed terms of the New Agreement are wholly inconsistent with the objective evidence pointing away from any inference that the plaintiff entered into the New Agreement with the defendants.

   [101] ts 690, counsel for the plaintiff's closing submissions.

3. Fourthly, the plaintiff points to cl 3.34(a) of the Lease in relation to Shop 248 provided that:

   Gourmet and Allied foods Pty Ltd as lessee is not to part with possession of the premises, except with the consent in writing of the lessor first obtained.

4. Fifthly, on 1 May 2013 the lease in relation to Shop 193 was assigned to Coventry Fresh.  The plaintiff submits that the terms of the lease for Shop 193 make it clear that, although the lease had been assigned, it did not absolve the defendants from any of its liabilities under the lease.  The plaintiff points to cl 5(a) - cl 5(d) of the deed of assignment of that lease, which make clear that although the lessor (the plaintiff) consented to the assignment, the terms unequivocally state: 'nothing in this deed releases or discharges the assignor from liability under the lease before the date of assignment'.[102]  The plaintiff submits that clause was in the same terms as a clause contained in the Lease.

   [102] Exhibit 12, terms of the assignment.

5. Consequently, the plaintiff submits that the terms of the Lease still bound the defendants and contradicted any suggestion that the Lease for Shop 248 had been terminated.

Was there a New Agreement? - The applicable law

1. As Newnes JA noted in RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd,[103] '[i]t is now established that it is not necessary that a contract be found using the 'classical theory of contract formation based upon offer and acceptance' '.

   [103] RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2010] WASCA 128.

2. A contract or agreement may be inferred from the acts and conduct of parties.  The question for consideration is whether the conduct of the parties including discussions, when objectively considered in the context of all of the surrounding circumstances, 'shows a tacit understanding or agreement'.[104]

   [104] RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [93] (Newnes JA).

3. However, not only must the conduct and circumstances point to the existence of a contract or agreement, but it must point to the existence of the agreement in the terms alleged in the proceedings.[105]

   [105] RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [93] (Newnes JA); Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44 [9].

4. Thus, the test in this case is whether, viewed as a whole and objectively from the point of view of reasonable persons on both sides, the dealings show a concluded agreement.  In that respect the parties must have clearly intended to have created the agreement.  Heydon JA (as his Honour then was) noted in Brambles Holdings Ltd v Bathurst City Council,[106] in discussing the formation of a contract that it is relevant to consider the following issues:[107]

   (a)'In all the circumstances can an agreement be inferred?'

   (b)'Has mutual assent been manifested?'

   (c)'What would a reasonable person in the position of the [plaintiff] and a reasonable person in the position of the defendant think as to whether there was a concluded bargain?'

   [106] Brambles Holdings Ltd v Bathurst City Council[2001] NSWCA 61; (2001) 53 NSWLR 153. 

   [107] Brambles Holdings Ltd v Bathurst City Council [81].

5. In this case, the New Agreement will only be inferred 'where the evidence is clear and such a conclusion is a necessary inference from the proven facts'.[108]

Conclusion - was there a New Agreement?

[108] RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [97] (Newnes JA); Pegrum v Fatharly (1996) 14 WAR 92, 94 - 95.

1. On the defendants' case the New Agreement took effect as at the signing of the Acknowledgement of Debt (exhibit 11) on 12 April 2013.  If it was to represent the final, written part, of the New Agreement, it makes no reference to the termination of the Lease for Shop 248 or that it was made in full and final settlement of any claims in relation to Shop 248 and Shop 193.  Given all of the relevant facts and circumstances, including the manner in which the parties had entered into the Lease for Shop 248 and the lease for Shop 193; Mr Satterthwaite's habit of querying matters that he either disputed or wanted changed; and the plaintiff's practice of requiring a meeting of board members to ratify any significant changes, I do not accept that the Acknowledgment of Debt was meant to represent only part of a new agreement.  It is clear that if the parties had intended to enter ino a new agreement, the terms of the Acknowledgment of Debt, being the final piece of the claimed New Agreement, would have reflected the new terms.

1. Furthermore, whilst I am satisfied that there were conversations between Mr Gregory Poland and Mr Satterthwaite about the future of Shop 248 and Shop 193, I am not satisfied on the balance of probabilities that the conversations amounted to an agreement, either alone or in combination with the Acknowledgment of Debt, that it:

   (a)was made in full and final settlement of claims in relation to Shop 248 and Shop 193; or

   (b)the Lease for Shop 248 would be terminated; or

   (c)that any debt in relation to Shop 248 was subsumed in the Acknowledgement of Debt.

2. Whilst Mr Gregory Poland did not give evidence at the trial, when the evidence of Mr Satterthwaite is carefully examined, particularly his evidence as to the words used by Mr Gregory Poland, I am not satisfied that anything said by Mr Gregory Poland amounted to the creation of a new agreement.

3. The words claimed by Mr Satterthwaite to have been spoken by Mr Gregory Poland, amounting to the oral part of the New Agreement, were never recorded in writing.  No contemporaneous note or email suggesting the conversation took place was produced at the trial.  If such a conversation occurred, in circumstances where Mr Satterthwaite demonstrated a practice of clarifying ambiguities or matters that he did not agree with, the failure by Mr Satterthwaite to confirm the terms of the New Agreement in writing, further causes me to doubt the defendant's claim of the creation of the New Agreement.

4. Where, such as here, the defendants are seeking to prove an agreement said to be significantly constituted by words claimed to have been said some seven years prior to trial, although some leeway must be allowed for lack of precision, the words said to constitute the agreement must be proved with some sufficient degree of certainty.[109]  Mr Satterthwaite's evidence, even taken at its highest, lacked the degree of clarity necessary to satisfy me on the balance of probabilities that what may have been said by Mr Gregory Poland was ever intended to be anything more than a suggestion that the defendants focus their efforts on Shop 193.  At best, Mr Satterthwaite's recollections of what Mr Gregory Poland said was an erroneous retrospective reconstruction of what Mr Gregory Poland may have said to him.  I am not satisfied on the balance of probabilities that a New Agreement was created.

The applicable law relating to breach of an essential term of a lease

[109] Watson v Foxman (1995) 49 NSWLR 315, 318 - 319.

1. The general contractual principles relating to termination for breach or repudiation of an essential term apply to leases.[110]  Consequently, an innocent party is entitled to be placed in the same position as if the terms of the lease had been complied with.[111]  The lessor is also entitled to sue the lessee for damages for loss of the benefit of the lease;[112] arrears of rent and loss of benefit of future rent,[113] less any amount the lessor has obtained as profits for the use of the property.[114]

Conclusions in relation to the plaintiff's claim

[110] Luxer Holdings Pty Ltd v Glentham Pty Ltd [2007] WASCA 209 [28] (Buss JA) (with whom Wheeler JA agreed), applying Shevill v The Builders Licensing Board (1982) 149 CLR 620, 625 - 627 (Gibbs CJ).

[111] Luxer Holdings Pty Ltd v Glentham Pty Ltd [29].

[112] Luxer Holdings Pty Ltd v Glentham Pty Ltd [30].

[113] Luxer Holdings Pty Ltd v Glentham Pty Ltd at [31].

[114] Luxer Holdings Pty Ltd v Glentham Pty Ltd at [40].

1. I am satisfied that the plaintiff has proved the debt owed to it by the defendants in the sum of $57,874.54, as well as the damages in the amount of in the amount of $216,156.56.  In addition, the plaintiff is entitle to interest on the outstanding amounts at a rate of 16%, pursuant to cl. 3.3 of the Lease.  The amounts of the debt and damages payable by the defendants to the plaintiff are made up as follows:

   Debt ($57,874.54)

   (a)the unpaid rent as at the date of termination of the Lease (3 October 2013), namely $43,562.27; and

   (b)unpaid electricity as at the date of termination of the Lease (3 October 2013), namely $12,000.81; and

   (c)unpaid interest charges as at the date of termination of the Lease (3 October 2013), namely $2,3111.46.

   Damages[115]

   (a)Unpaid rent for the months of November and December 2013 due pursuant to the Lease (2 x $4,504.50), namely $9,009;

   (b)Unpaid rent for the months of March 2014, November 2014, December 2014, January 2015 and February 2015 due pursuant to the Lease( 5 x $6,306.30), namely $31,531.50;

   (c)Unpaid rent for the months of March 2015 - February 2016 due pursuant to the Lease( 12 x $6,621.61), namely $79,459.32;

   (d)Unpaid rent for the months of March 2016 - August 2016 due pursuant to the Lease (6 x $6,952.70), namely $41,716.20;

   (e)The difference between the rent payable under the Lease for Shop 248 ($4,504.50) and any rent received by the plaintiff after the termination of the Lease on 3 October 2013, for the months of January and February 2014 (2 x $1,501.50), namely $3,003;

   (f)The difference between the rent payable under the Lease for Shop 248 ($6,306.30) and any rent received by the plaintiff after the termination of the Lease on 3 October 2013, for the months of April 2014 to October 2014 (7 x $3,303.30) namely $23,123.10; and

   (g)The difference between the rent payable under the Lease for Shop 248 ($6,952.70) and any rent received by the plaintiff after the termination of the Lease on 3 October 2013, for the months of September 2016 to February 2017 (6 x $4,635.74), namely $27,814.44.

   Damages for repairing, 'making good' and cleaning Shop 248

   (a)a nominal amount of $500 for repairing, making good and cleaning Shop 248.

   [115] See Plaintiff's Further Amended Particulars of Damages Pursuant to r 45C (4) of the District Court Rules, dated 20 July 2020.

2. In relation to the amount of $500 allowed for the plaintiff's claim for damages to 'make good' Shop 248, I note that it submits that the claim for the amount of $4,850 is a conservative one.[116] Although I accept Mr Jay Poland's evidence (set out at [75] - [79] above) generally about the sort of work that might have been required to 'make good' Shop 248 before re-leasing it, no invoices, quotes or receipts were produced by the plaintiff. Mr Jay Poland's evidence was punctuated by what 'would have been required', rather than what actually occurred. I note however that Mr Satterthwaite accepted that there was some necessity to do some work to 'make good' Shop 248 before it could be re-leased. In the circumstances, I am satisfied that some cost was incurred by the plaintiff, but I am unable to properly quantify the work completed or paid for by the plaintiff to make good Shop 248. Consequently, I allow a nominal amount of $500.00.

   [116] ts 82, J Poland.

Part 4: The defendants' counterclaim

The first and second defendants' counterclaim

1. In addition to the matters raised by the defendants in their defence to the plaintiff's claim, the first and second defendants claim that the conduct of the Trust or its agents or representatives, namely making various oral and written representations which the defendants claim breached the TPA or, alternatively, the ACL, induced them to enter into the Lease. The defendants claim these representations were false or misleading and as a result, they suffered loss and damage. They allege that the plaintiff:

   (a)engaged in conduct that was misleading or deceptive or was likely to mislead or deceive (s 52 TPA, or alternatively s 18 of Sch 2 ACL); and further or in the alternative;

   (b)engaged in unconscionable conduct (s 51AB of the TPA, alternatively s 21 ACL); and further or in the alternative;

   (c)made false or misleading representations (s 53 TPA or alternatively s 29 ACL); and further or in the alternative;

   (d)made false or misleading representations (s 53A TPA or alternatively s 30 ACL); and further or in the alternative;

   (e)further or in the alternative, engaged in misleading conduct (s 55A TPA, alternatively s 34 ACL); and further or in the alternative; and

   (f)made misrepresentations under the common law.

2. As pleaded, the first and second defendants' counterclaim alleges that the representations were made by the Trust,[117] by:

   1.Oral statements made by Mr Sheridan to the defendants in July or August 2010 (the First Representations);[118]

   2.Providing a brochure to the defendants in July or August 2010 which contained written representations (the Brochure Representations);[119]

   3.An email sent by Mr Jay Poland to the defendants dated 19 August 2010 (Preleasing Representation);[120] and

   4.Oral Statements made by Mr Jim Sheridan to the defendants on or about 1 July 2011 (July 2011 Representations).[121]

   [117] First and Second Defendants' substituted defence and Counterclaim dated 14 November 2019, par 22.

   [118] First and Second Defendants' substituted defence and Counterclaim dated 14 November 2019, par 22.

   [119] First and Second Defendants' substituted defence and Counterclaim dated 14 November 2019, par 23.

   [120] First and Second Defendants' substituted defence and Counterclaim dated 14 November 2019, par 24.

   [121] First and Second Defendants' substituted defence and Counterclaim dated 14 November 2019, par 25.

3. The defendants claim that all of the representations made by the Trust were false.  Furthermore, the defendants claim that they relied upon the false representations and consequently suffered loss and damage.  The defendant claims trading losses as follows:

   (a)Shop 193, July 2012 to March 2013 - $456,933.13;

   (b)Shop 248 July 2012 to March 2013 - $67,943.17;

   (c)The full cost of a loan provided by second defendant to first defendant to finance its operations including fitting out its shops - $356,824.00;

   (d)Loans provided by Accolade Catering WA - $78,762.00; and

   (e)Finance provided by Silver Chef for equipment - $82,235.00.

4. The total amount counterclaimed by the defendants is $1,042,697.30.

5. The only evidence relied upon by the defendants to prove the loss and damage claimed was the oral evidence of Mr Satterthwaite that the defendants suffered such loss, and limited trading figures for Shop 193, supplied by Mr Benefield.[122]

   [122] Exhibit 47.

6. The trading figures supplied by Mr Benefield set out the sales figures for the Mrs Fields at Shop 193 for the period between February 2012 and March 2013. Whilst those figures revealed that March and April 2012 apparently resulted in sales in the sums of $19,968 and $16,579 respectively, and the other months were considerably less, they are relatively meaningless amounts without reference to any other costs or expenses incurred by the business. Nor was any information provided in relation to New Zealand Natural. How the defendants arrived at the amounts of the trading losses (set out at [141] above) was not unexplained. No specific information was provided about the other losses or damages claimed by the defendants.

7. The evidence neither properly explained the damages sought, nor supported the claim in any meaningful way.  The defendants' evidence relied upon to prove the claimed loss or damage fell a long way short of satisfying proof of any damages suffered by the defendants on the balance of probabilities.

A summary of the plaintiff's defence to the counterclaim

1. The plaintiff denies the defendants' counterclaim and raises multiple issues in its defence.  They can be summarised as follows:

   1.The counterclaim, as pleaded, is brought against the Trust, not the plaintiff.  As a trust, in law, cannot make representations, the counterclaim must fail for that reason alone.

   2.If the claim is now brought against Coventry Square WA Pty Ltd (as opposed to Coventry Village Pty Ltd), Coventry Square WA Pty Ltd is not a party to the proceedings, and in any event the claim would be statute barred.

   3.The plaintiff denies that any of the representations were made.

   4.In the alternative, if the representations were made:

   (a)they were not false; and/or

   (b)were not relied upon by the first defendant for various reasons, including:

   (i)Some of the representations that the defendants claim induced them to enter into the Lease were, on the defendants' case, made after they signed the Lease.  Consequently, the defendants could not have been induced by the representations to enter into the lease;

   (ii)Many of the representations relied upon by the defendants as being false were matters that were known to the defendants.

   5.The plaintiff also relies upon specific clauses within the Agreement for Lease[123] (cl 3.1; cl 5.24; cl 5.30(d); cl 5.3(c); cl 5.43; cl 22(a); cl 22(b)) which authorised the plaintiff, in its absolute discretion, to make variations or changes to the way in which the centre operated, including such things as the tenancy mix.  Furthermore, the plaintiff also relies upon cl 16 of the Agreement for Lease which stipulates that the provisions of the Agreement for Lease, together with the disclosure statement and Lease itself constituted the entire agreement 'notwithstanding any negotiations or discussions prior to the signing of this agreement or anything contained in any brochure, market analysis report or other document prepared by the [plaintiff] or any of the [plaintiff's] agents for submission to potential lessees of the Coventry Square Markets.'[124]  In essence, the plaintiff claims that the terms of the Agreement for Lease specifically excluded any of the representations now relied upon by the defendants. For the reasons that follow, it is not necessary to determine this issue, although I note what Steytler P said in Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd,[125] namely that '[i]f, as a result of misleading conduct, a person is induced to enter into a contract and suffers loss, the right to a remedy will subsist whatever the parties may provide in their agreement'.

Preliminary issues: (a) Can a Trust make a representation? (b) Was the claim correctly brought against Coventry Village Pty Ltd, or does the claim lie against Coventry Square Pty Ltd?; (c) If the claim arose against Coventry Square Pty, was the cause of action transferred to Coventry Village Pty Ltd when it succeeded as trustee?

[123] Exhibit 9.

[124] Exhibit 47, cl 16 of the Agreement for Lease Shop 248.

[125] Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd [2005] WASCA 174 [59] (with reference to Clark Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367, 371, (Sheppard J) (with whom Fox J and, relevantly, Jackson J were in agreement); Petera Pty Ltd v EAJ Pty Ltd [1985] FCA 277; (1985) 7 FCR 375 378 (Wilcox J); and Oraka Pty Ltd v Leda Holdings Ltd [1997] FCA 297; (1997) ATPR 41-558 at 43,717).

1. Before considering each of the various representations relied upon by the defendants, it is convenient to deal with the preliminary issues first.

(a)     Can a Trust make a representation?

1. By the defendants' amended counterclaim,[126] each of the pleaded representations upon which they rely is alleged to have been made by the 'Trust', either through an oral representation made by Mr Sheridan, or in a written document or communication.[127]

   [126] Defendants' substituted counterclaim filed 14 November, 2019.

   [127] Counterclaim pars 21 - 25.

2. The TPA prohibited 'corporations' from engaging in certain conduct. Specifically, s 52 of the TPA, provides:

   A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive.

3. The Trust is not a corporation.  The plaintiff is a corporation which became a body corporate upon its registration on 2 October 2012, and trustee of the Trust on 15 October 2012.

4. Section 18 of the ACL refers to a 'person' which includes a corporation. A trust is not a separate legal entity or person, like a company or individual.[128]  Nor can a trust appoint agents or representatives.  However, a trustee of a trust may appoint or employ an agent to transact any business or do any act to be done in the execution of the trust or the administration of trust property.[129]

   [128] Raffles Corporation Pty Ltd v Cech [2001] QSC 129 [5] (Wilson J).

   [129] Ali v Twiyo Trading Trust [2018] QCATA 67 [11].

5. Consequently, the Trust was not capable of making a representation itself. For that reason alone, as pleaded the counterclaim must fail.

(b) Was the claim correctly brought against Coventry Village Pty Ltd, or does the claim lie against Coventry Square Pty Ltd?

1. The issue of whether the defendants' cause of action potentially lay against Coventry Square Pty Ltd, not the plaintiff (Coventry Village Pty Ltd), was raised by the plaintiff in the context of when, namely on the pleaded dates, the claimed representations were made.

2. As already noted at [10] and [150] above, the plaintiff was not registered as a company until 2 October 2012[130] and did not become the trustee of the Trust until 15 October 2012.[131]  Prior to that date, Coventry Square WA Pty Ltd was the trustee of the Trust.  All of the representations relied upon by the defendants were allegedly made prior to 15 October 2012.  Thus, if they were made, leaving aside the question of whether a Trust can make a representation in law, they were not made by the plaintiff, or its agents or representatives, since the Trust could not have employed or engaged a representative or agent prior to 15 October 2012.  Since Coventry Square Pty Ltd was the relevant trustee of the Trust at the time of the alleged representations, the plaintiff could not have made any of the representations relied upon by the defendants.  The counterclaim must also fail for this reason.

   [130] Exhibit 1.

   [131] Exhibit 5, Deed of Variation of Coventry Unit Trust.

3. Furthermore, if the counterclaim is now being pursued against Coventry Square Pty Ltd, not the plaintiff, then the counterclaim would now be time-barred. The defendants' claim is for damages pursuant to s 82 of the TPA or s 236 of the ACL for loss and damage suffered by them in the period July 2012 to March 2013. Consequently, the relevant 3 or 6 year limitation period for the commencement of an action has expired.[132]

   [132] TPA s 82(2) and ACL s 236(2).

4. Ultimately however, although the issue of whether the relevant Trust at the time of the representations was the plaintiff or Coventry Square Pty Ltd was squarely raised by the plaintiff in these proceedings,[133] no steps were ever taken by the defendants to make Coventry Square Pty Ltd a party to these proceedings.  Indeed, the defendants, through Mr Satterthwaite, expressly acknowledged that any action now brought by the defendants against Coventry Square Pty Ltd was time-barred.[134]  Consequently, the issues in this case are confined to the named parties.

(c)  If the claim arose against Coventry Square Pty, was the cause of action transferred to Coventry Village Pty Ltd when it succeeded as trustee?

[133] ts 192.

[134] ts 191.

1. If the representations were in fact made by Coventry Square Pty Ltd, and noting that Coventry Village Pty Ltd became trustee of the Trust on 15 October 2012, could the cause of action have been transferred to the plaintiff?

2. In Rosebridge Nominees Pty Ltd v Commonwealth Bank of Australia [No 6],[135] Le Miere J noted:

   The Trustees Act 1962 (WA) s 10 provides that where a new trustee is appointed, the execution of the instrument of appointment vests,… the trust property in the new trustee.  The effect of these provisions is that the appointment of a new trustee operates as a statutory assignment of the trust property vesting it in the new trustee and divesting it from the trustee whom he replaces.

   [135] Rosebridge Nominees Pty Ltd v Commonwealth Bank of Australia [No 6] [2014] WASC 203 [12].

3. Notwithstanding the fact that trust property is vested in the new trustee, a cause of action for damages under s 82 of the TPA cannot be assigned.[136]  As noted by Le Miere J in Rosebridge Nominees Pty Ltd v Commonwealth Bank of Australia [No 6]:[137]

   As a matter of statutory construction only 'a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part V' may recover damages under TPA s 28.

   [136] Pritchard v Racecage Pty Ltd[1997] FCA 27; (1997) 72 FCR 203 [205] - [206]; Chapman v Luminis (No 4)[2001] FCA 1106; (2001) 123 FCR 62.

   [137] Rosebridge Nominees Pty Ltd v Commonwealth Bank of Australia [No 6] [22].

1. I also note that the evidence revealed that the shopping centre had a significant number, and wide variety of shops available at Coventry Square Markets.

2. And as with my earlier findings, I am not satisfied that the representation that it would contain 'a veritable mix of shops' could amount to a material representation of fact or that the defendants' have proved it to be false.[292]

Coventry Square Markets would have high levels of foot traffic including tourist buses [sic] (statement of claim par 22 (d))

[292] Pappas v Soulac Pty Ltd (238).

1. Firstly, on Mr Satterthwaite's evidence, it is unclear whether he was asserting that this was said at the first meeting in August 2010, or the later meeting in July 2011.  If it was the later meeting in 2011, there is an issue as to whether it could have induced him to enter the agreement to Lease Shop 248, given it was signed on 16 August 2010.[293]

   [293] Exhibit 9.

2. Secondly, what constitutes 'high levels of foot traffic' was never properly explained.

3. Thirdly, Mr Sheridan was emphatic that 'foot traffic' was not a term that he would ever use.[294]  I accept Mr Sheridan's evidence on that point.

   [294] ts 627, Sheridan.

4. Notably, whilst various witnesses for the defendants, including Mr Satterthwaite and Mr Moyes, spoke of the need for high levels of foot traffic for the defendants' businesses to thrive, and that the level of foot traffic at the centre was insufficient for the businesses, no evidence was led to explain what levels of foot traffic would be considered high, or what levels were specifically required by the defendants.  Mr Moyes' evidence, even if he was an expert, fell short of satisfying these issues.  Consequently, even if this had been said by Mr Sheridan, there is no evidence that it was false.

5. I also accept Mr Satterthwaite's evidence that there was a discussion about tourist buses, given Mr Sheridan's acceptance that it was something that was proposed by Mr Gregory Poland. However, the uncontradicted evidence was that there were indeed tourist buses that ran from various places to the centre until COVID 19 prevented that from continuing.  Again, there is no evidence that this representation was false.

Coventry Square Markets would have a microbrewery and Shop 248 would be close to microbrewery (statement of claim par 22(e))

1. Mr Sheridan readily conceded that it was his practice to tell prospective tenants that they were looking at putting in a microbrewery.

2. The site plan (exhibit 38) made clear the location of both the proposed microbrewery/tavern, which was represented on the plan and marked 'Shop 1', and Shop 248.

3. Mr Jay Poland made it clear that he was indeed considering putting in a microbrewery at the front of the centre.  The decision not to proceed with a microbrewery was not made until late 2011.

4. Consequently, I am satisfied that Mr Sheridan made the representation that the centre would have a microbrewery.  I am not satisfied that he represented that Shop 248 would be close to the microbrewery.  The marked location of Shop 248 made it clear that, in the event that there was a microbrewery, it would not be close to it.

5. Strangely however, Mr Satterthwaite's opinion was that, as marked on the plan, it would be close.  Thus, on the defendants' case the only false aspect of the representation could only relate to the existence of the microbrewery.

6. There is no doubt that the microbrewery did not proceed.  However, on Mr Jay Poland's evidence it was, at the relevant time, the plaintiff's intention to set up a microbrewery at the centre at the site marked on the plan.  He sought advice from a liquor licensing consultant to further his intention.  Based upon that advice, he had concluded it would be impossible to obtain approvals for the microbrewery.[295]

   [295] ts 572, J Poland.

7. Thus, the question is whether, at the time the representation was made, were there reasonable grounds for the making of the representation?  On the available evidence, I am satisfied that there were reasonable grounds for the making of the representation.  I am satisfied that the plaintiff, until late July 2011, genuinely intended and believed that there would be a microbrewery at the centre.  There were reasonable grounds for making that representation. Consequently, this part of the defendants' claim must fail.

That Perth Online Gourmet was to be the sixth and last business in the market to sell meat, seafood, poultry and game (statement of claim par 22(f))

1. Both Mr Satterthwaite and Mrs Toms asserted that Mr Sheridan said that they, Perth Online Gourmet, 'were to be the sixth, and we thought, last', of these operators.[296] (Emphasis added)

   [296] ts 292, Satterthwaite.

2. On the other hand, Mr Sheridan was adamant that he did not say this.

3. As it turned out, Perth Online Gourmet, were not the last flesh selling shop at the centre.  Consequently, if the representation was made by Mr Sheridan, it was false.

4. It is of note, that the disclosure documents and the Lease itself gave the plaintiff the right to change any mix of shops, including allowing more stores of a certain type.  That is inconsistent with such a representation being made.  Furthermore, Mr Satterthwaite acknowledged that, as was outlined in the Lease, the landlord had every right to make changes to tenancies.[297]  Ultimately, given Mr Sheridan's emphatic evidence on the point and that he was very aware of 'not giving exact statements on things',[298] I cannot be satisfied that the representation was made.

The Brochure (exhibit 27) (statement of claim par 23(a) - 23(e))

[297] ts 304 Satterthwaite.

[298] ts 638, Sheridan.

1. The Brochure (exhibit 27) clearly contains each of the representations set out at pars 23(a) - 23(e) of the defendants' statement of claim.  I am also satisfied that the Brochure was provided to the defendants at the first meeting with Mr Sheridan in August 2010.  Many of the alleged representations are the same as, or very similar to, the First Representations.  The question still remains as to whether any or all of the representations contained in the Brochure were false.  In that regard, so far as the representations set out at pars 23(a) - 23(c) are concerned, they again are all, or at least in part, the sort of statements of opinion incapable of being proven to be correct or incorrect.[299]

That Coventry Square Markets would be Western Australia's premier markets (statement of claim par 23(a))

[299] Pappas v Soulac Pty Ltd (238) (Fisher J).

1. I have already considered the meaning of the word 'premier' at [361] above. Unlike the representation at par 22(a) of the statement of claim which represented that Coventry Square Markets would be 'a premier market' of equal standard to that of 'Victoria Markets in Melbourne', this represented that Coventry Square Markets would be Western Australia's premier markets. In essence, in the context of the representation, there seems to be little difference between being 'a premier market' and Western Australia's premier market.'

2. As already noted, there was a significant difference of opinion between the defendants' witnesses and that of the plaintiff's as to the standard of the market.  Furthermore, given the differences in the type of markets mentioned, it is an impossible task on the available evidence to qualitatively assess whether or not Coventry Square Markets was indeed Western Australia's premier markets.  Consequently, I am not satisfied that it could amount to a material representation of fact[300] or that the defendants' have proved it to be false.

That the markets would be a variable mix of restaurants, cafés and speciality shops (statement of claim par 23(b))

[300] Pappas v Soulac Pty Ltd (238) (Fisher J).

1. First, on Mr Satterthwaite's own evidence he accepted that there was indeed a good mix of 'flesh tenants' as well as a mix of restaurants, cafés and speciality shops.[301]

   [301] ts 398, Satterthwaite.

2. Secondly, as already noted above, the shopping centre had a significant number and wide variety of shops and restaurants available at Coventry Square Markets.

3. And as with my earlier findings, I am not satisfied that the representation that it would contain 'a variable mix of shops' has been proved to be false.

That the markets 'will be a focal point for both local and overseas tourists, a meeting place for families and friends and a cultural experience for all.'[302] (Statement of claim 23 (c))

[302] Exhibit 27, page 2.

1. As to the assertion in the Brochure that 'the markets 'will be a focal point for both local and overseas tourists, a meeting place for families and friends', the evidence revealed that tourist buses did indeed attend the centre at some time.

2. There is also no doubt that the evidence revealed that there was a mix of different cultures represented at Coventry Square Markets.[303]  Different cultural events and occasions were recognised and celebrated at the centre.[304]

   [303] ts 401, Satterthwaite.

   [304] ts 401, Satterthwaite.

3. The defendants have failed to prove that this statement was false.

The market would be divided into a number of sections all with their own unique theme (statement of claim par 23 (d))

1. Mr Satterthwaite accepted that this in fact did occur at Coventry Square Markets and that he had 'no problem [with] that'.[305]  Most of the other witnesses in the trial also confirmed that was the case. Consequently, it cannot be said to have been false.

'The café strip at the front of the markets would be where all the eateries would be located and this area would be the focus for all restaurants, cafes, bistros and a microbrewery' (statement of claim par 23(e))

[305] ts 402, Satterthwaite.

1. Save for the reference to a microbrewery, the correctness of the representation was, for the most part, not disputed by the defendants.[306]  It is the reference to the microbrewery that the defendants claim was false and was one that materially induced them to enter into the leases.

   [306] ts 402, Satterthwaite.

2. For the reasons already expressed and set out at [386] - [387] above, I am satisfied that the plaintiff had objectively reasonable grounds for making the representation at the time the Brochure was provided to the defendants. Thus, this part of the claim must fail.[307]

The Preleasing Representation - email of 19 August 2010 that 'Coventry Square Markets were then 80% pre-leased'

[307] Sykes v Reserve Bank of Australia(1998) 88 FCR 511, 513 (Heerey J); Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [159].

1. First, it is of note that this email was received by Mr Satterthwaite on behalf of the defendants on 19 August 2010, which was three days after he signed the agreements to lease Shops 193 and Shop 248.  In that regard, it could not be said to have induced the defendants to have entered into the leases.

2. Furthermore, as far as I am able to understand the defendants' contention as to this representation, it is said that the statement that they were '80% pre-leased' was false in that either they were not 80% pre‑leased, or alternatively that the word 'pre-leased' should be understood to mean leased, open and operating.  As to the latter contention, given that as at 19 August 2010 Coventry Square Markets was still being developed, the phrase '80% pre-leased' could never have been intended to have meant open and operating.

3. In any event, despite the plain language used in the email, the evidence from Mr Jay Poland was that after the centre opened it was never less than 90% leased.

4. Whatever may have occurred after the shopping centre started operating, there is no evidence that this representation was false at the time it was made.

July 2011 Representations

1. The defendants have pleaded that, 'on or about 1 July 2011' various representations were made by Mr Sheridan.  The first thing to note is that Mr Sheridan, by reference to his diary and the surrounding important events of 1 and 2 July 2011 (Mr Sheridan's date of birth is 2 July 1943 and he hosted an event to celebrate his birthday on 2 July 2011), categorically denies that he met with Mr Satterthwaite and others on either 1 or 2 July 2011.  I accept Mr Sheridan's evidence that he did not meet with Mr Satterthwaite and other people associated with the defendants on either of those days.  Whilst that may not be fatal to the defendants' case so far as any representations that may have been made 'on or about 1 July 2011', it is relevant in determining the credibility and reliability of the witnesses in relation to these events.  Where Mr Sheridan denies having been at the meeting, or making the representations alleged, I accept his evidence.  It also makes it more difficult to accept Mr Satterthwaite's evidence on these issues.

2. Compounding the difficulty in accepting the defendants' claim with respect to these representations is the fact that the maker of the representations, pleaded by the defendants as being Mr Sheridan, whether it occurred on or about 1 July 2011 or any other day, is more difficult to accept in light of the fact that the identity of the person making the alleged representations is far from clear.  Mr Benefield, who did not name the plaintiff's representative at the meeting, gave a description of the person that did not fit either Mr Sheridan or Mr Jay Poland.  At times, it was difficult to ascertain whether Mr Satterthwaite was referring to representations made in July or August 2010, or the July 2011 Representations.

3. Ultimately, these issues in combination with all the other issues I have identified, cause me to conclude that I cannot be satisfied that any of the July Representations were made at all.  In any event, there are other reasons, set out below, why each of the pleaded July Representations has not been made out by the defendants.

That the centre was to be divided into three sections with fresh food in the back end, the centre section was to be more up-market with a quality fashion and many other stores including a wine market and the front section was to be a food hall area plus restaurants fronting Walter Road and a microbrewery (statement of claim par 25(a))

1. Leaving aside whether Mr Sheridan made the representation on or about 1 July 2011, or for that matter any other day, save for the reference to the centre section being 'more up-market with a quality fashion', Mr Satterthwaite, Mr Moyes, Mr Benefield, Mr Holtham, Mr Sheridan and Mr Jay Poland all essentially confirmed the general correctness of the representation. No evidence was given by anyone about 'a wine market.'

2. Obviously the defendants' claim that the centre was neither 'up‑market' nor contained 'quality fashion'.  Mr Moyes recalled only two 'fashion shops'.

3. Mr Benefield ultimately said that the centre did not have the range of tenancies they had envisaged and it was not to the level described in the brochures and pictures.

4. On balance, save for the reference to a wine market, I am satisfied that someone made the representations on behalf of the plaintiff on or about 1 July 2011.  I am not satisfied that it was Mr Sheridan.

5. If the representation was made by Mr Jay Poland, then so far as the representation related to the proposed microbrewery, I have already dealt with that at [386] - [387] above.

6. I am also of the view that the words 'quality fashion' is the sort of representation that imports with it a subjective opinion.  It is the sort of statement of opinion that is incapable of being proven to be correct or incorrect.[308]

   [308] Pappas v Soulac Pty Ltd (238) (Fisher J).

7. I am not satisfied that this representation, or any part of it, has been proved by the defendants to be false.

There would be a large volume of foot traffic as it fronted onto the main road (statement of claim par 25(b))

1. For the reasons already set out at [376] - [380], I am not satisfied that the defendants have proved this representation was made, or that it was false.

Shop 248 is close to high levels of foot traffic being close to the entrance of the food hall and the restaurants (statement of claim par 25(c))

1. Shop 248 was indeed close to the entrance of the food hall.  Thus, this part of the representation could not be false.  I have already addressed the issue of 'high levels of foot-traffic' above.

2. This representation must fail as I am not satisfied that the representation relating to 'high levels of foot traffic' was made, nor that the other aspect of the representation was false. 

The area will be shut off from main area after hours, thus allowing the shop to be open late at night (statement of claim par 25(d)

1. On the evidence of Mr Holtham, whose evidence I accept, there is no evidence that this representation was false.  In any event, there is no evidence that the defendants materially relied upon this representation.

The centre would be similar and the equal of the Victoria Markets (sic) (statement of claim par 25(e))

1. First, I accept Mr Sheridan's general evidence that he would not have said this. Secondly, I have already addressed this issue at [358] - [368] above so far as it amounts to a statement of opinion that is incapable of being proven to be correct or incorrect.[309]  Thus, this part of the claim must fail.

The owners would be running buses from Hillarys and Dolphin Quay in Mandurah to the Centre for tourists (statement of claim par 25(f))

[309] Pappas v Soulac Pty Ltd (238) (Fisher J).

1. Even if Mr Sheridan made this representation, I note Mr Jay Poland's evidence that when planning for Coventry Square Markets commenced, they intended to utilise the connection with Sorrento Quay and Dolphin Quay through tourist buses that already visited those two sites.  He also said that tourist buses, carrying mostly Asian tourists, stopped at Coventry Square Markets on the way to the Swan Valley and this happened within two months of the centre opening.  In addition, Mr Holtham also said that they had tourist buses come in with overseas tourists until that stopped due to the COVID 19 Pandemic.  Thus, as to the question of whether tourists attended the centre or not, that was not false.  In my view, it could not be said that the distinction between tourist buses from Hillarys and Dolphin Quay in Mandurah to the centre, as opposed to tourist buses from other destinations, would have made any material difference to the question of whether the defendants were induced to enter the leases.  Thus, even if it was made by Mr Sheridan and it turned out to be false, it nonetheless must necessarily fail.

Did the plaintiff engage in unconscionable conduct (s 51AB[310] of the TPA, alternatively s 21 ACL)?

[310] The plaintiff’s written Submissions dated 17 July 2020 erroneously referred to s53 of the TPA.

1. As pleaded, the defendants also alleged that the plaintiff's conduct amounted to unconscionable conduct contrary to the TPA or alternatively the ACL.

2. In Serventy v Commonwealth Bank of Australia (No 2),[311] the Court of Appeal summarised the equitable doctrine of unconscionable conduct as occurring (with references deleted) if 'one party (A) takes advantage of an inability on the part of another party (B) to make decisions in their own best interests, in circumstances where this inability was sufficiently evident to A to render A's conduct exploitative.  B's special disability is sufficiently evident to A if and only if A actually knows of it or is willfully blind to it; constructive knowledge is not sufficient.  That is because unconscionable conduct involves a 'predatory state of mind' and exploitation or victimisation, albeit that, in this context, victimisation should not be narrowly understood.'

   [311] Serventy v Commonwealth Bank Of Australia [No 2][2016] WASCA 223 [18].

3. Furthermore, '[d]etermining whether a party to a transaction has engaged in unconscionable conduct will entail 'a precise examination of the particular facts' and 'every connected circumstance' as well as 'a scrutiny of the exact relations established between the parties'.[312]

   [312] Serventy -v- Commonwealth Bank Of Australia [No 2] [19], citing Jenyns v Public Curator [1953] HCA 2; (1953) 90 CLR 113, 118 - 119; Kakavas v Crown Melbourne [18], [122], [158] - [159]; Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 [291] - [293].

1. Beyond asserting that the Trust and its agents or representatives by the 'First Representations, the Brochure, the Preleasing Representations and the July 2011 Representations' in the 'alternative engaged in unconscionable conduct'[313] contrary to the TPA or ACL, the defendants did not identify how or why, if such conduct was carried out by or on behalf of the plaintiff, it amounted to unconscionable conduct in dealings with the defendants. Nonetheless, upon an examination of the whole of the evidence, nothing done by or behalf of the Trust amounted to unconscionable conduct. That claim is without merit.

Conclusion on the defendants' counterclaim

[313] Defendants’ counterclaim, par 31(b).

1. I am not satisfied that the defendants have made out any of the claims set out in their counterclaim.  The counterclaim must be dismissed.

2. In any event, even if the defendants had proved any of representations relied upon, there is no evidence capable of proving any of the loss or damages claimed.

Orders

1.The plaintiff's claim against each of the defendants is allowed in the amount of $57,874.54, plus damages of $216,156.56 and interest, to be calculated at the rate of 16% per annum as set out in the Lease, from 3 October 2013 until the date of judgment on the sums of $55,563.08 and $216,156.56.

2.The defendants' counterclaim is dismissed.

1. I will hear the parties in relation to any application for costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.

DF

Associate to Judge Levy

6 MAY 2021

[26] Exhibit 29.