George, Blackwell and Company P/L v Metroplaza P/L

[1994] FCA 71

7 1 9Y

JUDGMENT No. ........ ........ ., 1 ,., .... ,...

CATCHWORDS

TRADE PRACTICES - Misleading or deceptive conduct - Negotiations preceding grant of lease of shops in shopping centre - Representations as to turnover of other shops in shopping centre - Representations as to estimated contributions towards operational expenses of shopping centre

- No point of principle.

GEORGE. BLACKWELL AND COMPANY PTY LIMITED v METROPLAZA PTY

LIMITED

No. N G 793 of 1993

Neaves J.

2 March 1994

Sydney

9	A	)
)

NEW SOUTH WALES DISTRICT REGISTRY ) No. N G 793 of 1993

1

GENERAL DIVISION 1

BETWEEN: GEORGE, BLACKWELL AND COMPANY

PTY LIMITED

Applic~nt

AND: METROPLAZA PTY LIMITED

Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER :	Neaves S .
DATE OF ORDER	2 March 1994
WHERE MADE	Sydney
THE COURT ORDERS THAT:

1.    The application be dismissed.

2.    There be no order as to costs.

Note:  Settlement and entry of orders is dealt with in Order

36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
)

NEW SOU TH WmES DISTRICT REGISTRY ) No. N G 793 of 1993

)

GENERAL DIVISION 1

BETWEEN: GEORGE. BLACKWELL AND COMPANY

PTY LIMITED

Applicant

AND: METROPLAZA PTY LIMITED

Respondent

CORAM: Neaves J.

-- DATE. 2 March 1994

REASONS FOR JUDGMENT

George, Blackwell and Company Pty Limited ("the applicant") is the lessee from Metroplaza Pty Limited ("the respondent") of premises described as Shop P9 in a four level retail shopping centre complex known as the "Greenwood Plaza Shopping Centre". The shopping centre is part of an office and shopping complex called "The Optus Centre" which includes

centre's address is 36 Blue Street, North Sydney. It also has	a high rise building named "The Optus Tower". The shopping
a frontage to Pacific Highway, North Sydney. The applicant claims injunctive and other relief against the respondent under the provisions of the T r a d e P r a c t i c e s A c t 1974 (Cth). The injunctive relief sought is an order restraining the respondent from terminating the lease of those premises granted by it to the applicant. The applicant also seeks a declaration that the respondent has, in trade or commerce, engaged in .conduct that is misleading .or deceptive or is likely to mislead or deceive and an order varying the lease in such manner as the Court thinks fit. Alternatively, the applicant seeks a declaration that the lease is void ab initio. A claim is also made for damages, interest and costs.
The principal actors in carrying on the business of the applicant company are Peter Alexis George and Miles Anthony Blackwell who are also the directors of the company. Mr George is a very experienced business man with a variety of interests. He is experienced in negotiating, on behalf of a lessor, commercial leases with prospective tenants in large shopping areas. He was at one time an associate director of Baillieu Hardie Gorman. Later, his services as a consultant were made available to Ipoh Garden Borhad Australia Pty Limited by Gadwen Pty Limited, a company controlled by Mr George and his de facto wife. Later he was a consultant to Lada Holdings where he conducted market research in respect of
negotiated with prospective tenants in relation to development leasing demand, rental values and capitalisation rates and
properties. Later still, he was employed as a consultant in relation to various properties, including shopping centres, at the Gold Coast in Queensland. He has continued to be engaged in providing consultancy services and has become involved in matters of finance. He also has an interest, with Mr Blackwell, in a restaurant and a takeaway food outlet in the Queen Victoria Building in Sydney. He has previously had an interest in other food outlets.
Mr Blackwell describes himself as the business ,partner of Mr George. The evidence clearly establishes that Mr Blackwell has been primarily concerned with the fitting out of the food outlets in the Queen Victoria Building and the Greenwood Plaza Shopping Centre and with their day to day operations, the business and financial aspects, including the negotiations for leasing the premises, being primarily the
responsibility of Mr George.
The respondent is the registered proprietor of the land on which the shopping centre is erected. It is a wholly owned subsidiary of Industrial Equity Limited. That company, through its employees and consultants, arranged for the construction of the complex, including the shopping centre, and made the final decisions as to the mix of shops in the shopping centre and as to the companies or persons to whom leases WOLJ-d be granted. Baillieu Knight Frank (NSW) Pty Limited was employed as an agent in connection with securing prospective tenants for the retail shop premises contained
within the shopping centre.
It is convenient at this point to identify some of those who were involved in the project on behalf of Industrial Equity Limited and the respondent -

was

Lyn Shaddock, an employee of Industrial Equity
Limited, had overall responsibility for the project.

Ashley King a senior employee of that company 1992 when he resigned his position with that company. He described himself as a leasing negotiator for the shopping centre.

who reported to Mr Shaddock.
Ian David Tresidder was an employee of Baillieu

Michael Leonard Clifford Chapman was engaged by Industrial Equity Limited as a consultant. He was in charge of the leasing of premises within the shopping centre. He described himself as a retail consultant.

Campbell Holmes 3 Court was until April 1992 an employee of Baillieu Knight Frank (NSW) Pty Limited. From April 1992 to January 1993 he was Centre Manager of the shopping centre. He described himself as a retail and commercial property consultant.

Gavin Carrier, an employee of Industrial Equity
Limited, described as Commercial Manager.

Alison Margaret Reid, an employee of Industrial Equity Limited who, in January 1993, succeeded Mr Holmes 3 Court as Centre Manager of the shopping centre.

The shopping centre has four levels. It contains approximately 100 specialty shops and a supermarket. On what is known as the Plaza level there is an area designated as the "Good Food Plaza". It comprises 8 shops selling various kinds

chairs. The food is served on crockery which is provided by	of food and a common seating area furnished with tables and
the lessor. The lessor also provides cutlery and the equipment to wash the crockery and cutlery. It also provides staff to clear and clean the tables, to clean the eating area and to wash and return to the various shops the crockery and cutlery. Some of these activities on the part of the lessor have been referred to as "table bussing". The expressions "bussing charges" and "bussing expenses" have been used in a wider sense to refer to the operating expenses treated by the lessor as being directly referable to the operation of the "Good Food Plaza".
The shopping centre opened on 1 July 1992. It appears that 7 of the 8 shops commenced operating on that day. Those shops, respectively designated as P10, P11, P12, P13, P15, P16 and P19, are referred to in the evidence as "Side Wok" (sometimes as the "Chinese shop" and sometimes incorrectly as "Hard Wok" ) , "Hokka Hokka" (sometimes incorrectly as "Hocha Hocha"), "Swiss Deli" (in one instance as "Swiss Salad & Sandwiches"), "B.B.'s Coffee Shop" (sometimes as BB's Coffee and Croissants"), "Munchtime Express" (sometimes as the hamburger shop), "Pastarini (sometimes as the "Italian Takeaway" or the "Italian Shop" and in one instance as "Sputino") and "The Pie Corner". The shop which had not commenced to operate at that time was Shop P9.
The lease of Shop P9, which is dated 18 December 1992, is for a term of five years commencing on 1 January 1993. Clause B.l provides for the calculation and payment of
a base rent in each lease year. The base rent for the first lease year is fixed at $78,200.00. The expression "lease year" is defined to mean each successive period of 12 months the first of which commences on the commencement date which, in this case, is 1 January 1993. The lessee covenants to pay the base rent by equal monthly instalments in advance on the first day of each month. I interpolate to say that this provision was varied by agreement between the parties so that no amount was payable by -way of base rent in respect of the month of January 1993. The lessee is also required to pay to the lessor the lessee's proportion of the component operating expenses calculated in respect of the term of the lease on a daily basis (cl. C.l). The component is, relevantly, the shopping centre (see cl. A and Item 13 in the Summary of Lease Particulars). The expression "component operating expenses" means that part of the operating expenses allocated to a particular component pursuant to cl.C.1. "Operating expenses" is defined to mean the total of all amounts paid or payable by the lessor (or for the payment of which the lessor may be or become liable) in any outgoings year in respect of the building and/or the land, including expenses of the kinds specifically identified in the definition. The expression "outgoings year" is defined to mean each period of 12 months ending on 30 June in each year notwithstanding that part of any such 12 months period does not fall within the term of the lease. The expression "lessee's proportion" is defined as
follows "'Lessee's Proportion' means subject to the right of the : Lessor in its sole judgment to allocate to particular

Tenants, including the Lessee under this Lease, costs (in whole or part) identifiable in the Lessor's opinion as incurred in respect of such Tenants, and to exclude the same from the Operating Expenses for which other Tenants are liable, that proportion which the Area of the Premises bears from time to time to the Lettable Area of the Component of the Building in which the Premises are

located. "

"Lettable area" means, in the case of the shopping centre, the gross lettable area-retail determined in accordance with the BOMA method of measurement-, that being the method utilized by the Building Owners and Managers Association of Australia Limited (State Division).

Clause C.l(b) provides:

"(b) Determination of Component O~eratina Expenses: In

determining the Operating Expenses attributable to any component of the- ~uilding the following principles will be applied by the Lessor so far as the same are in the Lessor's opinion relevant and practicable in all circumstances then existing:-

(i)   Operating Expenses identifiable as incurred in respect of one or more (but not all) Components of the Building shall be allocated in full to the relevant Component(s);

(ii)  Operating Expenses other than those referred to in the preceding sub-clause (i) shall be allocated to the relevant Component in the same proportion that the Lettable Area of that Component bears to the total Lettable Area of all Components; and

(iii) Operating Expenses which are recoverable from a particular tenant shall not be allocated to the Component in which that tenancy is located.

Particulars of the manner in which any such	allocation has been made shall on request in writing
be made available by the Lessor to the Lessee PROVIDED that in the event of any differences arising between the Lessor and the Lessee as to any allocation by the Lessor of Component Operating Expenses the final determination of the Lessor shall prevail and shall be binding on the Parties."

Clause C. 2 provides that the lessor may, before or during each outgoings year, notify the lessee of the lessor's reasonable estimate of the lessee's operating expense contribution for that outgoings year. The lessee is required (cl.C.3) to pay, on account of the lessee's operating expense contribution, the estimates provided for in cl.C.2 by equal monthly instalments in advance on the same days and in the same manner as the lessee is required to pay base rent. Adjustment based on actual operating expenses during the year is to be made at the end of each outgoings year (cl .C.4). It is agreed between the parties that the commencing date for payment of operating expenses was 1 January 1993.

Clause C . 8 provides:

"Additional outaoinas: In addition to all other outgoings and rental payable by the Lessee pursuant to the terms of this Lease the Lessee shall pay to the Lessor upon demand the Lessee's share of additional outgoings in respect of inter alia cleaning, table bussing, central wash and general maintenance requirements which are incurred in relation to the area of the Shopping Centre known as the Good Food Plaza ("Good Food Plaza Outgoings"). The Lessee acknowledges that the contribution payable by the Lessee during the first year of the term has been estimated by the Lessor in the amount Sixteen Thousand Nine Hundred and Sixty Dollars ($16,960.00). The Lessor may before or during each Outgoings Year notify the Lessee of the Lessor's reasonable estimate of the Lessee's share of Good Food Plaza Outgoings for that Outgoings Year and the Lessee shall pay on account the estimates so provided by equal monthly instalments in advance on the same days and in the same manner as the Lessee is required to pay Base Rent. "

Although it is not expressly stated, it is implicit that an adjustment to the amount paid during the outgoings year on account of the lessee's share of the additional outgoings referable to the "Good Food Plaza" is to be adjusted at the end of the year to reflect the actual outgoings during the

The applicant commenced trading from Shop P9 on 21

January 1993.

The essence of the applicant's case, as pleaded in the applicant's second further amended statement of claim, is that it was induced to enter into the lease by representations made to it on behalf of the respondent on 21, 29 and 30 September 1992. At the hearing, however, it was not alleged that any material representation was made on 21 September 1992.

The second further amended statement of claim alleges that, on 29 September 1992, the respondent represented "the then average actual, or, in the alternative, reported, monthly turnover of various shops operating as food outlets" at the shopping centre. The rep resentations are pleaded (par.5) in the following terms:

"(a) the shop 'Hard Wok' [sic. - scil. 'Side Wok'] had a

stated turnover of $30,000 but the actual turnover
was in the range of $45,000-$50,000;

(b) the shop 'Hocha Hocha' [sic. - scil. 'Hokka Hokka'] had a turnover of $30,000 in the first month of operation and $40,000 in the second month;

(C) the shop known as 'Swiss Deli' had a turnover in the first month of operation of $50,000 and a turnover of $60,000 in the second month;

(d)	the shop known as 'B.B.'s Coffee Shop' had a turnover in the first month of operation of $45,000 and $55,000 during the second month;
(e)	the shop known as 'Munchtime Express' had a turnover in the first month of operation of $25,000 and $30,000 plus in the second month;
(-f)	the shop known as 'Pastorini' [.sic] had a stated

turnover in the first 2 months of operation of $35,000-$40,000 but the actual turnover was $45,000;

(g)	the shop known as 'Pie Cornerf had a turnover of $30,000;
(h)	the average monthly turnovers of the various shops operating as food outlets were improving; and

(i)$40,000 was a reasonable sum for average monthly turnover for the Applicant to adopt for budgetary purposes in assessing whether or not to take a lease of Shop P9."

It may be accepted that the references to "the first month" are references to July 1992 and that the references to "the second month" are to August 1992.

According to the particulars forming part of the second further amended statement of claim, those representations were made to Mr George and Mr Blackwell on behalf of the applicant by Mr Chapman as servant or agent of the respondent and by Mr Tresidder, the latter being alleged to have made the representations by his silence; the

representations were made at the shopping centre at about 3.50

p.m. on 29 September 1992; and they were continuous representations which were not qualified at any time prior to 18 December 1992, the date of the lease.

The representations alleged to have been made on 30 September 1992 in relation to Shop P9 are pleaded (par.6) in the following terms:

"(a) the estimated contribution of the Applicant, if it became the lessee of the said shop, towards the Respondent's operational expenses for year 1 of the lease would be $15,900;

(b)	the estimated contribution by the Applicant, if it became the lessee of the said shop, towards the Respondent's 'bussing' expenses for the Good Food Plaza for year 1 of the lease would be $16,960;
(c)	those estimated contributions were reasonable estimates and/or reasonably based on information available to the Respondent;
(d)	the contributions were and would be in respect of operation, cleaning and maintenance expenses for the Centre as a whole and/or the food plaza as a whole;
(e)	the lettable area of Shop P9 was 52.7 square metres but that the area for the purposes of charging outgoings was and would be 53 square metres."

Particulars given of that allegation are as follows:

"These representations were partly express and partly imp1 ied . Insofar as they were oral they were in disccssions with representatives of the Respondent prior to ltr December 1992. In part they were made in writing and are contained in a document described as 'Disclosure Statement' attached to a letter dated 30 September, 1992 from Industrial Equity Limited to Peter George and/or are to be implied from that document and the nature of the

transaction."

It is alleged that the applicant relied on the above representations and, induced thereby, entered into the lease on 18 December 1992 and thereafter fitted out the premises and, on 21 January 1993, commenced to carry on from those premises a restaurant business. It is further alleged that the representations were false, misleading or deceptive.

-In addition to the causes of action based on the Trade Practices Act, the applicant pleads -

(a)	the breach by the respondent of its duty to take reasonable care in making each of the representations; and
(b)	breaches of certain terms of the lease that are alleged to amount to warranties in similar terms to each of the representations pleaded or to amount to an agreement to give such warranties.

The present hearing has been confined to the question of liability, the quantum of damages (if any) to be awarded to the applicant being reserved for hearing at a later date.

Events prior to 29 September 1992

According to Mr George, he and Mr Blackwell decided, in about early September 1992, to locate suitable premises in a shopping centre in the central business district of the City of Sydney or in the business district of North Sydney from

which to operate a restaurant business providing speciality

takeaway food lines. Mr George said he was approached by Mr

Tresidder of Baillieu Knight Frank (NSW) Pty Limited in early September 1992 concerning the availability of shop premises in the "Greenwood Plaza Shopping Centre". According to Mr George, Mr Tresidder said that his company was the agent and consultant for the owner, Industrial Equity Limited, and that he understood Mr George was interested in a shop in that centre. Mr George said he asked questions of Mr Tresidder concerning the rent and the lease terms and inquired as to the turnover figures for the food shops adjacent to the premises known as Shop P9. According to Mr George, Mr Tresidder said he did not know the exact figures but that they were around $40,000 - $50,000 per month and were "generally in accordance with the norm" and further said:

"Michael Chapman who you know has got the exact figures
and he'll give these to you."

Mr Tresidder is said to have described Mr Chapman as being with Industrial Equity Limited and to be co-ordinating the project. In his oral evidence, Mr George said that he had previously (about 1981) known Mr Chapman when they both worked at Baillieu Hardie Gorman. Mr George also said that, in the discussion with Mr Tresidder, mention was made of the level of outgoings in relation to Shop P9. According to Mr George, Mr Tresidder said that the outgoings were "in line with the norm for these types of centres" and that the actual figures would be set out in a "Disclosure Statement". Mr George said that,

he and Mr Blackwell, visited the shopping centre with Mr	shortly after the discussion with Mr Tresidder, he, and later
Tresidder and were shown Shop P9.
Mr Blackwell gave a somewhat different account of how he and Mr George became aware of the Greenwood Plaza Shopping Centre. According to Mr Blackwell, in about July or August 1992, a former employee of the restaurant and takeaway business being conducted in the Queen Victoria Building, Brenda Yee, told him that she had been to the shopping centre and that she suggested that he should go and look at the food court that had been established there. Mr Blackwell said that he and Mr George went to look at the shopping centre shortly thereafter. He further said that the visit did not involve any contact with a leasing agent or anyone from Industrial Equity Limited. He said that he and Mr George thought that an area which was blocked off by a hoarding would be a good location for a takeaway food outlet. He said that subsequently - he thought in August 1992 - Mr George told him that he had spoken to Mr Tresidder concerning the area and that, following that conversation, he and Mr George went to the shopping centre and on this occasion were able to gain access to the area which Shop P9 now occupies. Further enquiries were then made to see whether it would be possible to lease the area.
In his affidavit sworn on 10 November 1993, Mr Tresidder agreed that, in or about early September 1992, he
P9. He said he could not recall who initiated the discussion. "had contact with" Mr George concerning the leasing of Shop
Nor could he recall details of the conversations he had with Mr George concerning the leasing of the shop. He agreed, however, that he had attended with Mr George on two or three inspections of the shop in about September/October 1992.
Mr Tresidder could not recollect what was said at any conversation he had with either Mr George or Mr Blackwell. His diary contained an entry suggesting that a meeting took place .in the Optus Tower on 11 September 1992: he thought Messrs George, Blackwell, Chapman and himself were present but he could not recall what was discussed. He said that he had no access to the turnover figures of the shops in the centre.
On 17 September 1992, a letter (Exhibit 8) bearing the signatures of Mr Tresidder and Mr Ashley King was sent to Mr George enclosing a document described as a "Disclosure Statement" setting out the basis upon which a lease of the shop premises would be granted. The letter continued:

"If you wish to proceed please sign the attached Disclosure Statement and return it to this office together with the Lessee information form, statement of Assets and Liabilities for yourself and all Guarantors, Bank References and your deposit.

If the offer is accepted by the Lessor a Lease will be forwarded to you upon receipt of the abovementioned documents and deposit monies."

The "Disclosure Statement" (Exhibit 8) showed the

lettable area as "52.7m2 approximately", the lease term as 5

years, the date for commencement of the lease as 1 December	1992 (the lessee being provided with a fitout period of 4
weeks prior to that date) and the base rental in Year 1 as $76,707.50. Clauses 8 and 9 of the Disclosure Statement were in the following terms:

" 8	.	Operational
Expenses As an additional rent to the Base Rental, the Lessee shall pay a percentage of the Lessor's operation and maintenance expenses of the Retail Centre. The amount payable by the Lessee will be based on the proportion that the area of the Lessee's premises bears to the total lettable area of the Retail Centre.

Estimated contribution

Year 1 - $15,810

Good Food

Plaza	Additionally the Lessee will be responsible for an additional charge in respect of specific additional cleaning and maintenance requirements for the Good Food Plaza.
Estimated contribution Year 1 - $18,445
Operating expenses will be subject to review on 1st July each year.

9. Promotional

Fund The Lessee wlll be required to contribute to a Promotional Fund. This levy will represent 5% of the base rental and as such will vary with changes in the base rental.

Year 1 - $4037.50."

There was also reference to a requirement that a bank guarantee equivalent to two months' rental be provided, the

guarantee being the personal guarantee of the lessee or of

company directors.

Attached to the Disclosure Statement was a document headed "Shopping Centre Details". It showed the total lettable area as 9032m2. Under the sub-heading "Charges to be borne by lessee", the document gave details of the variable outgoings for the shopping centre, being estimates for the period 1 July 1992 to 30 June 1993. The estimated figures totalled $2,660,250.00. The document also contained an estimated figure for the same period of $120,000.00 described as "Additional cleaning/table bussing - Good Food Plaza". The document did not state the lettable area of the "Good Food Plaza".

Mathematically, based on the lettable area referred

to of 52.71112 , the figure of $15,810 represented estimated operational expenses of $300 per m2 per annum. Similarly, the figure of $18,445 represented estimated expenses for the "Good Food Plaza", based on the area of 52.7m2, of $350 per m2 per annum. The evidence establishes that the figure of $350 per m2 per annum was not the correct figure, the figure which those who prepared the document intended to use being the figure of $320 per m2 per annum. It may also be noted that the lessee's contribution to the promotional fund was also miscalculated. The figure stated did not represent, as it should have, 5 % of the base rental of $76,707.50 per annum. It must also be observed that it is not possible from the Disclosure Statement itself or its annexures to determine how

were calculated. For example, if the estimated figure of	the figures of $300 per m2 per annum and $320 per m2 per annum
$2,660,250.00 is divided by 9,032m2, the quotient is not $300 but $295. To arrive at the figure of $300, the lettable area would have to have been taken as 8,867.50m2.
Mr Chapman agreed that he had had what he described as a major input into the preparation of the estimated outgoings in respect of the shopping centre as a whole which resulted in the figure of $300 per m2 per annum. He also said that he he was not involved in the preparation of the estimates of outgoings referable to the "Good Food Plaza", those estimates having been prepared by a food consultant, M r
Andrew Young. His evidence, however, does not elucidate how the figure of $300 per m2 per annum was determined.
Mr George asserts that on 18 September 1992 he received a telephone call from Mr Tresidder in which Mr Tresidder informed him that there were other parties interested in Shop P9 but that if he, Mr George, were to sign and send back the Disclosure Statement, he, Mr Tresidder, could make sure that the shop would be leased to him. According to Mr George, he said to Mr Tresidder that he thought the rent was too high but that, if he "could be assured of the occupancy/turnover ratios" that Mr Tresidder was using, he thought he would be prepared to go ahead. Mr Tresidder is said to have responded:

the turnovers which will show that the ratios are	"As I told you Michael Chapman whom you know will confirm
reasonable".

Mr George said he agreed to sign and return the Disclosure Statement "but subject to the turnovers being verified". He also said that he told Mr Tresidder that he would have to wait until Monday for the deposit cheque. According to Mr George, Mr Tresidder said that was acceptable.

Mr George sent to Mr Tresidder by facsimile transmission a letter dated 18 September 1992 (Exhibit 5) reading as follows:

"I refer to our telephone conversation and attach the signed Declaration of Lessee in respect of the disclosure statement sent to me by facsimile transmission on the 17th September 1992, subject to the figures on turnovers being satisfactory. I understand these figures will be sent to me in the next few days and attach a cheque for the deposit which I will arrange to be delivered on Monday as agreed."

The Declaration of Lessee signed by Mr George on

behalf of the applicant read:

"We hereby acknowledge that thls Disclosure Statement contains all agreements and representations that influenced us to contemplate entering into the proposed

lease. "

Mr Tresidder, in his oral evidence, had no

recollection of the contents of any conversation with Mr

received the letter of that date. Mr Chapman, however, agreed	George on 18 September 1992. Nor could he recall having
that he was approached by Mr Tresidder to provide Mr George with turnover figures relating to the other shops in the "Good Food Plaza".
Mr George further said that, during the week commencing Monday, 21 September 1992, he had various telephone discussions with Mr Tresidder and that he and Mr Blackwell met with him at the offices of Industrial Equity Limited located in the shopping centre -complex. The .matters discussed included, so Mr George said, the design of the shop, the type of fit out, the menu mix and the monthly turnover figures of the takeaway food shops already operating within the shopping centre. As to the turnover figures, Mr Tresidder, according to Mr George, said:

"I do not think that I have got exact figures but I have a rough idea. The figures for August for the Chinese was $30,000, for Hocha Hocha [sic] $40,000, the salad bar generated $55,000, the 'Coffee Lounge' $45,000, the hamburger shop $25,000, the pie shop $30,000 and the Italian shop $40,000. The exact turnover figures can be provided by Mike Chapman."

Mr George referred to a handwritten document which, he said, recorded the turnover figures mentioned by Mr Tresidder. The figures on the handwritten document accord with those set out above.

Mr Tresidder said in his affidavit sworn on 10 November 1993 that he had no recollection of giving any	turnover figures to Mr George either on 21 September 1992 or
at any other time. He said he had had no figures in his possession relating to the turnover of any of the shops.
Events of 29 September 1992
According to Mr George, a meeting took place on 29 September 1992 in what he described as a drawing or site
office within the Optus Tower. In his af fidavit sworn on 13
October 1993 he said that those present were Messrs Tresidder, Chapman, Blackwell and himself. In his oral evidence he said that two other persons were present, one being a Mr Vince Tradd and the other being unknown to him. He further said that that person was not Mr Holmes Court and that he had no recollection of Mr Holmes a Court being present. He said, however, that there was no doubt in his mind at all that Mr Tresidder was present.

Mr George's version of what relevantly took place is

that, in the course of the meeting, he said to M r Chapman:

"David [Tresidder] has provided us with some rough turnover figures for the other food shops for August. He said that you would be able to provide us with the exact

figures . "

According to Mr George, Mr Chapman had a pile of papers one or two inches thick in front of him and he turned over the first two or three pages as he was speaking, saying:

"Yes, that's right. The 'Hard Wok' [sic. - scil. 'Side

Wok'] is averaging a monthly turnover of $30,000 plus. However, I feel that they are understating the turnover figures and I believe that their actual turnover would be in the order of $45,000-$50,000. That would be more appropriate given the amount of customers they have. 'Hocha Hocha' [sic. - scil. 'Hokka Hokka'] are averaging $30,000-$40,000 per month. $30,000 was their turnover for the first month of operations and that increased to $40,000 in the second month. 'Swiss Deli' achieved a turnover of $50,000 during the first month of operation and that increased to $60,000 during the second month. 'B.B.'s Coffee Shop' had $45,000 in the first month and then $55,000 in the second. 'Munchtime' had $25,000 in the first month and $30,000 plus in the second. The 'Italian Takeaway' averaged $35,000-$45,000 in the first 2 months but I believe that they are understating the actual turnover. I think it would be more like $45,000. The 'Pie Shop' is averaging $30,000."

The references to the first month are to July 1992, the references to the second month to August 1992. Mr George said that, after those figures were provided, he said to Mr Chapman :

"I have used $40,000 per month as the turnover for my budget to see if the business is viable. That figure seems to be on the high side for me and I'll need to redo my figures."

Mr George said that Mr Chapman replied:

"It may be high for the first month but the turnovers are improving as the Centre gets established so it would be a reasonable figure to use as a budget for the whole year."

Mr George further said that, as Mr Chapman was speaking, he made a note of what he said and that he added to the note as the meeting continued. The note (Annexure "D" to Mr George's affidavit sworn 13 October 1993) reads as follows:

"North Svd.

Michael Chapman. Tues 29/9/92 3.50 p.m.

Eatery Figures - average

1. Side Wok 30,000+ M.C. feels they are under stating believe 45/50,000 more appropriate given amount of customers

2. Hocha Hocha[sic] 30/40,000 30 1st mth. 40 2nd mth

3. Swiss Deli. 1st mth 50,000+ 2nd mth 60,000

4. B/AB coffee shop 45,000 2nd 55,000 5. Munchtime exp. 25,000 2nd 30000+

6. Italian	35/40,000 1st & 2nd (understated 45)
7. Pie	30,000

D. Tresidder left - needs signed disclosure statement - some changes. Area 52.7 but used 53 sm. Used O/G of $620 psm = $32,860. Nett Rent 78,200. Promo $3910 = $114,970.

I said I had used $40,000 p.m. - my concern was the value of the bussing service. Michael said must be worth 1 to 1.5 persons & saving of washing machine & area.

I said the cost would be high in a restaurant and 0 in a T/A as no washing. We would still need washing area for cooking so no really space or labour saving. I said we are doing a study of the restaurant v T/A at QVB and then decide if T/O to rent ratio was correct. M.C. said David T. thought the deal was agreed and IEL had signed off on the figures. I said that the disclosure statement fax had been signed subject to knowing T/O figures. I said I would look at the comparisons between our restaurant & T/A at QVB & let him know tomorrow about the rent."

In the statement, "M.C." is an abbreviation for Michael Chapman, "O/G" for outgoings, "T/A" for takeaway, "QVB" for Queen Victoria Building and "T/OU for turnover.

In his oral evidence, Mr George said that Mr Tresidder left the meeting before it had concluded, saying that he had another appointment. Mr George said that, as he stood up to leave the meetlng, Mr Tresidder said:

"1'11 need to get you to sign another Disclosure Statement because the area has changed slightly. There are no major differences; we've taken about $1,500 off one of the outgoing charges and put it into the rent and we've reduced the rent by $1,000 so there's something like a $500 difference in the total. Nothing major."

M r Gearge also gave the following evidence:

"Q. Did he say what the new area was?

A.	He said it had been worked out on 53 square metres but it's really 5 2 . 7 , but the attitude was, you know, who's going to argue about . 3 of a square metre.
Q.	Did he give you an overall figure for the outgoings per metre at that meeting?
A.	Yes, I think I noted them down. He just said the figures would be and he quoted each of the figures and I noted the figures down as he was saying them.
Q.	Are they figures which you believe are found in your notes at that meeting?
A.	Yes, they were the figures that I made notes of as he said because I wanted to make sure that I could check them off against the Disclosure Statement when he sent it to me."

M r George said that, after Mr Tresidder left, he started

another conversation with Mr Chapman and that that conversation is also recorded in the note the text of which is

set out above.

In relation to the preparation of the note, Mr

George said:

"My recollection of this statement was that as Michael Chapman was giving me the figures I noted them down. I noted also the figures down that Davld Tresidder gave me. Subsequently, I think just after the meeting had finished and people were talking, whilst I was still in the area in that room, I made the remainder of this note."

According to Mr George, he then left the meeting but Mr Blackwell stayed on to talk about matters of fit out.

In his first affidavit, which was sworn on 16 November 1993 and was an affidavit in reply to an affidavit sworn by Mr Holmes h Court on 9 November 1993, Mr Blackwell made the general statement that, in making the decision to cause the applicant to enter into the lease, he had relied "on the monthly turnovers of other food shops told to me by Mr Chapman at a meeting that I attended with Mr George at the Centre on 29 September 1992 and what was told to me by Mr George in relation to turnovers". It is curious that he did not swear an affidavit in chief and that, in the affidavit sworn on 16 November 1993, he gave no detail as to the persons present at that meeting or as to what was said by those attending. He was unable to offer any explanation why this should have been the case. However, in an affidavit sworn two days later, after the hearing had commenced, he gave a history of his involvement in the project including an account of the	meeting on 29 September 1992. He said that Mr Chapman and Mr	Tresidder were present. He was not sure whether Mr Holmes h
Court was in attendance. He said that Mr Peter Whittle and Mr Vince Tradd were also present but he could not recall whether they were present during the discussion that took place concerning turnovers. His affidavit continues:

"I recall hearing the following conversation which took

place between Peter and Michael Chapman:

Peter:	'Do you have the turnover figures?'
Mr	Cha~man: 'Yes.'
Peter:	'What are they?'

Mr Cha~man: 'Swiss Deli - $55,000-$60,000, Chinese $40,000+, BB's Coffee Lounge $45,000+, The Pie Man $30,000, Munchtime $25,000-$30,000, the Italian $40,000+.'

I recall him mentioning the other outlet 'Hokka Hokka' but am unable to recall the turnover figure which Mr Chapman nominated. I do not recall whether Mr Chapman was reading from a document when providing these figures but I recall that he had documents in front of him. I recall there was a general discussion about the belief held by those there that Chinese operators never tell the truth about their turnover figures but I do not recall the content of this discussion. During this meeting, and as Mr Chapman was speaking, I saw that Peter was making notes.

It is clear that Mr Blackwell attended the meeting in order to meet those in Industrial Equity Limited who would need to be consulted concerning the design and fit out of the proposed shop. He had no clear recollection of what was said at the meeting. He agreed that he had only a "general remembrance".

In his affidavit sworn on 10 November 1993, Mr Tresidder said that he did not recall if he met with Mr George on 29 September 1992. In oral evidence, however, he said that he left his employment with Baillieu Knight Frank (NSW) Pty Ltd on 25 September 1992 and that after that date he did no further work at the Optus Centre. It is one of the curious features of this case that, notwithstanding the significance of this evidence in relation to the assertion by Mr George that he, Tresidder, had attended the meeting on 29 September 1992, no reference to his having left his employment with Baillieu Knight Frank (NSW) Pty Ltd was made in the affidavit he made on 10 November 1993.

Mr Chapman, in his affidavit sworn on 10 November 1993, said he could recall a meeting which he thought took place on or around 29 September 1992 at which Mr Holmes B Court appeared to read from a document he had in front of him turnover figures for the first two months of the operation of the Centre, being July and August 1992, in respect of the food outlets adjacent to Shop P9. He said that Mr George, Mr Holmes B Court and he were present. He could not recall that anyone else was present but of that he was not certain. In particular, he could not recall Mr Tresidder being at the meeting though he thought it possible that he was.

Mr Chapman asserted that he did not have access to the turncrer figures for the shops that were already operating in the "Good Food Plaza", that that information was confidential and that Mr Holmes B Court, as the Centre

He agreed that he had been approached by Mr Tresidder to	Manager, was the only person having access to those figures.
provide turnover figures for those shops. He said he had been informed by Mr Tresidder that Mr George and Mr Blackwell "needed some comfort as to what figures were being achieved by the other operators". He said he was not informed that Mr George wished to hear the figures from him.
Although in his affidavit sworn on 10 November 1993 Mr Chapman said that he had asked Mr Holmes B Court for turnover information which he, Mr Chapman, could supply to Mr George and made no mention of the figures being confidential, in his oral evidence he sought to maintain that, because the figures were confidential, he had always intended that Mr Holmes B Court should provide the figures. At a late stage in his oral evidence, Mr Chapman sought to suggest, for the first time, that a further reason why he did not provide the turnover figures was that he "undertook general caution in dealings with Mr George". He was, however, firm in his evidence that he did not provide the turnover figures to M r George but that those figures were provided at the meeting by Mr Holmes B Court.
Generally, Mr Chapman could not recall the conversation between them that Mr George said had taken place. He agreed, however, that at the meeting both he and Mr Holmes
3 Court commented upon the common practice of proprietors of
Chinese food outlets with respect to the provision of turnover figures. He denied that he made any comment suggesting that
the turnover figures provided by "Pastarini" were incorrect.
Mr Holmes B Court gave evidence that on 29 September 1992 he attended a meeting - which he believed took place in
the boardroom of Industrial Equity Limited in the Optus Centre
- at which Mr George and Mr Chapman were present. He believed
Mr Tresidder was not in attendance. He said that various

- .subjects were discussed, including the date from which the payment of rent was to commence, the permissible shop usage, shop fit out and design and the turnover figures of the shops in the "Good Food Plaza". He said he took to the meeting a document prepared from the written or oral statements given at the end of the months of July and August 1992 by the respective lessees of the turnover achieved in those months. He said that, referring to this document and rounding off the figures to the nearest thousand dollars, he provided to Mr George figures for each of the then operating shops ir. the "Good Food Plaza". From the document, which is in evidence (Annexure "A" to Mr Holmes Court's affidavit sworn on 9 November 1993), the following may be extracted:

Mr Holmes & Court also gave evidence that, when

referring to the turnover figures for "Side Wokv, he said
words to the following effect:

."The turnover was- $27,000.00 and $28,000.00. But, taking

the nature of the individual and past experience of this tenant, I have concern as to the accuracy of these figures and I would believe from past experience that he's understating his turnover by about one and a half

times. "

He said Mr Chapman made a similar comment but that he, Mr
Chapman, did not quote any turnover figures at the meeting.

Mr Holmes B Court agreed that Mr Chapman had approached him in relation to the provision of turnover figures to Mr George. He said Mr Chapman approached him on two occasions. On the first occasion, according to Mr Holmes

B Court, he was too busy to do anything about obtaining the

figures. On the second occasion, he said to Mr Chapman that there should be a meeting at which he, Holmes B Court, would "handle the turnover side of it". According to Mr Holmes A Court, there were other reasons why he wished to attend a meeting with Mr George. He said he wished to preserve the security of the turnover figures and to ensure that the usage

clause relating to the proposed shops was correct.

It was put to Mr Holmes B Court in cross-examination that some of the matters he said were discussed at the meeting on 29 September 1992 were not discussed at that meeting but at a meeting on 9 December 1992 attended by Mr George, Mr Chapman, Mr Carrier and himself. Mr Holmes B Court's recollection was that they were discussed at the first of those meetings and resolved at the later meeting. But, even if it be accepted that Mr Holmes B Court was attributing to the meeting on 29 September 1992 matters that were discussed only at the later meeting, that does not detract from his evidence that it was he, and not Mr Chapman, who provided the turnover figures to Mr George and in the manner which he described.

Mr Holmes h Court also said that, at the meeting on 29 September 1992, there was a discussion between Mr Chapman and Mr George concerning the amendment of some of the figures in the Disclosure Statement, particularly the base rent.

Mr George said that during September 1992 he prepared a number of budgets in respect of the proposed business. Some were handwritten and others were generated by computer. He produced (Annexure "B" to his affidavit sworn on 19 October 1993) what he said was a copy of the final version of a computer generated budget which he prepared either on the evening of 29 September 1992 or very shortly thereafter. For the purpose of that budget he used a monthly turnover figure

of $40,000.

According to Mr George, he discussed the matter with Mr Blackwell on the evening of 29 September 1992 and on the following day he telephoned Mr Tresidder and informed him that he and Mr Blackwell were prepared to proceed "but on the basis of the turnover figures which have been provided to us". According to Mr George, Mr Tresidder said:

"Okay, 1'1.1 get things moving at this end."

Mr Tresidder did not recall any such conversation. He said he had no further involvement with the matter after 25 September 1992.

Evsnts between 29 Se~tember 1992 and 31 Decemher 1992

Preparatory work on fitting out Shop P9 commenced in September 19 92. There followed discussions between Mr Blackwell (and sometimes Mr George) and employees of The Rice Daubney Group who were the appointed architects for the development of the Optus Tower and the Greenwood Plaza. The object of those discussions was to ensure that the design of Shop P9 fitted into the overall design of the shopping centre. According to the evidence, which I accept, of Denise Head, an architectural designer employed by The Rice Daubney Group, in September 1992 the area of Shop 9 had been blocked off from the view of the public by a temporary wall constructed and

painted so as to allow the remainder of the "Good Food Plaza"

to be used without it appearing to the public that there was a

vacant shop site. The area of Shop P9 as bounded by the temporary wall, which ran in a straight line between two columns, was 52.7 m2 . Miss Head said that the design pro£ ile of the front counters of all the shops in the "Good Food Plaza" operating by August 1992 was "free form", each being designed to "project" into the public area. Miss Head had kept detailed records of the various discussions with Mr Blackwell and Mr George. Her evidence establishes that

--agreement was reached that the counter of Shop P9 would be constructed in a character and style that was sympathetic to the design of the other shops. The plans in accordance with which the counter of Shop P9 was constructed are in evidence. The counter clearly has an irregular or free form shape and is so positioned that the area of Shop P9 was increased from the 57 7m2 to which reference has been made. The affidavit of Nicholas Krikis, Project Director of The Rice Daubney Group, sworn on 10 December 1993 establishes that the increase in area referable to the design of the counter is 8.51112. Mr Krikis also identifies another reason, relating to the positioning of the rear wall of the shop, for the area of the shop as surveyed varying from the area of 52.7m2, the difference being 1.0m2 .

On 30 September 1992, Mr 7eorge received a letter
(Exhibit 2) bearing that date sent to him by Industrial Equity

Limited. The letter was signed by Mr Chapman and Mr Ashley

King. Its text was identical with the letter dated 17 September 1992. One may surmise from the documents in	evidence that its text was really a form letter used whenever
a Disclosure Statement was sent out. Enclosed with the letter was a revised Disclosure Statement (Exhibit 2) which Mr George was asked to sign. That statement varied in a number of respects from that sent to him under cover of the letter dated 17 September 1992. In particular, the revised document showed the lettable area as "53m2 approximately", instead of "52.71112
approximately"; it provided for the lessee to have a base rent free period of one month; the base rent for Year 1 was shown as $78,200.00 instead of $76,707.50; the estimated contribution for operational expenses in Year 1 was shown as
$15,900.00 instead of $15,810.00; the estimated contribution
in respect of the "Good Food Plaza" in Year 1 was shown as
$16,960.00 instead of $18,445.00; and the contribution to the
promotional fund in Year 1 was shown as $3,910.00 instead of
$4,037.50. The figure of $15,900.00 is the product of $300
per m2 per annum multiplied by 53m2. The figure of $16,960.00 is the product of $320 per m2 per annum multiplied by 53m2. The figure of $3,910.00 represents 5% of the base rent of
$78,200.00 per annum. One of the attachments to the
Disclosure Statement was a copy of the document headed "Shopping Centre Details" that had been attached to the earlier Disclosure Statement.
On the same day, 30 September 1992, the declaration of lessee attached to the Disclosure Statement was signed on
behalf of the applicant and returned to the respondent.
It appears that Mr George also received a document in the form of an unsigned letter (Exhibit 9) to which was attached a Disclosure Statement (Exhibit 9) in identical terms to that to which reference has been made as being attached to the letter dated 30 September 1992 signed by Messrs Chapman and King. The document in the form of a letter also bore the date 30 September 1992 and identified as the proposed signatories David Tresidder and Ashley King. The evidence does not satisfactorily explain how that document came to be prepared or how it came into Mr George's possession.
In relation to the changes in the figures set out in the Disclosure Statements, Mr Chapman said that, when he saw the figures set out in the Disclosure Statement forwarded to Mr George under cover of the letter dated 17 September 1992, he concluded that the calculations were incorrect. The alterations which were made to that Disclosure Statement appear on a copy of that document in evidence, the alterations being in Mr Chapman's handwriting. Initially Mr Chapman said that further negotiations concerning the changes took place between Mr Tresidder and Mr George and that he was not personally involved in any such negotiations. Later, however, he agreed that, although he could not recall a discussion with Mr George zoncerning the changes to the Disclosure Statement, the discussion may have taken place at the meeting at which the turnover figures in relation to the operating shops were

provided. I have already referred to the evidence given by Mr

Holmes a Court in this regard.

According to Mr Blackwell, a meeting took place, probably in early October 1992, attended by himself, Mr George, Mr Tresidder, Mr Chapman and Mr Andrew Young who was introduced as a food consultant to Industrial Equity Limited. Mr Blackwell said that this meeting did not discuss rental, level of outgoings or the turnover being achieved by other food outlets already established in the Good Food Plaza. At one point in his oral evidence, Mr George said that he had no recollection of any meeting with Mr Tresidder between 29 September 1992 and 18 December 1992. He said, however, that a meeting had taken place in the boardroom of Industrial Equity Limited at the Optus Tower sometime after 29 September 1992 at which Mr Chapman and, he thought, M r Holmes a Court were p-esent. That meeting, he said, discussed a delay in the date of commencement of the lease. Later in his evidence he made general reference to meetings he had prior to 18 December 1992 with Mr Holmes a Court, Mr Chapman and Mr Tresidder.

An agreement for a lease was subsequently executed by the parties and by Messrs George and Blackwell as guarantors. The agreement is dated 18 December 1992. The lease to which reference has already been made was also executed by the respondent as lessor and the applicant as lessee. That document is also dated 18 December 1992. It also bears the signatures of Messrs George and Blackwell as guarantors.

Mr Chapman said he had no knowledge of any revision between l July 1992 and 18 December 1992 of the budget for outgoings for the shopping centre upon which the figures of

$300 and $320 per m2 per annum were based.

Mr Holmes Court gave evidence that he had been

involved in 1992 in the preparation of budgets relating to the outgoings to be paid by the tenants, including the tenants of the shops in the "Good Food Plaza". He agreed that he had been involved in the preparation of a document (Exhibit 7) bearing date 9 December 1992 and headed "Greenwood Plaza - Outgoings Forecast Year Ended 30 June 1993". The document had four columns. The first listed the various items of expenditure, the second was headed "Annual Budget" and the third was headed "F'cast Y.T.D. " which M r Holmes 3 Court said reflected actual expenditure from 1 July 1992 to the date of preparation of the document and forecasted expenditure for the remainder of the financial year "on a worst case scenario". The fourth column headed "Variance" showed the difference between the figures in columns 2 and 3.

Under the heading "Annual Budget", the document

showed :

Total recoverable outgoings	$2,641,250
Rate per square metre (total

area 8,783.1) $300.72

Under the same heading, the document showed:

Total "Good Food Plaza" bussing

Bussing rate per square metre $134,000

(total area 452.5) $296.13

The figure of $134,000 represented total estimated expenditure for "Good Food Plaza" bussing of $200,000 less one third of that figure ($66,000) which was shown as having been included in the estimate for total recoverable outgoings ($2,641,250).

Under the heading "F'cast Y.T.D.", the document

showed :

Total recoverable outgoings

Rate per square metre (total

area 8,783.1)

Under the same heading, the document showed:

Total "Good Food Plaza" bussing	$146,400
Bussing rate per square metre

(total area 452.5) $323.54

In arriving at these figures the total estimated expenditure for "Good Food Plaza" bussing of $219,400 had been reduced by one third ($73,000) and that figure had been included in the estimate of total recoverable outgoings ($2,614,950).

The evidence does not establish that the budget to
which Mr Holmes a Court referred was ever adopted by the

respondent. Indeed, the evidence is to the contrary. In a

memorandum dated 14 December 1992 (Exhibit 13), Mr Shaddock	strenuously disagreed with the proposal embodied in the budget
that one-third of the "Good Food Plaza" bussing charges be transferred to the forecasted expenditure for the shopping centre as a whole. So far as appears, the principle of making such a transfer was not adopted by the applicant in relation to the year ended 30 June 1993.
Events after 1 Januarv 1993
On or about 21 January 1993, the applicant received from the respondent a number of documents including a schedule (Annexure "D" to Mr George's affidavit sworn 19 October 1993) headed "Good Food Plaza, Greenwood Plaza, Outgoings 1992/1993". It showed, in relation to Shop P9, the current charge of $16,960 calculated at $300 per m2 per annum and a current forecast of $19,875 calculated at $375 per m2 per annum. The document showed the total lettable area of the "Good Food Plaza" as 431.3 m2. The document also gave the following details under the heading "Expenditure":

Good Food Plaza	$374.56 psm	$400.00 psm
Outgoings Charges per Square Metre

The applicant was informed that the increase in the bussing rate to $375 per mZ per annum was to be effective from 1 February 1993. Whether the respondent was entitled to act as it did may be a question having regard to the terms of the lease but that matter is not in issue in the present proceeding.

According to M r George, the turnover figures for Shop P9 after it commenced trading were disappointing and, as trading continued, it became apparent to him that the turnover would stabilise at around $20,000 to $25,000 per month on average. The situation, he said, did not improve.

On 24 June 1993, MS Alison Reid, Centre Manager of the Greenwood Plaza Shopping Centre, addressed a letter of that date to Mr Blackwell. The letter read:

"Greenwood Plaza has now completed the first twelve months trading and in accordance with the Terms and Conditions of the Lease we have reviewed the outgoings expenditure.

We have limited control over statutory charges, insurance and tariffs imposed upon us by the relevant authorities. All mechanical services are now beyond the realms of warranties and comprehensive maintenance programmes have to be put in place.

All items of expenditure have been thoroughly reviewed

operations of the shopping centre we have secured the	and costs contained where possible. To maintain the high standard currently being achieved in the day to day
best possible prices on all contracts and firmly believe we have acted wisely and economically.
The 93/94 Operating Expenditure Budget has been calculated and the annual charge relevant to your tenancy is $23840.00 and the monthly figure is now reflected in your enclosed statement and we ask that you amend your records accordingly.
The bussing costs for the Good Food Plaza have also been reviewed and increased to support the demand and patronage of the Eatery. As with the rest of the Centre the services are now not covered under warranty and these costs must be included. The annual charge relative to your tenancy is $35619.00 which equates to $2968.00 per month.
An audited statement of the 92/93 Operating Expenses will be forwarded to you upon completion.
Should you have any queries in this regard please contact the undersigned or Kevin Dickinson, Operations Manager."

Mr George sent a letter dated 30 July 1993 addressed

to MS Alison Reid, Centre Manager of the Greenwood Plaza,
reading as follows:

"Sho~ P9 Greenwood Plaza Food Court

My partner in the above business Mr Miles Blackwell has brought my notice to the increase in the bussing and outgoing charges.

I have compared the estimates for the outgoing and bussing charges with the disclosure statement sent to me on the 17th of Sept 1992, and find that the increases are 50.79% and 93.11% and this for less than one year. Even more extraordinary is that this should occur in a year when inflation has been almost static and indeed costs in several areas of the catering industry have gone down, so such increases are unacceptable.

I would add that when we agreed to lease this unit, it was upon the basis that the turnovers given to us for the other outlets were accurate. These were, per month,

Express $30,000+, B B coffee 45/55,000 Hocha Hocha [sic] Swiss Deli $55/60,000 Pie Corner $25/30,000 Munchtime	$40,000, Pastarini $40/45,000. You have indicated to my
partner Miles Blackwell that our turnover is in line with the other outlets and that our operation and food products are of a high standard. Our monthly turnover has been around $25,000 which is a long way short of the original turnover figures. At the current occupancy cost of $9,814 per month this represents occupancy cost to turnover ratio of 39.25% which is clearly uneconomic.
We have taken substantial promotion activities leaflet drops, breakfast promotions and a continuous fax circular to local offices offering specials at almost cost price to draw new customers to the centre. However at the current occupancy costs we cannot continue to commit resources to a business where the rent and occupancy cost are so far out of balance. We would propose that we should lower the total occupancy costs to a figure in the order of 20% of the turnover which would put us in a breakeven position. We are not seeking to make a profit on this business but simply to breakeven until the recession is over and the office population in North Sydney returns of normal. In the event of such an agreement we would sign a confidentiality agreement to prevent creating a precedent.
In our original approach for leasing we emphasised the need for a more commercial use clause which would allow us to increase our turnover. The landlord's food experts told us that the restricted food use would be sufficient, having regard to the overall services offered, clearly this has not translated into practice. Accordingly we would like to try and extend our menu subject to not unreasonably overlapping with our fellow food tenants."

Mr George said that he did not have the file with him when he composed the letter and that the turnover figures set out in the letter were given to him by Mr Blackwell over the telephone. Mr Blackwell confirmed this, saying that he read the figures from a handwritten document on the file. He did not identify the document and it was not produced.

MS Reid replied to the letter dated 30 July 1993 by letter dated 6 August 1993 in the following terms:

relation to the above and share your concern about the	"We are in receipt of your letter of 30th July 1993 in
level of your occupancy costs.
At present we are reviewing the 93/94 Operating Budgets and Bussing Costs and believe there are opportunities to make some savings on our original estimates. Once completed we will advise you of the revised charges and we expect this will be early next week.
In response to your request to expand your current menu, we would be only too happy to consider any additional lines you wish to carry and ask you to submit your suggestions as soon as possible.

In the meantime should you wish to discuss the matter further please do not hesitate to contact the undersigned."

According to Mr George, a meeting took place between MS Reid, Mr Blackwell and himself at 4.00 p.m. on 12 August 1993. Mr George said that MS Reid agreed that his statement that the turnover figures for Shop P9 appeared to be in line with those of other shop proprietors. She asked where he got the turnover figures mentioned in the letter dated 30 July 1993 to which Mr George replied -

"From David Tresidder and Mike Chapman. Were they
correct.

According to Mr George, MS Reid then said that those figures were "about $10,000 too much over the real figures and in some cases higher". He said that he then read out the turnover figures for the various shops as set out in the letter dated 30 July 1993 and that she read out figures for each shop from turnover schedules. According to Mr George, MS Reid said that

out - it is nowhere near". Mr George said MS Reid gave the the figure of $55,000/$60,000 for the Swiss Deli was "so far following figures for the other shops -

Pie Corner	$10,500/$15,000 and going down
Munchtime Express	$20,000
B & B	In the 20 thousands
Hokka Hokka	Mid 20 thousands
Pastarin1	Mid 20 thousands

MS Reid, while agreeing that a conversation along the lines of that deposed to by Mr George took place on 12 August 1993, denied that, in relation to figures for the Swiss Deli, she used the words attributed to her by Mr George. She said that she merely commented that the figures read out by Mr George were incorrect. According to her recollection, she gave the following figures:

Pie Corner $10,000 and $15,000 and going down

Munchtime Express Mid 20 thousands

B & B	High 20 thousands to low 30 thousands
Hokka Hokka	High 20 thousands
Pastarini	High 20 thousands to low 30 thousands

The evidence does not establish from what turnover schedules MS Reid was reading. Clearly, she could not have been reading from the turnover figures returned by the various lessees in respect of the months of July to November 1992. Those figures are in evidence (Exhibit 21) and are as follows:

13 BB's Coffee

In a letter dated 1 September 1993 addressed to MS Reid, M r George on behalf of the applicant asserted that -

"we calculated all the budget forecasts and signed the lease of this shop on the basis of the turnovers represented to us which you have now confirmed as being almost half of the turnover figures originally given to

us. "

In her reply dated 2 September 1993, MS Reid said:

"At our recent meeting confirmation was never given that turnovers represented to you were almost half the actual being achieved. We indicated they were less and each one varying to a different degree."

For completeness, it may be added that, by letter dated 27 September 1993, MS Reid informed Mr Blackwell that a review had been carried out of the 1993/94 budgeted outgoings expenditure making savings where possible. The result, she said, was a substantial reduction in the applicant's contribution backdated to 1 July 1993. According to MS Reid, the effect of the review was to reduce the contribution for operating expenses from the figure of $23,840.00 referred to in the letter dated 24 June 1993 to $20,223.00 and to reduce

the contribution for the bussing charges referable to the	"Good Food Plaza" from the figure of $35,619.00 referred to in
the letter dated 24 June 1993 to $31,374.00. The figures were
calculated on a lettable area of Shop P9 of 63m2.
The audited figures for recoverable expenditure for the year ended 30 June 1993 are in evidence (Annexure "J" to MS Reid's affidavit sworn on 30 November 1993). That document shows that total recoverable expenditure for the shopping centre as a whole (but excluding "Good Food Plaza" bussing charges) was $2,295,263 giving a rate per m2 per annum, based on a'lettable area of 8776.91112, of $261.51. The document also shows "Good Food Plaza" bussing charges at $161,476 giving a rate per m* per annum, based on a lettable area of 441.3m2, of $365.91.
Findinas
It will be apparent from what I have written that there is unanimity between the various witnesses as to almost no relevant fact. There is no agreement as to the date of the crucial meeting at which the turnover figures were discussed, as to the place where it was held, as to the identity of those who attended the meeting or as to what was said by those present.
Notwithstanding some uncertainty as to the date, I find that a meeting took place on 29 September 1992 at which Messrs George, Blackwell, Chapman and Holmes h Court were present. I am unable to say whether Mr Tresidder was
present - I think he probably was but, in the result, whether he was present or not is not of particular significance.
I further find that, at the meeting on 29 September 1992, various topics were discussed although it may be accepted that the primary purpose of the meeting was to enable turnover figures in relation to the shops then operating in the "Good Food Plaza" to be provided to M r George.
The applicant's case relies heavily on the notes prepared by Mr George concerning what was said at the meeting. According to Mr George, part of that note was written while Mr Chapman was speaking, part while Mr Tresidder was speaking and the remainder immediately after the meeting concluded. The note exhibits a number of curious features. It does not record who was present at the meeting - only M r Chapman's name is recorded at the commencement of the note. The language of the note, referring as it does to Mr Tresidder having left the meeting, is not consistent with Mr George having written down, as Mr Tresidder was speaking, the figures he is alleged to have provided as to the lettable area and the outgoings. I think it more probable that, if Mr George wrote down the figures for outgoings as they were provided, he did so on the copy of the Disclosure Statement sent to him under cover of the letter dated 17 September 1992. I think it more probable that the whole of the note recording what occurred at the meeting on 29 September 1992 was written at some time after the meeting, though when I am unable to say. If Mr George
wrote the figures down at some time after the meeting, he may
not have recollected correctly what the figures were. I note also that Mr Blackwell, while maintaining that Mr Chapman provided turnover figures at the meeting on 29 September 1992, recalled figures somewhat different from those set out in Mr George's note, though it must be said that he did not have a very clear recollection of what was said at the meeting.
There are other instances where Mr George has had difficulty with recording figures. For example, it is curious that the turnover figures which Mr George set out in his letter dated 30 July 1993 to MS Reid differ from those set out in his note of the meeting of 29 September 1992 and from those recalled by Mr Blackwell. Although Mr George said that the figures set out in the letter dated 30 July 1993 were read to hlm over the telephone by Mr Blackwell anu Mr Blackwell's recollection was that the figures were read from a document on the relevant file, no document has been produced which could be the source of the figures set out in the letter. Again, M r George's recollection, given during his oral evidence, of what
Mr Tresidder said to him immediately before leaving the
meeting on 29 September 1992 is not consistent with the changes that were, in fact, made to the figures set out in the Disclosure Statement dated 17 September 1992. There was not a difference of about $500 in the base rental but an increase of $1,492.50. If Mr George was referring to the variation in the total figure for outgoings, he was, again, in error as the
between Mr George's account of the turnover figures given to total increase was only $30. Further, there is inconsistency
him by MS Reid on 12 August 1993 and the account given by MS Reid.
To enable the applicant to succeed in relation to the representations alleged to have been made by the respondent concerning the turnover figures for July and August 1992 for the shops in the "Good Food Plaza", the Court must be satisfied that the evidence given by Mr Chapman and Mr Holmes
B Court as to what took place at the meeting on 29 September
1992 is a complete fabrication. The evidence of Mr George and Mr Blackwell on the one hand and that of Mc Chapman and Mr Holmes B Court on the other cannot be reconciled. The differences cannot be explained by lack of recollection on the part of one or more of the witnesses.
A strong attack was made on the credibility of Mr Tresidder, Mr Chapman and Mr Holmes a Court. Mr Tresidder's evidence was clearly unhelpful. He could recall nothing of any real significance in relation to his dealings concerning Shop P9, even when there was relevant documentary material available to him. I find it difficult to accept that he was being completely frank. I must also say that I did not find Mr Chapman to be an entirely satisfactory witness. He, like
M r Tresiddcr, was ever ready to s5elter behind a lack of
recall when matters were put to him that might appear to him to be crucial to the respondent's defence to the applicant's
claim. On the other hand, I discerned no basis upon which I should discount Mr Holmes B Court's evidence that it was he
and not Mr Chapman who provided the turnover figures at the relevant meeting and that the figures provided differed materially from those deposed to by Mr George and Mr Blackwell.
Having read and re-read the evidence and given the matter anxious consideration, I find myself in the situation where I am not satisfied that the representations as to the turnover figures for July and August 1992 for other shops in the "Good Food Plaza" as alleged by the applicant (see the representations (a) to (g) inclusive in par.5 of the second further amended statement of claim set out above) were, in fact, made. Not being so satisfied, the applicant cannot succeed on this aspect of the matter.
Nor, in my view, does the evidence establish that Mr Chapman on behalf of the respondent represented (see representation (h) in par.5 of the second further amended statement of claim) that "the average monthly turnovers of the various shops operating as food outlets were improving". As to representation (i) in par.5 of the second further amended statement of claim, I am not satisfied that Mr Chapman represented that "$40,000 was a reasonable sum for average monthly turnover for the Applicant to adopt for budgetary purposes in assessing whether or not to take a lease of Shop
P9".
The applicant has also failed to establish its case based upon the alleged representation as to the lettable area of Shop P9. The explanation for the difference between the area of "53m2 approximately" and the area of 63m2 subsequently determined by survey to be the correct area of the shop is to be found substantially in the changes to the position and configuration of the front counter of the shop. Those changes were agreed to by Mr Blackwell and Mr George during the course of the fit out of the premises. It must have been obvious to them that the positioning of the counter would result in an increase in the area of the shop. It must also be remembered that in respect of the period from 1 January 1993 to 30 June 1993, the applicant's contributions to the operating expenses of the shopping centre and the "Good Food Plaza" were calculated on the basis that the lettable area of Shop P9 was
531112 .
I turn now to the representations alleged to have been made on 30 September 1992 as to the estimated contributions to be made by the applicant to operational expenses of the shopping centre and to the expenditure directly referable to the "Good Food Plaza".
The first matter to notice is that the evidence does not establish the representations as alleged in sub-pars (a) and (b) of par.6 of the second further amended statement of claim. It is true that the Disclosure Statement forwarded
under cover of the letter dated 30 September 1992 identified the estimated contributions of $15,900 and $16,960 as relating
to "Year 1". The pleading alleges that that reference is to Year 1 of the lease, being the period of 12 months from the date of the commencement of the lease which, at 30 September 1992, was envisaged to be 1 December 1992. In my opinion, that allegation is not made out. The Disclosure Statement uses the expression "Year 1" in two different senses. In respect of the base rent, the reference is clearly to the
period of 12 months from the date of the commencement of the term of the lease. In respect of the operational expenses and the bussing charges, however, the reference is, in my view, clearly to the financial year ending 30 June 1993. There are, I think sufficient indications within the document itself and its annexures that that is the case. The expenditure estimates set out in the document headed "Shopping Centre Details" are expressly shown as relating to the financial year ending 30 June 1993 and the Disclosure Statement itself states that the operating expenses are to be subject to review on 1 July in each year. But, even if there be thought to be some ambiguity in this regard in the Disclosure Statement, the matter is put beyond doubt in the lease itself. I am satisfied that neither Mr George nor Mr Blackwell doubted that the estimates related to the financial year ending 30 June 1993.
The question remains, however, whether the applicant has established that the estimates, read as referring to the
and 10 of the second further amended statement of claim, "not financial year endlng 30 June 1993, were, in terms of pars 6
reasonable estimates and were not reasonably based on information available to the Respondent" and were, therefore, false, misleading or deceptive.
The essential foundation for success in such a contention must be a finding as to the information that was, at the relevant time, available to the respondent and an appreciation of the basis upon which the estimates of $15,900 and $16,960 as set out in the Disclosure Statement forwarded to the applicant under cover of the letter dated 30 September 1992 were made. As has already been mentioned, the estimate of $15,900 as the contribution of the applicant to the operational expenses of the shopping centre in respect of the financial year ending 30 June 1993 was the product of multiplying a figure of $300 per m2 per annum by the area of the Shop P9, namely 53m2. There is no evidence as to how the figure of $300 per m2 per annum was determined. It may be accepted that it was the quotient arrived at by dividing the total estimated operational expenses of the shopping centre for the year in question by the total lettable area of the shopping centre but it is not possible, on the evidence, to determine what the relevant figures were. For example, the total lettable area of the shopping centre variously appears as 9,032m2 (Exhibits 2, 8 and g), 8,783.1m2 (Exhibits 7 and C), 8,748.5m2 (Exhibit 17), 9,027m2 (Exhibit 19) and 8,776.9m2
(Annexure "J" to MS Reid's affidavit sworn on 30 November
$16,960 as the contribution by the applicant to the bussing 1993). And, as has already been mentioned, the estimate of
charges relating to the "Good Food Plaza" in respect of the financial year ending 30 June 1993 was the product of multiplying a figure of $320 per m2 per annum by the area of Shop P9, namely 53m2. There is no evidence as to how the figure of $320 per m2 per annum was determined. It may be accepted that it was the quotient arrived at by dividing the estimated bussing charges for the "Good Food Plaza" for the relevant year by the total lettable area of the "Good Food .Plaza" buy it is not possible, on -the evidence, to determine what the relevant figures were. The total lettable area of the "Good Food Plaza" variously appears as 452.51112 (Exhibits 7 and C), 431.31112 (Exhibit 17 and Annexure "D" to Mr George's affidavit sworn on 19 October 1993) and 441.3m2 (Annexure "J" to MS Reid's affidavit sworn on 30 November 1993). It may be notcd that the document Annexure "D" to Mr Ger-ge's affidavit sworn on 19 October 1993 refers to the original estimate as having been based on a leased area of the "Good Food Plaza" of 500m2. The significance of that statement, however, was not explored at the hearing.
Absent material to show how the estimates of $15,900 and $16,960 were determined, it is not possible to determine whether those estimates were reasonable or reasonably based on the material that was then available to the respondent.
The applicant sought to show that prior to the earlier of the two Disclosure Statements and, in any event, by 9 December 1992 the respondent had adopted a budget which,
relevantly, showed estimated bussing expenses relating to the "Good Food Plaza" at $200,000, a figure which it was asserted was greater than the estimated figure for such expenses on which the figure of $320 per m2 per annum was based. It must be accepted that the estimated contributions set out in the Disclosure Statement were based on estimates prepared some time before the Disclosure Statement was prepared. Indeed, it

may safely be inferred that the estimates of $300 per m2 and $320 per m2 were used in estimating the respective contributions to be made by each of the lessees who commenced to operate in the "Good Food Plaza" on 1 July 1992. It may also be accepted that the estimates were reviewed on at least one occasion prior to 18 December 1992 when the lease of Shop p9 was executed but the evidence does not establish that, at any stage prior to that date, the respondent concluded that the original estimates, whatever they were - and the Court has no evidence as to what they were - could not be achieved. I note that in his memorandum dated 14 December 1992, Mr Shaddock considered that steps should be taken to contain the bussing expenses within the recoverable budget. While it is true that, in January 1993, a decision was taken to vary the rate of $320 per m2 per annum for bussing charges to $375 per m2 per annum, that figure was based on estimated outgoings higher than those actually incurred. In the event, the original contributions figure of $620 per m2 per annum for operational expenses of the shopping centre, including the

busslng expenses was substantially achieved. Based on the	audited figures for the year ended 30 June 1993, the
contribution was $627.42 per m2 per annum, being $261.51 per m2 per annum in respect of the shopping centre outgoings based on audited recoverable outgoings of $2,295,263 and $365.91 per m2 per annum in respect of the "Good Food Plaza" bussing expenses based on audited expenditure of $161,476.
It follows that, in my opinion, this aspect of the applicant's case also fails. I am further of opinion that, by reason of the matters to which I have already referred, the applicant has failed to establish any of the other causes of action pleaded in the second further amended statement of claim. Indeed, I do not understand those causes of action to have been seriously pressed.
The application is, therefore dismissed. The question of costs remains. Having in mind the comments which I have made in these reasons concerning the evidence given by the witnesses for the respondent and recognising that much of the difficulty in making definitive findings as to the facts lies in the absence of satisfactory diary notes or other written records by those involved in the various events on the respondent's behalf, justlce will, I think, be done between the parties if each party bears its own costs of and incidental to the application. There will, therefore, be no order as to costs.

I certify that this and the preceding 55

pages are a true copy of the Reasons for Judgment herein of the Honourable M r Justice Neaves.

Associate -~P-~~-&~,JLU&
Dated: 2 March 1994

Counsel for the applicant : Mr A.J.L. Bannon

Solicitors for the applicant : Tzovaras & Company

Counsel for the respondent : Mr L.P. Robberds QC

and Mr P.J. Dowdy

Solicitors for the respondent : Carroll & O'Dea

Dates of hearing : 16, 18 and 19 November 1993,

1 and 2 December 1993

Date of judgment : 2 March 1994