Golden Harvest (Aust) P/L v Paing P/L - [2004] NSWCA 85

No judgment structure available for this case.

CITATION: GOLDEN HARVEST (AUST) P/L v PAING P/L & ORS [2004] NSWCA 85

HEARING DATE(S): 17/03/2004

JUDGMENT DATE:
4 June 2004

JUDGMENT OF: Beazley JA at 1; Ipp JA at 2; Bryson JA at 3;

DECISION: [2003] NSWSC 750 reversed. Appeal allowed, cross-appeal dismissed. see [60]

CATCHWORDS: LESSOR and LESSEE - Retail Leases Act 1994 s.10 compensation for misrepresentation - In Administrative Decisions Tribunal Judicial Member awarded compensation for misrepresentation under s.10 - Appeal Panel set aside and Newman AJ restored - whether JM's findings showed that there had been misrepresentation where Lessor said to the effect that nearby Residential Tower would be built - evidence did not deal with when and in what terms Development Consent was refused, with Lessor's intentions or whether they were reasonably based or with whether representation was misleading to the lessor's knowledge - appeals limited to question of law - held that there was no basis for award of compensation under s.10 - observations on representation as to a future matter.

LEGISLATION CITED: Administrative Decisions Tribunal Act 1997 s.119
Retail Leases Act 1994 s.11, s.72A
Trade Practices Act 1974 (Cth) s.52; subs.51A(1)
Supreme Court Act 1970 s.75A

CASES CITED: Global Sportsman Pty Ltd v. Mirror Newspapers Ltd (1984) 2 FCR 82
James & Ors v. Australia and New Zealand Banking Group Ltd & Ors (1986) 64 ALR 347

PARTIES :
Golden Harvest (Aust) Pty Limited - Appellant/Cross-Respondent
Paing Pty Limited (First Respondent / First Cross-Appellant)
Icontact Pty Limited (Second Respondent / Second Cross-Appellant)
Shen Zhen Famtec (Australia) Pty Limited (Third Respondent / Third Cross-Appellant)
Winsing Pty Limited (Fourth Respondent / Fourth Cross-Appellant)

FILE NUMBER(S): CA 40800/03

COUNSEL: S.D. Robb QC & Mr B.F. Katekar - Appellant
K.P. Rewell SC & Ms A.R. Beardow - Respondents

SOLICITORS: Colquhoun Murphy - Appellant
Creagh & Creagh - Respondents

LOWER COURTJURISDICTION: Supreme Court

LOWER COURT FILE NUMBER(S): SC 30113/02

LOWER COURT
JUDICIAL OFFICER : Newman AJ

40800/2003

BEAZLEY JA
IPP JA
BRYSON JA

FRIDAY 4 JUNE 2004

GOLDEN HARVEST (AUST) PTY LTD v. PAING PTY LIMITED & ORS

Judgment

1 BEAZLEY JA: I agree with Bryson JA.

2 IPP JA: I agree with Bryson JA.

3 BRYSON JA: This appeal arises ultimately from four proceedings in the Administrative Decisions Tribunal relating to retail leases of shop premises in the Carlingford Village Shopping Centre. To me it seems unfortunate that legislation confers rights to three levels of appeal without a requirement for leave at any stage. This does not sit well with policies of informality and expedition which can be seen in the terms of the Administrative Decisions Tribunal Act 1997, for example in s.73. The appellant Golden Harvest is the lessor in four leases, which were entered into on various dates from 16 August 1999 to 4 February 2000. After some months all the lessees were dissatisfied with their leasing arrangements for closely similar reasons, and began to pay rent at greatly reduced rates which they regarded as appropriate. The lessor made applications under the Retail Leases Act 1994, principally for payment of arrears of rent, and the lessees responded by making applications illustrated by the application of Winsing (also known as Vincent’s Electrical), the fourth respondent, dated 4 July 2001:

Q.10 What orders are you seeking?

2. Findings of misrepresentation;

3. Determination of fair market rent;

4. Orders that alleged arrears of rent be calculated on the basis of fair market rent.

4 The Hon. Russell Fox QC, a Judicial Member of the Administrative Decisions Tribunal treated the respondents’ applications as seeking “… orders (in effect) to reassess their rent because they were induced to enter into their leases by false or misleading representations made on behalf of the Applicant Lessor . The entitlement to relief arises from section 10 of the Retail Leases Act 1994 …”. The relevant parts of s.10 are:

10. Right to compensation for pre-lease misrepresentations

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

5 The Judicial Member decided that it was appropriate to hear evidence in all four matters together limited to the alleged misrepresentations, leaving the assessment of reasonable compensation for damage suffered to later mediation or hearing. After hearing the proceedings and evidence for three days and receiving submissions the Judicial Member gave written Reasons for Decision and made orders on 21 June 2002. As the Reasons for Decision and the orders show, the Judicial Member decided that the lessees were entitled to compensation under s.10. The orders were:

1. Respondents to file expert evidence to establish damage or loss flowing from failure to build residential development.

2. Registrar to appoint further direction hearing when evidence filed.

6 The lessor appealed to an Appeal Panel of the Administrative Decisions Tribunal. The right of appeal was conferred by s.113 of the Administrative Decisions Tribunal Act 1997, and the relevant parts of s.113 are as follows:

113 Right to appeal against appealable decisions of the Tribunal

(1) A party to proceedings in which an appealable decision of the Tribunal is made may appeal to the Tribunal constituted by an Appeal Panel.
(2) An appeal under this Part:
(a) may be made on any question of law, and
(b) with the leave of the Appeal Panel, may extend to a review of the merits of the appealable decision.

7 The Appeal Panel did not grant leave for a review of the merits and, according to the terms of their Reasons for Decision, disposed of the appeal on a question of law. After hearing the appeal on 18 September 2002 and receiving submissions, the Appeal Panel gave written Reasons for Decision on 29 November 2002 and made these orders:

1. Appeal allowed and judgment of the judicial member below set aside;

Retail Leases Act

3. If the parties are unable to agree on the quantum of rent payable, liberty to apply to list the matter before a judicial member of the Tribunal;

4. If the rent or any part thereof remains unpaid within fourteen (14) days of the parties’ agreement as to the amount owing, or failing such agreement, the Tribunal’s determination of the amount owing, the applicant be entitled to serve notice in writing terminating the lease.

8 The lessees appealed to the Supreme Court by Summons dated 19 December 2002 in the Administrative Law List of the Common Law Division. Their right of appeal was conferred by s.119 of the Administrative Decisions Tribunal Act 1997, and the appeal was again limited to a question of law:

119 Right of appeal to Supreme Court

9 The appeal was heard by Newman AJ on 17 July 2003, and on 15 August 2003 his Honour for reasons then published made the following orders:

1) Appeal upheld;
2) The decision of the Appeal Panel is set aside;
3) The case is to be remitted to the Appeal Panel to be heard and decided in accordance with the findings of this Court;
4) The respondents are to pay the appellants’ costs of this appeal.

10 The lessor then brought the present appeal to the Court of Appeal by Notice of Appeal filed on 12 September 2003. The lessor claims orders under which the orders of Newman AJ would be set aside and the orders made by the Appeal Panel would be restored. The lessees cross-appeal and claim that the order remitting the proceedings to the Appeal Panel for rehearing be set aside and that in lieu thereof the order of the Judicial Member be reinstated. The lessees also filed a Notice of Contention contending that Newman AJ had erred in failing to admit fresh evidence, being a copy of the development application submitted on behalf of the lessor to Parramatta City Council in respect of a proposed residential tower to be built on the Carlingford Village Shopping Centre, together with a copy of the Council’s determination of that development application.

11 The findings of the Judicial Member show that in each case before entering into a lease representatives of the lessor served on each lessee a statutory disclosure statement as required by s.11 of the Retail Leases Act 1994. The text of the disclosure statement included the following:

[7] Changes or developments planned by the Lessor for:

Yes Retail shopping centre Stage two residential tower

12 Annexed to the disclosure statement were many pages of artists’ impressions and drawings of the Carlingford Village Shopping Centre showing proposed development, including a two-tower thirteen-storey residential development above it. The Judicial Member found:

[8] There followed three pages of plans of the commercial levels of the Centre, one page showing the west and east elevation of “south building” which is clearly a thirteen [storey] residential tower, a page showing the south elevation of the south building in detail, and showing an outline of a similar building (presumably a second residential tower). There then followed a further page showing a schematic representation of fourteen floors of residential units and three levels of residential parking, two levels of retail parking and one and a half levels of visitor parking. There then followed a page headed “typical floor plan, north buildings levels 3-11 south building levels 3-13” and that very clearly shows an architectural floor plan of two separate towers containing a total of 8 residential home units per floor. There then followed a further four pages of architectural details of the commercial levels, parking, landscaping and similar.

13 The Judicial Member’s Reasons do not state with precision what were the statements on which his decision was based, and these must be understood from a number of references. So understood, the statements or representations were comprised of the disclosure statements together with oral statements made in the course of the negotiations for three of the leases. In the case of Winsing, Mr Lui a director had at least two meetings with Mr Barnes the selling agent and Mr Whittaker a site representative; the meetings took place in a room at the Carlingford Village Shopping Centre where there was an architectural model of the proposed development on view. Communication was through an interpreter as Mr Lui spoke no English. The Judicial Member’s findings (combined appeal book 87-88-89) do not include any findings that a representation was made to Mr Lui orally about what was proposed; the findings refer to Mr Lui’s being given the disclosure statement with its annexures, and seeing the architectural model, and the Judicial Member found:

[9] I accept Mr Lui’s evidence that he believed that such residential development would provide a core base of customers, but I draw no conclusion about the effect which such a residential development would have had on his sales turnover.

14 In negotiation for a lease to Icontact the second respondent, oral representations were made by Mr Antonios, the leasing manager in the Carlingford Village Shopping Centre project, to Mrs Yu and Mr Wong, directors of Icontact. The findings based on their evidence are:

[13] Debra impressed me as a particularly candid witness and I accept her evidence about the representations which were made to her by Mr Antonios to the effect that there would be a suburban version of Market City, the development which is adjacent to Paddy’s Markets in the City of Sydney, with a wide tenancy mix and residential tower on top. I accept that she saw an architectural model similar to the one before me, but showing no residential tower.

[14] I accept that these general representations were the background to the decision to occupy. However the representation which triggered the decision was made after the Centre had opened and had commenced trading, to the effect that another optometrist was coming in. I was given no evidence that this representation was not true.

[15] I am also satisfied that the tenancy mix was clearly on view at the date of signing of the Lease, and I do not accept that Mrs Yu was mislead in this regard. On the other hand I do accept that the representation of proposed residential towers played an important part in the decision. Mrs Yu, specifically, in her oral evidence referred to the detailed annexures which were the same as those described in relation to the Winsing matter. I note that Mrs Yu indicated that her solicitor, when the Lease was being signed, had drawn her attention to the risk involved in trade interruption during construction.

[16] The other director was Henry Tone Wong, the husband of Debra Feng Yu. His evidence satisfied me that he was not mislead by the tenancy mix representation. I was satisfied that he was fully aware of the initial difficulties, worried about them, sought guarantee about occupancy levels which he was not given and then went ahead anyway. But his oral evidence underscored the effect upon him of the Disclosure Statement.

15 In the negotiations with Paing the first respondent, directors and representatives of Paing had several conversations with Mr Barnes and Mr Whittaker. After finding to the effect that there were representations relating to the tenancy mix which did not have any significant operation the Judicial Member found:

[22] I am, however, again, satisfied that the same representations were made in relation to the residential tower proposal, and that both Disclosure Statements carried the words quoted earlier in these reasons, and the full compliment of architectural drawings of the tower proposal. Although the evidence of the involvement of a Mr Yip, who may not have been any representative of the Lessor and who according to the Paings made representations to them, raises some questions about their evidence, I am satisfied, especially in view of the nature of their businesses, that the prospect of the residential towers was pivotal to their decision to occupy.

16 In the negotiation relating to the lease to Shen Zhen Famtec (Australia) the third respondent, the Judicial Member’s findings establish (combined appeal book p92) that disclosure statements with accompanying architectural details were given to Mr Feng a principal of Shen Zhen, and to his daughter of high school age who accompanied him. The Judicial Member’s findings include findings based on oral evidence (combined appeal book p92 at para 24) to the effect that David Whittaker spoke of the development as “another Chinatown in northern Sydney”; and the Judicial Member went on:

[24] I am also satisfied that there were words used that there would be a residential tower, a post office, and a McDonalds outlet. I note these words were used at a time when the Centre was already trading, and at a time when it was possible for David Whittaker to use words to the effect ”most of the shops are leased, others are under offer, and this is the only one available”. In view of the fact that the Centre was trading, and apparently fairly fully occupied, I am not at all satisfied that the representations about further occupancy had any real effect on Mr Feng, but accept his evidence that he was swayed by the proposal for a residential tower and of course his particular Disclosure Statement contained the same words and architectural detail.

17 The tenancy mix was found not to be an operative representation.

18 In dealing with evidence given by witnesses called for the lessor the Judicial Member said:

[18] Mr Antonios is a leader in the retail leasing field, and a most impressive witness, who, I am satisfied, was aware of the need to ensure that all prospective tenants were aware of the residential tower proposal, and I am satisfied disclosed that it was a proposal which was to be put to the local Council for development approval. It is also clear that at no time did Mr Antonios actually have the Disclosure Statement available to him. Because of his expertise in this field, I assume that he complied fully with the law and had available for view by prospective Lessees, a full draft lease, but I make no finding whether it included all of the architectural detail which was part of the Disclosure Statements. I accept his evidence that that was a matter left to the solicitors once the initial negotiations had resulted in a formal proposal for lease.

[19] I note and accept Mr Antonios’ denials in cross examination and accept his insistence that he held the residential development out to be a proposal only. But I am also satisfied that the Disclosure Statement raises a very strong impression that there was to be a residential development.

[20] I found it difficult to reconcile Mr Antonios’ evidence to the effect that it was his view that the residential towers would make little difference to the trading of the Centre, with his evidence (which I accept) when he said:-

…. we mention the butcher which was subleased to Thai Khi and the Seafood shop and that there would be restaurants and take away food so that would be the basis of the food mix and then mention to him that we would have convenience type stores like the newsagency and the Pharmacists and those style of stores.

[25] The question of the display model of the centre, and the suggestion that at one time it had a tower or towers upon it, caused me much concern. However, on reflection, in view of the evidence of Mr Antonios, Mr Barnes and Mr Whittaker, despite the applicant witnesses’ various assertions to the contrary, I am not prepared to accept that Antonios, Barnes and Whittaker were not truthful. I am satisfied that the fact is that applicant witnesses all formed their belief in the towers from the graphic detail in the Disclosure Statements, and not from any mock-up on the display model.

[26] In relation to all four matters, it seems to me that Mr Antonios’ evidence is more than telling when he said:

… the ownership had proposed to put a residential tower on the property and that there was a D A in place with Council, but it required obviously – well it required Council approval, and if they [the prospective lessees] ask me the timing of all that I said we’re in the lap of the gods basically, we really don’t [know] what the timing of that would be, and if the approval would be forthcoming.

[27] Despite the final words, I am satisfied that these or similar words would mean to any prospective lessee that a residential development of some sort would be built upon the Centre.

19 After noting a passage in the evidence of Mr Barnes in which he suggested that most of the tenants would have seen the residential tower as a bonus the Judicial Member found:

[29] Having heard all of the evidence I accept most of what Mr Barnes said, save that I do not accept that the applicants regarded the residential tower as a bonus, I am satisfied that it was an integral part of each of their decisions.

20 After findings which excluded the significance of tenancy mix representations the Judicial Member found:

[32] It seems to me however that a different quality of representation arises in relation to the residential tower proposal. I am satisfied that in their own way each of the applicants asked about those proposals, and I am also satisfied that the representatives of the Lessor had a standard response which indicated that the residential tower was a proposal to the Local Council.

[33] I have some sympathy for what was in effect the Lessor’s proposition,:-“you’re damned if you do, and you’re damned if you don’t” because it was very clear that, if the proposal ever went ahead, the tenants would have to be warned of the substantial disturbance to their trade. Indeed, that is the way Mr McDowell addressed the matter, indicating to me that the matters in the Disclosure Statements were not representations, they were simply in response to the statutory obligation. That may well be so, and I can conceive of a circumstance where that might have applied, had the Disclosure Statement limited itself to the text. That would, in my view, have been sufficient to address any later complaints which the tenants might make about the disturbance during rebuilding. However, the pictorial details of artist’s impressions and architectural plans to show how the tower or towers would look above the existing Shopping Centre, in my view went far beyond that need, and was the cause of each of the witnesses before me being convinced that they had been told that there would be a residential tower build and that they had seen a model of it.

[34] In my view, the essential difference between the “trading mix” representations, and the “residential tower” representation was the fact that the latter was enshrined in the Disclosure Statements, in graphic pictorial detail.

…

[36] [Section 10] does not require exclusivity in the sense that the representation be the only reason for entering into the lease, but I am satisfied that the proper construction would not envisage a representation in relation to a minor or peripheral aspect. I am satisfied that the Section requires a representation to have been one which had a substantial influence on the decision making process of the party affected, but it need not be the only influence. It is in this sense that I am satisfied that all four applicants entered into the leases as a result of the representation that there would be a major residential development on the Centre.

21 In my understanding the last sentence of para.36 of the Judicial Member’s Reasons is an epitome of all the previous findings about the making of representations to the lessees; each of the lessees was given a disclosure statement which stated in the text that the residential development was proposed; and the statement in the text was graphically illustrated and strongly enforced by the accompanying illustrations and drawings; and there were also oral statements to the effect that the buildings shown in the disclosure statement including the residential development were going to be built, to a timing dependent on the required Council approval. I do not accept that the Judicial Member’s findings mean, as respondents’ senior counsel contended, that the oral representations conveyed a certitude or lack of qualification not found in the disclosure statement and accompanying documents; and I do not think that the last sentence of para.36 indicates this. The last sentence of para.36 refers back to all the previous findings and epitomises them. In those findings the documents and the oral representations conveyed the meaning that the residential development was going to be built. There is nothing in the documents or the oral statements to suggest that there was less than a real present intention that the development would be built; the text of the residential tower proposal did not suggest it was a mere proposal, or a matter of theory.

22 There is no evidence of an oral disclosure to Vincent Electrical yet the Judicial Member did not differentiate representations made to that lessee from representations made to others in his findings. This may be an indication that the Judicial Member did not regard the oral representations as being of prominent importance, and may mean that the findings are in one respect erroneous with respect to Vincent Electrical, but the findings when all taken together unmistakably include oral representations as well as the material in the disclosure statement.

23 In para.38 at p95 of the combined appeal book the Judicial Member made findings about when the representation was current and the date it took effect; for each lessee he adopted the date of the disclosure statement as the beginning of that period and the date of the lease as the end of that period. In so doing the Judicial Member appears to have equated making the disclosure statements with making the representation upon which remedies under s.10 were based. The concluding passages in his Reasons appear in paras.39 to 45:

[39] I assume that the date of the Local Council’s rejection of the development application is identifiable and not controversial.

[40] It also seems to me to be clear that the representation, even if not technically false, was misleading if that representation was maintained after the Local Council had formally rejected the application, but the appeal period had not yet expired.

[41] I am also satisfied that the necessary level of knowledge of false hood in the Lessor arose on the date of receipt by the Lessor of the [Council’s] Notice of Rejection.

[42] I note that there is a possibility that the zoning of the Centre was such that the application to the Local Council had no real prospect of being granted, and in that case, too, the representation might well be technically true but in fact misleading and dishonestly made.

[43] In that same vein, if the Lessor, or the Lessor’s [representative after] making application to Council became aware of the fact that the Council would not approve the application as made unless there were substantial amendments, then, again, the Lessor could not thereafter deny that the representation was dishonest or misleading.

[44] On reflection it seems to be to be pointless to direct the parties back to a mediation unless there is some actual expert evidence to indicate what effect the residential tower representation might have had on the trading prospects of the Lessees, and so I now direct that the Lessees within 28 days file such expert evidence.

[45] In order to further assist, I point out that I am satisfied that the Disclosure Statement, on close analysis, indicated that there would be a total of 80 three bedroom units, 40 two bedroom units and 40 one bedroom units, but gave no detail to indicate either the date of commencement or the length of time it would take before the building would be complete.

24 In paras.39 and 40 the Judicial Member found that the representation that there would be a major residential development on the Centre was misleading if the representation was maintained after the Council formally rejected the development application. Further in para 41 he found that the lessor had knowledge that the representation was misleading on and after the date of receipt of notice of rejection, even during the appeal period against such rejection.

25 The decision in favour of liability under s10 shows, by unmistakeably necessary implication, that the Judicial Member must have found that Council rejected the development application and that notice of rejection was received at some stage before any of the leases was entered into. The implication must be made, notwithstanding that there is no express finding, because the Judicial Member was plainly aware of the terms of s.10, and from para.38 onwards addressed the dates when the representations took effect and the events which brought it about that the representations were misleading and that the lessor knew that they were misleading; he cannot have gone on to reach the decision he reached without assuming that it had been established that the development application was refused and the refusal was notified before any of the leases was entered into. This is anomalous as para.39 shows that the date of rejection had not been established. Paragraph 39 is also anomalous as it is entirely inconsistent with the implied finding about the time of rejection and notification.

26 There are inconsistent references to falsehood in paras.40 and 41 but the Judicial Member’s decision was not based on a finding that a statement or representation was false.

27 Counsel for each party made extensive written submissions, and these were developed orally, in clear ways, by leading counsel. I should particularly notice several matters which were put by the lessor’s counsel. It was submitted that when the various expressions used by the Judicial Member in observations relating to the representation regarding the residential development are taken together, the Judicial Member found that the lessor had made a representation as to a future matter. It was not the lessor’s case nor the Judicial Member’s finding that the representation was that there was a mere proposal which might or might not be implemented; the representation was that there was a definite proposal which the lessor proposed to carry out. It was further submitted that the Appeal Panel understood the findings in the same sense, as a firm proposal which was going to be effected. The lessor did not submit that the representation as found related only to material in the disclosure statement.

28 Lessor’s counsel submitted that although the Judicial Member did not state that conclusion, it must be assumed that the Judicial Member found that the lessor had breached s.10. It was submitted that as the representation found by the Judicial Member was a representation as to a future matter, the lessees, if they were to establish a breach of s.10, had to establish that the lessor did not have an intention to build the residential towers at the time the representations were made, or that the lessor was aware of circumstances which would have prevented it from doing so; that it was not sufficient merely to establish that the forecast did not become true; and that the lessees had the onus of proof. The lessor’s counsel referred to a number of decisions relating to s.52 of the Trade Practices Act 1974 in support of this submission.

29 The lessor’s counsel submitted that the Judicial Member stated correctly, at para.37 that there was no evidence about the timing of any rejection of the development application; hence it should be understood that on a proper reading paras.39 to 41 speculated about that matter and did not contain any finding of facts. For a decision that there is liability under s.10 it was essential that there should be findings about the time of any rejection of the development application, the basis for rejection and the lessor’s intentions following such rejection. There was no evidence on those matters, and the Judicial Member noted this in para.37; the Appeal Panel noted this at para.40 and said “[t]he respondents conceded that no such evidence had been before the Tribunal”.

30 Senior counsel for the lessees submitted that it is irresistibly to be inferred from the evidence that there was no approved development application in existence at the time the representation was made. Counsel further contended that the Judicial Member’s finding was to the effect that there was a representation that the residential development would be built, and was not to the effect that there was a proposal to build a residential development. The representation that the residential development would be built was misleading because in fact there was not an approved development application in existence. The reason for there being no evidence from the Council file or Council sources and very little evidence at all on the subject of obtaining development approval was that it might not have been an issue but might have been thought to be a common ground at the hearing before the Judicial Member, so far as anyone was aware, that the project was never approved by Council. As there was no development approval, there was no basis for the level of assurance involved in making a statement that the residential development would be built. The representation was misleading if the maker of the statement had no present legal capacity to build the residential development and to put the representation into effect; if the maker had no such legal capacity at the time when the representation was made. It would have been unobjectionable to represent that there was a proposal to build a residential project, but it was a misrepresentation to tell the lessees that the project would be built.

31 It was further submitted that making a representation that some project will proceed involved making a representation that it is a present fact that the representor has the means to cause the project to proceed.

32 I turn to the operation of s.10. No pleadings and no formal written statements spelling out the grounds of the lessees’ claims under s.10 exist or are required. Before the Judicial Member the burden of establishing the facts on which entitlement to remedy existed was on the lessees, and the lessees bore the burden of proving and obtaining findings of all facts on which entitlement to remedy depended, other than facts which were established by the lessor’s making its applications for orders for payment of rent under the leases, and facts established by concessions made by the lessor at the hearing. It was at least necessary for the lessees to establish:

(a) that a statement or representation was made;

(b) that it was made by the lessor or a person acting under the lessor’s authority;

(d) that each lessee entered into a lease as a result of the statement or representation;

(e) that the lessor made the statement or representation with knowledge that it was false or misleading.

(f) that each lessee suffered damage attributable to the lessee’s entering into lease; and its amount;

33 The language of s.10 is not close to the language of s.52 of the Trade Practices Act 1974 (Cth). Although the two provisions deal with similar subjects, they operate in different ways. In s.10 it is not enough that the statement or representation should objectively be false or misleading; it is also necessary to show knowledge; nor is there any provision in the Retail Leases Act 1994 dealing expressly with the operation of a representation with respect to a future matter, as dealt with in subs.51A(1) of the Trade Practices Act 1974. A statement to the effect that a building is to be built is a statement with respect to a future matter or a prediction.

34 Lessees’ counsel referred to many authorities on s.52 but these are not directly applicable in my opinion because there is no close analogy between s.10 and s.52 in the language used. The close analogy relates to their underlying concepts; s.52 does not refer to “a false or misleading statement or representation” and s.51A, which turns on provisions relating to making a representation and treating the representation as misleading has no counterpart in the Retail Leases Act 1994. Further, knowledge that the statement or representation was false or misleading is necessary for liability under s.10 whereas liability under s.52 exists if conduct is misleading or deceptive or is likely to mislead or deceive, irrespective of intention or knowledge. It is not possible to pass readily from a decision on the operation of the Trade Practices Act 1975 to the interpretation of s.10. However such decisions can be useful as illustrations.

35 In Global Sportsman Pty Ltd v. Mirror Newspapers Ltd (1984) 2 FCR 82 the Federal Court (Bowen CJ Lockhart and Fitzgerald JJ) applied subs.52(1) before the enactment of s.51A. Although the following passage from their Honours’ judgment at p88 relates to s.52 to which the representor’s state of mind is immaterial, it contains some statements which I regard as presently important illustrations.

If a corporation is alleged to have contravened s 52(1) by making a statement of past or present fact, the corporation's state of mind is immaterial unless the statement involved the state of the corporation's mind. Whether or not s 52(1) is contravened does not depend upon the corporation's intention or its belief concerning the accuracy of such statement, but upon whether the statement in fact contains or conveys a meaning which is false; that is to say whether the statement contains or conveys a misrepresentation. Most commonly, such a statement will contain or convey a false meaning if what is stated concerning the past or present fact is not accurate; but a statement which is literally true may contain or convey a meaning which is false.

Many statements, for example, promises, predictions and opinions, do involve the state of mind of the maker of the statement at the time when the statement is made. Precisely the same principles control the operation of s 52(1) with respect to the making of such statements. A statement which involves the state of mind of the maker ordinarily conveys the meaning (expressly or by implication) that the maker of the statement had a particular state of mind when the statement was made and, commonly at least, that there was basis for that state of mind. If the meaning contained in or conveyed by the statement is false in that or in any other respect, the making of the statement will have contravened s 52(1) of the Act. Compare Lyons v Kern Konstructions (Townsville) Pty Ltd (1983) 47 ALR 114.

36 In James & Ors v. Australia and New Zealand Banking Group Ltd & Ors (1986) 64 ALR 347, which related to events before s.51A was enacted, Toohey J said at 372:

Misleading or Deceptive Conduct – The Relevant Law

Bell v Australasian Recyclers (WA) Pty Ltd

(1) ….

Bill Acceptance Corporation Ltd v GWA Ltd

Thompson v Mastertouch TV Services Pty Ltd

Global Sportsman Pty Ltd v Mirror Newspapers Ltd

Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd

(5) . . .

37 The applicability of these illustrations in the present case was not contentious.

38 In my opinion, without attempting an exhaustive exposition of the workings of s.10, a statement or representation to the effect that the representor was to do something in the future is not in my opinion false or misleading if the representor actually intended to act in the way represented, but is misleading if the representor did not have a reasonable basis for stating that it would so act in the future. In this way the representation has the effect of a statement of the representor’s present intention. Proving knowledge that the statement was false or misleading is an additional requirement; although lack of knowledge would often be proved by much the same material as absence of reasonable basis.

39 It is plain that the lessees did not put into evidence before the Judicial Member as part of their case any evidence establishing that the development application had been rejected, or establishing that notice of rejection had been given to the lessor, or establishing the dates of those events. If the lessees had in fact maintained that the representations became misleading when those events happened the issue would have been clearly discernible from the evidence in the proceedings. Given the informality of the proceedings, which was in accord with s.73 of the Administrative Decisions Tribunal Act 1997, the evidence is the only place to look to in order to establish what in detail the lessees’ case was and what was in issue. In the evidence there are only slight and incidental references to the outcome of the development application and no materials which would establish when it was rejected, or that it was rejected at some relevant time; nor does the evidence deal with notification of rejection. If the lessees had truly put forward a case of this kind, that fact would be quite clear from their own evidence in chief; and in particular from the tender of evidence from Council sources, such as documents relating to the development application, Council’s consideration, determination and notification, or the evidence of some Council officer with knowledge of the events. There is likewise no reflection in the evidence of an attempt by the lessor to answer such a case by dealing with what it intended to do about the development, or what it could in practicality when it knew of decisions of Council and had an opportunity to act further, or with the implications of decisions of Council on its plans and intentions. The absence of any dealing with such matters in evidence shows that the lessor was not confronted with a case to that effect, and was not called upon to answer it.

40 The only evidence alluding to these subjects which has been identified is the passage in the evidence of Mr. Antonios which the Judicial Member set out at para [26] of his Reasons, and the following:

PEARSON: But the sort of shops you were looking for would have been well complemented by a residential tower attached to the premises, wouldn’t they?

THE WITNESS: No. Well, I don’t know. We were – we were leasing off the supermarket. That was the facts that we had. We couldn’t speculate whether a residential tower would be built or wouldn’t be built or anything else being in the centre. We could only work off what we had.

PEARSON: You are, of course, aware of the disclosure statement?

THE WITNESS: Yes.

PEARSON: And, with your experience, you’re aware of the legal importance of the disclosure statement in retail leasing?

THE WITNESS: Yes.

PEARSON: And you’re aware of the part of the disclosure statement that makes reference to the residential tower, aren’t you?

THE WITNESS: Yes.

PEARSON: And you’re aware that that would have been put before every prospective tenant before signing leases?

THE WITNESS: Yes.

PEARSON: And yet you’ve made the observation that you never formed the opinion that a residential tower was actually going to be built?

THE WITNESS: Well, it was submitted to council. Obviously, the owners intentions were to build on it. Obviously, they wouldn’t have gone through the matter of engaging architects to look at it or even going through council to do it. Whether it was to be built or not was really up to council and the owners to discuss. There was, when it was rejected the first time through council, it was publicised in the local papers so it was – you know – it was fairly much public knowledge. I mean it was the public, I believe, that sort of rallied against it.

…

PEARSON: Did you ever volunteer to prospective tenants your own views as to likelihood of a residence or tower being built?

THE WITNESS: No.

…

PEARSON: So they would have been quite within their rights to rely on the wording contained in the disclosure statement?

THE WITNESS: No, I don’t – I think most of the tenants coming in would have seen it as a bonus. I mean, they were only working off the facts that we did have Thai Key supermarket that was going to have a second floor that was going to have a second floor with semi-professional office suites and it was going to be a [retail] level supporting the supermarket. That’s what I believe they formed their facts off.

PEARSON: But you appreciated that what you believe as a professional in the industry may be different to what prospective tenants may believe based on the material put before and discussions they hold.

THE WITNESS: Our main reason for disclosing to them as we did in the disclosure statement was that if the residential tower was to proceed the effects that it would have on the trading of the centre is a situation where I think you’re [damned] if you do and you’re [damned] if you don’t. If the tower was to go ahead and these tenants were sitting there and we had made no disclosure and the then the building works carried out around it then we’d be here now.

PEARONS: Well, don’t you think that it’d be – [that] if the council had rejected the development application at the time you were dealing with these tenants that that would be relevant material to put in the disclosure statement.

THE WITNESS: Well, the leasing campaign in the disclosure statements were issued over a period of time so some may have been issued prior to the council rejecting the plans and then it was the owner’s intention to re-lodge the plans anyway.

…

PEARSON: Well you say you are very precise, but you have also said that, at some stage during this leasing campaign that the first development application was rejected and that it was proposed that a second development application be lodged, is that right?

41 These passages could not be the basis for a finding to the effect that a development application for the residential development was rejected by Council, or was notified to the lessor between the times of the disclosure statements and the times of entering into the leases. The passages simply do not deal with those subjects. If the lessees had been putting a case that the lessor knew that there was a misleading representation and that that knowledge was based on knowledge of a decision by Council refusing a development application, cross-examination of witnesses called by the lessor would clearly show that that was the lessees’ case. The transcript does not show that there was any attempt to make out such a case by evidence.

42 Further, this material does not provide a basis on which it could be found that the representation became misleading when Council rejected the development application. For rejection of the development application to produce the result that the representation was misleading it would be necessary that the rejection put an end to the lessor’s intention to build the development, or that the rejection made building the development impossible or so difficult that it was misleading to represent that the building would be built. These are not conclusions which could reasonably be based on the simple event of rejection of the development application. As some slight references in the passages that I have set out show, there may have been a second development application or there may have been an intention to lodge one or there may have been a continuing intention to carry on with the project. The intention may have been genuine and reasonable even after one rejection by Council.

43 In the Appeal Panel the lessor’s contentions as to the question of law on which the appeal was based included (combined appeal book p106):

[T]hat the Tribunal had erred in law in finding that any representation in relation to the tower was false or misleading in that the representation was as to a future matter and there was no evidence that the representation was not genuine or was made without reasonable grounds.

44 The Appeal Panel was of this opinion (combined appeal book p108)

We are, therefore, of the view that whether there was sufficient evidence before the learned judicial member to warrant a finding that the appellant had made a false or misleading statement or representation with knowledge that it was false or misleading is a question of law.

45

Retail Leases Act

Trade Practices Act

Bill Acceptance Corporation Ltd v GWA Ltd

Lyons v Kern Konstructions (Townsville) Pty Ltd

; Milchas Investments Pty Ltd v Larkin

; T N Lucas Pty Ltd v Centrepoint Freeholds Pty Ltd

46 In my view this direction was correct.

47 When dealing with the law as applied to the facts the Appeal Panel’s decision contains the following passage at combined appeal book p112:

Warner v Elders Rural Finance Ltd

Demagogue Pty Ltd v Ramensky

; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd

Bill Acceptance Corporation Ltd v GWA Ltd

48 The Appeal Panel dealt with this matter further in para.39 at p114-119 of the combined appeal book

residential development consisting of a residential tower, additional car parking spaces and multilevel car parking is proposed

[40] Submissions were heard from both counsel for the appellant and the respondents in this appeal as to whether there was any evidence before the Tribunal allowing it to make a finding that the statement in the disclosure statement was false and misleading up to the time of entry into the leases by the respondents. In particular, in this appeal, counsel for the respondents was pressed to direct the Appeal Panel to any evidence that the application to build a residential tower had been rejected by council and, if so, upon what date and whether that date were before the date of the leases. The respondents conceded that no such evidence had been before the Tribunal. The only advertence to a possible rejection of the development application by council was in the evidence of Aaron Barnes, transcript 28 September, 2001 page 72, but this evidence falls far short of establishing that the appellant made a representation about a proposal to build the residential tower with knowledge that it was false or misleading.

[41] We are of the view that there was no evidence before the Tribunal to justify a finding that the appellant had made a representation about the building of the residential tower which was made with knowledge by the appellant that it was false or misleading…

49 As the opening sentence of para.39 shows the Appeal Panel was at this point proceeding on the view that the representation was the statement found in the disclosure statement to the effect that a residential development was proposed. In my opinion however their observations are equally applicable to a wider view of the representation based on the oral exchanges to the effect that the residential development would be built. This was not the only address made by the Appeal Panel to stating what it was that they treated as the representation; their difficulties grew out of obscurities in the Reasons for Decision of the Judicial Member. At para.34 at p112 of the combined appeal book they appear to have acted on an interpretation of the Judicial Member’s findings expressed thus “[t]he oral statements or representations, as found by the learned Judicial Member, were that there was a proposal by the [lessor] to build a residential tower which would be put to the Local Council.”

50 The decision of Newman AJ to overrule the Appeal Panel was based on his Honour’s view that they had overruled the Judicial Member on a question of finding of fact, and not on a question of law. After referring to the Judicial Member’s finding (with unfortunate errors of expression which can be cured by looking to paragraphs in the Judicial Member’s Reasons for Decision, and not to the correspondingly numbered paragraphs in the Appeal Panel’s reasons set out by Newman AJ) Newman AJ said:

17. Counsel for the [lessors] has submitted that it matters not whether it was represented to the leaseholders that the towers were to be built or that the representation was merely that there was a proposal that a tower might be built. Whatever representation had been made to the leaseholders it was the nature of a forecast as to future events and as such, as a matter of law, could not be misleading or deceptive unless it is proved that at its time of making that it is not a genuine proposal or that the person making the representation knew that it could not be carried out. There was in the [lessor’s] submission no evidence before the judicial member which enabled him to make findings adverse to the [lessor] on the latter two matters. Accordingly the appeal panel rightly found that the judicial member had erred in law in finding as he did. Reliance was place in this submission on the authorities I have noted earlier in these reasons.

18. I disagree. I have read the transcript of the relevant evidence upon which the learned judicial member made his findings.

51 Unfortunately this passage in the reasons not engage with the questions whether the representation became misleading upon rejection of the development application, and when that event occurred, which were raised by an address to the grounds on which the Judicial Member disposed of the claim. Newman AJ’s reasons do not reveal which passages in the transcript furnished the basis for finding that the representation became misleading when maintained after Council rejected the development application (Judicial Member’s Reasons para.[40]) or for finding that that event, and notification of rejection, happened at some time which was material (Judicial Member’s Reasons paras.[40] & [41]). I have myself read the transcript and I am satisfied that the only passages which could in any way be thought to touch on those subjects are passages which I set out earlier in these reasons. As Newman AJ did not identify the passages which might support findings on those subjects his reasons do not show how they could do so. In my opinion there are no passages which could support the findings expressly or impliedly made by the Judicial Member on those subjects.

52 My interpretation of the somewhat difficult expressions used by the Judicial Member when finding what the representation was differs in some respects from the view taken by the Appeal Panel, but the reasons they gave relating to the absence of an evidentiary basis for upholding the appeal are just as applicable to the view I take of the representation as to the view which they expressed. Without evidence establishing the time of rejection and the time of notification, the conclusion of the Judicial Member that the representation became misleading on rejection cannot be a basis for upholding the lessees’ claim. In my opinion the lessor was entitled to succeed before the Appeal Panel upon the question of law as understood by the Appeal Panel for two reasons. First there was no reasonable basis for concluding that the representation became misleading simply on rejection of the development application, as that did not prevent the lessor from making the representation good and did not show that the lessor had no intention of building the development. Secondly it could not on the evidence be found that rejection or notification happened at times which were material.

53 The lessees’ senior counsel’s proposition involved a stringent and incorrect application of the requirement that there be a reasonable basis for making a representation. There can in concept and in actuality be a reasonable basis for making a statement about a future event even if some necessary part of the means to cause the project to proceed or to cause the event to happen does not exist, or does not yet exist. Not having a development consent, or having had a development application rejected, are not unique obstacles in a building project: there are many essential needs for completion of the project including available finance, a building contract, a building contractor of suitable ability, supplies of materials, availability of labour; and many others. There will usually be unresolved difficulty about some or several essential needs, and the decision about what is a reasonable basis for making a representation would involve an appraisal of difficulties and a test of reasonableness. Counsel’s proposition was an excessive and incorrect simplification.

54 There were further submissions, which I will not set out, dealing with the basis on which the Appeal Panel disposed of the appeal before it and the basis on which Newman AJ was of the view that the Appeal Panel had disposed of the appeal on a question of fact, which it had no authority to do, and had not disposed of the appeal on a question of law. I do not regard it as necessary to examine these contentions in detail because in my opinion it is quite clear that the Appeal Panel’s order was correct. In my opinion the Appeal Panel did not make the error attributed to them by Newman AJ; the consideration they gave in the course of establishing what the Judicial Member had decided involved them in interpreting a number of passages and references in the Judicial Member’s reasons which are not, I must respectfully say, altogether clear or easy to interpret. The Judicial Member’s finding was not altogether clear, was not found in one place and had to be understood from several references, and did not use terms entirely consistently. Although at some times the finding referred to the representation in a way which apparently relates only to the disclosure statements, it does not when understood overall treat the disclosure statements as the whole of the relevant representation. The Appeal Panel did not, in addressing themselves to that matter, make any finding of fact, nor did they make any error.

55 In my opinion the Appeal Panel acted correctly in upholding the appeal to them on the question of law which the lessor put forward, and the Court of Appeal should allow this appeal, dismiss the cross appeal and restore the Appeal Panel’s decision.

56 Newman AJ did not spell out in his reasons what was the further matter which he contemplated the Appeal Panel was to hear and decide (see Newman AJ’s order 3), but in my opinion the order must have been made in contemplation that the Administrative Decisions Tribunal would proceed with the further stage of deciding compensation under s.10, as provided for by orders 1 and 2 made by the Judicial Member on 21 June 2002. It cannot have been the intended effect of Newman AJ’s order that the Appeal Panel was to reopen consideration of the application for a merits review, because Newman AJ was of the view that the Judicial Member had not erred in law in his finding; so no merits review could have been necessary.

57 The powers of the Common Law Division and also of the Court of Appeal are regulated by s.75A of the Supreme Court Act 1970. In the Common Law Division s.75A, including the provisions of subs.(5) relating to rehearing and of subss.(7) and (8) relating to receiving further evidence, operated subject to the limitation to a question of law in s.119 of the Administrative Decisions Tribunal Act 1997, and to subs.75A(4):

58 Bringing forward proofs of such elementary matters as are referred to in the Notice of Contention and doing so for the first time in the Common Law Division illustrates clearly that it cannot have been the lessees’ case before the Judicial Member that the development application was refused and the representations were false or misleading for that reason.

59 In concept there may be room for the Court to receive evidence in an appeal limited to a question of law, perhaps to show some event in the proceedings under appeal, although I am not able to furnish a concrete example. In my opinion the limitation of the appeal to a question of law put it beyond the power of Newman AJ to admit the evidence referred to in the Notice of Contention in support of the claim made by the lessees before the Judicial Member that the lessees suffered damage attributable to their entering into leases as a result of a false or misleading statement or representation made with knowledge that the statement or representation was false or misleading. Although no statutory provision limits the grounds of the present appeal against the decision of Newman AJ to a question of law, the limitations on the questions open in the earlier appeals necessarily limit the ground on which the Court of Appeal may act. For this reason the contentions in the Notice of Contention should not be upheld.

60 In my opinion the Court of Appeal should order:

(1) Appeal allowed with costs.

(3) Cross appeal dismissed with costs.

**********

Last Modified: 06/08/2004

Citations

Golden Harvest (Aust) P/L v Paing P/L [2004] NSWCA 85

Most Recent Citation

Cases Citing This Decision

11

Scicluna v New South Wales Land and Housing Corporation [2008] NSWCA 277

Krimbogiannis v Fallshaw (Investments) Pty Ltd [2015] NSWCATCD 155

Armstrong Jones Management Pty Ltd v Saies-Bond & Associates Pty Ltd (RLD) [2007] NSWADTAP 47

Cases Cited

13

Statutory Material Cited

4

Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] FCA 167

Kennards Self Storage Pty Ltd v Valuer-General [2023] QLC 3

Rogers v Kabriel [1999] NSWSC 368

Actions

Download as PDF Download as Word Document

CITATION:	GOLDEN HARVEST (AUST) P/L v PAING P/L & ORS [2004] NSWCA 85
HEARING DATE(S):	17/03/2004
JUDGMENT DATE:	4 June 2004
JUDGMENT OF:	Beazley JA at 1; Ipp JA at 2; Bryson JA at 3;
DECISION:	[2003] NSWSC 750 reversed. Appeal allowed, cross-appeal dismissed. see [60]
CATCHWORDS:	LESSOR and LESSEE - Retail Leases Act 1994 s.10 compensation for misrepresentation - In Administrative Decisions Tribunal Judicial Member awarded compensation for misrepresentation under s.10 - Appeal Panel set aside and Newman AJ restored - whether JM's findings showed that there had been misrepresentation where Lessor said to the effect that nearby Residential Tower would be built - evidence did not deal with when and in what terms Development Consent was refused, with Lessor's intentions or whether they were reasonably based or with whether representation was misleading to the lessor's knowledge - appeals limited to question of law - held that there was no basis for award of compensation under s.10 - observations on representation as to a future matter.
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 s.119 Retail Leases Act 1994 s.11, s.72A Trade Practices Act 1974 (Cth) s.52; subs.51A(1) Supreme Court Act 1970 s.75A
CASES CITED:	Global Sportsman Pty Ltd v. Mirror Newspapers Ltd (1984) 2 FCR 82 James & Ors v. Australia and New Zealand Banking Group Ltd & Ors (1986) 64 ALR 347
PARTIES :	Golden Harvest (Aust) Pty Limited - Appellant/Cross-Respondent Paing Pty Limited (First Respondent / First Cross-Appellant) Icontact Pty Limited (Second Respondent / Second Cross-Appellant) Shen Zhen Famtec (Australia) Pty Limited (Third Respondent / Third Cross-Appellant) Winsing Pty Limited (Fourth Respondent / Fourth Cross-Appellant)
FILE NUMBER(S):	CA 40800/03
COUNSEL:	S.D. Robb QC & Mr B.F. Katekar - Appellant K.P. Rewell SC & Ms A.R. Beardow - Respondents
SOLICITORS:	Colquhoun Murphy - Appellant Creagh & Creagh - Respondents

LOWER COURTJURISDICTION:	Supreme Court
LOWER COURT FILE NUMBER(S):	SC 30113/02
LOWER COURT JUDICIAL OFFICER :	Newman AJ