HAMILTON-SMITH v CFS Managed Property Ltd & Perpetual Nominees Ltd
[2005] SASC 461
•6 December 2005
SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
HAMILTON-SMITH v CFS MANAGED PROPERTY LTD & PERPETUAL NOMINEES LTD
Judgment of The Honourable Justice Duggan
6 December 2005
APPEAL AND NEW TRIAL - APPEAL GENERAL PRINCIPLES - INTERFERENCE WITH DISCRETION OF COURT BELOW - IN GENERAL - FAILURE TO EXERCISE DISCRETION
LANDLORD AND TENANT - RETAIL AND COMMERCIAL TENANCIES LEGISLATION - OBLIGATIONS, PROHIBITED TERMS AND PROTECTION FOR LESSEES - INFORMATION REQUIREMENTS
Proceedings were commenced in the Magistrates Court against appellant for arrears of rent and other charges - appellant counterclaimed, based on allegations of misleading and deceptive conduct contrary to Trade Practices Act 1974 and the Fair Trading Act 1987 - appellant appealed against the decision of the magistrate in favour of respondents for an amount comprising rent, GST and costs - whether failure by respondent to provide a disclosure statement pursuant to s 12 of Retail and Commercial Leases Act permits relief in the form of an order avoiding or varying the lease - magistrate erred in applying the test in s 12(5) of the Act - appeal allowed and order made varying terms of lease so as to exclude charges payable under the lease - appeal against dismissal of counterclaim dismissed.
Retail and Commercial Leases Act 1995 s 11, s 12; Trade Practices Act 1974 s 52, s 53A; Fair Trading Act 1987 s 56, s 59, referred to.
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97, applied.
Farooqi and Farooqi v Mazzocchetti and Mazzocchetti [1998] SASC 6619 (9 April 1998), distinguished.
Fox v Percy (2003) 214 CLR 118, considered.
HAMILTON-SMITH v CFS MANAGED PROPERTY LTD & PERPETUAL NOMINEES LTD
[2005] SASC 461Magistrates Appeal
DUGGAN J. The appellant entered into occupation of shop premises owned by Colonial First State Property Trust.
The shop is part of a complex known as Castle Plaza which is managed by the first respondent. The second respondent was appointed to provide custodian services to the first respondent pursuant to a custody agreement. According to the plaintiff’s case, the appellant was a monthly tenant.
The shop had been occupied previously by Bernsteen Pty Ltd (Bernsteen) which operated a number of retail outlets trading as “Bedroom Mazurka”.
The appellant occupied the shop from 25 January 2002 to 12 June 2002.
After the appellant vacated the premises, the respondents commenced proceedings against her for arrears of rent, occupation charges and outgoings. The appellant contested the claim on a number of grounds which raised issues concerning the terms of the agreement between the parties and the alleged failure of the respondents to comply with the disclosure requirements of the Retail and Commercial Leases Act 1995(“the RCLA”). The appellant also counterclaimed, pleading an entitlement to a set-off. The counterclaim was based principally on allegations of misleading and deceptive conduct contrary to the Trade Practices Act 1974 (“the TPA”) and the Fair Trading Act 1987 (“the FTA”).
The matter was tried before a magistrate in the Civil Division of the Magistrates Court. Judgment was entered in favour of the respondents in an amount calculated as follows:
Rent $ 5,618.79
GST 589.11
Costs $32,531.89
$38,739.79
Bernsteen had been in occupation of the premises pursuant to a Licence Agreement which was entered into between Bernsteen and Superannuation Funds Management Corporation of South Australia before the respondents became involved with the premises. Bernsteen went into liquidation on 21 March 2001.
The appellant was employed by Bernsteen as the retail manager of the Bedroom Mazurka outlets. She negotiated with the liquidator of the company to purchase stock and commenced negotiations with the Castle Plaza management for occupation of the premises previously occupied by Bernsteen at the Castle Plaza Centre. Most of the negotiations were conducted on her behalf by Mr Scarborough, a partner in South Australian Lease Management.
Mr Scarborough wrote to Castle Plaza on 10 January 2002 explaining that he acted for the appellant who wished to lease the premises. He offered the following terms:
1)Two weeks rent free to reorganise the business, stock the shop and commence trading.
2)Six months on a monthly tenancy basis at a gross rent of $3,585 per month plus GST (including all outgoings and marketing fund contribution).
3)At the end of six months have the option of taking up a new lease on the same commercial terms and conditions as previously offered by the lessor by way of letter dated 25 June 2001 addressed to Burnsteen Pty Ltd from Mr John Crase. The only variation required is that the lease term will be for 3 years.
4)The commencement date is likely to be within 7 days of receipt of the lessor’s approval of this proposal.
The marketing manager of Castle Plaza replied on 11 January 2002 advising that the suggested terms were unacceptable. The letter set out a “compromise position” as follows:
1We propose that your client takes over the store on a Casual monthly basis, for the period ending 30th June 2002. At this point of time, the arrangement will cease, and unless otherwise agreed, your client will vacate.
2Your client is able to enter the premises from Monday the 21st January and all charges will commence on the 1st February 2002.
3The monthly charge will be $3,585 per month, paid at the commencement of each month in advance.
4The terms and conditions of the occupation will be in accordance with the Castle Plaza casual leasing agreement and the existing Bedroom Mazurka Lease, with the Lease being the overriding covenant.
5The Lessor and your client will make every effort to negotiate an acceptable deal for a more permanent Lease, but both parties agree that if agreement is not reached by the 30th June 2002, this agreement will cease in accordance with point 1 of this letter.
6This proposal is subject to your client’s and the Lessor’s approval. It will not be presented to the Lessor unless it meets with your client’s approval firstly.
7Both parties will recognise that this agreement in no way entitles your client to further occupation beyond 30th June 2002, unless otherwise agreed.
These terms were accepted by the appellant.
The appeal is in relation to two major issues in the case. The first is whether the magistrate should have made an order avoiding the lease, or varying it, by reason of the failure of the respondents to provide the appellant with a disclosure statement pursuant to s 12 of the RCLA. The second is whether the magistrate was correct in dismissing the counterclaim.
Sections 11 and 12 of the Retail and Commercial Leases Act 1995 provide as follows:
11 A person must not, as lessor or on behalf of the lessor, offer to enter into a retail shop lease, invite an offer to enter into a retail shop lease or indicate by written or broadcast advertisement that a retail shop is for lease, unless—
(a) the person has a copy of the proposed retail shop lease (in written form, but not necessarily including particulars of the lessee, the rent or the term of the lease) available for inspection by a prospective lessee; and
(b) the person makes a copy of the proposed lease available to any prospective lessee as soon as the person enters into negotiations with the prospective lessee concerning the lease.
Maximum penalty: $500.
12 (1) Before a retail shop lease is entered into or renewed, the lessee must be given a disclosure statement for the lease.
(2) A disclosure statement is a written document stating or containing—
(a) the address of the shop; and
(b) the lettable area of the shop; and
(c) the permitted uses of the shop; and
(d) the term of the lease; and
(e) the hours during which the lessee will have access to the shop outside trading hours; and
(f) the date on which the shop will be available for occupation; and
(g) the amount of the base rent payable under the lease and the basis on which the base rent may be changed; and
(h) any other rent payable under the lease and the basis of its calculation; and
(i) each category of outgoings the lessee is to be liable to pay or reimburse (in whole or part), and an estimate of the lessee's annual liability for outgoings of each category; and
(j) whether the amount the lessee is required to pay towards outgoing includes a margin of profit for the lessor and, if so, the percentage profit or the basis on which the profit is to be calculated; and
(k) the nature of any other monetary obligations imposed on the lessee under the lease and, if possible, an estimate of the annual cost of complying with those obligations; and
(l) whether any right to renew or extend the term of the lease is given by the lease and, if so, the nature of the right; and
(m) the legal consequences of breach of a term of the lease (including the consequences of early termination of the lease by the lessee); and
(n) a warning that oral representations made by the lessor or the lessor's agent on which the lessee has relied should be reduced to writing and signed by or on behalf of the lessor before the lessee enters into the lease; and
(o) a warning that the lessee should obtain independent legal and financial advice before entering into the lease.
(3) If the shop is situated in a retail shopping centre, the disclosure statement must also state—
(a) the address of the retail shopping centre; and
(b) the number of shops in the retail shopping centre and their total lettable area; and
(c) the number of parking bays available for the use of customers of the shop and the number of parking bays available for use by the lessee and the lessee's employees; and
(d) the nature of the facilities and services provided by the lessor; and
(e) whether changes to the retail shopping centre are proposed and, if so, the nature of the changes; and
(f) the core trading hours; and
(g) the current tenant mix and any proposed changes to the current tenant mix; and
(h) whether the lessor is prepared to give the lessee an assurance that the current tenant mix will not be altered to the lessee's disadvantage by the introduction of a competitor; and
(i) whether there is a tenant association and, if so, the nature of the association, the voting rights of members, and the contributions payable by members; and
(j) whether contributions are or may be required towards the costs of advertising and promoting the shopping centre and, if so, the estimated annual contribution to be required from the lessee.
(3a) A disclosure statement must comply with requirements of the regulations about the form in which it is to be presented.
(4) The tenant should sign an acknowledgement of receipt of the disclosure statement before signing the lease or a document that binds the lessee to enter into the lease or to take the retail shop on lease for a renewed term.
(5) If a disclosure statement is not given as required by subsection (1), or contains information that at the time it is given is materially false or misleading, the Magistrates Court may, on application by the lessee, make one or more of the following orders as may be appropriate in the circumstances of the case -
(a) an order avoiding the lease in whole or part;
(b) an order varying the lease;
(c) an order requiring the lessor to repay money paid by the lessee;
(d) an order requiring the lessor to pay compensation to the lessee;
(e) an order dealing with incidental or ancillary matters.
(6) However, an order cannot be made under subsection (5) on the ground that a disclosure statement is incomplete or contains information that is materially false or misleading if -
(a) the lessor has acted honestly and reasonably and ought reasonably to be excused; and
(b) the lessee has not been substantially prejudiced.
The appellant was not given a copy of a lease in relation to the premises. Mr Scarborough had a copy of the Bedroom Mazurka or Bernsteen lease for the property in his file at the time of the negotiations. He had acquired the copy when acting for Bedroom Mazurka. He did not come into possession of it in his capacity as agent for the appellant. He did not give a copy of the lease to the appellant or discuss its terms with her.
I was referred to the following remarks made by Mason J in Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 658:
As against a third party the law imputes to a principal knowledge gained by his agent in the course of, and which is material to, a transaction in which the agent is employed on behalf of the principal, under such circumstances that it is the duty of the agent to communicate it to the principal. In the words of James LJ in Vane v Vane (1873) 8 Ch App 383 at p 399, “the actual knowledge of the agent through whom an estate is acquired is … equivalent to the actual personal knowledge of the principal”.
This principle does not apply in the present case where the contents of the earlier lease between third parties was acquired at a time when Mr Scarborough was not the appellant’s agent. In any event, the fact that Mr Scarborough had a copy of the lease does not affect the obligation imposed by s 12; nor is it relevant to the exercise of the discretion under s 12(5).
There is some vagueness about the identity of the other document referred to in para 4 of Castle Plaza’s letter of 11 January 2002 as the “Castle Plaza Casual Leasing Agreement”. Mr Sallis, for the appellant, submitted that no such document existed. Mr Douglas, for the respondents, submitted that it may have been exhibit P1, document 22 entitled “Casual Mall Space Licence”. It is not altogether clear on the evidence that document 22 is the document referred to in the letter. In any event, it is not in dispute that Mr Scarborough did not have a copy of that document.
The magistrate found at [181] of her reasons that the agreement between the parties comprised the following documents:
(a) the letter from Castle Plaza to Mr Scarborough dated 11 January 2002.
(b) the licence agreement between the landlord and Bernsteen.
(c) the variation to the licence agreement to provide for the payment of GST.
The licence agreement was one of the documents mentioned in para 4 of the letter from the marketing manager of Castle Plaza to Mr Scarborough dated 11 January 2002. There was a variation to that agreement which the respondent asserts was effected by agreement between Bernsteen and Castle Plaza on 2 June 2000 (P1, document 10) which required Bernsteen to pay GST as part of its rental payments.
It is not in dispute that the appellant was not provided personally with a copy of the document referred to in the letter of 11 January 2002 as “the existing Bedroom Mazurka Lease”. However, it is common ground that this document was the licence agreement entered into between Superannuation Funds Management Corporation of South Australia (the then owner of the premises) and Bernsteen, a copy of which Mr Scarborough had acquired when involved in the negotiations for that lease.
It was not in dispute on the hearing of the appeal that the respondent failed to comply with s 12 of the Act in that it did not provide the appellant with a disclosure statement.
It was necessary for the magistrate to consider whether, in the exercise of her discretion, relief should be granted under s 12(5) of the RCLA by reason of the fact that no disclosure statement had been provided to the appellant. The magistrate refused to make any order pursuant to s 12(5). She said:
The relief sought by the defendant pursuant to section 12(5) of the Act is set out in paragraph 32.10 of the Second Amended Defence and Amended Counterclaim. In this paragraph the defendant has, in effect, adopted the wording of section 12(5).
Counsel for the plaintiffs referred me to the case of Farooqi and Farooqi v Mazzocchettiand Mazzocchetti [1998] SASC 6619 (9 April 1998) where Bleby J stated:
“The appellants did not seek to have the lease avoided or varied by virtue of the failure to comply with s 12(1). Their claim in effect was for payment of compensation as a result of the failure to provide the disclosure statement. In my opinion, before that can be ordered, it must be shown that the loss or damage for which compensation is sought was incurred or at least contributed to by the failure to provide the statement. It was not suggested that the appellants’ outstanding liability for rent or for unpaid insurance premiums was in any way caused or contributed to by the failure to provide the statement.”
The defendant has not adduced any evidence to suggest that, had she been provided with a Disclosure Statement, she would not have proceeded with the agreement with Colonial Property Management (SA) Pty Ltd. She had engaged Mr Scarborough, an experienced leasing agent, to conduct the negotiations on her behalf and Mr Viscariello was providing her with legal advice. There was no evidence adduced by the defendant that she suffered any prejudice as a result of the failure to provide a Disclosure Statement nor did she adduce any evidence to establish that the alleged losses suffered by her were caused or contributed to by the failure to provide the Statement.
The granting of relief under section 12(5) of the Act is discretionary and in the circumstances of this case I am satisfied that there is no proper basis for exercising a discretion in favour of the defendant. The defendant has not suffered any, much less “substantial” detriment as contemplated by section 12(6)(b) of the Act and, on the evidence before me, the second plaintiff lessor acted honestly and reasonably throughout (section 12(6)(a) of the Act).
It is true that the provision of a Disclosure Statement would have clarified the issues of GST and electricity. However, I doubt that the clarification of the issue of GST would have affected the outcome of the negotiations in view of the fact that Mr Scarborough had proposed a monthly gross rental of $3,585.00 plus GST in his letter of offer dated 10 January 2002 (Exhibit P1-19). As to the issue of electricity, I have found that the defendant is not liable to pay electricity charges in any event.
In my view, the circumstances do not support the granting of the relief sought by the defendant in paragraph 32.10 of the Second Amended Defence and Amended Counterclaim.
In my view, the magistrate erred by applying what was said in the passage quoted from Farooqi’s case to all forms of relief referred to in s 12(5). In that case Bleby J was commenting on the discretion of the court to make an order pursuant to s 12(5)(d) of the RCLA “requiring the lessor to pay compensation to the lessee” by reason of the failure to provide a disclosure statement. His Honour was pointing out that, where positive relief of this nature is sought, the failure to provide the disclosure statement must have caused or contributed to the loss or damage claimed. Bleby J made it clear that the appellants in that case were not seeking to have the lease avoided or varied because of a failure to comply with the terms of the section.
In the present case, the appellant is seeking to avoid or vary the lease. This was the relief which was being sought in para 32.10 of the Second Amended Defence and Amended Counterclaim referred to in the passage quoted from the reasons of the magistrate. Although proof of loss or damage might be a relevant factor to take into account in considering the exercise of the discretion to grant relief of the type sought in para 32.10, it is not a pre-requisite to such relief. The magistrate was in error in treating it as such.
There is a further difficulty with the exercise of the discretion by the magistrate. In explaining that the appellant had suffered no prejudice, she stated that Mr Viscariello was providing the appellant with legal advice. Mr Viscariello is a lawyer. He was a director and shareholder of Bernsteen. He was described in the magistrate’s reasons as “the de facto partner” of the appellant, although this was not the case at the time of the negotiations for the present lease. It was not in dispute on the appeal that there was no evidence before the court to indicate that Mr Viscariello had provided the appellant with legal advice.
The magistrate also said in the reasons she gave for the exercise of her discretion that the appellant had not been substantially prejudiced by the failure to provide the disclosure statement and that the second respondent had acted honestly and reasonably. She specifically referred to s 12(6) of the RCLA which states that an order cannot be made under s 12(5) if the circumstances referred to in s 12(6) exist.
In my view, s 12(6) does not apply in cases where no disclosure statement has been provided to the lessee. The exercise of the discretion under s 12(5) must be considered if “a disclosure statement is not given … or contains information that at the time it is given is materially false or misleading”. Section 12(6) addresses the situation where “a disclosure statement is incomplete or contains information that is materially false or misleading” (emphasis added). The legislature has seen fit to prevent the exercise of the discretion in the event that the disclosure statement is incomplete and the other requirements of s 12(6) are satisfied. It is understandable that this should be the case. However, it would seem inappropriate to circumscribe the operation of s 12(5) in this way in a case where no disclosure statement was given to the lessee.
If I am wrong in this approach to the construction of s 12(6), I am nevertheless of the view that the appellant has been substantially prejudiced.
In the light of the errors made in the exercise of the discretion, it is necessary to consider the matter afresh. The purpose of s 12 is clear enough. It is not to be expected that every tenant will read the lease thoroughly. The disclosure statement extracts certain essential aspects of the lease which it is appropriate to bring to the direct attention of the lessee. They include the amount of the base rent payable, any other rent payable and the basis of its calculation and the legal consequences of breach of a term of the lease.
In considering the prejudice to the appellant by the failure of the respondents to provide a disclosure statement it is relevant to recall that the costs awarded against the appellant amounted to $32,531.89 out of a total award of $38,739.79.
The Bedroom Mazurka or Bernsteen lease provides in clause 4.2 that:
The costs of an [sic] incidental to the recovery of any moneys due pursuant to this Agreement and the Licensor’s costs and expenses incurred in remedying or attempting to remedy any breach of the Licensee’s covenants shall be deemed to be an addition to the Licence Fee falling due on the date on which such costs and expenses become due and owing and recoverable by the Licensor from the Licensee in the same manner as any unpaid Licence Fee.
The magistrate held that this clause applied. She said:
In my view the meaning of the clause is clear and unambiguous in its terms. The clause is not limited by any requirement that the costs must be reasonable or alternatively, are confined to a particular scale, for example, party and party costs or alternatively solicitor/client costs.
I agree with the submission of counsel for the plaintiffs that the reference to “falling due on the date on which such costs and expenses become due and owing” clearly means that the costs become due once the Licensor has been billed, in this case, by its solicitors, and must pay the account.
The contents of this common but onerous clause were part of the information which would have to be provided in the disclosure statement.
Furthermore, the terms of the lease as disclosed by the correspondence left some doubt as to whether GST was included in the figure for rent which was quoted or whether it was to be paid in addition to the quoted figure. The information required in a disclosure statement would have resolved this ambiguity, at least in the mind of the appellant.
It is important to bear in mind that, not only was the appellant not supplied with the disclosure statement, she was not given a copy of the lease. The second respondent was content to leave the formation of the contract between it and the appellant to the acceptance of the terms as stated in its letter of 11 January 2002. The only indication as to other terms of the lease was the reference in para 4 of the letter.
The circumstances of this case demonstrate the purpose that the disclosure notice serves. I have said that, in my view, s 12(6) does not apply in this case. But even if it did, I think the appellant has been substantially prejudiced by the failure to provide her with a disclosure statement.
In my view it is appropriate to make an order pursuant to s 12(5) that the lease be varied so as to restrict the liability of the appellant to pay rent in the sum of $5,618.79. Furthermore, I will direct that, in so far as it is necessary, the lease will be varied pursuant to s 12(5) so as to exclude clause 4.2.
The next matter for determination is the appellant’s counterclaim. It was asserted that there was a failure to provide the appellant with a disclosure statement pursuant to s 12 of the RCLA and that the appellant was thereby entitled to an exercise of the discretion pursuant to s 12(5) in her favour. In addition, however, it was pleaded that the failure to provide a disclosure statement constituted misleading and deceptive conduct on the part of the second respondent which was likely to mislead or deceive contrary to s 52 of the TPA and false or misleading representations concerning the nature of an interest in land contrary to s 53A of the TPA. The same conduct was relied upon as constituting misleading or deceptive conduct contrary to s 56 of the FTA and the making of a false or misleading representation concerning an interest in land contrary to s 59 of the FTA.
The magistrate found that the appellant had failed to establish any misleading and deceptive conduct on the part of the second respondent contrary to the provisions of the TPA and FTA by reason of the fact that no disclosure statement was provided. She also held that the defendant had failed to establish any false or misleading representations on the part of the second respondent contrary to s 53A of the TPA and s 59 of the FTA.
As to the first of these issues, it is well established that silence can constitute misleading and deceptive conduct contrary to the abovementioned Acts where there is a duty of disclosure. However, all the circumstances of the case must be considered: Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31. As Hill J said in Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 at 114, it is difficult to see how mere silence could, of itself, constitute conduct which is misleading or deceptive. In my view, it was not enough for the purposes of this aspect of the appellant’s case to establish that the failure to disclose information resulted in prejudice to the appellant. It is the conduct of the respondent which must be looked at in order to determine whether it was misleading or deceptive. The failure to provide the disclosure statement left the appellant in ignorance about certain matters which required disclosure, but it did not have a tendency to mislead or deceive so as to provide a remedy under the TPA or the FTA.
Section 53A of the TPA which deals with representations relating to land was also pleaded. However, this section requires proof of a false or misleading representation. Again, the failure to provide a disclosure statement in the present circumstances could not be viewed as a misrepresentation.
In my view, the magistrate was correct in refusing relief under the TPA and the FTA in so far as the foundation for that relief rested on the failure to provide a disclosure statement as required by s 12 or the failure to comply with s 11 of the RCLA by not providing a copy of the lease to the appellant.
It was also pleaded by way of counterclaim that Mr Crase, the Centre Manager of Castle Plaza Shopping Centre, made representations to the appellant that:
1The appellant would be allowed to trade in the Centre Court of Castle Plaza for two separate periods, each of two weeks and that this would be free of charge;
2The appellant would be allowed to place two advertisements in the Castle Plaza Shopping Centre catalogue, each advertisement being of the value of $300 and that this would be free of charge to the appellant;
3That the appellant would be paid the sum of $1800 as a contribution to her establishment costs of the shop.
It was alleged that the appellant relied upon these representations when agreeing to enter into occupation of the premises. According to the counterclaim, the representations constituted misleading or deceptive conduct and, again, reliance was placed on s 52 of the TPA and s 56 of the FTA. In the alternative, there was a plea of misrepresentation and an assertion of unconscionable conduct contrary to s 51AC of the TPA. Loss and damage claimed by the appellant included the cost of purchasing stock and incurring various other expenses in setting up the business.
The appellant’s counterclaim was dismissed. The magistrate rejected her evidence that Mr Crase had made the representations alleged. The appellant has appealed against these findings.
In order to deal with the appellant’s complaints, it is necessary to refer to some of the history of the negotiations for the lease.
I have said that Mr Scarborough represented the appellant in the negotiations. The magistrate found that he received instructions to act for the appellant in January 2002. I have also set out the terms of his letter to Castle Plaza dated 10 January 2002 and the letter forwarded by Castle Plaza in reply dated 11 January 2002. The appellant wrote on the letter:
I accept the above terms and conditions.
and signed the note. The circumstances in which the document on which she signed her acceptance was given to Mr Crase are discussed later in these reasons.
There is a dispute as to when the lease was accepted by the appellant, but an internal email dated 18 January 2002 which was included in the Castle Plaza file and tendered at the hearing (P3) records the following:
Brian Scarborough has now rang [sic] and indicated his acceptance of the terms set out in our correspondence attached. He said he will call next week to confirm a commencement date.
Can you please advise me what the next step is. Do I send out an OTL to Brian for signing?
The appellant said she went to Castle Plaza on 24 January 2002 with her mother and three year old daughter. She said Mr Crase spoke to her in his office while her mother waited downstairs for her. She said Mr Crase commented on the fact that she had two weeks free rent at the beginning of her lease. The free rent period is referred to in the letter of 11 January. She agreed that she was, in fact, given two weeks free rent.
The appellant said that, at the meeting, Mr Crase offered her the two advertisements in the catalogues. He mentioned that they were worth $300 per advertisement. She said he then offered her an opportunity to trade for two weeks in the Centre Court. This is a busy area of the Centre and Mr Crase is alleged to have told her that the value of the offer was $3,000 per week.
Finally, the appellant said that Mr Crase offered her $1800 towards fitting out her shop. She said she was thrilled at these offers and said that on that basis she would sign up. She said that it was at this stage that she signed the acceptance on the letter of 11 January. She said that she did not ever receive the two advertisements, the $1800 for the fit out, or the two weeks of free trading in the Centre Court.
Mr Crase said in evidence that the appellant came to see him on 24 January 2002. He said that, according to his recollection, the appellant handed him the letter dated 11 January while they were speaking together in the reception area of his office which is situated on the first floor of the shopping centre. The letter had already been signed by the appellant. According to his recollection, the discussions with the appellant were held in the reception area. However he conceded during cross-examination that some discussion may have occurred in his office.
Mr Crase denied that he told the appellant she could have two advertisements in a catalogue or catalogues. He said the catalogues are produced and paid for out of the Centre Marketing Fund and the fund is made up of an owner contribution and contributions from individual retailers. He said that, apart from charges made under the marketing fund, an individual tenant does not have to pay any extra money to advertise in the catalogue. Mr Crase said there was a general discussion about the practice of the Centre to produce catalogues from time to time, but he said the conversation did not go any further.
Mr Crase denied offering the appellant an opportunity to trade free of charge in the Centre Court. He said that he did not know of any mall in the State which would charge as much as $3000 per week to trade in an area such as this.
Mr Crase also denied offering to pay the appellant the sum of $1800 as a contribution to the establishment of the premises. He said that, at this stage, the vacancy rate was under 1 per cent. He said the Centre was trading extremely well and it was not difficult to lease premises. He said the management were in a position where they could bide their time to get the best possible deal for the owner.
Mr Crase said that at no time during the appellant’s occupancy did she raise the topic of trading in the Centre mall free of charge. Nor did she ask about free advertising or make any request for payment of $1800 towards the fitting-out of her shop. Mr Crase said that the alleged representations had not been raised prior to the delivery of the amended defence by the appellant’s solicitors in January 2003. The original defence was filed on 30 October 2002.
The appellant’s counsel relied on a note in Mr Scarborough’s file as support for the appellant’s version. The note reads:
Tanya [the appellant]
Deal okay at $3,585 all up with extra benefits offered (otherwise no go!)
Mr Scarborough was called by the appellant. He said that the note was undated when he found it in his file while preparing to give evidence. He said he wrote the date 21.1.02 on the note a week or so before the case. He said that, at that stage, he had no independent recollection of the date on which he had spoken to the appellant and written the note. However, he looked through the accounts records and noted that he had a conversation with the appellant on 21.1.02. Counsel for the appellant argued that the note was written after the visit to Mr Crase and after it is alleged he offered incentives to the appellant.
The magistrate made the following finding on this issue:
The file note dated 21 January 2002 is difficult to reconcile when its wording is considered. The expression “or else no go!” suggests that the conversation referred to may well have taken place before Mr Scarborough communicated the defendant’s acceptance of the offer to Ms Slattery on 18 January 2002.
I agree with the submission of counsel for the plaintiffs and find, on the balance of probabilities, that it is likely that this file note recorded a conversation occurring prior to 18 January 2002. Mr Scarborough told the Court he did not necessarily record every conversation he had with clients on the time sheet. The notation of “extra benefits” could be referring to the two week rent free period proposed by Mr Scarborough and to his proposal contained in the letter of 10 January 2002 that at the end of the six month period the defendant was to have the option of taking up a new lease on the terms and conditions previously offered to Bernsteen Pty Ltd by letter dated 25 January 2002.
The magistrate also made findings on the credibility of the main witnesses:
There was a significant contrast between the style and manner of the giving of evidence of Mr Crase on the one hand and the defendant on the other. The impression I gained of Mr Crase was that of a person who had nothing to hide and he gave his evidence in a frank, open and honest manner. I found him to be a credible witness. Counsel for the defendant was critical of much of his evidence particularly in relation to the details of the meeting on 24 January 2002, in particular, whether the defendant had made an appointment to see Mr Crase and whether any of his discussions with the defendant were held in his office. I do not accept counsel’s submission.
Mr Crase is Centre Manager of Castle Plaza comprising in excess of 70 tenancies. The meeting occurred over two years prior to his evidence being given and it is not surprising that his recollection with respect to some of these matters has become blurred with the passage of time.
I did not find the defendant to be a convincing witness. Her demeanour was often argumentative and aggressive. Furthermore, I found much of her evidence to be inherently improbable. Where the evidence given by Mr Crase has conflicted with the evidence of the defendant, I have rejected the defendant’s version of events and have accepted the evidence of Mr Crase.
I have also preferred the evidence of Mr Crase where it conflicts with the evidence of Mrs Smith, the defendant’s mother. There were inconsistencies between the evidence of the defendant and her mother. Mrs Smith told the Court the defendant told her before the meeting that she expected the meeting to take from between 15 minutes to half an hour. She also stated that her daughter was in a hurry after the meeting concluded and was running late whereas the defendant stated that after the meeting they walked about Castle Plaza and had a cup of coffee.
I also found Mr Scarborough to be a credible witness who endeavoured to give his best recollection of the events. It is clear that when he gave his evidence in relation to the conversation recorded in the file note subsequently dated 21 June 2002, his evidence was largely reconstructed as he had no recollection of having a conversation with the defendant on this date nor did he recall having any conversation with her on the issue of benefits.
I turn now to consider the evidence of Mr Scarborough. He was unable to recall the conversation recorded as occurring on 21 January 2002 with the defendant and the matters discussed during the course of that conversation. He had no recollection of having any discussion with the defendant on the issue of “benefits”. When recalled to give further evidence by the defendant, he suggested that, on the balance of probabilities, the file note of the conversation which he had noted at later date as occurring on 21 January 2002, was likely to have been made after the meeting between Mr Crase and the defendant on 24 January 2002.
This fact was not supported by the other documentary evidence. Mr Scarborough told the Court he would never have accepted a deal on behalf of the defendant without her instructions and he could clearly recall receiving those instructions. In the email dated 18 January 2002 from Ms Slattery to Ms Susan Wylie, Ms Slattery states:
“Brian Scarborough has now rang (sic) and indicated his acceptance of the terms set out in our correspondence attached. He said he will call next week to confirm a commencement date.” (Exhibit P3)
The letter attached to the email was the letter to Mr Scarborough dated 11 January 2002 (Exhibit P1-21).
Furthermore, whilst I accept the evidence of Mr Scarborough that he would not necessarily record every telephone conversation, no conversation on 24 January 2002 was recorded in the account dated 7 February 2002 (Exhibit D1) nor did he have any recollection of a conversation with the defendant concerning benefits. It was his practice to record any conversations relating to critical issues.
In my view, the telephone conversation recorded on 21 January 2002 is consistent with the email of Ms Sharon Slattery and consistent with the evidence of Mr Scarborough that he met the defendant on North Terrace and handed to her the letter dated 11 January 2002 to be signed by her and delivered to Mr Crase.
In my view, the fact of the defendant providing him with instructions to accept the offer prior to the meeting on 24 January 2002 is consistent with the file note Mr Scarborough made of a conversation with Mr Crase on 22 January 2002. This file note stated:
“Accept – need access now. EFTPOS will take longer than expected to install/connect. John Crase is to come back to me.
Need solicitor.” (Exhibit D1).
This file note is also consistent with the evidence of Mr Crase that Mr Scarborough rang him on his returning from leave querying access to the premises by the defendant. Mr Scarborough had assumed the letter signed by the defendant had been returned to him. Mr Crase told the court he subsequently telephoned his manager, Mr Spackman, to advise that the reference in the letter to occupation of the premises occurring on 21 January 2002 was not possible as he had not received the signed letter from the defendant.
The file note dated 21 January 2002 is difficult to reconcile when its wording is considered. The expression ‘or else no go!’ suggests that the conversation referred to may well have taken place before Mr Scarborough communicated the defendant’s acceptance of the offer to Ms Slattery on 18 January 2002.
After a lengthy consideration of the evidence, the magistrate made the following findings:
I turn now to consider the evidence of Mr Crase in relation to each of the three disputed alleged representations. The defendant asserted in her evidence that Mr Crase informed her the value of a period of two weeks trading from a mall within Castle plaza was $3,000.00 per week whilst in her pleadings the value of a period of 2 weeks was alleged to be $3,000.00. The figure of $3,000.00 was first raised in the defendant’s Second Amended Defence and Amended Counterclaim.
Mr Crase denied he made any such representation. In support of his evidence he referred to the Casual Mall Leasing Guidelines applicable as at 1 January 2001 (Exhibit P17) provided rates for internal tenants varying from $550.00 to $770.00 (inclusive of GST) dependent on the mall site.
I accept the evidence of Mr Crase and find that he made no such representation. His evidence is supported by the Casual Mall Leasing Guidelines (Exhibit P17).
The defendant also alleges Mr Crase informed her the value of the alleged 2 free advertisements offered in the Castle Plaza catalogues was $300.00. Again, I accept his evidence and find that he made no such representation. His evidence concerning the production of the catalogues supports such a finding together with the Calendar of Events tendered by the plaintiffs (Exhibit P18) indicating the promotional events planned during the period the defendant was to occupy the premises and the memoranda issued by Ms Slattery to the tenants of Castle Plaza (Exhibits P8 and P9).
I accept the evidence of Mr Crase and find that two catalogues were not published by Castle Plaza during the defendant’s occupancy of the premises and this fact was apparent from the Calendar of Events prepared by Ms Slattery in late August early September 2001 (Exhibit P18). I find that no representation was made by Mr Crase with respect to the free advertisements.
The defendant alleges that Mr Crase promised to pay the sum of $1800.00 as a contribution to the establishment costs of the premises. She also stated in her evidence that she intended to spend these monies on advertising as she was entitled to expend the fit out costs as she saw fit. She told the Court she was not required to produce any invoices to enable payment of the $1,800.00 to be made. Mr Scarborough told the Court it would be unusual to offer a sum of $1800.00 to be used for any purpose without being tied to a fit out requirement. I find the evidence of the defendant to be inherently improbable and, in any event, I accept the evidence of Mr Crase and find that no such representation was made to her.
In view of my finding that Mr Crase did not make the alleged representations pleaded in paragraphs 18.2.1-3 of the Second Amended Defence and Counterclaim, it is not necessary for me to consider the issues of reliance and inducement, misleading and deceptive conduct and unconscionable conduct.
In reviewing the evidence in the case I have had regard to the remarks of Gleeson CJ, Gummow and Kirby JJ in Fox v Percy (2003) 214 CLR 118:
On the one hand, the appellate court is obliged to “give the judgment which in its opinion ought to have been given in the first instance”. On the other, it must, of necessity, observe the “natural limitations” that exist in the case of any appellate court proceeding wholly or substantially on the record. These limitations include the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses’ credibility and of the “feeling” of a case which an appellate court, reading the transcript, cannot always fully share. Furthermore, the appellate court does not typically get taken to, or read, all of the evidence taken at the trial. Commonly, the trial judge therefore has advantages that derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole.
Nevertheless, mistakes, including serious mistakes, can occur at trial in the comprehension, recollection and evaluation of evidence. In part, it was to prevent and cure the miscarriages of justice that can arise from such mistakes that, in the nineteenth century, the general facility of appeal was introduced in England, and later in its colonies. Some time after this development came the gradual reduction in the number, and even the elimination, of civil trials by jury and the increase in trials by judge alone at the end of which the judge, who is subject to appeal, is obliged to give reasons for the decision. Such reasons are, at once, necessitated by the right of appeal and enhance its utility. Care must be exercised in applying to appellate review of the reasoned decisions of judges, sitting without juries, all of the judicial remarks made concerning the proper approach of appellate courts to appeals against judgments giving effect to jury verdicts. A jury gives no reasons and this necessitates assumptions that are not appropriate to, and need modification for, appellate review of a judge’s detailed reasons.
Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge’s reasons. Appellate courts are not excused from the task of “weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect”. In Warren v Coombes, the majority of this Court reiterated the rule that:
“[I]n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge but, once having reached its own conclusion, will not shrink from giving effect to it.”
As this Court there said, that approach was “not only sound in law, but beneficial in ... operation”.
After Warren v Coombes, a series of cases was decided in which this Court reiterated its earlier statements concerning the need for appellate respect for the advantages of trial judges, and especially where their decisions might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not. Three important decisions in this regard were Jones v Hyde, Abalos v Australian Postal Commission and Devries v Australian National Railways Commission. This trilogy of cases did not constitute a departure from established doctrine. The decisions were simply a reminder of the limits under which appellate judges typically operate when compared with trial judges. (footnotes omitted)
After reading the evidence and considering the submissions made by both counsel in respect of it, I am satisfied that the findings made by the magistrate in relation to the alleged representations by Mr Crase were open to her. The issue as to whether the representations were made turned very much on an assessment of the credibility of the two most important witnesses on that issue, the appellant and Mr Crase. The documentary evidence was of limited value. I do not think the magistrate’s findings in relation to the file note were erroneous.
In my view, the magistrate acted correctly in dismissing the counterclaim.
I will hear the parties as to the orders which should be made in consequence of these findings.
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