Khuu & Lee Pty Ltd v Corporation of the City of Adelaide - [2010] SASC 316

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application for Judicial Review)
KHUU & LEE PTY LTD v CORPORATION OF THE CITY OF ADELAIDE
[2010] SASC 316
Judgment of The Honourable Justice Anderson
19 November 2010
ADMINISTRATIVE LAW - JUDICIAL REVIEW - REVIEWABLE DECISIONS AND CONDUCT
Plaintiff seeks judicial review under r 199 Supreme Court Civil Rules 2006 of decision of defendant - decision not to offer plaintiff a new licence upon expiry of five-year licence - licence now expired - licence permitted plaintiff to sell fresh produce from community land - community land part of the Adelaide Central Market - licence was granted in conjunction with adjoining shop lease - offer made to renew shop lease - whether decision is amenable to judicial review - whether decision was an exercise of public power - whether no alternative remedy available to plaintiff.
Held: No judicial review - not an exercise of public power - alternative remedy available - no order for judicial review will be made.

ADMINISTRATIVE LAW - JUDICIAL REVIEW - GROUNDS OF REVIEW - PROCEDURAL FAIRNESS - HEARING - NATURE OF HEARING - OPPORTUNITY TO PRESENT CASE
Plaintiff seeks review on ground of denial of natural justice - whether defendant required to give plaintiff an opportunity to make submissions before making decision.
Held: No requirement for hearing.

LANDLORD AND TENANT - RETAIL AND COMMERCIAL TENANCIES LEGISLATION - OBLIGATIONS, PROHIBITED TERMS AND PROTECTION FOR LESSEES - MINIMUM TERM OF LEASE AND RENEWAL OF TERM
Plaintiff relies on Retail and Commercial Leases Act 1995 - plaintiff seeks enforcement of right of preference for renewal of licence - defendant gave plaintiff notice that licensed premises to return to roadway - defendant alleged breaches of the licence terms - whether plaintiff has a right of renewal - whether any of the s 20D(3) exceptions apply - whether defendant was required to negotiate new licence in good faith - whether defendant complied with s 20F notice requirements - whether lack of fair dealing on part of defendant.
Held: No right of preference - no lack of fair dealing - no breach of the legislation.
Retail and Commercial Leases Act 1995 (SA) s 20D, s 20D(1), s 20D(3)(b), s 20D(3)(d), s 20D(3)(d)(ii), s 20E, s 20E(5), s 20F, s 20F(1)(b), s 20H, s 68 and s 68(2)(j); Supreme Court Civil Rules 2006 r 199, r 199(2)(c), r 199.1.20; Local Government Act 1999 (SA) s 193 and s 202(1), s 202(2) and s 202(3)(b); Local Government (General) Regulations 1999 reg 15A(2); South Australia, Parliamentary Debates, Legislative Council 14 November 1996, 523-524, referred to.
R (Beer) v Hampshire Farmers Markets Ltd [2004] 1 WLR 233; R (Agnello) v London Borough of Hounslow [2003] EWHC 3112 (Admin); Mass Energy v Birmingham City Council [1993] Ennv LR 298; R v Bolsover District Council ex parte Pepper [2001] JPL 804; R (Molinaro) v Kensington and Chelsea Royal London Borough Council [2001] LGR 336, discussed.
R v London Borough of Camden ex parte Hughes [1994] COD 225, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"markets", "not offer lease"

KHUU & LEE PTY LTD v CORPORATION OF THE CITY OF ADELAIDE
[2010] SASC 316
Civil
ANDERSON J.
Introduction

This is an action in which the plaintiff seeks judicial review of the decision of the Corporation of the City of Adelaide (“the Corporation”) to not offer a new licence to the plaintiff for a vegetable stand which is part of the business of the plaintiff in the Lien Heng Asian Grocery which it operates in the Adelaide Central Market.
The judicial review is sought on the basis that the Corporation failed to comply with the rules of natural justice in that it did not provide the plaintiff with an opportunity to make submissions as to the grant of a new stand licence. The plaintiff seeks an order for judicial review in the nature of certiorari quashing the decision and a declaration that the decision is void and of no effect.
The Corporation disputes any entitlement by the plaintiff to judicial review.
In the alternative to judicial review, the plaintiff seeks remedies under the Retail and Commercial Leases Act 1995 (SA) (“the Act”) in that it claimed to have had a right of preference in respect of the stand. The plaintiff claims that the Corporation did not make any offer to grant a new stand licence or conduct any negotiations in relation to any such offer and has thereby not complied with the Act.
Under the Act the plaintiff claims a declaration that the plaintiff has a right of preference pursuant to the Act and alternatively an order that the Corporation be required to enter into a new licence with the plaintiff.
The plaintiff seeks an extension of time in which to commence the action. The extension sought is for about six weeks. The parties were already engaged in other litigation when the time expired. There is no suggestion of prejudice and I would accordingly grant an extension to 29 July 2010.
The issues are whether the plaintiff is entitled to judicial review and, if not so entitled, whether the defendant has acted in accordance with the provisions of the Act in declining to offer a new licence for the stand. The stand is situated on “community land” within the definition of s 193 of the Local Government Act 1999 (SA) (“the LGA”).
Background
The plaintiff operates an Asian grocery in the Adelaide Central Market. There are three relevant areas in which the plaintiff presently trades, each of which is governed by a separate agreement. There is a lease for the area known as the shop. There is a licence agreement for the stand and there is a further licence agreement for the cool room/storeroom. The lease and the two licences commenced on 1 September 2005 and expired on 31 August 2010.
There was no contractual right of renewal granted in respect of either the lease or the two licences. Each of the lease and licences are shopping centre leases in terms of the Act. Although the starting date for each was 1 September 2005, the documents were not in fact finalised until 20 May 2008 due to ongoing disputes between the plaintiff and the Corporation.
Proceedings were initially commenced in the Adelaide Magistrates Court on 3 June 2010 prior to the expiry of the lease and licences. The plaintiff sought declarations in that action relating to its rights under the Act.
On 25 August 2010 proceedings were taken out in this Court. All matters are now to be determined in this Court. An early trial was granted because of the urgency of the matter, and the Corporation has undertaken that the plaintiff can continue trading pursuant to its lease and two licences until this Court action is determined.
The plaintiff is a registered company trading as Lien Heng Asian Grocery and Mr Khai Kien Khuu is a director.
Mr Khuu was born in Vietnam and came to Australia with his parents when he was young. His parents operated this particular business as a partnership for some years, commencing in 1993 and Mr Khuu has been formally operating it since August 1999. Prior to that, he was involved in the bookkeeping and other areas of the business.
Much of the negotiation which has taken place, in various meetings held between the parties, has been conducted by a Mr Sam Pearson acting as agent on behalf of Mr Khuu. Mr Pearson is a retail lease consultant. Sometimes both Mr Khuu and Mr Pearson have been present when discussing matters with officers of the Corporation but at other times Mr Pearson has conducted those negotiations by himself. He has acted at all times as an agent duly authorised by Mr Khuu on behalf of the plaintiff.
The agreed evidence
Two large volumes of agreed documents were tendered before me and contain much of the correspondence passing between the parties. Much of this from the plaintiff’s point of view has been written by Mr Pearson.
The Corporation made a decision in late 2009 to not offer a further licence for the vegetable stand. The decision was made under delegated authority by the City Services and Facilities Committee of the Corporation on 14 December 2009. It was made without hearing from Mr Khuu. The Corporation made an offer to the plaintiff for the renewal of the shop lease and the licence of the cool room. The offer was subject to some conditions, which I will summarise.
Professional plans for upgrade of the fit-out of the shop conforming to the Corporation’s requirements to be provided to the Corporation by 31 January 2010
Completion of the approved shop fit-out by 31 March 2010
Vegetable stand to be removed
Five-year lease term commencing 1 September 2010
Commencement rental of $64,000 per annum with annual rent reviews
No contractual right of renewal
One lease to cover both the shop and the storeroom areas
Permitted use of the combined tenancy area to allow sale of Asian groceries and Asian fruit and vegetables without limitation on space occupied by either category of goods
Professional plans detailing the proposed revised layout of the shop as a result of the removal of the stand to be provided to Council by 31 March 2010
Approved works to be completed by 31 August 2010
As soon as this offer was communicated to Mr Khuu on 23 December 2009 he indicated that he would not enter into discussions unless the proposal involved all three areas that he then leased. In other words, if the vegetable stand was not to be included in any new arrangement, he was not prepared to negotiate. On the other side, the Corporation’s decision was that he was to be offered a new lease for both the store and the cool room but he was not, for a variety of reasons, to be offered a new licence for the vegetable stand. To that extent, therefore, there has been a standoff between the parties since that time.
Although a large number of meetings have been held, my observation is that most of them were a waste of time because neither party was prepared to move from its entrenched position.
I will detail later the various breaches of the earlier lease alleged by the Corporation. This was a relevant factor in the Corporation’s decision not to offer a further licence for the vegetable stand.
The vegetable stand is on the western roadway of the Central Market immediately south of the store. Its western perimeter abuts the eastern wall of the Asian Gourmet, a restaurant in the Central Market. The dimensions of the vegetable stand are 3 metres long by 2.8 metres wide, with an overall square metreage of 8.4 square metres. The store by comparison is 100 square metres of which 6.4 square metres has been approved for the sale of vegetables. Vegetable sales therefore presently take place in two areas of the business, both fronting the western roadway of the Central Market. The cool room/storeroom is 27.7 square metres and is separated from the store by a gyprock wall and passageway and abuts the store immediately to the north.
It is apparent that the Asian Gourmet has complained to the Corporation regarding the use of the vegetable stand and the intrusion by the stand on both the amenity of the restaurant and the resultant crowding of customers, which makes access to the restaurant somewhat more difficult.
As part of its attempts to obtain a new licence for the stand, the plaintiff has been involved in gathering signatures by way of a petition which was presented to the Adelaide City Council. It has also organised media coverage and has organised a march on the Corporation as a form of protest. It has also displayed protest signs/banners without the permission of the Corporation, which signs were intended to show the Corporation in a bad light and raise awareness of the plaintiff’s predicament.
Mr Khuu told me that the fresh vegetables sold from both the front of the store and from the vegetable stand constitute between 30% and 40% of the turnover of the business. Mr Khuu was, however, unable to say how much of that trade came from the stand as compared with the area at the front of the store. Given his insistence that the stand is an essential part of the business, I find that surprising.
His evidence as to the importance of the sale of fresh vegetables is that it is an important adjunct to the business but more particularly it is an attraction for people to shop in an “open air market” atmosphere with the goods displayed for easy inspection and selection. It also creates a visual attraction for potential customers seeing the display from a distance. Mr Khuu says that many of the vegetables are sold at about cost price so that there is little or no profit. The idea is to draw in the customers so that they might also purchase grocery items from the shelves within the store. There is a reasonable profit margin on those items.
The most recent chronology of events
As I have indicated, the stand licence expired on 31 August 2010. The Corporation gave notice to Mr Khuu dated 23 December 2009 that it would not offer a new licence. Mr Khuu wrote to the management of the Central Market on 7 January 2010 indicating that the business was not viable without the vegetable stand. The Corporation replied by confirming that if the new arrangements were accepted Mr Khuu would be unrestricted in his vegetable display area within the existing shop. In other words, he could rearrange his shop so as to provide as much area as he chose for the sale and display of vegetables. His expired lease, as I have already said, had a restriction of 6.4 square metres for the sale of vegetables from the shop.
On 11 January 2010 Mr Pearson on behalf of Mr Khuu was seeking to go behind the decision of the Corporation to ascertain the reasons for the lack of any new licence for the stand. The Corporation replied that the reason was that the existing licensed area occupied by the stand would revert to roadway. Mr Pearson again sought reasons from the Corporation on 1 February 2010.
Once Mr Pearson came back into the picture a series of correspondence flowed. He was fighting a rearguard action and his correspondence is in my view disingenuous. The fact is that the Corporation had made its position clear. In particular Mr Pearson knew that the stand was not being offered. He knew that the area was reverting to roadway yet he persisted with idle threats and comments on what he said was required under the legislation. This culminated in his threatening signage, his attempts to publicly embarrass the Corporation and his unrealistic requests to the Corporation.
Mr Pearson then attempted to embarrass individual councillors by displaying information publicly as to whether they supported the stand. He sent an email on 19 February 2010 to the Lord Mayor and all the councillors. It speaks for itself. It threatens to expose and embarrass individual councillors.
The Corporation gave notice on 12 February 2010 that certain breaches of the stand licence had to be remedied. On 12 March 2010 the Corporation advised of the matters they had taken into account in reaching their decision not to offer the stand licence. They were:
1.     The effect on the adjoining shop (Asian Gourmet).
2.     The effect on adjacent stalls.
3.     The congestion in the western roadway.
4.     Access for services associated with cleaning and waste management.
5.     Shopper safety and movement.
6.     Equitable consideration of all traders.
7.     The well-documented history of breaches of tenancy conditions by the lessee.
A report was prepared by a Mr Collingwood as an independent assessment on the viability of the plaintiff’s business without the stand. He was engaged by the Corporation. His expertise is in the area of retail design, and he reported to the Corporation on 29 March 2010. He concluded that the business would continue to be viable without the use of the area occupied by the vegetable stand. I can indicate that I place no weight on Mr Colllingwood’s opinion. His personal observations, which really were the basis of his conclusion, could have been drawn by any informed lay person and did not amount to an area of expertise, in my view. To properly determine viability he needed to have access to the financial statements of the business, or at the very least, basic accounting information, and Mr Khuu and Mr Pearson refused to provide that information to him. His opinion neither advances nor detracts from the case of the Corporation, in my view.
The oral evidence
Apart from the two volumes of documents containing a history of the relevant discussions between the parties, the plaintiff called evidence to support its contention that it had been denied fairness in the lack of transparency of the Corporation’s reasoning process and that it had not been given the appropriate notice under the provisions of the Act. The evidence called by both parties only really confirmed the correspondence tendered.
Mr Pearson gave evidence for the plaintiff. Mr Pearson is an experienced negotiator in the area of retail shopping leases. He demonstrated a sound working knowledge of the Act and its requirements in most respects. Both his oral evidence and his correspondence illustrates an unusual negotiating technique in that he is constantly critical on fairly technical grounds of various actions taken or not taken by the Corporation. In my view Mr Khuu’s cause was not best served by having a negotiator such as Mr Pearson. His correspondence, sometimes vitriolic, speaks for itself and shows how he was a very difficult person to deal with. His evidence has a flavour of conspiracy theory in the way in which he believed the Corporation was treating the matter. He was responsible for the preparation of some very insensitive signs, to which I have earlier referred. He said that he did not believe they could cause any offence. They speak for themselves, in my view, and although he described them as cartoons, I did not consider that they were either amusing or appropriate caricatures of the Corporation’s position. They were offensive to the Corporation and I have no doubt they were also offensive to various patrons in the market. Mr Khuu agreed to the placing of these signs, although it was Mr Pearson who prepared them.
In general I thought in cross-examination Mr Pearson was less than co-operative, quite dogmatic, and attempted always to give a self-serving answer without really addressing the question. All in all, therefore, I was not impressed by his evidence.
Mr Khuu gave evidence. It is quite apparent that he left much of the discussion for negotiations to Mr Pearson. He clearly gave Mr Pearson his authority to negotiate. I formed the impression that Mr Khuu did not get involved in much of the small detail but was more of a “big picture” person intent on running his shop. He decided to run it, not only within the limitations placed on him by the lease and licences, but he was prepared to extend his trading area by various transgressions which he frankly admitted.
I formed the impression that he generally had a very good understanding of his business. He seemed to me to be an astute businessman. As I have said, I found his answers relating to the trade done by the vegetable stand to be quite surprising. He was not prepared to tell me what proportion of his business related to the stand but I am sure he must have known the figures.
Mr Khuu must take sole responsibility for his attitude in refusing to discuss matters with the Corporation unless he was granted a new stand licence. The Corporation offered him various concessions in an attempt to negotiate, including financial assistance in the capital expenditure required to revamp the premises, including a contribution towards legal costs, and generally by turning a blind eye to some of his minor transgressions.
The same attitude he displayed in the witness box in not being prepared to answer questions about the financial breakdown of the business was obviously behind the reason that he and Mr Pearson communicated to the Corporation that they were not prepared to give Mr Collingwood access to trading figures. I am therefore left in the dark as to what trade is actually done from the stand in relation to both total vegetable sales and total sales overall. My suspicion is that the actual trade from the stand, although significant, is not such a major part of the business as to make the business non-viable without it. In any event, Mr Khuu has been given the option by the Corporation to rearrange his store in any way he chooses so that he has an unrestricted area for the sale of vegetables.

Mr Britten-Jones for the Corporation called five witnesses. He called Mr Bryson from Knight Frank, who were the managing agents for the Corporation and who reported directly to the Corporation. Mr Bryson worked in the confines of the Central Market and had an office there. He was a regular inspector of all aspects of the market and criticised Mr Khuu for his various transgressions and refusals to comply with directions given to him in relation to his store. I thought that Mr Bryson was somewhat over-technical in some of his requirements of Mr Khuu, and certainly there was no good chemistry between Mr Bryson and Mr Pearson. Generally, however, I thought Mr Bryson did his best to be objective, although at times naturally he allowed his frustrations with Mr Khuu to colour his evidence. I do not criticise him for this because of the position he was placed in as the de facto policeman, effectively attempting to control Mr Khuu. I have formed the view that it was not an easy task.
Ms Julie Brown was the person at the Corporation to whom Mr Bryson reported. I thought she was a good witness. I thought her answers were measured and fair. She could not recall all the details without reference to the various documents but I do not find that surprising. I can see no reason for assuming that she was in some form of conspiracy with Mr Bryson to get rid of Mr Khuu from the market. On the contrary, most of the correspondence and discussions make it clear that Mr Khuu was a valued tenant in the market, albeit that his transgressions had caused lots of headaches for the administrators over the years.
Mr Schmidt, who is now no longer with the Corporation, gave evidence as to his role as a peacemaker cum mediator as between the Corporation and Mr Khuu. Both Mr Pearson and Mr Khuu respected him and acknowledged that Mr Schmidt was trying to reach a solution. He conducted informal meetings with Mr Khuu and Mr Pearson to try to discover the sticking points, and a way through. However, any solution which might be reached was always subject to the condition that a new lease would only be granted in respect of the store and the cool room, and that the stand was not negotiable. Mr Schmidt did not have authority to offer the plaintiff a licence for the stand.
I have already dealt with Mr Collingwood’s evidence. I have no criticism of Mr Collingwood himself. He was asked to do a job but was not given the materials to do the job. Therefore his opinion, as I have indicated, is of very little value, if any.
Finally, Mr Smith, the CEO of the Corporation, became involved in direct discussions with Mr Khuu when it was apparent that all else had failed. I found Mr Smith to be an impressive witness who had a clear role in attempting to appease Mr Khuu, and agree a basis for a new trading arrangement, but again always on the basis that the vegetable stand was not going to be part of any new lease.
Overall therefore the witnesses did not really add all that much to what was obvious from the correspondence in the volumes tendered before me. It merely gave me an opportunity of seeing the people behind the decisions and the people behind the correspondence which was exchanged.
Judicial review
Rule 199 of the Supreme Court Civil Rules 2006 gives the power to make an order for judicial review. That rule states:
199—Power to make order for judicial review
(1)The Court may make an order for judicial review.
(2)An order for judicial review is an order of one of the following kinds—
(a)     an order preventing another court or a tribunal that has a duty to act judicially from acting beyond its jurisdiction or in contravention of the requirements of natural justice (prohibition);
(b)     an order setting aside the decision of another court or a tribunal that has a duty to act judicially because of error, absence of jurisdiction, failure to observe the requirements of natural justice or fraud (certioriari);
(c)     an order to compel the performance of a duty of a public nature that cannot be enforced by some other adequate legal remedy (mandamus);
(d)     an order to prevent a person from wrongfully exercising, or purporting to exercise, functions of a public character (quo warranto).
Although relief is sought in the nature of certiorari, pursuant to r 199(2)(b), I do not consider that sub-rule applies here. In my view the issues which arise point to r 199(2)(c) being the applicable sub-rule. Even then, this case would arguably only fall loosely within the parameters of r 199(2)(c) if the Corporation was performing a duty of a public nature.
Mr Ower for the plaintiff argued that the decision of the Corporation was made in conjunction with the performance of a public duty under a statutory power. He argued that the decision not to grant a new licence was made pursuant to powers in s 202 of the LGA. He submitted that the plaintiff has no other adequate legal remedy.
Mr Britten-Jones for the defendant argued that there was no right of judicial review in this matter. He submitted that the rules of the Supreme Court and in particular r 199 of the Supreme Court Civil Rules 2006 showed that this was not a case for judicial review.
The relevant parts of s 202 of the LGA provide:
202—Alienation of community land by lease or licence
(1)A council may grant a lease or licence over community land (including community land that is, or forms part of, a park or reserve).
(2)Before the council grants a lease or licence relating to community land, it must follow the relevant steps set out in its public consultation policy.
(3)However, a council need not comply with the requirements of subsection (2) if—
(a)     the grant of the lease or licence is authorised in an approved management plan for the land and the term of the proposed lease or licence is five years or less; or
(b)     the regulations provide, in the circumstances of the case, for an exemption from compliance with a public consultation policy.
(4)A lease or licence is to be granted for a term not exceeding 21 years and the term of the lease or licence may be extended but not so that the term extends beyond a total of 21 years.
(4a)Subsection (4) does not prevent a new lease or licence being granted at the expiration of 21 years (subject to the other requirements of this Act or any other law).
(5)A lease or licence may provide for—
(a)     the erection or removal of buildings and other structures for the purpose of activities conducted under the lease or licence;
(b)     the exclusion, removal or regulation of persons, vehicles or animals from or on the land, and the imposition of admission or other charges;
(c)     any other matter relevant to the use or maintenance of the land.
(6)A lease or licence must be consistent with any relevant management plan.
(7)     This section operates subject to the provisions of the Adelaide Park Lands Act 2005 in respect of the Adelaide Park Lands under that Act.
Mr Ower submitted that the decision was made under s 202(1). This is despite the fact that it was a decision not to offer a licence. He submitted that s 202(6) requiring any lease or licence to be consistent with the Central Market Management Plan gave the decision a public nature. He also pointed to the requirements in s 202(2) and the requirement to follow the steps set out in the public consultation policy.
Mr Britten-Jones submitted that the regulations specifically exclude the Central Market complex from the s 202(2) requirements and therefore the exception in s 202(3)(b) applies. The relevant regulation is 15A(2) of the Local Government (General) Regulations 1999 (SA) as follows:
15A—Exemption of certain leases or licences over community land from consultation requirements
(1)Pursuant to section 202(3)(b) of the Act, a council is not required to comply with its public consultation policy with respect to a lease or licence over community land if—
(a) the lease or licence is being granted to the Crown, or to a Minister or other agency or instrumentality of the Crown; and
(b) it is a term of the lease or licence that there is to be no substantial change in the use of the land (disregarding trifling, insignificant or subsidiary uses).
(2)Pursuant to section 202(3)(b) of the Act, The Corporation of the City of Adelaide is not required to comply with its public consultation policy with respect to a lease or licence over land within the Central Market Complex.
(3)In this regulation—
Central Market Complex means the area within the Certificate of Title Register Book Volume 5307 Folio 824 or Volume 5574 Folio 706.
As Mr Britten-Jones pointed out, s 202 in any event merely confers powers, and not jurisdiction for judicial review.
Mr Ower submitted that if the Corporation’s decision under s 202 of the LGA was an exercise of public power then it was reviewable and that natural justice principles came to the assistance of the plaintiff regarding its right to be heard. He put it that it was the decision not to grant a future licence which is the decision which is reviewable.
Section 202(3) of the LGA does not exempt the Corporation from compliance with s 202(6), only s 202(2). The requirement that the Corporation, when granting a lease or licence, ensures that the lease or licence is consistent with the management plan, and the fact that the plan requires public consultation, does on the face of it give that function a public flavour.
However, when s 202 is read as a whole and in conjunction with regulation 15A(2), it seems difficult to apply s 202(6) to the negative, that is, that any refusal to grant a lease or licence must also comply with the management plan. That does not seem to make sense. Mr Smith wrote to Mr Pearson by letter dated 24 March 2010. In that letter Mr Smith draws regulation 15A(2) to Mr Pearson’s attention and explains that Central Market leases require no public consultation to allow the Corporation to “continue commercial in-confidence lease negotiations with traders”. In my view, that is what happened in this matter. It was a private commercial dealing, and not an exercise of public power.
I do not consider that s 202(6) opens the door to utilising r 199(2)(c) for judicial review. It merely requires any lease or licence granted to be consistent with any relevant management plan.
Mr Ower looked to the common law to support his argument that whether judicial review was appropriate depended on whether there was an exercise of public power. He submitted that there was such as exercise because the stand is situated on “community land” within the meaning of s 193 of the LGA. He submitted that the public has access to this land.
Mr Ower accepted that while the grant of a lease or licence is usually a matter of private law, there are in this instance public law elements which are present. He referred to the Corporation as a governmental entity which he submitted exercised statutory power. He further submitted that the Central Market operates subject to various local government policies and guidelines. As such, Mr Ower submitted that the decision is amenable to judicial review. Because it is so amenable it maybe quashed for a denial of natural justice.
Mr Ower referred to decisions involving markets in the United Kingdom in relation to land open to the public where there had been a denial of procedural fairness in circumstances where no hearing was given to the affected party. Judicial review has been applied to cases involving markets conducted on publicly owned land to which the public has access: see R (Beer) v Hampshire Farmers Markets Ltd [2004] 1 WLR 233 which was applied in R (Agnello) v London Borough of Hounslow [2003] EWHC 3112 (Admin).
In Beer, Hampshire County Council appealed against a decision of a judge that a company set up by the council to run the Hampshire Farmers Markets was acting as a public authority. The company was called Hampshire Farmers Markets Limited (HFML). In Dyson LJ’s judgment, with whom the court agreed, he stated at [30] that counsel rightly conceded that had the decision been made by the council it would have been amenable to judicial review without question. HFML’s decision was to refuse Beer’s application to be a trader at the Farmers Markets. Beer was a local producer of trout. The appeal was dismissed and the conclusion that the decision was amenable to judicial review was upheld.
The basis for the decision was that despite the decision being made by a private company, it nevertheless had a public element. This was for a number of reasons.
First, the markets were held on public land owned by local councils, land to which the public had access. Second, HFML was not charged for the use of the land. In that way, HFML had an advantage over other similar farmers markets. Third, HFML was created pursuant to a statutory power of the council, and its registered office was that of the Council. It owed its existence to the council. Fourth, after setting up HFML, the council continued to assist the company. An employee of the council was its first secretary, a Mrs Stokes, who eventually became its business development manager and a director of HFML. Another council employee, Ms Driscoll, went to work for HFML. Finally, the court held that in making the decision, HFML stepped into the shoes of the council, performing the same functions in the same way and to substantially the same end. HFML took over the business of the Hampshire Farmers Markets and acquired its goodwill free of charge. HFML was a not-for-profit organisation, and its purpose was to promote the public interest.
Due to the presence of all these features, the decision was held to have a public flavour and was therefore reviewable.
In Agnello, a group of claimants made application for judicial review of decisions made regarding their applications to trade at the Western International Market, owned by the council. All claimants were not chosen to participate in the market. Silber J applied Beer when considering the factors which determine whether in market cases the decision to exclude a participant is amenable to judicial review. Silber J concluded at [35] that the decisions being challenged were subject to judicial review, having sufficient “public element, flavour or character”.
There were a number of features which added together to give the decision its public flavour. First, the council had a specific statutory power in relation to the market. The market was established under that power and maintained under that power. Second, the markets were held on public land owned by the council. Third, the power of the council to regulate the markets came not from the leases granted to the traders but from its power to make by-laws. The regulation therefore was not of a private nature. Fourth, the council invoked those powers to use by-laws to control the activities in the market. Silber J commented that the council was performing public functions different to those of a private landlord.
In Agnello, Silber J reviewed a number of authorities. He referred to the Court of Appeal in Mass Energy v Birmingham City Council [1993] Ennv LR 298 where the court had held that an unsuccessful tenderer was not entitled to judicial review. Glidewell J at 307 and 307 said:
I accept that because the statutory powers of the council not to contract by means other than those described in Part II of Schedule 2 of the Act, there is a public law element in this dispute to this extent (but only to this extent): that is a proper subject for judicial review to consider whether the council have complied with section 51(1) and entered into a contract as a result of following the procedure laid down in Schedule 2, Part II of the Act. In my judgment, judicial review has no further place in my judgment in this dispute.
Reference was also made by Silber J to R v London Borough of Camden ex parte Hughes [1994] COD 225. Latham J in that matter held “that the mere exercise of an essentially private law function, such as entering into a contract pursuant to a statutory power, is not susceptible to judicial review”.
In R v Bolsover District Council ex parte Pepper [2001] JPL 804 Keene J said at page 812 [33]:
Normally a decision by a local authority to sell or not to sell land which it owns is to be seen as a private law matter unless a public law element is introduced into the decision making process by some additional factor. That is because the starting point is that the local authority, in so deciding, is simply acting as a landowner in such cases and is not performing any public function. There may sometimes be some additional factors present; for example, if the authority has a policy which relates to the retention or disposal of certain types of land, that may make a decision a public law matter (see Pardes House School). A decision to dispose of open space without observing the statutory procedural requirements of section 123(2A) as to advertising the proposal would likewise involve a sufficient public law element. But neither of those factors arises here.
In R (Molinaro) v Kensington and Chelsea Royal London Borough Council [2001] LGR 336, Elias J said at [63]:
[63]In my judgment, this argument is wholly unsustainable, at least in respect of the first two claims. Manifestly, the council was not simply acting as a private body when it sought to give effect to its planning policy through the contract. Again, the decision not to permit a change of use, albeit one involving the exercise of discretion under a contract, was taken for the purpose of giving effect to its planning objectives.
His Honour also said at [64]-[65]:
[64]In my judgment, these factors themselves injected a sufficient public element into the decisions to justify their being subject to public law principles. In any event, I would, with great respect, differ from some of the wider observations of Keene LJ in the Bolsover case, although for reasons I return to below, not the decision itself.
[65]In my view, the fact that a local authority is exercising a statutory function ought to be sufficient to justify the decision itself being subject in principle to judicial review if it is alleged that the power has been abused. Nor do I see any logical reason why an abuse of power made pursuant to some policy should be treated differently to one made on a specific occasion.
All these decisions show how the question of whether judicial review is appropriate must be considered, having regard to the many factors canvassed in the decisions.
From those decisions there are several factors of importance which emerge. A local authority in entering into a contract, whether for the sale of land or the grant of a lease, is not performing any public function. However, when such an authority seeks to impose its policies through the contractual process, the decision may be reviewable because public aspects come into play. The example in R (Molinaro) of attempting to achieve planning objectives as to change of use through a private contract is a good one.
In my view Agnello and Beer are distinguishable from this case. Mr Khuu has not been excluded by the Corporation from trading in the market. He and his family have traded in the market for many years. The Corporation submitted that it is in fact attempting to keep him there. The Corporation has given reasons for its decision not to offer a new licence for the stand.
As I have said, s 202(1) of the LGA gives the Corporation the power to grant a lease or licence over community land. In exercising this power the Corporation does not have to follow its public consultation policy because of the regulation exempting it in respect of the Central Market complex. The Corporation is required to follow the policy in respect to management plans, and all leases granted must comply with the management plan. As I have said, this is not sufficient and cannot be reversed to apply to the refusal to grant a lease.

Therefore, even though there may be criticism from the plaintiff of the exercise of the s 202 power, for the reasons I have already outlined the matter is to be determined according to the private rights and duties created by the Retail and Commercial Leases Act. This was not an exercise of public power.
In the terms of r 199(2)(c) SCR, even if the decision of the Corporation could be regarded as the performance of a duty of a public nature, I consider that it can be enforced by other adequate legal remedies under the Retail and Commercial Leases Act.
In my view this is not a case for judicial review. It does not come obviously within SCR r 199, in my view. It is a case in which the provisions of the Retail and Commercial Leases Act apply and that is where the plaintiff has its remedy. It cannot be said that the plaintiff has no alternative remedy to judicial review: see r 199(2)(c) of the Supreme Court Civil Rules 2006.
Retail and Commercial Leases Act
As I have indicated earlier, there is no dispute that Division 3 of Part 4A of the Retail and Commercial Leases Act applies because the leases are within the definition of shopping centre leases. Under the Act a preference is to be given to an existing lessee who wants a renewal of the lease if the lessor proposes to re-let the premises. As I have said earlier in these reasons, the Corporation in its letter of 12 January 2010 confirmed that the reason for not offering a new licence was that “the existing licence area will revert to roadway”.
Section 20D is relevant. I now set out the section.
20D—Preference to be accorded to existing lessee
(1)If a lessor of premises in a retail shopping centre proposes to re-let the premises, and an existing lessee wants a renewal or extension of the term, the lessor must give preference to the existing lessee over other possible lessees of the premises.
(2)The lessor is to presume that the existing lessee wants a renewal or extension of the term unless the lessee has notified the lessor in writing within 12 months before the end of the term that the lessee does not want a renewal or extension.
(3)However, the lessor is not obliged to prefer an existing lessee if—
(a)     the lessor reasonably wants to change the tenancy mix in the retail shopping centre; or
(b)     the existing lessee has been guilty of a substantial breach or persistent breaches of the lease; or
(c)     the lessor requires vacant possession of the premises for the purposes of demolition or substantial repairs or renovation; or
(d)     the lessor—
(i)does not propose to re-let the premises within a period (the relevant period) of at least 6 months from the end of the term; and
(ii)requires vacant possession of the premises for the lessor’s own purposes during the relevant period (but not for the purpose of carrying on a business of the same kind as the business carried on by the lessee); or
(e)     the renewal or extension of the lease would substantially disadvantage the lessor; or
(f)     the lessee’s right of preference is, in the circumstances of the case, excluded by regulation.
Mr Britten-Jones argued that as the Corporation did not propose to re-let the premises, no preference had to be given in any event pursuant to the terms of s 20D(1). He argued that that was the end of the matter but if that was not correct then he relied on s 20D(3)(b) and (d).
The Corporation also argues that it was not obliged to give preference to Mr Khuu because of both s 20D(3)(b) and s 20D(3)(d). I will deal with the alleged breaches of the lease later, but for present purposes s 20D(3)(d)(ii) is relevant because the Corporation required the premises for its own purposes, namely, the reversion to roadway.
If there is no right of preference, s 20F becomes relevant. I now set out the section:
20F—Notice of absence of right of preference
(1)If a lessee of a retail shop in a retail shopping centre does not have a right of preference, the lessor must, at least 6 months (but not more than 12 months) before the end of the term of a lease, by written notice—
(a) notify the lessee of that fact; and
(b) state why there is in the circumstances of the case no right of preference.¹
(2)If the term of the lease is for 12 months or less, the periods referred to in subsection (1) are to be reduced by one-half.
Note—
1See section 20D(3).
On that basis the Corporation had to, by no later than 28 February 2010, advise the lessee that it had no right of preference and state why. Mr Britten-Jones concedes that the notice given on 23 December 2009 did not provide reasons and therefore would not satisfy s 20F(1)(b). He submitted, however, that the letter of 12 January 2010 was sufficient. He referred also to the letter of 22 January 2010. In combination Mr Britten-Jones submitted that these letters communicated to Mr Khuu that a new licence would not be available for the stand at the expiry of the existing licence and gave a reason that the area was reverting to roadway. That satisfied s 20F(1)(b) in Mr Britten-Jones’ submission. He argued that the Court is obliged to adopt a purposive approach to construing the Act and cited authority in support. Reliance was also placed on the Second Reading Speech of the Attorney-General regarding the 1997 amendments to the Act.
The Second Reading Speech does support Mr Britten-Jones’ submission. It is not necessary in my view to resort to it. The section on its face makes it clear that within the prescribed time the lessee has to be notified that he does not have a right of preference and given the reasons. Provided that is done within the time, it seems to me not to matter that it was conveyed in one, two or three separate letters, provided they were within time. In this case they were within time.
I conclude that the Corporation was correct in giving the appropriate notice, even though the first notice was deficient.
Breaches of the lease and licence
The question of whether there have been substantial or persistent breaches of the lease is not straightforward. Mr Bryson’s evidence and the documentation before the court tends to indicate that there have been persistent breaches. Mr Ower said that these are all minor, but in my view that does not matter if there are persistent breaches. The minor aspect comes into whether they are substantial breaches. In my view there have been both substantial breaches and persistent breaches.
The documentation in the volumes of agreed documents relating to breaches by the plaintiff falls into two main categories: (1) Notice of Default; and (2) informal memo or letter. Notices are required to be remedied within fourteen days of the date of the notice. Some but not all of the breach notifications relate to the vegetable stand. The oral evidence, particularly that of Mr Bryson, supports the documentation.
I summarise the Notices here:
·2 July 2004, in breach of rule 5 of Central Market Rules by trading beyond the yellow line
·14 July 2005, in breach of Memorandum of Lease clause 2.14.1 and Grocery Stand Licence Agreement clause 2.8, for erecting signage without approval
·24 May 2006, in breach of Agreement to Lease clause 26.4, refurbishment of shop fit out not done (was due 30 November 2005)
·24 January 2007, in breach of Agreement to Licence clause 13, erecting a new stand without approval
·4 March 2008, in breach of Lease clause 2.39 and Licences clause 2.20, failure to provide bank guarantee
·12 February 2010, in breach of Licence clause 2.5 and Appendix 2 clause 2, by using the business premises for protesting, and erection of signage without approval
I summarise the memos here:
·5 April 2005, signage still has not been removed
·12 February 2007, permanent stand structure was not put in place as agreed
·5 March 2007, walkway into the shop from the vegetable stand was not sealed off as agreed
·21 May 2007, failure to carry out works as agreed in February
·21 May 2008, reminder of breach of ‘yellow line rule’ and permitted dimensions of the vegetable stand, and failure to rectify breaches
·2 July 2008, notice of failure to rectify breaches as discussed 23 May 2008
·5 July 2008, continued failure to rectify breaches of clause 5.1.1 ii and iii, 5.1.3, 5.3.1, 5.3.2
·13 October 2008, request to rectify breaches following inspection of shop and stand
·21 October 2008, request for compliance with previous requests as no action has been taken
·31 March 2009, email notice of non-compliance with agreement to re-model the stand
·3 April 2009, non-compliance with agreement to re-model the stand, non-compliance with stand boundaries i.e. produce in the common area
·7 April 2009, non-compliance with agreement to re-model the stand, non-compliance with stand boundaries
·20 August 2009, still no action in regards to renovation of shop
·2 September 2009, email request to remove boxes currently in the common area (outside stand boundaries) and remove the produce above the red sticker on the Asian Gourmet window as previously agreed
·8 September 2009, default of rent and outgoings
·12 September 2009, memo notes that Central Markets Management are still awaiting renovations plans to be submitted for approval, stand modifications have not been completed, produce regularly placed above the red sticker, stand boundaries have been repeatedly ignored
·6 November 2009, reminder that memo of 12 September 2009 has not been complied with
·19 November 2009, failure to comply with stand requirements
In his evidence Mr Bryson confirmed the breaches set out in the documentation that occurred after he became manager of the Central Market in August 2006. He said he had been made aware of the previous breaches by his predecessor. He also said that breaches had occurred “all along” but not always resulting in a written warning. Mr Bryson said that Central Market Management had given Mr Khuu latitude in the past in relation to minor breaches. He said that some breaches, such as exceeding the 1.3 metre vegetable stand height limit or failing to make modifications to the stand as requested, added up but were relatively minor individually. It appeared from Mr Bryson’s evidence that management was more concerned with the more wilful breaches such as placing boxes of produce for sale outside the 8.4 square metres licensed stand area, sometimes all the way to the glass barrier, and putting up the protest signs.
It is quite clear from the evidence that the plaintiff has been guilty over many years of persistent breaches despite not always receiving a formal notice. The breaches are mainly storing produce and goods past the yellow line marking the boundary of the shop, storing produce beyond the licensed stand area, storing produce within the stand higher than the 1.3 metres permitted by the licence, and failing to re-model the stand and shop when required. Such breaches are deliberate and not accidental. It cannot be said that Mr Khuu was unaware of his responsibilities or was not reminded of them time and time again.
Although storing produce and goods past the yellow line in relation to the shop and failing to renovate the shop may not have a legal bearing in relation to s 20D(3)(b) of the Act as to the stand licence, such breaches are nevertheless relevant in relation to the plaintiff’s attitude towards the Central Market Rules and the terms of his leases.
There is ample evidence that the plaintiff repeatedly sold his produce from the stand in direct contravention of the terms of the licence. He admitted as much in his oral evidence. I find that this constitutes persistent breaches of the stand licence over the relevant period, as per s 20D(3)(b).
I consider that the erection of the offensive signage on two occasions without approval, as admitted by Mr Khuu and Mr Pearson, constitutes two substantial breaches as per s 20D(3)(b). The signage was offensive no matter what its purpose was. I also consider that the erection of the vegetable stand without approval in 2007 was a substantial breach. It does not matter that discussions were had with Central Market management regarding the stand prior to its erection. The fact is the stand structure had not been approved before it was erected. It had not been approved because the stand’s structural suitability and weight bearing capacity had not been certified. This is made clear in the email from Mr Bryson to Mr Pearson dated 12 January 2007. Erecting the stand without the certification and without approval created a safety hazard.
In my view Mr Britten-Jones is correct in his submissions that because the Corporation has established that it does not propose to re-let the premises, there is no obligation to offer Mr Khuu a preference in relation to the licence over the stand pursuant to s 20D(3)(d)(ii). If I am wrong in that, then in my view there have been both substantial and persistent breaches under s 20D(3)(b) and in any event the breaches are sufficient to not oblige the Corporation to give a preference to Mr Khuu.
Alleged lack of good faith
Mr Ower put forward arguments based on a lack of good faith in the Corporation’s negotiations. Section 20E deals with the implementation of preferential rights. I have already decided that there were none in respect of the stand. Therefore s 20E(5) which states “The negotiations are to be conducted in good faith” is not relevant in relation to the stand.
What the Corporation has done by its letter of 23 December 2009 is offer Mr Khuu a new five-year lease commencing on 1 September 2010 for both the shop and cool room/storeroom subject to certain conditions. It has offered Mr Khuu the ability to expand the area of his fresh fruit and vegetables to any part of the shop and/or cool room/storeroom without restriction.
The documents in the agreement to lease and the necessary disclosure statements were provided with a standard lease document on 14 January 2010. After further correspondence, the time for acceptance of the offer was extended to 29 January 2010. Mr Pearson at that stage made complaint regarding a lack of disclosure by the Corporation and alleged a failure to negotiate in good faith.
On 9 February 2010 the Corporation wrote advising that the offer to lease had lapsed. However, by a further letter written on 25 March 2010 the Corporation again offered to lease the shop and store room and again included an agreement to lease, disclosure statements and a standard lease document. It gave Mr Khuu until 23 April 2010 to accept the offer. The offer was not accepted.
Whereas I have said earlier that s 20E(5) did not apply in relation to the stand, it would apply to negotiations for the renewal or extension of the shop lease and cool room/storeroom. In my view there is nothing to show that the offer and negotiations have not been conducted by the Corporation in good faith. On the other hand Mr Khuu has effectively refused to negotiate without the inclusion of the stand.
As I have pointed out earlier in these reasons, there has never been any counter proposal suggested by Mr Khuu because his requirement was that unless he had all three leases there was no point in negotiating. Mr Britten-Jones submitted that each separate agreement must be dealt with on its own. He submitted that Mr Khuu was always at risk of the landlord not offering a new licence for the stand.
Section 20H deals with the fair dealing between the parties. This was the basis of the application to the Magistrates Court. Mr Ower submitted that there was a lack of fair dealing and that I can deal with the matter pursuant to s 68 of the Act which gives jurisdiction to the Magistrates Court to do various things, including s 68(2)(j), namely, to “do anything else necessary or desirable to resolve a dispute between the parties to the retail shop lease”. Mr Britten-Jones submitted that s 20H is the relevant section and that s 68 is really a section of last resort. He submitted that it simply gives jurisdiction but is not indicative of how the matter should be resolved when the provisions of s 20 are set out in such detail.
I agree with that submission. Notwithstanding that, I did make a suggestion to the parties as to a possible compromise. I assume that nothing has eventuated from discussions and that my final decision is required.
Conclusion
Therefore for the reasons which I have set out earlier, in my view this is not an appropriate case for judicial review. It is a case which comes clearly within the provisions of the Retail and Commercial Leases Act. For the reasons I have stated, the Corporation was not required to give any preference to Mr Khuu in relation to the stand licence and therefore I decline to make any of the orders sought by the plaintiff in its statement of claim.
I make the following orders:
1.I grant the plaintiff an extension of time in which to commence this action to 29 July 2010.
2.I refuse to make any order for judicial review, including an order in the nature of certiorari, a declaration or an injunction.
3.There will be judgment for the defendant as regards the plaintiff’s claim pursuant to the Retail and Commercial Leases Act.