Lin v Solomon

[2017] NSWCA 328

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Lin v Solomon [2017] NSWCA 328

Hearing dates:

22 September 2017

Date of orders:

15 December 2017

Decision date:

15 December 2017

Before:

Meagher JA at [1]
Payne JA at [2]
White JA at [126]

Decision:

(1) Appeal allowed in part.

 

(2) Set aside order 2 entered on 16 December 2016 and in lieu thereof order:

(a) The appellant pay the respondents the sum of $602,178.35 plus interest from 16 December 2016.

(3) The appellant to pay the costs of the respondents in this Court as agreed or assessed.

Registrar of this Court is directed to remove the erroneous entry made on 7 December 2016 and recorded in JusticeLink by the District Court Registry staff.

Catchwords:

ADMINISTRATIVE LAW – procedural fairness – bias – apprehended bias – whether primary judge should have recused herself

 

EVIDENCE – whether primary judge erred in admitting evidence about unpaid rent and outgoings – letter of demand tendered by appellant for non-hearsay purpose – effect of s 60 of the Evidence Act – business record – s 69 of the Evidence Act

  CONTRACTS — guarantee - misleading or deceptive conduct – whether representations made – whether reliance on representations

Legislation Cited:

Evidence Act 1995 (NSW)
Fair Trading Act 1987 (NSW)

Cases Cited:

Browne v Dunn (1893) 6 R 67 (HL)
Dee-Tech Pty Ltd & Anor v Neddam Holdings Pty Limited [2010] NSWCA 374
Demagogue Pty Ltd v Ramensky [1992] FCA 851
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7
Ellis v R [2015] NSWCCA 262
Galea v Galea (1990) 19 NSWLR 263
Gigi Entertainment Pty Ltd v Schmidt [2013] NSWCA 287
Gould v Vaggelas (1985) 157 CLR 215; [1984] HCA 68
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313
Limited v GWA Limited (1983) 78 FCR 1717 at 179; [1983] FCA 269
Luxer Holdings Pty Ltd v Glentham Pty Ltd [2007] WASCA 209
Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427; [2011] HCA 48
R v T, WA [2014] SASCFC 3; (2014) 118 SASR 382
Re Bill Acceptance Corporation Limited v GWA Limited (1983) 78 FLR 171 at 179; [1983] FCA 269
Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88

Texts Cited:

None

Category:

Principal judgment

Parties:

Xi Yue Lin (Appellant)

  Isaac Solomon (First Respondent)
Sara Cooper (Second Respondent)
Elizabeth Oxman (Third Respondent)

Representation:

Counsel:
R Angyal SC (Appellant)
M Galvin (Respondents)

  Solicitors:
Youngs Attorneys (Appellant)
Dentons (Respondents)

File Number(s):

2017/12414

Publication restriction:

None

 Decision under appeal 

Court or tribunal:

District Court of New South Wales

Jurisdiction:

Civil

Date of Decision:

16 December 2016

Before:

Gibb DCJ

File Number(s):

2014/328919

headnote

[This headnote is not to be read as part of the judgment]

The respondents were the landlords of a newsagency in a shopping centre. The appellant was the guarantor of the lessee’s obligations under the lease. The respondents brought a claim against the appellant for the default of payments of rent, outgoings, promotional levy and GST due under the lease in the District Court of New South Wales.

The appellant brought a cross-claim saying he was induced to enter into the guarantee of the lease by misleading and deceptive representations made by the respondents' leasing agent, and suffered damage by reason of those misleading and deceptive representations.

After the primary judge had reserved judgment, the appellant made an application that the primary judge recuse herself on the ground of apprehended bias.

The primary judge rejected the apprehended bias application and found in favour of the respondents on their claim, ordering judgment in the sum of $604,543.35. The primary judge dismissed the appellant’s cross claim, finding that the pleaded representations were not established, that the respondents had not engaged in misleading and deceptive conduct and (assuming the pleaded representations to have been made), her Honour also found that the appellant did not rely on the representations in entering into the lease.

The main issues on appeal were:

(i)    whether a fair minded lay observer might reasonably apprehend that the primary judge might not bring an impartial mind to the resolution of the question the judge is required to decide;

(ii)    whether the primary judge erred in allowing evidence the appellant had tendered, without limitation, to be used for the purpose of quantifying unpaid rent and outgoings owing to the respondents;

(iii)    whether the primary judge erred in quantifying the respondents’ claim for damages for breach of the lease; and

(iv)   whether, in respect of the cross-claim, the primary judge erred in finding that the pleaded representations were not misleading or deceptive, that the appellant did not rely upon those representations and that no loss was suffered by the appellant.

The Court (Meagher, Payne and White JJA) dismissing the appeal, held:

In relation to issue (i), per Payne JA at [62] (Meagher JA agreeing at [1], White JA agreeing at [127]):

The matters relied upon by the appellant, alone and in combination, would not cause a fair minded impartial observer to conclude that the primary judge might have prejudged the case in favour of the respondents. The hypothetical fair minded observer would conclude that the primary judge was struggling to understand the appellant’s claim, but would not apprehend that her Honour might not bring an impartial mind to the resolution of the issues in this matter raised by it.

Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63; Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427; [2011] HCA 48 applied.

In relation to issue (ii), per Payne JA at [77] (Meagher JA agreeing at [1], White JA agreeing at [127]):

The appellant tendered the document about which complaint was made, without seeking any limitation under s 136 of the Evidence Act 1999 (NSW). Having been tendered by the appellant for another purpose (to prove the date of the demand) and no limitation order having been sought or made, the effect of s 60 of the Evidence Act was that the hearsay rule did not apply to the representations contained in the letter. There was no error in the primary judge taking the letter into account.

In relation to issue (iii), per Payne JA at [95]-[96] [98]-[99] (Meagher JA agreeing at [1], White JA agreeing at [127]):

The primary judge did not err with respect to quantification of the damages suffered by the respondents by the breach of the lease in all but one respect. The primary evidence of loss was uncontested. The evidence to which objection was taken related to quantification of the amount to be deducted from that loss in mitigation. If the evidence objected to had been inadmissible, the damages payable by the appellant would have been greater.

In any event, the relevant evidence was admissible as being contained in a business record. The representations were made on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact: s 69(2)(b) of the Evidence Act.

It was open to the primary judge to find that there was “no evidence” of a rent free period. It was put to the witness in cross-examination by the appellant’s counsel that there was a nine month rent free period offered by the respondents to a lessee. The primary judge’s finding was based on that evidence.

In relation to the lessee’s obligation to make good the premises, the primary judge did not err in finding that there was no waiver of the lessee’s obligation by the respondents. However, the primary judge made an error in including the costs of removing the air conditioning in quantifying damages.

In relation to issue (iv), per Payne JA at [120] (Meagher JA agreeing at [1], White JA agreeing at [127]):

The primary judge did not err in finding that the appellant relied on his own knowledge and the written material he had considered when making his decision about the lease; and had not relied on anything said by the respondents’ leasing agent.

Judgment

1. MEAGHER JA: I agree with the reasons and proposed orders of Payne JA.

2. PAYNE JA: This is an appeal from a decision of Gibb DCJ in the District Court delivered on 16 December 2016. After the evidence and submissions had been completed and judgment had been reserved, the appellant made an application that the primary judge recuse herself on the ground of apprehended bias. The primary judge declined to do so.

3. After dealing with the bias application, the primary judge went on in her judgment to address the statement of claim and statement of cross-claim. Her Honour awarded the respondents $604,543.35 for various breaches of a lease by the lessee for whom the appellant was guarantor. The primary judge dismissed the appellant’s cross-claim for misleading or deceptive conduct on the part of the respondents’ leasing agent.

Background

4. In May 2009, Xianghong International Pty Ltd (Xianghong) entered into a lease for a newsagency in the CircaRetail shopping centre at 1 Circa Boulevarde, Bella Vista. The lease was for a term of five years, commencing on 30 July 2009 and terminating on 29 July 2014. The respondents are the registered proprietors of the shopping centre, and the lessor of the newsagency.

5. Xianghong was deregistered on 2 June 2013. The appellant was one of two directors of Xianghong, and the guarantor of its obligations under the lease.

6. Xianghong conducted the newsagency at the CircaRetail shopping centre for a number of years. No rent was ever paid, although the respondents recovered a deposit of $11,467.25 and drew on a bank guarantee in the sum of $34,410, which was credited against rent owing. No outgoings were ever paid by Xianghong.

7. On 5 December 2012, the respondents terminated the lease by re-entry. The respondents brought a claim against the appellant, as guarantor of the lessee’s obligations for the default of payments of rent, outgoings, promotional levy and GST due under the lease, in the District Court of New South Wales.

8. By amended statement of cross-claim dated 8 March 2016, the appellant alleged that he was induced to enter into the guarantee of the lease by misleading and deceptive representations made by the respondents’ leasing agent, Mr William Rogers, and suffered damage by reason of those misleading and deceptive representations.

9. On 11 – 13 October and 10 – 11 November 2016, the matter was heard before the primary judge. On 6 December 2016, after the primary judge had reserved judgment, the appellant made an application that her Honour should recuse herself on the ground of apprehended bias, being prejudgment. On 7 December 2016, that application was heard.

10. On 16 December 2016, the primary judge delivered judgment on the apprehended bias application and, immediately after, upon the claims arising under the lease. The primary judge rejected the bias application and found in favour of the respondents on their claim, ordering judgment in the sum of $604,543.35. The primary judge dismissed the appellant’s cross claim, finding that the pleaded representations were not established, that the respondents had not engaged in misleading and deceptive conduct and (assuming the pleaded representations to have been made) the appellant did not rely on the representations in entering into the lease on behalf of Xianghong as a director, or on his own behalf in guaranteeing its obligations.

The primary judgment

The recusal application

11. The primary judge’s reasons first dealt with the application that she recuse herself on the ground of apprehended bias. In his application, the appellant complained about judicial interference in the course of the appellant’s submissions and evidence, what were alleged to be attempts by the primary judge to persuade the respondents to withdraw concessions, claims of differential treatment of counsel and complaints about the primary judge allegedly remedying deficiencies in the respondents’ case.

12. In her reasons for declining to recuse herself, the primary judge outlined the test in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 identified by Gleeson CJ, McHugh, Gummow and Hayne JJ at [6]:

“Where, in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge (or other judicial officer or juror), as here, the governing principle is that, subject to qualifications relating to waiver (which is not presently relevant) or necessity (which may be relevant to the second appeal), a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide. That principle gives effect to the requirement that justice should both be done and be seen to be done, a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial. It is convenient to refer to it as the apprehension of bias principle.” (references omitted)

13. The primary judge also pointed out that in Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [31]-[33] and [63] the High Court had affirmed what had earlier been stated in Ebner, that:

“[63] … application of the apprehension of bias principle requires two steps. First, it requires the identification of what it is said might lead the judge to decide a case other than on its legal and factual merits. And second, there must be an articulation of the logical connection between that matter and the feared deviation from the course of deciding the case on its merits. The plurality in Ebner went on to say that "[t]he bare assertion that a judge (or juror) has an 'interest' in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated". So too, in this case, the bare assertion that the judge appeared to be biased through prejudgment would be of no assistance without articulation of the connection between the events giving rise to the apprehension of bias through prejudgment and the possibility of departure from impartial decision making.” (references omitted)

14. The primary judge found that a fair-minded observer viewing the exchanges identified in the bias application “might conclude that I was struggling to understand the [appellant’s] claim, as I was, but would not apprehend that I might not bring an impartial mind to the resolution of the issues in this matter”.

Breach of the lease – failure to pay rent, outgoings, promotional levy and GST from the time of entering into the lease

15. On this topic, the primary judge found that:

“The factual dispute is relatively simple to resolve. Rent was not paid. That was in default of the lease. Outgoings were not paid. No monies were paid for the promotional levy. … The breach of lease is proven, as is the failure to pay rent.”

16. The primary judge held that the lessee was in default and the landlord was permitted to re-enter and take possession of the premises in accordance with clause 26 of the lease, which provided:

“26.1 Tenant’s default

The Tenant is in default if:

the Tenant has failed to pay Rent or the Tenant’s Contribution to the Landlord on time, and the Landlord has given the Tenant a notice specifying the amount owing and requiring the Tenant to pay it within seven days after the notice is given; …

…

[and] the Tenant does not comply with a notice given by the Landlord under this clause 26.1.

26.2 Event of Default

If an Event of Default occurs then the Landlord may:

immediately re-enter into and take possession of the Premises or any part of them in which event this Lease will be at an end;” …

Quantification of unpaid rent, outgoings, promotions levy and GST

17. The primary judge held that the respondents’ claim required proof of a lease and the non-payment of moneys due under it. It also required proof of damage which is said to flow as a result of the repudiation of the lease. The non-payment of monies by Xianghong was not in dispute and her Honour held that “[t]he loss is obvious”.

18. The primary judge addressed quantification of unpaid rent, outgoings, promotional levy and GST. In particular, her Honour detailed the dispute over which documents were relevant for the purpose of proving the amounts owing. The appellant had submitted that various annexures to an affidavit of Mr Bruce Kinley, a Director of Property Management of the Circa Retail Shopping Centre, contradicted the claim made by the respondents and showed that a lesser sum than that claimed was owed by Xianghong.

19. The primary judge found that the figure of $137,202.91 in annexure F to Mr Kinley’s affidavit sworn on 28 August 2015, which was seized upon by the appellant, could not possibly be the right figure for rent and outgoings owed by the appellant at the time the respondents went back into possession, as demonstrated by annexure D in the same affidavit and by the letter of demand tendered by the defendant. Ultimately, her Honour accepted the calculation and quantification of unpaid rent, outgoings, promotional levy and GST provided by Mr Kinley, based in part on the figures in annexure L to the affidavit.

20. On the calculation of disputed amounts of outgoings and promotional levy, the primary judge found that this was to be done under the lease “…by the traditional methodology in accordance with authority, having regard to the terms of the lease and that which is properly claimable and deducting that received by way of mitigation”.

21. The primary judge applied what she described as the traditional approach to quantification of the respondents’ loss by reference to Dee-Tech Pty Ltd & Anor v Neddam Holdings Pty Limited [2010] NSWCA 374, Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, Gigi Entertainment Pty Ltd v Schmidt [2013] NSWCA 287, Luxer Holdings Pty Ltd v Glentham Pty Ltd [2007] WASCA 209 and Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313:

“The underlying factual matrix, as discussed earlier, may be stated with some simplicity here:

The plaintiffs/landlord did not receive the benefit of rent/outgoings/levy from the day after the date of re-entry (i.e. 6 December 2012) until the natural termination of the lease on 29 July 2014. That is a quantifiable sum. I accept Mr Kinley’s evidence (in exhibit H) that:

The rent and other money payable by Xianghong under the Lease was $125,273.00 per annum plus GST. This amount was subject to a rent review under the terms of the Lease to the end of the term being 29 July 2014.

The plaintiffs incurred some costs in making good the leased premises. It was the defaulting tenant’s obligation so to do, in which respect I reject the defendant’s assertion of waiver; and

The plaintiffs/landlord did secure a replacement tenant and mitigated their losses to the tune of monies won by way of rent from the new lessee (in which respect I reject the defendant’s contention that there was no rent-free period and rent for that 9-month period should be brought to book).”

22. The primary judge quantified the respondents’ losses as $604,543.35 being:

“$388,805.60 unpaid rent, outgoings etc as at the date of termination;

$264,493.28 unpaid rent, outgoings etc from the date of termination to the expiration of the lease;

$23,713.88 for changing the locks, removing the air-conditioning equipment, and making good including the erection, use and removal of hording;

from which must be dedicated the $72,469.41 received by way of mitigation.”

The appellant’s cross-claim

23. The appellant pleaded that the respondents’ agent, Mr Rogers, made a series of representations which induced Xianghong’s entry into the lease and the appellant’s entry into the guarantee of the lease, in breach of s 42 of the Fair Trading Act 1987 (NSW).

23. The misleading and deceptive conduct as finally pressed was particularised in the amended first cross-claim filed 8 March 2016 as comprising express oral representations made by Mr Rogers as follows:

1. that the building called “The Works” would employ 1,500 people and would bring significant customer traffic to the centre from 2011;

2. that the centre would very soon be busier than the Norwest Marketplace (where the first cross-claimant operated another newsagency);

3. that the centre would very soon be regularly “filled up” with customers; and

4. that in light of the increasing customer traffic to the centre throughout 2010 and the significant numbers of customer traffic to the centre from 2011 the lessee of the premises would have no difficulty making its payment obligations under any agreed lease.

25. The primary judge found that the words attributed to Mr Rogers by the appellant were said, but that those conversations did not conform to the pleaded oral representations. The primary judge also found that Mr Rogers’ evidence would not have assisted the respondents’ claim, but “that finding is of limited significance. … His silence does not fill evidentiary gaps. It neither advanced any defence nor negates it.” The primary judge held that drawing the appropriate inference that Mr Rogers’ evidence would not have assisted the cross-defendant’s case made no difference here.

26. The primary judge found the appellant to be an “unreliable” witness, “…afflicted with deficient recollections” and therefore treated his evidence with “some caution”. Her Honour found that some of the appellant’s evidence on the cross-claim “defied reality and was inherently unlikely to the point of being incredible”.

27. The appellant was an experienced business person in running a newsagency, and indeed ran one a five minute drive away from the proposed new shopping centre at Bella Vista. The primary judge found that “[h]e knew the area; and he knew that there was a large workforce in the Norwest area … [the appellant] made his own decision about the viability of the location for a newsagency – relevantly even before he met Mr Rogers.” The primary judge concluded that the appellant did not rely upon anything said by Mr Rogers.

28. Further, the primary judge found that a causal relationship between any loss and damage and any of the pleaded representations was not established. The primary judge noted that any misrepresentations needed only to be a cause, not the cause of the ultimate loss, but conceded that the apparent “forensic choice not to identify any specific reliance by reference to any specific ‘comments’ by Mr Rogers” was misguided as such evidence was central to the misrepresentation claim.

29. The primary judge dismissed the appellant’s cross-claim.

The issues on appeal

30. In his amended notice of appeal filed in court on 14 June 2017, the appellant advanced 22 overlapping grounds of appeal, many of which had numerous sub-grounds. I will attempt to summarise the grounds of appeal under four headings.

First group of issues identified in the notice of appeal - alleged apprehended bias of the primary judge

31. Ground 1 of the amended notice of appeal of appeal (apparently including any of sub-grounds 1.1-1.9 alone or in combination) was that the primary judge erred in failing to recuse herself for apprehended bias. The essence of the complaint was prejudgment reflected in differential treatment of the parties’ counsel, particularly reflected in interruptions and comments directed to the appellant’s counsel throughout the hearing. There was also a specific complaint about orders being entered by District Court Registry staff on 7 December 2016, before the primary judge had determined the recusal application.

Second group of issues identified in the notice of appeal - alleged errors in admitting evidence about unpaid rent and outgoings

32. Grounds 2-6 of the amended notice of appeal (inclusive) complained about the primary judge concluding, on the basis of the evidence before her, that the respondents were entitled to $388,805.60 in unpaid rent and outgoings under the lease as at the date of termination.

33. The essence of these grounds was a submission that evidence of unpaid rent and outgoings under the lease as at the date of termination had been wrongly admitted by the primary judge and that her Honour was bound to conclude, based on the only admissible evidence, that the respondents were entitled to recover only $137,202.81 in unpaid rent and outgoings under the lease as at the date of termination.

Third group of issues identified in the notice of appeal - alleged errors made in quantifying the respondents’ claim for damages for breach of the lease

34. Grounds 7-10 of the amended notice of appeal (inclusive) complained that the finding of the primary judge that the respondents were entitled to $264,493.28 as unpaid rent and outgoings from the date of termination to the expiration of the lease was based on inadmissible evidence.

35. Ground 11 of the amended notice of appeal complained that the primary judge erred in awarding the respondents $23,713.88 for changing the locks, removing the air-conditioning equipment, and making good the premises including the erection, use and removal of hording as “the respondents had waived payment by the appellant’s company of these expenses”.

Fourth group of issues identified in the notice of appeal - alleged errors in addressing the appellant’s cross-claim

36. Grounds 12-22 of the amended notice of appeal complained about the way the primary judge addressed the appellant’s cross-claim. Grounds 12-14 complained, in an overlapping and repetitive way, that the primary judge erred in finding that the words spoken by Mr Rogers did not match the pleaded oral representations. It was submitted that the primary judge erred in failing to draw a Jones v Dunkel inference from Mr Rogers’ failure to give evidence.

37. Grounds 15-17 complained, in a variety of ways, about the treatment by the primary judge of s 41 of the Fair Trading Act. The essence of the appellant’s complaint was that the primary judge should have concluded that the respondents had not discharged their onus to prove that there were reasonable grounds for making the representations. It was also alleged that her Honour erred in failing to find that the respondents had engaged in misleading or deceptive conduct under s 42 of the Fair Trading Act.

38. Grounds 18-21 (including sub-grounds 19.1-19.7) complained about every aspect of the primary judge’s findings about reliance. Sub-grounds 19.1-19.7 complained, without elaboration, about each of the detailed factual findings made by the primary judge about reliance. Ground 22 complained that the primary judge erred in her findings about causation.

First group of issues identified in the notice of appeal - alleged apprehended bias of the primary judge

Appellant’s submissions

39. The appellant’s principal complaint was that on 72 occasions, in separate passages and exchanges between the primary judge and senior and junior counsel for the appellant, the primary judge manifested apprehended bias. It was submitted that by reason of the primary judge’s persistent interruption of counsel, her Honour manifested differential treatment of counsel, a different attitude to evidence of loss presented by the parties and manifested a willingness to assist the respondents’ counsel.

40. The principal effect of the interruptions was asserted to be that it was “…impossible for counsel for the appellant to make coherent submissions, for which they later were criticised”.

41. In relation to the alleged differential treatment of counsel, the appellant submitted that the primary judge was “frequently rude, sarcastic and hostile to counsel for the appellant and unfailingly polite to counsel for the respondents”. In particular, a matter which was said to evidence apprehended bias was her Honour’s comment to the respondents’ counsel that: “…and Mr Angyal’s [method of quantification of damages] is no, no, no, this is all part of the cost of doing business and you bring it forward, and put it back and multiply it by your mother’s birthday”.

42. In relation to an alleged general willingness to assist and remedy the respondents’ case, the appellant gave examples of what he says support this submission. For example, he submitted that the respondents’ counsel’s abandonment of apportionment was “urged” by the primary judge, and that her Honour’s comments about the respondents’ witness, Mr Kinley, and his evidence about “The Works”, were incorrect and gave rise to the impression that she was “advocating on behalf of the respondents”. The appellant also submitted that further evidence of apprehended bias was the primary judge’s suggestion of a puffery defence to counsel for the respondents that was embraced but not pleaded.

43. The appellant submitted that comments made by the primary judge in relation to Mr Huang, the appellant’s co-director of the lessee company, “…indicated not merely a willingness to accept th[e] defence but constituted advocacy of it that travelled beyond the evidence”. The comments the appellant particularly took issue with were that Mr Huang thought that the proposed lease in the respondents’ centre was “so dodgy that he won’t go ahead with the business”, and that he “leaves the company because he won’t be party to a company relying on it”. The appellant submitted that the primary judge had no evidence to support either of these statements.

44. Additionally, a submission was advanced about the primary judge allegedly determining the claims under the lease before delivering judgment on the bias application, by reference to the date and time of orders made. The affidavits of Ourania Konstantinidis sworn on 21 September 2017 and Phil Yang sworn on 22 September 2017 were read at the hearing of the appeal. Both affidavits detail attempts by the solicitors for the parties to understand the orders. It appears that identical orders to those eventually made by the primary judge on 16 December 2016, about part only of the case, were made on JusticeLink on 7 December 2016 by Registry staff at the District Court. On 13 June 2017, Ms Konstantinidis, solicitor for the respondents, sent an email seeking clarification as to why there was more than one order. On 19 June 2017, the primary judge’s Associate replied:

“…

It would appear that registry officers entered “orders” on 7 December 2016. How and why that was done is a complete mystery. It was not done in chambers or at the direction of chambers.

It was not at Judge Gibb’s direction. This is the first time that it has come to Judge Gibb’s attention.

All that I can suggest is that you direct your enquiries to the Civil Registry.” (Phil Yang affidavit, p 36)

45. The appellant submitted that on the balance of probabilities, the orders emanated from Judge Gibb and emanated from her on 7 December 2016, which was while the hearing was still in progress and that if that be found, it was very strong evidence of apprehended bias because it demonstrated that her Honour had made up her mind as to the outcome of the proceedings.

Respondents’ submissions

46. The respondents submitted that this ground of appeal is “misconceived” and there was no error made by the primary judge in declining to recuse herself. The respondents submitted that “[t]he defence and cross-claim of the appellant was so inherently flawed in the view of the appellant’s own evidence that the findings made were inevitable”.

47. The respondents submitted that the references cited in the appellant’s submissions in support of this ground should not be read in isolation. Viewed in context, the selected exchanges highlighted in the appellant’s submissions evidence the primary judge’s attempts to understand the appellant’s case.

48. In relation to the appellant's submission about her Honour’s rejection of the methodology proposed by Taylor DCJ in GPT Funds Management 2 Pty Ltd v Footwear Trading Group Pty v Footwear Trading Group Pty Ltd [2013] NSWDC 199, the respondents submitted that the case itself, as distinct from an article about the case in the Australian Law Journal written by counsel for the appellant, had not been provided to the primary judge. In context, her Honour was "seeking guidance from both counsel as to the appropriate principles in relation to past and future loss where a lease had been terminated and damages were to be assessed looking backwards, in circumstances where the facts disclosed unchallenged mitigation and re-leasing of the premises crystallising damages".

Consideration of first group of issues identified in the notice of appeal - alleged apprehended bias of the primary judge

49. The applicable test where there is an allegation of apprehended bias is that stated by the plurality in Ebner (at [6]), namely whether “a fair minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide”.

50. The application of the Ebner test requires two steps: first, the identification of what it is said might lead the decision maker to decide a question other than on its merits; and, second, the articulation of the logical connection between the matter identified and the feared deviation from the course of deciding the question other than on its merits (Ebner at [8], [16], confirmed in Michael Wilson at [31] and [63]).

51. The appellant in written and oral submissions did not address the legal test to be applied for apprehended bias. The appellant did not explain how the primary judge erred in the application of the test as explained by those authorities. In particular, the appellant did not articulate the connection between the events he had identified said to give rise to the apprehension of bias through prejudgment and the possibility of departure from impartial decision making. The bare assertion of bias through prejudgment is of no assistance without the articulation of this connection: Michael Wilson at [63].

52. When the matters identified by the appellant are examined, there is no logical connection between the fact that her Honour debated elements of the appellant’s case, and pressed counsel for the appellant to identify how the submissions made conformed with the pleaded case, and the possibility of prejudgment. Her Honour also tested counsel for the respondents in the same way. This failure by the appellant to articulate any logical connection between the conduct relied on and the possibility of departure from impartial decision making means that this ground of appeal should be dismissed for that reason alone.

53. Ward JA in Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88 conducted an extensive survey of authority relating to the question of excessive judicial intervention and referred, inter alia, to Galea v Galea (1990) 19 NSWLR 263 at 281-282; R v T, WA [2014] SASCFC 3; (2014) 118 SASR 382 and Ellis v R [2015] NSWCCA 262. These authorities were not referred to, and no submission was made that this was a case where the “dust of conflict” aspect of those authorities was relevant. That issue can thus be put to one side.

54. The appellant’s principal complaint was about 72 allegedly inappropriate interventions by the primary judge. Virtually all of these interventions related to evidentiary rulings or exchanges during submissions. Appellate challenges based on complaints of excessive intervention by the primary judge in the course of the hearing are never easy to evaluate. Different considerations will apply to judicial intervention in the course of submissions, as compared to intervention in the questioning of witnesses. Robust discussion between bench and bar during the course of submissions is not a necessary indication of prejudgment or bias. The testing of counsel’s submissions, even strongly, is not necessarily an indication of bias.

55. A hypothetical fair minded observer would conclude that a judicial officer will test, and sometimes test strongly, submissions made to her for which there is no apparent basis. In relation to many of the 72 allegedly inappropriate interventions by the primary judge, objectively, the submission being advanced by the appellant was difficult to understand. For example, several of the allegedly inappropriate interventions concerned the appellant’s submission that the respondents failed to prove that $386,911.86 was owing by Xianghong for non-payment of rent and outgoings. This was in circumstances where the appellant had himself tendered a document, without evidentiary restriction, in his own case, which asserted that $386,911.86 was owing by Xianghong for non-payment of rent and outgoings. The primary judge’s pointing out to counsel the difficulty that this submission faced, based on the evidence in the case, was not apt to demonstrate an apprehension of bias. Rather it suggested an acute appreciation of the issue to be decided and the weight of the evidence in relation to it.

56. An examination of all the passages relied upon by the appellant reveals that they may conveniently be grouped into the following broad areas of contention in the appellant’s case:

1. passages where the primary judge and counsel were debating the pleading of the representations relied upon in the appellant’s cross-claim and the relationship between those pleadings and the evidence;

2. passages where the primary judge and counsel were debating the effect of the decision of Taylor DCJ in GPT on the quantification of the respondents’ loss; and

3. passages where the primary judge and counsel were debating evidentiary matters and in particular the effect of the business record provisions.

57. As to the first issue, it is clear that the primary judge took the view that the appellant’s pleading did not conform with the evidence relied upon. It will be recalled that the pleaded misleading and deceptive conduct comprised, and only comprised, oral representations made by Mr Rogers. The primary judge was obviously having difficulty with the way that the appellant’s counsel submitted that the words spoken by Mr Rogers differed from the pleaded representations. The critical exchanges between bench and bar were as to the effect of Demagogue Pty Ltd v Ramensky [1992] FCA 851 at [34]. The submission that the appellant was unable to put to the primary judge an argument about the effect of Demagogue should be rejected. As the transcript demonstrates, counsel for the appellant put to the primary judge the principle that Demagogue establishes. What is clear from those passages is that the primary judge was pressing counsel for the appellant about the pleaded representations. While the transcript demonstrates a vigorous debate between bench and bar, I do not regard those exchanges as demonstrating prejudgment. Rather, they demonstrate the primary judge’s seeking to understand how the appellant put the cross-claim.

58. The second area in which many of the 72 passages relied upon by the appellant occurred concerned debate as to the effect of the decision of Taylor DCJ in GPT on the quantification and calculation of the respondents’ loss. An important contextual element in the exchanges between counsel and the primary judge on this issue was that the appellant did not provide the primary judge with a copy of GPT but rather a copy of an article about the case in the Australian Law Journal written by counsel for the appellant. Nothing in this judgment should be understood as expressing any views about the decision of Taylor DCJ in GPT. The subject is only relied upon by the appellant as a particular of the apprehended bias claim. Reading the exchanges between bench and bar, it is true that the primary judge was sceptical about the methodology described to her as derived from GPT, but a fair minded observer would conclude that her Honour was attempting to understand the damages issues and looking for assistance from counsel for both parties. In this regard, the primary judge was testing closely the argument made by the respondents as well. The submission that the primary judge impermissibly urged counsel for the respondents to “withdraw a concession” about GPT should be rejected. The transcript references given demonstrate no more than the primary judge’s scepticism about the GPT methodology already noted. That, of itself, was not prejudgment. To the extent that the primary judge addressed a sarcastic comment to counsel for the respondents in addressing the GPT methodology (see [41] above], this was unfortunate and should not have occurred, as the primary judge herself recognised in her recusal judgment. It was not, however, evidence of prejudgment.

57. The third area of judicial intervention the subject of complaint appeared in passages in which the primary judge and counsel were debating evidentiary matters, and in particular the effect of the business record provisions of the Evidence Act1995 (NSW). As will become apparent when addressing the appellant’s grounds of appeal relating to these issues, a number of the arguments put by the appellant’s counsel to the primary judge were wrong, and clearly so. A fair reading of the interchanges on this subject demonstrates no more than the primary judge pointing out to counsel for the appellant some of the difficulties his submissions faced and giving him an opportunity to address her Honour’s preliminary views about those matters.

58. There were a few additional miscellaneous complaints made by the appellant under this ground. Those submissions were without merit. It was submitted that the primary judge demonstrated apparent bias in:

1. dealing with whether “the Works” had been built. The transcript demonstrates that the primary judge misunderstood, temporarily, some confusing evidence given by the appellant. That confusion was cleared up by counsel during the relevant exchanges;

2. making remarks about the appellant’s former joint venture partner Mr Huang. The primary judge was doing no more in the passages relied upon than reflecting on the evidence and testing the appellant’s damages claim;

3. suggesting a “puffery” defence. That complaint should be rejected. First, “puffery” is not a defence. It is in this context a description of conduct that is unlikely to be relied upon. Secondly, in the passage concerned the primary judge was merely testing the proposition that the appellant had demonstrated reliance upon misleading or deceptive conduct; and

4. displaying “radically different attitudes” to the parties’ evidence of loss. The respondents’ damages case on loss was relatively straightforward and proven by business records. The appellant’s damages case was seriously deficient and lacking in virtually any documentary support. Notwithstanding this, the primary judge admitted the appellant’s damages evidence, without limitation. The only difference in the “attitude of the primary judge to the admissibility of the two types of evidence” was that her Honour did not reject any part of that tendered by the appellant. The admission of evidence did not indicate apparent bias.

61. The only remaining submission about allegedly inappropriate judicial interventions concerned the cross-examination of the respondents’ witness, Mr Kinley. Five passages were relied upon. The problem for the appellant in this complaint is that, as addressed below at [80], the cross-examination proceeded on a fundamental misunderstanding of various business records which were in evidence. In short, where there was abundant evidence of there being $388,805.60 in unpaid rent and outgoings under the lease as at the date of termination and in circumstances where the appellant admitted that it had paid no rent at all during the lease, the appellant’s counsel was conducting a cross-examination to show that a particular journal in the respondents’ accounts demonstrated only $137,202.81 in unpaid rent and outgoings. A fair reading of the interventions shows the primary judge’s trying to understand those business records and the questions being asked by counsel for the appellant. The interventions do not demonstrate, as the appellant submitted, “apparent partiality to the respondents”.

62. Reading all of the judicial interactions about which complaint was made in context, it should be concluded that the primary judge did not display apparent partiality to the respondents. The matters relied upon, alone and in combination, would not cause a fair minded observer to conclude that the primary judge might have prejudged the case in favour of the respondents. That hypothetical observer would conclude that the primary judge was struggling to understand the appellant’s claim, but would not apprehend that her Honour might not bring an impartial mind to the resolution of the issues raised by it.

63. Finally, ground 1.9 deserves particular mention. The appellant identified, as a separate particular of the apprehension of bias, an entry made on the computer record of orders on 7 December 2016, before the decision by the primary judge recorded in orders entered by her Honour’s chambers on 16 December 2016. Despite uncontradicted evidence on this appeal from the primary judge’s chambers that her Honour had no knowledge about the making of that earlier computer entry on 7 December 2016 by District Court Registry staff, it was submitted that this Court should nonetheless conclude that the entry was made “at the direction of the judge and obviously with her Honour’s knowledge”.

64. The evidence before this Court does not permit a finding that in entering the orders on 7 December 2016 District Court Registry staff acted with the knowledge or authority of the primary judge. The evidence strongly suggests a finding that the entry was an obvious mistake by Registry staff. Her Honour had reserved her decision on 18 November 2016 and, after hearing the apprehended bias application on 7 December 2016, further adjourned it to 16 December 2016. .

65. Perhaps, it may be inferred, some draft orders had been prepared in her Honour’s chambers by 7 December 2016, but the mere drafting of an order (or a draft judgment) does not indicate prejudgment or bias. The submission that this Court should conclude that the order of 7 December 2016 was entered by Registry staff at her Honour’s direction is without foundation and should not have been made.

66. Ground 1 of the amended notice of appeal should be dismissed.

Second group of issues identified in the notice of appeal - alleged errors in admitting evidence about unpaid rent and outgoings (grounds 2-6)

Appellant’s submissions

67. The appellant submitted that the primary judge erred in allowing evidence he had tendered, without limitation, to be used for the purpose of quantifying unpaid rent owing to the respondents in the amount of $386,911.86. The document is a letter of demand from the respondents sent to the appellant dated 8 November 2012 which was an annexure to the appellant's affidavit sworn on 5 May 2016. Relevantly, it reads:

“You have failed to meet any payments and the Lessor had already called upon your Bank Guarantee resulting in a further breach of your lease when this was not replaced. The Lessor has exhausted the facilitation process and now seeks remedy under the lease. We refer to clause 26 of your lease, entitled "Default". We note that as at today's date your rental on the above premises continued to have arrears totalling $386,911.86 inclusive of GST. This represents a fundamental breach of the terms and conditions of your lease."

68. The appellant submitted that the primary judge impermissibly treated this letter as evidence of the truth of its contents. The primary judge noted in her reasons that the document was tendered without qualification and that neither party sought a limiting order under s 136 of the Evidence Act about the document. The appellant submitted that this does not “transform[s] ...hearsay statements in a document into admissible evidence”.

69. Additionally, the appellant submitted that the primary judge’s use of the letter of demand as truth of the contents by finding that $386,911.86 was the rent owing to the respondents “without warning to the appellant that it would be deployed in this manner” denied the appellant procedural fairness.

70. It was also submitted that the primary judge erred in admitting paragraph 5 and annexure A of Mr Kinley’s affidavit sworn on 5 October 2016 as the document was prepared by Mr Kinley for the purposes of litigation and was thus not a business record: s 69(3)(a) of the Evidence Act.

71. Finally, it was submitted that annexure A and annexure H to Mr Kinley’s affidavit sworn on 5 October 2016 should have been rejected as it became obvious during the respondents’ case that the evidence conflicted with business records tendered by the respondents being annexures D, E and F.

Respondents’ submissions

72. The respondents submitted that the evidence the subject of complaint was admissible. The relevant context was that the appellant admitted that no rent had been paid. The lease, which was in evidence, indicated the rent payable. All that needed to be calculated was the relevant CPI and the outgoings incurred.

73. Further, the letter of demand was not the only basis upon which the primary judge held that there were arrears in rent, outgoings and GST in the sum of $386,911.86.

74. The respondents submitted that the primary judge was referring to other evidence before her that corroborated the position of the debt owing, namely the documents annexures D, E and F of Mr Kinley’s affidavit sworn 5 October 2016 and Exhibits 3 and 4, being a rent and outgoings ledger and an “adjustment form” signed by Mr Kinley.

Consideration of second group of issues identified in the notice of appeal - alleged errors in admitting evidence about unpaid rent and outgoings (grounds 2-6)

75. The issue at the heart of these grounds of appeal is relatively simple to resolve. The lease was in evidence. It was admitted that the appellant had guaranteed Xianghong’s obligations under the lease. The appellant admitted that Xianghong was in default under the lease and had not paid any rent or outgoings as required by the lease. Clause 26 of the lease is set out at paragraph [16] above.

76. There was no issue before the primary judge that there had been no payments of rent and no payments of any other kind under the lease except the deposit and a recovery under a bank guarantee, both of which were taken into account by her Honour. The primary judge was entitled to approach this issue on that basis that there was no bona fide dispute between the parties.

77. The appellant tendered the document about which primary complaint was made, without seeking any limitation under s 136 of the Evidence Act. The objection in this Court to the use made of the document by the primary judge was that it was hearsay. Having been tendered by the appellant for another purpose (to prove the date of the demand) and no limitation order having been sought or made, the effect of s 60 of the Evidence Act was that the hearsay rule did not apply to the representations contained in the letter, including the representation that Xianghong was in arrears under the lease in the amount of $386,911.86.

78. In any event, there was abundant evidence before the primary judge that Xianghong was in arrears under the lease at least in the amount of $386,911.86 as at 5 December 2012, the date the respondents went back into possession of the premises. Paragraph 12 and annexure L to the affidavit of Mr Kinley sworn on 28 August 2015 contains a record of the property manager, Raine and Horne Commercial Retail Services, of an amount due as arrears as at 5 December 2012 of $388,805.60; paragraph 5 and annexure A to the affidavit of Mr Kinley sworn on 5 October 2016 contains a calculation by Mr Kinley identifying the components of the $388,805.60 being the total of rent, outgoings, promotional levy and GST. Nothing turns on the identification in these records of a slightly higher figure than the one contained in the letter of demand tendered by the appellant.

79. Senior Counsel for the appellant accepted that if the Court were to conclude the effect of s 60 of the Evidence Act was that the hearsay rule did not apply to the representations contained in the letter of demand tendered by the appellant, grounds 2-6 should be dismissed.

80. The only remaining issue to be addressed is the appellant’s claim that the aged delinquencies ledger he relied upon (Exhibit F to the affidavit of Mr Kinley sworn 28 August 2015) demonstrated that Xianghong was indebted to the respondents for unpaid rent and outgoings as at 5 December 2012 only in the amount of $137,202.81. The appellant’s submission must be rejected. It was not proved that the aged delinquencies ledger demonstrated anything of the sort. On its face, the page of the aged delinquencies ledger relied upon by the appellant addressed the date 31 January 2014. The amount of aged delinquency on that date seized upon by the appellant as due on that date was $137,202.81. That amount, containing the same components in the same amounts, can be seen at annexure D to the affidavit of Mr Kinley sworn on 28 August 2015 as relating only to the period 1 August 2013-31 July 2014. It is thus clear that Exhibit F to the affidavit of Mr Kinley sworn 28 August 2015 does not demonstrate that Xianghong was indebted to the respondents for unpaid rent and outgoings as at 5 December 2012 only in the amount of $137,202.81. On its face, that amount relates to a different period altogether.

81. Grounds 2-6 of the amended notice of appeal should be rejected.

Third group of issues identified in the notice of appeal - alleged errors made in quantifying the respondents’ claim for damages for breach of the lease

Appellant’s submissions

82. The appellant submitted that the primary judge erred in:

1. admitting as evidence of damages suffered by the respondents by reason of the appellant’s breach of the lease a document (Mr Kinley’s affidavit sworn on 28 August 2015, annexure L) that was inadmissible because it lacked foundation;

2. finding that Mr Kinley’s affidavit sworn on 28 August 2015, annexure L established the damages that were payable by the appellant’s company under the lease in the period from termination of the lease to the end of the term of the lease;

3. finding that Mr Kinley’s affidavit sworn on 28 August 2015, annexure L established the damages suffered by the respondents in the period from re-letting of the premises to the end of the term of the lease;

4. failing to find that there was no admissible evidence of damage suffered by the respondents by reason of the appellant’s company’s breach of the lease and in finding that the respondents had suffered damages in the amount of $192,023.87 (being $264,439.28 in unpaid rent and outgoings plus GST less $72,769.41 being the amount allowed in mitigation); and

5. finding that the respondents incurred expenses by reason of the appellant’s company’s breach of the lease in the amount of $23,713.88 when the evidence established that the respondents had waived payment by the appellant’s company of these expenses.

83. I note that it was not a ground of appeal that in assessing the value to the respondents of the reletting of the premises by way of mitigation of damages, the primary judge ought to have adopted the methodology applied by P Taylor DCJ in GPT.

84. The appellant submitted that the primary judge erred in finding that the respondents were entitled to damages in the amount of $23,713.88 for the losses incurred as a result of the termination of the lease by the respondents on 5 December 2017. The primary judge found that the respondents were entitled to damages for changing the locks, removing the air conditioning equipment and making good including the erection, use and removal of a hoarding.

85. The appellant accepted liability for the costs of changing the locks, in the amount of $308. The appellant submitted that:

1. the costs of making good the premises did not flow from the appellant’s breach of the lease;

2. the cost of removing the air conditioner did not flow from the appellant’s breach of the lease; and

3. the cost of erecting a hoarding around the premises did not flow from the appellant’s breach of the lease.

86. It was submitted that the respondents locked the lessee out of the premises and thereby terminated the lease. The appellant submitted that in doing so the respondents waived the appellant’s obligation to make good the premises in writing. The appellant relies on an email sent from the respondents’ solicitor to his solicitor on Monday 17 December 2012 saying:

“…

In order to assist your client, and to expedite the exit, our clients are prepared to allow your client to leave everything else in the premises, including the shopfront, rollers grill, ceiling, lighting, air-conditioning and floor tiling.

…”

87. In relation to the hoarding, the appellant challenged the primary judge’s findings about Mr Kinley who, in cross-examination, agreed with counsel for the appellant that “…the erection of the hoarding was not caused by the fact that you locked out Norwest News, … it would have happened anyway”. The primary judge said in her reasons:

“Mr Kinley’s concession was misplaced. In any event, he was merely a witness, being a real estate agent and not the plaintiff nor an employee of the plaintiff.”

88. The appellant submitted that such a finding “ignores the fact that Mr Kinley at all relevant times was, and continued to be, the Retail Property Manager of the centre owned by the respondents. He is a director of CH Real Estate Pty Ltd trading as Raine & Horne Commercial, whose job was to do the complete management of the centre. In that capacity, he had full power to manage leases in the centre”.

Respondents’ submissions

89. The respondents submitted that Mr Kinley’s affidavit sworn on 28 August 2015, annexure L was admissible and in any event went only to mitigation, a matter favourable to the appellant.

90. In relation to the appellant having an opportunity to make good the premises, the respondents relied upon a letter sent by the respondents’ solicitor to the appellant on 5 December 2012 which was before the primary judge as part of Exhibit 2. That letter said:

“… Your company has seven days from today’s date to remove its property from the Premises and make good any damage caused by reason of the removal of the property.

…

The Landlord’s exercise of its rights to re-enter the Premises is without prejudice to any claims it may have under the Lease for any monies due or its entitlement to claim damages for early termination of the Lease, including make good costs under clause 27.4 of the Lease.”

Consideration of third group of issues identified in the notice of appeal - alleged errors made in quantifying the respondents’ claim for damages for breach of the lease

91. This issue is also relatively simple. Grounds 7-11 address the damages claimed by the respondents for breach of the lease between December 2012 and the end date of the lease, July 2014. The appellant did not object to paragraph 29 of Mr Kinley’s affidavit sworn on 28 August 2015 which was admitted for all purposes. That provided:

“The rent and other money payable by Xianghong under the Lease was $125,273.00 per annum plus GST. This amount was subject to a rent review under the terms of the Lease to the end of the term being 29 July 2014.”

92. In relation to grounds 7-10, which concern the principal amount in dispute, the primary judge took the annual figure of $125, 273 plus GST, being the rent and outgoings Mr Kinley’s evidence proved, and applied it over the period between the termination and the end of the lease. No complaint was made by the appellant about the primary judge’s conclusion that the annual figure of $125,999 plus GST, being the rent and outgoings Mr Kinley’s evidence proved, multiplied over the period in question, totalled $264,493.28.

93. The subject of this complaint is the admissibility of annexure L to Mr Kinley’s affidavit sworn on 28 August 2015. That document identified the amount received in mitigation by the respondents which should be deducted from the loss otherwise demonstrated. It was the basis of the finding by the primary judge that $72,469.41 had been received by the respondents and should be deducted from the damages otherwise established.

94. It was not controversial that the appellant bore the onus of proving a failure to mitigate on the part of the respondent. If, as the appellant repeatedly submitted, annexure L to Mr Kinley’s affidavit sworn 28 August 2015 was inadmissible, the deduction made by the primary judge to the damages payable by the appellant based on that evidence of $72,469.41 ought not to have been made. No doubt for this reason the primary judge described this issue as a “storm in a teacup”.

92. I would infer, in any event, that the relevant representations contained in annexure L to Mr Kinley’s affidavit sworn 28 August 2015 were admissible as being contained in a business record. The representations were made on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact: s 69(2)(b) of the Evidence Act. I would not conclude that any of the relevant representations were prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, an Australian or overseas proceeding: s 69(3)(a) of the Evidence Act. Even if annexure L to Mr Kinley’s affidavit sworn on 28 August 2015 was inadmissible, the effect would be that the respondents have received too little in damages and no miscarriage of justice was occasioned by its admission.

93. The appellant’s next complaint, that there was no admissible evidence to support a finding about a nine month rent free period given to the business that replaced Xianghong, My Dental, should also be rejected. It was actually put to Mr Kinley in cross-examination by the appellant’s counsel that there was a nine month rent free period offered by the respondents to My Dental. The primary judge’s finding was based on that evidence. The submission that there was “no evidence” of that nine month rent free period is not correct.

94. The remaining complaints about damages concern the components of Xianghong’s breaches of the lease in relation to making good the premises. These were quantified by the primary judge as totalling $23,713.88 comprising:

1. $308 plus GST to change the locks;

2. $15,353.60 plus GST to make good the premises;

3. $3,776.35 plus GST for a new hoarding; and

4. $2,150 plus GST ($2,365) for removal of the air conditioning.

98. All but the last of these complaints should be rejected. The first matter is not in dispute. As to the second, the appellant’s suggestion that the respondents had waived the contractual obligation to make good the premises and re-instate the premises to a bare shell (clause 27.1 of the lease) should be rejected. The e-mail relied upon from Gadens does not constitute a written waiver of Xianghong’s obligations under clause 27 of the lease. The primary judge was correct to conclude that the e-mail contained no express or implied waiver of the terms of the lease and nothing was said in that respect by either side. As to the third matter, on the evidence before the primary judge the hoarding to protect the premises during the work to re-instate the premises to a bare shell was a necessary consequence of the work which had to be done to re-instate the premises to a lettable state, to perform the obligation contained in clause 27 of the lease. The hoarding expense was within the objective contemplation of the parties as a consequence of Xianghong’s breach of the obligation to make good the premises. The primary judge correctly so concluded. Mr Kinley’s acceptance of the contrary was, as the primary judge concluded, misplaced.

99. As to the air conditioning expenses, the appellant is entitled to succeed. The e-mail of 17 December 2012, whilst not constituting a waiver under the lease, nevertheless misstated the position under the contract. The appellant had 14 days under the lease to remove the air conditioner. The respondents’ solicitor told the appellant there was a shorter period than that provided under the lease. The e-mail also said that “our clients are prepared to allow your client to leave everything else in the premises…including air-conditioning”. In those circumstances the appellant should not have been ordered to pay $2,150 plus GST ($2,365) for removal of the air conditioning.

Fourth group of issues identified in the notice of appeal - alleged errors in addressing the appellant’s cross-claim (grounds 12-22)

Appellant’s submissions

100. The appellant challenges all aspects of the findings of the primary judge in relation to his cross-claim: the pleaded representations, whether the representations were misleading or deceptive, whether those representations were relied upon and whether loss was suffered.

101. In relation to the pleading, the appellant submitted that the primary judge erred in finding that the words spoken by Mr Rogers did not match the pleaded representations. Instead, her Honour should have found that the words spoken by Mr Rogers were to the effect of those pleaded. The primary judge should have found that the respondents were precluded from contending that Mr Rogers did not make the pleaded representations by reason of the rule in Browne v Dunn (1893) 6 R 67 (HL).

102. In relation to whether Mr Rogers’ representations were misleading or deceptive, the appellant submitted that the primary judge erred in failing to find that the pleaded representations were misleading. It was submitted that the pleaded representations dealt with future matters and that under s 41(2) of the Fair Trading Act, the respondents had the onus of establishing that they had reasonable grounds for making them. Section 41(2) of the Fair Trading Act as it applied at the time of entry into the lease provided:

“41 Interpretation

(1) For the purposes of this Part, where a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the person does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.

(2) The onus of establishing that a person had reasonable grounds for making a representation referred to in subsection (1) is on the person.

(3) Subsection (1) shall not be taken to limit by implication the meaning of a reference in this Part to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.”

103. The respondents’ evidence, it was submitted, “far from satisfying this onus, established that they did not have reasonable grounds for making the representations”.

104. In relation to whether the representations were relied upon, the appellant submitted that the primary judge erred in finding that there was no change of position in reliance on the pleaded misleading statements. The appellant contended that the shopping centre was only 69 per cent occupied when Xianghong’s lease commenced and that Mr Rogers’ representation that it would then be 80 per cent occupied was misleading and/or deceptive.

105. In relation to whether the representations caused loss, it was submitted that the appellant’s entry into a guarantee of the lessee’s obligations is the relevant loss. Accordingly, the primary judge should have found that the appellant changed his position to his detriment in reliance on the representations.

106. Specifically, the appellant submitted that the primary judge erred in making the following findings:

1. that the appellant was not concerned about representations about the availability of customers and conceded this in cross-examination;

2. that the appellant was ambivalent about everything else (other than traffic flow and his solicitor’s advice);

3. that the appellant expressed concern about traffic at the centre only at its start;

4. that there was no evidence that the appellant factored anything about buildings to be called “the Works” into Xianghong’s projected business plan or planning at all and that the appellant could not have had any reasonable expectation that the Works would be operational at any particular point in 2011;

5. that there was no reliance upon anything said by Mr Rogers in relation to the “busyness” of the centre; and

6. that nothing changed by reason of or in reliance upon Mr Rogers’ comments about rent.

107. The appellant also challenged the finding that the appellant “made his own decision about the viability of the location for a newsagency – relevantly even before he met Mr Rogers. He did not rely upon anything said by Mr Rogers”.

108. The appellant submitted that the primary judge’s reasoning was that the appellant’s only concern was ensuring he did not pay more than $100,000 in rent annually and that this was flawed because the offer he received on 10 September 2008 satisfied this criteria, but the appellant did not accept the offer for a lease until 12 February 2009. “Had his sole concern been rent, the September 2008 offer would have been accepted. It was not accepted.”

109. The appellant submitted that his acceptance of an offer to lease a shop in the centre was subsequent to his two meetings with Mr Rogers in early 2009, where representations were made about how busy the centre would be. The fact that the appellant did not accept the 10 September 2008 offer but promptly accepted the 6 February 2009 offer demonstrates, in the appellant’s submission, that the primary judge erred in finding that there was no reliance.

Respondents’ submissions

110. The respondents submitted that the finding that the appellant made his own decisions about the viability of a location for a newsagency even before he met Mr Rogers and that he did not rely upon anything said by Mr Rogers was open to the primary judge on the facts and no error has been shown.

111. The respondents submitted that the primary judge determined on the facts that the appellant did not rely upon the pleaded representations, and was entitled to take into account that the appellant was an unreliable witness whose misstatements reflected adversely on his frankness, honesty and reliability.

Consideration of fourth group of issues identified in the notice of appeal - alleged errors in addressing the appellant’s cross-claim

112. The primary judge found that the appellant’s evidence about what Mr Rogers had said, which her Honour accepted, did not match the pleaded express oral representations. That finding was correct. Accepting completely the appellant’s version of what Mr Rogers said, the pleaded representations were not made. The matters not said by Mr Rogers are identified in italics below:

1. Mr Rogers did not say that “The Works” would employ 1,500 people and would bring significant customer traffic to the centre from 2011;

2. the relevant conversation with Mr Rogers was a comparison with another shopping centre, Carlingford Court, not Norwest Marketplace. In the earlier conversation with Mr Rogers nothing was said about the centre very soon being busier than the Norwest Marketplace;

3. Mr Rogers did not say that the centre would very soon be regularly “filled up” with customers. In the relevant conversation Mr Rogers said the centre will “very soon” be filled up with tenants; and

4. Mr Rogers did not say that “in light of the increasing customer traffic to the Centre throughout 2010 and the significant numbers of customer traffic to the Centre from 2011 the lessee of the premises would have no difficulty making its payment obligations under any agreed lease”.

113. The primary judge did not, however, ground her rejection of the appellant’s cross-claim solely on these discrepancies. In analysing whether the pleaded representations were misleading and deceptive, her Honour applied s 41 of the Fair Trading Act and found, on the basis of a promotional brochure from the developer, Mulpha Australia, and the pre-disclosure statement, that the respondents had discharged their onus of proving that there were reasonable grounds for the representations about future matters: Re Bill Acceptance Corporation Limited v GWA Limited (1983) 78 FLR 171 at 179; [1983] FCA 269. No error has been shown in that conclusion. The primary judge, contrary to the appellant’s submission in this Court, drew a Jones v Dunkel inference that Mr Rogers’ evidence would not have assisted the respondents.

114. Her Honour then addressed the question of reliance for the purposes of analysing the cross-claim on the basis that the pleaded representations had been made and that they were misleading or deceptive. The primary judge made the following findings relevant to the issue of reliance which were correct on the evidence before her:

1. the appellant was an experienced businessperson and newsagent, who conducted a newsagency located a 5-minute drive away from the proposed new shopping centre. He knew the area well and he knew that there was a large workforce in the Norwest area;

2. the representations the subject of this claim were made by a sales manager, Mr Rogers. At no stage did Mr Rogers hold himself out as anything other than a sales manager. Mr Rogers was not a business adviser or a retail manager;

3. prior to any discussion between the appellant and Mr Rogers, the appellant had offered to enter into a lease of premises in the centre which were of the same size and having the same floor plan as the lease he ultimately signed. The terms offered by the appellant were remarkably similar to those ultimately obtained by Xianghong.

115. Having seen the appellant cross-examined about the details of the offers he made on behalf of Xianghong before the appellant had met Mr Rogers, the primary judge concluded that the appellant made his own decision about the likelihood of traffic and customers.

116. The primary judge rejected the appellant’s evidence about reliance, and found that neither the appellant or Xianghong relied on anything said by Mr Rogers about the ability to pay the rent. The primary judge concluded that the only things being negotiated between the appellant and Mr Rogers were fit out contribution and the length of the rent-free period.

117. The appellant’s attack on the reliance findings of the primary judge was weak and disjointed. His written submissions were limited to a statement that “[t]hese [findings about reliance] are dealt with in the statement of narrative form attached to these submissions”. When regard is had to the statement in narrative form no real attempt was made by the appellant to address any of the detailed findings about reliance made by the primary judge or to explain why those findings should not have been made.

118. An important aspect of his cross-examination related to a document from the developer Mulpha Australia which the appellant had seen. That document provided:

“CircaLocation

CircaRetail is located within Norwest Business Park – one of Australia’s largest master planned integrated business communities combining world class employment, commercial, retail and residential development.

Located in the thriving Hills Shire, Norwest offers a refreshing alternative to the stress of inner city working that had attracted some of Australia’s leading businesses and a workforce of approximately 30,000 people.

In the past decade Norwest Business Park has been recognised with over 30 national and international awards.

CircaRetail will also be adjacent to the newly developed Norwest Private Hospital.

Accessibility

CircaRetail is located in the south-west corner of the Norwest Business Park and will have direct access off Old Windsor Road near the crossroads of M7 Orbital and the M2.

Circa also boasts a generous car parking ratio, making it one of the most convenient and accessible locations in Sydney.

By bus, the North-West T-way rapid transport system provided links to Sydney’s CityRail network.

People

The workers

The greater Norwest Business Park currently accommodates approximately 30,000 people across over 800 businesses.

Once complete Circa is expected to accommodate over 10,000 people and will encompass approx. 300,000 sqm of commercial space and a private hospital.

The residents

The likely residents trade area that will be served by CircaRetail comprises one primary sector and four secondary sectors.

Primary sector

The projected resident population by 2011 is forecast to be approximately 6040. This encompasses Bella Vista and the immediate surrounding area.”

119. The appellant gave evidence about his consideration of this document which confirmed that he was not concerned about any of the future projections due to his personal experience of the area, his knowledge of the large workforce already there and his knowledge of the existing buildings and proposed buildings being constructed in the area.

120. The appellant relied on his own knowledge of the area and the written material he had considered when making his decision about the lease; and not on anything said by Mr Rogers. The primary judge was correct so to conclude.

121. Further, as the primary judge pointed out, the evidence of the appellant did not identify any representation or “comment” by Mr Rogers which he relied upon. Her Honour gave careful consideration as to whether, in the absence of this evidence, she should nevertheless infer reliance based on reasoning of the kind identified in Gould v Vaggelas (1985) 157 CLR 215; [1984] HCA 68. After setting out the cross-examination of the appellant about his reliance upon his solicitor and business advisor, and noting that the misleading conduct need only be “a” cause of the loss, her Honour concluded that the appellant had not established that the pleaded misleading conduct was a cause of any loss to the appellant.

122. No error has been shown in the primary judge’s findings about reliance. Grounds 12-22 of the notice of appeal should be dismissed.

Conclusion and orders

123. The appellant has had very limited success in one respect, being the costs of removing the air-conditioner. That involves a small variation in one aspect of the orders made by the primary judge. The appellant, save with respect to this matter involving less than $3,000, has been wholly unsuccessful. In those circumstances I propose that the appellant be ordered to pay the respondents’ costs of the appeal and that the order for costs made below not be disturbed.

124. In addition, given the obvious error involved, the Registrar of this Court should be directed to remove the erroneous entry made on 7 December 2016 and recorded in JusticeLink by the District Court Registry staff.

125. I propose the following orders:

1. Appeal allowed in part,

2. Set aside order 2 entered on 16 December 2016 and in lieu thereof order:

1. The appellant pay the respondents the sum of $602,178.35 plus interest from 16 December 2016.

3. The appellant to pay the costs of the respondents in this Court as agreed or assessed.

126. WHITE JA: I agree with Payne JA.

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Amendments

05 March 2018 - Paragraph [44] "Ms Konstantinidis, solicitor for the appellant" changed to "Ms Konstantinidis, solicitor for the respondents"

Paragraph [80] "Exhibit E to the affidavit of Mr Lin sworn on 5 May 2016" changed to ""Exhibit F to the affidavit of Mr Kinley sworn on 28 August 2015"

Paragraph [80] "it tendered" amended to "he relied upon"

Decision last updated: 05 March 2018