Relevant provisions of the CTRSA Act
31 Section 6 of the CTRSA Act provides:
(1) Where a retail shop lease is entered into and the tenant has not, at least 7 days before the entering into of the lease, been given a disclosure statement in accordance with subsection (4) or the disclosure statement given is incomplete or contains false or misleading information, the tenant may, in addition to exercising any other right, do either or both of the following
(a) within 6 months after the lease was entered into give to the landlord written notice of termination of the lease, unless subsection (3) prevents termination; (b) apply in writing to the Tribunal for an order that the landlord pay compensation to the tenant in respect of pecuniary loss suffered by the tenant as a result of
(i) the omission of the landlord to give a disclosure statement in accordance with subsection (4); or (ii) the giving of an incomplete disclosure statement by the landlord; or
(iii) the giving of false or misleading information by the landlord in the disclosure statement.
(2) Where the tenant under a retail shop lease gives to the landlord a notice of termination under subsection (1) the lease terminates upon the expiry of a period of 14 days after the notice was given. (3) A tenant cannot terminate a lease under this section on the ground that the tenant has been given a disclosure statement that is incomplete or contains false or misleading information if
(a) the landlord has acted honestly and reasonably and ought reasonably to be excused for the failure concerned; and (b) the tenant is in substantially as good a position as the tenant would have been if the statement had been complete or had not contained the false or misleading information.
(4) A disclosure statement given for the purposes of this section shall be in the prescribed form duly completed and signed by or on behalf of the landlord and the tenant and shall contain a statement notifying the tenant that he should seek independent legal advice. (5) Where the tenant under a retail shop lease (in this subsection this subsection referred to as the incoming tenant), nothing in this section gives to the incoming tenant a right to terminate the lease that the outgoing tenant would not have had if he had continued as the tenant under the lease.
(6) A disclosure statement is not required to be given
(a) on the renewal of a retail shop lease under an option (including the option arising by reason of section 13(1)); or
(b) on the assignment of a retail shop lease.
32 Section 16B(3) of the CTRSA Act provides:
This Division does not apply to conduct that occurred before the commencement of the Commercial Tenancy (Retail Shops) Agreements Amendment Act 2011 section 20.
33 Section 16C of the CTRSA Act provides:
A party to a retail shop lease must not, in connection with the lease, engage in conduct that is misleading or deceptive to another party to the lease or that is likely to mislead or deceive another party to the lease.
34 Section 16D(1) of the CTRSA Act provides:
A party, or former party, under a retail shop lease or former retail shop lease who suffers, or is likely to suffer, loss or damage because of misleading or deceptive conduct of another party or former party to the lease may apply in writing to the Tribunal for an order that the other party, or former party, pay compensation in respect of the loss or damage, or for other appropriate relief.
35 Section 16D(3) of the CTRSA Act provides: 36 Sections 16B, 16C and 16D are all in Div 2 of Pt IIA of the CTRSA Act, which was added to the Act by the Commercial Tenancy (Retail Shops) Agreements Amendment Act 2011 (WA) (Amendment Act). Section 20 of the Amendment Act commenced operation on 1 January 2013, which means that s 16C and s 16D of the CTRSA Act do not apply to conduct which occurred prior to 1 January 2013.The contentions regarding the disclosure statement claim
37 Loveday Corp contends that it was not given a disclosure statement in accordance with the requirements of s 6 of the CTRSA Act.
38 Loveday Corp says that it terminated the lease in writing on 14 February 2014 pursuant to s 6(1)(a) of the CTRSA Act. Loveday Corp has not identified the document which it says constitutes that written notice of termination. The only document which has been provided to the Tribunal which might constitute that written notice of termination is the email dated 14 February 2014 which Mr Loveday sent to Mr Lampropoulos (Loveday 14 February 2014 email).
39 Loveday Corp seeks an order for payment of the compensation amount under s 6(1)(b)(i) of the CTRSA Act due to the omission of Arise Joondalup to give a disclosure statement to it.
40 Loveday Corp says that if Arise Joondalup had given a disclosure statement to it in accordance with the requirements of s 6 of the CTRSA Act, that disclosure statement would have disclosed that there would be a delay in the centre opening and in particular the 'anchor tenant', Bunnings, opening its store. Loveday Corp says it would not have taken handover of the premises from Arise Joondalup until four weeks prior to the centre opening, which Loveday Corp says occurred on 22 March 2014. Loveday Corp contends that the disclosure of those delays would have been made in parts 7, 9 and 11 of the disclosure statement.
41 Arise Joondalup contends that a disclosure statement was sent to Loveday Corp on 20 July 2012 with the agreement for lease. However, Arise Joondalup concedes that there is no evidence that such disclosure statement was signed by Loveday Corp and returned to Arise Joondalup, and therefore the requirements of s 6(4) of the CTRSA Act have not been complied with.
42 Arise Joondalup contends that written notice was not given by Loveday Corp pursuant to s 6(1)(a) of the CTRSA Act to terminate the lease.
43 Arise Joondalup says that Loveday Corp has not proved the losses which it says it suffered as a result of the omission of Arise Joondalup to give a disclosure statement to Loveday Corp in accordance with s 6 of the CTRSA Act.
Decision regarding the disclosure statement claim
44 Section 6(4) of the CTRSA Act provides that a disclosure statement is to be in the prescribed form and that form is prescribed in the Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (WA).
45 It is not in contention that Arise Joondalup failed to give a disclosure statement to Loveday Corp which satisfied the requirements of s 6(4) of the CTRSA Act.
46 However, it is in contention whether Loveday Corp gave Arise Joondalup written notice of termination of the lease in accordance with s 6(1)(a) of the CTRSA Act. This issue turns solely on whether the Loveday 14 February email constituted such notice, because no other document has been put into evidence by Loveday Corp which could satisfy that requirement.
47 The Tribunal has decided that Loveday Corp did not give a written notice of termination to Arise Joondalup under s 6(1)(a) of the CTRSA Act. The Loveday 14 February 2014 email does not state that the lease is terminated. It states that Loveday Corp has decided to cease to trade from the premises and requests Arise Joondalup to advertise the premises for lease. It says that Loveday Corp 'will maintain [its] rental obligation until [Arise Joondalup] can source a new tenant'. That is clearly not a termination of the lease under s 6(1)(a) of the CTRSA Act. It was the start of the negotiations for the surrender of the lease, not the termination of the lease.
48 Section 6(1)(b) of the CTRSA Act provides that Loveday Corp can seek an order that Arise Joondalup pay compensation to it in respect of pecuniary loss suffered by it as a result of the omission of Arise Joondalup to give a disclosure statement to it in accordance with the requirements of s 6(4) of the CTRSA Act.
49 The Tribunal has decided that Loveday Corp has not proved its claim for compensation under s 6(1)(b) of the CTRSA Act for two reasons, each of which on its own is sufficient for the claim to fail.
50 Firstly, Loveday Corp has not proved the expenditures included in the compensation amount. Whilst the Lovedays say that they calculated the compensation amount from the records of Loveday Corp, they have not produced any of those records to enable those figures to be tested and verified. The compensation amount is a significant amount of money and the Tribunal is not prepared to find that those expenditures have been incurred just on the say so of the Lovedays. When counsel for Arise Joondalup pointed out during the final hearing that Loveday Corp had not filed any documentation to prove the expenditures, the Lovedays responded by saying that they could do so if they were given the opportunity to do that. The Tribunal decided that Loveday Corp had been given ample opportunity prior to the final hearing to file such documentation and the Tribunal therefore decided not to allow any further opportunity to Loveday Corp to do so.
51 Secondly, even if Loveday Corp had been able to prove the expenditures included in the compensation amount, it has not proved that such losses were suffered as a result of the disclosure statement not being provided.
52 The Tribunal does not accept Loveday Corp's argument that, if a disclosure statement had been given by Arise Joondalup then a delay in the opening of the centre and the Bunnings store would have been disclosed in parts 7, 9 and 11 of the disclosure statement, for the following reasons.
53 Part 7 of the prescribed form of a disclosure statement provides for details of planned alteration works to existing buildings and orders by statutory authorities to be disclosed. That part has no application to a situation such as this where a new centre is being constructed.
54 Loveday Corp contends that in item 24 in part 9 of the prescribed form of disclosure statement, Arise Joondalup would have been required to state that Bunnings was an anchor tenant and that 'it would be more than reasonable to extend this to estimated opening dates'. There are two problems with that contention. Firstly, item 24 only requires the names of anchor tenants to be listed and when their leases expire, not when they will open. Secondly, the Bunnings store was not part of the centre. It is located on a separate parcel of land and therefore Bunnings is not a tenant of the centre.
55 Loveday Corp contends that in part 11 of the prescribed form of a disclosure statement Arise Joondalup should have disclosed that the centre would not have been announced as open until 22 March 2014. None of the items in part 11 require any such disclosure.
56 Therefore the Tribunal has decided to dismiss the disclosure statement claim.
The contentions regarding the misleading or deceptive conduct claim
57 Loveday Corp contends that Arise Joondalup engaged in the following misleading or deceptive conduct in connection with the lease:
1) It 'coerced' Loveday Corp into accepting handover of the premises five and a half months earlier than when the centre was open for trade (allegation 1). 2) It gave verbal guarantees that the centre in its entirety would be complete and ready to trade by the time Loveday Corp's fit-out was completed (allegation 2).
3) It continued to give assurances on a weekly basis from 7 October 2013 through to 7 March 2014 that the 'anchor tenant' (Bunnings) would be open in a few weeks (allegation 3).
4) It said that the construction works at the centre were complete at the time of the handover (allegation 4).
5) It claimed that at October 2013 the signage was never intended to be part of the building, yet plans and documents prove that the signage was intended from at least May 2012 (allegation 5).
58 Loveday Corp says that it would not have accepted handover of the premises when it did but for the assurances provided by Arise Joondalup and it would have waited until the centre was complete. 59 Loveday Corp says that it suffered pecuniary loss because of the misleading or deceptive conduct in the following ways:
• It fitted out the premises, employed staff and opened its store prior to the 'grand opening' of the centre on 22 March 2014. • It invested all of its cash flow into its retail outlet at the premises until late February 2014 at the expense of its other four retail outlets.
• It lost its good credit rating, resulting in a negative impact on its capacity to trade profitably.
• It lost the $5,000 deposit it had paid to Arise Joondalup under the lease when it 'exited' the lease.
• It incurred a cost of $8,800 for a 'signage licence', which it would otherwise have negotiated to be included in the lease 'free of charge'.
• It paid $22,922.90 for signage at the premises that was destroyed as the lease had to be 'exited'.
• It incurred a 'restocking' fee of $11,718 when it had to return stock which it had put into the premises when the lease was 'exited'.
• It incurred the cost of $3,826 for telephone and EFTPOS contracts which had to be cancelled due to its 'forced exit' from the premises.
60 Arise Joondalup contends that, subject to certain conditions precedent being satisfied, having entered into the agreement for lease, Loveday Corp was obliged to enter into the lease on the terms contained in it, and the terms of the lease did not tie the handover of the premises or the commencement of the lease to the opening of the Bunnings store. Arise Joondalup says that if Loveday Corp wanted the timing of the handover of the premises to be linked to the opening of the Bunnings store it was open to it to insist on that being inserted as a term in the agreement for lease, which it did not do. 61 Arise Joondalup denies that it engaged in any misleading or deceptive conduct in relation to the agreement for lease, but says that even if that was the case, that conduct would have occurred prior to 6 September 2012 when the agreement for lease was made and s 16C and s 16D of the CTRSA Act do not apply to conduct that occurred before 1 January 2013.
62 Arise Joondalup says that on 7 October 2013 the preconditions for handover of the premises had been met and Loveday Corp was required to enter into the lease and accept handover of the premises, and the contention of Loveday Corp that it was coerced into handover should be rejected.
63 Arise Joondalup says that the sums comprised in the compensation amount are unverified and that even if that expenditure did occur it cannot be said that it would reflect Loveday Corp's loss for the purposes of s 16D of the CTRSA Act.
Decision regarding the misleading or deceptive conduct claim
64 Having considered the provisions of the agreement for lease, the Tribunal accepts the contentions of Arise Joondalup set out above.
65 Clause 2.1 of the agreement for lease provides that subject to the satisfaction of the 'conditions precedent' and completion of the 'landlord's works', Arise Joondalup will grant and Loveday Corp will take a lease of the premises (which are described as Unit 4, rather than Unit 5, for some reason which has not been explained) on the terms and conditions set out in the agreement for lease and in the draft lease document attached to it.
66 The 'conditions precedent' are set out in clause 3.1 of the agreement for lease. They provide that Arise Joondalup must become the registered proprietor of the land on which the centre was to be constructed, obtain any approval required from the Western Australian Planning Commission, obtain development approval and a building licence for the building to be constructed, and obtain finance approval for that. They also provide that Loveday Corp must obtain approvals for signage, the tenant's works and the specified usage of the premises.
67 The 'landlord's works' are set out in schedule 2 of the agreement for lease. They deal with the completion of the premises and the provision of various services within it.
68 The agreement for lease provides that the anticipated handover date was 1 September 2013 and the commencement date of the lease was estimated to be 1 October 2013. It further provides that Arise Joondalup was to carry out the landlord's works with reasonable speed and give notice to Loveday Corp when the expected date of practical completion of those works was known. It provides that the lease was then to be signed before Loveday Corp took possession and it authorised Arise Joondalup's lawyers to insert the commencement date in the lease, which was to be four weeks after handover.
69 The land on which the premises were to be constructed is described in the agreement for lease as either being Lot 807 on deposited plan 71347 if Arise Joondalup became the registered proprietor of all of that land as tenant in common with Bunnings, or 'Lot 2' if Arise Joondalup became the sole registered proprietor of that particular piece of land. In the lease the land is described as Lot 811 on deposited plan 74906 and the plan attached to the lease shows both Lot 811 and also Lot 810, which is the area where the Bunnings store was constructed. It seems that the agreement for lease contemplated that the centre was going to be either inclusive of the Bunnings store or separate from it, and it turned out to be the latter.
70 In any event, the handover of the premises to Loveday Corp and the commencement of the lease was dependent on all necessary approvals being obtained and the premises being completed, not the completion of any other premises or the Bunnings store. The Tribunal therefore accepts the contention of Arise Joondalup that Loveday Corp was required by the provisions of the agreement for lease to accept handover of the premises and enter into the lease when it did, because the handover date and the commencement date of the lease were determined in accordance with the provisions of the agreement for lease.
71 Therefore Loveday Corp cannot succeed in its contentions that it was 'coerced', misled or deceived into that by any conduct by Arise Joondalup, and allegations 1, 2, 3 and 4 must fail.
72 With regard to allegation 5, Loveday Corp would not have been able to negotiate the signage licence as part of the lease in October 2013 because that provision would have had to be in the agreement for lease, which set out what the terms and conditions of the lease were to be. Therefore, allegation 5 must fail.
73 Finally, to the extent that Loveday Corp alleges that it was misled or deceived regarding any of the matters referred to in allegations 1, 2, 3, 4 and 5 prior to entering into the agreement for lease on 6 September 2012, that cannot be dealt with by the Tribunal because s 16C and s 16D of the CTRSA Act do not apply to conduct prior to 1 January 2013 by virtue of s 16B(3) of the CTRSA Act.
74 The Tribunal has therefore decided to dismiss the misleading and deceptive conduct claim.
Summary of the decision regarding the Loveday claims
75 In summary, the decision regarding the Loveday claims is as follows:
• Although Arise Joondalup did not give a disclosure statement to Loveday Corp in accordance with s 6 of the CTRSA Act, Loveday Corp did not terminate the lease in accordance with s 6(1)(a) of the CTRSA Act and Loveday Corp has not proved its claim for compensation under s 6(1)(b) of the CTRSA Act. Therefore the disclosure statement claim fails and is to be dismissed. • Arise Joondalup did not engage in conduct that was misleading or deceptive in connection with the lease in breach of s 16C of the CTRSA Act and therefore the misleading and deceptive conduct claim fails and is to be dismissed.