Perfection Fresh Australia Pty Ltd v Melbourne Market Authority
[2013] VSCA 254
•19 September 2013
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2013 0101
| PERFECTION FRESH AUSTRALIA PTY LTD AND OTHERS | Appellants |
| V | |
| MELBOURNE MARKET AUTHORITY | Respondent |
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| JUDGES | HANSEN, TATE JJA and HARGRAVE AJA |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 30 July 2013 |
DATE OF JUDGMENT: | 19 September 2013 |
MEDIUM NEUTRAL CITATION | [2013] VSCA 254 |
JUDGMENT APPEALED FROM | Perfection Fresh Australia v Melbourne Market Authority (No2) [2013] VSC 342 (Elliott J, 2 July 2013) |
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Injunction – Interlocutory – Appeal from refusal – Store holders at Melbourne market, relocation to new market site – Whether serious question to be tried as to claim of right to an allocated space, and unconscionable conduct under s 22 of the Australian Consumer Law – Prejudice – Balance of convenience – Lesser risk of injustice – Injunction granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellants | Mr N Lucarelli QC | Wilmoth Field Warne |
| For the Respondent | Mr J H Karkar QC | Herbert Smith Freehills |
HANSEN JA:
This is an appeal from the refusal by a judge in the Trial Division to grant an interlocutory injunction in a case concerned with the process whereby the State Government is seeking to relocate the wholesale fruit, vegetable and flower market presently conducted at 542 Footscray Road, West Melbourne (the West Melbourne market), to a site at Cooper Street, Epping (the Epping market).[1] Since the appeal was heard, the trial of the proceeding has been fixed for 28 October 2013.
[1]Perfection Fresh Australia Pty Ltd & Ors v Melbourne Market Authority (No2) [2013] VSC 342 (‘Reasons’).
The appellants are store holders at the West Melbourne market and a company which represents their interests and those of others who conduct businesses at the West Melbourne market.
The West Melbourne market is, and the Epping market will be, owned and managed by the Melbourne Market Authority (MMA or the Authority, depending on the context), a body corporate established by s 4 of the Melbourne Market Authority Act 1977 (Vic) (the Act). Sections 5, 6 and 7 of the Act respectively provide for the objects, functions and powers of the MMA.
The objects of the MMA are –
(a)to provide a commercially viable wholesale facility for the efficient distribution of fresh produce; and
(b)to optimise returns on land and assets controlled and managed by the Authority; and
(c)to ensure a fair and competitive environment for the wholesale trading of produce.
The functions of the Authority include ‘to control, maintain and manage the Melbourne wholesale fruit and vegetable market and the market land’.
Section 7(1) provides, subject to the Act, that the MMA has power to do all things necessary or convenient to be done for or in connection with the performance of its functions. More particularly, sub-s (2) provides that the Authority may, subject to the Act, ‘grant leases, tenancies, permits and licences of land forming part of, or of buildings or chattels on, the market land or other land purchased or acquired by the Authority subject to any terms and conditions and the payment of any fees that the Authority determines’.
Section 8(1) provides that the MMA is subject to the general direction and control of the Minister, and any specific written directions given by the Minister.
The respective market sites are substantial in area, the West Melbourne market comprising 21.37 hectares, while the Epping site is approximately 67 hectares. The market has been conducted at the West Melbourne site since 1969. The West Melbourne market is comprised of a central trading complex made up of 107 stores ranging in size from 28 to 933 square metres; 664 stands of 21 square metres; 38 warehouses ranging in size from approximately 200 to 6000 square metres; other buildings, housing a range of functions; areas for loading and unloading produce; access roads; and provision for parking. Substantial and longstanding businesses are conducted at the market. All the business premises are leased from the MMA.
All current leases expire on or by 31 July 2014, following which, in the third quarter of 2014 or possibly in 2015, the MMA wants the Epping market to open. The MMA has sought to attract the existing store holders to commit to relocate their businesses to the Epping market accordingly. On 6 December 2012, a ballot was held in which the existing store holders desiring to do so, were allocated space at the Epping market.
Following the allocation process, the MMA advised store holders that they were required by 21 February 2013 to register their intention to sign an agreement for lease of the allocated space. On 25 February 2013, the Minister advised store holders that: this date was extended to 28 March 2013; that final lease documentation would be issued to them by 4 March 2013; and if they did not register their leases on or before 29 April 2013 they would forfeit their allocation, and any unallocated stores would then be offered for lease by auction/tender process. Subsequently, the MMA provided store holders with an Intention to Lease form, a Draft Agreement for Lease and a Draft Standard Store Lease.
On 28 March 2013, the appellants’ solicitors forwarded to the MMA an executed Intention to Lease form, for 92 store holders, informed the MMA of their preferred lease terms and advised that their clients had genuine concerns about the terms of their proposed relocation and of the leasing documents – including the proposed rental. On 16 April 2013 the Minister advised a reduction in rental from $478.12 per square metre to $392 per square metre if the Epping market opened on schedule, and if (among other conditions) the lease documentation was signed by 5pm on 31 May 2013. On 19 April the Minister further advised that any store holder who did not return an executed agreement for lease by 31 May 2013 would lose their allocation of stores at the Epping market.
These attempts to have store holders commit to leases were not sufficient to overcome differences and difficulties that store holders had with the terms proposed by the MMA/Minister, either as to rent or a wide range of other matters which affected, so it was said, the viability of conducting business at the Epping market. The store holders adopted the position that they did not wish to commit by executing a lease, at least not until further clarification of matters of difference was achieved.
In those circumstances the proceeding was commenced on 22 May 2013. By a summons filed on the same day, the appellants sought an interlocutory injunction to preserve the status quo pending trial. The application came before Vickery J on 28 May 2013. On 30 May 2013, Vickery J published reasons for judgment[2] and ordered, among other things, that until 5pm on 18 June 2013, or further order, the MMA be restrained from:
[2]Perfection Fresh Australia Pty Ltd & Ors v Melbourne Market Authority [2013] VSC 287.
(a)removing or purporting to remove any store holders’ allocation;
(b)otherwise disentitling a store holder from their allocation;
(c)reallocating any store holders’ allocation to any other person;
(d)informing or stating to any store holder that if they do not comply with a request then the Authority will remove their allocation;
(e)informing or stating to any store holder that if they do not comply with a request then the Authority will otherwise disentitle them from their allocation –
of a store at the Epping Market.[3]
[3]Ibid [154].
Elliott J heard the application for an interlocutory injunction on 17 and 18 June. On 27 June 2013 he discharged the interim injunction and dismissed the application for an interlocutory injunction. His Honour published his reasons on 2 July 2013.
The appellants instituted an appeal seeking the re-imposition of the interim injunction. On 18 July 2013, the Court (Hansen JA and Robson AJA) reimposed the interim restraint ordered by Vickery J until the hearing and determination of the appeal or further order, and ordered that the appeal be expedited.
The proceeding is brought as a group proceeding pursuant to Part 4A of the Supreme Court Act 1986 (Vic). There are nine named plaintiffs, the first eight of whom conduct a wholesale business by use of a store – and in four cases also by use of a warehouse – leased from the MMA. Each is also a member of the ninth plaintiff, Fresh State Limited (FSL). The members of FSL are those persons whose place of business is the West Melbourne market and who engage in buying or selling produce or services at the market. In paragraph 349 of the Further Amended Statement of Claim (statement of claim) it is stated that the group members are the 108 (approximately) store holders at the West Melbourne market, who are comprised of the 93 store holders which includes each of the plaintiffs, and a small number of other store holders who will suffer loss and damage as a result of the conduct of the MMA set out in the statement of claim. The 93 store holders have retained the appellants’ solicitors to act.
Statement of Claim
The initial statement of claim has been amended twice already, perhaps not surprisingly in view of the haste which may have accompanied its preparation. Nevertheless, and making all due allowances, something should be said about it. To start with, it runs to 195 pages. It need not, and should not, have done so. The reason lies in the inclusion of matters of evidence as distinct from and in addition to the material facts on which the appellants rely to establish the causes of action;[4] and, in relation to the claim of unconscionability, separating out and pleading separately each head of alleged unconscionability with consequent repetitiveness and prolixity which is carried into the prayer for relief which itself runs over 17 pages. Of course it could not be intended, but there is a suspicion of the in terrorem about it. Doubtless it can be coped with, as the respondents and their Honours have. But that is not the test of whether a pleading is in proper form. It ought not be forgotten that a judge may, of his or her own motion, order a pleading be struck out. This present pleading is of a model that ought not be tolerated and which could properly have led to the exercise of that discretion.
[4]Supreme Court (General Civil Procedure) Rules 2005, r 13.02(a).
Turning then to the statement of claim, the appellants put their case on three bases, contract, estoppel and conduct of the MMA that was unconscionable under ss 21 and 22 of The Australian Consumer Law (ACL).[5] The claims are pleaded as follows, in summary.
[5]The Australian Consumer Law is contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth) and was adopted in Victoria by the Australian Consumer Law and Fair Trading Act 2012 (Vic) which came into operation on 1 December 2012.
Contract
Following chronological reference to the statements of the MMA and the Minister, and the attitude and positions of store holders, paragraph 93A alleged an agreement made between the store holders and the MMA, viz:
93A.On or about 6 December 2012, the store holders entered into an agreement with the MMA (i.e. the 6Dec12 agreement) that in consideration of the store holders participating in a ballot for the allocation of specific stores at the Epping Market to be conducted on 6 December 2012 and accepting that allocation, the MMA would offer to each store holder a lease for the store(s) at the Epping Market allocated to the store holder in the ballot.
The agreement was particularised as being partly in writing and partly implied. The written part was constituted by certain documents from the Minister or the MMA prior to the ballot. The implication was based upon a raft of matters.
It was alleged, in paragraph 93F, that the 6 December 2012 agreement had terms that:
(a)the lease to be offered to the store holders by the MMA would be on the following basis:
(i)the lease would be for the store(s) allocated to the store holders in the ballot;
(ii)the lease would be for a term of five years;
(iii)the initial rent would be fair and reasonable;
(iv)the rent would be increased annually by an amount equivalent to the CPI;
(v)upon the expiry of the lease term the rent would be reviewed to market; and
(vi)otherwise upon the terms and conditions mutatis mutandis of the previous leases entered into between the MMA and the store holders;
(b)in the alternative to paragraph (a) above:
(i)the terms of the lease to be offered to store holders would be in all respects fair and reasonable; and
(ii)the MMA would act in good faith and fairly in setting the terms of the lease to be offered to store holders;
(c)the store holders could sell or assign their right to be offered a lease of the store(s) referred to in paragraph (a) above provided the MMA was notified of the sale or assignment; and
(d)the stores at the Epping Market, to be leased to the store holders, would at the MMA’s expense be suitable to conduct the store holder’s wholesale business. (Particulars omitted.)
It was then alleged, in paragraphs 93G, 93H and 93I respectively, that the MMA failed to perform, and was in breach of the terms alleged in paragraph 93F(a), (b) and (d).
Estoppel
This was pleaded, in paragraph 93B, in the alternative to the plea of the 6 December 2012 agreement, viz,
93B.In the alternative to paragraph 93A above, prior to the ballot being conducted on 6 December 2012, the MMA represented to store holders that upon the store holders participating in the ballot and accepting the stores(s) allocated to them, the MMA would offer to each store holder a lease for the store(s) allocated to the store holder in the ballot. (Particulars omitted.)
Then, in paragraphs 93C and 93D it was alleged that in participating in the ballot, accepting their allocation of stores, and then in refraining from seeking to obtain the lease of a store at the Epping market, the store holders acted in reliance upon the representation alleged in paragraph 93B; in the pleading this is called ‘the estoppel agreement’. By reason of these matters the MMA was estopped from denying that it agreed to offer each store holder a lease for their allocated store at the Epping market (paragraph 93E).
It is then alleged that the estoppel agreement contained the same terms as those alleged in relation to the 6 December 2012 agreement in paragraph 93G. That is followed by an allegation of breach as to which, again, the allegations in relation to the 6 December 2012 agreement are relied on (paragraph 93I).
Unconscionable Conduct
This section commenced with the following umbrella plea, viz:
94.The conduct of the MMA (referred to in paragraphs 95 to 364 below as to the proposed relocation of the store holders (including the class A store holders)[6] from the West Melbourne market to the Epping market in all the circumstances (including those in paragraph 96 below)) constitutes the MMA engaging in conduct in trade or commerce in connection:
(a)with the supply or possible supply of services to a person; or
(b)the acquisition or the possible acquisition of services from a person –
which is unconscionable within the meaning of s 21 of the ACL.
[6]Class A store holders are defined as store holders at the West Melbourne market that lease stores and warehouse premises from the MMA which they use to conduct their wholesale business.
It is convenient to note that the MMA did not dispute that it was relevantly engaged in trade and commerce, and hence that the ACL applied. It should also be noted that the reference to paragraph 364 is incorrect; the actual number should be 347, a reduction so small as to little reduce the sense of foreboding of the elaboration to come.
Then followed:
95.At all relevant times, the relocation of the store holders (including the class A store holders) from the West Melbourne market to the Epping market has been and remains a compulsory relocation in the circumstances referred to in paragraph 96 below.
96. The circumstances are as follows, namely:
(a)the MMA has stated that it will close the West Melbourne market by 31 July 2014;
(b)the MMA has insisted that all of the current leases for stores at the West Melbourne market expire on or before 31 July 2014 as those leases so provide;
(c)the store holders were opposed to the relocation and did not seek to enter into leases that expired on 31 July 2014 but agreed to do so;
(d)the MMA has proposed that the Epping market commence operation from 31 July 2014 and thereafter operate as the only wholesale fruit and vegetable market in Melbourne;
(e)if the store holders (and the class A store holders) do not meet the various deadlines and requirements imposed by the MMA as to the relocation they will lose the wholesale businesses they are conducting from their stores at the West Melbourne market as there is no other location where they could continue to conduct those businesses;
(f)the MMA is required to:
(i)provide a commercially viable wholesale facility for the efficient distribution of fresh produce; and
(ii)ensure a fair and competitive environment for the wholesale trading of produce; (Particulars omitted)
(g)the MMA has threatened that if store holders do not execute each of:
(i)the 6May13 dsafl;[7] and
[7]Draft standard agreement for lease.
(ii)the 6May13 dssl[8] –
[8]Draft standard store lease.
by 31 May 2013, then the stores allocated to them at the Epping market:
(aa) will no longer be allocated to them; and
(bb)will be reallocated to another person by national tender; and
(h)the 93 store holders have been told by the MMA that they must immediately provide an alternative initial term for their lease of the stores at the Epping market, different from that which they nominated with their Intention to Lease forms registered with the MMA on 28 March 2013, and if they do not then:
(i)the 6May13 dssl in relation to them will not be provided to them; and
(ii)the 6May13 dssl will not be executed by the 31 May 2013 and they will lose their allocation at the Epping Market. (Particulars omitted)
Then followed, in sequential order, each separately pleaded, a raft of matters as to each of which it was alleged that the conduct of the MMA was, in all the circumstances, unconscionable. They were or concerned:
§the amount to be charged for rent at the Epping market and the basis of rent review;
§the lettable area of the stores: some store dimensions were less than stated, inadequate provision for placing required steel beams, and location of drainage outlets;
§length of the initial lease term;
§effects of using ethylene glycol in the central cooling system, and store holders consequent inability to obtain insurance;
§the requirement for rental security bonds;
§the non-identification and non-quantification of rates, taxes, charges, fees and other expenses for the stores;
§fees for using the central cooling and heating system;
§warehousing issues;
§compensation for significant sums spent on stores at the West Melbourne market;
§business disruption and risks caused by the relocation;
§compensation for direct costs of relocating;
§failure to provide information as to ‘landlord’s works’;
§issues as to the landlord’s fit-out works at the Epping market;
§failure of the MMA to offer to amortise the cost of tenants’ fit-out works;
§complaints about the proposed operating rules at the Epping market.
It is not necessary to elaborate on these matters. In essence, they concern rent and financial matters including assistance, in the context of the pressure created by the State’s requirement that leases be signed by 31 May 2013.
Reasons for Judgment
His Honour delivered extensive reasons for judgment. In essence, on the three bases of claim he concluded as follows:
Contract
His Honour commenced his consideration by noting that none of the documents particularised as constituting the written part of the 6 December 2012 agreement contained an offer to the effect of the alleged agreement. He observed that the documents were put forward as being cumulative in their effect, culminating in a state of affairs immediately before the ballot on 6 December 2012. The store holders’ submission was that the cumulative effect of the various representations, considered in the circumstances, comprised an offer capable of acceptance by the store holders to create legal relations, and in consideration of which they had a right to new leases at the Epping market.
His Honour thus considered each document relied on as constituting the written part of the agreement. Having done so, he said that it was apparent that what the MMA proffered included the following:
(1)An entitlement to an offer of space, subject to the allocation rules and conditions imposed.
(2)The government’s approach towards rent would be fair and reasonable.
(3)As part of setting the level of rent, the government would seek to recover a maximum of $120 million of the relocation costs incurred by the government.
(4)Rent would be increased at 4% or CPI.
(5)The Ballot would be conducted on 6 December 2012 to determine the order in which stores were to be allotted in accordance with the proposed allocations.
(6)Formal offers would be contained in leasing documentation after the trading period and the position would only become binding once a lease had been signed.
(7)A failure to participate in the Ballot or the selection process would result in the proposed allocated space being forfeited.
(8)Any forfeited space would become the subject of an open/public competitive tender.[9]
[9]Reasons [92] (citations omitted).
It was apparent that there was a material difference between these matters and the terms pleaded in paragraph 93F. Accordingly, his Honour said, the pleaded terms must necessarily rely upon the further documents and facts particularised in paragraph 3 of the particulars as giving a basis for those terms to be implied.[10] However, and for reasons his Honour proceeded to develop, these further documents, collectively or individually, and when read objectively to ascertain the intention of the parties, could not give rise to the pleaded terms. Indeed, they were consistent with the earlier documents alleged to constitute the written part of the agreement.[11]
[10]Reasons [93].
[11]Reasons [95].
One of the particularised matters was particular 3(k) of the particulars as to implication in paragraph 93A; this stated that at all relevant times after 26 November 2010 the MMA required that store holders inform it of any sale or assignment of rights to the allocation of store space at the Epping market. This referred to the fact that allocated spaces were permitted to be transferred. The store holders submitted that they had a ‘right’ to the allocated space. His Honour rejected this submission, saying:
… In my view, the fact that the Market Authority contemplated that there could be a transfer of any rights to the allocation of store space at the Epping Site does not create or elevate what rights otherwise existed. Obviously, a person cannot transfer any right beyond the rights it has. The ability to transfer the allocation rights for consideration does not, of itself, mean that what was the subject of transfer was some form of proprietary right or other right which was capable of enforcement against the Market Authority. One needs to look to the source of the subject matter the subject of the transfer, rather than the existence of any transfer, or the existence of the right to transfer.[12]
[12]Reasons [110].
His Honour then noted that the store holders emphasised three matters as giving the foundation for the alleged implied terms. They were:
(1) The terms of the existing leases at the West Melbourne market.
(2)The fact that it had been represented that the government’s approach towards rent would be fair and reasonable.
(3)The position of the Market Authority required it to act in good faith.[13]
[13]Reasons [115].
His Honour considered and rejected each, and concluded:
It follows from what I have set out above, that the Ballot is likely to be characterised at trial as simply a step, albeit a very important step, in each of the West Melbourne Lessees procuring an offer from the Market Authority subsequent to the Ballot. In my view, the case contended for by the Storeholders to the effect that the participation in the Ballot on the terms and conditions imposed of itself gave rise to a legally binding contract entitling all such West Melbourne Lessees to a lease fixed for 5 years with very specific limitations on key matters including rent is a weak case and not a case that is likely to be made out at trial.[14]
[14]Reasons [121].
Finally, and for completeness, his Honour referred to two cases the store holders relied on, Manchester Ship Canal Company v Manchester Racecourse Company[15] and Croudace v Zobel.[16] The Manchester case was relied on in support of the pleading in paragraph 93F(b)(i) that ‘the terms of the lease to be offered would be in all respects fair and reasonable’. But the case was distinguishable, for there the Court was considering a contractual right of first refusal. Here, on the other hand, the store holders did not have a contractual right to be offered an allocation and a lease on the pleaded terms. His Honour said:
… In short, whatever “rights” the Storeholders had, they cannot properly be characterised as being akin to an option to enter into a new lease, or a right to insist upon an offer, upon particular terms.[17]
[15][1901] 2 Ch 37.
[16][1899] AC 258.
[17]Reasons [122].
Croudace was also distinguishable, for there the plaintiff had ‘a definite statutory right to apply for a lease’.[18]
[18]Croudace v Zobel [1899] AC 258, 261.
Estoppel
His Honour considered that the case of estoppel based on the representation alleged in paragraph 93B was ‘very weak’.[19] That case was, among other things, for a lease for a term of five years. His Honour considered the relief to be disproportionate to the minimum equity required to meet the estoppel, assuming it to be made out.
[19]Reasons [86].
Further, in pleading that the terms of the alleged estoppel agreement were the same terms as those of the 6 December 2012 agreement, the appellants had impermissibly conflated the claims in contract and equitable estoppel.
Unconscionable conduct
His Honour commenced consideration of this aspect by referring to ss 21 and 22 of the ACL and then noting the difficulty, ‘[i]n a case involving complex and drawn out negotiations and circumstances, involving a multitude of issues [in forming] a view with any certainty in relation to whether or not a plaintiff is ultimately likely to be successful in establishing unconscionable conduct at trial’.[20] He nevertheless concluded:
Without making specific findings in relation to each circumstance or course of conduct pleaded, I find that there is a serious question to be tried as to whether or not the Market Authority has acted unconscionably in the manner in which it has conducted its negotiations with the Storeholders, including the terms it has sought to impose in the proposed leases. On the evidence so far before the court, it is at least arguable that negotiations could have enlivened some of the matters provided in s 22(1) of the ACL, which in turn could give rise to a serious question of whether the Market Authority engaged in unconscionable conduct in contravention of s 21(1) of the ACL.[21]
[20]Reasons [151].
[21]Reasons [153].
His Honour then, without being exhaustive, referred to matters which suggested there was a serious question to be tried: these indicated that s 22(1)(a), (c), (e) and (i) of the ACL would be areas for consideration at trial. In particular, in relation to s 22(1)(a), prima facie there was a strong case that the MMA was in a strong bargaining position. This was seen in its extensive powers and resources, that there was no other market and that it was not limiting rent to a market rent. The relative strengths of the bargaining positions was a matter for trial. Also, in relation to s 22(1)(c), the absence of information on a substantial number of matters made it arguable that the documents supplied could not be properly understood. As to s 22(1)(l), however, his Honour was of the view that, on the evidence, the MMA had acted in good faith. It is not necessary to refer to his Honour’s observations in relation to other parts of s 22(1).
As against these matters, there were factors which suggested that the MMA had not engaged in unconscionable conduct. In summary, the present situation had arisen out of the circumstance that the MMA had given the Melbourne market lessees preferential rights to stores at the Epping market, rather than throw the allocation open to all comers. The Melbourne market lessees had been treated in an open and equal way, and it was their decision whether to accept a lease in the Epping market. Nevertheless, his Honour concluded that there was a serious question to be tried stating that:
In summary on this issue, I am persuaded by the evidence as it presently stands that there is a serious question to be tried about whether or not the conduct of the Market Authority was, in all the circumstances, unconscionable. However, as is apparent from the matters I have set out in the preceding paragraph, it is also likely that there are strong arguments to suggest that, in all the circumstances, the conduct of the Market Authority could not be properly characterised as unconscionable for the purposes of s 21(1) of the ACL. My view on the evidence available is that the likelihood of success at trial is uncertain. In short, the question is fairly evenly balanced, and in the circumstances the question of the balance of convenience ought to weigh heavily in determining the outcome of this application.[22]
[22]Reasons [168].
His Honour then turned to consider the ‘harm which might be suffered and the balance of convenience’. He immediately stated that while there was a serious question to be tried in relation to some of the claims, the prospects of success were not particularly strong. In those circumstances the weight to be given to the balance of convenience increased commensurately.[23] He concluded that the balance of convenience ‘overwhelmingly favours the MMA’ and the interim injunction being vacated.[24]
[23]Reasons [169].
[24]Reasons [170].
His Honour then dealt in turn with what he identified as the factors relied upon by the store holders as relevant to the alleged harm likely to be suffered and the balance of convenience. They were:
(1)The rent of $478 per square metre per annum may result in the Storeholders going out of business.
(2)The Storeholders will lose the right to a store at Epping.
(3)Damages are not an adequate remedy.
(4)The Storeholders have inadequate information upon which to properly consider the proposed leases.[25]
[25]Reasons [171].
His Honour dealt with each of these matters as follows:
172First, the evidence before the court does not establish that any of the Storeholders will go out of business if the new leases are signed. The submission is no higher than they may go out of business. The individual financial position of each of the Storeholders has not been provided to the court. In the circumstances, I cannot form any concluded view on this point. Although it is axiomatic that a rent increase will increase the operating expenses of a business, it does not necessarily follow that such an increase will necessarily make a business unprofitable. Further, the threatened conduct does not threaten the existing businesses of the Storeholders at any time up until the expiry of their existing leases. For the reasons set out above, there is serious doubt about whether the Storeholders have a right to maintain their businesses beyond the term of their exiting [sic] leases.
173Secondly, whether or not a Storeholder loses its store(s) is within each Storeholder’s own control. Each Storeholder is faced with the decision about whether they wish to have the certainty of maintaining the store(s) allocated to it by signing the relevant agreement(s) for lease and the lease(s). Adopting such a course would not preclude any Storeholder from maintaining a claim that the Market Authority has acted unconscionably. In addition to damages, there are many forms of relief that might be able to be obtained. The Market Authority has accepted that a claim for damages could be pursued by the Storeholders in the event that the leases are signed. Also, the prayer for relief may be amended to propose what changes would be required to the new leases (or any other relevant transactional documents) to give the Storeholders appropriate relief in the event they are successful at trial.
174In short, if the Storeholders have a good case, the court is perfectly able to protect them pursuant to the provisions of the ACL. Obviously, there is a risk involved, namely that the Storeholders will not succeed at trial, but that is a matter for them to assess.
175The above observations are particularly acute in circumstances where the Storeholders are not required to commence paying rent immediately. In other words, there will be no requirement to pay “double rent” by reason of the execution of the further leases. The course to be adopted will mean that the West Melbourne Lessees’ obligations under existing leases will cease at the time any of them become lessees at the Epping Site. Although there will be some costs involved in relation to fitout and the like, there is no suggestion that those costs would cause any of the Storeholders irreparable harm.
176Thirdly, in my view damages would be an adequate remedy in this case. The parties have agreed to have the trial of this matter heard this year. Through proper case management, the court may ensure that this occurs. The Epping Site is not due to open until August 2014, at the earliest. In those circumstances, it is likely that the trial can be heard and determined well before any substantial losses are suffered.
177Fourthly, in my view the provision of information, or lack thereof, does not materially alter the position. As noted above, a considerable amount of information has been provided by the Market Authority in more recent times. On the information that is available, each Storeholder may decide to proceed with the lease or not. If some Storeholders have the desire to have more concrete information on certain matters, then they can await the public tender process, but of course will lose their right to be allocated a store by so doing. Again, in my view, this is a matter for each Storeholder to decide.
178In summary, I can see little real prejudice or harm to the Storeholders if the injunction were discharged (as it now has been). I understand a difficult decision will need to be made by each Storeholder in the short-term as to whether or not to sign the new lease(s). However, if that course is adopted by the Storeholders, there could be no suggestion that the Market Authority would not be able to meet any other award of damages, or comply with any order of the court, if it is ultimately found that one or more of the claims of the Storeholders is made out.[26]
[26]Reasons [172]-[178] (citations omitted).
His Honour then referred to evidence of prejudice to the MMA if the injunction were to remain on foot.[27] In essence, the problem was that for the Epping market to open by August 2014, a lot of planning and development work was required, a deal of this turning on the requirements of the lessees. Hence, the MMA needed to know who had committed to a lease (and with what requirements), and the space, if any, untaken which could be offered to others. Further, the State had committed very substantial sums to the project, and a substantial delay in realising the benefit from such expenditures would be contrary to the public interest.
[27]Reasons [179].
Regarding these matters collectively, substantial prejudice would be suffered if the injunction were maintained pending trial. To counter this, the store holders would have needed to establish ‘a strong prima facie case or a strong case on issues relating to the balance of probabilities’; they failed to do so.[28]
[28]Reasons [180].
Discussion
The appellants submitted, in summary, as follows:
(1)On the contract case, that his Honour misapprehended the case and should have found that a serious question for trial arose (Grounds 5, 7 and 8 in the Notice of Appeal).
(2)No submission was addressed on the estoppel case. Counsel said that for the purpose of a serious question to be tried, there was sufficient on the alleged agreement.
(3)On the unconscionable conduct claim, and in accordance with Ground 9, that his Honour fell into error in not considering each cause of action and, in relation thereto, the guiding matters in s 22(1) of the ACL, and the uncontroverted expert evidence as to the fair and reasonable market rent at the Epping market.
(4)His Honour erred in his consideration of irreparable harm and the balance of convenience (Grounds 1-6 and 10).
Each counsel devoted a deal of their submissions to the contract question. Counsel for the appellants submitted that the 6 December 2012 agreement conferred on the store holders a right to be offered a lease for their allocated space on the terms alleged. The right crystallised in the space on allocation in the ballot. The right was, or was akin to, an option to purchase, which, being a proprietary interest, was properly to be protected by an interlocutory injunction. That had been submitted to his Honour, but it was contended he erroneously characterised the option as arising out of the existing West Melbourne market lease, rather than the pleaded allocation agreement. A feature of the right was that it was assignable. Another feature was the right to compensation in the event of a space allocated at the Epping market being less in area than that occupied at the West Melbourne market. It is unnecessary to set out the submission in all its detail which included reference to the many documents particularised in the statement of claim. Nor is it necessary to refer to the detailed response of the MMA, which not merely supported his Honour’s conclusion that the case was weak, but sought to establish that the case lacked all substance; this submission also referred to many of the documents referred to in the statement of claim.
The reason why it is not necessary to deal with the submissions is that the appeal should be allowed via the unconscionable conduct case. That being so, it is preferable that this Court, dealing with the matter on an interlocutory basis, not venture views that on the present state of the evidence might not be helpful, but worse may tend to embarrass the trial judge in his or her consideration of the issues. With respect, enough has been said already.
Turning then to the unconscionable conduct claim, counsel for the MMA submitted that his Honour was ‘overly generous’ in finding that there was a serious question to be tried as to whether it had acted unconscionably in the negotiations and the terms it had sought to impose in the proposed leases. From that generalised submission, counsel turned to the matter of irreparable harm, and then the balance of convenience. Thus, the MMA did not contend that it had not been open to his Honour to find that there was a serious question to be tried. Rather, the finding was characterised as ‘overly generous’. With respect, the finding was open and was properly made on the state of the evidence then available and in an interlocutory context.
On the matter of irreparable harm, counsel for the MMA submitted that there was a lack of evidence to substantiate the claim. The affidavits of Mr Usai and Mr Ponte, each a director of a store holder, and Mr Ponte being a director of the fourth and fifth plaintiffs, did not establish they were likely to suffer loss from moving to the Epping market.
Further, the MMA contends that it was open to store holders to enter into a lease at the Epping market under protest, so as to preserve their rights to claim relief including amendment of the lease, and damages, from the MMA. Further to this, counsel informed the court, on instructions, that in its defence to the statement of claim, the MMA would not contend that the entering into a lease broke the chain of causation.
Then, in relation to a submission of the appellants concerned with the irreparable harm suffered by store holders who would not enter into a lease in its present form, but would have entered into a lease as amended following trial, counsel submitted that that contained a concession that the Court could grant such relief. Hence, such persons could enter into a lease and be saved from irreparable harm by appropriate relief being granted at trial. This meant that damages was an adequate remedy. The shortcoming in this submission is, and which counsel immediately conceded, that it would not avail the person who did not enter into a lease and forfeited the opportunity to do so. In this respect counsel said that there were three classes of persons:
(1) those who enter into a lease: such a lease can be reformed;
(2)those who do not enter into a lease straight away but wait for the tender of an unallocated space, and then enter into a lease: such a lease also could be reformed;
(3)those who do not enter into a lease: if they had a case, they can be awarded damages, but they would not have a lease.
Counsel said, however, that the Court should proceed on the premise that store holders who have participated in the process will enter into the offered lease. On that premise, all the remedies under the ACL will be available. Those remedies are ample to enable a lease to be rendered conscionable. And that, counsel said, is the answer.
In any event, there was no evidence that the third class of person will not enter into the lease. Generally, the evidence is to the effect that all persons wish to enter into a lease.
On the balance of convenience, counsel submitted that his Honour’s reasoning was open and correct in principle, as to which he referred to K-Mart Australia Ltd v Stud Park Investments Pty Ltd.[29]
[29](Unreported, Supreme Court of Victoria Appeal Division, Ormiston, McDonald and Hansen JJ, 14 October 1994) 16-17.
The above has sought to distil the essence of the MMA’s submissions. Regard is also had to the full terms of counsel’s written submission.
A further and final submission of the MMA was made by a Notice of Contention. It was a contention of non-justiciability. The contention is that no cause of action under s 232 of the ACL for breach of s 21 arises against the MMA in respect of policy decisions of the Minister and the State Government in respect of:
… the policy decisions of the Minister and the State government to proceed to establish a new wholesale market at Epping; to set the maximum rent for stores at the Epping market at $478.12 sqm or $390 psm; to require the store holders by no later than 31 May 2013 to enter into the agreements for lease conditionally and leases offered to them in respect of the store or stores which they have chosen at Epping; to not make payment to the store holders for Landlord’s Works, amortisation of fit out, compensation for leaving West Melbourne; and to not proceed with the construction of warehousing at Epping until such time as the store holders have entered into the agreements for lease and leases conditionally offered to them in respect of the store or stores which they have chosen at Epping.
It will be noted that the contention applied only to a claim under the ACL. The reason why it did apply was that the Minister made the key decision setting the rent and imposing the deadline for execution of the lease documentation. That was what the appellant’s complaints came down to. While the MMA would be the landlord, it was the Minister who made the policy decisions for the State which has invested heavily in the project. Such policy decisions are not amenable to review by a court; see Minister for Arts, Heritage and Environment v Peko-Wallsend Ltd[30] and Aye v Minister for Immigration and Citizenship and Others.[31]
[30](1987) 15 FCR 274, 278-9.
[31](2010) 187 FCR 449, [98].
The effect of this was that ‘the financial decisions, the decisions that are policy decisions of government’ were not amenable to relief under the ACL. In this case, in effect, the store holders want the government to set aside more money for their benefit. It was a decision for government as to how public funds were to be allocated.
This ground of non-justiciability was argued before his Honour. He did not deal with it on the basis that it did not arise, having decided to refuse the injunction.
In the application of the principle there is a line between that which is a decision of the Minister on policy and that which is a matter done in the way of ‘operational’ implementation of policy or otherwise an act done by the MMA pursuant to its powers under the Act.[32] As to this, the matter is complicated by the large number of matters of which the appellants complain. The trial will have to deal with them all, sifting and considering them for substance as claims under the ACL. It is possible that none may qualify in that sense, or one or more may, one just does not know. One has to get the ultimate finding and then consider whether how that which is found stands in relation to the principle of non-justiciability. It can be said, as his Honour has, that there is a serious question to be tried, but to go further is to venture into the area of the judgment at trial. It would also involve a degree of speculation. Counsel for the MMA sought to cope with this difficulty by characterising and thereby reducing the various claims to money and the imposition of a deadline. As simple as this may make the issue appear, there is complexity, the issue is important and it is not appropriate to essay a conclusion upon it in an interlocutory decision ahead of the trial and the ascertainment of the relevant facts by the trial judge. Moreover, even having regard to the principle involved, this is an interlocutory situation and the lesser risk of injustice requires the continuance of the present injunction until trial.
[32]See Minister for Immigration, Local Government and Ethnic Affairsv Kurtovic (1990) 92 ALR 93, 116; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540, 557 [14].
That brings the discussion back to the matter of irreparable harm and the balance of convenience.
In his Honour’s consideration of prejudice or harm to the store holders, he seemed to have reasoned that they would or ought enter into the proffered lease.
There was, his Honour said, no evidence that any store holder ‘will’ go out of business, the submission was only that they ‘may’ go out of business. And the individual financial position of each store holder had not been provided; accordingly he could not form a concluded view on the point. As to this, it is to be borne in mind that this is a group proceeding, and that there are multiple plaintiffs as well as a large group. Further, there were complaints about matters other than rent.
The reasoning follows to an assumption that the court ‘is perfectly able to protect’ the store holders if they have a good case. With respect, it is not readily apparent how such a generalised assumption could be made in a group proceeding, a factor to which his Honour did not advert. This comment is also relevant to the assumption that damages would be an adequate remedy.
His Honour did not advert to the three categories of person the MMA’s counsel referred to. By not adverting to them, the above generalised conclusions were not subjected to the refinement that was required. What was the position of the person who, out of concern, did not enter into a lease at all? On his Honour’s analysis it would seem they would be left behind. But why should that category of person have to be placed in that situation rather than be protected until trial when in the light of the court’s judgment they can make an informed decision? Bear in mind that substantial commercial investments (present and future) are involved. Further, the person in the second category may be disadvantaged, having to be content with a possibly less satisfactory allocation through the tender process. On his Honour’s reasoning, all persons should assume the risk, enter the lease and see what they can achieve at trial.
This is in the context that effectively there is only the one market which the government controls, the MMA is in a strong bargaining position, it makes commercial sense for the store holders to be together, and they have been forced to a choice when they have allegedly insufficient information.
An additional relevant consideration is the difficulty of unscrambling situations that have been entered into, and of satisfactorily assessing damages. Further, no store holder could proceed on the assumption that they would receive the relief they considered appropriate, whether by amendment of lease, damages or otherwise. These things are notoriously uncertain and difficult of assessment in advance.
For these reasons and regarding the matter overall, it is seen that his Honour’s conclusion of ‘little real prejudice or harm’ to the store holders was made without reference, or appropriately balanced reference, to relevant matters. In short, the conclusion undervalued the store holders’ position. That was significant in the relative balancing of prejudice.
It follows that in this respect his Honour’s approach was affected by this error. That is, at the point where his Honour described the balance as fairly even with the consequence that the balance of convenience ought to weigh heavily in determining the outcome. In resolving that outcome as he did, his Honour gave disproportionate weight to the convenience of the State, with a consequent disproportionate subsumption of the risk to the appellants.
None of this is to deny the importance of the matters concerning the State and the public interest. All of the considerations mentioned by his Honour, and otherwise identified in the various comprehensive affidavits filed by the MMA are properly raised and significant. The MMA also relied on affidavits filed since the hearing before his Honour; they particularly raise a new ground of prejudice, namely of the ability to use the Melbourne market site in connection with the new East-West road. Again, that is not overlooked, although naturally it is not a matter which was considered by his Honour.
In the circumstances of the case, the question that loomed large was, where did the lesser risk of injustice lie if an injunction were or were not granted?[33] Regarding the matter overall, the answer is that it lay in granting the injunction. The injunction would protect the store holders until judgment at trial, whereas refusal would give rise to the difficulties mentioned above with the risk of irreparable harm to store holders that might not satisfactorily be able to be redressed. For the MMA, the injunction would mean delay, that is true, but it has the benefit of an undertaking, and a more certain situation following an early trial.
[33]K-Mart Australia Ltd v Stud Park Investments Pty Ltd (Unreported, Supreme Court of Victoria Appeal Division, Ormiston, McDonald and Hansen JJ, 14 October 1994) 17-20; Bradto Pty Ltd v Victoria (2006) 15 VR 65, [25]-[35].
For these reasons, the following orders should be made:
(1) The appeal be allowed.
(2)Paragraphs 1 and 2 of the orders made by Elliott J on 27 June 2013 be set aside and in lieu thereof order, upon the plaintiffs giving the usual undertaking as to damages, that, pending the hearing and determination of the proceeding or further order, the defendant be restrained from:
(a)removing or purporting to remove any store holders’ allocation;
(b)otherwise disentitling a store holder from their allocation;
(c)reallocating any store holder’s allocation to any other person;
(d)informing or stating to any store holder that if they do not comply with a request then the Authority will remove their allocation;
(e)informing or stating to any store holder that if they do not comply with a request then the Authority will otherwise disentitle them from their allocation –
of a store at the Epping market.
(3) The respondent pay the appellants’ costs of the appeal.
TATE JA:
For the reasons stated by Hansen JA, I agree that the appeal should be allowed, the orders made by Elliott J on 27 June 2013 be set aside, and in lieu thereof an interlocutory injunction be granted in the terms his Honour has proposed. I also agree that the respondent should pay the appellants’ costs of the appeal.
HARGRAVE AJA:
I also agree. In particular, I endorse the comments made by Hansen JA concerning the form and unreasonable prolixity of the statement of claim, including the prayer for relief. The statement of claim is inconsistent with both the overarching purpose and the overarching obligations under ss 7 and 24 of the Civil Procedure Act 2010 (Vic); and with r 13.02(1)(a) of the Supreme Court (General Civil Procedure) Rules 2005. A pleading in that form can only increase costs and complexity, and lead to an inefficient use of scarce judicial resources. Legal practitioners have a duty to ensure that pleadings are as concise as clarity and the nature of the case permits.
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