Samaha v Corbett Court Pty Ltd

[2006] NSWSC 1441

CITATION:	Samaha & Anor v Corbett Court Pty Limited; Corbett Court Pty Limited v Samaha & Anor [2006] NSWSC 1441
HEARING DATE(S):	7 to 9 and 25 August 2006
JUDGMENT DATE :	22 December 2006
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
DECISION:	Judgment for Lessor on Lessees’ Further Amended Statement of Claim; judgment for Lessor on the Lessor’s Amended Statement of Claim.
CATCHWORDS:	RETAIL LEASE – MISREPRESENTATION – whether the lessor made misleading or deceptive representations to intending lessee is – whether lessee is relied on any misrepresentations – whether failure to state representations in Lessee's Disclosure Statement created an estoppel against lessees.
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW) – s.100(1) Evidence Act 1995 (NSW) – s.60 Retail Leases Act 1994 (NSW) – s.10(1), s.11A, s.62B, s.72AA Trade Practices Act 1974 (Cth) – s.51A, s.52, s.82, s.87
CASES CITED:	Allen v Carbone (1975) 132 CLR 528 Pacific Carriers Ltd v BNP Paribas (2004) 78 ALJR 1045 Smith v Lush (1952) 52 SR(NSW) 207
PARTIES:	Brian Samaha – First Plaintiff (1482/05), First Defendant (1483/05) Pauline Samaha – Second Plaintiff (1482/05), Second Defendant (1483/05) Corbett Court Pty Ltd – Defendant (1482/05), Plaintiff (1483/05)
FILE NUMBER(S):	SC 1482/05; 1483/05
COUNSEL:	A.C. Canceri – Plaintiffs (1482/05), Defendants (1483/05) F.P. Donohoe – Defendant (1482/05), Plaintiff (1483/05)
SOLICITORS:	James Lahood & Associates – Plaintiffs (1482/05), Defendants (1483/05) Caldwell Martin Cox – Defendant (1482/05), Plaintiff (1483/05)

1482/05 Brian Samaha & Anor v Corbett Court Pty Limited
1483/05 Corbett Court Pty Limited v Brian Samaha & Anor

JUDGMENT
22 December, 2006

Introduction

1    Mr and Mrs Samaha entered into a lease with Corbett Court Pty Ltd (“Corbett Court”) in respect of Shops 3 and 4 in the Picton Mall, intending to carry on there the business of a greengrocer and delicatessen. The Picton Mall was newly constructed and when Mr and Mrs Samaha commenced trading in August 2004 it was not fully tenanted. The volume of business in the Mall was much less than Mr and Mrs Samaha had hoped. They could not afford to keep trading and closed the business after only about seven weeks. They have never paid any rent under the lease.

2    Eventually, Corbett Court rescinded the lease, took possession of Shops 3 and 4 and re-let them to another tenant. It then commenced proceedings against Mr and Mrs Samaha, claiming rent and outgoings due but unpaid during the term of the lease and damages.

3 Simultaneously, Mr and Mrs Samaha commenced proceedings against Corbett Court claiming a declaration that the lease is void, an order pursuant to s.72AA of the Retail Leases Act 1994 (NSW) (“RL Act”) or s.87 of the Trade Practices Act 1974 (Cth) (“TPA”) that they are not obliged to pay rent under the lease and damages for representations which, they say, were false or misleading.

4    Both proceedings were heard together, the evidence in one being evidence in the other. At the trial, Mr Canceri of Counsel appeared for Mr and Mrs Samaha and Mr Donohoe of Counsel appeared for Corbett Court. It was agreed that the case brought by Mr and Mrs Samaha would proceed first.

In their Further Amended Statement of Claim in proceedings 1482 of 2005, Mr and Mrs Samaha say that:

– the lease is void for uncertainty in that the commencement date of the term was left blank at the time that the lease was entered into;

– the lease was varied unilaterally by Corbett Court after it had been entered into by the insertion of the commencement date, whereby the lease is avoided;

– they were induced to expend money on fit-out of the premises by representations made by Corbett Court which were false, misleading and made without reasonable basis (“the Representations”) whereby they are entitled to compensation under s.10(1) of the RL Act;

– they were induced to enter into the lease by the Representations whereby:

they are entitled to compensation under s.10(1) of the RL Act;

they are entitled to damages under s.52 and s.82(1) TPA for the cost of fitting out the premises;

they are entitled to an order under s.72AA RL Act or under s.87 TPA that they are not obliged to pay any rent under the lease;

– Corbett Court was guilty of unconscionable conduct in contravention of s.62B RL Act in making certain of the Representations and in exerting undue pressure by representing, prior to execution of the lease, that another person had expressed interest in operating the business of a greengrocer and delicatessen in the Mall, whereby Mr and Mrs Samaha have suffered loss and damage.

5    By its Defence, Corbett Court:

– denies that the lease is void for uncertainty;

– denies that it made the Representations;

– denies that Mr and Mrs Samaha relied on any of the Representations in entering into the lease;

– says that Mr and Mrs Samaha are estopped from asserting that they relied on any of the Representations by reason of a representation which they themselves made to Corbett Court in their lessees’ disclosure statement.

6    By its Statement of Claim in proceedings 1483 of 2005, Corbett Court claims unpaid rent and outgoings during the term of the lease and damages for wrongful repudiation of the lease. In addition, it sues upon an alleged agreement with Mr and Mrs Samaha whereby, it claims, they are obliged to pay half of the cost of constructing additional storage space at the rear of the premises. Corbett Court says that the cost of construction was $39,670.79 so that Mr and Mrs Samaha are obliged to pay $19,835.39.

7    By their Defence, Mr and Mrs Samaha say they are not liable for rent and damages for breach of the lease by reason of the relief to which they are entitled in the proceedings commenced by them. As to the claim for contribution to building costs, they say that they agreed to pay half of a specified cost of construction, namely, $14,500, so that they are liable to pay $7,250.

The issues

8    The issues may be summarised thus:

– did the parties fail to agree on a commencement date for the lease so that it is void for uncertainty;

– is the lease avoided by reason of an unauthorised alteration subsequently made by Corbett Court;

– did Mr Corbett, on behalf of Corbett Court, make the Representations;

– did Mr and Mrs Samaha rely upon any of the Representations;

– are Mr and Mrs Samaha estopped by a representation made in their lessees’ disclosure statement from relying on any of the Representations;

– did Corbett Court exert any undue pressure on Mr and Mrs Samaha;

– what are the terms of the agreement between the parties as to payment of the cost of construction of additional storage space.

Whether lease void for uncertainty

9    On 4 February 2004, Corbett Court’s solicitor, Mr Cox, forwarded to Mr and Mrs Samaha’s solicitor, Ms Hart, a deed of agreement for lease in duplicate, the lease in duplicate, a disclosure statement, and a tax invoice. The deed of agreement for lease and the lease in duplicate had not been executed by Corbett Court and the documents were forwarded “subject to our client’s approval”, with a request that the deeds and the leases be executed and returned with a cheque for Mr Cox’s fees and expenses.

10    On 16 February 2004, Ms Hart forwarded to Mr Cox the lease in duplicate executed by Mr and Mrs Samaha. On 18 February 2004, Mr Cox acknowledged receipt of the executed leases and advised that he would retain the documents pending receipt of Mr and Mrs Samaha’s cheque for his fees and expenses, and said that he would then forward the leases to Corbett Court for execution.

11    On 26 February, Ms Hart forwarded to Mr Cox Mr and Mrs Samaha’s cheque for his costs and disbursements. On 3 March, Mr Cox lodged the lease in duplicate with the Office of State Revenue for stamping. On 8 March, Mr Cox forwarded to Corbett Court the lease and deed of agreement for lease in duplicate for execution by the company under seal.

12    On 16 April, a member of Mr Cox’s staff recorded in a diary note that Mr Corbett refused to execute the lease because he thought that the rent stipulated, namely, $84,000 per annum, was incorrect and that the rent had been agreed at $100,000 per annum.

13    On 6 May, Ms Hart wrote to Mr Cox confirming that there was a dispute as to the agreed rental and requesting clarification of Corbett Court’s position.

14    At some time before 17 May, Mr Corbett had signed the lease and the agreement for lease in duplicate but, in doing so, he had amended the rent appearing in the documents from $84,000 per annum to $100,000 per annum, and he had returned those documents to Mr Cox. However, on 17 May Corbett Court acknowledged that the correct rent was, in fact, $84,000 per annum.

15    Mr Cox then wrote to Ms Hart confirming that the rent was $84,000 per annum and he enclosed with his letter a copy of the front page of the lease for execution by Mr and Mrs Samaha as the page originally signed by them had been altered by Mr Corbett to show the incorrect rent. Mr Cox also enclosed for signature by Mr and Mrs Samaha a new p.7 of the lease, containing minor amendments. He requested that the re-executed pages be returned to him for inclusion in the lease.

16    On 29 June, Ms Hart wrote to Mr Cox enclosing the replacement pages of the lease executed by Mr and Mrs Samaha.

17    Up to that point the lease, in the form which had been executed by both Mr and Mrs Samaha and by Corbett Court, had not contained the date of commencement of the term, the termination date, or the option renewal dates, although the term of the lease was defined. Some time after Mr Cox received from Ms Hart the replacement pages for the lease, he ascertained from Corbett Court the date upon which Mr and Mrs Samaha had actually commenced trading in the premises, namely, 4 August 2004, and he inserted that date as the commencement date in the lease together with the appropriate termination date and the option renewal dates.

18    On 10 August, Mr Cox wrote to Ms Hart enclosing a copy of the executed lease in its final form, i.e. showing the dates inserted by him. On 24 November 2004, Mr Cox wrote to Ms Hart enclosing the original stamped and registered lease.

19    Mr Canceri submitted that the parties evidenced an intention to be bound by the lease at some time prior to 31 May 2004, at which time no commencement date had been agreed so that the lease was void for uncertainty. However, he was unable to state what particular act or communication prior to 13 May evidenced a common intention of the parties to become bound by the lease: Transcript 25.08.06, T3.35 – 5.30.

20    I am unable to accept Mr Canceri’s submission. There is nothing in the evidence to suggest that the parties had a common intention that they would be bound by the lease at any earlier time, or by any other means, than exchange of executed counterparts in identical terms. This is the normal expectation of parties to a transaction involving interests in real property as to how and when the agreement between them is to become binding: see e.g. Smith v Lush (1952) 52 SR(NSW) 207, at 212; Allen v Carbone (1975) 132 CLR 528, at 533; Pacific Carriers Ltd v BNP Paribas (2004) 78 ALJR 1045, at 1050-1051.

21    Here, on or about 16 February 2004, Mr and Mrs Samaha’s solicitor procured execution by them of a lease document which clearly had left the commencement date for the lease blank. That was because no one then knew when the shopping centre would be ready for occupation. Mr and Mrs Samaha were still enquiring about access to the premises for a fit-out on 16 May.

22    The counterparts of the lease executed by Mr and Mrs Samaha were sent back in February, and the re-executed replacement pages were sent back on 19 June, with the obvious implication that when the commencement date for the lease was known and accepted by both parties, the lessor’s solicitor was authorised to insert it in the executed counterparts of the lease and to effect exchange by sending one of the executed counterparts back to the lessees’ solicitor. This is in fact what happened.

23    Mr and Mrs Samaha commenced trading in the premises on 4 August 2004. Mr Cox inserted that commencement date in the lease and sent an executed counterpart of the lease containing the inserted commencement date to Ms Hart on 10 August. There was no protest from Mr and Mrs Samaha or Ms Hart that the commencement date inserted in the lease was not the commencement date agreed by the parties. Mr and Mrs Samaha continued to trade in the premises until late September. The stamped registered lease containing the inserted commencement date was sent by Mr Cox to Ms Hart on 24 November 2004. Again, there was no protest from Mr and Mrs Samaha or Ms Hart that the commencement date had not been agreed between the parties. Indeed, as far as the evidence reveals, there never was any suggestion from Mr and Mrs Samaha that the lease was void for uncertainty as to the commencement date until after these proceedings were commenced.

24    I conclude that:

– by sending to Corbett Court’s solicitors counterparts of the lease executed by Mr and Mrs Samaha with the commencement date left blank, Mr and Mrs Samaha implicitly authorised Corbett Court’s solicitor to insert in the lease such commencement date as might later be agreed between the parties;

– the parties agreed in fact on a commencement date of 4 August 2004, as evidenced by commencement of trading in the premises on that date, the insertion by Mr Cox of that date in an executed counterpart of the lease, and the acquiescence of Mr and Mrs Samaha in that insertion when a counterpart of the lease was returned to Ms Hart on 10 August;

– counterparts of the lease were exchanged so that the lease became binding on 10 August 2004, when Mr Cox returned to Ms Hart an executed counterpart of the lease with all dates inserted.

25    It follows from the above reasoning that I do not accept the further submission of Mr and Mrs Samaha that after the lease became binding on the parties it was materially altered by Corbett Court, without authorisation, so that it was avoided.

The evidence concerning the Representations

26    In their Further Amended Statement of Claim, Mr and Mrs Samaha allege that at a meeting on 14 December 2003 between Mr Corbett, representing Corbett Court, Mr Kevin James, a real estate agent engaged by Corbett Court, and Mr Samaha, Mr Corbett made the following representations:

“(i) On or about 14 December 2003 John Corbett represented to the first and second plaintiffs that the shopping centre would be fully occupied, or close to fully occupied, when it first opened for trading; and

(ii) on or about 14 December 2003 John Corbett represented to the first and second plaintiffs that the shopping centre would have a certain tenancy mix when it first opened for trading; and

(iii) on or about 14 December 2003 John Corbett represented to the first and second plaintiffs that he would close down the IGA store in Picton with the implied representation that the proposed business of the first and second plaintiffs would be more successful as a result; and

(iv) on or about 14 December 2003 John Corbett represented to the first and second plaintiffs that the shopping centre would be the ‘hub’ of the Picton area with the implied representation that the said shopping centre would be the most popular shopping centre in the Picton area; and

(v) on or about 14 December 2003 John Corbett represented to the first and second plaintiffs that he would make them wealthy if they operated a fruit and vegetable store from the premises.”

Reliance on the last representation was abandoned by Mr and Mrs Samaha during the trial.

27    In his first affidavit, sworn 6 June 2005, Mr Samaha said that Mr Corbett told him:

“‘Look. The whole centre is going to be full when it opens. There’ll be a grand opening. There is going to be a Coles and a liquor store there (John pointed to the floor plan). There’ll be food outlets along here (John pointed to shops 1 through to 11). There’ll be speciality shops. There’ll be a medical centre outside. You know, there are 5/6,000 people living in Picton and 16,000 living in surrounding areas. That’s a lot of people. I already have a person interested in running a fruit and vegetable store from the centre.’

I said to John words to the effect of: ‘I understand the shopping centre will be opening in early May. It will be full when it opens?’

John Corbett said to me words to the effect of: ‘Yes. It is going to be full when it opens.’

I said to John Corbett words to the effect of: ‘Good. Because I’m not going to spend that much money if the centre is not going to be full when it opens in May.’

At some point during the conversation John Corbett also said to me words to the effect of: ‘I want to close the IGA store down and move my father’s hardware store into the IGA premises. I want to knock down the hardware store and put a white goods store there.’”

…

“At some point during the conversation I had with John Corbett referred to [above] he said to me words to the effect of: ‘I’m going to make you a very wealthy man. The shopping centre is going to be the hub of the area.’ John said this to me a few times during our conversation.

I then said words to the following effect: ‘I cannot pay any more than $2,000 including outgoings. That’s what it’s worth to me. The shopping centre must be full.’

John Corbett said: ‘Yes. It will be full.’

John Corbett then put out his hand towards me and I shook it.”

28    In his third affidavit, sworn 26 July 2006, Mr Samaha said:

“I refer to the conversation set out in … my affidavit sworn 6 June 2005. I say that when I recollected the conversation with John Corbett and where he mentioned the food outlets, I say that the conversation was more detailed and John Corbett said the following to me:

John said: ‘There will be food outlets along here (John pointed to the floor plan at shops 1 to 11).’

I said: ‘What kind of shops will they be John?’

John said: ‘These will include Gloria Jeans, Baker’s Delight, Donut King and Michel’s Patisserie.’”

29    In his cross examination, Mr Samaha said:

“Q. Did you have any understanding of what opening the centre meant?
A. Fully opened.

Q. Fully opened?
A. Yeah.

Q. And I think there is somewhere in the evidence a reference to grand opening. Did somebody tell you about a grand opening?
A. Mr Corbett.

Q. Mr Corbett told you about …
A. An official opening, a grand opening.

Q. A grand opening with speeches and ribbon cuttings?
A. Yes, there were going to be balloons and everything, sorry.

Q. Very well and can you just remind me again what did Mr Corbett say about a grand opening and the state of the tenancies?
A. Mr Corbett said …
Q. This is in the 14 December meeting?
A. Correct yes, that I should hurry up and sign the lease because I am going to miss out. It will be full. The shopping centre will be full with a big tenancy mix and he progressed to tell me about the shops that were going to be in there and he just kept talking and talking for 20 minutes about the shopping centre and what it was going to have in there and he kept telling me that I would be crazy not to grab it straightaway.

Q. Did he say anything about when the shops would be full?
A. I asked him that would it be opened the day he told me on the lease.

Q. Sorry?
A. I asked him what date would it open so we could plan.

Q. This is the grand opening you are talking about?
A. No, the shopping centre opening.

Q. Now, I want to be clear about this. The opening with balloons and all that you have just referred to?
A. Yes, well I am not sure when he was going to do that. I just know when all the shops were going to be there. I asked him when all the shops were going to be there and when it was going to be open and he told me in May 3rd or something of May the shopping centre would be open at that meeting.

Q. Did you understand that …
A. I would understand that that would be the grand opening.

Q. The grand opening with the balloons and so on would be in May?
A. Yes with the politicians and the balloons and whatever would happen. That's what I understood the grand opening to be.

Q. Did you understand by that time that the grand opening with the balloons and speeches, by that time, so Mr Corbett was telling you, all the shops would be fully occupied?
A. Yes.”

30    Mr Samaha’s evidence was unsatisfactory, contradictory and unreliable in a number of respects:

– the Further Amended Statement of Claim alleges that Mr Corbett represented that the shopping centre would be “fully occupied or close to fully occupied when it opened for trading” . Mr Samaha denied that Mr Corbett had said “close to fully occupied” but he was unable to explain how those words appeared in the Further Amended Statement of Claim: T66.58 – T.67.37;

– at first, Mr Samaha said that he told his solicitors that the Further Amended Statement of Claim was incorrect in using the words “or close to fully occupied” – then he said that he could not recall: T69.1 – .20;

– at first, Mr Samaha said that he was “not sure” if he had read the Further Amended Statement of Claim. Later he said that he was unable to read anything except “little bits and pieces” and that he was unable to read his own affidavit, which had been read to him: T88.40 – T89.43;

– Mr Samaha said that his affidavit of 6 June 2005 had been read to him prior to his signing it by one of three named solicitors and that he was confident in giving that evidence. As soon as it was pointed out to him that a fourth solicitor had witnessed his signature on the affidavit, he said that it was that fourth solicitor who had read the affidavit to him and said “I can guarantee that” : T93.40 – T94.32;

– Mr Samaha was evasive when asked whether he was aware that the Disclosure Statement sent to him on 15 December 2003 was an important document: T82.15 – .26;

– in his affidavit of 6 June 2005 Mr Samaha said that he recalled “going through the Lessor’s Disclosure Statement with my solicitor at the time the lease was being negotiated” . In cross examination, Mr Samaha denied that the Disclosure Statement was read to him by his wife or his solicitor, Ms Hart, prior to his signature. Then he said that he did not remember: T128.34 – T129.29. Then he said that it was his practice to make sure that he did not sign anything unless he knew what was in the document and that when he received the Disclosure Statement he asked his wife to read it to him. He said that his wife told him that there was a Disclosure Statement in the document but she did not read the whole document. She read only those parts in the Disclosure Statement which were in handwriting. When confronted with the fact that the writing was that of Ms Hart so that Mrs Samaha could not have read those parts of the document before Mr and Mrs Samaha both went to see Ms Hart to give her instructions which caused her to write the additional words in the document, Mr Samaha retreated into assertions of confusion and inability to remember: T124.29 – T127.20;

– Mr Samaha said that Ms Hart did not take him through the Disclosure Statement: “she just put it in front of us and made us just sign it” : T82.50 – .55;

– he then vacillated between saying that Ms Hart did not explain the Disclosure Statement at all, that she did not explain it fully, that she went through parts of it, that she might have gone through the statement with him, that he did not remember saying in his affidavit that he had gone through the Disclosure Statement with Ms Hart, that he had been through the lease with Ms Hart but not the Disclosure Statement, that he did not know what a Disclosure Statement was, that he did not think Ms Hart went through the Disclosure Statement with him, that he did not know or was not sure whether Ms Hart had gone through the Disclosure Statement with him: T82.28 – T87.11.

31    Ms Hart was not called by Mr and Mrs Samaha to give evidence. There was no evidence to suggest that she was unavailable or unwilling to be called. I infer that Ms Hart’s evidence would not have assisted the case of Mr and Mrs Samaha.

32    I have formed the conclusion that Mr Samaha was willing to give any evidence which he thought might assist his case, without regard to its accuracy.

33 Mrs Samaha gave evidence as to what Mr Samaha had told her when he returned from his meeting with Mr Corbett and Mr James on 14 December 2003. The evidence was admissible under s.60 Evidence Act 1995 (NSW) to prove the content of a communication; that communication was relevant and admissible because Mrs Samaha said that, in deciding to proceed with the lease, she had relied upon what Mr Corbett was reported to have said. However, her evidence as to what Mr Samaha told her, being hearsay as to what Mr Corbett had said to Mr Samaha, would not be admissible to prove the making of the Representations by Mr Corbett unless the evidence fell within an exception to the hearsay rule. In my opinion, Mrs Samaha’s evidence is admissible to prove the making of the Representations to Mr Samaha because it falls within the exception provided by s.64(3): the maker of the statements to Mrs Samaha, namely, Mr Samaha, has been called to give evidence; Mrs Samaha actually heard Mr Samaha make the statements to her; and at the time that Mr Samaha made the statements, what had been said to him by Mr Corbett must have been fresh in his memory.

34    In her first affidavit, sworn 6 June 2006, Mrs Samaha gave evidence of a discussion which she and Mr Samaha had with Mr James on 11 November 2003. She gave no evidence about what Mr Samaha said Mr Corbett had told him at the meeting of 14 December. Neither did she give any such evidence in her second affidavit, sworn 15 November 2005. In her third affidavit, sworn on 23 July 2006, Mrs Samaha gave the following evidence:

“I recall that following a meeting that my husband had with John Corbett and Kevin James on a Sunday in or about mid December 2003, we had a conversation with words to the following effect:

I said: ‘How did the meeting go? Do you ask those questions we discussed?’

Brian said: ‘I spoke with John Corbett and John said that the centre would be full at opening and that there was a good tenancy which included a medical centre, chemist, bank, Baker’s Delight, Donut King, Gloria Jeans and a liquor shop as well as Coles.’

I said: ‘What was the cost that you agreed on?’

Brian said: ‘It is going to cost $2,000 a week in rent for our fruit shop.’

I said: ‘When is the shopping centre’s opening date going to be?’

Brian said: ‘The shopping centre will open on 1 May 2004. I shook hands with John Corbett and the shop is ours.’”

35    In cross examination, Mrs Samaha said that she attended a meeting with Mr Samaha and Mr James on 11 November 2003. She gave this evidence:

“Q. Can you remember and put in your own words what was said at that meeting?
A. First of all my husband discussed with him about sites and things like that, then he pulled out a plan and put it on – I think it was the bonnet of the car.

Q. Just take it steadily if you don't mind. Mr James pulled out a plan, did he?
A. Mr James pulled out a plan, yes, and he said to us, he showed us the car park where it came in and he said that will be an ideal spot because they are coming past and it has a back ramp, a back entry.

Q. Was he at that time referring to shops 3 and 4?
A. That's right.

Q. What else did he say, do you recall?
A. Yes, he told me about that Coles was going in there and he said that they were expecting to take thirty million, because IGA takes twelve and a half million and if we took one per cent of that we would be going alright. He also said that there was a proposed butchers. We were in 3 and 4 and there was going to be a butchers here and Bakers' Delight next door, and he said, ‘In the centre close to you there will be coffee shops, Gloria Jeans, Donut King, a lot of shops’. He said Michel's, he said the bank.

Q. That's what Mr James told you, was it?
A. Yes.

Q. Confident that's what he said?
A. I am.”

36    Of particular significance was the further evidence given by Mrs Samaha in cross examination that, at the meeting with Mr James on 11 November, Mr James said that the shopping centre would be fully let when it opened – the very statement attributed to Mr Corbett at his meeting with Mr Samaha on 14 December. Mrs Samaha was emphatic that it was Mr James who had made that statement to her on 11 November: T165.3 – T166.4. However, there was no mention in any of the affidavits of Mr and Mrs Samaha that Mr James had made any such statement to them. Mr Samaha denied in cross examination that Mr James had said at the 11 November meeting that the shopping centre would be fully let on completion: T49.52 – .54

37    Mrs Samaha said that although Mr James had said to her that the shopping centre would be fully let on opening (or “completion” – the terms seem to be used interchangeably in the evidence), she did not rely upon that statement in deciding to execute the lease. Rather, she said she relied upon what Mr Samaha told her Mr Corbett had said to him in the same terms. This evidence was improbable and unconvincing. It seemed clear to me that, in giving her evidence, Mrs Samaha appreciated that her case required her to demonstrate reliance upon Mr Corbett’s statements, not upon Mr James’ statement, and she tailored her evidence accordingly.

38    In her affidavit of 23 July 2006, Mrs Samaha said that Mr Samaha told her that Mr Corbett had told him that the tenants of the shopping centre would include a bank and a chemist. Nowhere in his evidence did Mr Samaha say that Mr Corbett had told him that there would be a bank and a chemist in the shopping centre. In cross examination, Mrs Samaha said that it was Mr James who told her that there would be a bank: see paragraph 35 above.

39    It is apparent that Mr James made some statements about the tenancy mix at his meeting with Mr and Mrs Samaha on 11 November 2003. It is also apparent that it was not until Mrs Samaha's last affidavit sworn about two and a half years after the events in question that Mrs Samaha endeavoured to recount Mr Corbett's statements allegedly made to Mr Samaha. Clearly, there is scope for confusion of recollection, on the part of both Mr Samaha and Mrs Samaha, as to what statements were made to them by Mr James and what statements were made by Mr Corbett to Mr Samaha. Further, it was clear from the manner in which they gave evidence that both Mr and Mrs Samaha feel very strongly that somebody must be to blame for the financial disaster which has resulted from their venture into a retail business and that the person to blame is Mr Corbett. I must assess their accuracy of recollection in this light.

40    Mr James was called as a witness by Mr and Mrs Samaha. He had refused to provide an affidavit and Mr Canceri led his evidence in chief orally. Mr James had taken no notes of the relevant part of the meeting on 14 December 2003 and he did not have a clear recollection of much of what was said during the meeting.

41    Mr James gave this evidence in chief:

“Q. Do you now recollect whether anything else was spoken of, apart from issues of rent and use of the tenancy?
A. Yes there was.

Q. Well what else was spoken about?
A. The issue of the leasing was raised by Mr Samaha and what other retail tenancies had been leased or who was going to be in the centre when it opened.

Q. Do you know what Mr Samaha effectively said?
A. Yes I do.

Q. What did he say?
A. He effectively asked who was going to be in the centre with him when it opened in terms of retailers.

Q. Did Mr Corbett respond to that?
A. Mr Corbett did respond. Mr Corbett laid a plan on the table and said, ‘The centre will be fully leased when it opens’.

HIS HONOUR: Q. I am sorry?
A. Mr Corbett laid a plan on the centre on the table and indicated to Mr Samaha that the centre would be fully leased when it opened.”

He did not recall if Mr Samaha said anything in response to that statement. He then said:

“Q. When Mr Corbett said the shopping centre would be fully leased upon opening, did you say anything in relation to that?
A. I was silent on that.

Q. Is there a reason why you were silent?
A. No other reason than the fact that I didn't make that statement.

Q. What do you mean by that?
A. I knew that not to be correct.”

Finally, he gave this evidence:

“Q. All right. If the statement had been made, and you know Mr Corbett says that he did not make the statement, but if it was made I suggest to you that what was said, by somebody at any rate, was that it was expected or hoped that the shopping centre would have a particular mix of tenants. Is that correct?
A. That's correct, yes.

Q. And that it was hoped that when the shopping centre opened it would be fully occupied?
A. That's correct.

Q. And that was what was said, to the best of your recollection?
A. I don't recall it, I'm sorry.”

42    Mr James’ evidence was unsatisfactory in a number of respects. In cross examination he was confronted with a statement which he had signed and provided to his own solicitor concerning the subject matter of this case. In that statement he had said that he could not confirm anything in the passage from paragraph 13 of Mr Samaha's affidavit of 6 June 2005l which I have set out above in paragraph 27. Yet in the witness box he gave evidence of his recollection of the critical statement by Mr Corbett as to the centre being fully let. He was asked whether he had seen Mr Samaha's affidavit before. He said that he was "absolutely" sure that he had not: T20.58 – T21.18. Yet in the statement which he had provided to his solicitor, Mr James had referred to paragraph 13 of Mr Samaha's affidavit. When this inconsistency was pointed out to him and it was put to him that he had, in fact, seen Mr Samaha's affidavit, as quite obviously was the case, he said:

“Q. What I am suggesting to you, Mr James, is that you had seen Mr Samaha's statement when you made that statement to your solicitor, Mr Capner. Do you agree with that?
A. That may well be the case but I'm sorry, I don't recall it.

Q. The evidence you gave previously was you hadn't seen any statement of Mr Samaha before you made that statement?
A. That's correct.

Q. So that was incorrect probably, wasn't it?
A. Well, I've simply said I don't recall it.”

43    Mr James’ professed inability to recall as a means of evading a question to which the answer must have been obvious was unsatisfactory and cast a doubt over the veracity of his evidence as a whole. Further, why would he have provided a statement to his own solicitor saying that he was unable to confirm Mr Samaha's evidence and then, at first, confirm that very evidence in the witness box, only to back away from it at the end? It is strange that Mr James able to confirm in the witness box the critical statement by Mr Corbett as to the centre being fully occupied when it opened when he could not recall with any precision so much else of what was said at the meeting: see, for example, T35.20 – T37.46.

44    I have found Mr James' evidence to be of no assistance in resolving the issue of what was said at the meeting on 14 December.

45    In his evidence of his discussion with Mr Samaha and Mr James on 14 December, Mr Corbett consistently denied that he had said to Mr Samaha that the shopping centre would be fully occupied or close to fully occupied when it first opened for trading. He agreed that he had referred to floor plans showing the location of various shops and said that there was a general discussion about other tenants, particularly food shops in the immediate vicinity of Mr and Mrs Samaha's proposed premises. He agreed that it was likely that Baker's Delight was mentioned but he could not remember if Donut King was mentioned, although he said it was possible.

46    Mr Corbett agreed that he had mentioned that Corbett Court hoped to have a medical centre as a tenant. He agreed also that there was a discussion about population figures for Picton. He resolutely denied that he said that he would close down the IGA store.

47    Mr Corbett's evidence as to what was said at the 14 December meeting was consistent and it was not implausible. He was not shaken in that evidence and it was not otherwise demonstrated that his credit or accuracy of recollection were unreliable.

48    Having regard to the observations which I have made above as to the unsatisfactory aspects of the evidence given by Mr and Mrs Samaha and by Mr James, I prefer the evidence of Mr Corbett. I am not persuaded, on the balance of probabilities, that Mr Corbett told Mr Samaha at the meeting on 14 December that the shopping centre would be fully let on completion. In view of the discrepancy in the evidence of Mr and Mrs Samaha in this regard and because I prefer the evidence of Mr Corbett generally, I am not persuaded that Mr Corbett told Mr Samaha that there would be any particular tenancy mix in the shopping centre, other than that there would be a Coles store.

49    I am not persuaded that Mr Corbett told Mr Samaha that he would close down the IGA store. It is improbable that Mr Corbett would have made this statement in view of the current lease of the IGA store. In any event, I note that in paragraph 13 of Mr Samaha's affidavit of 6 June 2005, Mr Samaha said that Mr Corbett told him "I want to close the IGA store down", not "I am going to close the IGA store down" (emphasis added).

50    It is quite possible that Mr Corbett said at the meeting something along the lines that the shopping centre would be “the hub of the Picton area”. However, there is no suggestion that he said that the centre would be the "hub" by the time that the centre opened or at any particular time in the future. It is highly significant that Mr Samaha was not prepared to say that shopping centre was not now the hub of the Picton area: T66.16 – .25. There is no suggestion that Mr Corbett said that the fact that that the centre would be “the hub of Picton” would have any particular impact on the profitability of Mr and Mrs Samaha's business in the premises as at the time they commenced business or at any other particular time.

51    It is notable that Mrs Samaha, in her affidavit of 23 July 2006, does not mention any representation about the shopping centre as “the hub of Picton”.

52    I think that it is probable that in the course of what Mr Samaha agreed was “casual talk or idle chit-chat” at the beginning of the meeting on 14 December (T59.50 – T60.37) Mr Corbett said words to the effect recorded in paragraph 16 of Mr Samaha’s 6 June affidavit: “I’m going to make you a very wealthy man. The shopping centre is going to be the hub of the area”.

53    During the trial, Mr and Mrs Samaha abandoned the statement “I’m going to make you a very wealthy man” as a representation relied upon for the purposes of the Trade Practices Act and the Retail Leases Act. Obviously, they recognised that that statement was mere puffery and that no one could seriously say that he or she solemnly relied upon such a statement in making an important commercial decision. The statement that the shopping centre would be the “hub of the area” was, according to Mr Samaha, said in the same breath and in the same context as the statement “I’m going to make you a very wealthy man” and was clearly of the same character: mere puffery. The fact that mere puffery contains an element of futurity does not, by invocation of s.51A TPA, convert it from a puff to a contravention of the Act, particularly when, as here, the puff has not been shown as false.

54 It follows that I am not satisfied that at the meeting of 14 December 2003 Mr Corbett made any statement to Mr Samaha in contravention of s.52 TPA or of the Retail Leases Act.

Reliance

55    In case I am wrong in my conclusions as to whether any of the relevant Representations were made to Mr Samaha, I should state my conclusions on the question whether, if any such Representations were made, Mr and Mrs Samaha relied on them in deciding to enter into the lease.

56    For the reasons I have given in relation to the making of the Representations, I do not regard the evidence of Mr and Mrs Samaha generally as reliable. However, on the question of reliance, Mr Donohoe submits that the most telling evidence against Mr and Mrs Samaha is the content of a Lessee's Disclosure Statement which they signed and returned to Corbett Court. The circumstances are as follows.

57 On 15 December 2003 Mr James sent to Mr and Mrs Samaha a Lessee's Disclosure Statement under s.11A Retail Leases Act.

58    Mr and Mrs Samaha went to see Ms Hart in early January 2004. On 19 January, Ms Hart wrote to Mr Cox requesting confirmation of certain inclusions and facilities to be made available in the premises. Mr Cox sent a facsimile to Mr James requesting instructions. Mr James responded by facsimile on 3 February. Attached to the facsimile was the disclosure statement with the Lessee's Disclosure Statement signed by Mr and Mrs Samaha. The disclosure statement contained the following:

– a paragraph required details "of any other agreements between Lessor and Lessee, or representations made by Lessor or Lessee including those relating to exclusivity or limitations on competing uses" . This paragraph contains typewritten terms relating to promises made by Corbett Court. Inserted in this paragraph in Ms Hart's handwriting were further terms undertaken by Corbett Court, of which she had sought confirmation in her letter of 9 January.

– beneath that section appears in the following:
“ Note:
Section 11A of the Retail Leases Act 1994 requires a lessee’s disclosure statement to be provided to the lessor within 7 days (or any agreed further period) of the lessee receiving the lessor’s disclosure statement. The lessee may be liable to a penalty for an offence under that Act if the lessee’s disclosure statement is not so provided.”

LESSEE’S DISCLOSURE STATEMENT
Advice to the Lessor

1. The Lessee acknowledges that the attached, Lessor’s Disclosure Statement, was received from the Lessor prior to entering into the lease.

2. The Lessor has made available to the Lessee a copy of the proposed retail shop lease.

3. The Lessee has sought / not sought independent advice in respect of the commercial terms contained in the Lessor’s Disclosure Statement and the obligations contained in the proposed retail shop lease.

4. The Lessee believes that the lessee will be able to fulfil the obligations contained in the lease, including the payment of the proposed rent, outgoings and other amounts, based on the Lessee’s own business projections for the business.

5. In entering into the retail shop lease, the Lessee has relied on the following statements or representations made by the Lessor or the Lessor Agents.

Note.
Matters such as agreements or representations relating to exclusivity or limitations on competing uses, sales or customer traffic should be detailed.

6. Apart from the statements or representations set out above, no other promises, representations, warranties or undertakings (other than those contained in the lease) have been made by the Lessor to the Lessee in respect of the premises or the business to be carried out in the premises.”

The space provided in paragraph 5 for the particulars of representations relied on by the lessees was left blank.

59    The Lessee's Disclosure Statement expressly and clearly called upon Mr and Mrs Samaha to state what representations made by Corbett Court, if any, they were relying upon in entering into the lease. The fact that, after having received legal advice, they did not specify any such representations must raise an evidentiary presumption that there were no relevant representations made or that, if any representations were made, Mr and Mrs Samaha did not place any reliance upon them.

60    Mr and Mrs Samaha sought to rebut such a presumption by saying that, in essence, their failure to insert in the Lessee's Disclosure Statement the Representations made by Mr Corbett was the fault of their solicitor, Ms Hart. Mr Samaha gave very brief evidence about the relevant discussion with Ms Hart in his first affidavit, as I have recounted. I have summarised above the contradictory and evasive evidence of Mr Samaha in this regard in his cross examination: see paragraph 30.

61    Mrs Samaha gave no evidence at all in any of her three affidavits about the meeting with Ms Hart or as to whether she had read the Lessee's Disclosure Statement before the meeting with Ms Hart, although the importance of such evidence from Mrs Samaha must have been evident to her legal advisers from the outset.

62    In cross examination, Mrs Samaha agreed that when she received the Disclosure Statement on or about 15 December 2003 she realised that it was an important document. She said that she probably read it "but I might not have understood it all”. Then she said that she could not recall reading the Lessee's Disclosure Statement part of the document, which appeared immediately above her signature. She said that she had no difficulty understanding the wording of that part of the document in the witness box nor would she have had any difficulty in understanding the words if she had read them for herself in 2003. However, she added, the words were not pointed out to her by Ms Hart. Then she said that she did not recall if she had read the words or not, and she added that if she did read them, she did not pay attention to them.

63    Mrs Samaha agreed that at a meeting with Ms Hart in January 2004 the only document discussed was the Disclosure Statement and that the document was signed by Mr and Mrs Samaha at that meeting. She said that Ms Hart did not go through the Lessee's Disclosure Statement with them before they signed it. She said that she was "100% sure" of that assertion.

64    Mrs Samaha's evidence to the effect that, although she could not remember having read the Lessee's Disclosure Statement for herself or to Mr Samaha, she was absolutely certain that Ms Hart had not read or explained it to them at their meeting, was improbable and unconvincing. It was quite clear that Mrs Samaha appreciated very well that demonstrating a genuine failure to understand the significance of the Lessee's Disclosure Statement at the time she signed it was critical to her case; she was determined to disavow any knowledge of the relevant part of the document and to place the blame for that circumstance on Ms Hart.

65    I regard it as inherently improbable that a solicitor would require a meeting with clients to go through a Lessee's Disclosure Statement – an important document in a leasing transaction – and would not explain carefully a part of it that was of critical importance to the clients. The fact that Ms Hart was not called by Mr and Mrs Samaha does nothing to lessen that improbability in the present case.

66    It is also of great importance to observe that, according to Mr and Mrs Samaha, they relied upon the representation that the centre would be fully occupied when it opened on or about 4 May 2004. May 2004 came and went without any opening of the centre and it was evident that there were few tenants preparing to fit out their premises. Nevertheless, Mr and Mrs Samaha did not then protest to Corbett Court that it had misled them and that they had relied upon the Representations in deciding to proceed with the lease.

67    For these reasons, I do not accept that, if Mr Corbett made any relevant Representations to Mr Samaha at the meeting of December, Mr and Mrs Samaha relied upon those Representations in entering into the lease.

Estoppel

68    In case I am wrong in the foregoing conclusions, I shall state my conclusions on the contention by Corbett Court that, in any event, Mr and Mrs Samaha are estopped by the Lessee's Disclosure Statement in now asserting that they relied upon any Representations in entering into the lease.

69    There is no dispute that Mr Corbett received the Lessee's Disclosure Statement prior to his execution of the lease. There was no challenge to his evidence that he relied on it in entering into the lease: T 218.29 – T219.11. That evidence is inherently probable: if the Lessee's Disclosure Statement had asserted reliance by Mr and Mrs Samaha on a representation that the centre would be fully let on opening and would contain a specified tenancy mix, a loud warning of risk of litigation would have sounded for Mr Corbett.

70    The Lessee's Disclosure Statement, signed by Mr and Mrs Samaha and sent to Corbett Court after they had received the advice of their solicitor, was a clear and unequivocal representation to Corbett Court that there were no representations by it upon which Mr and Mrs Samaha were relying in entering into the lease. Corbett Court relied upon that representation in entering into the lease and thereby changed its position irrevocably.

71    Mr and Mrs Samaha are therefore estopped from departing from the representation in their Lessee's Disclosure Statement.

Undue pressure

72    The only evidence in Mr and Mrs Samaha's affidavits of the allegation in the Further Amended Statement of Claim that Corbett Court exerted undue pressure on them to execute the lease was a single sentence in paragraph 13 of Mr Samaha’s affidavit of 6 June 2005. He said that Mr Corbett told him "I already have a person interested in running a fruit and vegetable store from the centre". Mr Samaha did not say what effect this statement had on his decision to proceed with the lease.

73    Mrs Samaha did not refer to this statement anywhere in her evidence.

74 I decline to find, on this exiguous evidence, that Corbett Court was guilty of exerting undue pressure on Mr and Mrs Samaha to execute the lease, in contravention of s.62B Retail Leases Act. That Mr and Mrs Samaha should have made, and persisted in, such a threadbare claim says a great deal about the substance and veracity of their claims generally.

Corbett Court’s claim against Mr and Mrs Samaha

75    None of the claims made by Mr and Mrs Samaha in the Further Amended Statement of Claim has succeeded. It follows that they have no defence to Corbett Court's claim for unpaid rent, other monies due under the lease, and damages for breach of the lease. These amounts, which will have to be calculated as at the date of judgment, are:

– the rent reserved under the lease for the term, less the rent received from the new tenant and the net proceeds of sale of Mr and Mrs Samaha's fixtures received by Corbett Court;

– the outgoings payable under the lease up until the time the new tenant commenced paying those outgoings;

– the cost of making good the premises after Mr and Mrs Samaha vacated the premises;

– the cost of reletting the premises;

– interest.

76    Mr Corbett's affidavit evidence gave particulars of the amounts owing for rent, outgoings, making good and the cost of reletting. There was no challenge to this evidence. I find the amounts claimed proved. Mr Corbett also gave evidence as to the fixtures of Mr and Mrs Samaha found in the premises when they vacated and auctioned at a clearing sale. There was no challenge to the propriety of the auction sale. I accept Mr Corbett’s evidence.

77    Mr and Mrs Samaha claimed that Corbett Court had failed to mitigate its damages for loss of rent by entering into a lease of the premises with a new tenant at a rent which was too low and by giving that new tenant a "rent-free holiday" as an inducement to take up the lease. Mr Corbett asserted that Corbett Court had endeavoured to obtain the best terms for the new lease which were then available in the market at the time. He was cross examined at some length but nothing emerged which would justify an assertion that Corbett Court did not act so as to obtain the best commercial terms possible to make up for the loss which it would suffer by reason of the breach of the lease by Mr and Mrs Samaha.

78    Mr and Mrs Samaha had the onus of proving that in entering into the new lease Corbett Court acted unreasonably. They adduced no evidence to show that Corbett Court had not made reasonable endeavours to seek new tenants for the premises. They adduced no evidence as to what rent could reasonably have been expected in the market at the time.

79    Mr and Mrs Samaha have failed to discharge the onus of showing that Corbett Court failed to act reasonably in mitigating the losses resulting from their breach of the lease.

80    Corbett Court claims that Mr and Mrs Samaha are liable for half the cost of constructing a storage room at the rear of the premises. Corbett Court alleges that there was an oral agreement between the parties that Corbett Court would undertake the cost of construction of the storage room, and that Mr and Mrs Samaha would pay half the cost. There is no dispute that Corbett Court caused the storage room to be constructed at a cost of $39,670.39.

81    In paragraph 4 of his affidavit of 6 June 2005, Mr Samaha denied that the storage room had been built at his request. However, in paragraph 3 of his affidavit of 23 May 2006, Mr Samaha agreed that at the meeting of 14 December 2003 he had requested that Corbett Court undertake the construction of the storage room.

82    In paragraph 44 of his affidavit of 6 June 2005, Mr Samaha said that he had agreed to pay half of the construction cost of the storage room. In paragraph 4 of his affidavit of 23 May 2006, he recorded a conversation with Mr Corbett in May 2005 in which, he said, he had agreed to pay half of the construction cost of the storage room, estimated between $8,000 and $12,000.

83    In his affidavit of 1 August 2006, Mr Samaha said, for the first time, that he had a meeting with Mr Corbett on 10 June 2004 at which Mr Corbett showed him a quote for construction of the storage room at a total of $19,425. He said that he protested that that cost was more than the $12,000 which he had been told about earlier, that he and Mr Corbett negotiated, and that they finally agreed that Mr Samaha would pay half of $14,500. He said that after the meeting Mr Corbett walked with him to his car and signed a copy of the quotation for the construction of the works as evidence of their agreement. A copy of the quotation was annexed to Mr Samaha's affidavit. It bears the signature of Mr Samaha, the figure $14,500 in handwriting, the handwritten date "10/6/04", and the handwritten initials "J.C.".

84    Neither in his affidavit evidence nor in his oral evidence did Mr Corbett say that the agreement alleged in Mr Samaha's affidavit of 1 August 2006 was not made, nor did he say that the initials on the document produced by Mr Samaha were not his initials. Despite my reservations about the reliability of Mr Samaha's evidence generally and despite the unsatisfactory manner in which his evidence concerning the 10 June agreement with Mr Corbett was adduced, there is no evidence to the contrary of Mr Samaha's assertion as to what took place on 10 June 2004 and I must accept it.

85    I conclude, therefore, that Mr Samaha agreed to pay $7,250 on account of the construction cost of the storage room and that he is liable to pay only that amount.

Orders

86 There will be judgment for Corbett Court on the Further Amended Statement of Claim in proceedings 1482 of 2005. There will be judgment for Corbett Court on its Amended Statement of Claim in proceedings 1483 of 2005 in an amount to be calculated, including interest up to the date of judgment pursuant to s.100(1) Civil Procedure Act 2005 (NSW).

87    I will stand the proceedings over for a short time to enable Corbett Court to bring in Short Minutes of Order in accordance with these reasons for judgment. I will then hear argument as to costs.

– oOo –