83 The pot plants were still a subject of discussion with the agents and were still the subject of default notices almost a year later in May 1998 and yet the evidence of Mr and Mrs Anderson was that they removed the plants when they were asked to do so. Thereafter, Mrs Anderson said they were only taken outside to be watered and then they were taken inside, but I think that is not the true position. I think the Andersons reacted in the way that Mrs Anderson mentioned in evidence. The stands of pot plants were popular with customers; they sold well. The Andersons took the view that they were doing no harm and that there was no reason for them to be removed and yet the plaintiff through its agent continued to press the point and, finally, the Andersons capitulated and the pot plants were removed and not displayed or sold again. It is a rather sad little episode. It no doubt reflects adversely upon Mrs Anderson's credit as it does upon that of Mr Anderson, but more clearly, to my mind, it demonstrates the depth of the breakdown in the relationship between landlord and tenant which certainly by this stage had occurred.
The Issue of the Floor
84 The genesis of that breakdown may, I think, have in part at least resided in the mishandling on both sides of the proposed repair to flooring in the supermarket in the vicinity of the butcher's department. This again is said to be a matter relevant to the credit of Mr and Mrs Anderson as, indeed, it is.
85 It appears that in two different areas of the store, changes have been made to remove walls which had previously been there so as to increase the floor area of the supermarket. I do not know when that was done but
(Page 41)it does not matter. Although internal walls, they do not appear to have been constructed upon a concrete slab but upon lower foundations. Upon the removal of the wall, the brick work was taken to a level below the concrete floor on either side and concrete fill was laid to provide a common surface. On that surface tiles were laid to provide an even floor for customers, but the nature of the construction resulted in the sub-floor moving and the cement work breaking down.
86 This has created a constant problem of the lifting of tiles and the disruption of the floor surface. From time to time the defendant has replaced tiles but this is essentially a cosmetic solution. The real solution appears to lie in the repair of the floor surface beneath the tiles and that, I think, would not be work which would be the lessee's obligation under cl 5.01 of the lease. Indeed, so much appears to have been ultimately accepted by the plaintiff and eventually by February 1997, the plaintiff was putting in train the carrying out of works to effect more permanent repairs. 87 Mr Sparta senior, Mr Sam Sparta, appears to have been in charge of this effort. Workmen were arranged and the work was supposed to have been done overnight to avoid any disruption to the defendant's trading activities. It appears the work was not completed and Mrs Anderson had to arrange to use trolleys as an informal barricade to keep customers from walking into areas where the floor was being worked upon, to avoid a consequent risk of injury.
88 After the store closed on the following evening, while Mrs Anderson and an employee, described as the shop boy, were working back, Mr Sparta arrived with workmen and sought to recommence the work. Mr and Mrs Anderson had arranged a family social function. Neither could remain at the store to oversee the operations. Mr Sparta was prepared to do so, but that was not satisfactory to Mrs Anderson, nor to Mr Anderson who was telephoned by his wife. They refused Mr Sparta permission to do the work. Cross words were spoken on both sides and over the next few days, the plaintiff, acting by its managing agent, communicated to the defendant the decision that the plaintiff would do no further work to repair the floor, noting that the refusal to permit the work to be carried out on the night in question had caused the plaintiff, at its own expense, to have to dispose of the ready mixed concrete that it had purchased for the job.
89 I received no clear explanation from Mr and Mrs Anderson about their reasons for causing the breakdown in the carrying out of the work.
(Page 42)Mrs Anderson said that it was necessary for one or other of them to stay over the period of some hours which would probably be required for the work to be completed. When asked why it was not possible to leave Mr Sparta in charge, she said he had not offered to supervise closely the workers concerned and she feared that they might steal stock from the store. I suspect that they were cross that the work had not been carried out when previously arranged, cross that they had been inconvenienced during trading hours and cross at the high handed attitude of Mr Sparta who turned up unannounced with workers and a batch of ready mixed concrete just before Mrs Anderson finished work and went home for the evening.
90 The Spartas, for their part, appear to have taken the view that they were putting themselves out to do the work and they were cross when permission was withheld and they were occasioned expense by the loss of the concrete. It rather seems to me that all involved behaved in a rather petulant and childish fashion and it was certainly from this time on that relations soured between Mr Sparta on the one hand and Mr and Mrs Anderson on the other, although they had rather been deteriorating prior to this time. The Trading Performance of the Supermarket
91 Mr Sparta says that from early in the defendant's tenancy, he noticed a deterioration in the trading activities of the shopping centre generally and in the number of customers. He adds that he was constantly receiving complaints from individual tenants and I have mentioned the pleaded contentions and the agreed facts in relation to them, in the context of the defendant's counterclaim for relief from forfeiture.
92 But an indication of the way in which matters developed from early 1997 is, in my opinion, that by April of that year Mr Sparta had drafted a letter to the plaintiff dated 29 April 1997 to be signed by various tenants complaining that since the defendant took over the lease of the supermarket, customers had been complaining about it, the number of customers patronising the shopping centre was decreasing and these other tenants had suffered "significant falls to our revenues, in some cases up to 50 per cent over the last 12 months." A number of tenants' signatures were obtained and, in addition, signatures were obtained from the proprietor of the adjoining Caltex Service Station and the medical centre on the opposite side of the shopping centre itself.
(Page 43)93 Ultimately, as Mr Sparta frankly conceded and his agent effectively confirmed, the decision taken by those concerned in the management of the plaintiff was that the defendant was a troublesome tenant, often in breach of different covenants in the lease, and they wished to have the tenancy terminated. They took the view, correctly I think, that the supermarket was the anchor tenant of the shopping centre and upon its capacity to draw customers to the centre, the viability of businesses of smaller, more dependent tenancies depended. As has been seen by the nature of the default notices, the plaintiff puts difficulties adversely affecting the profitability of such businesses at the door of the defendant. 94 On the other hand, Mr and Mrs Anderson contend that any downturn in business is not the fault of their management of the supermarket but more related to the limited catchment in the Marmion area where, apart from the much larger shopping centre at Karrinyup, there are a number of other shopping centres comparable to Marmion Village, or somewhat larger, which they assert, being nearby, draw customers from the Marmion Village Shopping Centre. Those discussed by the witnesses include Carine Glades, a centre nearby on Marmion Avenue, the Duncraig Shopping Centre a little further to the north, and two shopping centres a little further to the south at North Beach Plaza and Lynn Street, Trigg.
95 All this evidence was, to my mind, highly subjective. There was little in the way of hard evidence of primary fact. I was unable to draw any conclusion about the causes of movements of which the evidence spoke in the trading histories of those involved in the Marmion Village Shopping Centre. Undoubtedly, a number of the businesses were not as profitable as their owners had hoped they would be, but the causes seem to me to be highly speculative and I mention this evidence now merely because it seems convenient to do so in the context of a brief discussion of the history of the relationship between lessor and lessee. So far as it was suggested that other tenants who gave evidence could make a contribution to the allegations of breach of lease by the defendant, I must say that I found the evidence to lack utility in this regard.
The Managing Agents
96 I include in the observation as to the lack of utility the evidence of Mr Thomas, a real estate agent employed by Colliers Jardine, who has had a long association with this shopping centre, as the managing agent from 1991 to 1994 and then from June 1997. Mr Thomas gave general evidence and also referred to occasional visits to the supermarket. It was evident that he did not have a good relationship with the Andersons, both
(Page 44)of whom he described as "consistently surly". Mr Thomas' visits to the store generally followed the receipt of complaints on various occasions since June 1997.
97 During a short period at the end of 1997 and early 1998 when the previous tenant, Mr Wilson, returned, employed to assist in the management of the supermarket, Mr Thomas said that he noticed a drop in the number of complaints but he said the number rose again when Mr and Mrs Anderson took over the management. Initially when he raised the complaints with them, he said their response was "very antagonistic". It seems that in light of that response Mr Thomas soon ceased to raise such matters with either Mr or Mrs Anderson. 98 There is no doubt that Mr Thomas encountered difficulties in dealing with other tenants, particularly in respect of the payment of rent and at times when rent reviews arose. His evidence was that since 1997, rent increases for such tenancies have been either waived by the plaintiff or substantially reduced from that which would ordinarily apply under the terms of their leases, and there have been difficulties in obtaining agreement from tenants to incur additional expenditure to fit out tenancies where the presentation of the stores was suffering by reason of age. Specific cases were referred to, but Mr Thomas' evidence about them was substantially of a hearsay character and, as I have said, little concrete evidence emerged.
99 His superior, the director of retail management at Colliers Jardine, a Ms Langson, was also called by the plaintiff. It seems that very shortly after Colliers Jardine took over the management of this property for the plaintiff, she arranged a meeting attended by Mr Sparta with a Mr Dekok of FAL. It appears that the purpose of the meeting was to see whether the plaintiff might enlist the aid of FAL in dealing with the defendant for breaches of the franchise agreement. I think that was designed to assist the plaintiff in its efforts to terminate the lease, although Mr Sparta denied that that was the case.
100 At the meeting, it was decided that the agents would check the lease to see what legal action might be instituted and it was decided that as soon as there was any late payment of rent, a default notice would be issued. Solicitors would be consulted to see if other breaches might ground default notices. The agents were to contact the Health Department to "get them to do an inspection of the premises so as to put as much pressure as we can on the lessee." They were to investigate the defendant's financial position and provide to the other tenants the opportunity to put their
(Page 45)complaints in writing. It was undoubtedly the case that a campaign was got underway.
101 It is distasteful evidence but it does not cause me to react adversely to the plaintiff's case upon that ground. Its motivation was, I think, a genuine concern that the inadequacies of the defendant's operations were damaging the plaintiff financially. By the year 2000, Ms Langson said, she was of the view that, although FAL pronounced themselves satisfied with the functioning of the supermarket in the context of the franchise agreement, its operation continued to present inadequacies damaging the profitability of the shopping centre. I am not able to derive any assistance from that evidence but, rather, I am concerned to see to what extent the plaintiff was able to offer evidence of primary fact to support the conclusion of breach upon which its case depends.The Evidence of Other Tenants
102 I have mentioned that a number of other tenants were called. They include Mr Passmore senior and Mrs Passmore, the proprietors of the newsagency adjacent to the supermarket. Their son, Mark, was called. He operates the Australia Post office located within the newsagency. The newsagency has suffered a decline in turnover of about 20 per cent since the 1996/97 financial year. It was clear that Mr Passmore attributes that to the operation of the supermarket, but it was very evident that he was unable to offer any clear evidence to establish that fact.
103 Similarly, Mrs Passmore was in no better position. She used to shop regularly at Marmion Supa Valu but now does not do so. She says that her decision has been taken because upon some occasions, products which she particularly wanted were out of stock; pikelets that she wanted for her son's morning tea, the only brand of icecream that her husband and she eat. She purchased some bad chicken on one occasion.
104 It seems clear to me that she has developed an antipathy towards the Andersons. She thought that the store was "messy and untidy". The shelves were "often dirty". The quality of fruit and vegetables has deteriorated and her relationship with the Andersons has deteriorated to the extent that, she says, Mrs Anderson has banned her from the supermarket after an incident when she called Mrs Passmore at home because "my husband had laughed at her when she had glared at us earlier that day at the shopping centre". Mrs Passmore was banned and although she attempted to revisit the store, Mrs Anderson has insisted, she says,
(Page 46)that she should not shop there, threatening to call the police if Mrs Passmore would not leave, saying "get out, fatso".
105 Mrs Anderson, of course, denies any such exchange. I do not know what to make of it. It seems quite extraordinary that people should behave in such a childish fashion, but, in the end, if it did occur, the way in which the matter is put to me in evidence makes it clear that Mrs Passmore entirely lacks objectivity and I would not feel comfortable to rely upon her evidence in any degree. 106 Mr Passmore junior confirmed the animosity which has developed between his family and the Andersons. He also referred to out-of-stock items which he could not buy and products which were bad when purchased. He says he ceased to shop at the supermarket in about June 2000 when the Andersons threatened him with legal action because he was gathering the names and addresses of customers who had complained to him about the supermarket when they came into the newsagency. Again, his evidence about the inadequacies of the supermarket lacked objectivity or any precision of detail. I did not find it helpful.
107 Other tenants who gave evidence included the proprietor of Quality Drycleaning, a quite large tenancy in terms of area, adjacent to the supermarket and the newsagency. This was Mrs Beardmore. I thought her to be a witness who presented a balanced outlook. Her drycleaning business does much of its work from these premises, although the shop is a retail outlet. She has other such outlets in the northern suburbs. The turnover at this particular outlet has been in decline for some time and that is not a situation she encounters at other outlets.
108 She attributes this to the fact that the supermarket does not draw customers. Its appearance is generally old and tired and it needs refurbishment. There is a lack of hygiene and produce is sold out of date. Mrs Beardmore did not detail specific instances and so I am left merely with her general impression and her conclusion that it is inadequacies in the running of the supermarket which is leading to a reduction in the profitability of her shop. Whether she is right about the cause remains for my conclusion, but there is no doubt about the genuineness of this witness and I think her evidence was reliable. It was objectively given and provides useful background material. Her concern is such that she has sought favourable treatment on rent reviews, including in March 2000, and she says that if she is to commit to a renewal of her lease, she would much prefer that her present lease for a term of years be replaced by a periodic tenancy.
(Page 47)109 Ms Shaw, the co-proprietor of a travel agency at the shopping centre, gave evidence. Again I found her to be an acceptable witness. She has lived in the Marmion area for many years and gave evidence of a general deterioration in the standard of the supermarket over the last five or six years. For a time she ceased to shop there because of concern about the freshness of produce and the incapacity always to be able to purchase all that she wished. 110 Nonetheless, she and her partner took a three-year lease of the travel agency some two years ago. She then recommenced doing her shopping at Supa Valu, Marmion. She said she was surprised at the extent of the further deterioration which had occurred since she had previously shopped there. Again, the evidence lacked precision, but I accept it as background evidence, generally describing accurately Ms Shaw's subjective impressions of the supermarket.
Employees Called by the Plaintiff
111 The plaintiff called the previous proprietor of the supermarket, Mr Wilson. He and his wife owned the business from 1986 until 1994. I have mentioned at the outset of these reasons the history of the lease since 1992 and the circumstances of the sale of the business to the defendant at the beginning of 1995. Mr Wilson was again employed in the business to assist with its management generally and particularly to assist with the grocery department, from August 1997 until his resignation in January 1998. Mr and Mrs Anderson said they were moved to take that course, not only to have the expert assistance, but also because they thought that Mr Wilson might improve their capacity to deal with the plaintiff.
112 In the end I concluded that it would be unsafe to place much reliance upon the evidence of this witness. He said that he was employed by Mr Anderson who told Mr Wilson that because of his inexperience, the supermarket had become run down. He asked Wilson to help "get it back on track." However, Mr Wilson said that from about December 1997, he had increasing difficulty with Mr Anderson "because of his mood swings and his irrational behaviour and attitude." He was happy then, he said, when the opportunity to manage another supermarket came in January 1998, to tender his resignation and take the new position.
113 Needless to say, Mr Anderson denies the statement attributed to him when Wilson was employed, and having regard to my impression of Mr Anderson's character, I would think it to be most unlikely that he would make any such confession to Mr Wilson, who seemed to me to take
(Page 48)pleasure from the contrast between what he perceived to be his capacities as a supermarket manager and those of the Andersons. He said he was told "by literally dozens of people" who were customers of the supermarket and had been during his time, how pleased they were that he was back. He added that nearly all of the other tenants of the shopping centre expressed the same view. No doubt such statements were made to him, but I would draw no conclusion that they reflected anything other than polite friendliness.