Spuds Surf Chatswood Pty Ltd v PT Ltd (No 2), PT Ltd v Spuds Surf Chatswood Pty Ltd
[2011] NSWADT 152
•22 June 2011
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Spuds Surf Chatswood Pty Ltd v PT Ltd (No 2) PT Ltd v Spuds Surf Chatswood Pty Ltd [2011] NSWADT 152 Hearing dates: 11-15 May 2009, 18-22 May 2009, 14-17 September 2009 and 8-12 February 2010 Decision date: 22 June 2011 Jurisdiction: Retail Leases Division Before: P R Callaghan SC, Deputy President,
N Fagg, Non-judicial Member,
G Griffiths, Non-judicial MemberDecision: 1. Order proceedings 065171 be dismissed.
2. Order in proceedings 085081, Spuds Surf Chatswood Pty Ltd is to pay P.T. Ltd $327,533.55 plus interest to date.
3. Order that the issue of costs is reserved.
4. Various directions made.
Catchwords: Retail lease - shopping centre specialty shop - pre-lease misrepresentation - mall kiosks - incompletely executed lease - alteration to lease - obstruction of sight-lines and access to shop - covenant for quiet enjoyment - unconscionable conduct. Legislation Cited: Retail Leases Act 1994
Duties Act 1997Cases Cited: AG v World Best Holdings Ltd (2005) 63 NSWLR 557
Armstrong-Jones Management Pty Ltd v Saies Bond Pty Ltd (RLD) [2007] NSWADTAP 47
Arndale (Kilkenny) Pty Ltd v Gaetjens (1970) 44 ALJR 434
Aspromante Pty Ltd v Zagari (2000) 9 BPR 17, 247
Browne v Dunn (1893) 6 R 67
Branir Pty Ltd v Owston Nominees (No.2) Pty Ltd (2001) 117 FCR 424
Davis v Sydney Foreshore Authority [2010] NSWADTAP 43
Horwood v Memocorp Australia Pty Ltd [2010] NSWADT 69
Hughes Bros Pty Ltd v Trustees of Roman Catholic Church Diocese of Sydney (1993) 31 NSWLR 91
Jones v Dunkel (1959) 101 CLR 298
O'Neill v Henry (RLD) 2010 NSWADTAP 40
Perhauz v SAF Properties Pty Ltd [2007] NSWADT 122
Renard Constructions (ME) Pty Ltd v Minister of Public Works (1992) 26 NSWLR 234
Spathis v Hawave Investment Co. Pty Ltd [2002] NSWSC 304
Spuds Surf Chatswood Pty Ltd v P.T. Ltd [2007] NSWADT 130
Telstra Corporation Ltd v Sicard NSWSC 827
Wall's Gifts and Tobacco Pty Ltd v Warringah Mall Pty Ltd [2003] NSWADT 161Category: Principal judgment Parties: Spuds Surf Chatswood Pty Ltd - Applicant in 065171 and Respondent in 085081
P.T. Ltd - Respondent in 065171 and Applicant in 085081Representation: Spuds Surf Pty Ltd
P.T. Ltd
B. Zipser, Counsel (until 22 May 2009)
A. Fernon, Counsel (from 14 September 2009)
P.T. Ltd
R. Angyal S.C.
Spuds Surf Pty Ltd
Livingstone & Co Lawyers (until 22 December 2009)
Herro Solicitors (from 29 January 2010)
Colin Biggers & Paisley Lawyers
Registrar, Retail Tenancy Unit
Intervening (until 17 September 2009)
File Number(s): 065171, 085081
REasons for decision
Retail Lease Division: P.R. Callaghan S.C. (Deputy President), N. Fagg (Non-Judicial Member) and G. Griffiths (Non-Judicial Member).
BACKGROUND
In November 1998, Spuds Surf Chatswood Pty Ltd ("the Applicant") purchased a business known as Surf City ("Surf City") operating in shops 415 and 416 on level 4 of Westfield Chatswood (also referred to as Westfield Shoppingtown, Chatswood), a large shopping centre ("the Centre") owned by P.T. Ltd ("the Respondent" or "Westfield"). From January 1999 the Applicant occupied shops 415 and 416 under a lease from the Respondent. In about August 2002 Surf City was expanded into shop 417 and a new lease came into operation between the Applicant and the Respondent in respect of the three shops, 415, 416 and 417.
Westfield Chatswood is bounded by Victoria Avenue on the North, Albert Avenue on the South, Spring Street on the East and Victor Street on the West. There is a large multi-storey car park on the south side of Albert Avenue opposite the Centre with a pedestrian bridge over Albert Avenue from the "blue" level of the car park to level 4 of the Centre. To the west, part of the Centre from level 4 upwards is built above and over a northern section of Anderson Street which runs between Victoria Avenue and Albert Avenue, parallel to, and in between, Victor Street and Spring Street. Customer access to the Centre from Victoria Avenue includes an arcade at the eastern end connecting to Level 2 (ground), 3 and 4 by means of escalators and to the west, by a ramped mall to level 4. Travelators connect the levels at the eastern, Spring Street, end of the centre. Lift access between the levels is also off the mall leading from the blue level carpark to shops 415, 416 and 417, opposite the southern end of kiosk 406.
(a)Shops 415, 416 and 417 occupy a prime location in the Centre as a whole and on level 4 in particular, as they are on the T-junction of two malls or walkways. Shop 417 is at the northern end of a north-south mall about 10 metres ("m") wide. The walkway from the blue level Albert Avenue car park links with the north-south mall on the western side about 40m from the T-junction. The east-west mall runs between a Myer store at the western end and a food court at the eastern end. Outside shops 415 and 416 the east-west mall bifurcates around a void.
(b)Shops 415, 416 and 417 have an area of 240 square metres ("m2") with a frontage of approximately 17m, of which the shop 417 shopfront is approximately 6.5m. There was a Surf City hamper sign facing south above the entry located more or less in shop 416, in line with the eastern half of kiosks 406 and 407 and the edge of the void. Shop 417 extends into the mall approx 2.4m from the shopfront line of shop 416. When Surf City expanded into shop 416, a vertical or pylon Surf City sign was mounted at the southern end of that extension, facing east.
(c)Kiosk 407, eventually occupied by Boost Juice, has an area of approximately 20m2 fitted within a substantially rectangular layout of depth along the north-south mall or walkway of 6 or so metres and a width along the east-west walkway of 3 or so metres. The distance between it and the 417 shopfront was approximately 2.7m. The width of the east-west mall in front of shops 415 and 417 is approximately 4m excluding any kiosk structures.
(d)Kiosk 406, eventually occupied by Telechoice, covers an area of approximately 17m2 within a roughly rectangular layout of north-south depth of about 5.0m and east-west width of about 3.5m. There is a distance of approximately 2.7m or so between kiosks 406 and 407. Kiosk 406, like kiosk 407, is adjacent to, and about 1m from the void on the east.
Until about 2005, when they became estranged in their family and business relationships, the directors of the Applicant were Mr George Mimis and Ms Elizabeth Mimis-Weeks, who are brother and sister. Mr Mimis had a substantial involvement in running Surf City until that time but that then ceased and Ms Mimis-Weeks took over that task. By 2005 Surf City was not doing well financially. In August 2006 proceedings were instituted by the Applicant against the Respondent in this Tribunal. On 27 June 2007 the Applicant ceased to trade from, and vacated, shops 415, 416 and 417. The Applicant makes allegations and complaints against the Respondent, broadly stated, about kiosks adjacent to Surf City and particularly about the obstruction by the kiosks of the line of sight approaching Surf City from the south, about failure by the Respondent to honour an agreement for reduction in rent on account of that obstruction, and also about unfair and otherwise improper treatment of Surf City during its period of financial trouble.
PROCEEDINGS
On 31 August 2006 there was filed by Lundy Lawyers on behalf of the Applicant, Application for Original Decision 065141 in this Tribunal, being a combined retail tenancy claim and an unconscionable conduct claim. It sought orders as follows:
"1.The lessor to provide the lessee with accurate traffic flow figures from 10 August 2002 until 31 August 2006.
2.The lessor to remove the automatic teller machines in front of the lessee's premises.
3.The lessor to remove all existing temporary kiosks and desist from putting any further temporary or permanent kiosks in front of the lessee's premises.
4.The lessee to remove the "Boost" kiosk from in front of the lessee's premises.
5.The lessee to pay the lessee damages in the amount of $400,000.00."
That Application was withdrawn by a letter signed by Ms Mimis-Weeks on 15 September 2006. In the meantime, Ms Mimis-Weeks on 11 September 2006 had made an application to the Registrar of the Retail Tenancy Unit for mediation in respect of the Applicant's claims. That mediation took place on 6 October 2006 and was not successful in producing any compromise agreement between the parties.
On 12 October 2006 proceedings 065171 were commenced by the Applicant in this Tribunal by an Application for Original Decision filed on behalf of the Applicant by The Lease Police Pty Ltd. At an interlocutory hearing on 24 October 2006 this Tribunal restrained the Respondent from taking any steps to evict the Applicant from Surf City premises pending further order, subject to the Applicant paying to the Respondent that day the sum of $50,000.00 on account of rent and the balance of outstanding rent and accruing rent, on 31 December 2006. This Tribunal in a further interlocutory hearing on 23 November 2006 varied the orders made on 24 October 2006 to provide that the outstanding rent and accruing rent were to be paid by 17 December 2006, rather than 31 December 2006. There were further variations of the interlocutory orders on 18 December 2007 to the effect that the restraining order against the Respondent was continued on condition that the Applicant pay to the Respondent $50,000.00 on account of arrears by 12 January 2007 for $53,000.00 on account of rent by 6 February 2007 and $53,000.00 on account of rent by 2 March 2007. On 8 March 2007 proceedings were set down for final hearing on 16-19 April 2007 but on 12 April 2007 that final hearing date was vacated on an application by the Applicant; the Applicant was ordered to pay the Respondent's costs thrown away in respect of the adjournment and the restraining orders of 24 October 2006 were continued on the condition that the Applicant paid rent of $53,000.00 on 1 May 2007 and a further $53,000.00 on 1 June 2007.
On 3 May 2007 various interlocutory directions concerning the ongoing progress of the proceedings were made and the restraining order of 24 October 2006 was continued until 21 May 2007. Following a further interlocutory hearing on 21 May 2007, the Tribunal in a reserved decision delivered on 20 June 2007 ([2007] NSWADT 130) ordered, among other things, the Respondent be restrained from taking any steps to evict the Applicant from Surf City premises pending further order on condition, among other things, that the Applicant pay to the Respondent on account of rent $25,000.00 per month commencing on 1 June 2007 and that security be provided, as to be agreed by 26 July 2007, or alternatively ordered by the Tribunal, for the balance of the regular monthly rental payments until the date of any final decision on the Application.
As already noted, the Applicant ceased to trade from, and vacated, Shops 415, 416 and 417 on 27 June 2007. The Application for Original Decision was amended, through new solicitors for the Applicant, on 8 August 2007 and 12 December 2007. On 23 April 2008 the Respondent filed an Application for Original Decision in proceedings 085081 claiming unpaid rent and outgoings, lost rent and outgoings and making good costs totalling $291,908.58 plus interest. On 29 October 2008 there was an interlocutory hearing which dealt with, by way of rulings, an application brought by the Respondent challenging substantial parts of the evidence filed by the Applicant in proceedings 065171. The hearing of both Applications commenced on 11 May 2009 when, among other things, a Second Further Amended Application for Original Decision was filed, that document being amended by way of the expansion of some particulars on 16 September 2009 and 12 February 2010. The hearing occupied 16 hearing days in tranches in May 2009, September 2009 and February 2010. Further submissions after the last hearing day on 12 February 2010, continued in writing until 22 March 2010 including not only a Reply but a Response to Reply and a Reply to Response to Reply.
On account of the unconscionable conduct aspect of the Applicant's claims and in accordance with Clause 4 of Division 3 of Part 3B of Schedule 2 of the Administrative Decisions Tribunal Act 1997 ("the ADT Act") I have been assisted for the purposes of the hearing by two Non-judicial Members of the Tribunal. The assistance given to me by those members has been significant and I am most grateful to have had it, but the decisions I have made herein, while made in consultation with them, are mine alone.
ISSUES
In the current Application in proceedings 065171 the Applicant seeks the following orders:
"1.Pursuant to s72(1)(a) of the Retail Leases Act 1994...an order that the Respondent pay the Applicant $400,000.00 by way of damages and/or refund of rental payments.
2.Pursuant to s72(1)(f) of the Retail Leases Act 1994...a declaration that item 10 of the Lease as altered in the manner described...below, is a term of the Lease."
The Applicant pleads and particularises, in its statement of the Grounds within the Application, five claims against the Respondent. The first is a claim based on an alleged pre-lease misrepresentation in contravention of s10 of the Retail Leases Act 1994 ("the RLA"). The second relates to the alteration of the lease as referred to in Order 2 set out in the previous paragraph. The third is a claim under s34 of the RLA alleging inhibition or alteration to a substantial extent of the flow of customers to Surf City and the significant disruption and a significant adverse effect on trading at Surf City on account of kiosks. The fourth is an allegation of breach of the covenant for quiet enjoyment in the lease, based on the same matters as the s34 claim. The fifth claim is that the Respondent engaged in unconscionable conduct in contravention of s62B of the RLA. I will now give some further details of these claims.
The pre-lease misrepresentation claim was eventually not pressed by the Applicant as giving rise to any right to compensation under s10 of the RLA. The s10 claim was withdrawn to that extent by the Applicant's Counsel at the outset of closing addresses on account of what was explained as deference to the requirement under this section for proof of knowledge in the Applicant that the misrepresentation was false or misleading. Nevertheless, the matters of fact there asserted were still relied on behalf of the Applicant as part of the unconscionable conduct claim but in the Applicant's written Submissions in Reply of 19 February 2010 Counsel advises that "The Applicant does not press as a particular of unconscionable conduct, the matters pertaining to pre lease misrepresentations that are the subject of paragraphs 1 to 4 of the Second Further Amended Application". The pre-lease misrepresentation nevertheless remains part of the pleading and was the subject of extensive evidence. It is particularised in the current Application as follows:
"The pre-lease misrepresentation was partly written and partly oral. The written misrepresentation was contained in an e-mail from Olivier Sicouri to George Mimis dated 8 March 2002. A copy of the e-mail is at pages 15 to 23 of exhibit EMW-1. The e-mail attached a floor plan of level 4 of Westfield Chatswood. The floor plan indicated that there was and would be no kiosk in front of shop 417, near shop 417 or obstructing the line of sight between the car park blue level entrance and shop 417. This was a misrepresentation. The oral misrepresentation was made by Olivier Sicouri to George Mimis and Elizabeth Mimis-Weeks in a conversation on level 4 of Westfield Chatswood. Details of the conversation are set out in paragraph 13 of the affidavit of Elizabeth Mimis-Weeks sworn 15 May 2007."
Paragraph 13 of the affidavit referred to asserts particularly that Mr Sicouri referred to Shop 417 as being "in a great location" and providing "premium frontage and the best location in the centre" and to there being a line of sight from the point of entry from the car park to level 4 of the centre to Shop 417 which was "direct and unobstructed" and "clear and unobstructed".
The Applicant pleads that in reliance on the pre-lease misrepresentation, the Applicant decided to enter into the lease commencing in August 2002 in respect of Shop 417 in addition to Shops 415 and 416.
The alteration of lease claim is based on these pleaded assertions:
"5.In about May 2002 the respondent provided to the applicant an unsigned copy of a lease in relation to the Premises commencing on 22 May 2002.
6.On or about 10 August 2002 the applicant made hand written alterations to the lease, including an alteration to item 10, signed the lease with the hand written alterations and returned the document to the respondent.
...
7.The respondent accepted the alteration to item 10, as a result of which the alteration to item 10 became a term of the Lease.
Particulars
The respondent accepted the alteration by conduct. ...
8.In light of the alteration to item 10, the respondent is required to reimburse the applicant rent and interest of over $200,000."
The handwritten alteration was in the following terms:
"For every day there is a shopfront stall and/or visual impediment to the shopfront above 1.4m high in front of Shops 415-417 for part or whole day, the minimum rent payable by the Lessee calculated on a daily basis will reduce by 10%."
The claim under s34 of the RLA is pleaded as follows:
"9.In about November 2002 the respondent erected a kiosk in front of shop 417, following which a trader called Boost Juice commenced trading from the kiosk.
10.In relation to the Boost Juice kiosk :
a)The kiosk blocked the line of sight to the Premises by customers walking through level 4 of Westfield Chatswood, in particular customers walking in a southerly direction along the corridor between the car park blue level entrance and shop 417.
b)Customers queuing or waiting for drinks at the kiosk impeded the ability and likelihood of customers entering the Premises.
c)The nature of the business at the kiosk (food outlet) was unsuitable in comparison to the nature of the business in the Premises.
d)The Boost Juice kiosk continually played loud music.
11.As a result of the matters in the above paragraph, the Boost Juice Kiosk:
a)inhibited or altered to a substantial extent the flow of customers to the Premises; and
b)caused significant disruption and had a significant adverse effect on trading at the Premises;
within the meaning of s34 of the Retail Leases Act.
12.In and from November 2002 the applicant requested the respondent in writing to rectify the matter but the respondent failed to do so....
13.As a result of the above interference, the applicant suffered loss.
14.Pursuant to s34 of the Retail Leases Act, the respondent is liable to pay reasonable compensation to the applicant in respect of the loss.
15.In and after 2003 the respondent erected further structures in front of the Premises as follows:
a)kiosk containing a business trading under the name Optus Bar;
b)kiosk containing a business trading under the name Love Salad; and
c)St George ATM.
16.In relation to these further structures:
a)The further structures caused further interference to the Premises and to the applicant's business within the meaning of s34 of the Retail Leases Act.
b)The applicant has suffered loss as a result of the interference.
c)Pursuant to s34 of the Retail Leases Act, the respondent is liable to pay reasonable compensation to the applicant in respect of the loss."
In respect of the breach of the quiet enjoyment covenant, the Applicant pleads:
"17.An express or implied term of the Lease is that the respondent shall give the applicant quiet enjoyment in relation to the Premises.
18.In light of the matters in paragraph 9 to 16 above, the respondent has breached the covenant of quiet enjoyment.
19.As a result, the applicant has suffered loss for which the respondent is liable to compensate the applicant."
The particulars given by the Applicant in the Second Further Amended Application for Original Decision for the alleged unconscionable conduct in contravention of the RLA are:
"a)The conduct described in paragraphs 1 to 16 above is unconscionable.
b)Between late 2002 and 2007 the respondent failed to remove the kiosks and other structures in front of the Premises despite repeated requests and complaints by the applicant.
c)The respondent refused to recognise that the applicant's amendment to item 10 of the lease was a term of the lease, and continued to charge the applicant rent as if there was no amendment to item 10 of the lease.
d)The respondent treated the applicant unfavourably in comparison to other tenants at Westfield Chatswood. Particulars of the unfavourable treatment are contained in paragraphs 63 to 65 of the affidavit of Elizabeth Mimis Weeks sworn 15 May 2007.
e)In about November 2005 the respondent made misrepresentations to the applicant for the purpose of inducing the applicant not to downsize its store, on which misrepresentations the applicant relied. Particulars of the misrepresentations are at paragraphs 78 and 79 of the affidavit of Elizabeth Mimis Weeks sworn 15 May 2007.
f)From about April 2006 the respondent engaged in conduct which involved trying to get the applicant out of the Premises in order to accept another tenant, which was a competitor of the applicant, called City Beach. The conduct included or was evidenced by trying to evict the applicant from the Premises, accepting key money from City Beach in about June 2005, and not granting the applicant or the applicant's nominated successor a new five year lease in relation to the Premises.
g)From about April 2006 the respondent engaged in conduct which affected the applicant's ability to sell its business by not granting a new lease in relation to the Premises.
h)In about August 2006 the respondent made misrepresentations to the applicant which induced the applicant to remain in the Premises until about June 2007. The representations are identified in the affidavit of Elizabeth Mimis Weeks dated 7 December 2007. Between August 2006 and May 2007 the applicant suffered a further loss. But for the misrepresentations, the applicant would not have remained in the Premises in this period and suffered the loss.
i)The respondent's conduct in seeking to recover unpaid rent and other amounts owing under the Lease or arising from a breach of the Lease by the applicant is unconscionable."
The particulars in (d) were amended on 16 September 2009 to read:
"The respondent treated the applicant unfavourably in comparison to other tenants at Westfield Chatswood. Particulars of the unfavourable treatment are contained in paragraphs 63 to 65 of the affidavit of Elizabeth Mimis Weeks sworn 15 May 2007 and in the provision of promotional allowances to other tenants (being Golden Smoke, Ala Sultan, Federick Casey Momo, Mocca Clothing, House of Kaldor, Em Pret a Porter, Still Water Homewares, Original Kebab, Planet of the Crepes, Seduce, Liz Jordan, Industrie, Veri, YLT Cityphone, Jusco Supermarket and Capers Deli) but not the applicant."
The particulars in paragraph (a) quoted above were qualified in the Applicant's Submissions in Reply of 19 February 2010 by the withdrawal therefrom of the particulars of paragraphs 1 to 4 of the Second Further Amended Application for Original Decision.
These particulars were supplemented by Further Particulars dated 11 February 2010 as follows:
- "Particular (a) is relied upon by itself as giving rise to unconscionable conduct...
- Particular (b) is relied upon by itself as giving rise to unconscionable conduct...
- Particular (c) is relied upon in conjunction with any one or more of particular (a), (b), (f), (g) or (h) as giving rise to unconscionable conduct ...
- Particular (d) is relied upon in conjunction with any one or more of particular (a), (b), (f), (g) or (h) as giving rise to unconscionable conduct ...
- Particular (e) is relied upon in conjunction with any one or more of particular (a), (b) (f), (g) or (h) as giving rise to unconscionable conduct ...
- Particular (f) is relied upon by itself as giving rise to unconscionable conduct ...
- Particular (g) is relied upon by itself as giving rise to unconscionable conduct ...
- Particular (h) is relied upon by itself as giving rise to unconscionable conduct ...
- Particular (i) is relied upon in conjunction with any one or more of particular (a), (b), (f), (g) or (h) as giving rise to unconscionable conduct ...
- Each of particulars (a), (b), (f), (g) or (h) are also relied upon in conjunction with any one or more of the other particulars as giving rise to unconscionable conduct ...
- All of the particulars are relied upon cumulatively as giving rise to unconscionable conduct ..."
The Applicant particularises in the Second Further Amended Application for Original Decision the losses and damages which it claims as follows:
"a)In mid 2002 the applicant spent about $400,000 refurbishing the Premises.
b)Since 2003 the applicant has suffered trading losses in relation to trade at the Premises.
c)In relation to the business conducted by the applicant from shops 415 to 417, the surf manufacturers Quicksilver, Rip Curl and Billabong had granted the owners of the business (which was the applicant since about November 1998) the right to sell the manufacturers' brands in Westfield Chatswood. Each surf manufacturer only permitted two retailers in or near any shopping centre to sell their brands. As a result of the exclusive right, the applicant's business had a value of at least $500,000. In 2007 the applicant was required to vacate the Premises because it could no longer afford to pay rent. As a result, the applicant lost the right to sell the surf manufacturers' brands in Westfield Chatswood. Hence the applicant lost a right of value, including the opportunity to sell the right, which is a financial loss to the applicant.
d)If the applicant is liable to the respondent for rent and interest claimed in proceedings 085081 in the ADT, this is an additional loss suffered by the applicant."
In a Summary of Applicant's Claim for Damages and Relief Sought dated 10 February 2010 the Applicant states that:
(a)It does not press its claim under s10 of the RLA (for $400,000 for refurbishing the expanded Surf City premises);
(b)In respect of the s34 claim (and, I gather, the quiet enjoyment claim) it claims lost gross profit result from lost sales, which profit exceeds the Tribunal's jurisdiction, so the Applicant seeks $400,000;
(c)Under the alteration of lease claim, the Applicant claims 10% of rent paid from 10 August 2002 to 28 February 2007. The total rent paid was $2,187,779.90 so the claim is $218,777.99, with interest.
(d)For the unconscionable conduct claim the Applicant seeks:
(i)The lost value of its business entitlements to brands addressed at $250,000;
(ii)The value of rent and outgoings paid from 1 September 2006 to 28 February 2007; being $53,049.88 x 6 = $388,299.28.
(iii)$400,000, as the total of these damages exceeds that figure.
(iv)An order by way of defence to the claim by the Respondent, that no rent on other amounts are payable pursuant to the lease as sought by the Respondent.
In its Amended Points of Defence filed 15 September 2009 the Respondent raises in addition to matters essentially of denial and evidentiary argument, the following points:
"1.The Lessee's Disclosure Statement in the lease document is blank although it has been altered to indicate that the Lessee did not seek independent advice. By that statement the Applicant represented to the Respondent that it was not relying on the Respondent's alleged representation in entering into the lease, the Respondent entered into the lease in reliance on this representation by the Applicant and the Applicant therefore is estopped from relying on the Respondent's representations.
2.The lease has not been executed by the Respondent and it has been signed only by one of the directors, Mr Mimis, and not by the other, Ms Mimis-Weeks. Therefore there was a lease pursuant to s8 of the RLA containing terms in the printed lease, which the Applicant agreed to, and the hand written addition to clause 10 of the printed lease, not having been agreed to by the Respondent, therefore did not form part of the s8 lease.
3.If there be a written lease it is a nullity by force of s304(1) of the Duties Act 1997 because the Applicant has failed to pay stamp duty on it."
In proceedings 085081 brought by the Respondent (as the Applicant Lessor) includes assertions that the subject lease was terminated on 28 June 2007 when the Respondent re-entered and re-possessed the premises, that the Respondent re-lease Shop 415 to "San Marina" with rent commencing on 1 November 2007, that the Respondent re-leased Shops 416 and 417 to "Forever New" with rent commencing on 24 September 2007, that the combined annual rent paid by the new lessees exceeded that payable by the Applicant under the subject lease by $2,784.71 per month, and that the Applicant failed to remove fixtures, fittings and signage and to make good the premises, all of which the Respondent was required to do. The Respondent's claim in those proceedings is particularised as follows:
"Rent/outgoings payable to Termination Date:$210,661.03
Lost rent/outgoings from Termination Date to
Commencement of new leases:$126,688.97
Make good costs: $27,500.00
LESS security deposit$ 35,625.00
LESS credit for rent differential:$ 37,316.45
TOTAL LOSS/DAMAGE$291,908.55"
The amount claimed later increased to $327,533.55 as the guarantee or other document constituting the security deposit expired without the Respondent calling it up.
In its Amended Response in proceedings 085081 filed on 17 September 2009 the Applicant says:
"1.The respondent (Spuds Surf Chatswood Pty Ltd) claims that the conduct of the applicant (PT Limited) in seeking to recover from the respondent loss or damage suffered by reason of or arising out of the breach of the lease by the respondent is unconscionable within the meaning of s62B of the Retail Leases Act 1994 (NSW)
Particulars of unconscionable conduct
See particulars of paragraph 20 of the second further amended application filed in proceedings no.65171 on 11 May 2009 ("the Claim")
2.Further or in the alternative the respondent claims a set off in respect of the amount payable to it by reason of the matters set out in paragraph 5-8 of the Claim."
FACTUAL OUTLINE
November 1998 - March 2002 - Surf City
In a tendered affidavit, Ms Mimis-Weeks gave some background to the purchase by the Applicant of Surf City in November 1998:
"The purchase price was $650,00 (not including stock). A reason Spuds paid $650,000 to purchase the business was as follows:
a)There are three major suppliers of surf brands in Australia - Quicksilver, Rip Curl and Billabong.
b)Each supplier only permits two retailers in any shopping centre to sell their brands.
c)As at November 1998 there were two retailers in or near Westfield Chatswood selling surf brands. They were Surf City and Surf Dive and Ski.
d)Accordingly, a significant part of the purchase price of $650,000 was for the exclusivity of the right to sell the three brands in and near Westfield Chatswood."
By lease bearing date 11 February 1999 the Respondent granted to the Applicant a 5 year term in Shops 415 and 416 in Westfield Chatswood commencing on 15 January 1999 at a base rent of $212,800 per annum. The lease was executed by Mr Mimis and Ms Mimis-Weeks as directors of the Applicant and as guarantors. There had been negotiations for the lease with Westfield involving Mr Mimis and Gary Cassim & Associates, Solicitors, on behalf of the Applicant.
At that time Kiosk 406 was occupied by Optimum Leasing Pty Ltd for the retail sale of sunglasses, sunglasses accessories and brand name items of ultra-violet protection, for a term of 5 years from 1 November 1997. Kiosk 407 was occupied under a 5 year lease from 1 February 1998 by Garber Holdings Pty Ltd for the retail sale of jewellery, watches and gifts. That lease of Kiosk 406 was surrendered on about 27 October 1999 and that lease of Kiosk 407 was surrendered on about 7 July 2000.
From about August 1998 to November 1999 there were redevelopment building works carried out within Westfield Chatswood. In a memorandum faxed to Westfield management on 10 September 1999 Mr Mimis particularised a decline in turnover of Surf City in that period and sought "some form of rental refund or credit for the period" on account of the building works. Thereafter Surf City's account with Westfield was credited with various amounts totalling about $54,000.00 by way of "promotional allowance".
After negotiations extending over a period of a few months and involving a Development Application to Willoughby Council, on 1 September 2001 a registered 5 year lease of 55 square metres premises in and around Kiosks 406 and 407 between Develop 7 Australia Pty Ltd (trading as "B Zone") and the Respondent commenced. The B Zone kiosk as set up comprised four illuminated "walk through" display units on a north-south line parallel to an adjacent void on the east and a further four illuminated display units and a cash and wrap counter in front of them in a semi-circular shape. The western side of that counter was the kiosk's widest point, the width of the kiosk there being about 5 metres. There was an illuminated sign in the form of a globe of diameter approximately 800mm or so on top of a narrow diameter pole about 1.2m high above the cash and wrap counter and mirrors on top of the display unit. There was track lighting suspended from the ceiling and two ceiling-mounted television monitors on pantograph suspension systems. There were from time to time items exhibited for sale on top of the display units.
Between July and December 2001 there were negotiations between Mr Mimis and Mr Olivier Sicouri (then a Westfield leasing executive and later the managing director of his own asset and investment business) for a new 5 year lease to the Applicant of Shops 415 and 416. In an affidavit Ms Mimis-Weeks recounted that situation:
"In late 1999 there was a large refurbishment and expansion of Westfield Chatswood. Following the refurbishment and expansion, in late 2001 communications commenced between Spuds and Westfield in relation to Surf City moving to a new location. ...
Initially, the negotiations between Spuds and Westfield concerned the possibility of Spuds moving to a new location close to the Victoria Avenue arcade entrance of Westfield Chatswood. However, George and I rejected this opportunity and decided to remain in shops 415 and 416. The negotiations then concerned Spuds taking a new lease of shops 415 and 416. The reason George and I were interested in taking a new lease of shops 415 and 416 (before the expiry of the 1998 lease) was:
a)In 2002 we planned to do a refurbishment of Surf City in shops 415 and 416.
b)Before we undertook the refurbishment, we wanted the security of a five year lease (in contrast to one year remaining on the 1998 lease)."
In March 2002, it transpired that the tenant in shop 417 was vacating and negotiations commenced between the Applicant and the Respondent concerning the expansion of Surf City into shop 417.
Spuds Surf /Surf City Stores
By mid 2001 there were several Spuds Surf or Surf City stores including Westfield Surf City. Five were owned by companies owned by Mr Mimis: Westfield Burwood, Westfield Hornsby, Parramatta, North Rocks and Carlingford. Two stores were owned by the Applicant being Surf City within Westfield Chatswood and another store at the corner of Victoria Avenue and Archer Street, Chatswood. Ms Mimis-Weeks worked full time at a management level at the Carlingford and Hornsby stores from about 1995 to 2005 and from 1999 at Surf City at Westfield Chatwood; her evidence is that she was at each store at least twice a week. Mr Mimis had a controlling role in respect of all Spuds Surf and Surf City stores until about 2005. There was a leased warehouse for the stores at Chatswood and until about 2005 there were transfers of stock between all Spuds Surf and Surf City stores without money changing hands for such transfers. A computerised accounting programme called 'Osipos' was used for the stores until about 2002 when MYOB was used as the accounting software. External accountants were used by Spuds Surf to finalise and lodge annual tax returns, business activity statements and instalment activity statements.
March 2002 - August 2002 - Expansion to Shop 417
During February 2002 Mr Mimis had been negotiating in writing and meetings with Mr Sicouri on behalf of Westfield for a new lease of shops 415 and 416, at a base annual rent of about $250,000. Those negotiations were overtaken towards the end of February 2002 by information that shop 417, which was occupied by Nike, would be becoming vacant in the near future. Further negotiations between Messrs Mimis and Sicouri led to a lease for a term of 6 years commencing August 2002 at a base annual rent of $472,500 for shops 415, 416 and 417 being issued by Westfield's solicitors, Landerer & Company, to Mr Mimis on 8 May 2002. That lease had been recommended within Westfield management by Mr Sicouri on 13 March 2002 and it was approved by Westfield on 18 March 2002 as advised to Mr Mimis by Mr Sicouri by a letter of that date which attached Disclosure Statements. On 22 March 2002 Mr Mimis signed the Disclosure Statements and made alterations to some details within the Lessor's Disclosure Statement but made none to the Lessee's Disclosure Statement; agreement to those amendments was achieved by an exchange of faxes between Mr Sicouri and Mr Mimis a few days later.
Ms Mimis-Weeks claims, and the Respondent disputes, that as to the events leading up to the lease of Shops 415, 416 and 417:
(a)Between 11 March 2002 and 20 March 2002 she met with her brother and Mr Sicouri on Level 4 at Westfield Chatswood concerning the possibility of Surf City expanding into Shop 417 and in particular, they observed and discussed the line of sight from the area of the entrance to Level 4 from the blue car park, north towards Shop 417;
(b)Mr Mimis had passed on to her, and she relied on, a floor plan forwarded by Westfield to Mr Mimis, of Level 4 which did not show any kiosks outside Shop 417.
The competing contentions on these matters will be scrutinised later in this Decision as will disputes in the evidence concerning a number of other discussions involving her and Westfield personnel and outlined below.
It is convenient at this stage, however, to set out in more detail an account from contemporaneous documentation concerning these events of February - March 2002:
13 February 2002
Mr Sicouri wrote to Mr Mimis referring to recent discussions regarding a proposed new lease of Shops 415 and 416 and enclosing a disclosure statement of several pages for a 5 year lease commencing on 1 May 2002 with a base annual rent of $252,000. The letter also enclosed a red-covered booklet of 40 or so pages being Westfield's "Fitout Requirements - Specialty Shops" ("Fitout Requirements" or "red book") and stated Westfield's proposal to be subject to, among other things, "compliance with the requirements in the enclosed booklet 'Fitout Requirements - Specialty Shops'". The disclosure statement also included reference to finishes, fixtures etc to be provided by the Lessee being "In accordance with the Fitout Requirements".
20 February 2002
Mr Mimis returned the disclosure statement and other documentation to Mr Sicouri with a number of suggested amendments, changes of the commencement date to 1 July 2002, of the base annual rent to $250,000, and expanding the permitted use of the premises from "retail sale of Surf Boards, Wet Suits, Skis and associated Clothing and accessories" to "retail sale of Surf/Skate/Street/Snow Clothing accessories, Surf and Boogy Boards, Wet Suits, .... and apparel."
25 February 2002
Mr Mimis sent to Mr Sicouri a memorandum offering a minimum rent of $360,000 per annum for 240 m2 comprising the Nike store and Shop 415 and 416 with "other terms as per my memo dated February 20 2002." The memorandum from Mr Mimis also referred to discussions with Mr Sicouri for a Surf City store in Westfield Eastgardens and proposed terms for the lease of the store.
8 March 2002
Mr Sicouri forwarded by email to Mr Mimis a chain of several short emails, concerning Shops 415, 416 and 417, involving himself and other Westfield personnel between, it seems, 4 and 8 March 2002. The reproduction of the emails which has been tendered is poor and difficult to follow in respect of material around 4 March 2002. The emails refer to a plan. There are two attachments in A4 size in the reproduction tendered, the first being a floor plan of Level 4 of Westfield Chatswood in small scale and the second being a drawing entitled "Sketch Plan" and marked "Preliminary" showing shops 415, 416 and 417 combined. The email from Mr Sicouri to Mr Mimis says simply "As discussed". In the reproduction of the email chain as tendered, that email is immediately preceded by an email from Mr Sicouri to Mr Ron Zeman of Westfield saying "This plan does not make sense".
11 March 2002
Mr Mimis forwarded that email chain to Ms Mimis-Weeks saying "FYI new floor plan" and attaching two PDF documents, one of which is referred to in the attachment part of the heading on the email as "L4 - cover" and the other as "SK415-16-17".
13 March 2002
Mr Sicouri prepared a Westfield Business Case Recommendation for a lease of shops 415, 416 and 417 to Surf City for 6 years at proposed minimum rent of $427,500 per annum.
18 March 2002
Mr Sicouri wrote to Mr Mimis with respect to "Proposed lease of Shop 415/7":"We refer to your recent discussions with Mr Olivier Sicouri, Regional Manager-Leasing and on behalf of the Lessor, PT Ltd, we have pleasure in submitting our proposal to you for a lease of the above premises. Details of our proposal are set out in the Disclosure Statement which is attached in duplicate to this letter."The disclosure document comprised several pages and like the letter of 13 February 2002 enclosed a copy of the Fitout Requirements and required compliance with them. The disclosure statement also included reference to finishes, fixtures etc having to be provided by the Lessee being "In accordance with the Fitout Requirements".
22 March 2002
Mr Mimis returned the completed disclosure statement documentation by fax to Mr Sicouri. He had made a number of alternations and additions to the document which he had signed and dated in various places. One printed page headed "Lessee's Disclosure Statement - Advice to Lessor" included Item 5 which read:"In entering into the retail shop lease, the Lessee has relied on the following statements or representations made by the Lessor or the Lessor's agent."That item left space for matters to be inserted. None was inserted. In the Advice to Lessor the word "sought" (as an alternative) was deleted from Item 3 so that it read:"The lessee has 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."
25 March 2002
Mr Sicouri wrote a letter to Mr Mimis in response to Mr Mimis' communication of 22 March 2002 requesting confirmation of his acceptance of his responses by signing and returning a copy of that letter.
5 April 2002 Mr Mimis faxed to Mr Sicouri a memo attaching a copy of the letter of 25 March 2002 which Mr Mimis had signed on 4 April 2002.
5 April 2002 Mr Sicouri wrote to Mr Mimis in reply and advised that Westfield's solicitors, Landerer & Co., had been instructed to issue lease documentation. Contact details were also supplied of Westfield's Tenancy Co-Ordinator and Specialty Shops' Designer.
It is also convenient to note again that the then frontage of Shops 415 and 416 was about 10.5 metres and that the frontage of Shop 417 which adjoined Shop 416 on the west was about 6.5 metres. Shop 417 was opposite the eastern side of the north-south mall walkway. Shops 415 and 416 were approximately 133 m2 in area and the combined area of Shops 415, 416 and 417 was about 240 m2.
On 8 May 2002, Landerer & Co, Solicitors, on behalf of Westfield wrote to Mr Mimis in respect of shops 415, 416 and 417, enclosing for his attention a lease in duplicate, a Deed of Agreement in duplicate, a Westfield check list and an invoice for their costs and disbursements. The letter stated that those documents were forwarded on the following conditions precedent:
(a)The existing lessee in respect of shop 417 surrendering its lease on terms and conditions acceptable to the Lessor.
(b)Our client must be able to obtain vacant possession of the premises before possession is granted under this Lease.
(c)Our client must approve the plans for any proposed alterations to the premises and for any illuminated sign. Any such plans should be sent directly to our client for its consideration.
The letter also stated that:
"The Lessee shall not be permitted to commence trading until we have received the following:
1.Executed Lease in duplicate.
2.Executed Deed of Agreement in duplicate.
3.Completed Westfield Document Checklist.
4.Cheque in our favour as shown in the attached account.
5.Cheque for $11,236.30 in favour of the Office of State Revenue in respect of anticipated stamp duty. Please ensure that your name, address and the details of the Premises appears on the reverse side of the cheque.
6.Cheque or Bank Guarantee for $35,625.00 in favour of P.T. Limited for the security deposit.
7.Cheque for $39,187.50 in favour of P.T. Limited for one month's rent in advance inclusive of GST.
8.Original Insurance Certificate(s) of Currency. We have enclosed a letter specifying our client's requirements and request that you forward it urgently to your insurance brokers.
9.Engineer's certificate certifying the structural adequacy of the fitout to be handed to centre management."
On 14 May 2002 there was a meeting between Mr Mimis and Ms Megan Johnson, a Regional Manager - Leasing for Westfield, agreeing that:
(a)The Nike shop would cease trading on 30 June 2002 and would remove fixtures, fittings, lighting and so forth, leaving the remainder of the tenancy to be made good by Spuds Surf.
(b)Rent for Shops 415, 416 and 417 would commence on 1 August 2002 (that date was subsequently extended to 10 August 2002).
(c)The Respondent would contribute an additional $10,000 to the Lessee's fitout making the total contribution in that regard $30,000.
For the year ended 30 June 2002, the Applicant returned for tax purposes a profit of $3,522.00.
On 1 July 2002 Mr Mimis wrote to Ms Johnson requesting that the commencement date for the rent be extended and that the lease include a promotional rebate on the minimum rent should the ratio of rent to gross sales exceed 18%. The extension of the date for the commencement of rent was ultimately agreed to but Westfield did not agree to the proposed promotional rebate.
The Applicant took possession of Shop 417 about 3 July 2002 and undertook refurbishment of Shops 415, 416 and fitting out Shop 417.
On 9 August 2002 Mr Mimis met with Mr Gary Pinter, another Westfield leasing executive, and Ms Johnson at Westfield's Head Office. Ms Mimis-Weeks says that shortly before that meeting Mr Mimis told her:
"I am concerned about the level of rent we have agreed to pay, as well as the clutter of traders in and around the store. I have organised a meeting at Head Office to discuss the matter with Westfield."
The Respondent allowed the Applicant to take possession of, fit out, and commence trading from shop 417 without securing execution by the Applicant of the lease and notwithstanding that on Monday, 12 August 2002, Mr Talbot Sanderson, the Assistant Centre Manager, reported to, among others, Ms Johnson and Mr Pinter that:
"The new store was due to open on Saturday. I have spoken to George Mimis on Friday and today to advise that until leases, bank guarantees, structural certificates etc are received, he must not open.
He had advised on Friday that he would have documents to us by the end of Friday, that then became Saturday and he is now saying 5 pm today.
The difficulty is that he is expanding into the store next door ... so he is open and trading in the old half whilst the fit out occurs in the new half ..."
On or about 21 August 2002 Landerer & Company received a cheque and a partially executed lease from Mr Mimis. The cheque was for the first month's rent plus GST and this was in replacement for an earlier cheque which Mr Mimis had sent on or about 13 August 2002 and which was not met on presentation. The lease was signed by Mr Mimis only; it was not signed by Ms Mimis-Weeks who says that she thought she did not have to sign the lease because Mr Mimis was both a director and the company secretary and had therefore signed it in both capacities. Mr Mimis had made manuscript changes to the lease by altering the commencement date to 11 August 2002 and the expiry date to 10 August 2008 but also adding to Item 10 on the front page of the lease:
"For every day there is a shop front stall and/or visual impediment to the shop front above 1.4 metres high in front of shops 415 to 417 for part or whole day, the minimum rent payable by the Lessee calculated on a daily basis will reduce by 10%."
On 26 August 2002 Landerer & Company wrote to Mr Mimis:
"We refer to the Lease and Deed of Agreement recently returned to us and note:
1.you have not provided us with a cheque for costs and stamp duty as requested under cover of our letter dated 8 May 2002;
2. you have amended the commencement and expiry dates to read 11 August 2002 and 10 August 2008. This is not agreed and we have been instructed that the commencement and expiry dates must be 10 August 2002 and 9 August 2008 respectively. Please let us have your written authorisation to make this change to Item 7 and 8 of the Lease;
3.you have made an unauthorised addition to Item 10 of the Lease and this addition is not agreed. Please let us have your written authorisation to delete this addition;
4.the documentation has not been fully executed. As you would be aware from previous leases entered into by our company, the documentation must be signed by the two directors or one director and one secretary of the Lessee company. It is not acceptable that the Lease only be executed by George Mimis and returned to us. The documentation must be executed by both George Joseph Mimis and Elizabeth Anne Weeks. We therefore enclose re-engrossed pages 6 and 7 of the Deed of Agreement in duplicate and re-engrossed pages 33 and 34 of the Lease in duplicate. Please ensure that the pages are executed properly this time and returned to us.
Once you have attended to all of the above, we may be in a position to certify to our client that the documentation is in order for execution by it."
September 2002 - December 2003 - Boost Juice and Other Kiosks
Negotiations which had commenced in the end of July 2002 between Westfield, Boost Juice Pty Ltd and D-7 Cosmetic Pty Ltd concerning B Zone vacating kiosks 406 and 407 and kiosk 407 becoming a Boost Juice outlet, continued through to about 5 November 2002 when the B Zone kiosk was removed and construction of a Boost Juice kiosk commenced. The Boost Juice kiosk commenced trading on about 15 November 2002.
As already noted, Kiosk 407 had an area of approximately 20m2 fitted within a substantially rectangular layout of depth along the north-south mall or walkway of 6 or so metres and a width along the east-west walkway of about 3.5 metres. The Boost Juice kiosk as installed included two blade signs. One was located on the western side towards the south western corner, facing north-south; it presented advertising and menu material, and it extended to approximately 2.8 metres above the floor and was approximately 900mm wide ("the first Boost Juice sign"). The other sign was at the north eastern corner of the kiosk facing east-west, in similar form ("the second Boost Juice sign"). The first Boost Juice sign had affixed at its top, about 300mm high, formed separate letters reading "Boost", facing north. There was nothing affixed above the second Boost Juice sign. On the western side of the kiosk on the northern side of the first Boost Juice sign, there was a free-standing bottled drink refrigerator of about 1.8m height and about 800mm width. At the north-western end of the Boost Juice kiosk there was a glass display case on top of the counter, to a height of about 1600mm in and on which pineapples and other promotional material seem to have been regularly placed. The north-western corner of the kiosk was within 3.0m of Shop 416 and the northern end of the kiosk was about 1.5m closer to Surf City than the B Zone kiosk had been. The lease of the Boost Juice kiosk included a term that the Lessee's fitting out works would be carried out as shown in the "approved plans" and "in accordance with the fit out requirements provided to the Lessee by or on behalf of the Lessor".
The matter of this, and other, kiosks was raised in writing by Mr Mimis with Mr Timothy Roberts, who had commenced as the Centre Manager of Westfield Chatswood in August 2002, on 12 November 2002:
"I write regarding my premises Shops 417-417 Westfield Chatswood.
As you are no doubt aware, I have been extremely concerned regarding the clutter of temporary and permanent kiosks outside of my shopfront and main entrance. It is interesting to note that since the cosmetic kiosk was removed that my sales have significantly improved over the last week. Moreover, the signage and entrance is much more visible to through traffic entering from the foodcourt carpark.
It is disconcerting to see that the new kiosk being built at present is so close to my entry door, much closer in fact then the previous kiosk. I trust that the Westfield height restrictions on such kiosks will prevent my shopfront and signage from being blocked from the foodcourt carpark entrance.
I further express my concern over the continuing temporary kiosks located adjacent to my shopfront which create a barrier to ease of movement and entry to my store. The most recent being the calendar temporary trader last week. These matters require resolution as they are noted in my new lease and have been discussed in person with Gary Pinter and Megan Johnson.
You will be aware that I pay a premium rent to achieve the shop front and location that I trade from and as such I cannot afford to have my trade impeded by such kiosks without concurrently addressing any rental. This is particularly the case when I have now some sales record of the improvement when the clutter is removed.
Perhaps we can meet on site to review the above further as a matter of urgency..."
Mr Mimis responded to Landerer & Company's letter of 26 August 2002 (set out above) by a letter dated 9 December 2002 (which he copied to Mr Roberts), dealing with the numbered points raised by Landerer & Company as follows:
"I write in response to your letter dated 26 August 2002 and apologise for the delay. I have been attempting to resolve my concerns relating to point 3 in your note directly with Centre Management to no avail.
I address the points in your correspondence as follows;
1.Payment of your costs will be forthcoming.
2.Agree to commencement date of 10 August 2002 and expiry of 9 August 2008.
3.Not agreed.
In discussion with each of Gary Pinter and Megan Johnson of Westfield Leasing (including a meeting at 12.30 pm on 9 August 2002 at Westfield HQ), the issue of the casual tenancies outside and around my doorway and visual impairment as a result of kiosk sightlines was discussed. It was understood as a result of this meeting that we would meet on site again to work out a resolution to my concerns which were agreed to by the parties in this meeting. At this point there has been no resolution.
In fact, casual tenancies have been abundant since the commencement of this new lease creating difficulties for traffic flow to see and access my shopfront. Additionally, a large Boost Juice kiosk has now been erected directly outside my doorway entrance with signage well in excess of the limitations placed by Westfield as follows: pursuant to Clause 7.0 - Appendix 6 Kiosks of the Westfield Fitout Requirements (Specialty Shops), it is clearly noted that "maintaining sightlines through all Kiosks is essential, therefore height restrictions apply. Maximum height 1400mm, (public contact is recommended at 1200mm.)" The signage erected by this Kiosk at 2600mm is well in breach of your standard fitout guidelines, thus further impairing my shopfront.
I have been offered additional signage opportunities by centre management on 27 November 2002, at my own expense, which is not an acceptable resolution this problem given the very significant rental I pay for the premium frontage that I should have.
Perhaps if I may suggest a meeting with Westfield HQ (Gary Pinter and appropriate leasing personnel), may be step 1 in this resolution process. However, I must note that should this not be resolved promptly, as it is now well overdue and impairing my optimal trade, that I will have to retrospectively invoke the hand written amendment to Item 10 of the lease.
4.I will have the required pages re-executed as per your request.
Your early attention to the above would be most appreciated."
On 20 March 2003 Westfield agreed on the commercial terms for a lease of Kiosk 406 to Business Service Brokers Pty Ltd trading as Telechoice. The Telechoice kiosk (sometimes referred to as "the Optus kiosk") was subsequently installed and commenced trading on 1 June 2003. As already noted, Kiosk 406 covered an area of approximately 17m2 within a roughly rectangular layout of north-south depth of about 5m and east-west width of about 3.5 metres, and there was a distance of 2.5m or so between kiosks 406 and 407 and the Telechoice kiosk had a blade sign on the eastern side facing north-south about 800mm wide standing about 1m above the kiosk cabinet. The subject lease included a term that the Lessee's fitting out works would be carried out as shown in the "approved plans" and "in accordance with the fit out requirements provided to the Lessee by or on behalf of the Lessor".
On 13 May 2003 Mr Mimis again wrote to Mr Roberts concerning the Boost Juice, and other, kiosks outside Surf City:
"Further to our various discussions and correspondence I write to you to bring to finality the issue relating to Boost Juice and various other kiosks outside my tenancy.
As discussed with you last year, clearly the placement and height of this Boost Juice tenancy is contrary to Westfield's standard design requirements, whilst the kiosk is larger than any previous kiosk in this location as per lease plans. I feel strongly that this has had an impact upon my immediate trade and traffic flow. Moreover, the variety of other temporary kiosks outside and around my premium shopfront have also impacted my trade potential. This is highlighted by the numerous weeks of casual trading of cheap ladies apparel kiosks selling replica garments to many of those sold in my store but subject to significantly lower rent and no fitout requirements, right adjacent to my shopfront.
Consequently, I now urgently need to bring this matter to closure. As you are aware there exists a provision in my lease to withhold 10% of the gross rental under the above circumstances. At this point I am left in a position where I will have to invoke this clause..."
Mr Mimis and Mr Roberts met on 23 May 2003 to discuss the matter and Mr Roberts wrote to Mr Mimis on 28 May 2003 setting out his appreciation of the outcome of that meeting:
"Further to our meeting of Friday 23 May 2003 concerning your issues in relation to the Boost Juice Kiosk and its height and the casual fashion adjacent to Boost Juice.
As indicated, the casual site will become a permanent kiosk in the coming weeks and the casual fashion will cease.
Secondly, having reviewed the information supplied by you in relation to Boost Juice, the following information is provided.
The issue that you have constantly identified is the height of the menu boards. The section of the fit out guide you refer to, page 40, is specific in reference to the kiosk height to be restricted to 1400mm. This has been complied with strictly. On page 41, the restriction on menu boards only that they 'be kept to a minimum' in quantity. No restriction in height is identified or implied and as a result, I believe no further issue exists here.
Trusting this clarifies matters and should you have any further concerns, please do not hesitate to contact me."
The Applicant recorded a loss of $389,793 compared with a profit of $3,522 which the Applicant had achieved in the 2002 financial year. The figures for 2003 included an item, seemingly unexplained, of $590,022 for "other expenses" which was about $400,000 higher than the corresponding figure in 2002.
On 1 July 2003 Mr Mimis opened a new Spuds Surf store at 350 Victoria Avenue, Chatswood. That store took over the Billabong account from Surf City and thereafter Surf City ceased taking Billabong and Mambo products from around March 2004. Purchases of these two products had been in the order of $20,000 per month.
Mr Mimis re-visited the issue of the kiosks with Westfield on 1 December 2003 when he wrote again to Mr Roberts:
"Further to our various conversations, meetings and correspondence I write to further address the matter that is the Boost Juice Kiosk outside my tenancy.
You note in your letter to me dated 28 May 2003 that you believe no issue exists in relation to the height of the kiosk. However, I believe you may have misinterpreted the Westfield Fitout Requirements Handbook. Point 7.0 page 40 states 'maintaining sight lines through all kiosks is essential, therefore height restrictions apply. Maximum height 1400mm." The point you refer to stating 'overhead elements including menu boards and structure are to be kept to a minimum' is not relevant here as the Boost Kiosk structures that are over 1400mm are not overhead but rather from the ground up. Had they been overhead they would not create the level of visual impairment that they currently do to my tenancy.
As such it would be appreciated if you could advise as a priority how you intend to rectify this situation."
There is no evidence of any response to that letter.
January 2004 - June 2005 - Ms Mimis-Weeks' conduct of Surf City
Mr Mimis ceased to be a director of the Applicant, according to ASIC records, on 27 January 2004. Mr Mimis has not given evidence in the hearing of this Application and the significance of that situation will be addressed later in this Decision.
On 12 March 2004 Landerer & Company wrote to Mr Mimis enclosing a copy of their letter of 26 August 2002, noting that they had had no response from him and seeking return of the duly executed re-engrossed pages for the lease within seven days. Mr Mimis responded by way of letter dated 30 June 2004, again addressing the numbered paragraphs within the letter from Landerer of Co of 26 August 2002:
"1.I will clarify whether in fact a cheque was drawn for your costs and stamp duty.
2.Agree to commencement date of 10 August 2002 and expiry of 9 August 2008.
3.Not agreed. This has been communicated on numerous occasions to the Centre Management with no response forthcoming.
4.Elizabeth Mimis is a sole director for this company. I will have the required pages re-executed by her and attach a copy of an ASIC verification for your file."
For the year ended 30 June 2004 the Applicant recorded a loss of $222,612.
In July 2004 the store operated by the Applicant at the corner of Victoria Avenue and Archer Street, Chatswood, closed and in November 2004 the Spuds Surf store at 350 Victoria Avenue, Chatswood, owned by Mr Mimis, closed.
On 1 November 2004 Westfield wrote to the Applicant noting that a total of $97,041.36 was outstanding under the subject lease and threatening termination of the lease unless the amount were received in full within 7 days.
On 1 February 2005 a lease by the Respondent to Love Salad Pty Ltd in respect of Kiosk 426 commenced. This lease had a permitted use of the retail sale of salads and bottled water. Kiosk 426 was located to the south of Kiosk 406 about 4m distance on the eastern side of the north-south mall, just south of the point where the east-west walkway bifurcated around the void to the east.
On 18 February 2005 Mr Andrew Stevens, then a Regional Leasing Manager for Westfield, and Mr John Papagiannis then General Manager of Leasing for Westfield, met with Mr Mimis and they discussed the possibility of downsizing the Surf City store at Westfield Chatswood. On 21 February 2005 Mr Stevens followed up that meeting with an email to Mr Mimis setting out a proposed downsizing of Surf City involving taking 65 m2 of Shop 415 out of Surf City lease and leaving that lease with an area of Shops 416 and 417 of about 175 m2, and reducing the gross annual rent for Surf City from $535,000 plus GST to approximately $438,000 plus GST. The email attached a sketch plan showing the proposed downsizing. Mr Mimis responded by email to Mr Stevens on 23 February 2005 "I will review this and get back to you". The evidence does not disclose any further communication between them.
On 23 February 2005 Landerer & Company sent a fax to Mr Mimis in response to his letter to them of 30 June 2004:
"We refer to your facsimile dated 30 June 2004 and advise that we have been instructed to respond as follows:
1.We still wait receipt of cheque for our costs and cheque for stamp duty in this matter. We note that the Lessee will be liable for any fines and penalties that may be imposed by the Office of State Revenue as a result of late payment in stamp duty.
2.The Commencement and Expiry Dates of the Lease have now been amended as agreed.
3.The Lessor will not agree to the unauthorised amendment made at Item 10 of the Lease and once again we request your authority to reinstate item 10 to its original form.
We note that such authority may be given by signing and forwarding copy of this facsimile back to our office.
4.We await receipt of ASIC verification that Elizabeth Mimis is the sole director/secretary of the Lessee company at the time that the Lease was executed. This was not attached as noted in your facsimile.
We advise that we are unable to progress the Lease in this matter until such time as the outstanding items above are attended to by the Lessee..."
Following a telephone conversation which she had with them the previous day, on 29 April 2005 Landerer & Company forwarded to Ms Mimis-Weeks a copy of their fax of 23 February 2005 to Mr Mimis and also a copy of the lease in its then executed form. The covering letter from Landerer & Company requested that she "please provide us with the outstanding items as requested in our facsimile." Ms Mimis-Weeks says in evidence that she did not sign the lease or the guarantee because the Respondent refused to agree to the hand-written amendment to Item 10 of the lease, but it was her view that there was a lease in force.
In May 2005 a St George ATM was placed outside Shop 417 at the western end of the shop-front.
From 24 June 2005 to 26 June 2005 Westfield permitted Surf City to operate a temporary merchandising stall outside the shop at no charge.
For the year ended 30 June 2005 the Applicant recorded a loss of $227,745.
July 2005 - August 2006 - Events leading up to ADT Application
On 14 July 2005 Ms Mimis-Weeks met with the then Centre Manager, Mr Gregory Patterson, and two other Westfield Centre personnel. Ms Mimis-Weeks complained about some temporary stalls on Level 4 and they dealt with her complaints. In the course of the discussions, she enquired concerning further temporary stall bookings for Surf City and they also suggested to her that she take advantage of the services of a retail consultant, which they offered.
On 26 July 2005 Ms Mimis-Weeks met at the Centre with Mr Derek Rossel who had just taken over as the Centre Manager and Mr Andrew Stevens, a Westfield leasing executive. A number of matters were discussed including the possibility of the chain called City Beach coming into the centre, temporary stalls and the possibility of Surf City being downsized. The evidence of Ms Mimis-Weeks and Mr Stevens confirms that Mr Rossel said something to the effect that he would stop future casual stalls being placed on the balcony in front of Surf City. Overall, however, there is conflict in the evidence as to the details of the discussions, particularly whether the issue of sightlines was raised. Ms Mimis-Weeks emailed Mr Stevens the following day:
"Thank you for your time yesterday, I look forward to some positive results from our meeting yesterday. I am giving serious thought to the opportunity for a store such as you described. I am unable to meet Friday, but Monday around 1 pm is good for me, does this suit you? Thanks."
On Monday, 1 August 2005, Mr Mimis-Weeks met again with Mr Stevens. Their discussions commenced at the Centre Management office at Westfield Chatswood and they walked around the centre. They had discussions concerning the possible downsizing of Surf City. Again, there is conflict in the evidence as to the details of this discussion.
Mr Stevens sent an email to Ms Mimis-Weeks on 8 August 2005 with reference to the "proposed downsize" of Surf City. This set out the same details as had been contained in Mr Stevens' email to Mr Mimis of 21 February 2005 (detailed above) and attached the same sketch plan. Ms Mimis-Weeks responded by email on 11 August 2005:
"Just want to confirm details of our meeting relating to below. At our meeting you did mention that Westfield would pick up the costs of downsizing the store should I elect to do so with a new 6 year lease being offered to me and that the new rent for the smaller store would be around $150,000 less than what I pay now. You also recommended that the downsizing occur on the ladies side of the present store. I do understand that these are all discussion points which need to be finalised should I go ahead with the proposal.
Also, have you had any feedback from your design team on the present obstructions to my shopfront from the kiosk tenancies? I am interested to see what you can offer me to offset this situation. Looking forward to catching up again shortly."
Mr Stevens responded on the same day by making these points:
" · Lessor pays for new intertenancy wall etc
- 6 year lease
- I do not recall $150, however I could try and get the differential to $120k gross
- I am looking at the sightline matter today with design"
Mr Rossel met with Ms Mimis-Weeks again on 23 August 2005. In attendance also was Ms Katie Preston who was a retail design manager or retail architect at Westfield Chatswood. Ms Mimis-Weeks' evidence is that the purpose of the meeting was "to discuss what Westfield could offer me by way of compensation for the sightline blockage as a result of Boost and other kiosks" whereas Mr Rossel's evidence is that Ms Mimis-Weeks requested the meeting to discuss moving the signage on Surf City to a more visible location. On 31 August 2005 Ms Preston emailed Ms Mimis-Weeks:
"It was great to meet you last week with Derek Rossel to discuss some of your concerns regarding the shopfront for Surf City-Chatswood.
Following our meeting last week, please find attached photos of your shopfront. As discussed I am happy to work through some additional signage opportunities with your designer or signage contractor, to assist with your shopfront branding presentation and exposure.
Please don't hesitate to contact me if I can be of assistance, or you wish to discuss further."
Mr Rossel said in evidence:
"I do recall Ms Preston told Ms Mimis that, if she drew up a design for new signage, Ms Preston would review it. As far as I know, Ms Mimis did not submit a design for new signage and the Applicant's main sign remained above shops 415 and 416."
Ms Mimis-Weeks met with Mr Rossel on 13 September 2005 and apparently requested that Mr Mimis be released as a guarantor under the lease of Surf City on the basis that she would give that guarantee. Mr Rossel emailed her the following day confirming that Westfield "would require a statement of Assets and Liabilities (and Net Asset position) to be completed and verified by your accountant". Ms Mimis-Weeks responded the following day by email:
"Thanks for your time yesterday. Whilst I have been a tenant of Westfields for many years I do understand that a change to the guarantor on the lease requires you to conduct due diligence.
I do not envisage any problems regarding my credit worthiness or my ability to provide Westfield with a personal guarantee.
As you are aware I am travelling overseas on Friday for a fortnight so the matter will have to wait until my return. Mark said that this should not be a problem."
The reference to Mark was to Mr Mark Northern who was then the Regional General Manager of Shopping Centre Management for Westfield.
On 13 October 2005 Mr Northern telephoned Ms Mimis-Weeks about the $9,000 rental arrears Westfield had recorded at 30 June 2005 in respect of Surf City at Chatswood. Ms Mimis-Weeks told him that this was payable by her brother under an arrangement she had with him as to rent payments for Hornsby, Burwood and Chatswood stores, out of money he was to receive from Westfield for the surrender of the Hornsby lease.
On 21 November 2005 Ms Mimis-Weeks accepted an offer made by Westfield on 11 November 2005 of a promotional allowance of $4,500.00 for the reimbursement to Surf City of the costs in September 2005 of a publicity exercise by Surf City involving roving models and distribution of flyers within the Centre.
Ms Mimis-Weeks says that in discussions with Mr Rossel on 21 November 2005, she advised him that she was planning to downsize to shops 416 and 417 "after the Christmas trade", that he sought to discourage her from downsizing and detailed "a great future for Westfield Chatswood over the coming years." She says that she said she would put off the downsizing until 30 June 2006 "to see if there was any positive impact from the works" and made a request for rent relief in the meantime which Mr Rossel refused. Mr Rossel disputes the details of this evidence of Ms Mimis-Weeks but does say that he spoke to her of "a number of initiatives we're working on in 2005 and 2006 to improve Westfield Chatswood."
On 15 March 2006 Westfield wrote to the Applicant pointing out that $50,500.55 remained outstanding in respect of Surf City, reminding the Applicant that payments were due on the first of each month and demanding payment of this amount.
In mid March 2006 there was an outbreak of legionnaires disease within the Chatswood CBD area. Mr Rossel says in respect of this outbreak:
"The NSW Health Department investigated and, to the best of my knowledge, was unable to identify the source of the outbreak. For a short period, trade suffered in some shops throughout Chatswood. To the best of my recollection, Westfield agreed to grant the Applicant $5,000 to cover the cost of a marketing campaign to be paid on receipt of an invoice for that amount from the Applicant. This payment was to assist the Applicant to promote the business given the concerns stated by Ms Mimis-Weeks regarding the Legionnaires scare in the Chatswood CBD area. It was not a rental abatement."
Ms Mimis-Weeks gave evidence in her principal affidavit that there was a discussion between herself and Mr Rossel on 10 April 2006 where she spoke of "rent relief" and Mr Rossel spoke of a "promotional allowance of $5,000 for March" and the possibility of a similar benefit for April 2006; Mr Rossell disputed these allegations to the extent set out above.
On 7 April 2006 at an Asset Review meeting within Westfield in which Mr Papagiannis participated there were discussions about Borders, City Beach or Pumpkin Patch becoming a "minimajor" at Westfield Chatswood.
There were meetings on 24 April 2006 between Ms Mimis-Weeks and Mr Rossel and on 25 April 2006 between Ms Mimis-Weeks and Mr Stevens. On these occasions, there were discussions concerning some suggestion that City Beach might be interested in coming into Westfield Chatswood. There is a conflict in the evidence as to the details of these discussions.
On 27 April 2006 Mr Stevens faxed to City Beach a proposal for a lease, subject to the existing lease being surrendered and vacant possession being obtained, to City Beach commencing on 1 August 2006 of shops 517 and 518 on Level 5 in Westfield Chatswood. These shops were then occupied as an Esprit store and comprised about 727 m2. Westfield received no response to this proposal and it lapsed. Esprit remained the tenant of shops 517 and 518.
Mr Mimis wrote to Mr Northern at Westfield on 1 May 2006:
"I refer to our meetings on 9 August 2005 and 16 September 2005 and our numerous conversations regarding my personal and bank guarantees for above premises and reiterate my demand that Westfield take whatever steps necessary to collect rent due, including any arrears, from Spuds Surf (Chatswood) Pty Limited trading as Surf City, the Lessee of the above Premises.
Your failure to take any steps for the collection of the rent on the terms strictly documented in the lease is prejudicial to my rights which are expressly reserved.
By this letter I hereby put Westfield on notice that as a result of Westfield's failure to take whatever steps necessary to collect the arrears of rent from the Lessee at any time during the Term of the lease, I will not be bound to pay any amount said to be owed under the guarantee."
Ms Mimis-Weeks and Mr Rossel had a telephone conversation on about 4 May 2006. She says they dealt with matters such as default by Surf City in rent payments, the legionnaires outbreak and City Beach. There is conflict in the evidence of Ms Mimis-Weeks and Mr Rossel concerning the details of this discussion.
Ms Mimis-Weeks says that she had a discussion with Mr Rossel on 8 May 2006 wherein he indicated to her that the refurbishment of the food court and the upgrading of the car park were not going ahead for the time being. She says that she discussed the possible sale of Surf City and her intention to downsize the business if it was not sold. She says that he said that she should call Mr Peter Leslie, the Westfield Divisional Director of Leasing for Australia and New Zealand, but she says that she assured him that rental arrears would be paid up by 30 June 2006 at the latest. Her evidence is also that that discussion had been preceded by a meeting earlier with Ms Maija Pelham , who was evidently an assistant to Mr Rossel, and had similar discussions with her. Mr Rossel says in his affidavit that to the best of his recollection no conversation in those or similar terms took place.
On 17 May 2006 Adams & Co Lawyers wrote to the Applicant on behalf of Westfield demanding payment of arrears of rent and charges for April and May 2006 totalling $86,501.65. The letter advised:
"1.If all monies now due and owing to our client in the sum of $86,501.65 are not paid to it by 3.00 pm Wednesday 24 May 2006, we are instructed that our client will immediately commence proceedings against both the Lessee and the Guarantors;
2.You will be liable for our client's costs of us acting in this matter in dealing with its issues with you (approximately $400.00) which will increase significantly if you continue to breach the terms, covenants and conditions of your Lease;
3.Upon successful conclusion of any proceedings we will seek indemnity costs against you and the Guarantors."
The letter also warned of a possible statutory demand being issued as a preliminary step to applying to the Court to have the Applicant wound up. The letter was copied to Mr Mimis and Ms Mimis-Weeks at their respective residential addresses.
There was a telephone discussion between Mr Rossel and Ms Mimis-Weeks on 17 May 2006 wherein Mr Rossel had alerted Ms Mimis-Weeks to the likelihood of Westfield in accordance with its standard operating procedure, writing a letter of demand for payment of arrears. Ms Mimis-Weeks alleges that the discussion also included assertions by her that Westfield was trying to get rid of Surf City so that they could put City Beach into the Centre and that Mr Rossel said that she should not make a $10,000 payment on account of the arrears which she said she was intending to make that day. Mr Rossel denies those details.
On 2 June 2006 a meeting took place between Mr John Papagiannis, the Westfield General Manager of Leasing at Westfield Head Office and Ms Mimis-Weeks. Mr Papagiannis says that Ms Mimis-Weeks' husband, Mr Graeme Weeks, and a solicitor acting for the Applicant, Mr John Lundy, were also in attendance. The future of Surf City's lease after August 2008, reconfiguration of the shop and the possibility of City Beach coming to Westfield Chatswood were discussed. There is dispute in the evidence as to the details of this discussion, particularly as to complaints by Ms Mimis-Weeks concerning Westfield's treatment of Surf City, including blockages of the store's sightlines and customer traffic.
On 2 June 2006 Mr Rossel signed an internal "Lockout request" in respect of Surf City. The request then went through a process whereby Westfield officers higher in the chain of management also authorised, by signing, it. The last of those signatures was subscribed to the request on or shortly after 13 June 2006. This document recorded the Surf City's occupancy cost as 35.7% of its sales.
On 19 June 2006 Landerer and Company, on behalf of Westfield, wrote to Lundy Lawyers on behalf of the Applicant. They forwarded with it the original of the executed Lease, the original of the executed Deed of Agreement and copies of their letters of 23 February 2005 to Mr Mimis and of 29 April 2005 to Ms Mimis-Weeks. Landerer and Company commented in particular:
"1.Please forward to us:
(a)Cheque for $1,348.55 in payment of our costs. A copy of our tax invoice dated 8 May 2002 to the Lessee is enclosed.
(b)Cheque for $11,236.30 in favour of the Office of State Revenue in respect of anticipated stamp duty. Please ensure that the Lessee's name, address and details of the Premises appear on the reverse side of the cheque. As previously advised, the Lessee will be responsible for any fines and/or penalties that may be imposed by the Office of State Revenue as a result of late payment of stamp duty.
2.You will observe from the enclosed copy of the Lease that the Commencement Date in item 7 and the Expiry Date in item 8 on the front page of the Lease have been amended as agreed.
3.Please forward to us authority to strike out the hand written words that have been added to item 10. You may provide us with that authority by signing the copy of this letter where indicated and return to us.
4.Our ASIC extract relating to the Lessee is dated 11 April 2002 and at the time the current directors of the Lessee were George Joseph Mimis and Elizabeth Anne Weeks and the company secretary was recorded as George Joseph Mimis. If that correctly reflects the directors of the Lessee at the time of execution of the Lease, we request that Elizabeth Anne Weeks countersigns on page 33 of the Lease where the signature of George Mimis presently appears. Also, we shall request that countersign as a director of the Lessee on page 6 of the Deed of Agreement where the signature of George Mimis appears."
They also requested that Ms Mimis-Weeks sign the Deed of Agreement in her capacity as guarantor. They requested that the above matters be satisfied within 14 days and they noted that they had retained the counterpart executed Lease and the counterpart executed Deed of Agreement which they would forward to Lundy Lawyers when they had returned the properly executed originals to them. Further execution of the Lease did not eventuate. It was not stamped.
Adams & Co Lawyers on behalf of Westfield wrote to the Applicant on 19 June 2006 advising that there was then an amount of $96,349.06 comprising $86,501.65 outstanding for May and June 2006 rent and charges and $9,847.41 being arrears dating back to 30 June 2005. They noted Ms Mimis-Weeks had advised Westfield on 5 June 2006 that she would pay one half of the rent for May and June 2006 by 15 June 2006 but that this had not occurred. They advised:
"This matter is now extremely serious and your repudiation of the terms, covenants and conditions of your Lease put your continued occupation of the premises at risk."
They required that the full amount be paid to Westfield by 26 June 2006. The letter was copied to Mr Mimis and Ms Mimis-Weeks at their respective residential addresses.
Mr Lundy on behalf of the Applicant telephoned Mr Papagiannis on 22 June 2006 and Ms Mimis-Weeks rang Mr Papagiannis on 26 June 2006. She requested that he send her an email outlining his discussions with Mr Lundy; their discussions went onto include City Beach, as to which Ms Mimis-Weeks accused Westfield of conspiring to lock her out of Surf City because they had done a deal with City Beach and Mr Papagiannis replied that no deal had been done with City Beach, City Beach having not responded to the offer Westfield made to them some time ago. On 27 June 2006 Mr Papagiannis emailed Ms Mimis-Weeks and Mr Lundy:
"As discussed, please find below, on a Without Prejudice basis, Westfield's view on the Surf City Chatswood premises.
We understand that you have a potential purchaser for the business and as mentioned to John Lundy, your solicitor, the lessor will consider an assignment of lease subject to the usual assignment criteria being met, for the balance of the existing lease. The lessor is not in a position at this point to offer yourself or your potential purchaser an early new lease for an extended term. Furthermore, due to the uncertainty of our Surf strategy in Chatswood going forward, we are unable to provide a commitment at this point that a new 5 year lease will be offered on expiry to yourself or your purchaser.
On the issue of downsize, I have confirmed with Andrew Stevens that there was no acceptance of any deal and that this point the lessor withdraws any offers for downsize in the current premises until further notice."
On 26 June 2006 there was an exchange of letters between Lundy Lawyers and Adams & Co whereby it was agreed that the Applicant would pay $86,501.65 that day and that no action would be taken at that stage as previously threatened. Agreement was not reached on the $9,847.41 as to which in particular Adams & Co disputed an assertion by Lundy Lawyers to the effect that that amount had been included in a settlement arrangement which Mr Mimis had negotiated with Westfield in respect of his surrender of the Spuds Surf leases at the Burwood and Hornsby Westfield Centres.
For the financial year ended 30 June 2006 the Applicant returned a loss of $7,076.00.
The Argyle Partnership, lawyers, on behalf of Mr Mimis wrote to Adams & Co on 4 July 2006:
"We act for George Mimis in the above matter who has provided to us a copy of your letter dated 19 June 2006.
Our client denies that it is liable to the debt to your client as alleged or at all.
Notwithstanding that Spuds Surf Chatswood Pty Ltd entered possession of the subject premises and has remained in occupation of that premises, at no time has our client entered a binding agreement to guarantee the obligations of the lessee to your client.
Furthermore our client advised your client by writing to take immediate steps to collect arrears of rent and if necessary possession of the premises should the lessee fall into further arrears.
Our client rejects any liability as alleged or at all."
Following telephone communications which Ms Mimis-Weeks initiated on 2 August 2006 with Mr Robert Jordan, the Managing Director of Westfield for Australia and New Zealand, a meeting was arranged for 9 August 2006. It was attended by Ms Mimis-Weeks, her husband, and Mr Lundy with Mr Peter Leslie and Mr Papagiannis on behalf of Westfield. At that meeting various matters were discussed including:
- Mr Lundy raised the manuscript addition which Mr Mimis had placed at Item 10 in the Lease document. Mr Papagiannis maintained Westfield's position that that amendment had not been agreed to.
- Complaints were made by Ms Mimis-Weeks about structures obstructing the shopfront of Surf City, namely Boost Juice, the Optus kiosk and the St George ATM. Mr Leslie contended that complementary usage like Boost Juice would benefit Surf City. Mr Lundy said that basically they were seeking compensation in excess of $200,000.00 representing 10% reduction in rent for every day those structures were installed. Mr Leslie rejected that claim.
- Discussions between Ms Mimis-Weeks and Mr Stevens in August 2004 concerning downsizing of Surf City were raised. Mr Papagiannis contended that any offer involved was made over a year ago and had not been accepted.
- Ms Mimis-Weeks contended that the offer was not accepted because Mr Rossel had outlined various strategies to be implemented by Westfield for upgrading of the Centre including the food court seating and a new parking system. Ms Mimis-Weeks indicated that she would still like to downsize Surf City and was seeking a new 6 year lease.
- Ms Mimis-Weeks complained about Westfield's recent debt collecting activities against Surf City. She said that the $9,000.00 which had been added to the claims was something relating to Mr Mimis and the Hornsby Spuds Surf shop.
- Mr Papagiannis told Mr Weeks that Westfield had not done any deal to bring a new surf operator into Westfield Chatswood.
- The meeting commenced, Ms Mimis-Weeks says in notes attached to her principal affidavit, "Lundy started by saying we are her to discuss a multi-million dollar claim we have here against Westfield Chatswood." Ms Mimis-Weeks says in those notes that it was a 2 hour meeting.
- The meeting concluded according to Mr Papagiannis' notes of the meeting with Mr Leslie advising that Westfield would try to respond within a week.
There are disputes in the evidence as to the details of this discussion.
After telephone enquiries as to progress made of Mr Papagiannis by Mr Lundy on 17 August 2006 and by Ms Mimis-Weeks on 18 August 2006, a telephone conference call took place between Ms Mimis-Weeks and Messrs Leslie and Papagiannis on 21 August 2006. Westfield's position was advised as being, in summary, agreement to a new lease for 5 years at the expiry of the then current lease and to downsizing Surf City. Ms Mimis-Weeks sought reduced rent and asked Westfield to reconsider.
Ms Mimis-Weeks says that she telephoned Mr Jordan on 24 August 2006 and complained particularly about the absence of rent relief.
Another teleconference took place on 30 August 2006. This included Ms Mimis-Weeks, her husband, and Messrs Leslie and Papagiannis. Ms Mimis-Weeks says in her principal affidavit that there was discussion of a suggestion of help by Westfield to find a purchaser of Surf City.
As is noted in the Issues section of this Decision above, also on 30 August 2006, Lundy Lawyers on behalf of the Applicant filed proceedings 065141 in this Tribunal.
September 2006 and subsequently
Events during this period are substantially covered by what has been set out above in the Proceedings section of this Decision. Nevertheless, some matters of significance in terms of dealings between the parties outside the context of those proceedings should be noted.
On 1 September 2006 Ms Mimis-Weeks wrote to Mr Rossel seeking a refund of 10% of the rent paid by the Applicant since the Boost Juice kiosk started operating in November 2002 and seeking removal of and compensation for, the Boost Juice, Optus and Salad Bar kiosks and the ATM.
On 25 September 2006 Landerer & Co wrote to Lundy Lawyers demanding (subject to the mediation due to take place on 6 October 2006) payment of rent arrears of $85,385.67 plus accruing rent of $53,049.88 by 9 October 2006.
There were telephone discussions in September 2006 and early October 2006 in some or all of which Messrs Leslie, Papagiannis, Northern, Ms Mimis-Weeks and Mr Weeks participated. In particular in a telephone conference on 28 September 2006 between Messrs Leslie and Papagiannis and Mr Weeks, Mr Leslie told Mr Weeks that Westfield had contacted the four main surf shop operators: City Beach, Surf Dive 'n' Ski, Wild Surf and Breakaway. He said that Surf Dive 'n' Ski and Wild Surf had rejected the offer, that he was awaiting an answer from Breakaway and that a meeting with City Beach had been arranged for the third week of October. Mr Weeks made reference to involvement he had with the Australian Competition and Consumer Commission ("ACCC").
On 12 October 2006 there was a meeting between Messrs Jordan and Leslie and Ms Mimis-Weeks and Mr Weeks. Messrs Jordan and Leslie offered to allow the Applicant to surrender its lease without further payment of rent, which would be $1,167,097.00 for the remaining 22 months of the term. Ms Mimis-Weeks rejected that offer and made a counter offer by letter to Mr Jordan on 16 October 2006 to the effect of a settlement arrangement such as that, she said, had been previously made between Westfield and Spuds Hornsby where Westfield made a payment equivalent amount to the rent for the remaining year of the lease. Mr Jordan rejected that counter-offer by letter the same day.
On or about 24 October 2006 Ms Mimis-Weeks wrote to the Westfield Board of Directors with copies to among others, Mr Graham Samuel at ACCC and Ms Tina Perinatto at the Australian Financial Review. The letter commenced:
"I am writing to you as a last resort with respect to what I consider to be the most unconscionable conduct I have experienced in my twenty years in business and as a lessee and store proprietor."
There were communications between Westfield and City Beach and between Ms Mimis-Weeks and City Beach during October 2006 and into early November 2006 which produced no result. In the course of this, Ms Mimis-Weeks recorded, without his consent, telephone conversations with Mr Gunn of City Beach on 31 October 2006 and 7 November 2006. City Beach made an offer to purchase the business for $100,000 which might be increased to $400,000 if Ms Mimis-Weeks negotiated a rent reduction of $300,000. That situation did not develop.
Between late April and early June 2007 there were negotiations involving first, Ms Mimis-Weeks and Rip Curl and then, Westfield and Rip Curl. These included an offer by Rip Curl to purchase Surf City's stock and furniture and fittings, to make "a goodwill payment to secure the site of $100,000"; and:
"An additional one off payment in the event a reduction in the gross lease rental can be achieved, equal to the amount by which the new rental rate is reduced below a gross rent of $605,000. For example if the new starting gross rent is $450,000 then this additional payment would be $155,000."
The negotiations also included an offer by Rip Curl to Westfield to take a 7 year lease of Shops 415, 416 and 417 at a base rent of $390,400. No result was achieved by the negotiations.
The Applicant vacated Shops 415, 416 and 417 on 27 June 2007.
On 24 September 2007 the Applicant leased Shops 416 and 417 to Forever New Clothing Pty Ltd and on 1 November 2007 the Applicant leased Shop 415 to Tap Dance Pty Ltd. The annual rents under the new leases totalled $670,015. In June 2007 the Applicant's rent for Shops 415, 416 and 417 was $636,000 per year.
FACTUAL DETAILS
Prefatory
In this section, some of the matters outlined in the previous section will be dealt with by more detailed reference to the evidence. There were numerous meetings and other discussions where there are conflicts in the evidence. At the conclusion of more than four days of cross-examination of Ms Mimis-Weeks, Counsel for the Respondent indicated that there was affidavit evidence from Westfield personnel in response to Ms Mimis-Weeks' evidence and that he had taken the view that the rule in Browne v Dunn ((1893) 6 R 67) did not require him "to put to the witness every single disagreement between the evidence of the Respondent and the evidence of the Applicant." In immediately ensuing discussions Counsel noted that there had been previous discussions on this point between them and that Ms Mimis-Weeks had also put on affidavits in reply. Evidently a measure of agreement about it had been achieved between them. Those discussions concluded with these remarks by me:
"I would say this out of fairness to both counsel. Particularly in this Tribunal and particularly when evidence goes on in the form of written statements or affidavits, I do not see the need for any, shall I say, ritualistic or formal compliance with the so-called rule in Browne v Dunn. Nevertheless there may be some potent disagreements (and it is) a matter for forensic choice by advocates as to whether they explore those matters in cross-examination. I don't wish to say anything more unless counsel want to raise any aspect of what I've just said with me."
Counsel apparently conducted the hearing on the basis of the matters thus discussed. Nevertheless, it behoves the Tribunal to consider the salient parts of the conflicting evidence, which will be done in this section of the Decision, and to the extent necessary to resolve relevant issues, make findings, which will be done in a later section of the Decision. In this section evidentiary details of other matters outlined in the previous section will also be dealt with.
Alleged pre-lease misrepresentation
The misrepresentation as asserted in the current Second Further Amended Application for Original Decision in proceeding 065171 has been referred to in the Issues section of this Decision above and will be set out below in this Decision ("the misrepresentation"). Other versions of the misrepresentation were earlier asserted by the Applicant and in the Application for Original Decision in proceedings 065141 the misrepresentation was alleged thus:
"The lessee was assured in 2002 by the then centre manager Greg and the leasing executive Tim that the entrance to the store would remain visible from the blue level car park entry, with uninterrupted traffic flow from this entry point at all times. The store's design was planned to ensure that the doorway would be accessible to and in line with that entrance."
In the Application instituting proceedings 065171 filed on 12 October 2006, the misrepresentation was included in this assertion:
"Lease entered into by Lessee after Lessor engaged in misleading, deceptive and unconscionable conduct. In particular Lessee was assured that the store would remain visible from the blue level car park entry with uninterrupted traffic flow, from the Centre Manager at the time and the Leasing Executive. This was then not followed through. There were no casual or permanent kiosks in front of the lessee's premises when the lease was entered into."
In an affidavit of 21 November 2006, Ms Mimis-Weeks said:
"During my earliest discussions with these Westfield representatives referred to, I had observed that there were from time to time in early 2002, a couple of casual kiosks which had been placed in the vicinity of the Surf City shop such as the B zone cosmetics kiosk, calendar kiosks and a clothing vendors. The presence of these kiosks concerned me greatly given Surf City's reliance on good visibility and foot traffic. I recall at some time early in 2002 prior to renovating the store, saying on at least three occasions to both Mr Tim Roberts and Oliver that it was important for my store that I have an unobstructed flow of traffic and unobstructed views of the front of the store leading in from the carpark as I intended to build the store's doorway directly in line with the blue level entry walkway. At the time the blue level entry was the no 1 entry point to the centre."
In Particulars of Unconscionable Conduct served on 24 November 2006, the misrepresentation was referred to thus:
"In early 2002 representatives of the Respondent, Tim Roberts and Oliver, assured representatives of the Applicant that the entrance to the Applicant's store would remain visible from the blue level car park entry with uninterrupted traffic flow from this entry point at all times when they knew, or ought reasonably to have known, that such representations were untrue."
The pleading and particularisation of the misrepresentation in the form now contained in the Second Further Amended Application for Original Decision was introduced in those terms in an Amended Application for Original Decision filed 8 August 2007. The particulars of the misrepresentation in the Second Further Amended Application for Original Decision are:
"The pre-lease misrepresentation was partly written and partly oral. The written misrepresentation was contained in an e-mail from Olivier Sicouri to George Mimis dated 8 March 2002. A copy of the e-mail is at pages 15 to 23 of exhibit EMW-1. The e-mail attached a floor plan of level 4 of Westfield Chatswood. The floor plan indicated that there was and would be no kiosk in front of shop 417, near shop 417 or obstructing the line of sight between the car park blue level entrance and shop 417. This was a misrepresentation. The oral misrepresentation was made by Olivier Sicouri to George Mimis and Elizabeth Mimis-Weeks in a conversation on level 4 of Westfield Chatswood. Details of the conversation are set out in paragraph 13 of the affidavit of Elizabeth Mimis-Weeks sworn 15 May 2007."
In paragraph 13 of her affidavit referred to in these particulars, Ms Mimis-Weeks says that on a day between 11 and 20 March 2002 she joined a meeting between her brother and Mr Sicouri outside shop 417 and Mr Sicouri said:
"Shop 417 is in a great location. The corridor running from Grace Brothers to the Food Court is known as the Golden Mile. Also, the car park blue level entry over there is one of the busiest entries into this shopping centre. When people enter the centre from this entry, they will have a direct and unobstructed line of sight to shop 417. Come and have a look."
Ms Mimis-Weeks also says that they went to the entrance to level 4 from the car park and Mr Sicouri said:
"When people enter the centre from this entry, they will have a direct and unobstructed line of sight to shop 417."
In cross examination, Ms Mimis-Weeks was taken to possible inconsistencies between the earlier versions and the current version of the misrepresentation. Included in her answers are the following:
"I think the name is - the name Greg isn't accurate but I think that I had two to three meetings with Olivier Sicouri discussing the upcoming tenancy and whether we were going to move the store or whether we were going to expand the store and on one of those occasions, at least to my recollection, Tim Roberts was there."
"...Olivier Sicouri made the representation."
"...As I said I'm not sure whether (Tim) was at one of the other meetings I had with Olivier Sicouri discussing the sight line issue. There was more than one meeting and Tim was there at one of the meetings."
In cross examination, Ms Mimis-Weeks suggested that her legal representatives had responsibility for any inaccuracies or inconsistencies in the various forms of allegation concerning the misrepresentation. For example:
"Q. Which is false, your current evidence or the reference to Tim in particulars 1.1 (of the Application in proceedings 065171)?
A. The evidence that's in my affidavit here is accurate. As I mentioned to you, the evidence in this affidavit I believe to be accurate but it was recounted and it was submitted by my lawyer without my permission. To the best of my knowledge he put in what I instructed him to put him, I'm not trying to be --
Q. You've already agreed that what's in the document before you under particulars 1.1 was true and accurate to the best of your knowledge, haven't you?
A. I understand, but if you look at the back, I'm not being difficult, but if you look at the back it was signed by John Lundy and I also expressed that I subsequently took him off my case because he filed this without my permission. In fact, he put the whole contents together and filed it without my permission.
Q. And you put exactly the same material in the application for mediation and declared that it was true and accurate so far as you were aware, didn't you?
A. My - yes, my subsequent legal advisor did the same thing."
An assertion is made in the Application filed to institute proceedings 065171 on 12 October 2006 that "there were no casual or permanent kiosks in front of the Lessee's premises when the lease was entered into", and as I have already noted, in her principal affidavit Ms Mimis-Weeks says that when in March 2002 she was with her brother and Mr Sicouri at the entrance to level 4 from the car park:
"We looked back to shop 417. I observed that there was a clear and unobstructed view of the front windows of shop 417."
Ms Mimis-Weeks was asked questions in cross-examination about the B Zone kiosk. She said that she regarded the lease as having been entered into in about August 2002 and that she did not believe that the B Zone kiosk was then there. As previously noted, the B Zone kiosk was installed in about September 2001 and removed in November 2002 and replaced then by the Boost Juice kiosk.
Ms Mimis-Weeks was cross examined in relation to the assertion in her affidavit of 21 November 2006 that "...there were from time to time in early 2002, a couple of casual kiosks which had been placed in the vicinity of the Surf City shop such as the B Zone cosmetics kiosk, calendar kiosks and clothing vendors." It was put to her that the B Zone kiosk was a permanent one and she answered as follows:
"How would I know the difference between a permanent and casual kiosk? I don't have - I'm not privy to the leases. To my - for me looking at kiosks they all look like they're casual, they have very substantial things that disappeared two weeks after they're there. I don't have any knowledge of whether they're permanent or not, there is no way I would know if that was permanent or casual.
It was pointed out to her that the B Zone kiosk had been there since September 2001 and Ms Mimis-Weeks said: "That doesn't mean anything."
In cross examination Ms Mimis-Weeks' attention was drawn to the fact that prior to the allegation of the misrepresentation as including a documentary, as well as an oral basis in August 2007, the earlier details of the alleged misrepresentation did not include reference to any documentary basis. The cross examination on this aspect included the following:
"Q. Version four has two bits; an oral bit and a written bit.
A. Yes.
Q. Versions one, two and three didn't have a written bit, did they?
A. I went through three hard drives of computers scouring during the process of the last three years for every bit of information I had that was sent to me by Oliver Sicouri and Tim Roberts to substantiate my claim. I can't recall the exact date upon which I came over this document, but I included it in my evidence when I found that document and this document supported my view at the time that we had written confirmation that there would be no stores there and I just had to find the actual copy before I could put it into my evidence.
Q. So when you prepared versions one, two and three you had forgotten about the email from Mr Sicouri, is that your evidence?
A. No, it's not that I had forgotten, I didn't have the copy to attach to it, so there was no point in making that allegation until I had the copy.
Q. That evidence is false, isn't it?
A. That's not correct.
Q. You'd simply forgotten about the email from Mr Sicouri when you prepared versions one, two and three, hadn't you?
A. That's not correct. I stated that I had to locate it before I could put it into my evidence.
Q. You stated that all the versions one, two and three were accurate, didn't you.
A. They are, yes....
Q. When you prepared versions one, two and three is it your evidence that you had at that time remembered Mr Sicouri's email?
A. I knew that there was an email with a floor plan attached to it, I had to locate the floor plan - the email.
Q. But you put forward versions one, two and three as accurate before you located the email, is that your evidence?
A. I don't understand what you're asking me in relation to the email. I've expressed that I knew there was an email with a floor plan that showed no kiosks. I needed to locate that before I put the floor plan into my affidavit.
Q. At the time you prepared versions one, two and three on your evidence you believed that the email was relevant to the representations made by the respondent, didn't you?
A. Yes, that's correct.
Q. So when you prepared versions one, two and three on your evidence you believed that the email was relevant to the representations made by the respondent didn't you?
A, Yes, that's correct.
Q. So when you prepared versions one, two and three on your evidence you believed that the email was relevant to the representations made by the respondent, didn't you?
A. Yes, that's correct.
Q. So when you prepared versions one, two and three on your evidence you knew that they were incomplete?
A. Well, I may never have found the email."
Ms Mimis-Weeks was again taken to the B Zone kiosk and cross examination at that stage included the following:
"Q. You understood, didn't you, at the time you were deciding in March 2002 whether the applicant should expand the shop 417 that the B-Zone kiosk might continue to be there?
A. It might continue to be there is accurate, correct.
Q. So you couldn't have relied on its absence from the plan as representing that it would not continue to be there, could you?
A. That's not correct.
Q. Why is that not correct?
A. Because it wasn't marked on the plan.
Q. But you knew that despite it not being marked on the plan it might continue to be there?
A. For a period of time, yes; but not as a permanent kiosk it wasn't marked on the plan."
In his evidence in chief, Mr Sicouri in particular has denied ever meeting or speaking with Ms Mimis-Weeks as alleged by her or at all, and said that all his meetings between late 2001 and early 2002 in relation to Surf City were with Mr Mimis, and he did not make representations as alleged by Ms Mimis-Weeks. In cross-examination, among other things:
- He said:
- "In relation to lease expiries, the number of meetings would not be very high because the tenant is familiar with space and knows the centre and there's no need to meet with them. In the case of vacancies the likelihood is higher and you would have to meet them on site.
- ...
- Vacant shop is a shop that isn't occupied and therefore it becomes a high priority to try and fill it and because it's a high priority and because it's unlikely that the tenant who will take it is already an existing tenant at the centre, you would have to meet them to show them the centre. If - if the tenant knows the centre, he's an occupant then the - the need to meet the centre - the need to meet the tenant is low because they're already in occupant and they know the centre. They probably know it better than you."
- "The only two people I think - my recollection of the only two people I've ever had meetings with who - who worked for Westfield and - and have had a - I've met a tenant with simultaneously have been Sue O'Malley, who was the centre manager during my time and Scott Stevens, who I think, was the assistant centre manager. I think it's fair to say that I'm pretty sure about that - quite - very sure."
- He said that he knew of another Westfield officer called Tim Roberts but was not sure whether he had met him but that it was "highly improbable" that he had attended a meeting at Westfield Chatswood at which Tim Roberts was present.
- In another affidavit of his tendered in cross-examination on behalf of the Applicant he said:
- "To the best of my recollection, I did not have any meetings with Mr George Mimis at which Mr Tim Roberts was present."
- He said that he did not recollect ever meeting Mr Mimis in Chatswood. They used to meet at Toby's Estate coffee shop which was down the road from Westfield Towers in the city. He also said:
- "I recollect it particularly because George had a Porsche of which I'm a big fan of and so it was always an opportunity for George to show off his Porsche down at the Toby's Estate coffee shop."
- He said that he could not remember with certainty that a copy of the Westfield Chatswood level 4 floor plan was attached to his email of 8 March 2002 to Mimis and acknowledged that "The plan doesn't reflect the kiosk ... I knew was there..."
- As to Shop 417 he said: "You might say it's a good site, yeah, but conversely - you know, different sites suit different retailers so it's a subjective thing. This site, I'll fair to say, this site you just - people just need to go and stand there, there's nothing to sell. This - this is a site that's got high - high amounts of people, a lot of national chains around. There's not - there's not really much to sell on the site, you could make - this is a site that you could've called ten retailers who would've taken the shop, first phone call. So, one has to appreciate that there was very little selling required for a site of that quality."
- When Ms Mimis-Weeks was pointed out to him in the hearing room he confirmed that he did not recall ever having met her and said that it was "unlikely because she's very attractive..."
- He did not recall telling Mr Mimis that the east-west mall outside Shops 415 to 417 was known as "the golden mile" and he did not recall that the mall was known as such.
- His attention was drawn to the assertion that he had said between 20 February 2002 and 22 March 2002 "When people enter the centre from the blue level car park entry they will have a direct and unobstructed line of sight to Shop 417." He denied that it was possible that he said that and he said "...it's impossible because it wouldn't have been true...because there was a kiosk outside the shop."
Mr Timothy Roberts was the centre manager of Westfield Chatswood from August 2002 to September 2003. At the time of giving evidence he had progressed to General Manager - Shopping Centres for New South Wales and ACT. He said that it was "not correct to assert that I attended any meetings of the sort referred to by Ms Mimis-Weeks" as his first day in the position of centre manager of Westfield Chatswood was 10 August 2002. He also said that he has never met or spoken to Ms Mimis-Weeks. Mr Roberts was not challenged on that evidence in cross-examination beyond the following:
"Q. And is it possible that around February, March 2002 you attended or were present at a meeting between Mr Oliver Sicouri and a prospective tenant concerning the leasing of a shop?
A. It's absolutely impossible that that occurred. There are no circumstances under which I would've attended a meeting with a retailer in my prior capacity."
Complaints by Mr Mimis concerning kiosks
In cross-examination Mr Roberts was referred to the time lapse between the letter which Mr Mimis had written on 12 November 2002 expressing concern about the kiosks outside Spuds Surf and Mr Roberts' letter to Mr Mimis of 28 May 2003 (both letters are set out above in the Factual Outline section of this Decision). He gave an explanation to the effect that there had in the meantime been discussions between himself and Mr Mimis and he had conducted some enquiries, saying, for example:
"What's probably missing in the transcript is there were conversations between George and I over the phone that reflected my response in the first instance to his issues, one in part about the mall space and we both had a very amicable discussion on a number of occasions about that. And more latterly the kiosk design issued that he raised. In the first instance I spent a bit of time, as I said I would, with him discussing with our design colleagues about the design, particularly with the Boost Juice kiosk and between the original raising of the issue I would be - my recollection would be I'm sure we discussed it, but I more formally responded in May."
In later cross-examination he was referred to the letter from Mr Mimis to him of 13 May 2003 (also set out above in the Factual Outline section of this Decision). His attention was brought in particular to the reference there to the Boost Juice kiosk having "had an impact upon my immediate trade and traffic flow". Included in his responses was this:
"We spent quite a bit of time making sure that the design of the kiosk was in a, in similar location to any previous usages in that space. I think it's important to reflect on this is that I took the height reference in this to be about the menu boards not the physical height of the whole of the kiosk because that certainly wasn't raised as an issue, it's the menu boards particularly that Mr Mimis was referring to and I think we responded fairly clearly to that."
He was also asked to address the B Zone kiosk, as it had been, particularly in terms of line of sight facing north and among his answers was this:
"It's a different, it's a different line of sight to what was previously there. This is from memory and I know we don't have any photos of the prior kiosk but the prior kiosk ran very much in the same direction as the Boost Juice kiosk did and had fixtures that would have been, you know, probably not dissimilar in height, I couldn't be sure but not dissimilar to height the menu, to the menu board so there was, there was a line of sight impact to them, it's not as if what was replaced with Boost Juice is vastly different in many ways it's just food usage versus cosmetic accessories so but I couldn't describe it accurately."
Reference was also made in cross-examination of Mr Roberts to the blade sign on the Telechoice kiosk, for example as follows:
"Q. So that if one is walking down the corridor from the blue level car park then the Optus bar blade sign would be facing and visible to a person walking down the corridor?
A. Yeah, I don't, I don't agree with that, I think there are a large number of physical impediments that obscure your line of sight through there anyway, there are columns that aren't depicted on the plan as I say that make it very difficult to see that particular blade sign so I don't think that blade sign is creating a natural line of sight impediment."
He also said in answer to a further question concerning the Telechoice kiosk:
"...The blade sign is set to the rear of the kiosk as you move along that corridor so it would probably be the last thing you see rather than the first thing you see. And if I refer you back to the photo its location is so far back that it actually is blending into the columns behind it, the grey decorative columns that are also acting as support. It would be one of the last things you'd see as you come along that corridor and your view of those shops would be more obvious to you, more immediately than necessarily the blade sign."
Mr Roberts was asked a few questions in cross-examination about the Fitout Requirements but this issue was not developed with him.
Mr Roberts was referred to the letter of 9 December 2002 which Mr Mimis wrote to Landerer & Co. (also set out in the Factual Outline section of this Decision above) and in particular he was asked:
"Q. ... Mr Mimis writes that he's been offered additional signage opportunities by centre management on 27 November 2002 at his own expense. Do you recall that offer being made by you or were you aware of that offer being made by Gary Pinter and/or Megan Johnson?
A. I don't recall, I'm not aware of Gary or Megan making that offer to Mr Mimis, it could well have been the case but I wouldn't be aware of that. I certainly recall having a conversation with Mr Mimis that if he wanted to discuss doing some additional signage then we'd be more than willing to entertain that discussion."
Ms Johnson and Mr Pinter were also referred to by Mr Mimis in his letter of 12 November 2002 to Mr Roberts (set out in the Factual Outline section of this Decision above). Neither Ms Johnson nor Mr Pinter was called as a witness.
It is also pertinent to note some evidence given in response to questions asked of Mr Roberts from one of the non-judicial members:
"Q. Did (Mr Mimis) state that the Boost Juice signage or anything to do with the kiosk were impacting on Surf City's sales?
A. I can't recall the discussions to answer it clearly but certainly his letter in 2003 indicates there was an impact, he perceived there was an impact.
Q. Did he make comments that the queues around Boost Juice were causing an impact on the sales of (his) store?
A. No.
Q. No. Queues, no, just the signs and the--
A. Predominantly the general theme of the discussions were more about the style of customer at Boost was identical to his style of customer so there was a complimentary nature to that."
A copy of the letter that Mr Mimis addressed to Mr Roberts on 1 December 2003 (also set out above in the Factual Outline section of this Decision) and he said:
"I'm aware of the letter. I'd left the centre in September 2003 so my successor rang me to get a background on the correspondence but that's the extent of it from my memory."
2005 - August 2006
In 2005, at a time not precisely identified in the evidence but evidently during the first half of 2005, Ms Mimis-Weeks took over full time involvement in Surf City at Westfield Chatswood. She described in an affidavit her work situation prior to that:
"Between at least 2002 and 2005 I worked full time (including weekends) between Spuds Carlingford, Spuds Hornsby and the two Surf City stores at Westfield Chatswood (ie the store at shop 415 to 417 ('the 415/417 Store') and the store on the corner of Victoria Avenue and Archer Street ('the Vic Ave store') - until the Vic Ave store closed) and used the 415/417 Store as my base. In this period:
(a)I worked three to four days per week at the two Surf City stores at Chatswood. On these days I arrived at the 415/417 Store around 9.30 am, spent most of the day at 415/417 Store with periodic attendances at the Vic Ave Store, left the Chatswood stores around 5.30 pm, and worked in the stores through lunch. I also worked at the Surf City Chatswood stores most Thursday evenings from about 3 pm to 9 pm.
(b)On the remaining days, on at least half the days, I came to the Chatswood stores for short periods of time."
A significant background to the new work role adopted by Ms Mimis-Weeks in 2005 was the falling out with her brother which she described in an affidavit as follows:
"In about 2005 my brother George and I had a significant falling out. Since this time, we have communicated with each other infrequently and we only communicate on necessary occasions (such as in relation to the recent death of our father)."
It is convenient to repeat here in summary form, as further parts of that background, some of the events of the previous 6 months or so as noted above in the Factual Outline section (in the sub-section "January 2004 - 30 June 2005 - Ms Mimis-Weeks' conduct of Surf City") of this Decision:
27 January 2004 - Mr Mimis ceased to be a director of the Applicant.
30 June 2004 - Mr Mimis responded to Landerer & Co. who acted on behalf of the Respondent advising, among other things, that Ms Mimis-Weeks was sole director of the Applicant and he would have the lease re-executed by her.
July 2004 - The Surf City store operated by the Applicant at the corner of Victoria Avenue and Archer Street, Chatswood closed.
November 2004 - The Spuds Surf store at 350 Victoria Avenue, Chatswood, owned by Mr Mimis, closed.
1 November 2004 - Westfield Chatswood wrote to the Applicant demanding payment of arrears of rent of $97,041.36.
February 2005 - meetings between Mr Mimis and Mr Andrew Stevens, then a Regional Leasing Manager, for Westfield, and Mr John Papagiannis, then General Manager of Leasing for Westfield, and exchanges of emails concerning the possibility of downsizing the Surf City store at Westfield Chatswood.
23 February 2005 - Landerer & Co. faxed to Mr Mimis in response to his letter to them of 30 June 2004.
29 April 2005 - Landerer & Co. forwarded to Ms Mimis-Weeks a copy of their fax of 23 February 2005 to Mr Mimis and also a copy of the lease in its then executed form, and requested that she attend to the outstanding items.
30 June 2005 - the Applicant recorded a loss of $227,745.00 for the financial year with a decline in sales over the previous year of 31.9%.
July 2005 - August 2006
I will now turn to the details of some of the conflicts of evidence in relation to the more significant events between July 2005 and August 2006 outlined above in the Factual Outline section of this Decision (in the sub-section "July 2005 - August 2006 - events leading up to ADT application").
On 26 July 2005 Ms Mimis-Weeks met at the Centre with Mr Derek Rossel who had just taken over as the Centre Manager and Mr Andrew Stevens, a Westfield leasing executive. A number of matters were discussed including the possibility of the chain called City Beach coming into the Centre, temporary stalls and the possibility of Surf City being downsized. Mr Rossel's evidence was that he could not remember the meeting. There is a conflict between the affidavit evidence in chief of Ms Mimis-Weeks and Mr Stevens, in respect of the following matters:
- Ms Mimis-Weeks says that Mr Rossel said that he would arrange a meeting with Westfield design personnel regarding what they could do to improve sight lines.
- Mr Stevens says that Mr Rossel made no reference to sight lines and said the meeting suggested was to examine steps that could be taken in relation to the signage and exposure of Surf City.
In cross-examination Mr Stevens did qualify that issue to an extent in that he expressed a recollection that Ms Mimis-Weeks had asserted a loss of sight lines due to the Boost Juice kiosk but he also said that the subsequent meeting with Ms Katie Preston, a Westfield retail design manager, "would be looking at the store rather than the kiosk" and "what could the retailer do to improve the sight lines available to them in the tenancy rather than looking at the kiosk itself."
Following that meeting there was an exchange of emails between Mr Stevens and Ms Mimis-Weeks giving rise to an arrangement for a meeting at the Centre Management office on 1 August 2005. An email from Ms Mimis-Weeks to Mr Stevens of 27 July 2005 is set out in the Factual Outline section of this Decision above.
On 1 August 2005, there was a meeting between Ms Mimis-Weeks and Mr Andrew Stevens which Mr Stevens referred to in his affidavit thus:
"We met in the reception area of the centre management office at Westfield Chatswood and then walked through the Chatswood centre whilst having a discussion about, among other things, opportunities for locating her business to a smaller shop in the centre. We also had a discussion about Ms Mimis opening a fashion boutique at Westfield Chatswood in addition to the Surf City shop and I showed Ms Mimis a possible site about 90 square metres in size near the Myer store."
There was a discussion between concerning downsizing Surf City and there are conflicts in their evidence in chief concerning those discussions, which generally persisted through cross-examination:
- Mr Stevens said that Mr Rossel made no reference to sight lines and said that the meeting suggested was to examine steps that could be taken in relation to the signage and exposure of Surf City.
- Ms Mimis-Weeks asserted in effect that Mr Stevens agreed to the downsizing of Surf City but Mr Stevens said that he said something to the effect that any downsizing would be subject to an appropriate retailer taking the downsized component of the premises.
- Ms Mimis-Weeks said that Mr Stevens said that rent for the smaller store would be $180,000 per annum less than the then rental. Mr Stevens denied saying that and said that he said something to the effect that he "could run some numbers and come back to you".
- Ms Mimis-Weeks said that Mr Stevens agreed that Westfield would pay for the cost of downsizing and Mr Stevens said that he told her that they would look to her to pay those costs.
- Ms Mimis-Weeks said that she told Mr Stevens that she would do the downsizing at the beginning of winter trade in February or March 2006. Mr Stevens denied that.
- Ms Mimis-Weeks said that Mr Stevens asked that she give him as much notice as possible of when she planned to downsize so that he could start looking for a tenant for Shop 415. Mr Stevens denied that.
- Ms Mimis-Weeks referred to the discussions as involving a "deal" and said she asked Mr Stevens that the deal be emailed to her. Mr Stevens denied those assertions.
Sequels to that meeting being the emails between Mr Stevens (8 August 2005) and Ms Mimis-Weeks (11 August 2005), the meeting involving them and Ms Katie Preston on 23 August 2005, Ms Preston's email to Ms Mimis-Weeks of 31 August 2005 and the lack of any response from Ms Mimis-Weeks in respect of a design for new signage are set out above in the Factual Outline section of this Decision.
There is conflict between the evidence in chief of Ms Mimis-Weeks and Mr Rossel as to the discussions between them and Ms Preston on 23 August 2005. Ms Mimis-Weeks said in her principal affidavit:
"On the 23 August 2005 I met with Rossel and Katie Preston to discuss what Westfield could offer me by way of compensation for the sightline blockage as a result of Boost and other kiosks. The conversation included words to the following effect:
Me:'I should be getting significant rent relief from Westfield because my stores sightlines and traffic flow are blocked by Boost and the other kiosks. My trade has dropped off significantly. What is Westfield going to do about it?'
Rossel:'I can't give you rent relief but if you spend $5,000 promoting Surf City in the centre using roving models I will reimburse you the $5,000 that you spend.
Preston:'I will allow you to put Surf City stickers on the top of your shopfront window so that the customers can see the signage above the kiosks.'
Me:'No, I don't like the idea of stickers running along the length of the window.'
Mr Rossell said in his affidavit:
"Ms Preston was a retail design manager or retail architect at Westfield Chatswood. She advised tenants on design of their tenancies and the Respondent required that she approve plans for works on any of the tenancies within the Centre. My recollection is that Ms Mimis requested the meeting ... initially with Andrew Stevens for the purpose of discussing moving the signage on the Applicant's shopfront to a more visible location. It was for that reason that Ms Preston attended the meeting. To the best of my recollection, there was no request during the meeting by Ms Mimis for rent relief for the Applicant. I do recall that Ms Preston told Ms Mimis, that, if she drew up a design for new signage, Ms Preston would review it. As far as I know, Ms Mimis did not submit a design for new signage and the Applicant's main sign remained above shops 415 and 416. Ms Mimis refers to Ms Preston having offered to allow the Applicant to put 'stickers on the top of your shop front window'. I do not recall any such offer being made during this conversation or at any other time in my presence. Westfield does not normally allow stickers to be substituted for proper bulkhead signage."
As detailed above, in the Factual Outline section of this Decision, Ms Mimis-Weeks met with Mr Rossel on 13 September 2005 in relation to a request that Mr Mimis be released as a guarantor under the lease of Surf City on the basis that she would give that guarantee. In notes attached to Ms Mimis-Weeks' principal affidavit there is included a paragraph subscribed to details of a meeting of 21 November 2005 with Mr Rossel which will be discussed below:
"During the month of February I told both Rossel and Northern in 2 different phone conversations that I had sought legal advice and that I did not have to let George off as guarantor and that I chose not to for personal reasons. Northern said he would write to George saying that Westfield did not accept his withdrawal as guarantor and that unless I agreed to replace him Westfield could not force me to do so. Rossel said it is a matter between George and myself and that Westfield would not get involved."
There are noted in the Factual Outline section of this Decision above, first, a discussion on 13 October 2005 between Ms Mimis-Weeks and Mr Northern concerning an arrangement between her and her brother as to rent payments for Hornsby, Burwood and Chatswood stores out of money to be paid by Westfield to her brother for the surrender of the Hornsby lease; and secondly, the situation in November 2005 where a promotional allowance was paid to Surf City by Westfield in the sum of $4,500.00.
Ms Mimis-Weeks says that in discussions with Mr Rossel on 21 November 2005 she advised that she was planning to downsize to shops 416 and 417 "after the Christmas trade", that he sought to discourage her from downsizing and detailed "a great future for Westfield Chatswood over the coming years." There is conflict between Ms Mimis-Weeks and Mr Rossel as to the details of this discussion and that conflict is conveniently presented by quoting Mr Rossel's affidavit responses to Ms Mimis-Weeks' evidence in her principal affidavit:
"Paragraph 79 of the Mimis 15 May Affidavit contains statements that I allegedly made to Ms Mimis relating to downsizing the Applicant's shop.
At no point did I say to Ms Mimis: 'You would be silly to downsize. There is a great future for Westfield Chatswood over the coming years. There is a council development linking Westfield to Chatswood chase and we are spending money upgrading the centre.'
At no point did I specifically state to Ms Mimis that the food court would be refurbished, or that 200 extra seats would be provided, or that a new car park was going to be constructed, or that Westfield had pulled back funding for refurbishment of the food court. I did say to Ms Mimis:
'There's a number of initiatives we're working on in 2005 and 2006 to improve Westfield Chatswood. One of these initiatives may be increasing the number of seats in the food court. Others that we have been working on involve improving car parking. We're introducing an auto-pay system, so that you can pay before reaching the exit, assisting customers to exit faster. The other initiative that we're working on for car parking is a trial over three levels of a parking guidance system. We're also painted three levels of the car park under the Myer building and we intend to do the same in the remainder of the car park in due course.'
I have never been aware of any plan to link Westfield Chatswood and Chatswood Chase and, for that reason, I am sure that I did not say to Ms Mimis words to the effect that there was a Council development linking the two shopping centres.
I did not say to Ms Mimis words to the effect that she would be made to downsize now when all this was happening over the next six months. I have no recollection of Ms Mimis saying to me: 'OK. I will put off the downsize until 30 June 2006 to see if there is any positive impact from the works' or words to that effect."
In the Factual Outline section of the Decision above, there is detailed an allowance of $5,000 made by Westfield to the Applicant in March 2006 consequent on the Legionnaires disease scare in the Chatswood CBD area.
On 7 April 2006 at an Asset Review meeting within Westfield in which Mr Papagiannis participated there were discussions about Borders, City Beach or Pumpkin Patch becoming a "minimajor" at Westfield Chatswood.
As is noted in the Factual Outline section of the Decision above, on 27 April 2006 Mr Stevens faxed to City Beach a proposal for a lease, subject to vacant possession, to City Beach commencing on 1 August 2006 for Shops 517 and 518 on Level 5 in Westfield Chatswood. These shops were then occupied by an Esprit store and comprised about 727 m2. Westfield received no response to that proposal and it lapsed, with Esprit remaining the tenant of Shops 517 and 518. It is also there noted that that development followed meetings on 24 April 2006 between Ms Mimis-Weeks and Mr Rossel and on 25 April 2006 between Ms Mimis-Weeks and Mr Stevens. There are conflicts in the evidence concerning those meetings.
In relation to the meeting on 24 April 2006, Ms Mimis-Weeks says as to the discussion with Mr Rossel on 24 April 2006, that he included words to the following effect:
"Rossel:City Beach has been sniffing around the centre. Do you know anything about their movements? They are looking for a site to come into the centre.
Me:They cannot come in without the support of the surf brands who only allow two accounts per centre.
Rossel:Surf Space in Chatswood Chase is up for sale. If City Beach bought the Surf Space business, could they come into the centre?
Me:No. You can't take the labels from one centre in Chatswood to another. There are only two accounts allowed per centre.
Rossel:Would you sell your business to City Beach?
Me:No one has approached me from City Beach, I haven't given it any thought."
Mr Rossel says in an affidavit in respect of this conversation and another on 4 May 2006 detailed by Ms Mimis-Weeks:
"I refer to paragraphs 82 and 84 of the Mimis 15 May Affidavit, in which Ms Mimis deposes to a conversation she allegedly had with me on or about 24 April 2006 about City Beach being interested in a shop in Westfield Chatswood. I have no recollection of conversations with Ms Mimis in these terms or to this effect. I did say to Ms Mimis with respect to City Beach:
'If you are speculating that City Beach wants to come into the Centre, you should speak to someone at Westfield Leasing - they are responsible for leasing shops. Why don't you speak to the senior leasing executive, Andrew Stevens because this is his domain.'
Ms Mimis said:
'I don't want to talk to Andrew Stevens. I want to talk to someone more senior.'"
In cross-examination, Mr Rossel said that he did not become aware of any offers being made by Westfield to City Beach to take a tenancy at Westfield Chatswood and that:
"...it's not always the case that I would know if an offer has been made to a tenant. Generally speaking, I will only know that a deal is agreed, signed and documented. At that point I know that, you know, the deal's done. I don't do the leasing deals, I just manage the business, and the tenants who have signed deals."
He did not recall attending a meeting with Mr Stevens in 2005 where Mr Stevens stated that "City Beach is interested in entering the centre". He denied that he said to Ms Mimis-Weeks in 2006 words to the effect "City Beach has been sniffing around the centre". He also said, among other things:
"I do recall (Ms Mimis-Weeks) speculating at some point that Westfield wanted to bring in City Beach but I don't believe that was in 2005. I believe that conversation took place in 2006."
As to the conversation between Ms Mimis-Weeks and Mr Stevens on 25 April 2006, Ms Mimis-Weeks' evidence in her principal affidavit is as follows:
"On 25 April 2006 I had a conversation with Andrew Stevens which included words to the following effect:
Me:'Is City Beach trying to come into Westfield Chatswood? Rossell told me that City Beach was sniffing around and I am concerned what that means for me and my business.'
Stevens:'No. We are not trying to secure City Beach into a site when they have supply problems. Have City Beach approached you to buy your business?'
Me:No.'"
Mr Stevens' evidence is that he believes that at or around 25 April 2006 he did have a conversation with Ms Mimis-Weeks to the above effect except that the denies saying "We are not trying to secure City Beach into a site when they have supply problems" and says that he may have said words to the effect "If City Beach is unable to get supply then they are probably not pursuing."
In his affidavit Mr Stevens gave the following explanation of the offer of 28 April 2006 to City Beach:
"In or about April of 2006, on level 5 of Westfield Chatswood, Esprit was not the most appropriate use for the size of the tenancy which it occupied and as such this had a negative influence on traffic and overall sales productivity for that precinct in the Centre. Esprit at that site was failing to attract significant pedestrian traffic and was trading poorly. Westfield was keen to attract an anchor tenant, such as a large format surf retailer, who was perceived would draw customers, pedestrian traffic, to that area on level 5.
As a consequence Westfield, at about that time, had discussions with City Beach concerning the possibility of that large format surf wear retailer taking premises on level 5. Those discussions culminated in an email dated 28 April 2006 from Westfield to City Beach.
On its terms this email refers to the 'current Esprit site at Chatswood' (not the Surf City site) and attaches an offer (dated 27 April 2006) expressed to be in respect of 'shop 517/518' (being the Esprit site at Westfield Chatswood on level 5), having an area of 727.0m2 with a handover date of '1 August 2006 (subject to surrender by Esprit)'. Minimum Rent (semi gross) of '$697,500 per annum plus GST'. Outgoings (total) of $27, 822.29' and Percentage Rent 10.0%.
Westfield received no response to this offer from City Beach and the offer consequently lapsed. Esprit remains a tenant of Shops 517/518 at Westfield Chatswood.
Even before forwarding the e-mail dated 28 April 2006 Westfield understood there to be a number of difficulties with its proposal being that:
1.City Beach was not enamoured with the location of the Esprit store.
2.Esprit was not willing to vacate its premises at Westfield Chatswood without having available to it suitable alternative premises at Westfield Chatswood.
3.Suitable alternative premises were not at the time available to Esprit.
4.Any consideration of an offer by City Beach would be subject to brand supply."
In her principal affidavit Ms Mimis-Weeks referred to a telephone conversation with Mr Rossel on 4 May 2006 as follows:
"On 4 May 2006 I had a telephone conversation with Rossel. The conversation included words to the following effect:
Rossel:'Mark Northern does not want Surf City as a tenant at Westfield anymore, you have to be careful. Mark wants to send you a lock out notice. Out of 1,000 tenants whose rent is in arrears each week Northern always picks on Surf City and asks me what is she doing, why is her rent late? I am trying to protect you by not acting on Northern's instructions to evict you.'
Me:'This is unfair. The legionnaires outbreak has caused me to fall behind in rent payments by two weeks. I should have been given rent relief long ago after all I've been through with the kiosks disrupting my trade. Is this happening now because City Beach wants to come in to the centre?
Rossel:'Westfield wants City Beach in Chatswood. Don't underestimate the worth of City Beach to Westfield. Westfield gets millions of dollars in flow on effects from having City Beach in their centres and the same will happen here. Westfield would lease a lot of sites off the back of City Beach as a tenant and increase the profile of the centre with all the advertising that they do. The smart thing to do is call Peter Leslie. He is the Australian director for Westfield leasing. I recommend that you work out a price for your business, ring Peter Leslie and offer it to him. Peter Leslie has a personal relationship with the owner of City Beach. He will welcome your call.'"
Mr Rossel responded to that in his affidavit as follows:
"I refer to paragraphs 84 and 86 of the Mimis 15 May Affidavit, in which Ms Mimis deposes to alleged conversations with me in which I referred to Mr Mark Northern. Mr Northern is Regional General Manager of Shopping Centre Management for Westfield. I did not make any of the statements about Mr Northern attributed to me by Ms Mimis. I did say to Ms Mimis:
'If the rent is not paid, the lessor will take steps to make sure that Spuds Surf complies with the terms of the lease. That means that, if the rent has not been paid within a reasonable timeframe in accordance with the lease, Westfield will take action to recover outstanding rent. This is standard operating procedure. Typically, if the rent has not been paid, Westfield will send a 'seven-day letter' demanding payment of arrears. That letter may come from Westfield itself or from lawyers acting for Westfield.'"
In cross-examination Mr Rossel denied that Mr Northern had said to him that he did not want Surf City as a tenant at Westfield any more. Mr Rossel added "he just wanted them to pay the rent". He said that it was possible that he told Ms Mimis-Weeks that she might be sent a lock out notice:
"Yeah, it's possible because I was having conversations with her about her paying outstanding rent and I'm pretty confident that at some point I would have spoken to her about the possibility of receiving a legal letter from us on the basis that she continued to fail to pay the rent."
He also denied that he said to Ms Mimis-Weeks that "Westfield gets millions of dollars in flow on effects from having City Beach in their centres" and "Westfield would lease a lot of sites off the back of City Beach as a tenant and increase the profile of the centre." He was asked whether he said to her words to the effect "Peter Leslie has a personal relationship with the owner of City Beach" and he denied that. When pressed with a further question whether it was possible, he said "No. No way. Not possible. Didn't say it. Never happened."
As noted in the Factual Outline section of this Decision above, Ms Mimis-Weeks says that she had a discussion with Mr Rossel on 8 May 2006 wherein he indicated to her that the refurbishment of the food court and the upgrading of the car park were not going ahead for the time being. She says that she discussed the possible sale of Surf City and her intention to downsize the business if it was not sold. She says that he said that she should call Mr Peter Leslie, the Westfield Divisional Director of Leasing for Australia and New Zealand, but she says that she assured him that rental arrears would be paid up by 30 June 2006 at the latest. Her evidence is also that that discussion had been preceded by a meeting earlier with a woman named Maija, who was evidently an assistant to Mr Rossel, and had similar discussions with her. Mr Rossel says in his affidavit that to the best of his recollection no conversation in those or similar terms took place.
On 17 May 2006 Adams & Co Lawyers on behalf of Westfield wrote to the Applicant demanding payment of arrears of rent and charges for April and May 2006 totalling $86,501.65. The substance of that letter is set out in the Factual Outline section of this Decision above. As is also noted there, the letter warned of a possible statutory demand being issued as a preliminary step to applying to the Court to have the Applicant wound up. The letter was copied to Mr Mimis and Ms Mimis-Weeks at their respective residential addresses.
There was a disputed telephone discussion between Ms Mimis-Weeks and Mr Rossel on 17 May 2006. In her principal affidavit, Ms Mimis-Weeks describes the conversation as follows:
"On 17 May 2006 Rossel phoned me and we had a conversation which included words to the following effect:
Rossel:Mark Northern is going to send you a letter demanding all rental arrears be paid within 7 days or you will be evicted.
Me:I cannot pay all arrears in 7 days. This is ridiculous. It's no coincidence that all of a sudden Westfield are going to evict me now when I have been in arrears since Easter. I am on my way to Chatswood now with a cheque for $10,000.00 to pay you for rent. Is it because I recently told you I have a buyer and Westfield wants City Beach to come in and I won't speak to Peter Leslie? It is clear Westfield are trying to get rid of me so that they can put City Beach into the centre without having to buy my business. Westfield are trying to stop me selling my business to anyone else.
Rossel:Don't worry about the legal letter Westfield are sending. I will speak to Northern and see if I can get him not to send it, but you should not pay the $10,000 until I get back to you.
Me:OK. I will wait until I hear from you."
Mr Rossel says by way of his affidavit:
"I refer to paragraphs 84 and 86 of the Mimis 15 May Affidavit, in which Ms Mimis deposes to alleged conversations with me in which I referred to Mr Mark Northern. Mr Northern is Regional General Manager of Shopping Centre Management for Westfield. I did not make any of the statements about Mr Northern attributed to me by Ms Mimis. I did say to Ms Mimis:
'If the rent is not paid, the lessor will steps to make sure that Spuds Surf complies with the terms of the lease. That means that, if the rent has not been paid within a reasonable timeframe in accordance with the lease, Westfield will take action to recover outstanding rent. This is standard operating procedure. Typically, if the rent has not been paid, Westfield will send a 'seven-day letter' demanding payment of arrears. That letter may come from Westfield itself or from lawyers acting for Westfield.'"
He also says:
"I have no recollection of Ms Mimis saying to me that she was on her way to Chatswood with a cheque for $10,000 for rent or words to that effect. Had Ms Mimis said this or words to this effect to me, I would not have said to her, and I did not say to her:
'Don't worry about the legal letter that Westfield are sending. I will speak to Mark Northern and see if I can get him not to send it, but you should not pay the $10,000 until I get back to you.'
There was some cross-examination of Mr Rossel in relation to that conversation:
"Q. Do you recall a conversation where in a discussion about rental arrears Ms Mimis-Weeks said words to the effect that she's on her way to Chatswood now with a cheque for $10,000 to pay rent?
A. No. She never presented any cheques.
Q. Do you recall a discussion in May 2006 where she said that she was coming to Chatswood with a cheque for $10,000?
A. No, we would have been very happy if she was coming to Chatswood with a cheque for $10,000. She didn't."
Mr John Papagiannis, at the time of giving his oral evidence, was the Director of Leasing for Westfield and previously, and at all relevant times, he had been a Group General Manager of leasing within Westfield. There was a meeting in which he and Ms Mimis-Weeks were involved on 2 June 2006. Ms Mimis-Weeks says that that meeting followed a telephone call which he had made on 18 May 2006 to Mr Peter Leslie, who was the then Director of Leasing, in which Mr Leslie indicated that he would arrange a meeting between her and his assistant. There is a measure of conflict between the evidence of Ms Mimis-Weeks and Mr Papagiannis as to the details of that meeting. In her principal affidavit Ms Mimis-Weeks says:
"On 2 June 2006 I met with John Papagiannis at Westfield Head Office. We had a conversation which included words to the following effect:
Papp:Why has your store been trading so badly compared to City Beach stores in other centres?
Me:Westfield has erected kiosks and an ATM machine in front of my store which blocks my sight lines and customer traffic. Have you had discussions with City Beach about entering the Chatswood centre?
Papp:We have been talking to City Beach. City Beach and Westfield want City Beach to enter the centre. However, City Beach cannot enter because the surf brands only permit a maximum of two retailers in the centre, and there are already two retailers.
Me:I am concerned about Westfield's motives regarding the tenancy of Surf City. Rossel has told me that Northern has it in for me which is causing me great concern. Does Westfield intend to renew Surf City's lease in August 2008 when the lease expires? I want to know whether Westfield has promised the esprit site to City Beach at the end of my lease. I have an offer from a buyer for my business which I am considering but if Westfield wants the surf brands for City Beach you should act now.
Papp:I will get back to you in approximately two weeks after I have spoken to my colleagues."
Mr Papagiannis says in his affidavit:
"On 2 June 2006, I met with Mr Elizabeth Mimis, her husband, Mr Graeme Weeks, and a solicitor acting for Spuds Surf Chatswood Pty Limited, Mr John Lundy. During the course of that meeting, a conversation to the following effect took place:
Mr Mimis said: 'We want to stay in the business, reconfigure the shop and sign a new lease. We have someone to buy the business and want to know
Westfield's position on extending the lease.'
I said: 'We are unsure of our future surf strategy for this centre and I will have to get back to you.'
Ms Mimis said: 'I've heard that City Beach is sniffing around, Derek Rossel, the Centre Manager, told me that they want to enter the centre.'
I said: 'That's right. City Beach are interested in Chatswood but we haven't come to terms with them.'"
In some explanations proffered by Ms Papagiannis in his affidavit concerning matters discussed at that meeting, he said among other things:
"In around June of 2006, Westfield's tenancy mix strategy involved a large surf store as it was believed a large format surf store would have significant drawing power to the centre and a particular precinct within the centre. We were, however, aware that it was difficult to secure brands for a third surf store within the centre as we already had two existing surf stores. In addition to that, whilst we were wanting to extend the surfwear offered within the centre to a large format, we were unsure of our overall strategy as the large space which would have been required was not available at that time. This is what I was referring to when I said we were unsure of our strategy for a large format surf store during the conversation on 2 June 2006 ..."
A number of happenings then in June 2006 might now be dealt with in comparatively short form:
(a)As noted in the Factual Outline section of this Decision above, on 2 June 2006 Mr Rossel signed an internal "lock out request" in respect of Surf City. The request went through a process whereby Westfield officers higher in the management chain also authorised it, by signing it. Mr Papagiannis signed it on 9 June 2006. The last of those several signatures was subscribed to the request on or shortly after 13 June 2006. This document recorded, among other things, Surf City's occupancy cost as 35.7% of its sales. In oral evidence, Mr Rossel said that he did not have a discretion whether a lock out request should be raised and he was required to do so by reason of the quantum of the debt which was the largest single debt at Westfield Chatswood in 2006.
(b)Ms Mimis-Weeks says in her principal affidavit that she had a discussion with Mr Rossel on 5 June 2006 wherein, among other things, she queried whether she would receive a promotional allowance and said that she promised that all rent arrears would be paid up by 30 June but she could not make two payments a fortnight apart. Mr Rossel says in his affidavit that Ms Mimis-Weeks said she would pay half the outstanding rent by 15 June.
(c)As is noted in the Factual Outline section of this Decision above, on 19 June 2006 Adams & Co Lawyers, on behalf of Westfield, wrote a letter of demand to the Applicant, copied to Mr Mimis and Ms Mimis-Weeks at their respective residential addresses. Other details in the letter are set out above and are not repeated here.
(d)As is also noted in the Factual Outline section of this Decision above, Landerer & Co, on behalf of Westfield, wrote to Lundy Lawyers on behalf of the Applicant on 19 June 2006. They forwarded with it the original of the partially executed lease, the original of the partially executed Deed of Agreement and copies of their letters of 23 February 2005 to Mr Mimis and 29 April 2005 to Ms Mimis-Weeks. The substantive contents of the letter are quoted above and will not be repeated here. They requested attention to the new re-execution of the lease and documentation by Ms Mimis-Weeks.
(e)There were telephone calls to Mr Papagiannis by Mr Lundy on behalf of the Applicant on 22 June 2006 and by Ms Mimis-Weeks on 26 June 2006 (she says in her principal affidavit that she also rang on 19 June 2006). These were followed up by an email of 27 June 2006 from Mr Papagiannis to Ms Mimis-Weeks and Mr Lundy which, while it is set out above, it is convenient to repeat it here:
"As discussed, please find below, on a Without Prejudice basis, Westfield's view on the Surf City Chatswood premises.
We understand that you have a potential purchaser for the business and as mentioned to John Lundy, your solicitor, the lessor will consider an assignment of lease subject to the usual assignment criteria being met, for the balance of the existing lease. The lessor is not in a position at this point to offer yourself or your potential purchaser an early new lease for an extended term. Furthermore, due to the uncertainty of our Surf strategy in Chatswood going forward, we are unable to provide a commitment at this point that a new 5 year lease will be offered on expiry to yourself of your purchaser.
On the issue of downsize, I have confirmed with Andrew Stevens that there was no acceptance of any deal and at this point the lessor withdraws any offers for downsize in the current premises until further notice.
Please do not hesitate to contact me should you have any further queries."
(f)As is noted in the Factual Outline section of this Decision above, on 26 June 2006 there was an exchange of letters between Lundy Lawyers and Adams & Co, whereby it was agreed that the Applicant would pay $86,501.65 that day and that no action would be taken at that stage as previously threatened. Agreement was not reached on the balance of $9,847.41 as to which Adams & Co disputed an assertion by Lundy Lawyers to the effect that the amount had been included in a settlement arrangement which Mr Mimis had negotiated with Westfield in respect of his surrender of the Spuds Surf leases of the Burwood and Hornsby Westfield centres.
Events of August 2006 might also be dealt with here in comparatively short form:
(a)The meeting of 9 August 2006 involving Mr Robert Jordan, the Managing Director of Westfield for Australia and New Zealand, attended by Ms Mimis-Weeks, her husband, Mr Lundy, the then solicitor for the Applicant and Messrs Leslie and Papagiannis on behalf of Westfield, is detailed to an extent in the Factual Outline section of this Decision above. It led to an arrangement for Westfield to report back to Ms Mimis-Weeks within a week or so. Each of Mr Mimis-Weeks and Mr Papagiannis has produced quite lengthy notes of that meeting. The discussions were extensive but do not, in my assessment, require any analysis of items of conflict between the two sets of notes.
(b)The teleconferences of 17 August 2006 and 30 August 2006 noted in the Factual Outline section above involved advice of Westfield's position that it would agree to a new lease for 5 years, to downsizing Surf City, to assistance to Ms Mimis-Weeks in finding a purchaser but not to a reduction in rent. The notes in the Factual Outline section above suffice for the present purposes except that in relation to the second meeting Mr Papagiannis denies saying as Ms Mimis-Weeks said he did "We will have to do a deal on the rent to get a new tenant."
September 2006 and subsequently
Events of September 2006 might be dealt with here in comparatively short form also:
(a)On 1 September 2006 Ms Mimis-Weeks wrote to Mr Rossel seeking a refund of 10% of the rent paid by the Applicant since the Boost Juice kiosk started operating in November 2002 and seeking removal of and compensation for, the Boost Juice, Optus and Salad Bar kiosks and the ATM.
(b)As is noted in the Proceedings section of this Decision above, on 11 September 2006 Ms Mimis-Weeks made application to the Registrar of the Retail Tenancy Unit for mediation in respect of the Applicant's claims and on 15 September 2006 withdrew the application in proceedings 065141 in this Tribunal.
(c)By 25 September 2006 there were rent arrears of $85,385.67 in respect of Surf City, as asserted in a letter of demand from Landerer & Co to Lundy Lawyers.
(d)As is noted in the Factual Outline section of this Decision above, on 28 September 2006 there was a telephone discussion between Messrs Leslie and Papagiannis and Mr Weeks. Mr Leslie told Mr Weeks that Westfield had contacted the four main surf shop operators, City Beach, Surf Dive 'n Ski, Wild Surf and Breakaway. He said that Surf Dive 'n Ski and Wild Surf had rejected the offer, that he was awaiting an answer from Breakaway and that a meeting with City Beach had been arranged for the third week of October. The reference which Mr Weeks made to ACCC noted above, Mr Papagiannis says, was that Mr Weeks said that he had connections in the ACCC and other retail units and they would be interested to know about the letter of demand from Landerer & Co of 25 September 2006.
As is also noted in the Factual Outline section, there were a few more ongoing telephone discussions, the first part in October, involving Westfield personnel and Ms Mimis-Weeks and/or Mr Weeks.
Mr Papagiannis says in an affidavit:
"In or about October of 2006, both Peter Leslie and myself approached City Beach with a view to assisting the Applicant to negotiate a sale of its business to that organisation. Westfield was prepared to assist the Applicant by informing City Beach that if it could reach terms with the Applicant to purchase its business, the Respondent would grant City Beach a new lease even though the Applicant's Lease was due to expire on 9 August 2008. To the best of my knowledge, the Applicant and City Beach were not able to agree commercial terms on which City Beach would be prepared to buy the Applicant's business. ...to date the Respondent has not leased a shop in Westfield Chatswood to City Beach."
The mediation took place at the Retail Tenancy Unit on 6 October 2006 without achievement of any resolution of matters in issue between the parties.
On 12 October 2006 proceeding 065171 was commenced by the Applicant in this Tribunal by an Application for Original Decision filed on behalf of the Applicant by the Lease Police Pty Ltd.
As is noted in the Factual Outline section above, on 16 October 2006 Ms Mimis-Weeks by letter rejected an offer made by the Respondent on 12 October 2006, through Mr Jordan, to allow the Applicant to surrender its lease without further payment of rent which would have been $1,167,097.00 and made a counter-offer. On the same day Mr Jordan rejected that counter offer by Ms Mimis-Weeks. The letter which Ms Mimis-Weeks wrote was:
"Further to our meeting at 2 pm on Thursday 12 th October 2006, you asked me to come back to you with an offer.
The only terms of reference I have for such an offer is the surrender arrangement made previously between Westfield and Surf City Hornsby where one years rent was paid in consideration for one year remaining on the lease. As such there is 22 months remaining on the lease for Spuds Surf Chatswood Pty Ltd, which equates to a value of $1,167,097.36 based on Westfield rent calculations. No increases in outgoings or CPI are included in this sum.
This is a without prejudice offer and the timeframe for the surrender of the premises may be negotiated.
Please respond to this offer by close of business on Wednesday the 18 th October 2006."
Mr Jordan's letter was as follows:
"The offer to surrender contained in your letter is not acceptable to Westfield. As discussed in our recent meeting, Westfield does not require the surrender of your lease and therefore the value you attributed to the lease is not appropriate."
On 24 October 2006 Mr Mimis-Weeks wrote at length to the Westfield board of directors with copies sent to among others, Mr Graham Samuel at ACCC and a journalist at the Australian Financial Review. The substance of the letter is set out in full below:
"I am writing to you as a last resort with respect to what I consider to be the most unconscionable conduct I have experienced in my twenty years in business and as a lessee and store proprietor.
As a Westfield Lessee of many years standing and a Westfield shareholder I feel compelled to bring to my Board's attention the unconscionable conduct of Westfield staff in relation to my tenancy at Westfield Chatswood which I have held since 1998.
I attach, for the Board's information, a copy of my statement, which was handed up to Tribunal member Molloy at the ADT on the 24 th October 2006. This gives a very brief but accurate overview of the difficulties I have had with both the Centre Management and leasing staff of Westfield since the commencement of my new lease in 2002. It also provides a description of the nature of the dispute.
On several occasions I have met with senior Westfield staff and their legal advisers, specifically Mr Robert Jordan and Mr Peter Leslie, in an attempt to resolve, commercially, my dispute with Westfield. Their condescending attitude and resolute inaction has only inflamed the situation and galvanised my resolve to seek redress through the courts.
I am, with the assistance of the ACCC, currently preparing affidavits and further and better particulars of the claim, which are due to be filed in the ADT shortly.
As a result of Westfield's recent attempts to lock me out and prevent me from re-entering my store, the matter was listed for an application for an urgent interim order to prevent Westfield undertaking this course. My application was granted with several conditions.
Seeking redress through the courts is not my preferred course of action however, due to Westfield's unconscionable conduct, through your agent Mr Peter Leslie and his sub ordinates, and the pursuit of Westfield's referred Surf and street wear retailer, City Beach, I have been left with no alternative.
I require, as a Westfield lessee and a shareholder, answers to the following questions...
1)What is Westfield's policy in regard to dispute resolution?
2.)What is Westfield's policy in regard to their timely execution and registration of Leases?
3)What is Westfield's policy in regard to the size, configuration and positioning of kiosk tenancies?
All of these questions have been put to Messrs Leslie and Jordan and to the Westfield staff who attended the mediation at the NSW Retail Tenancies Unit being Mr John Papagiannis, Mr Derek Rossel, Mr Mark Northern and Westfield's Solicitor, Mr Martin Deutsch.
The mediation was a fiasco as a result of the above Westfield agents not responding to commercial offers, uttering blanket denials and threatening to determine the lease and lock me out of my shop if I didn't withdraw the action.
Could the board please respond to the above 3 questions and advise me of the date for the next board meeting so I can attend same, register my concerns and finally (and hopefully) see justice done.
I look forward to your response to this matter."
Matters thereafter are sufficiently referred to in the Factual Outline section above.
OTHER EVIDENCE
In this section I will refer to other relevant evidence which does not conveniently fit within the coverage of relevant events and evidence in relation to them in the Factual Outline and Factual Details sections.
Architectural three dimensional presentation
Ms Marina Radosevic, an Architectural Draftsperson, was called by the Respondent as an expert in preparing three dimensional computerised CAD drawings. Ms Radosevic explained that:
"In order to prepare three dimensional computerised CAD drawings of a particular site or location, the following process is employed:
(a)A client provides us with floor plans and drawings which contain a two dimensional representation of a site or location with dimensions and elevations.
(b)Information from the plans and drawings is entered into a computer program called 'Revit' which is a computer software program used by draftspersons and architects as a building modelling information tool.
(c)A two dimensional representation of the site or location is then reproduced on the computer by the draftsperson using the Revit program.
(d)The dimensions and elevations in the computerised version of the two dimensional plans are the same as those shown on the hard copy paper plans and drawings.
(e)The Revit program then converts the two dimensional plan into a three dimensional representation of the site or location.
(f)The Revit program then converts the three dimensional representation into a series of cross sections or still views taken from various points on the three dimensional representation.
(g)The cross sections or still views are then animated by the program to create a 'walk through' effect of the site."
She produced, and there were tendered in evidence, documents comprising:
(a)Two two dimensional plans generated by the Revit program of level 4 of Westfield Chatswood, one showing the B-Zone kiosk and the other showing the Telechoice and Boost Juice kiosks.
(b)Representations taken from four different positions as viewed from the exit from the blue level car park on level 4 of the Westfield Chatswood centre showing a graphic representation of the Telechoice and Boost Juice kiosks which currently occupy the premises known as K406 and K407.
(c)Representations taken from four different positions as viewed from the exit from the blue level car park on level 4 of the Westfield Chatswood centre showing a graphic representation of the B Zone kiosk which previously occupied the premises known as K406 and K407.
She also produced and there was tendered in evidence a CD Rom containing graphic representations of:
(a)The two dimensional plans referred to as (a) in the preceding paragraph.
(b)A walk through showing the Telechoice and Boost Juice kiosks, with the walk through commencing at the entrance from the blue level car park exit and ending at a point immediately past the kiosks and in front of the shop-front to shop 417.
(c)A walk through view showing the B Zone kiosk, with the walk through commencing at the entrance from the blue level car park exit and ending at a point immediately past the kiosk and in front of the shop-front to shop 417.
(d)A similar walk through in which the B Zone kiosk is superimposed on the Boost Juice and Telechoice kiosks.
Beyond producing the material detailed above, Ms Radosevic expressed no opinions in her report, particularly as to comparison between any respective obstructions of south-north sightlines by the Boost Juice kiosk and/or the Telechoice kiosk on the one hand, and by the Boost Juice kiosk on the other hand. During her cross-examination she was shown some photographs, first, some taken by Ms Mimis-Weeks of the Boost Juice and Telechoice kiosks in November 2006 and secondly, some taken by Ms Preston in August 2005 of those kiosks and also the Love Salad kiosk and the shop-front of Surf City (with the St George ATM machine on the western end of that frontage). Included in the answers by Ms Radosevic were acknowledgments by her that:
(a)One of the November 2006 photos, taken in front of the Telechoice kiosk at the south eastern end looking north and showing the Optus blade sign presented "considerably worse" sightlines (to Surf City) than a photo of the B-Zone kiosk, included in the material attached to her report, taken near the south eastern corner and looking generally north;
(b)One of the August 2005 photos taken a few metres south of the Love Salad kiosk, roughly in line with the walk-through line which she had sought to simulate in her Rivet exercise "substantially inhibits the sightlines towards the Surf City store in that position";
(c)In one of the August 2005 photographs taken close to the south western corner of the Love Salad kiosk looking north, "the Boost Juice sign on the left hand side provides a substantial impediment... to the Surf City sign;
(d)She did not reflect the St George ATM in her evidence and she had not been asked to do so; and
(e)In another of the August 2005 photographs which was taken on the eastern side of the south-north walkway, south east of the Love Salad kiosk, the Optus blade sign on the Telechoice kiosk "provides a blockage to the sight views of Surf City".
Fitout Requirements
The Westfield Fitout Requirements comprise a red-covered booklet (apparently often referred to in Centres as "the red book") of 40 or so pages. The Fitout Requirements are evidently issued to all prospective tenants; for example, they were issued to the Applicant with the disclosure statements issued to the Applicant in March 2002, as detailed in the Factual Outline section above. They are also referred to in lease clauses calling for the Lessee's fitting out work to be done in accordance with "the approved plans" and "the fitout requirements" provided to the Lessee by or on behalf of the Lessor. Appendix 6 of the apparently then current Fitout Requirements deals with kiosks and item 7.0 Visual Presentation is relevant:
"Maintaining sightlines through all Kiosks is essential, therefore height restrictions apply. Maximum height 1400mm, (public contact is recommended at 1200mm).
- Overhead elements including menu boards and structure are to be kept to a minimum. Canopies over free standing kiosks will not be approved, unless proven that sight lines will not be inhibited.
- Overhead signage design must also be mindful of sightlines to surrounding tenancies.
- All sightlines, heights and overall mass are subject to review by the Builder. ..."
Another relevant provision is clause 2(e) which expresses as one of the Lessee's obligations:
"The Lessee must
...
(e)comply with any rules or requirements of the Builder or the Lessor in relation to the Centre or the Lessee's Works;"
The definition of "Builder" in Clause 1.3 is such that in the case of an already developed Centre such as Westfield Chatswood "...the Builder is the company appointed by the Lessor to manage the Centre."
I note at this stage that the red books that are in evidence are those evidently produced in April 2002 and July 2004. The provisions above appear in both. The Respondent makes a submission to the effect that the relevant time consideration of the red book was March 2002 when the lease of the expanded Surf City was being negotiated and there is no evidence of the contents of the red book then. In my opinion, the more relevant time was about November 2002 when the Boost Juice kiosk was set up. In any event, it seems that at all relevant times the red book provisions were to the above effect.
A booklet labelled "Retail Design Management Kiosk design guidelines - General Retail" was issued in January 2005. Included in a section at the back are notes that "this is a guide to assist Lessees ..." and "is illustrative only". The booklet includes under the heading "general kiosk design signage:"
"1 x off main signage pylon maximum size 2600mm (H) x 800mm (W) x 15mm (D)."
Also relevant in this regard are clauses 10(1) and 29 of the Boost Juice lease:
"LESSEE'S WORKS
10.1(a)On or before the commencement date or any later date as the Lessor advises the Lessee in writing, the Lessee will carry out at its cost all its fitting out work to the Premises as shown in the approved plans referred to in this clause in accordance with the fitout requirements provided to the Lessee by or on behalf of the Lessor. The Lessee will carry out such work in a good and workmanlike manner to the Lessor's satisfaction.
(b)Before doing any fitting out work at the Premises the Lessee will prepare plans and specifications for such work and will obtain the approval of the Lessor to such plans and specifications.
(c)All work performed at any time by the Lessee requires the Lessor's written consent.
29KIOSK HEIGHT CLAUSE
The Lessee covenants and agrees with the Lessor that the height of the Kiosk including any counters, signs, displays, merchandise and equipment installed therein shall not exceed 1400mm from the upper surface of the floor of the Shoppingtown upon which the Kiosk is situated."
Those clauses are also in other kiosk leases in evidence.
Cross examination of Mr Stevens included:
"Q. Mr Stevens, you're aware that the clause in the lease for Boost Juice includes a restriction on signs to provide that they shall not exceed 1400 millimetres?
A. As I viewed it yesterday, yes.
Q. Yes, And, sir, would you accept that these guidelines at least appear to be contrary to provision in that lease?
A. It would appear so.
Q. Do you have any knowledge or understanding, sir, as to why guidelines have been prepared that would appear to be contrary to the provision of the lease in relation to that matter?
A. The lease is a contract struck at a point in time; and the guidelines are reviewed and upgraded as necessary during the course of that period."
Retail Trade expert evidence
Mr Tony Standley, a retail consultant, gave evidence on behalf of the Applicant. He is a principal of the Retail Alert Group of Asquith. He has had a substantial number of years experience in the retail trade, particularly in negotiating specialty retail Shopping Centre Leases. He is involved with the Retail Traders Association or Australian Retailers Association as it is now known, particularly in relation to its Tenancy Committee. He was briefed with among other things, a draft of an affidavit, evidently the principal one, of Ms Mimis-Weeks and on 11 May 2007 he undertook a two hour site inspection between 12 noon and 2 pm on level 4 of Westfield Chatswood.
Included in opinions which he expressed were:
(a)"...there is a positive co-relation between the accessibility of a store to passing pedestrian traffic in a shopping centre and the turnover of the store."
(b)"...the material interference with the visibility of shops 415 to 417 would interfere with the ability of the Lessee to maximise or deliver sales as would be the case if the product offered for sale by the Lessee had clear line of sight by customers in particular entering level 4 of Westfield Chatswood from the car park blue level entry as existed at lease commencement."
(c)"...the noise and unsatisfactory usage of a Boost Juice kiosk is not conducive for quality fashion retailing similar to the business the Lessee was conducting in shops 415 to 417 and would have a detrimental effect on sales from shops 415 to 417 particularly in prime trading period."
(d)"A progressive deterioration of business from the time the Boost Juice kiosk was installed from 2002 ... would have had an effect of a progressive deterioration of prime time trading sales in the region of high single digit % loss of sales in 2002 to loss of prime time trading sales of double digit % proportions in 2007."
(e)"...the combined effect of the Boost Juice kiosk and the ATM kiosk on visibility and customer access as observed to Lessee's premises during peak trading has affected the Lessee's to the detriment of the Lessee."
During cross-examination, Mr Standley said:
(a)That the Boost Juice kiosk involved "an aggressive usage".
(b)That he knew the B Zone kiosk was in existence at the commencement of the lease of Shops 415, 416 and 417. He had assumed that it either did not interfere with sightlines to those shops or interfered less with those sightlines than did the Boost Juice, Telechoice and Love Salad kiosks.
(c)After being shown plans of the B Zone kiosk, that the B Zone kiosk was likely substantially to interfere with the sightlines to Shops 415, 416 and 417.
(d)That he had not compared the kiosk circumstances pertaining at the commencement of the lease and the circumstances as he observed them on 11 May 2007.
Included in his answers to Non-Judicial Members were:
(a)Expansion of Spuds Surf into the additional space of Shop 417 could reasonably be anticipated to yield a 15% to 20% expansion in sales.
(b)He had not been asked to value the business.
(c)The loss by a shop of the right to sell a particular brand in a shopping centre would have a significant effect on the shop.
(d)His reference to "high fashion" in relation to the business of Surf City had been made in the sense "...the term high fashion in surfwear would denote the key brands..." and "...a business such as Surf City is very, very brand dependent...".
Mr Standley gave his evidence on 20 May 2009 during the first hearing period. At the commencement of the second hearing period on 14 September 2009 Senior Counsel for the Respondent moved for orders rejecting the evidence given by Mr Standley and in the alternative, an order that he be recalled for further cross-examination. For reasons which I gave then ex tempore, I dismissed that application. Included in Senior Counsel's closing submissions is one to the effect that because of, among other reasons, bias on the part of Mr Standley "his evidence is of no assistance to the Tribunal and should be disregarded in its entirety."
The Respondent called Mr Garry Terrill who is a Retail Management Consultant of Glen Iris, Victoria. He says that he has had over 30 years of industry experience including the previous seven years as a Retail Management Consultant, his function in that role being he says "to work with retailers experiencing difficulties in their business and by doing so to help them either improve their cash flow or to structure a strategy to sell or otherwise exit from their businesses." The report explains further:
"I work six days a month in 'Retailer Relations' for companies in the Westfield Group. My brief there is to work with retailers in Westfield shopping centres in Western Australia and Victoria who will benefit from retailer consulting advice and that can include retailers who are in difficulty. My fees for doing so are paid by Westfield but my consultations and reports are confidential to the retailer with whom I am working. My brief is to be completely independent. I have a contract with the Australian Retailers Association to perform the same function for members of that Association. I am about to commence training sessions for Association members designed to help troubled retail businesses deal with cash flow problems and to realise their potential for growth."
He made two visits to Westfield Chatswood, each about a couple of hours' duration, the first on 14 December 2006 and the second on 21 February 2007.
His report contains an executive summary:
"With regard to the retailer's claim that the adjacent Boost Juice, Optus, Salad Bar and ATM Kiosks were the cause of its trading problems, during my visits to the centre neither the sight lines nor the customer traffic flow appeared to be adversely affected.
Surf City appeared to be experiencing a number of problems that, when combined, would have negatively impacted on sales, profitability and cash flow. The business appeared to be having problems with supply and management of its product, with consequential impacts on trading performance because of lost sales. Cash flow appeared to be a problem that was affecting both supply of stock from vendors and staffing levels in the store. The general operational standards within the store were below average. This may have been due to reduced staffing levels (themselves perhaps caused by reduced cash flow) or by the owners of the business having been distracted by other matters.
As I will elaborate in this report, in my opinion the retailer's trading problems were more likely to be caused by extended trading losses, poor management and industry trends than by the presence of the kiosks."
(a)Significant among opinions expressed by Mr Terrill in his report were:
"My assessment is that the store is in a prime location in the centre. It has strong traffic flow past its doors and has extremely strong shop front visuals.
Based on the time I spent in the store and in walking through the mall from various directions, it is my opinion that the store's sight lines and customer traffic flows were not adversely affected by the named kiosks. Also, during my times in the centre the Boost Juice kiosk was not playing loud music, which apparently has been an issue.
In my opinion, the presence of the Boost Juice kiosk has not interfered with the flow of customer traffic to the Surf City shop. Further, it is my opinion that it was not unreasonable of the landlord to have located the Boost Juice kiosk in the position which it occupies.
I am aware of other centres in which Boost Juice Kiosks apparently adversely affect centre traffic to adjacent retailers. In Westfield Chatswood, however, the configuration of the Centre is quite different to these situations and, as a result, the customer traffic flow did not seem to be adversely impacted by the Boost Juice and other Kiosks."
(b)He suggested several likely causes of trading problems at Surf City, in relation to product, visual presentation, customer service, store operations and industry considerations.
(c)As to product he said, among other things:
"The overall product being offered for sale was consistent with other independent surf stores and included men's, women's and children's apparel and accessory lines. The main brands represented in the store were Rusty, Ripcurl, Quicksilver and Roxy.
The actual stock levels in the store appeared to be lower than in comparable stores. There were many gaps in the stock and out of stocks in the ranges. This in my experience suggests that there were problems with stock management, housekeeping or in vendors supplying the business."
(d)As to visual presentation, he said among other things:
"The overall visual merchandising structure and standards were of a fairly basic standard. The shop lacked the visual theatre that surf stores normally project in terms of projecting the brand image and customer lifestyles that this type of business normally targets."
(e)As to customer service, he said:
"The customer service in the store was unsatisfactory during the time I spent in the store. The two staff members were positioned behind the cash register and wrap counter and did not attempt to acknowledge any customers moving through the store. In my experience, this has a negative impact of sales both because customers are not given assistance in making purchases, and because customers feel that they are being ignored."
(f)As to store operations, he said:
"The overall operations of the store appeared to be quite inefficient and to lack direction. This was evident from the low standards of the store in the areas of housekeeping, customer service and product ticketing. In my experience, this is due to inadequate staffing levels or the poor quality of store staff, or both. In my experience, this was both an indication of, and a cause of, declining profitability."
(g)As to industry considerations, he said among things:
"Across the centres with which I have experience, the surf retail category has experienced slower sales over the 2006 period, with some of the smaller independent surf retailers experiencing actual sales decreases against the previous year."
Included in the answers which he gave in cross-examination were:
(a)He agreed that one of the photographs taken by Ms Mimis in about November 2006 had the south eastern corner of the Telechoice kiosk, from the position where the photograph was apparently taken, the first Boost Juice sign "interferes in part with the sightline to the Surf City store".
(b)He agreed that "on each occasion one could see the four items ... being the Optus bar, its sign board, the Boost Juice kiosk and its sign board, with Shops 415 to 417 behind it. On each of those occasions those four items blocked or interfered in part with the sight lines to Shop 415 to 417."
(c)He agreed that another of those photographs taken at the south western corner of the Love Salad kiosk looking north showed a "partial reduction in the sightlines to 415 to 417."
(d)He sought to qualify those answers or some of them first by, saying that as one walked north past the Telechoice kiosk, the mall opened up and secondly, by saying:
"...the eye line of a consumer picks up specifically on a tenancy approximately seven to nine metres out because further out from that point you have a number of tenancies in vision and that's when the focus would normally happen ..."
In the case of Surf City, he placed that point at about midway along the western side of the Boost Juice kiosk, north of the first Boost Juice sign.
(e)There were two situations that he was aware of, as he said in his report, where "Boost Juice kiosks apparently adversely affect centre traffic to adjacent retailers." In both those cases, unlike the situation here, the kiosks were in the middle of the mall such that traffic was divided around the kiosk and both sat outside "mature age mens' stores, suiting stores." He said that "the customer group here of Boost Juice is very different to a mature age mens' store that sells suiting". His cross-examination on this point continued:
"Q. What is your opinion as to the customer base which is attracted to a Boost Juice kiosk?
A. I think the customer is unisex and it's very much teens to probably late twenties and probably a very compatible customer type to a surf business, that why I contrasted a mature age menswear store where it wasn't compatible because it's such a different clientele.
Q. If the customer base for Surf City was affluent families and did not just include young people but also included more mature people in their forties and fifties then would there not be a difference between the customer base for the Boost Juice kiosk and the customer base for Surf City?
A. That could be the case but my perception of the Surf City product range and brands was that it was younger and I would accept that certainly families would shop in the store, absolutely."
Included in his answers to Non-Judicial Members was:
"Q. I'm saying that if we double the stock you're saying that it doesn't necessarily follow that you'll double the sales. Is it reasonable to assume that you would get a 50% increase in sales?
A. I'd like to do the financial modelling around it before answering a question like that but I think it would be reasonable to assume up to that level.
Q. So if you were to err on the side of conservatism, if you were to say that it would be somewhere between 15%, 20% that would be a reasonable assumption for anybody to make?
A. It would be and if you ask me what advice I would give if a business was going to go from 100 metres to 200 metres and they were only going to increase their sales by 15 to 20% I'd advise them against it."
Other complaints by Ms Mimis-Weeks
In this sub-section, I will outline relevant evidence relating to complaints by Ms Mimis-Weeks concerning the Boost Juice kiosk in terms of queues, incompatibility with the Surf City business and loud music, and concerning unfavourable treatment by Westfield of the Applicant in comparison to other tenants in Westfield.
First, I will deal with the complaints about queues. In the Second Further Amended Application for Original Decision a complaint is made in relation to the Boost Juice kiosk of:
"Customers queuing or waiting for drinks at the kiosk impeded the ability and likelihood of customers entering the Premises."
In her principal affidavit, Ms Mimis-Weeks expressed some conclusions based on her observations of the Boost Juice kiosk period from late 2002 to May 2007, including:
- Queues formed parallel to the shopfront of Surf City.
- Queues commenced forming at about 10.30 am each day.
- On weekdays between 12 pm and 2 pm the queue had up to 30 people, sometimes comprising two parallel lines.
- At other times the queue would be between 4 and 10 people.
- On Thursday afternoons and evenings the queue would be up to 12 people.
- On Saturdays and Sundays the queue would get up to about 20 people.
- On occasions up to 60 people were in and around the kiosk waiting for their drinks to be made.
- The queues were greater in school holidays.
Photographs taken by her in November 2006 from Surf City showed queues of up to about 12 people at the Boost Juice kiosk. Included in her affidavit, was this comment:
"I have observed people who went to Surf City from the direction of the corridor leading from the blue level carpark. When there are lines of people in front of the Boost Juice kiosk, I have observed these people make a detour around the pillars in front of Shop 418 before entering Surf City."
It is appropriate to note here some evidence which Mr Papagiannis gave in answer to questions from one of the Non-Judicial Members. He said that the east west traffic comprised not just traffic between Myer and the Foodcourt but also traffic coming up from Victoria Avenue entry. He estimated, without any studies of directional traffic, that the east west part of the overall traffic at the T junction on level 4 was "more than probably 60%". I also note that during cross-examination he said in answer to questions suggesting queues at the Boost Juice kiosk were "channelling customers away", that he did not think that was happening and that "It's an opportunity for the retailer that sits around them ... you've got a captured audience."
Secondly, I will deal with the complaint of the continual playing of loud music at the Boost Juice kiosk. In support of that complaint, Ms Mimis-Weeks said in her principal affidavit:
"Since November 2002 of the Boost Juice kiosk have played very loud music from the Boost Juice kiosk. If I am standing within 2 metres of the kiosk and speaking with someone, the person must shout in order for me to hear and understand them. I can also hear the music from the counter inside Surf City..."
Included in one of her answers in cross-examination on this issue, was this comment:
"I'm sure if you check Westfield's files all the security people came up at least four or five times a day to have the music turned down. They couldn't hear themselves speaking on their walkie-talkies."
In cross-examination Mr Rossel (the Westfield Centre Manager from July 2005 to December 2007) said that he accepted that there were complaints made on behalf of Surf City about the noise levels from the Boost Juice kiosk "a number of times", and said that management "acted immediately":
"We discussed the concerns of your client with Boost Juice and asked them to exercise every care to ensure that the noise levels are not disruptive to any surrounding businesses."
Ms Ruth McGovern, who became the Centre Manager at Westfield Chatswood in February 2008, gave her understanding of a procedure whereby Westfield dealt with complaints of noise being made by a tenant in the Centre:
- Assess the noise level to determine whether it was excessive and disruptive at the ambience.
- If assessed to be disruptive, the tenant would be spoken to.
- If there was no action, speak to the Area Manager of the tenant.
- If there was still no action, to go to the highest level of management, by letter if necessary, warning of a breach of the lease.
Thirdly, there is the complaint expressed in the Second Further Amended Application for Original Decision:
"The nature of the business at the kiosk (food outlet) was unsuitable in comparison to the nature of the business and the premises."
During her cross-examination Ms Mimis-Weeks said:
"My customers were primarily families, affluent families, a lot of mothers with young children. The last thing they want is blaring music that's going to, you know, make them feel like they have to rush out of the store."
The cross-examination also included the following in relation to the photographs of the Boost Juice kiosk which Ms Mimis-Weeks took in November 2006:
"Q. It would be fair to say, wouldn't it, that the customers lined up outside Boost Juice generally speaking are young?
A. I don't agree.
Q. The target market for your shop when it traded at Westfield Chatswood was 12 to 24 year olds, wasn't it?
A. That's completely inaccurate. I had an extensive customer base of women in their forties and mothers with children.
Q. The persons lined up outside Boost Juice in the photographs I've referred you to generally would appear to fall within that age range, wouldn't they?
A. There are people there that are older than that."
Mr Roberts (the Manager of Westfield Chatswood from August 2002 to September 2003) answered as to questions from one of the Non-Judicial Members as to the target market of a surf shop that "probably somewhere between 12 and 30 would be a very strong mix of customer for them".
Mr Stevens (a Westfield leasing executive) said in cross examination:
"Well, I think that it would be reasonable to assume that the likely customer of a surf store and the patron of a Boost Juice kiosk would be very similar."
Comments by the retail trade experts are covered in the Retail Trade Expert Evidence sub-section above.
Finally in this sub-section, I will deal with the evidence dealing with particular (d) in respect of the allegation of unconscionable conduct which, as amended on 16 September 2009 reads:
"The respondent treated the applicant unfavourably in comparison to other tenants at Westfield Chatswood. Particulars of the unfavourable treatment are contained in paragraphs 63 to 65 of the affidavit of Elizabeth Mimis Weeks sworn 15 May 2007 and in the provision of promotional allowances to other tenants (being Golden Smoke, Ala Sultan, Federick Casey Momo, Mocca Clothing, House of Kaldor, EM Pret a Porter, Still Water Homewares, Original Kebab, Planet of the Crepes, Seduce, Liz Jordan, Industrie, Veri, YLT Cityphone, Jusco Supermarket and Capers Deli) but not the applicant."
The substantial parts of paragraphs 63 to 65 of Ms Mimis-Weeks' affidavit of 15 May 2007 (her principal affidavit) were, after objection, rejected at the interlocutory hearing in October 2008. No supplementary evidence in chief by Ms Mimis-Weeks in respect of those matters was tendered whether by affidavit or orally when her evidence commenced at the hearing on 11 May 2009. I have not detected, perhaps not surprisingly, any reference during her cross-examination to the matters particularised in (d).
The issue of rent relief was raised during cross-examination of Mr Rossel:
"Q. If a tenant at Westfield Chatswood made an application for rental assistance or rent relief in the period that you were centre manager, is that an application that you dealt with as centre manager?
A. It's something that we collectively deal with as a team, however, I would be involved in the administration of that request.
Q. And when you say 'that we are involved collectively as a team', who else is part of the team that ---
A. That would be - yeah, the decision - the collective decision would be made by the centre management representatives and the leasing representatives that work on Westfield Chatswood. It's not my sole decision.
Q. In the period that you were centre manager at Westfield Chatswood, did Westfield have a policy in relation to applications for rental relief or rental assistance?
A. The policy really is to - each circumstance is very different, so there's no one-size-fits-all policy for providing rental assistance."
The issue was also raised during cross-examination of Ms McGovern (who became the Westfield Chatswood manager in 2008). She said that as centre manager she had authority to deal with a rent relief application up to $10,000 per month. She identified a Westfield document listing Westfield Chatswood tenants who had received rent relief (called "promotional allowance") during 2006. It appears that the names listed in the amendment of particular (d) made on 16 September 2009 were taken from that document. She was also asked, as was Mr Stevens who followed her as a witness, some questions about a hairdresser whose business in the Victoria Arcade at Westfield Chatswood had been the subject of a new lease at a reduced rent. The explanation given was to the effect that his business had been a long-standing one but it had been adversely affected by a change to traffic-flow by alterations to the lay-out of that to the Victoria Avenue access to the Centre.
One of the tenants listed in the amended particular (d), Jusco, was raised in cross-examination of Mr Papagiannis. That was, he explained, a large store, over 600 square metres, on level 6. Westfield's long term strategy was to move Bing Lee into that space and in the meantime assist Jusco to stay on. Ultimately, he said "the lease was surrendered, a payout was negotiated on the back of that."
Financial evidence
On behalf of the Applicant, financial evidence came through Ms Mimis-Weeks and her husband and the tender of various documents such as tax returns, business activity statements and some print-outs of accounting material. Some pertinent aspects of that evidence might be noted:
(a)As is noted in the Factual Outline section above, there was a warehouse in Chatswood for all the Spuds Surf/Surf City stores and until about 2005 there were transfers of stock between all the stores without money changing hands for such transfers. A computerised accounting programme called "Osipos" was used for the stores until about 2002 when MYOB was used as the accounting software. External accountants were used to finalise and lodge all annual tax returns, Business Activity Statements and instalment activity statements.
(b)Mr Weeks describes his occupation as that of a consultant. He has no accounting qualifications. Until late 2004 the financial records were maintained by an accounts clerk at the warehouse. He then took over that work on behalf of the Applicant.
(c)The claim under s10 of the RLA not being pressed, it is not necessary to note in any detail such evidence as was given, which was principally through Ms Mimis-Weeks and the tender of several invoices and quotations.
(d)Ms Mimis-Weeks swore in an affidavit of 21 May 2007 that "Spuds Surf City Chatswood Pty Ltd does not have or prepare financial statements, profit and loss accounts, balance sheets and auditor's reports." Mr Weeks said in cross-examination that the Applicant had prepared and had financial statements for the period 1 July 2001 to May 2007 including profit and loss statements and balance sheets, and that since 2004 the Applicant gave that financial data to its external accountants in MYOB format on a disk. No such records were produced, and no external accountants were called to give evidence, by the Applicant.
(e)Using some figures apparently from a spreadsheet prepared by the Applicant's external accountant, Mr Weeks suggests that the gross profit margin on sales for the Applicant since 2001 was 42.31%.
The Respondent tendered a report from Mr Robert Bell, Chartered Accountant, dated 22 April 2008, dealing with the Applicant's claims for the $400,000 loss incurred in the refurbishment of Shops 415 to 417, the loss of value of the business of at least $500,000 said by the Applicant to be the loss of the right to sell the brands Quicksilver, Rip Curl and Billabong in Westfield Chatswood, and the Applicant's claim for trading losses incurred since 2003 because of the Respondent's actions in allowing the erection of the Boost Juice, Optus and Love Salad kiosks. He had considered various affidavits and accompanying material from Ms Mimis-Weeks, Mr Weeks and the Applicant's then external accountant, Mr Aaron Yeung. Mr Yeung's affidavit was not tendered by the Applicant in these proceedings. Included in opinions expressed by Mr Bell were:
(a)The Applicant had not produced evidence to substantiate the fitout expenses claimed and having used the refurbished premises for a period of about 5 years to undertake trading, its fitout would be substantially depreciated;
(b)There were suggestions in what he had seen that the business had no substantial value by 2007;
(c)The sales data provided showed that in the first quarter the Boost Juice kiosk commenced trading, Surf City achieved higher sales than in any other quarter. Sales in calendar year 2003 were only marginally lower overall than in calendar year 2002, the first and second quarters being higher than the corresponding quarters in calendar year 2002. Sales did not fall substantially until the third quarter of calendar year 2004. There were no financial statements, profit and loss accounts, balance sheets or auditor's reports for the Applicant and this made it impossible to determine whether the company was suffering trading losses or the quantum of such losses.
Among other answers which Mr Bell gave in cross-examination were acknowledgments that he had not been to the Surf City shop; he had limited experience in relation to the sale of a surf shop; he was not aware of any possible sale to Rip Curl in 2007; he was not aware that Westfield had offered a new lease to the Applicant; and on figures shown to him for calendar year 2004, the average trade figures at Westfield Centre were going up about 4.5% but the trade figures for Surf City were going down by nearly 17%. Included in answers which he gave to Non-Judicial Members were that it was possible that the plant and equipment in the shop did have a value greater than its depreciated value and that the exercise of trying to value any trading loss by multiplying gross profit by loss of sales was very difficult.
Findings
Alleged pre-lease misrepresentation
As is noted in the Issues section of this Decision above, the claim by the Applicant under s10 of the RLA on account of the misrepresentation was withdrawn by Counsel at the outset of the closing submissions. Counsel for the Applicant explained:
"...we do no pursue the claim under s10 of the Retail Leases Act. That is not because it is conceded that the relevant representation was not made. In my submission there is evidence to support the fact that the relevant representations were made, the relevant representations being one oral, namely a conversation with Mr Sicouri, which is obviously disputed, and the other one being the plan, which is not disputed because that's clearly in evidence. Nevertheless, s10 involves knowledge elements and, in my submission, I'm not going to push or press that claim, in light of the requirements of s10 and knowledge and the evidence, as it rests today in that regard. So that leaves my client's claim under s34 of the Retail Leases Act. It leaves my client's claim in respect of the clause under the lease and it leaves my client's claim in relation to unconscionability. There's also quiet enjoyment as well there, but that is, in essence, similar to the s34 claim under the Retail Leases Act."
Then in the Applicant's written Submissions in Reply dated 19 February 2010, Counsel for the Applicant withdrew the reliance on the alleged pre-lease misrepresentation as part of the Applicant's unconscionable conduct claim:
"The Applicant does not press as a particular of unconscionable conduct, the matters pertaining to pre lease misrepresentations that are the subject of paragraphs 1 to 4 o the Second Further Amended Application ('the Application'). Accordingly, particular (a) to paragraph 20 of the Application is now limited to the matters that are the subject of paragraphs 5 to 16 of the Application."
The misrepresentation claim had until then constituted a significant part of these proceedings. It remains part of the proceedings, certainly as still pleaded and at least as a matter of pertinent background. The evidence in relation to it was substantial and conflicting and requires some findings of fact which I will make.
The history recounted in Factual Outline and Factual Details sections of this Decision concerning the matters alleged in relation to the misrepresentation, in my opinion, tells against those allegations being correct. A summary of that history might be given:
(a)The Applicant had been running the Surf City business in Shops 415 and 416 at Westfield Chatswood since the beginning of 1999 (see Factual Outline above).
(b)In early 2002 the Applicant was considering refurbishment of Surf City. Mr Mimis on behalf of the Applicant and Mr Sicouri on behalf of the Respondent were negotiating a new lease for Surf City. The availability of Shop 417 came up and Mr Mimis was interested in that. The Applicant was the sitting tenant of Shops 415 and 416. Shop 417 was next door. Shop 417 was a prime site. The Applicant, particularly through Mr Mimis, knew the premises. Mr Mimis was experienced in retail and other business and, evidently by choice, sought no financial, legal or other professional advice. These are matters emanating particularly from Mr Sicouri's evidence as considered in the Factual Details section of this Decision.
(c) Kiosk 406 was occupied until 27 October 1999 by a retailer of sunglasses. Kiosk 417 was occupied until 7 July 2000 by a jewellery, watches and gifts retailer. From 1 September 2001 kiosks 406 and 407 with some surrounding space was occupied by the B Zone kiosk for the sale of cosmetics until early November 2002.
(d)On 11 March 2002 Mr Mimis forwarded to Ms Mimis-Weeks the email chain including as attachment copy of a plan of level 4 of Westfield Chatswood in small scale and Preliminary Sketch Plan of Shops 415, 416 and 417 combined.
(e)Mr Sicouri recommended within Westfield management a lease to the Applicant of Shops 415, 416 and 417 on 13 March 2002 and the was approved by Westfield on 18 March 2002.
(f)On 18 March 2002 Mr Mimis forwarded an offer of lease attaching disclosure statements.
(g)Ms Mimis-Weeks says that she was a recipient party to the misrepresentation between 11 March 2002 and 20 March 2002.
(h)On 22 March 2002 Mr Mimis signed the disclosure statements. He made alterations to some details within the Lessor's Disclosure Statement. He made no alterations to the Lessee's Disclosure Statement and in particular inserted no reference to any representation concerning non-obstruction of line of sight to Surf City on Shop 417. (In an appropriate case, and this is not now that, given the withdrawal of claims based on the alleged pre-lease misrepresentation, this would be a significant consideration and may even given rise to an estoppel: Samaha v Corbett Court Pty Ltd [2006] NSWSC 1441 at [68] to [71] and Armstrong-Jones Management Pty Ltd v Saies Bond Pty Ltd (RLD) [2007] NSWADTAP 47 at [118] to [127].)
(i)On 8 May 2002 Westfield's solicitors forwarded to Mr Mimis for execution and other attention by him a lease for Shops 415, 416 and 417 and other documents.
(j)The Applicant took possession of Shop 417 about 3 July 2002 and undertook refurbishment of Shops 415 and 416 and the fitting out of Shop 417.
(k)Ms Mimis-Weeks says that on or about 9 August 2002 her brother told her before a meeting at Westfield head office to discuss this, that he was concerned about the level of rent that the Applicant had agreed to pay as well as the clutter of traders around the store. In the letter Mr Mimis wrote to Landerer & Co on 9 December 2002, he referred to that meeting as being with Gary Pinter and Megan Davies of Westfield and said that at the meeting the "issue of the casual tenancies outside and around my doorway and visual impairment as a result of kiosk sightlines was discussed." While referring to "sightlines" he made no reference as to any representation having been made as to sightlines.
(l)The Applicant commenced trading from Shops 415, 416 and 417 on 12 August 2002 without the Respondent, despite previous requests of the Applicant, having received an executed lease or other appropriate documentation.
(m)Mr Mimis forwarded to Landerer & Co. on 21 August 2002 the lease only partially executed in that it was signed by him only and not by Ms Mimis-Weeks, who at that stage was the other director of the company. It included, apart from a change by a day to the commencement of dates of the term of the lease, the amendment already detailed above but repeated here, to Item 10 on the front page of the lease:
"For every day there is a shop front stall and/or visual impediment to the shop front above 1.4 metres high in front of shops 415 to 417 for part or whole day, the minimum rent payable by the lessee calculated on a daily basis will be reduced by 10%."
Mr Mimis made no reference to any prior representation of non-obstruction of line of sight.
(n)In November 2002 the B Zone kiosk was removed and the Boost Juice kiosk commenced in kiosk 407. Mr Mimis' letter of complaint to Westfield Centre Management of 12 November referred to "the clutter of temporary and permanent kiosks outside of my shop front and main entrance", while referring to "the visibility to through traffic entering from the foodcourt carpark", made no reference to any representation having been made by Westfield as to sightlines.
(o)In his letter to Landerer & Co of 9 December 2002 he said "in fact, casual tenancies have been abundant since the commencement of this new lease creating difficulties for traffic flow to see and access my shop front." He referred also to the Boost Juice kiosk and its signage "well in excess of the limitations placed by Westfield" (in the Kiosk Guidelines). He made no reference to any representation having been made by Westfield as to sightlines.
(p)In his letter of 13 May 2003 to Mr Roberts concerning the Boost Juice and other kiosks outside Surf City, Mr Mimis made no reference in his complaints to any representation having been made by Westfield as to sightlines.
(q)In his letter of 1 December 2003 to Mr Roberts in response to Mr Roberts' letter of 28 May 2003, Mr Mimis while continuing his complaints concerning the Boost Juice kiosk, made no reference to any representation having been made by Westfield as to sightlines.
(r)Ms Mimis-Weeks commenced making complaints to Westfield in about July 2005. The first explicit reference she made to any representation having been made by Westfield as to non-obstruction of sightlines seems to have been in the Application for Original Decision filed in proceedings 065141 on 31 August 2006.
The weight of the evidence, as canvassed early in the Factual Details section of this Decision as to the alleged oral basis of the misrepresentation is significantly against any finding that the misrepresentation had been so made. In particular:
(a)The assertion in the Application for Original Decision in proceedings 065141 that the makers of the alleged misrepresentation were "Centre Manager Greg" (Greg Patterson, the then Centre Manager) and "the Leasing Executive, Tim", was wrong. Ms Mimis-Weeks subsequently identified the maker of the representation as Mr Sicouri and said in evidence that the reference to "Greg" was wrong. "The Leasing Executive Tim" was apparently a reference to Mr Tim Robertson, who was not a leasing officer but he succeeded Mr Patterson as Centre Manager in August 2002. Ms Mimis-Weeks has persisted, perhaps faintly, with a claim that Mr Roberts had been at a meeting with Mr Sicouri before the Applicant decided to take over Shop 417. Mr Roberts convincingly, in my assessment, denied any possibility that he had been so involved.
(b)Ms Mimis-Weeks' explanation was that her then solicitor, Mr Lundy (who did not give evidence), was responsible for these incorrect details as he had "put the whole contents together and filed them without my permission". I find that explanation difficult to accept. It is not easy, in my view, to imagine a solicitor confusing, in that sort of detail, information that must have come to him from Ms Mimis-Weeks.
(c)Mr Sicouri's position in evidence is in particular that he denied ever meeting or speaking with Ms Mimis-Weeks as alleged by her or at all, and said that all his meetings which were in late 2001 and early 2002 in relation to Surf City were with Mr Mimis and were in the city and that it was not true that in March 2002 people would have a direct and unobstructed line of sight to shop 417 as the B-Zone kiosk was outside the shop. He did not make representations as alleged by Ms Mimis-Weeks. His maintenance of those positions through cross-examination, as elaborated in the Factual Details section, I found persuasive.
(d)Mr Mimis has not given evidence and the absence of any evidence from him is, without contemplating any inference (which the Respondent invites and in my opinion, correctly) on the basis of Jones v Dunkel (1959) 101 CLR 298, a significant deficiency in the Applicant's evidence.
The documentary part of the misrepresentation is said to be constituted by the email from Mr Sicouri to Mr Mimis of 8 March 2002 and the small scale floor plan of level 4 of Westfield Chatswood attached. That email read simply "as discussed". It was forwarded by Mr Mimis to Ms Mimis-Weeks on 11 March 2002 under cover of an email reading "FYI new floor plan". The level 4 plan was one of two plans attached and the other was a preliminary sketch plan of Shops 415, 416 and 417. The sketch plan was in my opinion probably "the new floor plan" referred to by Mr Mimis and in any event the more significant of the two attachments. The complaint is made that the level 4 plan "indicated that there was and would be no kiosk in front of shop 417 or obstructing the line of sight between the car park blue level entrance and shop 417." In my assessment, not only was no such indication explicit on the plan, no such indication could reasonably be deduced by any person having the knowledge of the Centre premises that Mr Mimis, and even Ms Mimis-Weeks, had. It could not rationally be seen as constituting any inducement by the Respondent to the Applicant who I repeat, was the sitting tenant of Shops 415 and 416, to take over the lease of the next door shop, 417. Ms Mimis-Weeks has given evidence referred to in the Factual Details section above to the effect that she regarded the B-Zone kiosk as only a casual kiosk, particularly as it was not shown on the level 4 plan; given alone the significant size and structure of that kiosk as detailed in the Factual Outline section above, I find that explanation unacceptable.
In these circumstances, I find that the Applicant's allegations concerning the misrepresentation, as to both its oral and documentary aspects, have not been made out on the balance of probabilities.
Complaints by Mr Mimis concerning kiosks
I have summarised in the alleged pre-lease misrepresentation sub-section a few paragraphs above, the complaints which Mr Mimis made concerning kiosks between 9 August 2002 and 1 December 2003. It is appropriate that I now state concisely some conclusions which I have come to on the evidence in relation to matters involved in, and surrounding, those complaints. For probably about 9 months of that period, there was probably a situation of, what I would describe as, some uncertainty prevailing so far as the Applicant, through Mr Mimis, was concerned about the significant increases for Surf City in shop size and rent, the impact of kiosks on Surf City's occupancy of Shops 415, 416 and 417 and a wish for an alteration in respect of item 10 on the first page of the lease. There was, I have concluded, a measure of fault on the part of Westfield in relation to two aspects of those matters:
(a)It was obviously inconsistent with good management for Westfield to have permitted the Applicant to take over Shop 417 without the lease documentation, and associated details, being finalised. In particular, as detailed in the Factual Outline section above, Mr Sanderson, the Assistant Manager of Westfield Chatswood, by 12 August 2002 warned Head Office management of an impending situation in that regard and that warning was evidently not heeded.
(b)Mr Mimis' complaints came to centre on the Boost Juice kiosk and non-compliance with the Fitout Guidelines as shown by his letters of 12 November 2002 to Mr Roberts, 9 December 2002 to Landerer & Co., and 13 May 2003 to Mr Roberts (set out in the Factual Outline section above), particularly in relation to what I have termed in the Factual Outline section above, the first Boost Juice sign, which was located on the western side of the kiosk towards the south western corner facing north south, extending approximately 2.8 metres above the floor and being approximately 900mm wide. Westfield's assessment of those complaints as referred to in the letter of 28 May 2003 from Mr Roberts to Mr Mimis (also set out in the Factual Outline section above) was arguably wrong.
It seems to me that:
(a)Item 7.0 Visual Presentation of the Fitout Requirements in relation to kiosks is less than a clear and comprehensive provision. It does not sufficiently deal with signage. While referring in places to menu boards and signage it does so with reference to "overhead" items and does not explicitly address items extending upwards from the ground or counter. The relevant stipulations concerning signs are expressed only in general terms, referring to maintenance of, non-inhibition of, and mindfulness of, sightlines, and minimisation in number; the absence of detailed specifications is unfortunate. That generality should be contrasted with the dimensional specification for a blade sign given in the Guidelines brochure published in January 2005 (see Fitout Requirements sub-section of the Other Evidence section above) and the apparent restriction to only one such sign on a kiosk. The Guidelines appears to have been only an advisory document and not of the same status as the Fitout Requirements.
(b)Clause 29 of the Boost Juice lease, however, is much clearer in its terms and purports to restrict to a floor height of 1400mm, not just counters but also signs. There is a measure of conflict between that situation and the situation specified in the Fitout Requirements.
(c)A submission on behalf of the Respondent that clause 29 of the lease should be read subject to clause 10.1, such (as I understand the submission) that, once given, approval by the Lessor of plans and specifications for the kiosk may override the height restriction in clause 29, should not be accepted. The clauses should be read together and effect should be give to each. Powers of approval such as that given to the Lessor by clause 10 (and by clause 2(e) of the red book) must be exercised reasonably (Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234, especially per Priestley JA at 269-270; Hughes Bros Pty Ltd v Trustees of Roman Catholic Church of Diocese of Sydney (1993) 31 NSWLR 91).
(d)The Fitout Requirements were disseminated by Westfield to tenants and prospective tenants and referred to in the lease documentation. They were a feature of the overall relationships among Westfield and its tenants and prospective tenants. They set minimum standards for all. Involved in the need for the reasonable exercise by Westfield of its power of approval of proposed kiosk drawings and specifications, was a requirement to check that those details conformed to the Fitout Requirements. The Fitout Requirements failed adequately to deal with signage and arguably Westfield's approval of the plans and specifications for the Boost Juice kiosk was in that regard, wrong.
Unfortunately -
(a)The above matters were not fully developed with Mr Roberts during his evidence.
(b)When Mr Mimis did explicitly revisit the issue by his letter of 1 December 2003 to Mr Roberts, Mr Roberts had left the Centre and, it seems on the evidence, that letter was not followed through.
(c)The issue was not taken up by Ms Mimis-Weeks until, it seems on the evidence, about July 2005 by which time Surf City was suffering financial difficulty and other issues such as possible downsizing of Surf City and possible sale of the business were also involved.
It seems to me that had the above considerations been more thoroughly agitated between the parties in what would have then been an appropriate time frame (I think up to about mid 2003) the situation of uncertainty, as I have referred to it, facing the Applicant, at least in relation to lease documentation and kiosks, may have been resolved. That said, it was the responsibility of both parties to have then pressed harder towards achieving a compromise resolution at that time. Both failed to do that. As it was, those considerations thereafter remained unresolved and became other facets of a business which was going on to experience difficulties.
Alteration to lease
As noted above in the Issues section above, the Applicant says that the Respondent by conduct accepted the alteration which Mr Mimis made to Item 10 on the front page of the lease to the partially executed lease which he returned to Landerer & Co. on 21 August 2002:
"For every day there is a shop front store and/or visual impediment to the shop front above 1.4 metres high in front of shops 415 to 417 for part or whole day, the minimum rent payable by the Lessee calculated on a daily basis will be reduced by 10%."
The Applicant accordingly claims "in light of the alteration to Item 10", evidently by reason of an alleged agreement by the Respondent to that alteration, the Respondent is required to reimburse the Applicant rent and interest in accordance with the alteration.
Appropriate guidance as to the legal approach to the assessment of such a situation is given in Branir Pty Ltd v Owston Nominees (No.2) Pty Ltd (2001) 117 FCR 424 at [369] by Allsop J:
"...a number of authorities discuss the need not to construct one's thinking in the formation of contract to mechanical notions of offer and acceptance. Contracts often, and perhaps generally do, arise in that way. They can also arise when business people speak and act and order their affairs in a way without necessarily stopping for the formalities of dotting i's and crossing t's or where they think they have done so. ...Sometimes this failure occurs because, having discussed the commercial essentials and having put in place necessary structural matters, the parties go about their commercial business on the clear basis of some manifested mutual assent, without ensuring the exhaustive completeness of documentation. In such circumstances, even in the absence of clear offer and acceptance, and even without being able (as one can here) to identify precisely when a contract arose, if it can be stated with confidence that by a certain point the parties mutually assented to a sufficiently clear regime which must, in the circumstances, have been intended to be binding, the court will recognise the existence of a contract. Sometimes this is said to be a process of inference or implication. For my part, I would see it as the inferring of a real intention expressed through, or to be found in, a body of conduct, including, sometimes, communications, even if it be the case that the parties did not consciously advert to, or discuss, some aspect of the relationship and say: 'and we hereby agree to be bound' in this or that respect. The essential question in such cases is whether the parties' conduct, including what was said and not said and including the evident commercial aims and expectations of the parties, reveals an understanding or agreement or, as sometimes expressed, a manifestation of mutual assent, which bespeaks an intention to be legally bound to the essential elements of a contract. ..."
The evidence here falls well short of demonstrating "a manifestation of mutual assent, which bespeaks an intention to be legally bound to" that alteration. Mr Mimis failed to advance it before the Applicant went into possession of Shop 417. Regular, and I think sufficient, rejection of that alteration was made on behalf of the Respondent by Landerer & Co. in letters to Mr Mimis and/or Ms Mimis-Weeks (as detailed in the Factual Outline and Factual Details sections above) of the following dates: 26 August 2002, 12 March 2004, 23 February 2005, 29 April 2005 and 19 June 2006. From February 2005 ongoing communications between Ms Mimis-Weeks and Westfield executives concerning the Surf City business were underway covering all aspects of the business including downsizing and sale and this issue seems to have been, at most, another aspect of those communications. The parties dealt with each other throughout in respect of rent payments on the basis of the figures specified in the printed lease.
It is clear to my mind, however, that there was a relevant mutual assent between the Applicant and the Respondent concerning the other provisions of the lease and those provisions became effective accordingly. That situation is confirmed by application of s8(1) of the RLA:
"For the purposes of this Act, a retail shop lease is considered to have been entered into when a person enters into possession of the retail shop as lessee under the lease or begins to pay rent as lessee under the lease (whichever happens first)."
I note Aspromonte Pty Ltd v Zagari (2000) 9 BPR 17,247 at [51]-[56] and Perhauz v SAF Properties Pty Ltd [2007] NSWADT 122 at [56]-[72].
The status of the guarantees, which are a matter between the Respondent and Mr Mimis and Ms Mimis-Weeks, is not in issue in these proceedings.
The Applicant's claim based on the alteration to the lease has not been made out.
I add that included in the Respondent's submissions, as pleaded in its Amended Points of Defence, is one that:
"If - as the applicant claims - there is a written lease that includes the hand-written amendment, it is a nullity by force of s.304(1) of the Duties Act 1997 because the applicant has failed to pay stamp duty on it ,,,"
As to that submission I say only that the lease documentation was tendered without any objection with respect to that provision, that the lease document is an incompletely executed instrument, that the provision does not in terms nullify an instrument, and that I do not see any duty problem should impinge on the conclusions which I have expressed above.
S34(1) RLA
Consistently with s34(1) of the RLA the Applicant claims that as a result of matters pertaining to the Boost Juice kiosk the Respondent inhibited or altered to a substantial extent the flow of customers to Surf City and caused significant disruption and had a significant adverse effect on trading at Surf City. The matters complained of in relation to Boost Juice are:
"a)The kiosk blocked the line of sight to the Premises by customers walking through level 4 of Westfield Chatswood, in particular customers walking in a southerly direction along the corridor between the car park blue level entrance and shop 417.
b)Customers queuing or waiting for drinks at the kiosk impeded the ability and likelihood of customers entering the Premises.'
c)The nature of the business at the kiosk (food outlet) was unsuitable in comparison to the nature of the business in the Premises.
d)The Boost Juice kiosk continually played loud music."
The Applicant also claims that in and after 2003 the Respondent erected further structures in front of Surf City being the Telechoice kiosk, the Love Salad kiosk and the St George ATM and that "the further structures caused further interference to the Premises and to the Applicant's business within the meaning of s34 of the Retail Leases Act."
S34(1) further provides that if:
"...the lessor does not rectify the matter as soon as reasonably practicable after being requested in writing by the lessee to do so, the lessor is liable to pay the lessee reasonable compensation for any loss or damage (other than nominal damage) suffered by the lessee as a consequence."
In submissions, Counsel for the Applicant cites Wall's Gifts and Tobacco Pty Ltd v Warringah Mall Pty Ltd [2003] NSWADT 161 at [40]:
"While it is the case, we consider, that access to the applicant's shop today is not as good as it was in September 1998, we do not consider that this is the comparison that is required by cl 34 in the present circumstances. The comparison that is required is as between what the respondent stated would be the way in which the concourse would be used and how it is now used."
On the basis of what is said there, it is submitted again that the plan of level 4 of Westfield Chatswood included as an attachment in the email chain which Mr Mimis forwarded to Ms Mimis-Weeks on 11 March 2002 indicated that there were no kiosks in front of Shops 415, 416 and 417. It is also submitted again that it was reasonable for the Applicant to conclude that the B-Zone kiosk was only a casual kiosk. In relation to those submissions, I adhere to the views that I have expressed above in the Alleged Pre-Lease Misrepresentation sub-section of this section to the effect that the plan could not reasonably be viewed in that way and that it was not reasonable to conclude that the B-Zone kiosk was only a casual kiosk. Additionally, what was said in [40] of the Wall's Gifts decision was appropriate to the circumstances of that case where a crucial factor was that when the subject lease was entered into, the disclosure statement had forecast the change in the kiosk arrangements within that mall about which the Lessee subsequently complained in those proceedings. That is not the case here and I think that here a more appropriate comparison is, as submitted on behalf of the Respondent, between the extent of any relevant obstruction by the B-Zone kiosk and any relevant obstruction by the Boost Juice kiosk; such an assessment is pertinent to determine whether, as emphasised in the Wall's Gifts decision at [45]-[46], there were involved inhibitions or alterations "to a substantial extent", "significant disruption" and "significant adverse effect" as alleged by the Applicant.
So far as the complaint concerning blockage of the line of sight is concerned, my conclusions are:
(a)It is clear, and this I did not discern to be contested by Westfield personnel such as Mr Roberts and Mr Stevens, that from various positions and from various angles the south-north view of Shops 415, 416 and 417, and even Shop 417 itself, was hindered by the Boost Juice kiosk and in particular the first Boost Juice sign.
(b)It is also clear that there had also been a similar, but different, hindrance presented by the B-Zone kiosk. Despite the greater site coverage and the suspended overhead fittings of that kiosk, I assess that hindrance to be of a lesser order, but not significantly so, than that created by the Boost Juice kiosk.
(c)Kiosks, including permanent kiosks, were at all relevant times a feature of the walkways and malls on level 4 of Westfield Chatswood.
(d)I found all the expert evidence of Mr Radocevic, Mr Standley and Mr Terrill to be helpful in various, and different, respects, but I do not see the need to analyse that evidence here beyond the accounts of it which I have given in the Other Evidence section above. I assess all that evidence to have been given professionally and I do not accept the criticisms made on behalf of Westfield, of Mr Standley.
(e)It is to be regretted that, as I have said in the sub-section above, some compromise was not achieved in 2002-2003 as I have noted above. Such a compromise could have involved what in my opinion would have been some reduction in size of comparatively small order of the first Boost Juice sign, or relocation of it. I certainly do not see that the removal of the sign completely was called for.
(f)Questions of degree are involved. Overall, I am not persuaded that there were involved in respect of line of sight hindrances, by reason of the Boost Juice kiosk inhibitions or alterations "to a substantial extent", "significant disruption" and "significant adverse effect" as alleged by the Applicant.
As to complaints based on queues at, unsuitability of the nature of the business of, and loud music emanating from, the Boost Juice kiosk, my conclusions are:
(a)None of these complaints is of the same significant as that concerning the blockage of sightlines.
(b)There is no substance in the complaint concerning the unsuitability of the nature of the Boost Juice business in relation to the business of Surf City. On the whole it discloses a measure of compatibility between the customer mixes of the two businesses.
(c)Problems with loud music were intermittent and not continuous and were reasonably controlled, or capable on control, by procedures which Westfield had in place.
(d)There may have been from time to time obtrusions to a relevant extent by larger queues at the Boost Juice kiosk, but not such as to amount to a relevant inhibition of access to, or any other problem for, Surf City.
The Applicant puts all these complaints concerning the Boost Juice kiosk cumulatively. Looking at them cumulatively, I am not persuaded that there was involved by reason of any aspect of the Boost Juice kiosk situation, inhibitions or alterations "to a substantial extent", "significant disruption" and "significant adverse effect" as alleged by the Applicant.
As to the complaints concerning the Telechoice kiosk, the Love Salad kiosk and the St George ATM:
(a)There is little, if any, relevant evidence of interference to Surf City emanating from these structures (apart from Mimis-Weeks' assertions) beyond Mr Standley's opinions which I have noted above.
(b)Among considerations arising from the evidence are in particular:
(i)The blade sign on the Telechoice kiosk was on the eastern side adjacent to the void and away from the south-north walkway; and
(ii)The Love Salad kiosk was some distance from Surf City, on the southern side of the Foodcourt walkway.
(c)There was no request in writing by the Applicant for their removal until 1 September 2006.
(d)There was not caused to Surf City by any or all of those facilities any significant inhibition, alteration, disruption or adverse effect, of the order prescribed by s34(1), or at all.
Quiet enjoyment covenant
The Applicant claims in light of the matters relied on for the s34 claim, that the Respondent breached the express or implied term of quiet enjoyment and thereby suffered loss. The covenant was express and contained in Clause 18 of the lease:
"QUIET ENJOYMENT
18.1If the Lessee pays the rent and performs its covenants contained in this Lease it will peaceably possess and enjoy the Premises for the term granted without any interruption from the Lessor or any person lawfully claiming through, from or under it subject always to the rights, powers, remedies and reservations of the Lessor contained in this Lease."
In submissions on behalf of the Respondent, attention is also drawn to Clause 16 dealing with "Lessor's rights to alter and manage car parks and common areas":
"All common areas and car parks are subject at all times to the exclusive control and management of the Lessor ... with respect to the common areas and the car parks ... or any part (thereof) ... the Lessor may at any time ... construct buildings or improvements in the common areas ..."
Interference with the quiet enjoyment of leased premises, to amount to a breach of a covenant for quiet enjoyment, has to be substantial but it does not have to be direct and physical (Spathis v Hanave Investment Co Pty Ltd [2002] NSWSC 304 at [125]-[152] and Telstra Corporation Ltd v Sicard [2009] NSWSC 827 at [20] and [21]). The order of any interference as I have sought to deal with it above in relation to the s34 claim, is not, to my mind, substantial. Accordingly, I am not satisfied that the claim for breach of the covenant for quiet enjoyment has been made out.
I should, however, make mention of two other matters submitted on behalf of the Respondent in relation to this claim. First, it was submitted that, as the clause was expressed, the benefit of the covenant to the Lessee was conditional upon the Lessee paying the rent and that "apart from isolated small periods, Spuds was always in arrears of rent". Arrears of rent in respect of Surf City did not become significant until about 2005 and at least until then, this was not a relevant consideration. Secondly, it was submitted that the covenant for quiet enjoyment was subject to Clause 16 such that installation of the kiosks and the ATM could not constitute a breach of the covenant. I do not accept that submission. The provisions must be read together. In Arndale (Kilkenny) Pty Ltd v Gaetjens (1970) 44 ALJR 434, the High Court held that covenants in a lease giving lessees of shops the right to use common areas in a shopping mall and giving the Lessor the right to construct buildings in the common areas had to be read together so that the power of construction in the Lessor could not override the right of use in the Lessees, with the result that the Lessor was found to have been rightly enjoined at first instance from installing kiosks. I add that this decision is distinguishable not in point of principle but in point of fact in that the subject kiosks at Westfield Chatswood were on spaces designated as kiosks and as was put in reply on behalf of the Applicant, "the kiosks are not common areas of the mall".
Unconscionable Conduct
S62B(1) of the RLA provides:
"A Lessor must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable."
In the Applicant's Outline of Submissions, reliance is placed on the following parts of s62B(3):
"(3) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessor has contravened subsection (1) in connection with a retail shop lease, the Tribunal may have regard to:
(a)the relative strengths of the bargaining position of the lessor and the lessee, and ...
(d)whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessee or a person acting on behalf of the lessee by the lessor or a person acting on behalf of the lessor in relation to the lease, and ...
(f)the extent to which the lessor's conduct towards the lessee was consistent with the lessor's conduct in similar transactions between the lessor and other like lessees, and
(g)the requirements of any applicable industry code, and
(h)the requirements of any other industry code, if the lessee acted on the reasonable belief that the lessor would comply with that code, and
(i)the extent to which the lessor unreasonably failed to disclose to the lessee:
(i)any intended conduct of the lessor that might affect the interests of the lessee, and
(ii)any risks to the lessee arising from the lessor's intended conduct (being risks that the lessor should have foreseen would not be apparent to the lessee), and ...
(j)the extent to which the lessor was willing to negotiate the terms and conditions of any lease with the lessee, and
(k)the extent to which the lessor and the lessee acted in good faith."
In AG v World Best Holdings Ltd (2005) 63 NSWLR 557 at [120]-[121] Spigelman CJ said in relation to s62B::
"Unconscionability is a well-established but narrow principle in equitable doctrine. It has been applied over the centuries with considerable restraint and in a manner which is consistent with the maintenance of the basic principles of freedom of contract. It is not a principle of what 'fairness' or 'justice' or 'good conscience' requires in the particular circumstances of the case. ...The Ministerial second reading speech ... indicates a similar concern to distinguish what is unconscionable from what is merely unfair or unjust. Even if the concept of unconscionability in s62B of the Retail Leases Act is not confined by equitable doctrine, as the decisions under s51AC of the Trade Practices Act (Cth) suggest, restraint in decision-making remains appropriate. Unconscionability is a concept which requires a high level of moral obloquy. If it were to be applied as if it were equivalent to what was 'fair' or just', it could transform commercial relationships in a manner which the Minister expressly stated was not the intention of the legislation. The principle of 'unconscionability' would not be a doctrine of occasional application, when the circumstances are highly unethical, it would be transformed into the first and easiest port of call when any dispute about a retail lease arises."
That authority has been regularly applied in this Tribunal - for example, Horwood v Memocorp Australia Pty Ltd [2010] NSWADT 69, O'Neill v Henry (RLD) [2010] NSWADTAP 40 and Davis v Sydney Foreshore Authority [2010] NSWADTAP 43.
As set out in the Issues section of this Decision above, the Applicant relies on some 9 particularised situations which it says, severally and in various combinations, constituted unconscionable conduct by the Respondent. I will now deal with my consideration of each of those situations.
The first particular, (a), as amended by deletion of reference to paragraphs 1 to 4, is that "the conduct described in paragraphs 5 to 16 above is unconscionable". This relates to the claims in respect of the alteration to the lease, s34(1) of the RLA and the quiet enjoyment covenant, none of which I have found to have been established. This particular has not been made out.
Particular (b) is that:
"Between late 2002 and 2007 the Respondent failed to remove the kiosks and other structures in front of the Premises despite repeated requests and complaints by the Applicant."
As to the Boost Juice kiosk, I have found above to the effect that there was a measure of fault on the part of Westfield in relation to its assessment, with respect to the Fitout Requirements and provisions of the lease, concerning matters complained of by Mr Mimis in 2002 and 2003. As I have also found, there were failures by both parties properly to have followed that issue through to resolution within an appropriate time frame, which, on my assessment, finished in about 2003. When the issue was revisited about 2 years later, it had become an entrenched problem for both parties and part of a larger problem which the Applicant faced in respect of the Surf City business. I do not see such failures in these respects by Westfield amounted to unconscionable conduct. I also repeat that an appropriate compromise solution between the parties could have involved some reduction in size of comparatively small order of the first Boost Juice sign, or relocation of it and that certainly removal of the sign completely was not called for. I add that, as I have found above, there was no request in writing by the Applicant for the removal of the Telechoice kiosk, or the Love Salad kiosk and the St George ATM until 1 September 2006. Also, as I have found, none of those facilities caused any relevant hindrance to Surf City. The removal of any or all of them was not called for. This particular has not been made out.
Particular (c) is that:
"The Respondent refused to recognise that the Applicant's amendment to Item 10 of the lease was a term of the lease, and continued to charge the Applicant rent as if there was no amendment to Item 10 of the lease."
I have found above that the Applicant's claim based on the alteration to the lease has not been made out. The alteration did not become a term of the lease. This particular has not been made out.
Particular (d) as amended on 16 September 2009 is:
"The respondent treated the applicant unfavourably in comparison to other tenants at Westfield Chatswood. Particulars of the unfavourable treatment are contained in paragraphs 63 to 65 of the affidavit of Elizabeth Mimis Weeks sworn 15 May 2007 and in the provision of promotional allowances to other tenants (being Golden Smoke, Ala Sultan, Federick Casey Momo, Mocca Clothing, House of Kaldor, EM Pret a Porter, Still Water Homewares, Original Kebab, Planet of the Crepes, Seduce, Liz Jordan, Industrie, Veri, YLT Cityphone, Jusco Supermarket and Capers Deli) but not the applicant."
In the Other Complaints by Ms Mimis-Weeks sub-section of the Other Evidence section above, I have dealt with matters of evidence pertinent to this complaint. The evidence comes nowhere near proving the assertions in the paragraph at all, let alone as a situation of unconscionable conduct. This particular has not been made out.
Particular (e) is as follows:
"In about November 2005 the respondent made misrepresentations to the applicant for the purpose of inducing the applicant not to downsize its store, on which misrepresentations the applicant relied. Particulars of the misrepresentations are at paragraphs 78 and 79 of the affidavit of Elizabeth Mimis Weeks sworn 15 May 2007."
This particular relates to a discussion between Ms Mimis-Weeks and Mr Rossel on 21 November 2006. It is referred to in the Factual Outline section above and detailed, to an extent, in the Factual Details section above. There are conflicts between Ms Mimis-Weeks and Mr Rossel as to the details of this discussion. Without dealing with the details of those conflicts, I do say that for Ms Mimis-Weeks to seek to attribute, on the basis of no more than one discussion, responsibility to Westfield for any decision by her not to downsize Surf City, was not commercially sound and is not credible. In any event, this particular, and some of those following, involve issues of credit. A vigorous attack has been presented on behalf of Westfield as to the credibility of Ms Mimis-Weeks. I carefully observed Ms Mimis-Weeks throughout the hearing, particularly during her extensive cross-examination. It suffices, I think, if I say that I have deduced that in difficult times for the Surf City business between 2005 and 2007 Ms Mimis-Weeks became, somewhat understandably, significantly upset by that situation. That upset developed to an extent which coloured her attitude towards Westfield at the time, such that, incorrectly in my conclusion, she saw Westfield as being the cause of all the problems of the business. That attitude has since persisted, if not increased, and it has also inappropriately coloured her evidence in these proceedings. I have found it difficult to accept her as a witness whose evidence should be relied on, on its own, particularly as to matters where there is conflict between her and other witnesses. On the other hand, I have not found the credibility of any of the Westfield witnesses to be significantly questionable. Overall, I accept Mr Rossel's evidence as to this discussion. This particular has not been made out.
Particular (f) is that:
"From about April 2006 the respondent engaged in conduct which involved trying to get the applicant out of the Premises in order to accept another tenant, which was a competitor of the applicant, called City Beach. The conduct included or was evidenced by trying to evict the applicant from the Premises, accepting key money from City Beach in about June 2005, and not granting the applicant or the applicant's nominated successor a new five year lease in relation to the Premises."
Relevant evidence concerning the Surf City situation in April and May 2006 is referred to, sufficiently I think, in the Factual Details section above. My assessment of the evidence does not persuade me that the Applicant has proved the assertions which it makes here. In particular, a submission which I discern is made on behalf of the Applicant to the effect that Westfield were then seeking to move City Beach into Westfield Chatswood and to move Surf City out, has not in any way been established in my opinion; other considerations apart, Westfield obviously had commercial interests in looking at the possibility of bringing City Beach in as a "minimajor" tenant on level 5 in the then, evidently foundering, Espirit premises. I am not at all persuaded that Westfield had any sinister motive in that regard nor am I satisfied that there was anything untoward in the erasing, within Westfield, of a lockout notice in respect of Surf City in June 2006. After all, as the document recorded, Surf City's occupancy cost was then 35.7% of its sales and as Mr Rossel said, "Surf City's then rent debt was the largest at Westfield Chatswood in 2006". This particular has not been made out.
Particular (g) is that:
"From about April 2006 the respondent engaged in conduct which affected the applicant's ability to sell its business by not granting a new lease in relation to the Premises."
This is to an extent repetitive of matters relied on by the Applicant in relation to Particular (f) above. As is noted in the Factual Details section above, following a meeting on 9 August 2006 involving Mr Jordan, the managing director of Westfield for Australia and New Zealand, later in August 2006 Westfield offered to the Applicant to agree to a new lease for 5 years, to downsizing Surf City, to assisting Ms Mimis-Weeks in finding a purchaser, but not to a reduction in rent. The Respondent draws attention in submissions to s62B(6) of the RLA which provides:
"A person is not to be taken for the purpose of this section to engage in unconscionable conduct in connection with a retail shop lease by reason only that the first-mentioned person fails to renew the lease or issue a new lease."
This particular has not been made out.
Particular (h) is that:
"In about April 2006 the respondent made misrepresentations to the applicant which induced the applicant to remain in the Premises until about June 2007. The representations are identified in the affidavit of Elizabeth Mimis Weeks dated 7 December 2007. Between August 2006 and May 2007 the applicant suffered a further loss. But for the misrepresentations, the applicant would not have remained in the Premises in this period and suffered the loss."
In the Applicant's Outline of Submission it is submitted, among other things, that the Respondent "has led no evidence of any conversations with potential buyers to establish that it did in fact seek to discuss the sale with any suppliers" and that the Respondent "never proffered any potential buyer of the business". The evidence of Mr Papagiannis in this regard, not significantly challenged, is to the effect, as referred to in the Factual Outline and the Factual Details sections above, that Westfield approached City Beach, Surf Dive 'n Ski, Wild Surf and Breakaway, without success. The matters asserted by Ms Mimis-Weeks in her affidavit of 7 December 2007 were that she believed following representations from Westfield that:
"(a)Westfield was giving me an extension by 5 years on the lease of shops 415 to 417.
(b)Westfield would help me to sell my business.
(c)Westfield would do a deal on rent to help find a new tenant to purchase my business and take over the lease."
I am satisfied that, with reference to what I have referred to in this paragraph and the preceding paragraph, Westfield, to the extent that it made them, acted in accordance with representations (a) and (b). I am not satisfied that it made the representation in (c), and in particular, I accept Mr Papagiannis' denial that he said in August 2006 "We will have to do a deal on the rent to get a new tenant.". This particular has not been made out.
Particular (i) is that:
"The respondent's conduct in seeking to recover unpaid rent and other amounts owing under the Lease or arising from a breach of the Lease by the applicant is unconscionable."
As is submitted on behalf of the Respondent, s62B(5) of the RLA provides:
"A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with a retail shop lease by reason only that the first-mentioned person institutes legal proceedings in relation to that lease or refers to arbitration a dispute or claim in relation to that lease."
There is no unconscionable conduct raised by this particular and it has not been made out.
In the result, none of these has been made out at all, let alone as unconscionable conduct. At the time of closing addresses, on 11 February 2010, the Applicant proffered the particulars in various combinations (as noted in the Issues section above). I do not see that any combination of individual particulars, none of which has been made out, can change the result that no unconscionable conduct has been proved.
Loss and damage
Given that all the Applicant's claims have failed, I do not assess as an appropriate exercise, to seek to unravel the evidence as to quantum, particularly concerning any lost profits by the Applicant and the value of the Surf City business. Nevertheless, I do find that the Applicant has not proved any causal link between conduct by the Respondent and any loss or damage suffered by the Applicant. Also, I do make some short comments on particular matters of quantum: I found the Applicant's evidence, particularly as to the value of the business and loss of profits, inadequate; as to the value of the business, probably the best evidence is to be found in the offer by Rip Curl in April-June 2007, among other things, to make "a goodwill payment to secure the site of $100,000" and I would have accepted that the business had a goodwill value of $100,000; as to the loss of profits I agree with submissions by the Respondent to the effect that the assessment which the Applicant has sought to make out was speculative and in no way persuasive. The issues in these proceedings do not include a general inquiry into why the Surf City business ultimately failed but I do confirm that I am satisfied that it did not fail because of any of the complaints pleaded by the Applicant. I note, but do not express any view on, other suggested causes of that failure such as competition from the Applicant's other store, and Mr Mimis' store, in Victoria Avenue, loss of the Billabong brand, poor management of Surf City, poor cash flow, product supply and management problems and industry trends away from small surf shops.
CONCLUSIONS AND ORDERS
The applications by Spuds Surf Chatswood Pty Ltd in proceedings 065171 accordingly fail and the proceedings must be dismissed. In proceedings 085081 Spuds Surf Chatswood relies for its defence only on matters asserted in proceedings 065171 and accordingly the applications by the Respondent in proceedings 085081 must succeed.
In the result the Tribunal ORDERS that:
1.Proceedings 065171 be dismissed.
2.In proceedings 085081, Spuds Surf Chatswood Pty Ltd is to pay to P.T. Ltd $327,533.55 plus interest to date.
3.The issue of costs is reserved.
The Tribunal DIRECTS that:
4.In proceedings 085081 P.T. Ltd is to file and serve a formulation of its claim for interest, together with supporting submissions, within 14 days of the publication of these Reasons for Decision, and Surf City Pty Ltd is to file and serve any response with supporting submissions, within 14 days thereafter.
5.Any application by P.T. Ltd for costs in either or both proceedings is to be filed and served, with supporting submissions, within 14 days of the publication of these Reasons for Decision, and any response by Surf City Pty Ltd is to be filed and served, with supporting submissions, within 14 days thereafter.
6.Each of the above applications may be adequately determined by the Tribunal on that material and without holding a hearing.
**********
Decision last updated: 08 July 2011
5
16
2