Spuds Surf Chatswood Pty Ltd v PT Ltd (No 2) (RLD)
[2012] NSWADTAP 35
•03 October 2012
Administrative Decisions Tribunal
New South Wales
- Amendment notes
Medium Neutral Citation: Spuds Surf Chatswood Pty Ltd v PT Ltd (No 2) (RLD) [2012] NSWADTAP 35 Hearing dates: 21 and 22 June 2012 Decision date: 03 October 2012 Jurisdiction: Appeal Panel - Internal Before: M Chesterman, Deputy President
P Molony, Judicial Member
J Schwager, Non-judicial MemberDecision: 1. The Respondent is to pay to the Appellant the sum of $97,535.72.
2. (a) Within 28 days of the date of this decision, the Appellant is to file and serve:
(i) its supplementary submissions relating to the appeal in file 119042; and
(ii) its submissions relating to the costs of the present appeal (file 119034).
(b) Within a further 28 days, the Respondent is to file and serve submissions in reply.
(c) The Appellant's and the Respondent's submissions relating to the appeal in file 119042 are to be served on the Intervenor in that appeal (the Registrar of Retail Tenancy Disputes) as well as on the opposing party.
(d) Any submissions by the Intervenor relating to the appeal in file 119042 are to be filed and served within 21 days after service of the Respondent's submissions.
(e) These questions regarding costs will then be decided 'on the papers', pursuant to section 76 of the Administrative Decisions Tribunal Act 1997, unless the Appeal Panel determined that a hearing should take place.
Catchwords: Retail lease - obstruction of sight-lines and access to shop - unconscionable conduct - causation - assessment of damages Legislation Cited: Administrative Decisions Tribunal Act 1997
Australian Securities and Investment Commission Act 2001 (Cth)
Competition and Consumer Act (Cth) 2010
Retail Leases Act 1994
Trade Practices Act 1974 (Cth)Cases Cited: Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349
Armstrong-Jones Management Pty Ltd v Saies-Bond & Associates Pty Ltd [2006] NSWADT 323
Armstrong-Jones Management Pty Ltd v Saies-Bond & Associates Pty Ltd (RLD) [2007] NSWADTAP 47
Atma Investments Pty Ltd v The Astor Pty Ltd (RLD) [2003] NSWADTAP 53
Attorney General of New South Wales v World Best Holdings Ltd (2005) 63 NSWLR 557; [2005] NSWCA 261
Australian Competition and Consumer Commission v Allphones Retail Pty Ltd [2009] FCA 17
Browne v Dunn (1893) 6 R 67
Butt v McDonald (1896) 7 QLJ 68
Commissioner of Corrective Services v Aldridge [2000] NSWADTAP 5
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64
Duncan v Aljayar Pty Ltd [2010] NSWADT 224
Jones v Schiffmann (1971) 124 CLR 303
Mackay v Dick ((1881) 6 App Cas 251
Macquarie International Health Clinic Pty Ltd v Sydney South Area Health Service [2010] NSWCA 268
Samaha v Corbett Court Pty Ltd [2006] NSWSC 1441
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
Seymour v Australian Broadcasting Commission (1990) 19 NSWLR 219
Spuds Surf Chatswood Pty Ltd v PT Ltd (No 2), PT Ltd v Spuds Surf Chatswood Pty Ltd [2011] NSWADT 152
Spuds Surf Chatswood Pty Ltd v PT Ltd (No 3), PT Ltd v Spuds Surf Chatswood Pty Ltd (No 2) [2011] NSWADT 186
Spuds Surf Chatswood Pty Ltd v PT Ltd (RLD) [2012] NSWADTAP 2
Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell [2011] NSWCA 389
United Group Rail Services Ltd v Rail Corporation NSW (2009) 74 NSWLR 618; [2009] NSWCA 177Texts Cited: Duncan, Commercial Leases in Australia (Law Book Co, 4th ed, 2005)
Lang's Commercial Leasing in Australia (CCH, 1999-, loose-leaf)Category: Principal judgment Parties: Spuds Surf Chatswood Pty Ltd (Appellant)
PT Ltd (Respondent)Representation: Counsel
A Fernon (Appellant)
S Angyal SC (Respondent)
Herro Solicitors (Appellant)
Colin Biggers & Paisley Lawyers (Respondent)
File Number(s): 119034 Decision under appeal
- Jurisdiction:
- 9108
- Citation:
- Spuds Surf Chatswood Pty Ltd v PT Ltd (No 2), PT Ltd v Spuds Surf Chatswood Pty Ltd [2011] NSWADT 152
- Date of Decision:
- 2011-06-22 00:00:00
- Before:
- Retail Leases Division
- File Number(s):
- 065171
Introduction
This is our second decision in this appeal. The proceedings at first instance were a great deal longer and more complex than most proceedings in the Retail Leases Division. The same can be said of the decision given by the Tribunal and of our first decision in the appeal.
In our first decision, we included a lengthy outline of the evidence and submissions put before the Tribunal and of the findings and rulings made by the Tribunal, in so far as these were relevant to the matters raised on appeal. We will not repeat this material here.
Similarly, we will not provide a full summary of the submissions that were advanced by the parties in the appeal or of our rulings relating to them. We will recapitulate only to the extent required to provide a starting-point for our discussion of the questions with which this second decision is specifically concerned.
Accordingly, the ensuing reasons must be read in conjunction with our first decision. Standing alone, they do not provide a full account of all the matters relevant to the conclusions that we have reached in the appeal. They include a number of cross-references to the numbers of relevant paragraphs in the Tribunal’s decision at first instance (preceded, as in our first decision, by the letter ‘T’) and to paragraph numbers in our first decision (preceded by ‘A’).
At A1 to A6, we gave the following short description of the proceedings before the Tribunal:-
1… In the proceedings, a major question was whether the Applicant, a former lessee of retail shop premises within a large retail shopping centre in Chatswood, was entitled to recover damages from the Respondent lessor on the ground that the lessor, by improperly permitting the erection of three kiosks and an ATM machine near the premises, had disrupted the Applicant’s trade to a significant extent. As will appear below, this question dominated the appeal to which the present decision relates.
2 The Tribunal proceedings commenced on 12 October 2006 with the filing of an Application (file no. 065171) by the Applicant, Spuds Surf Chatswood Pty Ltd. In it, the Applicant sought an order that the Respondent, PT Ltd, pay $400,000 by way of damages and/or rental payments and a declaration that a clause in a memorandum of lease purporting to record the agreement for lease between the parties should be altered in a specified manner.
3 Although, as just indicated, the parties were in dispute regarding one clause of the lease between them, it was common ground between them that this lease (hereafter ‘the Lease’) was governed by the Retail Leases Act 1994 (‘the RL Act’).
4 On 23 April 2008, the Respondent filed an Application (file no. 085081) in which it sought an order that the Applicant pay $291,908.58 plus interest by way of unpaid rent and outgoings, lost rent and outgoings and making good costs.
5 The hearing of the competing Applications took place over 19 days during May and September 2009 and February 2010.
6 In its decision, delivered on 22 June 2011 (Spuds Surf Chatswood Pty Ltd v PT Ltd (No 2), PT Ltd v Spuds Surf Chatswood Pty Ltd [2011] NSWADT 152 – hereafter ‘the Tribunal’s decision’ or ‘the substantive decision’), the Tribunal dismissed the Applicant’s claim (which had been amended since the filing of the Application) and upheld that of the Respondent. It ordered the Applicant to pay the sum of $327,533.55 plus interest to the Respondent.
At A27 and A28, we added the following background information:-
27 The shopping centre in which the premises leased to the Applicant were situated (hereafter ‘the Centre’) was known as Westfield Chatswood, or as Westfield Shoppingtown, Chatswood. In the Tribunal’s decision, the Centre’s owner, the Respondent, was also referred to on occasions as PT Ltd or ‘Westfield’.
28 At all material times until 27 January 2004, the sole director of the Applicant was Mr George Mimis. His sister, Ms Eliabeth Mimis-Weeks, was the secretary. At some time during 2004 or 2005, they became estranged from each other, and Ms Mimis-Weeks took over control of the Applicant. Mr Mimis ceased to have any involvement with its affairs.
From a date in January 1999, the Applicant occupied Shops 415 and 416, on Level 4 of the Centre, under a lease from the Respondent. The dispute between the parties arose after the creation of a new lease (‘the Lease’) relating to adjoining premises, Shop 417, as well as to these two shops.
Pursuant to the Lease, the Applicant carried on business in these shops (hereafter ‘the Premises’) under the name Surf City from the date when it took possession of Shop 417 (3 July 2002) until it vacated them on 26 June 2007.
As we stated at A38:-
38 In the Lease, the permitted use was stated as ‘Retail sale of surf, skate, street, snow clothing and accessories, surf and bodyboards, wet suits, outerwear and apparel’. The minimum annual rent was $427,500.00, payable in monthly instalments. There was provision for the rent to increase in line with the CPI and for the payment of a ‘percentage rent’.
In very short form, the complaint by the Applicant with which this appeal is primarily concerned was that between dates in or about November 2002 and February 2005 the Respondent improperly authorised the construction of three kiosks close to the Premises after the commencement of the Lease, thereby causing the sightlines to the Premises along an important north-south walkway on Level 4 of the Centre to be obstructed to a substantial extent and inflicting substantial damage to the Applicant’s business. The ground on which the Applicant claimed that these authorisations were improper was that the installation of blade signs ‘from the ground up’ on the kiosks contravened a clause (Item 7.0 of Part B of Appendix 6 – Kiosks) in a booklet called ‘Fitout Requirements: Specialty Shops’ (‘the Red Book’), that was issued by Westfield and distributed to all existing and prospective tenants of the Centre. The Respondent gave a copy of the Red Book to the Applicant in March 2002. Item 7.0, to which in the first appeal decision we gave the label ‘the 2002 Height Restrictions’, stipulated a maximum height of 1400 metres for all kiosks. It added that ‘Overhead elements including menu boards and structure are to be kept to a minimum’ and that ‘Overhead signage design must also be mindful of sightlines to surrounding tenancies’. In January 2005, the Respondent promulgated new guidelines (‘the 2005 Height Restrictions’) setting a maximum height of 2600 mm for kiosks.
In the proceedings, the labels given to the three kiosks in question were Boost Juice, Telechoice and Love Salad. The dates of their construction were, respectively, November 2002, May 2003 and February 2005. The Boost Juice kiosk replaced an earlier kiosk – the B-Zone kiosk – that had stood on roughly the same site between September 2001 and November 2002.
One of the grounds on which the Applicant unsuccessfully claimed relief at the Tribunal hearing was that the Respondent had engaged in unconscionable conduct as defined in section 62B of the RL Act.
On 22 June 2011, the Tribunal delivered its principal decision (Spuds Surf Chatswood Pty Ltd v PT Ltd (No 2), PT Ltd v Spuds Surf Chatswood Pty Ltd [2011] NSWADT 152). It ordered that the Applicant’s application (in file 065171) should be dismissed. It upheld the Respondent’s cross application (in file 085081) and ordered the Applicant to pay the sum of $327,533.55 plus interest to the Respondent. Relevant features of a second Tribunal decision delivered on 3 August 2011 (Spuds Surf Chatswood Pty Ltd v PT Ltd (No 3), PT Ltd v Spuds Surf Chatswood Pty Ltd (No 2) [2011] NSWADT 186) are outlined near the end of these reasons.
On 19 July 2011, the Applicant filed a Notice of Appeal against the Tribunal’s decisions dismissing its application in file 065171 and upholding the Respondent’s application in file 085081.
The first hearing of the Applicant’s appeal took place before us on 17 and 18 November 2011.
On 30 January 2012, we delivered what we will call ‘the first appeal decision’ (Spuds Surf Chatswood Pty Ltd v PT Ltd (RLD) [2012] NSWADTAP 2). In that decision, we rejected a number of grounds of the appeal. But for reasons set out at A284 to A310, we gave the following ruling (at A311) with regard to the Tribunal’s dismissal of the Applicant’s unconscionable conduct claim:-
311 For the foregoing reasons, the appeal with respect to the unconscionable conduct claim is upheld, to the extent that we grant leave for this part of the appeal to extend to the merits and invite further submissions to be made at a forthcoming hearing.
In the course of our discussion (A312 to A326) of the questions of causation and assessment of damages within the Applicant’s claim, we observed (at A316) that ‘the Tribunal’s treatment of these questions was brief, no doubt because (as it said at T242) its overall decision was against the Applicant’, and (at A317) that ‘at the hearing of the appeal neither of these questions received significant attention’. This was chiefly because, as the present decision demonstrates, many other matters had to be canvassed.
We therefore made the following determination (at A318):-
318… at the forthcoming hearing for the purpose of receiving further submissions on the Applicant’s unconscionable conduct claim, the parties should also be invited to address again the questions of causation and damages. They will not, however, be permitted to adduce further evidence, unless strongly compelling reasons are advanced.
In addition to an order scheduling a directions hearing, our orders in the first appeal decision were as follows:-
1. Leave is granted for this appeal to extend to the merits.
2. A further hearing is to take place, for the purpose of receiving further submissions from the parties on the following questions:-
(a) Whether conduct of the Respondent occurring between February 2002 and July 2005 amounted to unconscionable conduct as claimed by the Appellant.
(b) Whether any such unconscionable conduct of the Respondent caused the Appellant to suffer loss for which damages may be recovered.
(c) If yes to (b), what is the amount of such loss.
At A17 to A19, and at A252, we recorded some observations about the circumstances in which leave may be granted (under section 113(2)(b) of the Administrative Decisions Tribunal Act 1997) for an appeal to extend to the merits and about the consequences of doing so. The principal consequence, stated in section 115 of this Act, is that we must determine ‘what the correct and preferable decision is’ on the material before us. At A252, we quoted an authoritative statement on the approach that we should adopt for this purpose, contained in the Appeal Panel’s decision in Commissioner of Corrective Services v Aldridge [2000] NSWADTAP 5 at [94 – 98]. The concluding sentences of paragraph [98] should, we think, be quoted again here because they pertain directly to our task in the present decision:-
While the Appeal Panel is required to exercise the jurisdiction, which the Tribunal initially exercised, the Appeal Panel is not required to exercise this jurisdiction by starting the matter afresh and by conducting a hearing as it would be conducted in the Tribunal. Unless there are exceptional circumstances the appeal should be determined by considering the transcript, the documents admitted as exhibits, any additional factual material in documentary form, which we choose to take into account and the submissions by the parties or their legal representatives.
At an interlocutory hearing on 9 May 2012, the Appeal Panel in this case, constituted by Deputy President Chesterman, heard submissions and made orders with respect to applications filed by both parties for leave to adduce further evidence at what we will call the second appeal hearing. Leave was granted to the Applicant to file supplementary affidavits sworn by its director, Ms Elizabeth Mimis-Weeks, and by her brother, Mr Graeme Weeks, to which financial statements regarding the Applicant’s business during the relevant period were annexed. Leave was also granted to the Respondent to reply to this new evidence by filing a report prepared by an expert witness, Mr Robert Bell, who had testified in the proceedings at first instance. An application by the Respondent to file a further affidavit sworn by a former manager of the Centre, Mr Timothy Roberts, was rejected.
In accordance with directions given following the first appeal decision, the parties filed written submissions in advance of the second appeal hearing.
This hearing took place on 21 and 22 June 2012. As at the first hearing, Mr Fernon of counsel appeared for the Applicant and Mr Angyal SC for the Respondent. We admitted the affidavits of Ms Weeks and Mr Graeme Weeks and the report prepared by Mr Bell. Mr Bell was briefly cross-examined. On the afternoon of 21 June, we visited the Centre, in the company of representatives (including legal representatives) of the parties, and conducted a view of an area within Level 4 near the three shops (415, 416 and 417) that had constituted the Premises.
We will now discuss in turn the various questions that have arisen at the second stage of this appeal.
Whether the Applicant’s unconscionable conduct claim, as now framed, should be considered at all
We refer to our reasons, given at A284 to A303, for concluding that the Tribunal, in dismissing the Applicant’s unconscionable conduct claim, attached insufficient weight to a number of matters established by the evidence. These matters included the following:-
(a) The existence of the 2002 Height Restrictions, stipulating a maximum height of 1400mm for kiosks in the Centre, which the Respondents made known to the Applicant, along with other tenants, before the commencement of the Lease.
(b) The Respondent’s refusal to acknowledge assertions by the Applicant that these Restrictions were ambiguous in an important respect – namely, whether or not the height limit applied to blade signs (such as menu boards) erected ‘from the ground up’ – and that, on what was at least a ‘viable’ interpretation of them, plans approved by the Respondent for the construction of three kiosks near the Premises had contravened them.
(c) The Respondent’s conduct in replacing these restrictions by the 2005 Height Restrictions (in which the height limit for kiosks was increased to 2600mm) early in 2005.
We refer also to our reasons, at A305 to A311, for granting leave for the appeal to extend to the merits of the unconscionable conduct claim.
In his submissions filed on behalf of the Respondent before the second appeal hearing, Mr Angyal argued that if we were now to endorse an unconscionable conduct claim based substantially on the existence and alleged contravention of the 2002 Height Restrictions, this would constitute a denial of procedural fairness to the Respondent. The reason, he maintained, was that amended Particulars of the unconscionable conduct claim provided by the Applicant during the Tribunal hearing – notably in paragraph 20 of a Second Further Amended Application for Original Decision filed on 11 May 2009 – did not refer to these Height Restrictions or the alleged contravention of them. This was the case even though earlier versions of these particulars – notably Particular 10 of Particulars served on 24 November 2006 – expressly referred to these matters.
Within paragraph 20 of the Second Further Amended Application, as amended during the Tribunal hearing, the four Particulars of unconscionable conduct that we held in the first appeal decision (at A271) to require further consideration were Particulars (a), (b) and (c) and (i). These stated as follows:-
(a) The conduct described in paragraphs 5 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.
(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 Tribunal explained at T232 that paragraphs 5 to 16, to which Particular (a) referred, related to the Applicant’s claim in respect of an attempted alteration by Mr Mimis to the Lease (being the ‘amendment’ referred to in Particular (c)), its claim for damages under section 34(1) of the RL Act and its claim of breach of the covenant for quiet enjoyment.
In his written submissions to us, Mr Angyal relied on the following aspects of communications between the parties following the filing of the Second Further Amended Application:-
(i) In Points of Defence filed by the Respondent on 11 May 2009 and in Amended Points of Defence filed on 14 September 2009, the Respondent’s reply, in paragraph 32 of each document, to Particulars (a) and (b) implied clearly that it did not understand Particular (b) to relate to alleged contravention of Height Restrictions.
(ii) The Applicant did not advise the Tribunal or the Respondent that these two versions of paragraph 32 demonstrated a lack of understanding of Particular (b).
(iii) At the hearing, the Applicant did not put to any of seven witnesses who were employees or ex-employees of the Respondent the proposition that the Respondent had acted unconscionably with respect to the Height Restrictions.
(iv) In written submissions to the Tribunal filed on 11 February 2010 (which was the second last day of the Tribunal hearing), the Respondent argued that ‘the factual basis for Particulars (a) and (b) of the unconscionability claims is the same as the s. 10 claim [at the outset of closing addresses on that day, the Applicant in fact abandoned this claim of a pre-lease misrepresentation by the Respondent] and the s. 34 claim’ and that ‘conduct that “does not quite involve a contravention” of s. 10 or s. 34 cannot be unconscionable.
(v) In written submissions filed on 11 February 2010, the Applicant advanced a claim of unconscionable conduct based on alleged contravention of the 2002 Height Restrictions and the proposition that the Applicant relied on these Restrictions in entering into the Lease.
(vi) Despite this, in documents entitled Further Particulars Re Applicant’s Unconscionability and Damages Claim and Summary of Applicant’s Claim for Damages and Relief Sought, filed by the Applicant on 12 February 2010, no mention was made of the Height Restrictions.
(vii) In written submissions in reply filed on 19 February 2010 and in a letter dated 25 February 2010 to the Deputy President Callaghan (who constituted the Tribunal), the Applicant ‘further developed’ the claim contained in its submissions of 11 February 2010. No amended particulars of this claim were ever provided.
(viii) In a letter dated 19 March 2010 to Deputy President Callaghan, the Respondent objected to the Applicant’s being permitted to expand its allegations of unconscionable conduct.
(ix) In a marked up copy of this letter, also sent to Deputy President Callaghan, the Applicant denied that it was expanding its allegations of unconscionable conduct. The Applicant maintained here that it ‘did not abandon its claim that in breaching its own guidelines, the Respondent engaged in unconscionable conduct’.
Relying on these matters, Mr Angyal argued that the Respondent had understood, from the Second Further Amended Application of 11 May 2009, that the Applicant had abandoned the assertion, made in Particular 10 of the Particulars dated 24 November 2006, that the Respondent had engaged in unconscionable conduct through contravening its own guidelines. The Respondent, he said, conducted its case on this basis. Because the Applicant did not re-agitate this argument until submissions at the end of the hearing (i.e. on 11 February 2010), the Respondent had no opportunity to lead evidence responding to it. It objected subsequently to the attempt by the Applicant to resuscitate Particular 10 of the Particulars of 24 November 2006.
Mr Angyal went on to point out that the Tribunal discussed and dismissed the Applicant’s unconscionable conduct claim on the footing that it was confined to the matters particularised in the Second Further Amended Application of 11 May 2009. But in the first appeal decision, at A299, we stated that the Applicant’s case on its unconscionable conduct claim could, ‘at its highest’, be based on matters that, as we acknowledged at A302, went ‘beyond the matters alleged in the relevant particulars ((a), (b) and (i)) of the Applicant’s unconscionable conduct claim’. We set out at A299 a formulation of such a claim containing eight paragraphs.
According to Mr Angyal, our justification for so doing was insufficient. It was not enough for us, he said, to advance the following reasons (as we did at A302):-
… many of the additional matters were included in the Applicant’s Tribunal Submissions and its Tribunal Submissions in Reply. Other matters were the subject of findings by the Tribunal elsewhere than in the section of its decision in which it dealt with the unconscionable conduct claim. The Respondent could not reasonably assert that, when defending this claim, it would expect these additional matters to fall outside the range of those considered by the Tribunal.
A further matter relied on by Mr Angyal was that at the preliminary hearing on 9 May 2012, the Respondent’s application for leave to file an affidavit by Mr Roberts (see [21] above) was rejected. Mr Angyal described the testimony in this affidavit as being ‘of central relevance’ to the unconscionable conduct claim that we outlined at A299.
The outcome, he claimed, was that ‘the Appeal Panel has permitted the Applicant on appeal to run a case that it did not run at trial, but has not permitted the Respondent to lead evidence in opposition to it’.
In his oral submissions at the second appeal hearing, Mr Angyal did not revisit this matter.
In addressing us on this matter at the second appeal hearing, Mr Fernon made the following points.
First, Particular (a) in paragraph 20 of the Second Further Amended Application referred amongst other things to the conduct of the Respondent on which the Applicant based its claim for damages under section 34 of the RL Act. That conduct, particularised in paragraphs 9 to 16, included the erection of the three kiosks which, it was there claimed, obstructed sightlines to the Premises.
Secondly, at the hearing before the Tribunal, the documents distributed by the Respondent that contained the 2002 Height Restrictions (i.e., the Red Book) and the 2005 Height Restrictions were admitted into evidence. They were the subject of cross-examination, at some length, of two witnesses of the Respondent whom it employed at the relevant time, Mr Stevens and Mr Papagiannis. There was no objection to this cross-examination on the ground of relevance. Furthermore, in his oral submissions to the Tribunal on 11 February 2010, Mr Fernon argued that the content of this cross-examination was ‘very relevant to the issue of unconscionability’ (Transcript, 11.2.10, p 14, lines 32-33).
Thirdly, in these oral submissions to the Tribunal, Mr Fernon argued also that the fact that the Respondent breached the 2002 Height Restrictions through approving the construction of the three kiosks was an aspect of its claim under section 34, because it demonstrated that these approvals were ‘unreasonable’ and were not in accordance with ‘recognised shopping practices’. He pointed out that paragraphs (c) and (d) of section 34(1) called for a ruling as to whether the relevant conduct of the lessor was ‘reasonable’. He argued also that the 2002 Height Restrictions should be treated as evidence of ‘recognised shopping practices’ and that section 34(2) expressly brought these into consideration when determining ‘reasonableness’ under section 34(1)(c). He subsequently put forward submissions linking contravention of the 2002 Height Restrictions, the claim under section 34 and the unconscionable conduct claim. They included the proposition that ‘the s 34 issue… on its own would constitute unconscionable conduct’ (Transcript, 11.2.10, p 34, lines 34-35) and the following passage (p 35, lines 7-17):-
… the s 34 case relates to the guidelines and the reliance made on the guidelines and the intention was made (sic) on the guidelines and the complaints that have been in relation to failure to comply with the guidelines. Now this tribunal may find that, notwithstanding the fact that there was an interference with sight lines, it doesn’t represent the substantial interference that is otherwise required by s 34, but, in my submission, in circumstances where my client has been induced into entering into a lease, induced into incurring these very substantial liabilities and risks, that he has been induced to do it and then to allow that situation to happen, in my submission, and not do anything about it would be unconscionable.
Fourthly, in Particular (a), the Applicant indicated that in its unconscionable conduct claim it relied on the conduct of the Respondent that also provided the basis for its claim under section 34.
Fifthly, in the section of his oral submissions of 11 February 2010 relating specifically to the Applicant’s unconscionable conduct claim, Mr Fernon relied more than once on the Respondent’s alleged contravention of the 2002 Height Restrictions. He said, for instance, that ‘the issue of unconscionable conduct relates back and arises from matters from the very commencement of negotiations with the lease in relation to shop 417 and I refer to and rely upon what I’ve already said in relation to the guidelines about that, its provision to tenants, for the purposes of being able to rely upon it’ (Transcript, 11.2.10, p 37, lines 14-18). He then emphasised (a) the importance that the Applicant attached to having clear sightlines to the Premises; (b) the fact that, as landlords knew, tenants were ‘vulnerable’ because of the severe financial risks they were taking and relied greatly on the information obtained from landlords and on their expectations as to how landlords would operate; (c) the existence, for these reasons, of the RL Act, industry codes of practice, guidelines and an expectation that guidelines will be complied with; and (d) the acceptance by Mr Stevens and Mr Papagiannis, in their testimony, that guidelines were important to tenants. He then said (Transcript, 11.2.10, p 39, lines 24-25): ‘Now, in my submission, Westfield’s response to this issue of sightlines is the essence of unconscionability.’
Sixthly and most crucially, Mr Angyal, in addressing the Tribunal on 12 February 2010, did not at any stage argue that, to the extent that Mr Fernon invoked the existence and alleged contravention of the 2002 Height Restrictions as a component of the Applicant’s unconscionable conduct claim, he was putting forward a claim that the Respondent, due to lack of prior notice, was not in a position to meet. Mr Angyal’s submissions dealt at some length, chiefly in the context of the section 34 claim, with the nature of these Restrictions and with the question whether the Respondent had in fact contravened them. He subsequently acknowledged (Transcript, 12 February 2010, p 54, lines 6 to 9) that Particular (a) relating to the unconscionable conduct claim ‘drags in the whole s 10 case and the whole s 34 case and everything else in fact, the refund of rent claim’, except for the breach of covenant for quiet enjoyment. He raised no objection to the Applicant’s seeking to include in its case on unconscionable conduct the matters on which its section 34 claim was based, but sought merely to rebut this case on its merits.
In the light of these submissions by Mr Fernon, we are satisfied, subject to one qualification, that no denial of procedural fairness to the Respondent will be caused by our taking account of the Applicant’s assertion that the existence of both the 2002 and the 2005 Height Restrictions and the Respondent’s contravention of the 2002 Restrictions were matters of relevance to its unconscionable conduct claim. It appears to us that Mr Angyal, having been put on notice at the Tribunal hearing that the Tribunal was being asked to take account of this assertion and having made no objection to this, should not now be permitted to claim that we, in the discharge of our duty under section 115 of the ADT Act to arrive at the ‘correct and preferable’ decision, should put the assertion to one side.
We agree with Mr Angyal that the Tribunal treated the unconscionable conduct claim as confined to the matters particularised in paragraph 20 the Second Further Amended Application. But it regarded the alleged contravention of the 2002 Height Restrictions as falling within the scope of Particular (b) (this Particular referred to failure by the Respondent to ‘remove the kiosks and other structures in front of the Premises despite repeated requests and complaints by the Applicant’). At T208 to T211, it made a number of findings regarding these Restrictions and the Applicant’s claim that they had been contravened. At T233 (which forms part of a long passage quoted by us at A272), it explicitly took account of these findings when concluding that the Applicant had not established unconscionable conduct under Particular (b).
The qualification that we have foreshadowed is that we should not take account of any evidence tending to establish unconscionable conduct on the part of any specific person who was employed by the Respondent during the relevant period unless, during the Tribunal hearing, that evidence was put before the person in question and he or she had an opportunity to respond to it. To this extent, we accede to Mr Angyal’s submissions.
At the preliminary hearing on 9 May 2012, the Appeal Panel, constituted by Deputy President Chesterman, applied this principle in the course of determining that the Respondent should not have leave to tender at the second appeal hearing a further affidavit by a former manager of the Centre, Mr Roberts. One of the main grounds on which the Respondent sought leave was that Mr Roberts should in fairness be given an opportunity to rebut any allegation by the Applicant that his conduct in rejecting an interpretation of the 2002 Height Restrictions urged on him by the Applicant (as to this, see A39, A42, A43 and A47 to A49) was not ‘in good faith’ and for that reason was unconscionable, by virtue of section 62B(3)(k) of the RL Act. It was only on the basis of an undertaking by Mr Fernon that he would not allege bad faith on Mr Roberts’ part that the Panel decided against granting leave to the Respondent to tender any part of Mr Roberts’ affidavit.
At the time when this undertaking was given, Mr Angyal claimed that this amounted to a concession that Mr Roberts acted in good faith. Mr Fernon disputed this proposition. Having regard to the fact that the Applicant bears the onus of establishing unconscionable conduct, we are inclined to agree with Mr Angyal on this matter. Where no allegation of bad faith is or can be made in relation to the specified conduct of a specified individual, it must be presumed, we think, that he or she acted in good faith. But very little turns on this narrow question.
At the commencement of the second appeal hearing, the scope of Mr Fernon’s concession was again brought into question. Mr Angyal indicated that, according to notes taken by his instructing solicitor, the Panel had stated at the hearing on 9 May 2012 that in view of this concession the Applicant would have to make out its case of unconscionable conduct by the Respondent without any allegation of bad faith against the Respondent. The transcript of this hearing does not, however, bear out this claim by Mr Angyal. What the Panel expressly took into account in rejecting the Respondent’s application relating to Mr Roberts’ affidavit was a statement by Mr Fernon that he would make no allegation of bad faith on the part of Mr Roberts.
Whether the Applicant is estopped from alleging breach of the 2002 Height Restrictions
The Respondent’s contention that an estoppel arose. At T204, in the course of describing a claim of pre-lease misrepresentation that the Applicant initially made against the Respondent, the Tribunal mentioned the possibility that certain conduct of the Applicant, outlined below, may have given rise to an estoppel impairing its capacity to establish this claim. The Tribunal did not explore this question further because the claim of a pre-lease misrepresentation was abandoned at the conclusion of the Tribunal hearing.
At the second appeal hearing, Mr Angyal argued that an estoppel such as the Tribunal envisaged had in fact arisen, impairing the Applicant’s capacity to establish its unconscionable conduct claim. He submitted that the Applicant was estopped by conduct on its part during negotiations for the Lease from alleging for the purposes of this claim that it had entered into the Lease in reliance on there being no breach of the 2002 Height Restrictions.
The evidence relied on. The evidence on which Mr Angyal based this submission was as follows.
The Applicant initially took possession of Shops 415 and 416 under a lease commencing on 15 January 1999. In July 2001, negotiations began between Mr Mimis and Mr Olivier Sicouri, a Westfield leasing executive, for a new lease of these shops.
The lease of the space occupied by the B-Zone kiosk commenced on 1 September 2001. The heights of the eight display units and the cash and wrap counter constituting this kiosk did not exceed the limit of 1400 mm prescribed by the 2002 Height Restrictions. But in Mr Angyal’s submission, the kiosk contravened those Restrictions (according to the interpretation of them urged by the Applicant) by virtue of the illuminated sign, the mirrors and the display items mentioned by the Tribunal when describing it at T26 (this passage was reproduced by us at A31):-
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 were from time to time items exhibited for sale on top of the display units.
The next matters on which Mr Angyal relied formed part of T31 (we reproduced this paragraph, with some omissions, at A37):-
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 [comprising] changes of the commencement date to 1 July 2002, of the base annual rent to 1 July 2002 and expanding the permitted use of the premises…
….
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 alterations 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 & Company., had been instructed to issue lease documentation. Contact details were also supplied of Westfield's Tenancy Co-Ordinator and Specialty Shops' Designer.
During these negotiations, relating initially to a renewed lease of Shops 415 and 416 and subsequently to the Lease that finally came into existence, Mr Mimis did not at any stage state that in deciding whether or not to enter into either lease, he relied on adherence by the Respondent to the 2002 Height Restrictions when approving the construction of kiosks in the Centre. When signing and returning, on 20 February and 22 March 2002 respectively, the two lessee’s disclosure statements that had been sent to him, he did not state, in the designated space in clause 5, that he relied on an agreement or representation by the Respondent to this effect. This was the case even though (a) in completing the earlier statement he referred to some other representations by the Respondent, (b) he made significant handwritten additions to other parts of both disclosure statements and (c) in one of the additions made to the later statement, in a section headed ‘Lease Period’, he expressly mentioned the Respondent’s ‘Fitout Requirements’. Similarly, he made no attempt to have a clause inserted into either lease obliging the Respondent to adhere to the Restrictions.
In addition, it was probable, according to Mr Angyal, that Mr Mimis (who was an experienced businessman) and Ms Mimis-Weeks expected the term of the B-Zone lease to be for five years. In cross-examination, Ms Mimis-Weeks admitted to being aware that the B-Zone kiosk obstructed the sightlines to the Applicant’s expanded shop (i.e., the Premises) from the car park entrance.
In his affidavit, Mr Sicouri stated as follows. On 5 April 2002, after reviewing Mr Mimis’s fax of that date, he formed the opinion that the parties had reached agreement on ‘the commercial terms’ of a lease of the Premises to the Applicant. He therefore instructed Landerer & Company to draft a lease and other necessary documents and send them to Mr Mimis. But he would not have issued those instructions if he had ‘known’ (a) that the Applicant believed that he had ‘made a representation to it or agreed with it’ that people entering Level 4 of the Centre from the car park entrance would have ‘a direct and unobstructed line of sight to Shop 417’, or (b) that the Applicant ‘intended to enter into a lease of shop 417 in reliance on that representation or agreement’.
At a meeting between Mr Mimis and Ms Megan Johnson, the Respondent’s Regional Manager for Leasing, on 9 May 2002, the matters discussed included the dates on which the Applicant would take possession of the Premises pursuant to the Lease and the increased rent under the Lease would become payable. The former topic, together with a request for a rent rebate if the ratio of rent to gross sales exceeded 18%, was the subject of a letter from Mr Mimis to Ms Johnson dated 1 July 2002. Neither at the meeting nor in the letter did Mr Mimis mention the 2002 Height Restrictions or the contravention of them by the B-Zone kiosk.
Although in a letter dated 10 July 2002 the Respondent rejected Mr Mimis’s request for a rent rebate, Mr Mimis did not protest on the ground of this contravention or of obstruction of sight lines by the B-Zone kiosk.
According to a letter written by Mr Mimis to Landerer & Company on 9 December 2002 (see T45 and A42), he expressed concern about ‘visual impairment as a result of kiosk sightlines’ during a meeting on 9 August 2009 with Ms Johnson and Mr Gary Pinter, a Westfield leasing executive. The only kiosk to which Mr Mimis could have been referring was the B-Zone kiosk. This was the first time that anyone on behalf of the Applicant made any complaint about impairment of sightlines by this kiosk.
Relevant case law. Mr Angyal contended that by virtue of the matters just outlined the Applicant was estopped from asserting that it entered into the Lease in reliance on there being no breach of the 2002 Height Restrictions. He based this contention on relevant passages within the two lessee’s disclosure statements which Mr Mimis had signed, on section 10(2A) of the RL Act and on two decisions relating to lessee’s disclosure statements, Samaha v Corbett Court Pty Ltd [2006] NSWSC 1441 and Armstrong-Jones Management Pty Ltd v Saies-Bond & Associates Pty Ltd (RLD) [2007] NSWADTAP 47.
Clause 5 of each of the lessee’s disclosure statements, in which space was provided for material to be entered by the Applicant, commenced as follows:-
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 agents.
Note: Matters such as agreements or representations relating to exclusivity or limitations on competing uses, sales or customer traffic should be detailed.
Two further passages in the documents signed by Mr Mimis should also be mentioned. The first immediately preceded the lessee’s disclosure statement, under the heading ‘Declaration by lessee’. Mr Mimis’s signature appeared under this declaration. The second was clause 6 of the lessee’s disclosure statement, under which his signature also appeared. These two passages were as follows:-
I acknowledge that:
(i) both Part 1, Lessor’s Disclosure Statement and Part 2, Lessee’s Disclosure Statement contain all agreements and representations that influenced me to contemplate entering into the proposed lease.
6. Apart from the statements or representations set out above, no other promises, representations, warranties or undertakings (other than those contained in the lease) have been made by the lessor to the lessee in respect of the premises or the business to be carried out on the premises.
Section 10 of the RL Act confers on a party to a retail shop lease the right to obtain reasonable compensation for damage suffered as a result of entering into a lease in reliance on a pre-lease misrepresentation made by another party to the lease in the knowledge that it was false or misleading. Subsection (2A) states:-
(2A) The making of a representation by a prospective lessee in a lessee’s disclosure statement given to a prospective lessor under a retail shop lease that the prospective lessee has sought independent advice, or as to statements or representations relied on by the prospective lessee in entering the lease, is considered to be the making of a representation by a lessee to the lessor.
In Samaha v Corbett Court Pty Ltd [2006] NSWSC 1441, two lessees claimed to have been misled by misrepresentations by the lessor. The alleged misrepresentations and the circumstances of their making were described as follows in the judgment of Palmer J at [1] to [3] and [26]:-
1 Mr and Mrs Samaha entered into a lease with Corbett Court Pty Ltd (“Corbett Court”) in respect of Shops 3 and 4 in the Picton Mall, intending to carry on there the business of a greengrocer and delicatessen. The Picton Mall was newly constructed and when Mr and Mrs Samaha commenced trading in August 2004 it was not fully tenanted. The volume of business in the Mall was much less than Mr and Mrs Samaha had hoped. They could not afford to keep trading and closed the business after only about seven weeks. They have never paid any rent under the lease.
2 Eventually, Corbett Court rescinded the lease, took possession of Shops 3 and 4 and re-let them to another tenant. It then commenced proceedings against Mr and Mrs Samaha, claiming rent and outgoings due but unpaid during the term of the lease and damages.
3 Simultaneously, Mr and Mrs Samaha commenced proceedings against Corbett Court claiming a declaration that the lease is void, an order pursuant to s.72AA of the Retail Leases Act 1994 (NSW) (“RL Act”) or s.87 of the Trade Practices Act 1974 (Cth) (“TPA”) that they are not obliged to pay rent under the lease and damages for representations which, they say, were false or misleading.
In their Further Amended Statement of Claim, Mr and Mrs Samaha allege that at a meeting on 14 December 2003 between Mr Corbett, representing Corbett Court, Mr Kevin James, a real estate agent engaged by Corbett Court, and Mr Samaha, Mr Corbett made the following representations:
(i) On or about 14 December 2003 John Corbett represented to the first and second plaintiffs that the shopping centre would be fully occupied, or close to fully occupied, when it first opened for trading; and
(ii)… that the shopping centre would have a certain tenancy mix when it first opened for trading; and
(iii) … that he would close down the IGA store in Picton with the implied representation that the proposed business of the first and second plaintiffs would be more successful as a result; and
(iv) …that the shopping centre would be the ‘hub’ of the Picton area with the implied representation that the said shopping centre would be the most popular shopping centre in the Picton area;…
Palmer J found that the testimony of Mr and Mrs Samaha lacked credibility and that these alleged misrepresentations were not made. His judgment then included the following passages, at [55 – 60] and [65 – 71]:-
Reliance
55 In case I am wrong in my conclusions as to whether any of the relevant Representations were made to Mr Samaha, I should state my conclusions on the question whether, if any such Representations were made, Mr and Mrs Samaha relied on them in deciding to enter into the lease.
56 For the reasons I have given in relation to the making of the Representations, I do not regard the evidence of Mr and Mrs Samaha generally as reliable. However, on the question of reliance, Mr Donohoe submits that the most telling evidence against Mr and Mrs Samaha is the content of a Lessee's Disclosure Statement which they signed and returned to Corbett Court. The circumstances are as follows.
57 On 15 December 2003 Mr James sent to Mr and Mrs Samaha a Lessee's Disclosure Statement under s.11A Retail Leases Act.
Mr and Mrs Samaha went to see Ms Hart [their solicitor] in early January 2004…. On 19 January, Ms Hart wrote to Mr Cox [Corbett Court’s solicitor] requesting confirmation of certain inclusions and facilities to be made available in the premises. Mr Cox sent a facsimile to Mr James [an estate agent engaged by Corbett Court] requesting instructions. Mr James responded by facsimile on 3 February. Attached to the facsimile was the disclosure statement with the Lessee's Disclosure Statement signed by Mr and Mrs Samaha. The disclosure statement contained the following:
– a paragraph required details "of any other agreements between Lessor and Lessee, or representations made by Lessor or Lessee including those relating to exclusivity or limitations on competing uses". This paragraph contains typewritten terms relating to promises made by Corbett Court. Inserted in this paragraph in Ms Hart's handwriting were further terms undertaken by Corbett Court, of which she had sought confirmation in her letter of 9 January.
– beneath that section appears in the following:
“Note:
Section 11A of the Retail Leases Act 1994 requires a lessee’s disclosure statement to be provided to the lessor within 7 days (or any agreed further period) of the lessee receiving the lessor’s disclosure statement. The lessee may be liable to a penalty for an offence under that Act if the lessee’s disclosure statement is not so provided.”
LESSEE’S DISCLOSURE STATEMENT
Advice to the Lessor
1. The Lessee acknowledges that the attached, Lessor’s Disclosure Statement, was received from the Lessor prior to entering into the lease.
2. The Lessor has made available to the Lessee a copy of the proposed retail shop lease.
3. The Lessee has sought… independent advice in respect of the commercial terms contained in the Lessor’s Disclosure Statement and the obligations contained in the proposed retail shop lease.
4. The Lessee believes that the lessee will be able to fulfil the obligations contained in the lease, including the payment of the proposed rent, outgoings and other amounts, based on the Lessee’s own business projections for the business.
5. In entering into the retail shop lease, the Lessee has relied on the following statements or representations made by the Lessor or the Lessor Agents.
Note.
Matters such as agreements or representations relating to exclusivity or limitations on competing uses, sales or customer traffic should be detailed.
6. Apart from the statements or representations set out above, no other promises, representations, warranties or undertakings (other than those contained in the lease) have been made by the Lessor to the Lessee in respect of the premises or the business to be carried out in the premises.”
The space provided in paragraph 5 for the particulars of representations relied on by the lessees was left blank.
59 The Lessee's Disclosure Statement expressly and clearly called upon Mr and Mrs Samaha to state what representations made by Corbett Court, if any, they were relying upon in entering into the lease. The fact that, after having received legal advice, they did not specify any such representations must raise an evidentiary presumption that there were no relevant representations made or that, if any representations were made, Mr and Mrs Samaha did not place any reliance upon them.
60 Mr and Mrs Samaha sought to rebut such a presumption by saying that, in essence, their failure to insert in the Lessee's Disclosure Statement the Representations made by Mr Corbett was the fault of their solicitor, Ms Hart…
65 I regard it as inherently improbable that a solicitor would require a meeting with clients to go through a Lessee's Disclosure Statement – an important document in a leasing transaction – and would not explain carefully a part of it that was of critical importance to the clients. The fact that Ms Hart was not called by Mr and Mrs Samaha does nothing to lessen that improbability in the present case.
66 It is also of great importance to observe that, according to Mr and Mrs Samaha, they relied upon the representation that the centre would be fully occupied when it opened on or about 4 May 2004. May 2004 came and went without any opening of the centre and it was evident that there were few tenants preparing to fit out their premises. Nevertheless, Mr and Mrs Samaha did not then protest to Corbett Court that it had misled them and that they had relied upon the Representations in deciding to proceed with the lease.
67 For these reasons, I do not accept that, if Mr Corbett made any relevant Representations to Mr Samaha at the meeting of December, Mr and Mrs Samaha relied upon those Representations in entering into the lease.
Estoppel
68 In case I am wrong in the foregoing conclusions, I shall state my conclusions on the contention by Corbett Court that, in any event, Mr and Mrs Samaha are estopped by the Lessee's Disclosure Statement in now asserting that they relied upon any Representations in entering into the lease.
69 There is no dispute that Mr Corbett received the Lessee's Disclosure Statement prior to his execution of the lease. There was no challenge to his evidence that he relied on it in entering into the lease:… That evidence is inherently probable: if the Lessee's Disclosure Statement had asserted reliance by Mr and Mrs Samaha on a representation that the centre would be fully let on opening and would contain a specified tenancy mix, a loud warning of risk of litigation would have sounded for Mr Corbett.
70 The Lessee's Disclosure Statement, signed by Mr and Mrs Samaha and sent to Corbett Court after they had received the advice of their solicitor, was a clear and unequivocal representation to Corbett Court that there were no representations by it upon which Mr and Mrs Samaha were relying in entering into the lease. Corbett Court relied upon that representation in entering into the lease and thereby changed its position irrevocably.
71 Mr and Mrs Samaha are therefore estopped from departing from the representation in their Lessee's Disclosure Statement.
The case of Armstrong-Jones Management Pty Ltd v Saies-Bond & Associates Pty Ltd (RLD) [2007] NSWADTAP 47 also involved a claim by a lessee (‘S-B’) in a newly established shopping centre to have relied on a pre-lease misrepresentation by which the lessor (‘AJM’) was bound. This representation was to the effect that Harvey Norman would be the ‘anchor tenant’ in the centre. As in the present case and in Samaha, the space in clause 5 of the lessee’s disclosure statement for the disclosure of any agreements or representations relied on by the lessee was left blank.
In its decision at first instance (Armstrong-Jones Management Pty Ltd v Saies-Bond & Associates Pty Ltd [2006] NSWADT 323), the Tribunal found that the alleged misrepresentation was made by an estate agent on behalf of AJM and that the other requirements of section 10 of the RL Act were satisfied. In ruling that S-B’s case on reliance was not undermined by its failure to mention this representation in the disclosure statement, it held that the representation fell outside the category defined in clause 6: that is, that it was not a representation ‘in respect of the premises or the business to be carried out in the premises’. The Tribunal went on to hold that by virtue of proving the ingredients of its claim under section 10, S-B had also established its unconscionable conduct claim.
This decision was reversed on appeal, because the Appeal Panel took a different view of S-B’s failure to mention the relevant representation in the lessee’s disclosure statement. In dealing with this issue, the Panel (at [105 – 110]) first gave an outline, quoting relevant passages, of the Samaha decision, which had been delivered after that of the Tribunal at first instance. It then engaged, at [111 – 126], in a lengthy discussion of the issues raised:-
111 The commentary on this decision [Samaha v Corbett Court] in Lang’s Commercial Leasing in Australia (1999-, loose-leaf) notes at [85-281]:
‘[O]f particular interest is the consequence of the lessee having failed to indicate any representations by or on behalf of the lessor in the lessor’s disclosure statement. Lessees in New South Wales have been required to provide a lessee’s disclosure statement since 1 March 1999. Para 5 and 6 of that statement cover statements and representations. This decision illustrates the care required by lessees’ representatives to ensure that material statements and representations are concisely and adequately stated in the lessee’s disclosure statement. The consequence of there being nothing contained in para 5 and 6 had the effect in this decision of negating reliance and operating also by way of estoppel.’
112 In the present case, the Tribunal’s conclusion that the representation was not one that fell within the parameters of the disclosure statement regime freed it from having to deal with the kind of objections raised by Palmer J. In contrast to the Tribunal’s approach, Palmer J did not take such a precise view of the scope of the matters that might be addressed in the lessee’s disclosure statement. It can be seen that none of the representations alleged in Samaha bore on the kind of matters the subject of express reference in the note at cl 5 of the prescribed form. For example, the tenancy mix issue, and more importantly the question of anchor tenants, is not expressly mentioned in the note at cl 5.
These observations accord with an important aspect of our decision on liability in this case. We did not decide that the Respondent was bound by a contractual obligation to the Applicant to require that any kiosk established close to the Premises should comply with the 2002 Height Restrictions. In the first appeal decision, we upheld the Tribunal’s rejection of an argument along these lines, based on the handwritten amendment made by Mr Mimis to the memorandum of lease prepared on the Respondent’s behalf. If the Respondent had been bound by any such obligation, its approvals of the plans for the three kiosks would in each case have been a breach of contract, and liability to pay damages, assessed according to normal contractual principles, would have followed as a matter of course.
Our finding of unconscionable conduct against the Respondent was instead dependent on proof of a continuing course of conduct, extending beyond the approval of contraventions of the 2002 Height Restrictions so as to include also the Respondent’s refusal to acknowledge that contravention had occurred, its reliance on a greatly liberalised version of the Restrictions that it issued in 2005 and, as we have just pointed out, its refusal of rent relief.
It is at least arguable that because the Respondent’s liability for unconscionable conduct differs in these significant respects from simple contractual liability, an award of damages for lost profits, such as would normally follow from a finding of breach of contract, would not be appropriate in this case. But we do not need to pursue this question, since there were, as we have already indicated, quite different grounds for rejecting the Applicant’s claim for damages for loss of profits.
It is for these reasons that the order that we now make under section 72AA of the RL Act is one directed solely at reducing the amount of rent and interest payable by the Applicant to the Respondent.
The questions remaining are (a) what amount or proportion of the rent payable should be the subject of abatement and (b) over what period should the abatement occur.
With regard to the first of these questions, we derive guidance from the fact that as at March 2002, when negotiations for the Lease were in train, the current minimum rent paid by the Applicant for Shops 415 and 416 was $229,200 per annum and the current minimum rent for Shop 417, being then payable by the tenant preceding the Applicant, was $169,900. The evidence for this is contained in an internal document of the Respondent, headed ‘Business Case Recommendation’ and dated 13 March 2002. The total of these two amounts is $399,100.
In the same document, it was noted that the minimum rent being proposed for the Lease being negotiated for all three Shops was $427,500. This was in fact the amount ultimately agreed on, with provision for annual increases calculated by reference to the CPI and for an additional percentage rent based on turnover.
In this document, it was also noted that the ‘Surplus to Current Rent’ that would then be generated would be $28,500. This represents 7% of the rent being obtained by the Respondent under the two earlier leases and 6.7% of the rent due under the Lease.
It was claimed by Ms Mimis-Weeks and indeed acknowledged in the testimony of witnesses called by the Respondent – for example, its expert witness, Mr Terrill (see Transcript, 21.5.09, p 41, lines 28 to 36) – that the shop premises formed by combining Shops 415 and 416 with Shop 417 occupied a ‘premium site’ on Level 4 of the Centre because of its position at one end of the north-south walkway leading from the car park entrance. This was the case even though at the time of commencement of the Lease the B-Zone kiosk interfered to some extent with the sightlines from the walkway.
It is legitimate, in our opinion, to treat the ‘surplus’ amount of $28,500 within the rental figure of $427,500 stipulated in the Lease as reflecting, at least to some degree, the additional value of the site occupied by the Premises by virtue of its ‘premium quality’. This value was diminished by the interference to sightlines caused by the erection, over the ensuing period of about 30 months, of the three kiosks about which the Applicant complained.
Mr Terrill’s evidence effectively confirmed these two matters. In cross-examination (Transcript, 21.5.09, p 41, lines 39 to 47), he acknowledged that ‘subject to a consideration of the impact of the kiosks a landlord could charge a premium or higher rent for shops 415 to 417 because of that positioning at the end of a corridor’ and that ‘in light of the erection of the three kiosks and their signboards there’s some interference with what would otherwise be an excellent line of sight directly ahead to 415 to 417’.
The evidence of another expert witness called by the Respondent, Ms Radosevic, included statements in cross-examination (see T169 and A64) making it clear that, in her view, the overall impact of the three kiosks was to interfere more significantly with the sightlines than the B-Zone kiosk had done.
The Respondent chose, however, to reject the Applicant’s requests for rent relief on account of this interference. This rejection constituted, as we have said, one of the grounds for our finding of unconscionable conduct. If the Respondent had been prepared to, in effect, surrender to the Applicant a significant segment of the ‘surplus’ annual rent of $28,500 that it had secured by entering into the Lease, we would, as we have said, have been reluctant to make this finding.
In determining what annual amount of rent foregone would have been sufficient for this purpose, we receive no specific guidance from the evidence or from legal principle. We must simply abide by a well-known pronouncement (to which Mr Fernon referred us) contained in the judgment of Mason CJ and Dawson J in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83:-
The settled rule, both here and in England, is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can. Indeed, in Jones v Schiffmann (1971) 124 CLR 303 at 308, Menzies J went so far as to say that ‘assessment of damages… does sometimes, of necessity, involve what is guess work rather than estimation’. Where precise evidence is available the court must do the best it can.
Although this passage relates to damages for breach of contract, not for unconscionable conduct under the RL Act, the broad message that it conveys is, we believe, applicable to the latter category of case.
Doing ‘the best we can’, we conclude that an offer by the Respondent to ‘surrender’ 50% of this annual minimum rent ‘surplus’ of $28,500 – i.e., $14,250 – during the period after the Boost Juice kiosk was constructed would have been sufficient to ward off any finding of unconscionable conduct and is accordingly appropriate for present purposes.
As indicated at T21, the Respondent’s cross claim for unpaid rent and outgoings related to (a) the period of almost exactly five years between the commencement of the Lease on 2 July 2002 and the Applicant’s vacating of the Premises on 28 June 2007 and (b) a further period until the commencement of rent payments under new leases on 24 September 2007 (Shops 416 and 417) and 1 November 2007 (Shop 415). In approximate terms, a period of 5 years and 4 months is involved.
The amount to which the Applicant should be entitled, with respect to the loss occasioned by the Respondent’s refusal to grant rent relief, is accordingly $14,250 x 5.3333: i.e., $76,000. The Applicant should also receive interest on this sum.
As noted near the commencement of these reasons, the Tribunal, in its principal decision (Spuds Surf Chatswood Pty Ltd v PT Ltd (No 2), PT Ltd v Spuds Surf Chatswood Pty Ltd [2011] NSWADT 152), upheld the Respondent’s cross claim against the Applicant and ordered that the Applicant was to pay $327,633.55 on account of unpaid rent and outgoings (plus interest) to the Respondent.
If that amount has already been paid, the order that we now make will operate an order that the amount of $76,000 plus interest (calculated in the same manner as under the Tribunal’s order) should be refunded to the Applicant, pursuant to paragraph (a) of section 72AA(1) of the RL Act. If it has not been paid, our order will take effect as an order under paragraph (b) that the amount of $76,000 plus interest is not due or owing under the Tribunal’s order, or alternatively an order under paragraph (a) that this amount is now to be paid by the Respondent to the Applicant (thereby permitting set-off of the smaller debt against the larger).
In its second decision (Spuds Surf Chatswood Pty Ltd v PT Ltd (No 3), PT Ltd v Spuds Surf Chatswood Pty Ltd (No 2) [2011] NSWADT 186), the Tribunal held that the amount of interest to be paid by the Applicant to the Respondent, being pre-judgment interest from 23 April 2008 to 3 August 2011), was $92,811.46.
The amount of interest payable by the Respondent to the Applicant under our order should therefore be $76,000 x 92,811.46 divided by 327,533.55. The resulting figure for interest is $21,535.72, and the total amount to be paid under our order is $97,535.72.
Costs
In its second decision, the Tribunal ordered that the Applicant should pay the Respondent’s costs of both proceedings (065171 and 085081) on a party-party basis. That order is the subject of an appeal (‘the costs appeal’) filed by the Applicant on 31 August 2011 (file 119042). The Registrar of Retail Tenancy Disputes has intervened in this appeal.
Following the institution of the costs appeal, the parties and the Registrar filed written submissions relating to it.
At the commencement, on 17 November 2011, of the first hearing of the principal appeal, it was directed, with the consent of the parties, that the determination of the costs appeal should be deferred pending disposal of the principal appeal.
A further matter now requiring determination is the costs of the principal appeal. The parties have indicated that they wish to be heard on this matter.
The following directions are accordingly given, relating both to the costs appeal and the costs of the principal appeal:-
(a) Within 28 days of the date of this decision, the Appellant is to file and serve:
(i) its supplementary submissions relating to the appeal in file 119042; and
(ii) its submissions relating to the costs of the present appeal (file 119034).
(b) Within a further 28 days, the Respondent is to file and serve submissions in reply.
(c) The Appellant’s and the Respondent’s submissions relating to the appeal in file 119042 are to be served on the Intervenor in that appeal (the Registrar of Retail Tenancy Disputes) as well as on the opposing party.
(d) Any submissions by the Intervenor relating to the appeal in file 119042 are to be filed and served within 21 days after service of the Respondent’s submissions.
(e) These questions regarding costs will be decided ‘on the papers’, pursuant to section 76 of the Administrative Decisions Tribunal Act 1997, unless the Appeal Panel determined that a hearing should take place.
This decision is amended pursuant to s87 of the Administrative Decisions Tribunal Act this 5 March 2013. The paragraphs amended are [14] [215] [217] and [280]
Amendments
05 March 2013 - slip rule s87 of the Administrative Decisions Tribunal Act
Amended paragraphs: 14, 215, 217, 280
Decision last updated: 05 March 2013
2
8
5