Tsimbakis v BlackRock Investment Management (Australia) Limited

[2010] NSWADT 187

CITATION:	Tsimbakis v BlackRock Investment Management (Australia) Limited [2010] NSWADT 187
DIVISION:	Retail Leases Division
PARTIES:	Applicant: Aristotelis Stanley Tsimbakis Respondent: BlackRock Investment Management (Australia) Limited
FILE NUMBER:	095031
HEARING DATES:	16-17 November 2009
SUBMISSIONS CLOSED:	17 December 2009
DATE OF DECISION:	27 July 2010
BEFORE:	Olsson E, SC - Deputy President; Harrison B - Non-Judicial Member
CATCHWORDS:	Holding-over, misleading and deceptive conduct, unconscionable conduct
LEGISLATION CITED:	Retail Leases Act 1994
CASES CITED:	Harbourside Catering Pty Ltd v TMG Developments Pty Ltd (2007) NSWSC 1375; Perhauz and Anor v SAF Properties Pty Ltd and Ors [2007] NSWADT 122
REPRESENTATION:	Applicant Representative: Mr Lindo, solicitor Respondent Representative: Mr McAuley, solicitor
ORDERS:	Application dismissed; Declaration that Applicant’s continued possession of premises is pursuant to a holding over of lease; Costs reserved and parties to file and serve submissions as to costs within 14 days.

REASONS FOR DECISION

Introduction

1 By an amended Application filed on 13 August 2009 the Applicant sought orders granting the Applicant a new lease on terms plus damages of $21,251.00 for breaches of s.62B(9), s.62E, s.72AA(a) and (b) of the Retail Leases Act 1994 and damages of $36,000.00 for unfair competition and also an order that the Respondent be estopped from denying the Applicant’s right to a lease of shop 14A, Rosemeadow Market Place.

2 The principal issue which arises is whether the Respondent had agreed with the Applicant that it would grant him a new lease in respect of premises which were smaller in size and lower in rent than those which he already occupied, whether any representations had been made as to the grant of a new lease and whether they had been relied upon, whether (if made) they were misleading or deceptive and whether the Respondent’s conduct had been unconscionable. A secondary issue related to unfair competition alleged by the Applicant to have occurred when the Respondent permitted certain retail tenants to sell items or products in direct competition with the Applicant’s business yet not accorded the Applicant the same latitude.

3 The Premises in question are known as shop 14A, Rosemeadow Marketplace.

The Applicant’s case

4 The applicant, Aristotelis Stanley Tsimbakis (known as ‘Stanley’ or ‘Stan’) instituted proceedings in this Tribunal in early 2009. The Application was twice amended and he moved on the Second Amended Application filed on 13 August 2009.

5 The Applicant’s case was that he and the Respondent had been in a landlord and tenant relationship for more than ten years, involving various shop premises and two different businesses. It was said that much of the relationship had been characterized by verbal agreement and little was reduced to writing, although in fact the Tribunal received evidence of two written leases between the parties.

6 In about February 2008, the Respondent represented to the Applicant that due to his [the Applicant’s] concerns about high rent and the occupation of unnecessary space (that was impacting on the profitability of the business), the area allotted to him would be reduced from 114 square metres to approximately 80 square metres and that the rent would be reduced from about $70,000.00 per annum to approximately $36,000.00 per annum (Amended Application, ground 1).

7 Alternatively, the Applicant contended that he communicated his intention to renew the lease but for a smaller shop and that the Respondent knew this and negotiated with him to achieve such a lease but that it failed to comply with its own agreement and served a Notice to Quit (Amended Application, ground 1).

8 Further or in the alternative, the Applicant contended that the Respondent had acted unconscionably in that it mislead the applicant by informing him that a new lease was going to be entered for premises of a reduced size, by participating in organizing a builder to inspect the premises and provide drawings and by providing a quotation for the reduced rent.

9 Notwithstanding these promises, on 16 February 2009, the Respondent served a Notice to Quit.

10 The Applicant contended that the Respondent has breached s.62B (1)- (9) of the Retail Leases Act 1994 (“RLA”) by representing to the Applicant that the size of the premises would be reduced. The Applicant said that he relied on those representations and incurred cost in obtaining quotes for new fit out and so on. He said that the Respondent took unfair advantage of the relative strength of its bargaining position contrary to ss.62B (3)(i) and (ii).

11 The Applicant also said that the Respondent’s conduct was unconscionable and that a promissory estoppel arose to prevent the Respondent from terminating the lease (Amended Application, grounds 2 and 4).

12 Further the Applicant said that the Respondent had permitted other tenants in the centre to compete with the Applicant but had denied the Applicant reciprocal rights and that this was a breach of agreement for which damages, particularized as ‘excessive rent’ were due to him (Amended Application, ground 3).

13 The Applicant seeks a new lease in the terms in which it was discussed with the Respondent (including the reduced size and rent) and damages for the unfair competition aspect of the claim in relation to which the Applicant said he had suffered loss as result of the Respondent permitting other food stores to sell produce and items which were in direct competition with the Applicant, whilst it held the Applicant to the strict terms of his use.

The Respondent’s case

14 The Respondent, on the other hand, denied that it had ever offered the Applicant a new lease. It argued that in 2008, negotiations occurred between the parties with a view to reducing the size of the Applicant’s premises but that no agreement was reached. The version of the conversation or conversations alleged to have occurred between Ms McDonald for the Respondent and Mr Tsimbakis were refuted by the Respondent. The latter argued that it had always advised the Applicant that the reduction in size of the premises was contingent upon the TAB taking over that portion of the shop that the Applicant did not want.

15 The Respondent said that all leases in the shopping centre provided for competition between shop owners and that no representations had been made to the Applicant and there was no agreement by which the Applicant had exclusivity as to its product or items. It said that so far as it was aware, none of the shops in the centre had terms for exclusivity. Moreover, the Respondent denied that there was any evidence that other shops sold products or items contrary to the terms of their leases.

16 It follows that the Respondent denies unfair and unconscionable conduct.

17 It sought an order (in its Response to Amended Application, filed 24 August 2009) that the Application be dismissed with costs and a declaration that the lease is holding over pursuant to clause 2.3 of the lease, the effect of which is to allow either party to terminate the lease upon one month’s notice.

Outline of the evidence

18 The principal witnesses in the case were Mr Tsimbakis (for the Applicant) and Ms McDonald and Mr Purchase (for the Respondent). All were cross-examined at some length on affidavits.

19 In addition, affidavits of Laurel Lee Tsimbakis, (Exhibit A), Christopher Phillips (Exhibit B) and Nicole Perry (Exhibit C) were read.

The Applicant

20 The Applicant said that in 1999, he was the lessee of shop number 13 at the centre. He sold pizza and kebabs. He had had some experience in running a food business, having previously had a pizza shop at Ambervale.

21 He became aware, in about 1998-1999, that the shop next door to number 13 was vacant. It was number 14A. It was larger than his shop and he was desirous of taking it over.

22 He negotiated terms with Ms McDonald, who was the centre manager at that time, including a payment of $40,000.00 to purchase the fit out of the shop. He commenced to trade from 14A in 1999 as ‘Stan’s Takeaway’. He retained shop 13 for a period but did not renew its lease upon expiry. Ultimately (in 2004) it was leased to a business known as ‘Chicken Express’.

23 During the period in which he held both shops, Mr Tsimbakis said that he had been denied permission to sell similar products in both shops and that the shops were required to maintain their individual identity and product. I will return to this aspect shortly.

24 The Applicant continued to trade in shop 14A throughout 2000 and up until 2005 when a new lease was granted for three years with an option to renew. The rent was lower than it had been hitherto and the Applicant, according to Ms McDonald, was given permission to sell pizzas and kebabs in addition to the takeaway food he had been selling. He was cross-examined about this lease and he admitted candidly that he was aware that it contained the terms and conditions which governed the relationship between landlord and tenant.

25 At the end of 2006, the Applicant said that he approached Ms McDonald and expressed to her the concerns he had about his profitability in a shop the size of number 14A, particularly in light of the business known as Chicken Express which had commenced to trade from shop 13. As the name implies, Chicken Express sold a variety of chicken products including a quarter of a chicken and chips, chicken rolls and so on. It had had, he said, an immediate impact on Stan’s Takeaway business.

26 Ms McDonald told the Applicant that there was nothing she could do and he should continue to observe the terms of his lease. It should be noted that, as mentioned above, upon renewal of the lease in 2005 the Applicant’s permitted use had been increased to include pizza and kebabs.

27 The Applicant said that throughout 2007 he raised the profitability of his business with Ms McDonald. There seems little doubt that his business was struggling against the competition of (at least) Chicken Express and probably other shops in the centre, whose range of fare overlapped that of the Takeaway shop however it was Ms McDonald’s evidence that none of the shops in the centre (at least during her tenure as manager) had ‘exclusivity’ rights and that it was centre policy that businesses within the centre be allowed to compete with each other. For example, whilst the Applicant had shop 13 (Pizza and Kebabs), a Pizza Hut had been introduced in direct competition to the Applicant. The Respondent produced a series of Lessor’s Disclosure Statements to the Tribunal which supported this evidence.

28 Mr Tsimbakis said that in early 2008 Ms McDonald spoke or wrote to him about the possibility of the TAB (which had an outlet nearby) taking over a portion of his shop. He said that in about February 2008 she offered him a reduction in the size of his shop of 35 square metres that would reduce the amount of his rent. He said in paragraph 14 of his affidavit that he accepted the offer straight away and that she asked him to get his shopfitter to look at it. He said builders and the architect for the TAB came to look at the shop.

29 His evidence was slightly different in cross-examination: apart from casting the conversation in different terms he also said that Ms McDonald gave him calculations on a piece of paper and that “we agreed with 32 square metres in the end”.

30 The Applicant had retained solicitors to assist him in his leasing requirements. Macarthur Law Group wrote to Ms McDonald on 19 March 2008, referred to a meeting on 6 March at which “possible adjustments to the premises were discussed” and advised that their client is “currently considering your offer for the smaller premises and is corresponding with the required tradespersons regarding the alterations.”

31 The solicitor’s letter does not seem to fit the evidence given by Mr Tsimbakis as to the conversation regarding a reduction in size of premises. Moreover it was followed on 30 April by a letter which referred to “the meeting of 6 March, where possible adjustments to the premises were discussed…we are instructed that the TAB requires 35 square metres…[which] will dramatically escalate [the costs] since the whole cool room will have to be moved and structural alterations will need to be made…On the other hand if the space required is only 32.3 metres…the cost will be significantly reduced.”

32 This letter represented a serious inconsistency in the Applicant’s case because if he had agreed 32 square metres with Ms McDonald in February 2008, it would make no sense for his solicitor to be enquiring about 35 or 32 square metres at the end of April.

33 The Applicant relied on documents that were annexed to his affidavit as Annexure D. They comprised a shopfitting drawing and a page showing different rents based on premises of different sizes. He said that the latter document was Ms McDonald’s offer to him of the new sized shop and the lower rent and outgoings, being 80 square metres and rent and outgoings of $49,100.00 (approximately) compared to 114.8 square metres and rent and outgoings of $70,351.00.

34 Mr Tsimbakis said that following the March conversation with Ms McDonald they discussed it again and that she said that since the TAB was a bigger and more important tenant, she would deal with it first and then talk to him (the Applicant). He said that he raised the subject with her from time to time as he was falling behind in rent and was concerned about the viability of his business. Nothing happened for a few months, then in June 2008, Ms McDonald resigned or retired and a new centre manager arrived, Mr Purchase.

35 Mrs Laurel Tsimbakis gave evidence, as did Ms Nicole Perry. Their evidence does not, to my mind, detract or alter anything said above. Mrs Tsimbakis said that her husband returned to the shop in early March 2008 after a meeting with Ms McDonald. She said that he said, “I am excited. The centre management is going to reduce the size of the shop and we will have to pay a reduced rent. I have agreed with the centre management’s proposal.”

36 In short, she gave similar evidence to that of her husband as to the critical meeting between himself and Ms McDonald. She was not party to the conversation with Ms McDonald. It is possible that Mr Tsimbakis would agree with ‘centre management’s proposal’ without consulting her, when she was his business partner and it is possible that he agreed with a proposal without knowing what the actual terms were intended to be, but it does not overcome what, to my mind, are the very persuasive terms of the solicitor’s letters which do not tally with the Applicant’s version of events.

37 Mr Purchase called Mr Tsimbakis in for a meeting soon after he took over (in about July). Mr Tsimbakis said the meeting was to discuss his continued occupation in the centre; Mr Purchase said it was to discuss Mr Tsimbakis’ arrears of rent and whether he wished to continue as a tenant in the shopping centre.

38 Mr Tsimbakis’ evidence about this conversation is of particular importance: he said in his affidavit that he said “I am not leaving; I have no intentions to leave. I have been here for 10 years. I have a young family to provide for, I have invested a great deal of time and money into my business and it is not an option for me to abandon my business.”

39 He was cross-examined about this conversation. He was asked whether he referred to the agreement with Ms McDonald about the new lease and he said it “wasn’t discussed”. He was asked “You didn’t say anything in your affidavit about the fact that you had already agreed with Louise McDonald? No”

40 In short, in his first conversation with the new centre manager the subject of which was his continued occupation as a tenant, the Applicant did not mention the one, critical matter which had been agreed with Ms McDonald. He did not mention that he had an agreement with her that the TAB would take part of his shop and that his new lease would reflect a smaller sized premises.

41 Mr Tsimbakis’ evidence was that Mr Purchase and he discussed the proposal of the TAB and that Mr Purchase had returned to the shop a couple of times with the builder, the air conditioning contractor and maybe some others.

42 Mr Tsimbakis said that in about October 2008, Mr Purchase said to him that he would be required to move as the TAB required his premises and he said that was fine with him as long as he could move to the premises next door (shop 15) because it was 90 square metres and vacant. Once more, the Applicant was presented with an opportunity to tell Mr Purchase that an agreement had been struck with the TAB or that he already had an agreement for smaller premises and he failed to mention it. This can only be because it had not occurred.

43 In November 2008 the Applicant and Mr Purchase had a conversation in which Mr Purchase advised him to bring his rent up to date and that he would see what he could do [for him].

44 The Applicant referred in his affidavit to correspondence from his solicitors to the Respondent but the only relevant correspondence was that which has already been identified.

45 He said that on 9 December 2008, his solicitors received a letter from the solicitors for the Respondent advising that they were not prepared for him to exercise his option to renew the lease or enter a new lease. A Notice to Quit was sent to him dated 16 February 2009.

46 The Notice to Quit arrived almost 9 months after the lease was due for renewal, and more than 2 months after the letter advising him that he would not be given a new lease.

47 Finally, the Applicant read an affidavit of Mr Christopher Phillips who was a TAB franchise owner. He had some familiarity with the Rosemeadow Marketplace franchise and also the discussions regarding the TAB’s extension into shop 14A. His evidence confirmed that there was a lively interest by TAB in the shop but that the negotiations were protracted and extended into 2009. At best, it confirmed that he had no knowledge of the negotiations with the Applicant and that the TAB seemed to have settled on the proposal of taking part of shop 14A but not until 2009.

The Respondent

48 Ms McDonald swore an affidavit and was cross-examined. To her affidavit she annexed a number of relevant documents. Annexure D was a printout of the Applicant’s Rent Reconciliation. It reveals that from about May 2004, he was having difficulty in staying abreast of his rent payment obligations. This is consistent with his evidence about the impact of Chicken Express on his business. It is also consistent with the evidence of Ms McDonald to the effect that she had to speak with him on a number of occasions about his being in default of his rent.

49 Annexure E is a file note of Ms McDonald. It purports to record a conversation she had with Mr Tsimbakis on or about 31 January 2008. The timing of it is important since clause 2.2 of the Lease (Annexure F) provided that the option to renew the lease for a further term required notice of the same to be given between six and three months before the terminating date. In the present case, the notice had to be delivered in the period from 1 December 2007 to the end of February 2008.

50 The file note records that the Applicant was in arrears of rent and that he could not exercise the option until the arrears were cleared (see clause 2.2(b)) and that in any event he wanted a new lease rather than the exercise of the option on the existing one.

51 The content of the note indicates quite clearly that Mr Tsimbakis did not wish to exercise the option (which is broadly consistent with his later conduct which was directed towards obtaining a new lease) and was not, at least in January 2008, in a position to do so. By February it appears that the Applicant was up to date with his rent (see Annexure D) but he did not exercise the option to renew. The letter of Macarthur Law Group of 19 March infers that the Applicant was considering the exercise of the option although by then, according to clause 2.2(a) of the lease, it was too late. He could only hope to negotiate a new lease.

52 Ms McDonald said that generally, the Applicant was a “fairly difficult” tenant in that he was “very demanding”, “needed a lot of help with the rent”.

53 She said that generally she endeavoured to ensure that tenants operated within their permitted uses and would ask them to refrain if she observed breaches or received complaints. However she emphasized that the centre had a ‘non exclusivity’ policy. This comment is supported by the evidence tendered by the Respondent of a number of Landlord Disclosure statements. She also denied under strenuous cross-examination that she was or had been aware of breaches of tenants’ permitted uses.

54 She gave evidence that although she had misgivings, she acquiesced when the Applicant, then in shop 13, indicated he wanted to take over shop 14A when it became vacant. They subsequently had many conversations about the viability of two shops but matters seem to have come to a head in about 2007 when the Applicant approached her and said that he was concerned about profitability and his arrears of rent.

55 However she disagreed that she had offered or provided any options to him regarding a reduction in the size of his shop; rather she said that she had asked him to look at shop 15 but that he declined, saying he did not want to be on that corner. She agreed that if he had taken it, it would have required work because it was not a ‘wet shop’ but since he was not interested in it, the subject of the work or a quote for the work, never came up.

56 She denied that she had seen the letter of Macarthur Law Group of February 2008 but said by way of explanation that normally, acceptance of options are directed to the owner rather than centre manager.

57 As to other correspondence, she said that she did not reply because Mr Tsimbakis was in arrears of rent and it was a matter for the owners to respond, and not herself. She said that as far as she was aware, the option was not accepted because it was not expressed as an acceptance and anyway, he had indicated that he did not want it.

58 She agreed that the TAB had expressed interest in the shop but that she had not made any offer to Mr Tsimbakis other than to say that if the TAB “put pen to paper” and requested the additional space, then his space might be reduced but that until the TAB acted, nothing would happen. She said the TAB did not take the matter any further. She explained the document at Annexure D to Mr Tsimbakis’ affidavit as the hypothetical figures they discussed during the conversation about the TAB. Mr Tsimbakis had insisted that the figures be written down so that he could think about whether it would be viable. She denied having given him a floor plan or having engaged a builder or architect to look at the site.

59 Mr Purchase, the incoming centre manager, gave evidence and was cross-examined. He said that Ms McDonald had told him that the Applicant was looking for smaller premises and that the TAB was interested but that they needed to sign something first. He understood that the matter was in the stage of negotiations. He said that the TAB was a priority because if he could not get them to sign an agreement, he could not give the applicant a smaller shop.

60 He said that he obtained a quote to ascertain the cost of changing the shop around and that Council approval would have been required. However it never reached the stage of getting Council approval because the TAB “pulled the plug”. He said that he was “very disappointed” when they did so by email because they had even sent executives up from Melbourne to look at the shop.

61 He said he kept the Applicant fully informed as the process went on but when it became clear that the TAB were not interested he asked him if he intended to stay in the centre; at that time his rent was in arrears again and he had not provided us with turnover figures. He was not acting like a tenant who intended to stay. He said that he had not offered him shop 15 because it needed major work to change it to a wet shop including installation of a grease trap.

62 He said that in August 2008, Mr Tsimbakis had said to him that he was worried because he was $10,000.00 behind in rent; rather than saying “don’t worry, I’ll see what I can do” as alleged by Mr Tsimbakis, he had in fact pushed him for money because he could “see the crunch coming”. He said that he asked the owners if he could get a reduction in rent for the time being but they rejected his overture. He said he told Mr Tsimbakis to get the rent up to date and get some advice.

63 He issued the Notice to Quit on the owners’ instructions in about February 2009. He said there were two reasons – the Applicant’s failure to keep up with the rent and his failure to supply turnover figures on the monthly basis required by the lease.

64 With respect to the issue of other tenants committing breaches of their permitted uses, he was cross-examined at length. He said that he was aware that from time to time that tenants breached their permitted uses but the practice was to issue them with notices about it. He could recall only one instance in which he himself had issued such a notice, saying that with ‘no exclusivity’ clauses there was not much point to the permitted use clauses.

65 He said that the Applicant had contacted him regarding the butcher selling seafood, but it was within his use so it was permitted. Mr Tsimbakis also complained of breaches by the Chinese takeaway, Chicken Express and the Bakery and two were served with breach notices; the others were operating within their uses. He made the point that Stan’s Takeaway had a very wide range of merchandise including Italian food, Mexican food, kebabs, cooked fish, hamburgers and so on and there was nothing stopping him from extending his range but he did not do so.

Findings
As to the reduction in size of the shop

66 Generally, the evidence of Ms McDonald was cogent and clear. She appeared to have a good recall of the matter and was thoughtful in her answers. She is clearly a person of considerable retail leasing experience.

67 She said that after Mr Tsimbakis took over the shop at 14A, he was often behind in rental payments. She said that they talked about the possibility of him renting another, smaller shop (number 15) but that he rejected that on more than one occasion. This evidence conflicts sharply with that of Mr Tsimbakis who says he was never offered an alternative shop.

68 The Tribunal has to weigh the respective evidence on this point and decide which version it prefers. This is a difficult task: on the one hand, Ms McDonald’s evidence was measured and supported in many cases by documents. On the other hand, there was no documentary evidence that she offered shop 15 to Mr Tsimbakis on any particular occasion, let alone a number of times.

69 On the other hand, the evidence of the Applicant’s solicitor’s correspondence, annexed to Mr Tsimbakis’ affidavit, is compelling. Annexure C to the affidavit of 22 July 2009 is a letter from Macarthur Law Group to Ms McDonald dated 26 February 2008. In part it says, “Our client would like to provide an expression of interest in the exercise of the existing lease option or enter into a new lease agreement. We further advise that our client is willing to consider smaller premises of approximately 80-90 square metres. Could you please advise us if such as site is available…”?

70 The whole tone and content of that letter suggests that a shop the size of the one at number 15 was being considered. Assuming it was vacant (and the evidence indicates that it was) it is scarcely credible that it would not have been offered to the Applicant. This tends to support Ms McDonald. But there is further correspondence that has already been quoted in these reasons. At Annexure E is the letter of 19 March 2008 which refers to Macarthur’s client “currently considering your offer for the smaller premises..”

71 On the balance of probabilities, it seems that the reference to the smaller premises in that letter could only be a reference to shop 15. That being the case, the Tribunal prefers Ms McDonald’s evidence on that point.

72 Should her evidence generally be preferred to that of the Applicant?

73 As the Tribunal has pointed out in (inter alia) Perhauz and Anor v SAF Properties Pty Ltd and Ors [2007] NSWADT 122 at 79 on the application of standard principles of contract law, the question whether an oral agreement to lease the premises was concluded during conversations depends upon two matters (a) whether there was an intention to conclude a binding agreement and (b) whether agreement was reached on all the essential terms of the contemplated lease.

74 Mr Tsimbakis said that Ms McDonald made him an offer regarding the TAB taking over a portion of his shop and he accepted it. She denied any such agreement but admitted that the parties were in negotiation. However she emphasized that she had not made any offer capable of acceptance to Mr Tsimbakis because she had not finally agreed terms with the TAB.

75 Mr Tsimbakis was cross-examined on his conversations with Ms McDonald at length. He conceded that much of what he said in answer to the cross-examiner was not contained in his affidavit yet the conversation or conversations about the TAB taking portion of the premises was critical to his case. He said that she said to him that the TAB wanted 35 square metres, that she could not reduce his rent but could reduce the size of the shop (and therefore the rent) that she worked the figures out then and there and he said that he agreed. He said that he “walked away happy and started to make phone calls”.

76 The Tribunal is satisfied that Ms McDonald would have been aware and careful of making an offer to a tenant who was capable of acceptance and would not have done so without being sure of the terms she was offering. On the present facts, the more probable version of events is that recounted by Ms McDonald: that she saw a dual opportunity for assisting Mr Tsimbakis by arranging for the TAB to take the additional space they required from his shop, thus leaving him with smaller premises and therefore lower rent and for keeping a big client happy.

77 It follows that the Tribunal accepts Ms McDonald’s version of events and finds that there was no intention by both parties to conclude a binding agreement. The letter of Macarthur Law Group of 30 April 2008 (part of Annexure E to Mr Tsimbakis’ affidavit) tends to support the fact that the TAB assumption of portion of the shop was in negotiation only at the relevant time: it queries whether the TAB want 32 or 35 square metres and it refers to “possible adjustments” to the premises. Mr Tsimbakis was asked about this in cross examination and his answer was that 3 metres or so would not have broken the deal and that the only part of the agreement which had not been finally agreed was whether the TAB would take 32 or 35 square metres.

78 On Mr Tsimbakis’ version, the difference of 3 square metres is played down yet plainly it would have a significant impact on the cost of the renovation. This must have been of significance to a person who was already in arrears of rent.

79 Moreover it is difficult to avoid the natural meaning of the words in the letter of his own solicitor where the author’s language is plainly that of a participant in a negotiation. Had the deal been concluded, one would have expected to find a confirmatory letter.

80 Therefore on balance, the Tribunal is satisfied that as at the end of April 2008, the Applicant and Respondent had discussed ways in which his shop size and therefore rent might be reduced but that nothing had been decided and no particular representations had been made.

81 As to the second criterion in Perhauz, there was no evidence that any other terms, let alone essential terms such as the length of the lease, options to renew, the amount of rent and so on, had even been discussed.

As to permitted usage

82 As far as permitted usage is concerned, the evidence favours a finding that whilst the Respondent required the Applicant to keep the two businesses at shops 13 and 14A separate and distinct in terms of the fare they offered, it was prepared to allow some cross- usage. Mr Tsimbakis’ evidence was that from November 1999 to December 2000, he was required to keep the businesses of the Takeaway and his former shop (numbers 14A and 13 respectively) separate. This period was short lived and indeed changed when Chicken Express arrived. After that date, the Takeaway was permitted to sell pizza and kebabs (ie the business of the former shop).

83 The Tribunal has had the benefit of reading the Landlord’s Disclosure Statements for most if not all of the shops. They all contain ‘no exclusivity’ clauses. The evidentiary burden is on the Applicant to show that the Respondent acted unfairly in permitting other tenancies to expand their product for sale beyond the terms of their specific usage. There is little or no evidence of the permitted usages of all the other food shops in the centre and it is not possible to determine from the evidence whether those tenants who expanded their product range were merely imaginative and enthusiastic or acting in breach of their leases. Because of the paucity of evidence and for the reasons that follow, the Tribunal finds that the Respondent did not engage in unfair or unconscionable conduct insofar as it was alleged to have occurred contrary to prescribed usage.

84 The Tribunal also prefers the evidence of Ms McDonald and Mr Purchase and finds that there was no discriminatory elasticity in the manner in which the Respondent enforced the permitted use of the premises in the centre and that to the extent that other tenants expanded their usages, so did the Applicant.

85 Furthermore, as Mr Purchase said, Stan’s Takeaway had a very wide range of merchandise in its usage and the Applicant could have expanded his fare had he chosen to do so.

86 Turning to the Grounds for Relief alleged in the amended Applicant, the Tribunal finds that Ground (1) has not been made out in that it finds that there was no agreement nor representation that the Applicant could have either a renewal of lease or a new lease of premises of reduced size.

87 It follows that the Notice to Quit was not served in breach of any agreement for lease.

88 As to Ground (2) the Applicant argued that the Respondent misled the Applicant that there were negotiations in place to address the size of the premises and that a new lease was going to be entered. Firstly, the Tribunal finds that there were negotiations underway from early 2008 which addressed the question of the size of the Applicant’s premises but does not find that there was a representation that a new lease would be entered with him. The Tribunal is of the view that the Respondent’s representatives, mindful no doubt of the importance of their language and conduct, took care to advise the Applicant at all relevant times that no deal or agreement could be reached unless and until the TAB signed a document to the effect that they would take part of the Applicant’s premises.

89 The Tribunal finds that the Respondent did not unfairly use its bargaining position nor did it act unfairly towards the Applicant. The Tribunal regards the following factors as significant in reaching this finding:

a. the Applicant was experienced as a lessee in retail leasing, having been in subject premises for more than 10 years and having previously operated a retail shop in other premises

b. the Applicant had negotiated at least two leases with the Respondent over the years and both those leases were contained in writing

c. there was no evidence of a history of verbal agreements between the parties

d. the Applicant had a longstanding difficulty in maintaining his rent obligations and was often in arrears

e. the Applicant was unequivocal in his words and actions about his right to exercise an option to renew the lease; he did not want to renew the lease but wanted a new lease on terms which included a reduction in the size of his premises

f. the Applicant had, at all material times, access to a solicitor to advise him

90 Ground 3, that the Respondent was in breach of the lease because it allowed other tenants to compete with the Applicant but did not give reciprocal latitude to him, is not made out. The centre had a clear policy of promoting competition between tenants and made it clear in lessor disclosure statements that there was no exclusivity in the centre.

91 Of course, that does not dispose of the argument that the Respondent permitted tenants to operate in breach of their permitted usages but the evidence does not support the claims made.

92 Ms McDonald and Mr Purchase were both cross-examined at length about alleged breaches by tenants and both admitted that from time to time, such breaches occurred. However they added that where those matters had been brought to their attention, they had acted and served notices on the offending tenants. There was no evidence to refute that this in fact occurred and in fact the Applicant had been the beneficiary of an extension to his permitted usage when he was allowed to trade in pizza and kebab after the opening of Chicken Express.

93 Ground (4) sought a finding that a promissory estoppel arose to prevent the Respondent from denying the Applicant the right to lease the shop.

94 The Respondent argued that the Tribunal does not have power under s. 72 or any other section to make as an order as to promissory estoppel. The Tribunal is a creature of statute and is limited by its direct statutory powers. It has no inherent jurisdiction. S.72(1) does not give the Tribunal any express power to make findings such as promissory estoppel.

95 The applicant relied on s.72(1)(a) and (b) and neither give rise to the power to grant a new lease nor make a finding of estoppel. It was suggested by the Applicant that s.72(2) provides the jurisdiction but that subsection does not bestow a general power; it is limited by reference to subsection (1).

96 The Tribunal finds therefore that it cannot make an order which incorporates a finding of promissory estoppel. However, for the sake of clarity, the Tribunal is of the view that even if it were vested with that power, it would not have found, on the evidence and for the reasons advanced above, that an estoppel was made out.

97 Although a claim for unconscionable conduct was not a mainstay of any of the Grounds in the amended Application, nevertheless it was raised and argued.

98 A major component of the assertion that the Respondent had acted unconscionably was that it had made certain misrepresentations and led the Applicant to believe that there was an agreement to lease premises of reduced size, had knowingly allowed him to rely on that assumption and therefore not exercise the option to renew and had then reneged on the agreement.

99 The Applicant cited Harbourside Catering Pty Ltd v TMG Developments Pty Ltd (2007) NSWSC 1375 where Palmer J held that s.62B(3)(k) relevantly provides that in determining whether a lessor has, in connection with a retail shop lease, engaged in unconscionable conduct, the Tribunal may have regard to the extent to which the lessor has “acted in good faith”.

At paragraph 52 His Honour said:

“ A power conferred by contract or statute, exercise of which may cause detriment to another, must be exercised in furtherance of the purpose for which the power was conferred, and not arbitrarily or capriciously. That principle has long been one upon which Courts of Equity have interfered with the exercise of contractual rights under the rubric “unconscionable conduct”: see e.g. Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd [1972] HCA 36 ; (1972) 128 CLR 529 , at 549 per Stephen J; Pierce Bell Sales Pty Ltd v Frazer [1973] HCA 13 ; (1973) 130 CLR 575 , at 587 per Barwick CJ; Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 , at 368 per Sheller JA. The same principle, applied in the same way, has recently been re-labelled “the duty to act in good faith”, which is implied by law in contracts: see e.g. Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 , at 263-264 per Priestley JA; Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 , at 37; Alcatel (supra) at 369. The concept of “unconscionable conduct”, including the duty to act in good faith, has been taken into consumer protection law and finds expression in legislation such as s 51AA(1) and s 51AC(1) and (3)(k) Trade Practices Act 1974 (Cth). However, unconscionable conduct for the purposes of this legislation is not limited to conduct which would move Equity to intervene: see Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd [2000] FCA 1365 ; (2000) 104 FCR 253. Unconscionable conduct, including the duty of good faith, in exercising a power conferred under a lease clearly has the same content in s 62B(1) in the Retail Leases Act as it does in the Trade PracticesAct . The exercise by a lessor of a right conferred by a lease or by the Retail Leases Act with the intention of causing harm to the lessee will be unconscionable both in equity and for the purposes of s 62B(1) RLA. That is so because the right will have been exercised for a purpose for which it was not conferred. However, it does not follow that hostility between the parties will, of itself, render unconscionable an exercise of the right. It is not the law that those exercising their legal rights against others must do so only with goodwill and disinterest. A legal right may be exercised validly if the end sought is that for which the right has been conferred, even if the person exercising the right feels a personal satisfaction that the other party will suffer as a consequence: see NRMA Ltd v Scandrett [2002] NSWSC 1123 ; (2002) 43 ACSR 401 , at [52]-[55], and the cases cited. The purpose for which a right has been exercised is a question of fact. Where the exercise of the right produces a result which is commensurate with the purpose for which the right is conferred, it is difficult to infer that the right was nevertheless exercised capriciously, arbitrarily, or with an intention of causing loss to the other party.

100 The Applicant argued that the Respondent had not acted in good faith, in particular by making promises which were acted upon by the Applicant and which it knew were relied and acted upon by the Applicant.

101 For the reasons elaborated upon earlier, the Tribunal finds that the alleged promises were not made and that the parties were at best in negotiation the successful result of which was not assured but would have delivered the Respondent with premises of a reduced size to offer to the Applicant. No terms were agreed and no details were discussed.

102 The Tribunal reiterates the observation that as of February 2008 it was open to the Applicant to exercise his option to renew the lease. It was his choice not to do so. Instead, he chose to pursue a risky course by trying to obtain smaller premises. He knew or ought to have known that the course was risky because it was entirely dependant upon a third party, the TAB, entering into an agreement. The onus is on the Applicant to demonstrate unconscionable conduct and he has not done so.

103 Finally, the Respondent seeks orders that the Application is dismissed and a declaration that the Applicant is in possession pursuant to the holding over provisions of the expired lease. The parties made little comment about the latter: clause 2.3 of the lease which expired in May 2008 provides that if the tenant continues to occupy the premises after the term [has expired] with the landlord’s consent then the tenant occupies the premises under a monthly tenancy which either party may end by giving one months notice expiring on any day and this tenancy will be on the same terms as this lease so far as they apply to a periodic tenancy with rent being the rent payable immediately prior to the terminating date reviewed as provided in this lease except that the landlord may prior to the terminating date or subsequently on not less then one month’s notice vary the rent.

104 The Tribunal made an order on 2 April 2009 that stayed the effect of the Notice to Quit. It is not known whether the Applicant continues in occupation and the parties may care to address that aspect when they prepare submissions as to costs.

105 Therefore the orders are:

i. the amended Application is dismissed

ii. to the extent that it is necessary now to do so, the Tribunal declares that the Applicant is in possession pursuant to a holding over of the expired lease and is able to be terminated by either party on 1 months notice in writing

iii. the question of costs is reserved. Any submissions with respect to costs are to be filed and served within 14 days.