Wood & Wilson v Bergman

[2003] NSWADT 82

CITATION:	Wood & Wilson -v- Bergman [2003] NSWADT 82
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Anthony Peter Wood Leanne Maree Wilson RESPONDENT Angelique Bergman
FILE NUMBER:	025084
HEARING DATES:	18/03/2003
SUBMISSIONS CLOSED:	03/18/2003
DATE OF DECISION:	04/23/2003
BEFORE:	Chesterman M - ADCJ (Deputy President)
APPLICATION:	Damages
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Environmental Assessment and Planning Act 1979 Retail Leases Act 1994
CASES CITED:	Moweno v Stratis [2002] NSWSC 1151 Thompson v Easterbrook (1951) 83 CLR 467 Westropp v Elligott (1884) 9 App Cas 815 Randi Wixs Pty Ltd v Pokana Pty Ltd [2002] NSWADT 205
REPRESENTATION:	APPLICANT J Priestly, Barrister RESPONDENT M Baker, Barrister
ORDERS:	1. Declare that the lease between the parties is not a retail shop lease under the Retail Leases Act 1994; 2. Declare that the Tribunal does not have jurisdiction to determine the Lessees' application; 3. Application dismissed.

Introduction

1 In this matter, the applicant Lessees, Mr Anthony Peter Wood and Ms Leanne Maree Wilson, applied for relief by way of damages under the Retail Leases Act 1994 (NSW) (“the Act”) in relation to a lease of premises at 16 Granuaille Road, Bangalow that had been granted to them by Ms Angelique Bergman (“the Lessor”). On 18 March 2003, a preliminary hearing was held to determine whether the Tribunal had jurisdiction to grant relief. Mr J Priestley of Counsel, instructed by Hertzberg Heydon, Solicitors, appeared for the Lessees. Mr M Baker, Solicitor, instructed by Mr P Smith, Solicitor, appeared for the Lessor.

2 The Lessees claimed that this lease was a retail shop lease within the definition in s 3 of the Act and that the Tribunal accordingly had jurisdiction to grant the relief sought. The Lessor claimed that the Tribunal had no jurisdiction because the lease fell outside this definition.

The subject matter of the lease

3 In the course of this hearing it emerged that there had been uncertainty as to the precise scope of the premises leased. The Lease itself was signed by the Lessor and both Lessees, apparently on or just before 1 July 2000. It was expressed to commence on that day and terminate on 30 June 2001. It described the property leased simply as “16 Granuaille Road, Bangalow”. The Lessor was the registered proprietor of the whole of this property.

4 However, in the statements filed before the hearing by Mr J Stearn, who was the Lessor’s husband and managed all aspects of the lease on her behalf, and by Mr A Wood, one of the Lessees, the lease was said to cover only parts of the property. Mr Stearn and Mr Wood concurred in stating that the lease covered only the following areas: (a) one of three shops on the property (“Shop 1”); (b) an adjacent external area between Shop 1 and Granuaille Road, which was covered by an awning sheltering three petrol pumps; (c) a driveway to one side of Shop 1, which was designated in a plan annexed to Mr Stearn’s statement as “shared” between Shop 1 and another shop (“Shop 3”); and (d) a parking area beside this shared driveway.

5 It did not, according to their statements, include two other shops on the property. One of these, “Shop 2”, was a motor vehicle tyre shop. The other, “Shop 3”, was a mechanical repair shop for motor vehicles. According to Mr Stearn, Shops 2 and 3 were “separately leased”.

6 In their application to the Tribunal, the Lessees alleged that the Lessor had breached the terms of the lease by charging additional rent and interfering with their right of possession. They also alleged that the Lessor had engaged in unconscionable conduct in charging additional rent and in repossessing part of the premises, thereby obtaining financial benefit. In the course of the hearing to determine jurisdiction, however, Mr Priestley indicated that if the matter proceeded further he would seek leave to amend the application so as to claim only that “the Lessor engaged in unconscionable conduct by repossessing the Lease premises and obtaining financial benefit”.

7 These foreshadowed amendments reflected the fact that the Lessees henceforth wished to frame their case on the footing that only the four areas within the property at 16 Granuaille Road that I have described had been included in the lease. Previously, as indicated in a letter dated 16 May 2002 from Hertzberg Heydon to Mr Smith, they had claimed that it covered the whole of this property.

8 There was in fact some evidence that, following separate negotiations between the parties, the Lessees had been informally granted some form of right of occupation of Shop 2, in return for an annual rent of $5,200. In the circumstances, I do not need to explore in detail this aspect of their dealings with the Lessor.

9 Mr Baker indicated at the hearing that he would oppose any such amendment to the Lessees’ application. He accepted, however, that the issue of jurisdiction should be determined on the footing that the lease related only to the four areas within the property at Granuaille Road that I have indicated.

10 The issue to be determined by the Tribunal in this hearing was accordingly whether or not the lease of these four areas – which from now on I will call “the premises” – fell within the definition of a retail shop lease in s 3 of the Act.

Relevant provisions of the Act and their interpretation

11 Under s 3 of the Act, “retail shop lease” and “retail shop” are defined as follows:-

"retail shop lease" or "lease" means any agreement under which a person grants or agrees to grant to another person for value
a right of occupation of premises for the purpose of the use of the premises as a retail shop:
(a) whether or not the right is a right of exclusive occupation, and
(b) whether the agreement is express or implied, and
(c) whether the agreement is oral or in writing, or partly oral and partly in writing.
"retail shop" means premises that:
(a) are used wholly or predominantly for the carrying on of one or more of the businesses specified in Schedule 1 (whether or
not in a retail shopping centre), or
(b) are used for the carrying on of any business (whether or not a business specified in Schedule 1) in a retail shopping centre.

12 In Moweno v Stratis [2002] NSWSC 1151 at [8], Barrett J stated that, in deciding whether a lease falls within the Act, one of the key matters to be determined whether the right of occupation granted is “for the purpose of” the alleged use of the premises. At [26], he emphasised that this should not be done by “proceeding direct to an examination of actual use and regarding that as the primary matter to be determined”. He held to be incorrect the approach taken, in that respect, by this Tribunal in Randi Wixs Pty Ltd v Pokana Pty Ltd [2002] NSWADT 205.

13 In Moweno, at [25], Barrett J defined as follows the circumstances in which evidence of actual use of the relevant premises would be useful:-

…. only if the written agreement of the parties was uncertain or there was some suggestion that the true terms of their bargain
were to be gathered from their conduct, as distinct from the written word.

14 Barrett J also cited (at [10]) a passage from the judgment of Dixon, Williams, Webb, Fullagar and Kitto JJ in Thompson v Easterbrook (1951) 83 CLR 467 at 481, dealing with the situation where the purpose for which a lease is granted is not apparent from the terms of the lease. Their Honours cited the following dictum of Lord Watson in the English case of Westropp v Elligott (1884) 9 App Cas 815 at 831:-

Where the particular purpose for which the holding is to be used is not defined by contract, the legislature must have intended
that the purpose should be ascertained by reference to the use or uses which the contracting parties must as intelligent and
reasonable men be held to have had in their contemplation when they entered the lease.

15 Barrett J cited also, at [11], the following dicta of the High Court in Thompson v Easterbrook, at 482 :-

But, though the time of the letting is initially the time as at which the purposes must be ascertained, it is apparent that the
parties may afterwards change the nature of the purposes. They may do this by a contract express or implied, or by conduct
giving rise to an estoppel or a general waiver… In our opinion even an affirmative consent by the landlord will not suffice
unless it is given by a contract between the parties, express or implied, or the circumstances lead to the conclusion that the
landlord has waived any provisions of the lease inconsistent with the change of user or is estopped from objecting to the
change of use.

16 In Randi Wixs Pty Ltd v Pokana Pty Ltd [2002] NSWADT 205 at [12], Mr Molloy, Judicial Member, made the following observations about the meaning of ‘predominantly’ in s 3 of the Act:-

“Predominantly” is defined in the Australian Oxford Dictionary (1999) as, “being the strongest or main element”. It is not helpful
in my view to analyse that by way of some percentage, even if it was possible so to analyse. Obviously, it must be more than 50
per cent but in order to predominate, it seems to me that the use must be “the most conspicuous or effective” portion of the use
to which the premises are put.

17 I find these observations helpful, noting that nothing said by Barrett J in Moweno detracts from their authority. In addition, the definition of “predominate” in the Macquarie Concise Dictionary was cited on behalf of the Lessor. This includes the following phrases:-

1. to be the stronger or leading element; preponderate; prevail…
4. to be more noticeable or imposing than something else.

18 The Lessees claimed that the purpose for which the right of occupation of the premises had been granted under the lease was for the use of them for, in effect, the carrying on of three businesses. These were the businesses of selling what they called “groceries”, selling automotive parts and accessories and selling petrol.

19 The first two of these types of business are to be found in Schedule 1 of the Act. Henceforth, I will refer to them collectively, for convenience, as “the Schedule 1 businesses”.

20 The so-called “grocery business” in fact included soft drinks, ice creams, confectionery and fast food: that is, it went beyond a normal definition of groceries. But the sale of these products is covered in the Schedule’s list of specified businesses. The relevant items on the list are the following: convenience food shops, fast food shops, general stores, grocery shops and motor vehicle and motor cycle accessories shops (excluding tyre shops and battery shops).

21 The list in Schedule 1 does not include petrol stations. I take the view (the point was not argued at any length) that the sale of other products, such as oil and transmission fluids, which in similar fashion to petrol are consumed by motor vehicles on a continuing basis would also not fall within the phrase “motor vehicle and motor cycle accessories shops” in Schedule 1.

22 The contention that the parties envisaged the operation of the three types of business at the premises was borne out by the terms of the lease. Clause 6.1.1 stated that the Lessees must “use the property for the purpose stated in item 16 in the schedule and not for any other purpose”. Item 16 read as follows, in bold:-

Permitted use: PETROL STATION and Shop for the sale of grocery items and automotive parts and accessories.

23 Mr Priestley argued that, in the light of the evidence regarding the dealings between the parties and the actual manner in which the businesses were conducted, the purpose envisaged for the right of occupation granted by the lease was that it should be used predominantly (though not wholly) by the Lessees for carrying on the two Schedule 1 businesses. The third business, that of selling petrol, was to play a subsidiary role.

Outline of the argument of the Lessor

24 For the Lessor, Mr Baker did not oppose the proposition that the conduct of each of these three types of business by the Lessees was envisaged by the parties at the time the lease was entered into and did, in fact, occur during the currency of the lease. But he contended that the business of selling petrol was intended to be, and was in fact, the predominant use. In essence, he said the business was that of a petrol station. Any activity within the scope of the Schedule 1 businesses was intended to be, and was in fact, within the limits commonly associated with the present-day operation of a petrol station.

The parties’ initial intentions regarding the use of the premises

25 The terms of the lease did not preclude the possibility that the Schedule 1 businesses might become predominant. If the Lessees allowed this to happen, they would not breach the provisions of the lease. Equally, the lease agreement did not require, expressly or impliedly, that the premises should be predominantly used for these two types of businesses.

26 As appears from the authorities cited above, I must accordingly seek initially to determine “the use or uses which the contracting parties must as intelligent and reasonable [people] be held to have had in their contemplation when they entered the lease” (Westropp v Elligott (1884) 9 App Cas 815 at 831).

27 The Lessor purchased the premises, together with a business which was described in the sale documents as a “service station”, from a Mr and Mrs Firth in November 1999. Mr and Mrs Firth operated the business until early 2000, but then moved out. Mr Stearn decided that he would try to “lease” the business along with the premises.

28 The parties in this matter commenced negotiations relating to the lease in or about May 2000. The Lessees sought a lease of one year only, as they wished to try their hands at running the business. They also wished to negotiate a further lease of three years, to take effect on the expiry of the initial lease if the business was successful. As I have said, this initial lease was signed on 1 July 2000 and the Lessors took possession on that day.

29 In fact, the Lessees’ business activities proved unsuccessful. The further lease was never signed. The Lessees remained in possession until a date in February 2002, apparently under holding over provisions for the period after the expiry of the lease on 31 June 2001. They departed after, according to their case, the Lessor put a sign in the window advertising the business for sale. These events, which gave rise to their claim against the Lessor, need not be explored further here.

30 For the duration of the lease, the Lessees agreed that, in lieu of their purchasing the business, they would pay to the Lessor one per cent of all fuel sold in it. One quarter of this payment was to represent interest on a loan of $25,000 advanced to them by the Lessor to finance their purchase of stock. It was contemplated that if the subsequent lease went ahead, they would purchase the business.

31 In cross-examination, Mr Wood stated that in a draft of the lease submitted to him by the Lessor’s solicitor during negotiations, the permitted use was stated to be “Petrol station” only. It was at his insistence that the later words “and Shop for the sale of grocery items and automotive parts and accessories” were added. Mr Stearn said that he could not remember this incident, as there were numerous changes to the draft leases during this period.

32 At the conclusion of his evidence, I asked Mr Wood whether during the negotiations he discussed with Mr Stearn the use to which the premises would be put. He replied that on the matter of what stock the Lessees would acquire, he and Mr Stearn differed on product lines. He considered that the stock had been run down and he indicated to Mr Stearn that he wished to expand the retail side. Mr Stearn, he claimed, encouraged this. This evidence from Mr Wood was not contradicted by Mr Stearn.

33 Because the negotiations were difficult, the preparation of the lease was hasty at the last minute. It was not signed until 1 July 2000, the day of its commencement. This may explain why, as I have already indicated, it did not clearly specify the premises leased.

34 In addition, while a form of certificate under s 16 of the Act formed part of the lease, it was not completed and signed. The result was that, if in fact the lease fell within the Act, it would by force of this section have lasted for five years. This result would have been clearly contrary to the intention of the parties. Similarly, no lessor’s or lessee’s disclosure statements were completed in accordance with the Act.

35 Mr Baker argued that the inference to be drawn from these features of the lease was that none of the parties considered it to fall within the Act. Mr Priestley countered by pointing out that a draft of the intended subsequent lease of three years was accompanied by draft disclosure statements, suggesting the opposite inference.

36 Before and during the period of the lease, the premises were within land zoned “2(a) Residential”. As stated on a certificate, dated 17 November 1994, under s 149(2) of the Environmental Assessment and Planning Act 1979, this meant that the use of the land for “shops (other than general stores and shops listed in Schedule 3)” was prima facie prohibited. However, in 1973, the local authority had given its consent to a building application to alter the existing buildings so as to set up a “garage – service station”.

37 Mr Baker argued that these restrictions prevented any change of user of the premises from a service station to user for the purposes of the Schedule 1 businesses. He said that the parties must be taken to have negotiated with knowledge of these restrictions. Mr Priestley argued in response that the Lessees, in particular, could not realistically be expected, in the absence of evidence to the contrary, to have been aware of the relevant documents or their effect, notably the building application of 1973.

The parties’ subsequent intentions regarding use of the premises

38 The authorities cited above require me to consider also whether the parties effected any change of intended user “by a contract express or implied, or by conduct giving rise to an estoppel or a general waiver” (Thompson v Easterbrook (1951) 83 CLR 467 at 482).

39 Neither side adduced any evidence to suggest that, once the lease commenced, there was any contract, express or implied, providing for the businesses operated by the Lessees within the premises to change in any material respect.

40 Mr Stearn did not suggest in his evidence that at any time during the lease he raised any objection to the extent to which the Lessees engaged in the Schedule 1 businesses, rather than focusing on what he considered to be the primary business, that of a petrol station. He said that he called in at the premises quite frequently and knew what was happening there.

41 As I have said earlier, any development in the nature of the Lessees’ operations that caused the Schedule 1 businesses to “predominate”, although formerly they did not do so, would not in fact have breached the express terms of the lease. At most, it might have contradicted an implicit understanding between the parties as to the relative importance of these businesses as compared with the business of selling petrol. If any such development occurred and had this effect, I consider that because Mr Stearn, as the Lessor’s agent, was in a position to know about it (having visited the premises regularly), but both he and the Lessor refrained from making any objection, the Lessor must be taken to have waived any right to object.

42 Amongst the annexures to Mr Stearn’s statement and the evidence tendered at the hearing there were, however, documents prepared and/or signed by the Lessees or their solicitors after the commencement of the lease which, in Mr Baker’s submission, supported the primary characterisation of their business as one of selling petrol. In these documents, the premises were described expressly or by implication (through the use of the word Mobil, being the brand of petrol sold) as a service station. They comprised a draft option agreement signed by the Lessees; a draft loan agreement that had been prepared in handwritten form by Mr Wood; a draft rental agreement, also prepared by Mr Wood; a notice of vacation of the premises, signed by the Lessees; and a letter from the Lessees’ solicitors to the Lessor’s solicitor.

43 By contrast, a draft contract prepared by the Lessor’s solicitor for the sale of the business from the Lessor to the Lessees, specifying 1 July 2001 as the completion date, described the type of business as “Petrol station and Shop”.

The actual use of the premises

44 The evidence that I have reviewed so far does not provide an affirmative answer to the key question of whether the purpose for which a right of occupation was granted under the lease was that the premises be used predominantly for the carrying on of the Schedule 1 businesses. While there are pointers both ways, it is impossible to conclude from this evidence that the parties reached, or should be taken to have reached as “reasonable” people, an agreement to this effect, either before or during the currency of the lease.

45 In these circumstances, evidence of actual use (of which a good deal was put before me) must be given consideration. This accords with the statement of principle that I have quoted above, at [13], from the judgment of Barrett J in Moweno v Stratis [2002] NSWSC 1151 at [25].

46 I will now discuss relevant aspects of the manner of use of the premises during the period of the lease, beginning with those emphasised in the argument for the Lessees.

Evidence relied on by the Lessees

47 First, the total area of the premises was about 232.4 square metres. The areas of the four different segments, in square metres, were as follows: Shop 1 – 64.68; the site of the petrol pumps – 27.72; the shared driveway – 70; the parking area – 70. The area of Shop 1 had in fact been increased in size by the Lessor before the lease was granted.

48 Mr Priestley argued that these figures showed that only a small proportion of the premises was concerned with the activity of selling petrol. He contended that, within Shop 1, only the cash register was used in this activity, and the rest of the space was wholly devoted to the Schedule 1 businesses. A rough floor plan showing an area for the sale of car parts (8.28 square metres), a refrigerator and a freezer gave support to this contention.

49 Mr Stearn maintained in his evidence, however, that the size of Shop 1 had been increased before the lease for reasons other than development of the Schedule 1 businesses. He said that it was because the shop had been too small for comfortable use even just by those entering it to pay for petrol. He wanted to make it more attractive in order to increase sales of petrol.

50 Mr Priestley claimed also that the parking area (though not the driveway) should be regarded as wholly associated with these businesses. Mr Baker disputed this claim. Mr Stearn said that most of the parking was by motorists wishing to go to the toilet nearby.

51 Secondly, Mr Wood testified that, shortly after taking possession, the Lessees rearranged the layout of Shop 1 so that all customers had to walk past the retail shelves in order to pay for any purchases (including purchases of petrol). This, he said, had a substantial impact on the volume of sales of these products.

52 Thirdly, stocktaking records compiled by the Lessees towards the end of 2001 showed that the number of stock lines maintained in the two Schedule 1 businesses totalled 1,484. In the petrol business, there were only three lines: unleaded petrol, lead-reduced petrol and diesel. Two important types of motor vehicle fuel were not sold: premium unleaded petrol and liquid petroleum gas.

53 A shorter stocktaking record annexed to Mr Stearn’s statement was allegedly compiled at the time of commencement of the lease. It showed a narrower range of items in the food, drink and grocery categories.

54 Mr Baker sought to downplay the significance of the disproportion between petrol and other lines by pointing out that many of the different stock lines belonged within a single type of automotive product (for example, fan belts) or grocery, food or drink item. In the case of cigarettes, for example, Mr Wood agreed in cross-examination that there might have been as many as 30 lines.

55 Mr Baker also argued, in relation to the business in food, drink and groceries, that it went little beyond what Mr Stearn in evidence called “travellers’ needs”. Up to a point, this argument seemed to be supported by a list, supplied by Mr Wood, of the types of product sold in this business. It was as follows: groceries, cigarettes, confectionery, fast food, soft drinks, ice cream and newspapers. In addition, the bulk of the items listed both in the stocktaking records produced by Mr Wood and in those annexed to Mr Stearn’s statement fitted this general description.

56 Within the stocktaking records produced by Mr Wood, however, a number of individual items shown would generally be regarded as outside, or at least on the edge of, any definition of “travellers’ needs”: for example, tomato paste, smoked oysters and packets of pasta. The same applied to a few items – for example, stuffed olives – appearing on Mr Stearns’ list.

57 Fourthly, Mr Wood testified that he spent only about a quarter or a third of his time attending to drivers’ needs in relation to petrol, oil and water, and the balance attending to the customers of the Schedule 1 businesses. He thought that amongst the staff these proportions would have been closer to 50-50. In relation to matters such as ordering and checking stock and cleaning the premises, much more time was required for the Schedule 1 businesses than for the business of selling petrol. None of this evidence was subjected to challenge.

58 Fifthly, of all the items sold by the Lessees at the premises, only 25 per cent were of petrol and the rest were within the Schedule 1 businesses. This, Mr Priestley argued, refuted any claim that in the vast majority of cases the reason why people came to the premises was that they wished to buy petrol.

59 Sixthly, accounts completed for the period from 1 July 2000 to 30 June 2001 showed distinctly higher profits in the Schedule 1 businesses than from the sales of petrol. They gave figures as follows for the Schedule 1 businesses: gross takings, $171,829.90; purchase cost, $143,899.72; profit, $27,930.18. The equivalent figures for the petrol sales were gross takings, $870,418.21; purchase cost, $850,775.30; profit, $19,642.91. Measured on this basis, the Schedule 1 businesses earned 58.71 per cent of the total profits of the enterprise ($47,573.08), whereas the contribution from the petrol sales was only 41.29 per cent of the profits.

60 Mr Baker disputed these figures in so far as, in calculating the purchase cost of the petrol, Mr Wood included (a) a sum of $10,261.24, being the one per cent payable by the Lessees to the Lessor in lieu of their purchasing the business (see [30] above) and (b) a further sum of $2,429.48 representing commission payable on fuel cards. Mr Baker argued that these should both have been charged against the gross profit of the total enterprise, not just against the petrol-selling business. On this basis, the contributions made by the two categories of business to the total profits would be closer to 50-50.

61 Seventhly, Mr Wood testified that a significant number of the customers were not “travellers”, who only made purchases of food, drink or groceries because they also bought petrol. They were members of the local community. This was the case particularly between 7.00 and 8.00 am and between 6.00 and 7.00 pm, when the shop was the only retail shop open in Bangalow.

Evidence relied on by the Lessor

62 I turn now to the aspects of the actual use of the premises which received emphasis in the argument for the Lessor.

63 First, beside Granuaille Road and near to the premises, there was a prominent sign bearing the words “Mobil Products”. There was also a sign advertising petrol prices. The three petrol pumps stood in a prominent position outside Shop 1. In addition, Shop 3, which also faced Granuaille Road, had a prominent sign with the word “Tyres”. Mr Baker argued accordingly that the predominant appearance or “image” of the premises, so far as the public was concerned, was clearly that of a service station.

64 Mr Priestley sought to downplay these features of the premises by contending that the phrase “Mobil Products” included car parts and accessories, which were within the scope of the Schedule 1 businesses. It should also be mentioned (though Mr Priestley did not specifically draw attention to this) that some of the items of food, drink and groceries sold inside Shop 1 were listed on a signboard fixed to the awning above the petrol pumps. These included milk, bread, ice cream and pies.

65 Secondly, the accounts for 2000-2001 showed that the actual turnover of the petrol sales ($870,418.21) exceeded that of the Schedule 1 businesses ($171,829.90) by a ratio of about five to one. In other words, the petrol business contributed about 83.5 per cent of the gross takings of the whole enterprise. This, Mr Baker argued, was a better indicator of the mode of use of the premises than comparing contributions to the enterprise’s profits.

66 Thirdly, annexed to Mr Stearn’s statement were copies of four letters from estate agents in the region of Bangalow, each expressing the opinion that the property at 14 Granuaille Road was a service station. In two of them, alternative characterisations such as corner store or general store were explicitly rejected.

67 Mr Priestley contended that, even within the liberal criteria for admission of evidence in Tribunal hearings, they were inadmissible on the ground that they were irrelevant.

68 I agree that an opinion of this nature has very limited relevance to the issue to be determined, namely, the purpose for which the right of occupation was granted in this case. Furthermore, the letters appear to refer to the whole property at 14 Granuaille Road, not specifically to the premises leased.

Conclusions regarding the use of the premises

69 Put briefly, the upshot of this evidence regarding actual use is as follows.

70 The Lessees indicated during negotiations that they wished to enlarge both the range and the scale of their selling of food, drink and groceries. The evidence suggests that they succeeded in doing so.

71 It was argued for the Lessees that the Schedule 1 businesses were initially, or became, predominant in terms of (1) floor area, (2) number of stock lines, (3) time devoted by the Lessees and their staff, (4) number of items sold and (5) contributions to overall profits of their enterprise.

72 In relation to items (2) (number of stock lines) and (4) (number of items sold) on this list, this contention clearly held good. The same applied to number (3) (time devoted by the Lessees and their staff), so long as the requirements in relation to cleaning are taken into account.

73 As to item (1), floor area, I consider that the assertion that the parking area of 70 square metres was used only for the purposes of the Schedule 1 businesses was not made out. When this and the shared driveway are left out of account, the relevant floor areas were 64.68 square metres (Shop 1, in which the cash register played a significant role in petrol selling) and 27.72 square metres (the petrol pump area). The shop area was therefore predominant, but not hugely so.

74 As to item (5), relative contributions to overall profits, I accept Mr Baker’s argument that the figures put forward by Mr Wood unduly favoured the Schedule 1 businesses. At most, the contribution of these businesses amounted to about 55%. If this can be called a predominant contribution, it is by a small margin only.

75 It was argued for the Lessor that the business of selling petrol was predominant in terms of (1) outward appearances and (2) contribution to gross takings.

76 Both of these assertions clearly held good, as the evidence summarised above shows.

77 Mr Baker summed up his argument for the Lessor by submitting that the proper characterisation of the whole of the Lessees’ enterprise was that of a service station. He argued that it was common knowledge that in present-day service stations the primary business of selling fuel was frequently associated with ancillary retailing of food, drink, groceries and automotive parts and accessories. Maintaining that this in fact was industry practice, he drew my attention to s 78 of the Act, which requires that accepted practices and interpretations within any industry concerned should be taken into account when interpreting the Act.

78 At the end of the day, however, it is not relevant, in my view, to consider whether this characterisation of the Lessees’ enterprise is correct. The Act does not expressly exclude service or petrol stations from the definition of “retail shop”. It has nothing at all to say about service or petrol stations as such. So far as the Act is concerned, premises that are used predominantly for the businesses of selling of groceries and/or automotive parts are “retail shops” within s 3, irrespective of whether the fact that petrol is sold there also warrants calling the premises a “service station” or a “petrol station”.

79 The above discussion (at [16], [17]) of the meanings of “predominant” and “predominate” indicates that they draw on concepts such as “stronger”, “leading”, “main”, “conspicuous” and “more effective”. Applying these to the evidence of actual use, I find it impossible to say that the use of the premises for the Schedule 1 businesses was “predominant” as compared with their use for the petrol-selling business.

80 The former use may have involved the expenditure of more time by the Lessees and their staff, the engagement of a larger proportion of the area leased and, by a small margin, the generation of a larger sum by way of profit. According to those measures, it was the “leading” or “main” use. But the latter use was the more conspicuous one and, in terms of gross takings, was the “leading” or “more effective” use.

81 In the outcome, neither of the two uses appears to me to have been established as “predominant”.

Conclusions

82 As explained earlier, the issue posed by the relevant definitions in s 3 of the Act is whether “the purpose of the use of the premises” under the lease was “wholly or predominantly for the carrying on” the Schedule 1 businesses. I said earlier in this judgment (at [44]) that the evidence regarding the dealings between the parties did not support a finding that they reached, or should be taken to have reached as “reasonable” people, an agreement to this effect, either before or during the currency of the lease.

83 For reasons just outlined (at [79] - [81]), the significant conclusion to be drawn from the evidence of actual use is that the use of the premises for the Schedule 1 businesses was not “predominant”.

84 It follows from these two findings that the lease in this matter was not a “retail shop lease” within the meaning of the Act and that the Tribunal does not have jurisdiction to determine the Lessees’ application.

85 I therefore make two declarations. The first is that the lease between the parties is not a retail shop lease within the meaning of the Retail Leases Act 1994 (NSW). The second is that the Tribunal therefore does not have jurisdiction to determine the Lessees’ application.

86 The application must be dismissed.