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Federal Court of Australia |
COURT
IN THE FEDERAL COURT OF AUSTRALIACATCHWORDS
Trade practices - consumer protection - misleading and deceptive conduct - jurisdiction of court to hear and determine all claims made by applicant - admissibility of similar fact evidence.Trade practices - consumer protection - misleading and deceptive conduct - lease of shops - knowledge of and reliance upon that conduct.
Damages - measure of damages - power of court to make orders compensating person suffering loss or damage - discretion of court - powers to vary contract or arrangement - principles to be applied - variation of lease.
Trade Practices Act 1974 ss. 52, 82, 86, 87.
HEARING
MELBOURNEORDER
1. That the lease dated 22 September 1978 and entered into between Centrepoint Freeholds Pty. Ltd. as lessor and Mister Figgins Pty. Ltd. as lessee, being the lease of shops G15, 116 and part 112 at Centrepoint Mall, Bourke Street, Melbourne, be varied as hereinafter set out and that the lease as so varied had effect on and after the commencement of the lease on 10 October 1979:(a) Delete PART IV (Initial rent) of the SCHEDULE to the lease and in lieu
thereof insert the following:
" PART IV
(Initial rent)
$53,430 per annum - $4,452.50 per calendar month - $1,027.50 per week."
(b) Delete the following clauses of the lease:
"Clause 6.02, Clause 6.03, Clause 24.01(c), Clause 26.00 and Clause 27.00."
(c) Vary APPENDIX 1 (Rent Review) to the lease by deleting from paragraph 3
thereof the following words:
"PROVIDED FURTHER and it is hereby agreed and declared by the Lessor and the Lessee that notwithstanding the foregoing the rental payable hereunder shall not in any event be less than the rental payable at the relevant rent adjustment date."
2. That the lease dated 22 September 1978 and entered into between
Centrepoint Freeholds Pty. Ltd. as lessor and Mister Figgins
Pty. Ltd. as
lessee, being the lease of shop 112 at Centrepoint Mall, Bourke Street,
Melbourne, be varied as hereinafter set out
and that the lease as so varied
had effect on and after the commencement of the lease on 10 October 1979:
(a) Delete PART IV (Initial rent) of the SCHEDULE to the lease and in lieu
thereof insert the following:
" PART IV
(Initial rent)$7,050 per annum - $587.50 per calendar month - $135.58 per week."
(b) Delete the following clauses of the lease:
"Clause 6.02, Clause 6.03 and Clause 25.00."
(c) Vary APPENDIX 1 (Rent Review) to the lease by deleting from paragraph 3
thereof the following words:
"PROVIDED THAT and it is hereby agreed and declared by the Lessor and the Lessee that notwithstanding the foregoing the rental payable hereunder shall not in any event be less than the rental payable at the relevant rent adjustment date."
3. That the respondent at its own expense annex to each copy of the said leases executed by the parties or either of them an office copy of this order and endorse upon the schedule of each such document the words "The lease has been varied by the order of the Federal Court of Australia a copy of which is annexed hereto".
4. That the respondent pay four-fifths (4/5ths) of the applicant's costs, to be taxed.
5. Liberty to apply.
DECISION
By application filed on 29 September 1980 the applicant claims relief against the respondent under a number of headings. Included among the claims made are the following:1. Declarations that specified conduct of the respondent constituted conduct
of the respondent in trade or commerce which was misleading
or deceptive or
likely to mislead or deceive in contravention of s.52(1) Trade Practices Act
1974 as amended ("the Act"), that specified representations made on behalf of
the respondent contravened s.53(aa) of the Act and that specified statements
made on behalf of the respondent were made in contravention of s.53A of the
Act.
2. Damages under s.82 of the Act for loss and damage suffered by or in
consequence of the said conduct, representations and statements with
incidental
orders of set-off between any damages so awarded and any rent
payable by the applicant to the respondent under the terms of deeds
being
leases of shops at the Centrepoint Mall at Melbourne.
3. Orders under s.87 of the Act in relation to the leases of the said shops.
4. A declaration that the applicant is entitled to avoid the leases and for
consequential orders under s.87 of the Act and to rescind the leases pursuant
to its common law entitlement and for consequential orders.
5. Damages for breaches of common law.
The application proceeded by way of pleadings and came on for hearing on 16
February 1981. The Statement of Claim as amended pursuant
to leave granted on
that day, alleged the incorporation of each of the parties and that the
respondent was a trading corporation.
Paragraph 2 is set out:
"2. At all material times one Craig Robertson acted as a servant and/or agent of the respondent in relation to leasing and proposed leasing of shops by the respondent to tenants at the Centrepoint Mall, Bourke Street, Melbourne."
The Defence, as amended pursuant to leave granted on 16 February 1981,
contained the following:
"2. Save to admit that one Craig Robertson acted in connection with the
leasing and proposed leasing of shops by the Respondent to
tenants and
prospective tenants at the Centrepoint Mall, Bourke Street, Melbourne, it
denies the allegations contained in paragraph
2 thereof."
It is common ground between the parties that the said Craig Robertson died in March 1979.
The applicant pleads the existence of two deeds constituting the leases of
the said shops, and by paragraph 4 of the Statement of
Claim alleges that in
order to induce it to make and enter into the said deeds the respondent
represented and warranted to the applicant
some seventeen separate facts,
hereinafter referred to as "representations". Particulars allege that the
representations were partly
in writing, partly oral and partly to be implied
and were given and made by Mr. Robertson acting as agent for the respondent.
The
respondent admits the deeds but denies each and every allegation contained
in paragraph 4 of the Statement of Claim. The applicant
alleges that each of
the representations was false and that the warranties were broken, all of
which is denied by the respondent.
The applicant alleges that the
representations were made in connection with the grant or possible grant of an
interest in land under
s.53A of the Act, all of which is denied by the
respondent. Paragraph 7 of the Statement of Claim alleges that the
representations constituted
contraventions of s.52, s.53(aa) and s.53A of the
Act. The respondent denies each of those allegations. The applicant alleges
that the representations were made fraudulently
and further constituted a
breach of a duty of care owed to the applicant. The respondent denies each of
those allegations. Paragraph
11 of the Statement of Claim is set out:
"11. By reason of the matters aforesaid and in particular -
(a) By reason of the contravention of the provisions of Sections 52, 53(aa)
and 53A of the Trade Practices Act 1974;
(b) By reason of the breaches of warranty and the false representations made
and negligence as aforesaid -
the applicant has suffered and will continue to suffer loss and damage in
respect of the said shops."
Particulars are then set out. The respondent denies each of the allegations.
The respondent's defence, as it stood after being amended on 16 February 1981, pleaded a number of facts designed to establish defences of waiver and estoppel, a defence based upon s.45 of the Act and defences based upon express terms contained in the said deeds. At the time leave was given to the respondent to amend its defence to include, inter alia, those defences, the applicant was given leave to file and serve within four days a reply to the amended defence.
In his opening, counsel for the applicant stated that the respondent, in the year 1977, was developing a shopping complex fronting Bourke Street, Melbourne, to be known as the "Centrepoint Mall" and that during a series of meetings in 1977 and 1978 Mr. Robertson made the representations to Mr. Figgins on behalf of the applicant. Evidence called would establish that the representations were false and that a number of them were known to be false by Mr. Robertson and the respondent, and that the representations were made with the intent of inducing the applicant to enter into the deeds. Counsel stated that among the witnesses he proposed to call were eight persons, other than Mr. Figgins, who were closely associated with tenants of other shops in Centrepoint Mall and to whom Mr. Robertson had made representations identical with or similar in substance to those made to Mr. Figgins. Of those eight witnesses, five were closely associated with tenants which, as applicants in proceedings pending in the Federal Court, were making claims similar to those made by the applicant.
Before the first witness was called counsel for the respondent sought a
ruling that the evidence proposed to be given by those eight
witnesses was
irrelevant and not admissible and that the ruling should be given before any
evidence was called. In support of his
submissions counsel established that by
letter dated 9 February 1981, the applicant's solicitors informed the
respondent's solicitors
that it was proposed to call evidence from witnesses
to show that statements were made by agents of the respondent which were
similar
in substance to those made to Mr. Figgins. By letter dated 12 February
1981, hand delivered, they identified the proposed witnesses
as being other
tenants at the Mall to whom Mr. Robertson had made similar or identical
representations as those made to Mr. Figgins.
The names of the proposed
witnesses were supplied by letter dated 13 February 1981. By letter dated 12
February 1981 the respondent's
solicitors had given notice that they contended
that the evidence was inadmissible and that inadequate notice had been given
if the
evidence was otherwise admissible. In substance, counsel submitted:
1. That the evidence was inadmissible to prove that the representations
alleged by the applicant were in fact made to the applicant
by Mr. Robertson
on the basis that it was not probative of the issue as to whether statements
were made by A to B to prove that A
made those or similar statements to other
persons (similar facts).
2. If the applicant intended to rely upon the principle that the evidence was
directed to prove that the respondent had engaged in
a course of systematic
fraud, it had to establish more than that the representations had been made to
the witnesses, but had to establish
the instances of fraud and that that had
not been pleaded.
3. That if the evidence was tendered to prove a systematic fraud, the evidence
should not be admitted because it would be oppressive
or unfair to the
respondent and that the respondent had not been given fair notice of the
evidence, particularly in the circumstances
where Mr. Robertson was deceased,
five of the proposed witnesses were closely associated with proceedings of a
similar nature which
were presently pending in the Court and that in order to
be in a position to cross examine each of the eight witnesses the respondent
should have been given adequate time for preparation of what was said to be
eight separate actions.
4. That if the applicant relied upon the proposed evidence to establish intent or fraud on the part of the respondent that would be relevant only with respect to the common law claims based on fraud, or possibly breach of duty and that the Federal Court did not have jurisdiction to hear and determine the claims based on fraud, negligence or breach of warranty and that the evidence of intent of fraud was not admissible.
In answer, counsel for the applicant indicated that it was proposed to file
and deliver a reply to the effect that the applicant
was induced to enter into
the deeds which gave rise to the alleged waiver and estoppel and the defence
based upon the express terms
contained in the deeds by reason of the
representations which constituted misleading or deceptive conduct as well as
fraud, and that
it was entitled to rescind the deeds. In the light of the
proposed reply, the substance of the submissions made by counsel for the
applicant were:
1. That the witnesses would give evidence that in the course of negotiation
leading to the execution of deeds being leases of other
shops at Centrepoint
Mall, Mr. Robertson had made a number of representations which were, in fact,
similar to the representations
made to Mr. Figgins, and that the only issue
was whether that evidence was relevant to prove an issue of fact between the
applicant
and the respondent, namely that Mr. Robertson had made the
representations to Mr. Figgins.
2. That the repetition of the representations tended to establish that the
respondent intended to make misleading or deceptive statements
and that
established intent which supported the view that the representations did
constitute conduct which contravened s.52 of the Act.
3. Insofar as fraud is concerned, the evidence tended to establish that the
representations made to Mr. Figgins were not made by mistake
or by accident
but pursuant to a system or course of conduct.
4. The evidence would tend to establish the agency of Mr. Robertson which was
an issue raised by the pleadings.
5. No principles of law required a party to give prior notice to an opposing
party of the names of proposed witnesses.
6. The court had jurisdiction to hear and determine the common law claims and in that event, if otherwise necessary, the evidence was directed to prove a course of conduct or system of fraud by the respondent.
In reply made on 18 February 1981 counsel for the respondent sought and was granted leave to further amend the defence by deleting the paragraphs raising the defences based upon express terms contained in the deeds, c.f. Kok Hoong v. Leong Cheong Kweng Mines Ltd. (1947) A.C. 993, especially at pp.1016-1017.
The defence, as further amended, was filed on 19 February 1981 and retained the paragraphs raising the defences of waiver and estoppel. By its reply filed on 18 February 1981 the appellant alleges that in doing the acts alleged to constitute waiver or giving rise to the estoppel it was induced to do so by the representations, warranties, misleading and deceptive conduct, false and fraudulent representations and false and misleading statements of the respondent.
The substantive question to be determined is whether the evidence proposed
to be given by the eight witnesses has any probative
force in relation to a
fact in issue. The general principle is that proof of "similar facts" done by
a party to litigation does not
tend to prove that the party did a particular
act in issue alleged in litigation. The general principle is stated in Cross
on Evidence,
Second Australian Edition, paragraph 14.2 at p.342, as follows:
"Evidence of the misconduct of a party on other occasions (including his possession of incriminating material) must not be given if the only reason why it is substantially relevant is that it shows a disposition towards wrongdoing in general, or the commission of the particular crime or civil wrong with which such party is charged, unless such a disposition is of particular relevance to a matter in issue in the proceedings."
This is a general principle and there are many instances where evidence of
"similar facts" is admissible. Thus evidence of "similar
facts" is admissible
where the facts include "circumstances whose relation to the fact in issue
consists in the probability or increased
probability, judged rationally upon
common experience, that they would not be found unless the fact to be proved
also existed". This
principle was discussed by Dixon J., as he then was, in
Martin v. Osborne [1936] HCA 23; (1936) 55 C.L.R. 367 at pp.375-6 as follows:
"If an issue is to be proved by circumstantial evidence, facts subsidiary to
or connected with the main fact must be established from
which the conclusion
follows as a rational inference. In the inculpation of an accused person the
evidentiary circumstances must
bear no other reasonable explanation. This
means that, according to the common course of human affairs, the degree of
probability
that the occurrence of the facts proved would be accompanied by
the occurrence of the fact to be proved is so high that the contary
cannot
reasonably be supposed. The circumstances which may be taken into account in
this process of reasoning include all facts and
matters which form constituent
parts or ingredients of the transaction itself or explain or make intelligible
the course of conduct
pursued. The moral tendencies of persons, their
proneness to acts or omissions of a particular description, their reputations
and
their associations are in general not matters which it is lawful to take
into account, and evidence disclosing them, if not otherwise
relevant, is
rigidly excluded. But the class of acts and occurrences that may be considered
includes circumstances whose relation
to the fact in issue consists in the
probability or increased probability, judged rationally upon common
experience, that they would
not be found unless the fact to be proved also
existed. The application of this, as of any other general statement about
relevancy
is subject to the well-known specific rules of exclusion. For
instance, the rule against hearsay and the warning implied in the descriptive
phrase res inter alios acta lead to the exclusion of evidence not only of what
a stranger to the cause has said but also of what
he has done, if it is
offered to prove his knowledge of some fact and thus the existence of that
fact, notwithstanding that the fact
itself be relevant and its proof by
another medium be receivable. But it is at least true, I think, that the acts
of a party are
admissible against him whenever they form a component in a
combination of circumstances which is unlikely to occur without the fact
in
issue also occurring. The repetition of acts or occurrences is often the very
thing which makes it probable that they are accompanied
by some further fact.
The frequency with which a set of circumstances recurs or the regularity with
which a course of conduct is
pursued may exclude, as unreasonable, any other
explanation or hypothesis than the truth of the fact to be proved."
His Honour then referred to a number of cases illustrating the application of those principles.
Section 52(1) of the Act provides that a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Under s.80 of the Act, the court is empowered, on the application of specified persons, to grant an injunction restraining a person from engaging in conduct that constitutes a contravention of s.52(1). In the present case, the applicant alleges that the representations by Mr. Robertson constitute conduct which contravenes s.52(1) of the Act. That conduct has now ceased, but on the assumption that it was continuing and the applicant was seeking an injunction under s.80 of the Act, evidence of representations made by Mr. Robertson would be admissible to prove that conduct. The applicant is seeking damages under s.82(1) of the Act which provides that a person who suffers loss or damage by conduct of another person that was done in contravention of s.52(1) may recover the amount of the loss or damage against that other person. In order to succeed in its claim the applicant must establish that it suffered loss or damage by the conduct of the respondent. On the facts of the present case an essential feature in establishing the claim appears to be that the applicant knew of that conduct. In these circumstances counsel for the respondent contended that since the knowledge of the applicant was an essential feature of the applicant's case, evidence of similar representations made to other persons was irrelevant to tend to prove that the representations were made to the applicant and he contrasted the provisions of s.80 of the Act. Put another way, his submission was that the fact that the representations, even if constituting conduct under s.52, were made to other persons, does not tend to prove that the representations, even if constituting conduct under s.52, were made to the applicant. He contended that the evidence of the eight witnesses was not logically probative of the fact in issue. I do not accept that contention.
It must be remembered that at present the only issue for determination is
the admissibility of evidence. The question of the weight
to be given to the
evidence, if admitted, does not arise at this stage. Likewise, the ruling
sought relates to evidentiary facts,
not to material facts, c.f. Harris v. Gas
and Fuel Corporation of Victoria (1975) V.R. 619. In that case the Full Court
of the Supreme Court had to consider whether evidence of "similar facts"
constituted "material facts"
under s.23A of the Limitation of Actions Act
1958. In a joint judgment, the Court said at p.625:
"But even if all this were established and it was admissible as an evidentiary fact, this would still not make it a material fact relating to the applicant's cause of action. However much similar facts could be relied upon as evidence to support a conclusion of negligence or breach of duty of the Gas and Fuel Corporation in causing personal injury to the applicant (compare Martin v. Osborne [1936] HCA 23; (1936), 55 C.L.R. 367), the similar facts so established would not be material facts which must be pleaded and upon which any cause of action by the applicant would be based."
In the present case, the respondent at all material times was developing a shopping complex and in so doing was seeking tenants to whom it could lease shops situated within that complex. By its pleadings, the respondent admits that Mr. Robertson acted in connection with the leasing and proposed leasing of shops by the respondent to tenants and prospective tenants in that complex. The fact in issue is whether Mr. Robertson made representations to Mr. Figgins which representations constituted engaging in conduct under s.52 of the Act. If it is established by evidence that Mr. Robertson made representations which constituted conduct under s.52 of the Act to other prospective tenants of shops in the same complex, there is a probability or increased probability judged rationally upon common experience, that similar representations were made to Mr. Figgins. The representations, if constituting conduct of the requisite kind, established a pattern which would lead to support the proof of the fact in issue. The evidence of the eight witnesses would, in my opinion, have probative value and is logically probative of a fact in issue.
The line of authorities relied upon by counsel for the respondent dealt with issues of fraud, and in view of the opinion I have formed, based as it is on conduct proscribed by s.52(1) of the Act and related to one venture, I do not need to refer to those authorities further. It is sufficient to say that they are not uniform and arise mainly in jurisdictions outside Australia. Likewise, at this stage, I do not express any opinion on the relevance of intent in establishing a case under the Act.
In support of his submissions based on oppression and unfairness, counsel
for the respondent relied upon an expression of opinion
in Mood Music
Publishing Co. Ltd. v. De Wolfe Ltd. (1976) 1 Ch. 119. That was an action
based on breach of copyright where a defence was that any resemblance was
coincidental. The defendant objected
to evidence being tendered to establish
"similar facts" in relation to other recordings. The evidence included a "trap
order". Lord
Denning at p.127 said:
"The admissibility of evidence as to 'similar facts' has been much considered
in the criminal law. Some of them have reached the highest
tribunal, the
latest of them being Reg. v. Boardman (1975) A.C. 421. The criminal courts
have been very careful not to admit such evidence unless its probative value
is so strong that it should be received
in the interests of justice: and its
admission will not operate unfairly to the accused. In civil cases the courts
have followed
a similar line but have not been so chary of admitting it. In
civil cases the courts will admit evidence of similar facts if it is
logically
probative, that is, if it is logically relevant in determining the matter
which is in issue: provided that it is not oppressive
or unfair to the other
side: and also that the other side has fair notice of it and is able to deal
with it. Instances are Brown
v. Eastern & Midlands Railway Co. (1889) 22
Q.B.D. 391; Moore v. Ransome's Dock Committee (1898) 14 T.L.R. 539 and Hales
v. Kerr (1908) 2 K.B. 601."
The cases therein referred to do not seem to support the general principles stated. Counsel could not refer to any other authority to support his contention. In my opinion, witnesses, otherwise logically probative of a fact in issue, is not rendered inadmissible by reason of oppression and unfairness. Nothing that I have said is to be taken as pre-judging any further application made by counsel for the respondent.
In my opinion, the evidence outlined is admissible and I so rule. In these circumstances it is unnecessary to consider the other matters raised in argument. The issue of jurisdiction, however, was argued at length, and it would be of assistance to the parties if I express my opinion on that issue.
Counsel for the respondent contended that the court had no jurisdiction to hear and determine any of the claims except those arising under the Act. He relied upon the opinions expressed in the recent decisions of the High Court in Philip Morris Incorporated v. Adam P. Brown Male Fashions Pty. Ltd. and United States Surgical Corporation v. Hospital Products International Pty. Ltd., unreported, 10 February 1981.
There is no doubt that the Federal Court has jurisdiction to hear and
determine "matters" arising under the Act, but the issue is,
which of the
other claims made by the applicant come within those "matters". It is
immaterial what phrase is used to describe those
claims, whether it be
"accrued jurisdiction", "attached jurisdiction" or "incidental jurisdiction".
What is important is to determine
the principles to be applied and the
application of those principles to the facts of the present case. Stephen J.
agreed with the
conclusions and reasons expressed by Mason J. in the two
recent judgments. In his reasons in the Philip Morris case, after considering
a long line of previous decisions of the High Court culminating in Moorgate
Tobacco Co. Ltd. v. Philip Morris Ltd. [1980] HCA 32; 54, A.L.J.R. 479, Mason J. said:
"So much, then, for the claim that the defendant's narrow view of 'matter' has
the support of authority. Once it is accepted, as it
must be, that there is no
special magic in the scope of those matters which involve the interpretation
of the Constitution, the lesson to be learned from the authorities is that the
Court having jurisdiction to determine a matter falling within ss. 75 and 76
giving rise to the exercise of federal jurisdiction has jurisdiction to decide
an attached non-severable claim.
The classification of a claim as 'non-severable' does not necessarily mean that it is, or must be, united to the federal claim by a single claim for relief, though this is a common illustration of a non-severable claim. The non-severable character of the attached claim may emerge from other aspects of the relationship between the federal and the attached claim. For example, it may appear that the resolution of the attached claim is essential to a determination of the federal question. Likewise, it may appear that the attached claim and the federal claim so depend on common transactions and facts that they arise out of a common substratum of facts. In instances of this kind a court which exercises federal jurisdiction will have jurisdiction to determine the attached claim as an element in the exercise of its federal jurisdiction."
I propose to apply those principles to the facts of this case. Counsel for
the applicant formulated the matter before the court
as follows:
"The matter before the court is the controversy between the applicant and the
respondent arising out of the fact, if it be true, that
the applicant was
induced to become a tenant of the respondent by reason of the false statements
made by the respondent in the circumstances
referred to in the statement of
claim."
Counsel for the respondent does not dispute that formulation.
In my opinion all the claims made by the applicant come within the jurisdiction of the Federal Court. The resolution of those claims, insofar as they are based upon the common law, is essential to the determination of the federal question. The claims depend upon common transactions and facts and arise out of a common sub stratum of facts. Accordingly, in my opinion, the Federal Court has jurisdiction to hear and determine all claims made by the applicant.
My opinion is supported by the views expressed by Smithers J. in Firona Pty. Ltd. v. Hersfield Holdings Pty. Ltd. unreported, 13 February 1981.
Accordingly, I propose to allow the applicant to call the eight witnesses, or such of them as he may decide.
In September 1980, Mister Figgins Pty. Ltd. (hereinafter called "the applicant") commenced proceedings in the Federal Court against Centrepoint Freeholds Pty. Ltd. (hereinafter called "the respondent"). Each of the parties to the proceedings is a corporation under the Trade Practices Act 1974 as amended ("the Act"). During the year 1975, the respondent, by related companies, was considering developing a large area of land situated between Swanston and Elizabeth Streets, Melbourne and extending from Bourke Street to Little Collins Street as a new shopping complex. The development became known as the Centrepoint Mall, Bourke Street. The Mall was opened for trading in October 1979. To give effect to the development, it was necessary for the respondent to obtain tenants of shops to be constructed in the Mall and to have those tenants enter into leases of their shops prior to the opening of the Mall so that the Mall could be used for trading when it opened. The respondent engaged one Craig Robertson to act as its agent for the purpose of finding tenants for shops in the Mall. In addition, from time to time publicity drives were undertaken by the respondent in an attempt to attract potential tenants. A number of leases were entered into well in advance of the day the Mall opened for trading in October 1979. In September 1978, the applicant as lessee, entered into two leases of shops in the Mall, one lease being for shops G15, 116 and part 112, and the other lease for shop 112.
By its claim, the applicant alleges that in entering into the leases it
relied upon a number of representations made to it by or
on behalf of the
respondent. The representations alleged were -
(a) There would be many big name, strong and high quality traders trading
around the said shops and "Rarity" would have a shop directly
opposite the
said shops.
(b) The first floor was to be a high class boutique area.
(c) (i) The upstairs shop being part Shop 112 was situated in a high class
fashion boutique area.
(ii) The ground floor at the Mall was fully leased apart from the applicant's
shops and that 90% of the shops on the First Floor boutique
area had been
taken.
(d) The Mall would be open for trading by mid-March 1979.
(e) The Trade Exhibition and theatrette proposed to be conducted at the Mall
would attract a large number of people in addition to
normal passing traffic.
(f) There were to be two entrances to the Mall from Bourke Street which would
permit and allow greater passing traffic through the
Mall between Little
Collins and Bourke Street.
(g) The commencing rent for the shops was to be $109,750 per annum.
(h) The applicant's share of maintenance charges and outgoings which were to
be payable by the applicant would be around 12% of the
rental payable and
would not exceed 15% of that rent.
(i) The applicant's shops would be the only shops at the Mall permitted by the
respondent to retail shoes.
(j) The Centrepoint Mall would be equal to the quality and standard of the
Centrepoint complex in Sydney.
(k) The Centrepoint Mall would attract a volume and quality of customer
similar to that attracted by Centrepoint Sydney.
(l) The Centrepoint Mall was to have closed circuit television which would
assist public movement in and around the Centre and help
the public to become
aware of the facilities available to the public at the Centre.
(m) The Centrepoint Mall would possess the characteristics and have the
appearance of the Mall as set out in the brochure handed to
the applicant.
(n) The applicant's proposed occupation and use of the shops was lawful and
would remain lawful for the duration of its lease and
any renewal thereof.
(o) The respondent had complied with all relevant municipal and statutory
requirements so as to enable the applicant to use its said
shops for the
purpose of selling ladies' and men's fashion footwear, accessories and fashion
clothing for the duration of the lease
and any renewal thereof.
(p) A substantial sum of money would be spent on advertising the Centrepoint
Mall both for its opening and on a continuing basis.
(q) There would be at least two restaurants in the Centre.
By its claim the applicant alleges that each of those representations -1. Constituted conduct by the respondent that was misleading or deceptive in contravention of s.52 of the Act.
2. Constituted false representations under s.53(aa) of the Act.
3. Constituted false or misleading statements under s.53A of the Act.
In addition to the claims based on the Act, the applicant alleges that the
representations constituted -
1. Terms of an agreement between the applicant and the respondent.
2. Fraudulent misrepresentation by the respondent.
3. Negligence on the part of the respondent.
By its application, as amended, the applicant is claiming damages and in
addition orders under s.87 of the Act. In his final submissions, counsel for
the applicant abandoned the claims insofar as they were based on the
representations
set out in paragraphs (g), (i), (n), (o), (p) and (q) as set
out above. Likewise, counsel stated that he did not pursue the claims
insofar
as they were based upon the grounds that the representations constituted -
1. Terms of an agreement between the applicant and the respondent.
2. Fraudulent misrepresentation by the respondent.
3. Negligence on the part of the respondent.
4. False representations under s.53(aa) of the Act.
5. False or misleading statements under s.53(A) of the Act.
In the result, the applicant is claiming damages under s.82 of the Act and orders under s.87 of the Act.
Section 82 provides -"82.(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention."
Section 52 is within Part V of the Act and provides -
"52.(1) A corporation shall not, in trade or commerce, engage in conduct that
is misleading or deceptive or is likely to mislead or
deceive.
(2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of sub-section (1)."
The relevant provisions of s.87 are -"87.(1) Where, in a proceeding instituted under . . . this Part, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in . . . in contravention of a provision of Part . . . V, the Court may, whether or not it . . . makes an order under s.80A or 82, make such order or orders as it thinks appropriate against the person who engaged in the conduct . . . (including all or any of the orders mentioned in sub-section (2) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.
(1A) The Court may, on the application of a person who has suffered, or is
likely to suffer, loss or damage by conduct of another
person that was engaged
in . . . in contravention of a provision of Part V, make such order or orders
as it thinks appropriate against the person who engaged in the conduct . . .
(including all or any of
the orders mentioned in sub-section (2)) if the Court
considers that the order or orders concerned will compensate the
first-mentioned
person in whole or in part for the loss or damage or will
prevent or reduce the loss or damage."
Sub-section (2) contains provisions relating to the type of orders that may be made by the Court. Both s.82 and s.87 are within Part VI of the Act.
By its defence, the respondent raised the Constitutional validity of s.87 of the Act. Requisite notices were given under s.78B Judiciary Act 1903 but no Attorney-General appeared in these proceedings. In final submissions, counsel for the respondent abandoned any defence based on the invalidity of s.87.
In opening the applicant's case, counsel stated that he proposed calling eight witnesses, other than Mr. Figgins, who were closely associated with tenants of other shops in the Mall and to whom Mr. Robertson had made representations identical with or similar in substance to those made to Mr. Figgins. Of those eight witnesses, five were closely associated with tenants which, as applicants in proceedings pending in the Federal Court, were making claims similar to those made by the applicant. At the close of the opening, counsel for the respondent submitted that the evidence proposed to be given by the eight witnesses should not be admitted and sought a ruling on that question of admissibility. It was an admitted fact that Mr. Robertson had died in March 1979. On 25 February 1981 the Court ruled that the evidence was admissible and published its reasons. The substance of the reasons was that as an essential step in establishing its case the applicant had to establish that the representations constituted conduct of the respondent in contravention of s.52 of the Act. If the evidence by the eight witnesses tended to prove that conduct, there was a probability or increased probability that similar representations constituting conduct of Mr. Robertson were made to Mr. Figgins, but in order to establish its case, the applicant had to show that it had suffered loss or damage by that conduct. This involved the fact that the applicant at least knew of that conduct.
During the course of the hearing, thirteen witnesses were called by counsel for the applicant and twelve witnesses were called by counsel for the respondent. A large number of exhibits, some of which were very voluminous, were tendered. In addition, at the request of the parties, the Court held a view of the Mall. The view was held on the basis that the Court could treat as evidence what it saw and the view was not to be limited to the basis of assisting the Court to understand the evidence to be given. As it was, the view was of great assistance to the Court in understanding the evidence, and in addition, in some respects assisted the Court in making findings of fact.
In the course of submissions, counsel for the respondent raised the question
of the degree of satisfaction that should be required
by the Court before the
applicant established its case. In this regard, the death of Mr. Robertson
makes the task of the Court that
much more difficult. To a large degree, the
applicant's case is based upon conversations between Mr. Figgins and Mr.
Robertson. Mr.
Figgins only can give evidence of those conversations. He has
given that evidence and much relies upon his credibility as a witness.
The
respondent cannot call Mr. Robertson to give evidence. The respondent is
unable to seek information from Mr. Robertson from which
to cross-examine Mr.
Figgins. The applicant's case may have been affected adversely by evidence
given by Mr. Robertson. In this respect,
counsel contended that the Court
should scrutinize with great care the evidence of Mr. Figgins relating to
statements made by Mr.
Robertson as well as the other witnesses' evidence of
alleged statements made by Mr. Robertson. He referred to what Isaacs J. said
in Plunkett v. Bull [1915] HCA 14; (1915) 19 C.L.R. 544 at pp.548-9 -
"Then we come to the question how far the onus of proof which lay upon the plaintiff was satisfied. She had the burden of establishing the original creation of the indebtedness of the deceased to her, and undoubtedly it is established that in cases of this sort the Court scrutinizes very carefully a claim against the estate of a deceased person. It is not that the Court looks on the plaintiff's case with suspicion and as prima facie fraudulent, but it scrutinizes the evidence very carefully to see whether it is true or untrue."
This is accepted, but at the same time, the applicant should not be
penalized by the death of Mr. Robertson. In the present case,
the applicant's
claim is based on grounds including a contravention of s.52 of the Act, and
until final submissions, an allegation
of fraudulent misrepresentation. The
civil standard of proof applies, and with necessary adaptions, I adopt what I
said in Trade
Practices Commission v. Ansett Transport Industries (Operations)
Pty. Ltd. [1978] FCA 21; (1978) 32 F.L.R. 305 at p.329 -
". . . referred to Briginshaw v. Briginshaw ((1938) [1938] HCA 34; 60 C.L.R. 336) per Latham C.J. at pp.343-4 and Dixon J. at pp.360, et seq., the well-known passages relating to the 'degree of persuasion of the mind according to the balance of probabilities and the gravity or otherwise of the fact of whose existence the mind is to be persuaded'. See Rejfek v. McElroy ((1965) [1965] HCA 46; 112 C.L.R. 517, at p.521). This latter case does not detract from the opinions expressed in Briginshaw v. Briginshaw. In the present case the civil standard of proof is to be applied, but I keep in mind the gravity of the consequences resulting from a finding that the acquisition of the shares constitutes a contravention of s.50 of the Act."
Before considering the evidence in detail, I desire to make some general comments concerning my impressions of Mr. Figgins, Mr. Alter and some of the other witnesses. Mr. Figgins is the managing director of the applicant and the major shareholder in that company. He is an astute businessman, and through a number of companies conducts and controls a large number of retail shoe shops in Melbourne and Sydney. To a remarkably large extent he exercises a detailed control over those shops. He was expanding his business at a great speed and often at the utmost limits, or even beyond those limits, of his financial resources. He was far-sighted and planned far ahead, but at the same time retained a large degree of personal control of the activities of individual shops. He did not like delegating authority, although he left the detail of his financial arrangements to others. Nevertheless he had a remarkable knowledge of the whole of his business activities. He was subjected to a long, careful and competent cross-examination. After seeing and hearing him during the four days that he gave evidence I find that his recollection of facts was good, he was not evasive, and that essentially he was a witness of truth. At the same time he was not the innocent victim he at times appeared to be. He was a tough, experienced businessman not averse to acting in a deceptive manner. When he first heard of the possible development, he attempted to ensure that he would be the only retailer of shoes operating in the Mall. He obtained a letter of undertaking dated 28 November 1975 from Hanover Freeholds Pty. Ltd., which, for present purposes, can be treated as a related company of the respondent, in favour of the applicant under which the applicant in substance was to have the first offer of shops in the proposed development, and that named competitors of the applicant were not to be granted leases in the Mall. Mr. Figgins forwarded a copy of that letter of undertaking to Mr. Robertson at about the time negotiations began between them concerning the proposed leases in the Mall. Mr. Figgins could be very devious. After he knew that his venture into the Mall was not the financial success he had anticipated he made no formal complaint concerning the alleged misrepresentations. Although a formal letter of complaint was written on his behalf by the solicitor for the applicant in April 1980, he raised no formal complaint to Mr. Alter, a director and joint controller of the respondent. One of his reasons for not making complaint was that he was trying to induce Mr. Alter to take over the development of a site he, Mr. Figgins, had purchased in Sydney to develop into a shopping mall. It was only after he failed in doing this that he commenced action in the Federal Court in September 1980, some nine months after he knew that many of the representations he alleged had been made were in fact untrue.
Mr. Figgins had no hesitation in manipulating events for the financial advantage of his companies. He regularly did not pay rent when it became due, not only with respect to his shops in the Mall, but also with respect of other shops leased from companies related to the respondent. Many writs were issued against his companies for arrears of rent. Mr. Figgins was astute in persuading the respondent and its related companies to accept belated payments. Likewise, he was able to induce the respondent and its related companies to accept reduced rent based upon various factors including a depressed market and noise being caused by construction work. At all relevant times the finances of his companies were dangerously extended and he had serious cash flow problems which he was trying to resolve by what can be described as dubious commercial practices.
Mr. Figgins is an ingenious thinker. He was able to put into effect plans for the construction of an intermediate level linking his three shops in the Mall, thereby making use of space which otherwise would have been wasted. The construction work was carried out at the expense of the applicant, but by doing this it was able to obtain storage space for its shops rent free. This illustrates the fact that he was able to see possibilities and had the ability to turn them to his own advantage even though, as in this respect, at the urging of Mr. Robertson.
Before entering into the leases of the shops, Mr. Figgins obtained legal advice concerning their terms and as a result a number of standard terms of the leases were varied in favour of the applicant. He was not a man easily mislead and always attempted to turn all matters to the benefit of his companies.
Despite all these views of Mr. Figgins I find him a witness to be relied upon. Although documents which tended to establish all these matters, as well as other matters going to credit, were put to him in cross-examination, he made no effort to evade the issues or to dispute the conclusions to be drawn from them. On the facts of this case he did not comply perhaps with the traditional morality applicable to commerce, but this does not affect adversely my impression of him as a witness of truth.
Mr. Alter gave evidence also. He, together with a Mr. Fayman, controlled the respondent. Earlier three persons, Mr. Alter, Mr. Fayman and a Mr. Herscu controlled Hanover Developments Pty. Ltd. which, in substance, was a joint venture of those three. Some years ago that joint venture was divided and thereafter Mr. Alter and Mr. Fayman controlled a number of related companies, including the respondent and Pacific Shopping Centres Pty. Ltd., the managing company for the Centrepoint Mall. The building construction works for the Mall were carried out by another related company, Centrepoint Custodians Pty. Ltd. Mr. Alter did not have many meetings with Mr. Figgins, and his evidence is not crucial in the challenge to the credibility of Mr. Figgins on most issues. Nevertheless, his presence in the witness box was of importance. I found him an unsatisfactory witness. He was evasive and had an unfortunate habit of either not knowing or forgetting any fact which I would have expected him to know or remember, but which he thought would be adverse to the respondent. Obviously he is a man of great ability and able to make a financial success of his various activities. He appeared to be an astute businessman, and from observation I formed the view that he knew a lot more of the details concerning the development of the Centrepoint Mall, including the leasing arrangements, than he was prepared to admit. A committee comprising Mr. Alter, Mr. Fayman, Mr. Robertson and a Mr. Axup, who was the project manager for the building of the Mall, met regularly during the crucial period of construction and letting. The decisions were made by Mr. Alter and Mr. Fayman, but during this period Mr. Fayman was overseas for much of the time thus letting Mr. Alter make the decisions on his own. Reports were prepared by Mr. Axup from information supplied to him, including information from Mr. Robertson. Mr. Axup kept the minutes of the meetings of the committee. These documents have been a useful source of contemporaneous information. Despite the fact that Mr. Alter must have known of the reports and minutes at the time they were prepared and of the facts recorded, his recollection of those facts was extremely bad. A document produced from Mr. Robertson's papers in the custody of the respondent showed the rents that Mr. Robertson claimed he would be able to get for the shops in the Mall and the next highest range of rents suggested by another estate agent who, apparently, had been asked to report. The respondent chose Mr. Robertson to act as its agent and the terms of his appointment are set out in a document dated 16 December 1977 and signed by Mr. Alter and on behalf of Mr. Fayman. There can be no doubt that the rents for the shops at the Mall were extremely high when compared with rents for shops of a similar kind in arcades in areas near the Mall. Mr. Robertson then had the task of inducing tenants to enter into leases for shops in the Mall at those high rentals. The scene was set for hard selling by Mr. Robertson. Mr. Alter must have expected this. In this regard, the evidence of Mr. Alter and my impressions of him achieved an importance greater than the direct effect of his evidence. The impression gained is that Mr. Robertson had placed himself in a position where he had to go to extreme lengths in an attempt to achieve the results which he had promised Mr. Alter. Mr. Alter was prepared to do all things to help Mr. Robertson to achieve those results. The scene was set for the conduct to be engaged in by Mr. Robertson which gives rise to the present claim by the applicant.
In this respect the evidence of the witnesses connected with the other tenants in the Mall is important. Generally speaking, I found those witnesses honest and attempting to tell the truth to the best of their recollection. They were not persons with the business experience and devious turn of mind of Mr. Figgins. The effect of their evidence was to establish conduct by Mr. Robertson remarkably consistent with what could be expected of a person in the position of Mr. Robertson and as appearing from the brief summary concerning Mr. Alter and Mr. Robertson relating to the leasing arrangements for the Mall. The evidence of the conduct of Mr. Robertson given by those witnesses bears a striking similarity to the evidence of the conduct of Mr. Robertson given by Mr. Figgins. In those circumstances, the Court more easily finds the conduct proved. In addition, it must be established that Mr. Figgins knew of that conduct and acted upon it. In this last respect, it must be said that Mr. Figgins acted upon that conduct because he believed that the whole concept would be a financial success leading to the financial success of his own business. His expectations were not to be fulfilled.
The substance of the assignment given by the respondent to Mr. Robertson as
set out in the document dated 16 December 1977 was to
seek out and obtain a
suitable tenant mix for the Centrepoint Mall development at rents which
equalled or exceeded a specified budget
of net returns, i.e. the expected net
cash receivable on a fully paid-up basis for the first year of operation and
in accordance
with leases for the basement, ground floor, first floor and
second lower floor for a total of $2,508,000 p.a. with certain areas
excepted.
The fee for the assignment was 5.18% of the total budget net rents. The
general obligations of Mr. Robertson were -
"a) Seeking out and obtaining a suitable tenant mix and selection at net rents
which equal or exceed budgets.
b) Conducting lease negotiations with tenants and in conjunction with Hanover
staff bringing same to a satisfactory conclusion.
c) Provide an epitome of the lease together with a statement of lessee
requirements. This is to be in the form of an application form
properly
completed (with deposit monies) and signed by the prospective tenant.
d) Co-ordinate with Architect, Consultants, Builder and Project Staff at
planning and project meeting and at other times decided necessary
in relation
to tenant mix and leasing only.
e) Co-ordinate in any other activities relevant to the tenant mix and
leasing.
f) Your firm is accountable to the directors of Hanover (or their nominees in
writing) for the satisfactory performance of your responsibilities.
g) Your Mr. Robertson is to personally attend to our account and be responsible for its progress and completion."
The concept of tenant mix is of importance. The financial success of shopping ventures similar to Centrepoint depends largely upon compatible and competing traders attracting potential customers. The absence of a proper tenant mix is one of the major complaints by the applicant. The budgetted net rents were in accordance with the rents Mr. Robertson had assessed could be obtained. His assessment was $2,592,673. The assessment of the other agent, who acted as agent for the respondent or related companies with respect to other developments, was $1,399,638.
An important document for the purposes of this case is a brochure prepared
on behalf of the respondent and approved by Mr. Alter
depicting the lay-out of
the Mall, the position of the shops, the existence of the walkways and a
sketch of the Bourke Street entrance
to Centrepoint. The sketch was explained
on the brochure as, "You are in Bourke Street Mall, looking into Centrepoint
Mall . . .
Melbourne's new Mall-to-Mall retail environment". A certain degree
of artistic licence can be expected, and for the purposes of this
case the
drawings of the persons appearing in the sketch can be ignored. The overall
effect of the sketch depicts an attractive entrance,
open and easily seen from
Bourke Street. From the ground floor wide escalators ascend to and from the
first floor and descend and
ascend to and from the basement. The scene is
spacious. There is nothing cramped or mean about it. It looks inviting and
attractive
and commands attention. It depicts a strong invitation to enter,
browse and buy. People in Bourke Street are able to see clearly
along the
walkways on the ground floor as well as the basement and the first floor
level. Shops at lower levels can be seen clearly
from Bourke Street. The
overall effect is most inviting and attractive. The brochure was designed to
attract potential lessees and
for this purpose was very effective. It had the
following statements endorsed on it -
"Now leasing:
CENTREPOINT MALLThe new way through to Melbourne's Bourke Street Mall
Centrepoint Mall ushers in spacious walkways will
an exciting new era for City facilitate the pedestrian
retailing. It creates an flow throughout the
opportunity for retailers centre.
where before there was none.
The concept of a mall shopping Melbourne's Bourke Street
environment that will blend Mall will create a new
with the City Council's new pace for pedestrians -
Pedestrian Mall is refreshing relaxed, more leisurely.
and original. It will become a centre
for Melbournians to meetFive city buildings have been Mall is designed to become
and mingle. Centrepoint
to open in November '78,All floors flow from Bourke, and it's a retail oppor-
P.O. Box 387,The vast basement has been South Melbourne, 3205.
Advertisements containing the sketch and similar wordings were inserted in the press.
The first meeting between Mr. Figgins and Mr. Robertson took place as early as the beginning of 1977, i.e. before Mr. Robertson had received his signed assignment and before the brochure was provided. At that time Mr. Robertson did not know of the existence of the letter of undertaking dated 28 November 1975. Mr. Figgins was keen to become a lessee in the Mall and he intended to keep his preferred position against competitors. Under cover of a letter dated 10 February 1977, he forwarded to Mr. Robertson a copy of the letter of undertaking. The letter referred to recent discussions between Mr. Figgins and Mr. Robertson. Apparently at that early meeting Mr. Figgins told Mr. Robertson that he wanted shops in the Mall preferably opening on to Bourke Street.
Before considering the particular allegations made it is important to note the crucial dates of July 1978 and September 1978. The detailed discussions between Mr. Figgins and Mr. Robertson concerning the proposed leases in Centrepoint commenced early in the year 1978. The application for the tenancy of shops G15, 116 and part 112 is dated 3 July 1978, while the application for the tenancy of shop 112 is dated 20 July 1978. The two leases for those shops are each dated 22 September 1978. The Mall opened for trading on 10 October 1979. Some tenants made complaints to the respondent almost immediately and groups of tenants combined to present their complaints to the respondent. Early in the year 1980 solicitors' letters were being written demanding relief against the respondent. Although aware of those actions, the applicant did not take any overt action until a letter of demand in April 1980. Legal proceedings were not commenced by the applicant until September 1980.
The applicant caused the intermediate level to be constructed connecting shop 112 with an intermediate shop level between shop G15 and shop 116. That intermediate level was to be and is used as a store for all three shops and was constructed at the cost of the applicant. For this purpose the applicant made use of the architect engaged by the respondent or its related companies for the construction of the Mall, namely Mr. Barnard-Brown. Shop 112 is situated on the first floor level. Shop 116 is situated on the lower second floor level. Shop G15 is situated on the ground floor level directly below shop 116. Internal stairways link G15 and 116 to an intermediate shop level which can be entered by the public only from G15 or 116. Retail sales to the public take place on that intermediate shop level between the two shops as well as from G15 and 116. A door gives entry from that intermediate shop level to the store-room and another door gives entry from shop 112 to the same store-room. The store-room is in the nature of a secret hidden room, the presence of which is not suspected by the passing public. The "up" escalators from the Bourke Street entrance go direct to the lower second floor level, even though the sketch on the brochure depicts them as going to the first floor level. Shop 116 is on the level at the top end of that escalator, but after reaching that point in order to reach the entrance to shop 112 a customer has to go down another escalator or a flight of stairs or walk around the side, front and third side of shop 116 and down a sloping walkway towards Little Collins Street and then turn to the right and to right again. In fact, one of the striking effects of the Mall is the confusion caused by the walkways, both level and sloping, the escalators, stairs and corners. It is easy to become disoriented and confused and it is easy to become lost as in a maze.
It is convenient to consider the allegations made in the order discussed by counsel for the applicant in his final address, namely paragraph (h), paragraph (c) (ii), a group of paragraphs (m), (e), (f) and (l), paragraph (d) and finally the group being paragraphs (k), (a), (j), (b), (c)(i). It will be recalled that the allegations contained in paragraphs (g), (i), (n), (o), (p) and (q) were abandoned.
At a meeting held early in the year 1978, probably in February, Mr.
Robertson met Mr. Figgins at the Richmond office of the applicant.
At that
time Mr. Figgins wanted a shop with a frontage to Bourke Street and another
shop with a frontage to Little Collins Street.
At that February meeting, Mr.
Robertson informed Mr. Figgins of the rent required for those two shops. The
rents were very high and
Mr. Figgins claimed he could not pay them. The
substance of the conversation and all following conversations is taken from
the evidence
in chief of Mr. Figgins -
"I said to Mr. Robertson these rents are ridiculous, they are much too high
and I cannot possibly afford that kind of rental. Then
he said to me, well you
must rember the opening of the centre will be in March 1979, and you must
consider the inflation between
now and then, that is taken into account in
these rentals. I replied to him, well I still think the rentals are ridiculous
and much
too high even taking that into consideration. Then he said to me,
well let me explain a little more about the centre, I do not think
you fully
realise the potential of this. He said, this centre is very much, will be very
much like Centrepoint in Sydney. He said
with added attractions, and then he
went on to explain to me what the attractions were.
He said there would be closed circuit television on the various levels where
the public could see the various facilities throughout
the centre. It would
help in traffic flow throughout the centre. Another point he said that there
would be a trade exhibition in
the development which would attract extra
people. He said also there would be a theatrette. They were going to retain
part of the
picture theatre and create a theatrette which also would give
added traffic flow to the centre. He said there would be a child minding
centre within the development. He had a plan on my desk in front of us and he
pointed to the front of Bourke Street and he said this
very wide frontage and
these two malls will create a funnel effect and create huge traffic flow into
the centre. I said to him, well,
yes, it looks very good; it is all very well,
but I consider the most important parts of the centre are the tenants
themselves and
the tenancy mix. Do you have many applications for tenants at
this stage?
I said a very important part of the centre would be the tenancy mix and the type of tenants, and he said to me he had hundreds of applications already, far more in each type of retail area than he needed to fill the centre. He would be very careful in his selection and select only the best retailers for the centre."
At the second meeting in about March 1978 Mr. Robertson had a plan of
Centrepoint with him and a copy of the brochure. A discussion
took place
concerning rentals of various shops. Mr. Figgins asked a Mrs. Thompson, the
Executive Director, to come to the meeting
to take notes of the rentals. Mrs.
Thompson gave evidence of what was said at that meeting and at a subsequent
meeting at which she
was present when the names of other proposed tenants were
mentioned by Mr. Robertson. Her recollection is not good, but her evidence
supports the substance of some of the evidence given by Mr. Figgins. At the
second meeting in 1978 Mr. Figgins asked Mr. Robertson
about outgoings -
"I said what is the total cost of the outgoings that I am going to have to
pay, and he said, the total of outgoings will be between
10 and 15 per cent of
the rental. He said for the purpose of calculating your costs you should work
on 12 per cent of the rental."
A discussion then ensued about the need for storage space for a shoe retail
shop. The conversation continued -
"Mr. Robertson then said to me, why do you not consider a shop inside the
centre, and I said I did not want a shop inside the centre,
and he said, but I
do not believe that you really appreciate how good this centre is going to
be.
Then he went on to explain more about the centre and to sell me on the whole
concept, I think, because he said to me, there is going
to be a complete
gourmet food centre in the basement which will pull traffic like the food
centre in Sydney, in the complex in Sydney.
He said there will be over 20
countries represented in different types of food stores. He also said there
will be a delicatessen
area very similar to the delicatessen area in the Myer
food section.
Then we talked about the ground floor and he said he had far more tenants than he needed from all over Australia to fill the ground floor and he would only select from Australia's top retailers for that area as it is the most important area."
Reference was then made to the fact that Mr. Figgins conducted a shop at
Centrepoint Sydney and the conversation continued -
"Well, he asked whether it was successful and I said, yes, it was very
successful, and he said, is not that inside the complex, and
I said, yes, and
he said, then you should know what to expect from this centre because it is
going to be very similar in the tenancy
mix and quality of tenants and concept
as that particular centre.
He said an area that would specifically be of interest to me would be the first floor area and, you know, naturally I questioned why and he said this is going to be very much like the gallery level of Centrepoint in Sydney in its concept, quality of tenants and tenancy mix. He said the whole area would be fully carpeted and he would only have high class, high fashion and accessory boutiques on that level."
At this meeting Mr. Robertson handed the brochure to Mr. Figgins. In
addition, Mr. Figgins had seen the advertisement in similar
form in the
"Herald" on Saturday, 18 March 1978. In relation to the brochure the evidence
is -
"Firstly, he opened this up and he said this is how the centre will look.
Then he turned it over and he marked a shop. The number is G.O.4, but it is
not just that shop. It is a section in behind that as
well and he suggested
that I might be interested in that shop because of the large area at the back
and he could do a cheaper rental
which would enable me to have storage behind.
However, he said this shop is on offer to Rarity Menswear and that if they did
not
sign the lease within the next couple of weeks then I could have the shop.
He also said there is an area on here in orange and he
offered those shops as
well and said that they would also be very suitable.
They are G.14 and G.15, and also on the first floor 114.
He said we could have a shop on the upper level, also on the ground, and there
was enough height between for a mezzanine floor which
would be very suitable
for storage and he suggested that I should consider that as well."
Mr. Robertson left the brochure with Mr. Figgins and that brochure was tendered as an exhibit in the hearing.
A further meeting occurred either late in March or early in April -"At this meeting Mr. Robertson told me I could not have that Rarity shop any more and I asked why and he said, 'Well, Rarity have taken it'. I asked again, 'Well, has it actually been leased, has Rarity actually signed the lease?' and he said, 'Yes'. So then discussions centred around the other shop on that pamphlet and he produced a new plan, a large plan with a transparency that laid over the top. He proceeded to explain how the other shop could be linked to the first floor and how I could have a storage area, and whatever."
A further meeting occurred in April at which Mr. Robertson produced a plan
prepared by Mr. Barnard-Brown. A number of conversations
took place concerning
that plan and alterations to it. A series of meetings took place including
meetings with Mr. Barnard-Brown.
A rental for the area was discussed and
negotiations took place between Mr. Figgins and Mr. Alter and an amount was
agreed upon.
The terms of the agreement were contained in a letter from the
applicant to Mr. Robertson dated 9 May 1978. Difficulties arose relating
to
the obtaining of municipal approval for the proposal. Eventually the
application for tenancy of shops G15, 116 and part 112 was made by the
applicant on 3 July 1978. The application sets out the name of the lessee, the
shops to be leased, the area of the
shops and that the uses of the shops were
to be for retailing of ladies' and men's fashion footwear, accessories and
fashion clothing.
The lease was to be for a term of six years with two options
for a further six years each, and the commencing date was to be March
1979.
The rent was $84,000 per annum and a deposit of $7,000 was paid, being one
month's rental in advance. There was provision for
rental review every two
years and, failing agreement, rental to be determined by an arbitrator. The
application for tenancy was a
pro-forma document provided for all persons
seeking to become tenants of the centre. Included in it is the following -
"Rates & Taxes, Common Area Outgoings, Merchants Association contribution
payable by lessee."
Special conditions were inserted as follows -
"Store area between ground and first levels to be provided over shops G12, 13,
14 & 15. By the Lessor at the cost of the Lessee in
accordance with detailed
plans to be provided by Lessors architect to approval of Lessor and Lessee,
such area to be occupied rent
free and not to be taken into account in any
rental review under the lease or any extension thereof."
A further special condition was typed in as follows -
"The Lessor agrees that no other Lessee in the Centrepoint Mall will be
permitted to sell footwear."
There is also typed in a notation, "This application is subject to the Applicant's Solicitors' approval of the formal lease".
In the letter forwarding the tenancy application to the respondent the
applicant included the following statements -
" . . . you will note that the application has been completed subject to my
Company's Solicitors' approval of the formal lease, and
that the lease will
provide that no other lessee in the development will be permitted to sell
footwear.
Noting that the rental payable is high, and in order for my company's tenancy to be viable, it is vital that the overall development and project is successful. Accordingly, to enable me to further assess the project's prospects, I request that you furnish me with details of the prospective Lessees in the development."
A letter from Mr. Axup to the applicant dated 7 July 1978 confirmed that Mr. Robertson would provide to the applicant a list of prospective tenants from whom signed leasing applications had been received. Mr. Robertson failed to do this.
A further meeting took place between Mr. Figgins and Mr. Robertson and the
following conversation is set out -
"He (Mr. Robertson), brought along the plans of the centre and he mentioned to
me that the shop 112 was now available, they have overcome
the problems with
the council, and that I should consider now that shop. I said, 'Well, firstly,
I'm much more interested in knowing
what the tenancy mix is and who the
tenants are' so I asked specifically, 'Who are all the tenants?' He opened up
the plans on my
desk and I called in Mrs. Thompson, because I wanted her to
have a look at the tenancy mix and the tenants.
I noticed that there were not any names on these plans, there were just the
types of shops that they were going to be written on them;
in other words,
there was 'ladies fashion' written on the plan and I pointed to that and I
asked Mr. Robertson, you know, 'Who is
that shop?' He would give me the name
of the retailer. He said, 'I can't tell you all the retailers in the centre'
and I wanted to
know why and he said, 'Because I have to keep it confidential,
I promised them that I would keep this information completely confidential,
the same as I promised you'. I had previously asked him to do the same.
I said I had to know who the tenants were because I must - I had to be able to
judge the viability of the centre, I would have to
know who was going in
there. He said: I can tell you a few but I cannot tell you many of them. So
then he proceeded to tell me some
of the names.
Among the names he mentioned to me there was Rarity, there was Portmans, Just
Jeans, there were Dunklings, Edments, Gucci, Cue.
I do not remember others that he mentioned to me. He did not mention many more
names than that, actually, and I was not happy with
that, and I said - I asked
him the question: 'Well, how much of the centre is actually leased at this
point of time' He said, 'Well,
the whole of the ground floor is leased, apart
from yourselves, and 90 per cent of the first floor is taken.' He said 'If you
don't
hurry up and make up your mind on that shop 112, I can't hold it
forever'.
'It is in a key position, in the heart of the gallery level and, you know, it
will go'. I had to make up my mind from that."
The applicant agreed to take a lease of shop 112. Mr. Figgins then said in
evidence -
"Some of those names are very large businesses and quite important traders in
the city, especially Portmans. This was of interest
to us because it was
women's fashion, it is a good women's fashion shop, and they are a very large
company, they pull a lot of traffic;
so that one in particular was of special
interest to us.
It is very important to us. I would say the potential of any centre rests on the tenants that are in there, because that is the drawcard of any retail business, the retailers there, and the difference between a one-shop operator that does not have the contacts and cannot get the right merchandise and one that has a lot of pull and a large retailer that can buy well - the difference in pull is the difference of night and day. We only look for centres where we have top retailers in and around us."
In relation to shops 112 and 116 Mr. Figgins said he expected that the area would be exactly like the gallery level of Centrepoint in Sydney and that Mr. Robertson said that the area would be very much like the Centrepoint Gallery Level in Sydney.
The application for tenancy for shop 112 is dated 20 July 1978 and is in a similar form to the earlier application. The use of premises is to be the same. The term is to be the same. The annual rental was $25,750. The special condition is stated to be "Nil. (Refer signed leasing application form for shops G15, 116 and part 112 dated 3 July and out letter of July 7th 1978)", and the application was made subject to the applicant's solicitors' approval to the formal lease. The letter from the respondent of 7 July confirmed the terms of the special arrangement in relation to the intermediate floor and that in the initial letting it was not proposed to lease premises to any other ladies' footwear retailer.
I find that the conversations between Mr. Figgins and Mr. Robertson as set out did occur and were substantially as given in evidence by Mr. Figgins.
The allegation contained in paragraph (h) is -"(h) The applicant's share of maintenance charges and outgoings which were to be payable by the applicant would be around 12% of the rental payable and would not exceed 15% of that rent."
On the evidence, I am satisfied that Mr. Robertson, in the course of conversations, did mention to Mr. Figgins that the outgoings would be between 10 - 15% of the rent, but that he should act on a percentage of about 12%. In fact, the outgoings were in excess of 15%. A more realistic estimation would have been 20 - 25%, but even that would have been speculation in 1978. In fact, 20 - 25% was the estimate reached by officers of the respondent and advised to Mr. Alter and expressed in a letter dated 17 May 1979 from Mr. Axup to the respondent's solicitor. Even at that date a warning was given as to the uncertainty and unreliability of that estimate. Apart from one, all the relevant witnesses gave evidence of conduct by Mr. Robertson in relation to his estimate of outgoings or overheads compared to rent, and these ranged from about 10% to about 15%. The odd man out said Mr. Robertson told him about 20%.
A difficulty arises in relation to what is meant by the word "outgoings" and what Mr. Figgins understood that word to mean, or rather in the context of the facts of this case what was the meaning to be given to the word "outgoings". Initially at least, municipal rates, both local government and Board of Works, and State land tax were not to be levied on individual shops. One set of rates was to be levied on the whole building and apportioned to the tenants. In addition to those statutory rates commonly referred to as outgoings there were other expenses to be incurred by the respondent in relation to the common areas. These additional expenses were to be apportioned between the tenants. The community outgoings were difficult to assess prior to the completion of the Mall. There is no common method by which these various groups of outgoings and expenses are dealt with in other developments. In some cases one course is adopted, while in others a different course. An examination of the position with respect of other shops leased by the applicant shows there was no common pattern. Normally, one would expect "outgoings" to include statutory rates only. In another sense outgoings include charges for services and utilities such as electricity. At the same time prospective lessees are concerned to know the total amount of payments required to be made in addition to rent to enable them to occupy the leased premises. A total figure is desired to enable the proposed tenant to make an assessment of the viability of the business to be undertaken in the leased site. The applications for tenancy draw a clear distinction between three classes of payment apart from rent - namely, (1), rates and taxes; (2), common area outgoings; and (3), Merchants' Association contributions. The leases, all in a standard form, draw a distinction between "outgoings" and "apportionable outgoings". Outgoings are treated as municipal rates and other statutory charges imposed in respect of shops leased under the lease. These outgoings related to what are described as "rates and taxes" in the application for tenancy forms. The leases make other provisions for what are described as "apportionable outgoings" which are defined to cover a large number of expenses, including depreciation, and costs incurred by the respondent with respect to common areas including rates and taxes imposed with respect to those common areas. Apportionable outgoings can be equated to "common area outgoings" referred to in the application for tenancy forms. Under the leases, the lessees are required to become members of the Merchants' Association and can be charged contributions up to a maximum of 5% of the annual rent. This charge corresponds with the third type of charge referred to in the application for tenancy forms. The maximum amount of those contributions can be ascertained. The amounts of the other charges were incapable of accurate estimation, but the amounts of the rates and taxes were more susceptible to accurate estimation than apportionable outgoings.
As I have said, I am satisfied that Mr. Robertson stated that his estimation of the outgoings would be between 10 - 15% of the rent. That statement was made without any attempt to remove confusion as to what was included in the word "outgoings". The statements were made in a form which indicated that apportionable outgoings were to be included. In fact, counsel for the respondent made submissions to the effect that the apportionable outgoings approximated 15% of rent. In any event, because of the fact that the storage area leased by the applicant was leased rent-free but was to be included for the purposes of outgoings and apportionable outgoings, distorted percentages arise when compared with rent. To the extent that the statements were confusing, they could constitute conduct which was misleading or deceptive under s.52 of the Act. Mr. Robertson either knew or should have known that the estimation of 15% for all outgoings and apportionable outgoings was misleading, but he made no attempt to correct that misleading conduct. In the present case, however, I am concerned only with the effect of that conduct on Mr. Figgins. I am not satisfied that Mr. Figgins acted or relied upon that conduct, or more particularly I am not satisfied that he caused the applications for tenancies and the leases to be signed and executed by the applicant in reliance in any respect on that conduct.
From his experience with the other shops being conducted by the applicant, Mr. Figgins knew or should have known that charges in the nature of the apportionable outgoings when added to normal outgoings exceeded by far 15% of the rent paid for those shops. In addition, Mr. Figgins sought legal advice concerning the terms of the leases, and as a result hard bargaining took place between the applicant, the respondent and their respective solicitors resulting in special concessions being granted to the applicant. In particular, the definition of apportionable outgoings contained in the leases was varied to make the relevant clauses that much less onerous for the lessee than in the standard form of lease. If the applicant had been relying or acting upon the conduct of Mr. Robertson in this respect the simple solution would have been to insert a proviso that the total amount of outgoings and apportionable outgoings would not exceed 15% of the rent payable. This was not done.
The applicant does not make out a case based on paragraph (h).
The allegation contained in paragraph (c)(ii) is -"(c) (ii) The ground floor at the Mall was fully leased apart from the applicant's shops and that 90% of the shops on the First Floor boutique area had been taken."
Mr. Robertson was carrying out the terms of his assignment to seek lessees for the Mall. The words he used to Mr. Figgins have been set out. He was receiving many enquiries but few applications for tenancies. Even fewer leases were being executed. Some confusion exists as to whether Mr. Robertson considered applications for tenancies as being equivalent to leases, but the result does not depend upon a distinction of that kind. Mr. Robertson was the perpetual optimist and considered as an existing fact what he hoped might eventuate. The evidence shows that he used this technique in an attempt to induce potential lessees to make applications for tenancies even though there were variations in words used. The tenancy reports being prepared by officers of the respondent and made available to Mr. Alter and to Mr. Robertson showed a very different picture to that painted by Mr. Robertson to Mr. Figgins. The respondent was having very real difficulty in obtaining lessees. The rents were very high and potential lessees were wary of entering into leases. The leasing reports, particularly those of July 1978 and October 1978, show a small number only of leases and not many more applications for tenancies. Mr. Robertson received copies of those reports, and although it is not necessary for the purposes of s.52 of the Act to establish that a person engaging in the conduct therein referred to knew that the conduct was misleading or deceptive, nevertheless on the facts found I am satisfied that Mr. Robertson knew that his statements concerning the number of shops already leased were false. In fact, the difficulty in obtaining lessees continued right up to the opening of the Mall, but in order to be successful it was important that the Mall have a full house of tenants when it opened.
I am satisfied that Mr. Figgins relied and acted upon this conduct of Mr. Robertson. The applicant makes out a case based upon paragraph (c)(ii).
The allegations contained in paragraphs (m), (e), (f) and (l) are -"(m) The Centrepoint Mall would possess the characteristics and have the appearance of the Mall as set out in the brochure handed to the applicant.
(e) The Trade Exhibition and theatrette proposed to be conducted at the Mall
would attract a large number of people in addition to
normal passing traffic.
(f) There were to be two entrances to the Mall from Bourke Street which would
permit and allow greater passing traffic through the
Mall between Little
Collins and Bourke Street.
(l) The Centrepoint Mall was to have closed circuit television which would assist public movement in and around the Centre and help the public to become aware of the facilities available to the public at the Centre."
I am satisfied that the applicant has made out a case based upon paragraphs (m) and (l). I am not satisfied that the applicant has made out a case based upon paragraphs (e) and (f).
The nature of the brochure has been described. Its purpose was to attract potential lessees. Copies were given to the other witnesses who gave evidence concerning enquiries for leases. The brochure was relied upon by the respondent as an important selling feature for prospective lessees. Even allowing for artistic licence, the sketch on the brochure is deceptive and misleading under s.52 of the Act. The Mall was in the course of construction when the applicant made its applications for tenancies and entered into the leases. Mr. Figgins had to rely to a large degree upon the brochure to visualize the completed Mall. He was given the brochure early in 1978. I find he relied upon it and acted upon it.
In reality, the appearance of the Mall from Bourke Street bears no resemblance to the sketch depicted on the brochure. In fact there is a large diamond-shaped support column directly in front of the escalators thus blocking the open aspect depicted in the brochure. A plan in the brochure shows a round column placed there, but that is completely ignored in the sketch. The escalators are much narrower and steeper than those depicted in the sketch. The entrance in fact is rather narrow and congested and has a rather mean appearance. The existence of the shops in the Mall is hard to define. The centre escalators give access to the first floor which, at the top point, in reality constitutes the lower second floor level. It will be recalled that shop 116 is at that level, but shop 112 is at a lower level and can be reached from Bourke Street only in the manner described earlier. The effect of this added height and narrower escalators is that the shops in the Mall at the top of the escalators, as well as in the basement, are difficult to see from the street, and the shops on the first floor level do not have the wrap-around effect depicted in the sketch. The Mall does not have the inviting and attractive entrance depicted in the sketch. It does not possess the characteristics nor does it have the appearance as depicted in the sketch.
The evidence given by Mr. Alter relating to the brochure, the escalators and
the closed circuit television was most unsatisfactory.
He had approved the
sketch before it was printed. In evidence he attempted to justify the Mall as
being consistent with the sketch.
He prevaricated and attempted to avoid
answering questions in cross-examination. This can be illustrated in
particular by his evidence
concerning the width of the escalators and the
closed circuit television. The brochure states -
"Closed circuit TV will provide a visual link between floors, while wide
escalators . . . and spacious walkways will facilitate the
pedestrian flow
throughout the Centre."
In the context of the Mall, the escalators are not wide. No closed circuit television was provided. There is no visual link between floors. There may have been technical difficulties with television screening but the substitution of a moving sign outside the Mall does not constitute a replacement for the television.
The plans on the brochure depict an area labelled "Exhibition Trade" on the second floor and a "Theatrette" in the basement, as well as two entrances to the Mall from Bourke Street. To that extent representations were made to Mr. Figgins and for that matter to the other witnesses who had been given copies of the brochure, of those facts. None of those features eventuated. The brochure continued to be relied upon by the respondent even after decisions had been made not to provide those facilities. Nevertheless, on the evidence I am not satisfied that Mr. Figgins, in causing the applicant to make the applications for tenancies or to execute the leases, relied or acted upon any of those representations.
The applicant conducted a shoe shop in the basement of the Leviathan building contiguous with the proposed theatrette. Before making the applications for tenancies he had negotiated with Mr. Robertson concerning the possibility of linking the Leviathan shop to the basement of the Mall. This could have been done only on the basis that the theatrette was not being proceeded with. Technical difficulties prevented the linking of that shop with the Mall. Apart altogether from the evidence of Mr. Barnard-Brown, I find that Mr. Figgins either knew or must have known that there was to be no theatrette at the time the applications for tenancies were made.
Likewise, the plans annexed to the lease of shops G15, 116 and part 112 to identify the shops, the subject of the leases, depicted that the second mall did not open on to Bourke Street, I do not believe Mr. Figgins when he says he did not notice that from the plans. They are clearly defined in red. Further, the whole concept of the special development of shops G15, 116 and 112 was based on a walkway around three sides of G15. The walkway along the Bourke Street side of that shop is not shown on the plan in the brochure, but is shown on the plan annexed to the lease of shops G15, 116 and part 112. The numbers given to the shops as appearing on the brochure had been altered at the time the applications for tenancies were signed. From all these re-arrangements, Mr. Figgins either knew or should have known that the second entrance to Bourke Street had been closed and that the walkway had been re-directed to go past the Bourke Street side of shop G15 to meet with the other walkway near the escalators where that walkway entered into Bourke Street.
There is confusion as to what is meant by the trade exhibition, or rather the area marked "Exhibition Trade". No clear ideas had been formulated as to what was being planned, but an impression was given that it would attract persons to the Mall and thus increase the number of potential customers walking through the Mall. I am not satisfied that Mr. Figgins relied or acted upon that representation. His concern was with the appearance of the Mall, the number of shops that had been let, the types of businesses to be conducted and the names of the persons carrying on those businesses, particularly in the areas of the Mall near the shops to be leased by him.
The allegation contained in paragraph (d) is -"(d) The Mall would be open for trading by mid-March 1979."
In the brochure it is stated that the Mall is planned to open in November 1978. The applications for tenancies stated that the commencing date of the leases is March 1979. The Mall did not open for trading until October 1979. Rent and outgoings did not become payable by the applicant until October 1979. The Mall was in the course of construction. The shops being leased by the applicant were in the course of being constructed. There were delays in construction and delays in obtaining the requisite approvals from statutory authorities for the construction of the particular shops. The proposed opening date was being postponed from time to time. Mr. Figgins knew all of these facts. I am not satisfied that on these special facts this paragraph specifies conduct that was misleading or deceptive under s.52 of the Act.
The allegations contained in paragraphs (k), (a), (j), (b) and (c)(i) are
set out -
"(k) The Centrepoint Mall would attract a volume and quality of customer
similar to that attracted by Centrepoint Sydney.
(a) There would be many big name, strong and high quality traders trading
around the said shops and 'Rarity' would have a shop directly
opposite the
said shops.
(j) The Centrepoint Mall would be equal to the quality and standard of the
Centrepoint complex in Sydney.
(b) The first floor was to be a high class boutique area.
(c) (i) The upstairs shop being part Shop 112 was situated in a high class fashion boutique area."
I am satisfied that the applicant has made out a case based on paragraphs (a), (b) and (c)(i). I am not satisfied that the applicant has made out a case based on paragraphs (k) and (j).
It is accepted that to be successful a shopping complex of a type similar to
Centrepoint needs a proper tenant mix, high quality
traders who compete and
complement each other, and that well-known business names help to attract
customers to the complex thereby
increasing the number of potential customers
for all tenants. The concept of a tenancy mix was stated by Mr. Cummins, a
well-qualified
witness whose qualifications are referred to later. He said -
"The tenancy mix is really the quality of tenants in a premises. A good tenancy mix is one where one tenant leads a possible purchaser into the next tenant and vice versa, so if you get a good quality tenant in the beginning, if the person wanting to purchase does not purchase there he might go to a next door shop or the one after, and get a reasonable opportunity to get a similar quality of goods."
The first shop situated within the Mall that Mr. Figgins desired to lease had a large area suitable for storage purposes. Mr. Robertson told him that "Rarity" had a lease of that shop. "Rarity" is a well-known business name attracting customers and the shop being situated opposite shop G15 would tend to attract persons as potential customers of the applicant. Likewise, Mr. Figgins insisted on being told the names of other retailers who had leases of shops in the Mall. He was given names by Mr. Robertson, albeit reluctantly, despite a direction from the respondent. In fact Mr. Axup had advised against the giving of the names in view of the danger of misrepresentation claims, but Mr. Alter had overruled the advice of Mr. Axup.
Mr. Robertson gave the names to Mr. Figgins and they included names of well-known, reputable and attractive retailers whose businesses complemented the business proposed by Mr. Figgins. I find that Mr. Figgins relied upon the conduct constituted by those statements and made the applications for tenancies. The applicant has established grounds (a), (b) and (c)(i).
There is a Centrepoint shopping complex in Sydney. Plans and photographs of
that complex were tendered in evidence. In addition,
Mr. Cummins gave evidence
concerning Sydney Centrepoint -
"There is no comparison whatever. Here in Sydney you have probably the best
arcade of its type in Australia with quality tenants on
the one floor sitting,
or rather close to one another on one floor, and on the other floors you have
a different gradation of shop
type, a slightly lower level as you come down,
whereas in Melbourne you have a mixture of one or two quite good, with one or
two
quite poor. That, coupled with the fact that in Melbourne you have a most
extraordinary layout of walkways due to the design of the
building, whereas in
Sydney you have a direct walk through from one point to another, from one
focal point, which is Myers, to another
focal point at the other end, which is
of course David Jones, two of the leading stores of Sydney."
Sydney Centrepoint was discussed in conversations between Mr. Figgins and Mr. Robertson. In the absence of counsel, but with their consent, I had a view of Centrepoint Sydney as an aid to understanding the evidence. There are marked differences between the two complexes, but difficulty arises from an attempt to give any realistic meaning to the words used in conversations. I am not satisfied that the evidence discloses sufficient to constitute conduct under s.52 of the Act.
In the result, I am satisfied that the applicant has made out a case under s.52 of the Act based upon six of the eighteen paragraphs set out in the statement of claim, namely paragraphs (a), (b), (c)(i), (c)(ii), (1) and (m).
In his submissions counsel for the applicant contended that the applicant had suffered loss or damage by the conduct of the respondent done in contravention of s.52 of the Act and sought an order under s.82 for the recovery of the amount of that loss or damage. In addition, he sought orders under s.87 of the Act. He contended that the applicant had suffered and was likely to suffer loss or damage by that conduct and sought orders mentioned in s.87(2).
Before considering what orders should be made, a preliminary issue calls for
determination. Counsel for the applicant submitted
that in the absence of any
cross claim by the respondent, the Court was limited to the making of an order
in the form sought by the
applicant. His submission can be summarized as
follows -
"What the applicant is asking for and what the act gives is a right to
damages, and if that is the relief which the applicant chooses
and the factual
foundation for it exists, the applicant has an election, and if the relief
that he chooses is damages, and he is
otherwise entitled to it, damages is
what the applicant ought to have. In our submission it would not be open to
the court to say
to the applicant: We would rather give you some other form of
relief which we have got jurisdiction to give if you ask for it.
It certainly does not lie in the mouth of the respondent to say we want the court to exercise the powers under section 87. The respondent is not a party, who, on the facts proved, has any standing to ask for relief under section 87."
This preliminary issue is of importance. The statement of claim alleges that
the applicant suffered loss and damage in respect of
the shops, and the
particulars thereof in their amended form are -
"1. (a) Trading loss in the Miss F Shop G15 and 116 -
(i) for the 38 weeks to 30th June 1980 $116,967;
(ii) for the 6 months to 31st December 1980 $60,848;
(iii) The losses have continued since the 31st December 1980 and are
continuing.
(b) Trading loss in the Snob Shop 112 -
(i) for the 38 weeks to the 30th June 1980 $40,371;
(ii) for the 6 months to the 31st December 1980 $24,979;
(iii) The losses have continued since the 31st December 1980 and are
continuing.
(c) The cost of providing working capital for the said shops at the rate of 15
per centum per annum on the following figures:
(i) average stock $78,668;
(ii) equipment $7,678;
(d) Cost of fixtures and fittings for the purpose of opening up the said shops
being the total payable under the two leases of the
fixtures and fittings
$344,015.
Pay-out figure as at the 9th day of February 1980 was $216,288.12.
Value of the fixtures and fittings on the basis of being dismantled and
removed from the demised premises as at the 12th February
1981, $11,600.
2. Further and in the alternative to the trading loss the applicant claims the
difference between the rent due under the said leases
and the market rent of
the demised premises as follows:
(a) Shop 15 on the ground floor market rent $41,100 per annum plus rates and
land tax.
(b) Shop 112 on the first floor market rent $7,050 plus rates and land tax.
(c) Shop 116 on the first floor market rent $12,330 plus rates and land tax.
The difference in rent as set out above is continuing.
3. Maintenance charges and outgoings are being charged to the applicant which are far in excess of 15 per centum of the rental payable by it."
The primary claim made in submissions was for the recovery of the loss and damage suffered by the applicant up to the date of judgment and rescission of the leases from that date. The primary submission made by counsel for the respondent was that, assuming that the applicant established a case under s.52 of the Act, the Court should make orders under s.87 varying the amount of rent specified in the leases.
The submissions of counsel for the applicant on this preliminary issue are
rejected. The relevant parts of s.82 are -
"A person who suffers loss or damage by conduct of another person that was
done in contravention of . . . (s.52) . . . may recover
the amount of the loss
or damage by action . . ."
Jurisdiction to hear and determine that action is conferred by s.86 -
"86. Jurisdiction is conferred on the Court to hear and determine actions,
prosecutions and other proceedings under this Part and
that jurisdiction is
exclusive of the jurisdiction of any other court, other than the jurisdiction
of the High Court under section 75 of the Constitution."
The court referred to in that section is defined to mean the Federal Court of Australia.
Section 87 confers powers on the Court. Sub-sections (1) and (1A) are
complementary. In the present case the condition precedent to the exercise
of
powers under s.87(1) is the existence of the proceedings alleging
contravention of s.52 and in which the Court has found that the applicant has
suffered loss or damage by the conduct of the respondent in contravention
of
s.52. Alternatively, the condition precedent to the exercise of power under
s.87(1A) has been satisfied. In these circumstances, the Court has power,
namely it -
". . . may, whether or not . . . it makes an order under . . . s.82, make such
order . . . as it thinks appropriate against . . . (the respondent) . . .
(including all or any of the orders mentioned
in sub-section (2) of this
section) if the Court considers that the order or orders concerned will
compensate . . . (the applicant)
. . . in whole or in part for the loss or
damage or will prevent or reduce the loss or damage."
Sub-section (2) then lists a large number of wide-ranging types of orders that
may be made as indicating the wide nature of the discretion
conferred upon the
court -
"(2) The orders referred to in sub-sections (1) and (1A) are -
(a) an order declaring the whole or any part of a contract made between the
person who suffered, or is likely to suffer, the loss
or damage and the person
who engaged in the conduct or a person who was involved in the contravention
constituted by the conduct,
or of a collateral arrangement relating to such a
contract, to be void and, if the Court thinks fit, to have been void ab initio
or at all times on and after such date before the date on which the order is
made as is specified in the order;
(b) an order varying such a contract or arrangement in such manner as is
specified in the order and, if the Court thinks fit, declaring
the contract or
arrangement to have had effect as so varied on and after such date before the
date on which the order is made as
is so specified;
(c) an order directing the person who engaged in the conduct or a person who
was involved in the contravention constituted by the
conduct to refund money
or return property to the person who suffered the loss or damage;
(d) an order directing the person who engaged in the conduct or a person who
was involved in the contravention constituted by the
conduct to pay to the
person who suffered the loss or damage the amount of the loss or damage;
(e) an order directing the person who engaged in the conduct or a person who
was involved in the contravention constituted by the
conduct, at his own
expense, to repair, or provide parts for, goods that had been supplied by the
person who engaged in the conduct
to the person who suffered, or is likely to
suffer, the loss or damage; and
(f) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, at his own expense, to supply specified services to the person who suffered, or is likely to suffer, the loss or damage."
There is no doubt that in a clear case under s.82, the Court is under a duty to assess, on the evidence before it, the loss or damage suffered, no matter how difficult or complex that assessment may be. Assessment of the damages involves, in such a case, the question of causation. The section confers a right upon applicants to recover the amount of that loss or damage. Section 87 confers a discretion upon the Court, a discretion to make orders which it considers will compensate the applicant in whole or in part for the loss or damage. That discretion must be exercised according to law and in this regard reference may be made to the well known passages appearing in House v. The King [1936] HCA 40; (1936) 55 C.L.R. 499 per Starke J. at p.503 and per Dixon, Evatt and McTiernan JJ. at pp.504-5.
I reject any suggestion that the form of order to be made in this case is limited to the form of relief claimed by the applicant. Section 87 confers upon the Court a wide discretion to do justice between the parties. The Court should not restrict the exercise of that discretion by imposing upon itself technicalities which might defeat the policy of the section. No claim is made that the submissions of counsel for the respondent have caught the applicant by surprise. No application was made for an adjournment to enable counsel to consider and prepare a reply to the submissions of counsel for the respondent concerning the form of relief to be awarded. The Court is required to consider all matters properly before it and to make such orders under s.82 and s.87 as it considers appropriate. It must apply the law, but in doing that it must do justice between the parties. It must do what is fair between the parties.
Mr. Cummins was called by the applicant to give evidence. He is a highly
qualified and very experienced valuer. He has wide experience
in the managing
and letting of shops in various arcades in the City of Melbourne. He gave
evidence of what he considered to be the
current market value of the rents of
the shops G15, 116 and 112. The reasonable values of those rents were similar
in October 1978.
His valuations were based on the assumption that in addition
to the rent, the lessee would be required to pay the statutory rates
and
taxes, such as the municipal rates, the Board of Works rates and State land
tax, but that the lessor would pay common area outgoings,
namely the
apportionable outgoings as referred to and defined in the leases. In addition,
the lessee would be required to pay for
the services and utilities provided to
the shops. Mr. Cummins' valuations were -
Shop G15 - $41,100 per annum
Shop 116 - $12,330 per annum
Shop 112 - $ 7,050 per annum
On this basis, in Mr. Cummins' opinion the reasonable rent for the shops G15 and 116 and part 112 was $53,430 per annum.
Under the leases, in addition to the rent and the cost of services and
utilities provided to the shops, the applicant was required
to pay statutory
rates and taxes and apportionable outgoings. The amounts of rent under the
lease from the commencement date, 10
October 1979, and for the ensuing two
years were -
Shops G15, 116 and part 112 - $84,000 per annum
Shop 112 - $25,750 per annum
Mr. Cummins' opinion was that no rent should be charged for the storage area since it was constructed by the tenant at its own cost, but that the tenant should pay any statutory rates and taxes applicable thereto as well as the cost of services and utilities. The tenant should not pay or reimburse the lessor any sums being apportionable outgoings within the meaning of the leases.
No evidence on this aspect was called by the respondent, and I accept the evidence of Mr. Cummins. On this evidence, the direct damages suffered by the applicant can be determined.
In addition, much evidence was led by the applicant concerning the consequential loss or damage suffered by the applicant. Because of the order proposed to be made, it is not necessary to consider the whole of that evidence in detail, but I should comment that I found the evidence most unsatisfactory and unreliable. It raised difficult questions of causation, namely whether the loss of profits was caused by the general depressed nature of the retail market generally in 1979 and 1980 and by the strained financial resources of the applicant. It is sufficient to say that on the submissions of counsel for the applicant, the total amount of the consequential loss or damage claimed was very high.
There is no doubt that the applicant has suffered loss or damage under s.82 of the Act. The conduct of the respondent did influence the applicant in its decision to make the application for tenancies and to execute the leases. At the same time, that conduct was not the sole influence affecting the applicant. The conduct was a factor affecting the applicant in making those decisions. That is sufficient for the purposes of s.82. Nevertheless, Mr. Figgins was an experienced and resourceful businessman, eager to extend his retail businesses into the Centrepoint Mall and to prevent his competitors from doing likewise. He wanted his companies to be part of the exciting new venture.
The primary submission of counsel for the applicant was that the damages should be calculated by adding together the direct damages, being the difference between the reasonable value of the shops and the amount that the applicants had agreed to pay for them, and the consequential loss, being the loss of profits for conducting the business and the loss related to the expenditure in fitting out those shops. If the lease was not to be rescinded as from the date of judgment, further damages should be awarded, but the primary submission was that the leases should be rescinded as from that date. As an alternative to that last submission it was contended that the terms of the lease be varied by reducing the amount of rent for the shops, by relieving the applicant from its obligation to pay apportionable outgoings and to relieve the applicant from its obligation to carry on business in the shops of the retailing of ladies' and men's fashion footwear, accessories and fashion clothing. If the last-mentioned obligation was varied, any type of business could thereafter be conducted in those shops thus making it possible that an assignment of lease could be obtained more easily, the lease having some four years and three months to run as a minimum term.
In an action for damages for fraudulent misrepresentation, the amount of
damages to which a plaintiff is entitled is, prima facie,
"the amount by which
the price which he has paid exceeds the true value of the thing bought at the
time when he bought it"; McAllister
v. Richmond Brewing Co. (N.S.W.) Pty. Ltd.
(1942) 42 S.R.N.S.W. 187 per Jordan C.J. at 192. This passage is taken from a
longer and very helpful passage at pp.191-3 where the Chief Justice considers
the general questions of rescission and damages for deceit. At p.192 the Chief
Justice said -
"The rule is well settled, and exceptional circumstances are necessary to
justify an award of anything more by reference to the general
principle, but
such circumstances may occur."
At p.193 the Chief Justice said -
"Different considerations would arise when, as a result of deceit, the purchaser has been led to have dealings with a third party which made rescission impossible. In such a case, the circumstances might be such as to entitle the buyer to recover by way of damages any unavoidable loss which was fairly referable to the deceit."
The general principles to be applied are stated by Dixon J., as he then was,
in Toteff v. Antonas [1952] HCA 16; (1952) 87 C.L.R. 647 at pp.650-1 -
"In an action of deceit a plaintiff is entitled to recover as damages a sum
representing the prejudice or disadvantage he has suffered
in consequence of
his altering his position under the inducement of the fraudulent
misrepresentations made by the defendant. When
what he has been induced to do
is to make a purchase from the defendant and part with his money to him in
payment of the price, then,
if the transaction stands and is not disaffirmed
or rescinded, what is recoverable is 'the difference between the real value of
the
property, and the sum which the plaintiff was induced to give for it' per
Abbott L.C.J. Pearson v. Wheeler ((1825) Ry. & Mood. 303,
at p.304 (171 E.R.
1028, at p.1029)). As Sir James Hannen P. in Peek v. Derry ((1887) 37 Ch. D.
541, at p.594; cf. [1889] UKHL 1; (1889) 14 App. Cas. 337) pointed out, the question is how
much worse off is the plaintiff than if he had not entered into the
transaction. If he had not done
so he would have had the purchase money in his
pocket. To ascertain his loss you must deduct from the amount he paid the real
value
of the thing he got. It may be objected that the point of the
application of this doctrine lies in identifying 'the transaction'
and that
what Mayo J. has done is to identify it as the purchase of the goodwill and
that only. But what is meant is the transaction
into which the representation
induced the plaintiff to enter. The measure of damages in an action of deceit
consists in the loss
or expenditure incurred by the plaintiff in consequence
of the inducement on which he relied diminished by the corresponding advantage
in money or moneys worth obtained by him on the other side : Potts v. Miller
((1940) [1940] HCA 43; 64 C.L.R. 282, at p.297). You look to what he has been induced to part
with as the initial step. He is entitled to say that but for the fraud he
would never have parted with his money : per Coleridge L.C.J., Twycross v.
Grant ((1877) 2 C.P.D. 469, at p.491). But he cannot recover the entire price
he has paid unless the thing prove wholly worthless. If the thing has any
appreciable
value the damages must be reduced pro tanto : per Cockburn L.C.J.,
Twycross v. Grant (at p.543). It must not be forgotten that after
all deceit
is an action on the case for special damage incurred in consequence of the
defendant's fraudulent inducement."
A useful reference to some of the many cases dealing with these matters appears in Ivanof v. Phillip M. Levy Pty. Ltd. (1971) V.R. 167 per McInerney J. at pp.170-1.
Under s.82 of the Act, the applicant is entitled to recover the loss or damage suffered "by conduct of another person". There must be a casual connection between the conduct and the loss or damage. The words of Dixon J. just cited may be adapted to read that a claim under s.82, when based on s.52, is in the nature of an action for special damages incurred in consequence of the respondent's misleading or deceptive conduct. The damages to be recovered are, in my opinion, to be determined in a manner similar to deceit cases. The principles to be applied are similar to those applied in determining the measure of damages in tort, not for breach of contract. With respect, I agree with the views expressed by Fox J. in Brown v. Jam Factory Pty. Ltd., Federal Court of Australia, 26 March 1981, unreported.
There may be cases where the measure of damages to be recovered exceeds the difference in value between the amount by which the price paid exceeds the true value. Esso Petroleum Co. Ltd. v. Mardon (1976) 1 Q.B. 801 is such a case, see Lord Denning M.R. at pp.820-1 and Ormrod L.J. at pp.828-830. See also the Jam Factory case, supra.
In the present case counsel for the applicant contended that there were circumstances justifying the recovery of the greater amount of damages. He referred to the expenditure incurred by the applicant in constructing the storage area, the benefit of which remains with the respondent. He relied upon the provisions of Clause 8 of the leases which restricts the permitted use of the shops to that of the retailing of ladies' and mens' fashion footwear, accessories and fashion clothing. He referred to the long period between the execution of the leases and the commencement of the tenancies. He contended that thereafter the respondent was entitled to commence and continue trading to determine if the businesses could be conducted at a profit. All those factors, it was contended, should be taken into account as circumstances justifying an increase in the amount of damages to be recovered.
In my opinion, in the present case the amount of damages to be recovered by the applicant is to be determined by reference to the difference between what were the reasonable rents for the shops in October 1979 on the one hand, and the rents and the liability to pay apportionable outgoings as provided for in the lease on the other. Counsel for the respondent submitted that some allowance should be made in favour of the respondent because of the benefit conferred on the applicant by reason of the absence of competitors in the Mall. He contended that the evidence of Mr. Cummins was based on the shops as shops and did not take into account the effect of the special benefit resulting to the applicant. That contention is rejected since the leases did not confer that benefit on the applicant. The undertaking by the respondent concerning competition as contained in the letter of 7 July 1978 is limited to the initial lettings only.
Reference has been made already to the special nature of the wide discretion conferred upon the Court by s.87 of the Act. That is a discretion not always available to a court in assessing damages for tort or, for that matter, for breach of contract. Mr. Figgins was an active supporter of the concept of the Centrepoint Mall. He desired to participate in the development to the exclusion of his competitors. When the Mall opened for trading in October 1979 he knew or should have known that each of the representations established, and being those contained in paragraphs (a), (b), (c)(i), (c)(ii), (1) and (m) set out above, were false, yet he resolved that his companies commence trading. Thereafter, even though he knew that his businesses were a financial failure, or rather were not making the profits he had anticipated they would make, he made no complaint to Mr. Alter. He engaged in that course deliberately in an attempt to induce Mr. Alter to make special arrangements to ease the applicant's difficulties and in an attempt to induce Mr. Alter to enter into the new development proposed in Sydney. Mr. Figgins knew that other tenants at the Mall were making formal complaints to the respondent concerning misleading and deceptive conduct by the respondent relating to the Mall. He knew letters of demand had been written and negotiations for possible settlements were taking place. The first formal claim was not made by the applicant until a solicitor's letter in April 1980, and even after that date no attempt was made to press the claim until the application was issued in September 1980. Although the difficulties inherent in the traditional problems of deciding whether to rescind a contract or to affirm the contract and sue for damages in the event of deceit are to be avoided as far as possible in proceedings under s.82 and s.87 of the Act, nevertheless some consideration and weight must be given to the actions of the parties after knowledge of the existence of misleading or deceptive conduct. Section 87 enables the Court to overcome many of those types of difficulties, but at the same time the conduct of the parties, and in the present case particularly the conduct of the applicant, is relevant to be considered in the exercise of the discretion conferred by s.87 of the Act, and more particularly for present purposes in determining the amount of damages to be recovered under s.82. In my opinion, the applicant by its conduct has affirmed the leases. The consequential losses are not caused by the conduct of the respondent but by the actions of the applicant. The applicant is not entitled to recover damages over and above the difference in value of what it got and what it bargained to get. There are no special circumstances justifying additional damages.
For similar reasons, in the exercise of the discretion conferred by s.87 it is proposed that the leases should not be rescinded either ab initio or as from the date of judgment in this matter. In further support of that decision I rely upon the fact that Mr. Figgins is an experienced and capable businessman. He obtained legal advice concerning the terms of the leases. He was able to obtain special terms relating to rent far more favourable to him than to lessees generally under the standard form of lease. The initial rent was to remain the same and was not subject to increases by the application of a formula based upon increases in the consumer price index. Likewise, the rent review under the applicant's leases was to be at two-yearly rests and in the failure of agreement the amount of the rent was to be determined by an arbitrator. There was a proviso to the effect that the rent so determined was not to be less than the rent payable at the relevant time of the review. Under the standard form of lease the rent was to be reviewed yearly and increased by the application of a formula based upon increases in the consumer price index. The applicant should be bound by the terms of its leases in the form as varied by the orders to be made by the Court. However, in the course of his submissions, counsel for the respondent conceded that the proviso just mentioned preventing any reduction of rent on review should be deleted. I propose to vary the terms of the leases accordingly.
One of the essential requirements of a successful shopping complex such as Centrepoint Mall is the existence of a proper tenant mix. The nature of the business being conducted in shops G15, 116 and 112 forms part of that tenant mix at Centrepoint. In the absence of agreement by the respondent, I can see no reason why other terms of the applicant's leases should be varied to relieve the applicant of its obligation to continue the permitted use of those shops. At the same time it is important that the respondent continue to attempt to obtain a proper tenant mix for Centrepoint. The applicant is entitled to that course of action by the respondent.
It remains to consider what form of orders should be made. Having regard to
what has been said, the discretion conferred by s.87 of the Act, the damages
to be recovered by the applicant and the continuation of the leases into the
future, the simplest, neatest
and most effective method of giving effect to
the judgment of the Court is to make orders under s.87 of the Act, and in
particular under s.87(2)(b) thereof. It is proposed that the Court vary the
two leases and to declare that the two leases as so varied have effect from
the commencement
of the leases, namely 10 October 1979. The variations of the
leases are as follows -
1. Lease of shops G15, 116 and part 112
(a) The SCHEDULE to the lease be varied by deleting PART IV thereof and
substituting the following -
" PART IV
(Initial rent)$53,430 per annum - $4,452.50 per calendar month - $1,027.50 per week."
(b) The following clauses of the lease be deleted -
"Clause 6.02, Clause 6.03, Clause 24.01(c), Clause 26.00 and Clause 27.00."
(c) APPENDIX 1 (Rent Review) to the lease be varied by deleting from Clause 3
thereof the following words -
"PROVIDED FURTHER and it is hereby agreed and declared by the Lessor and the
Lessee that notwithstanding the foregoing the rental
payable hereunder shall
not in any event be less than the rental payable at the relevant rent
adjustment date."
2. Lease of shop No. 112 -
(a) The SCHEDULE to the lease be varied by deleting PART IV thereof and
substituting the following -
" PART IV
(Initial rent)$7,050 per annum - $587.50 per calendar month - $135.58 per week."
(b) The following clauses of the lease be deleted -
"Clause 6.01, Clause 6.03 and Clause 25.00."
(c) APPENDIX 1 (Rent Review) to the lease be varied by deleting from Clause 3
thereof the following words -
"PROVIDED THAT and it is hereby agreed and declared by the Lessor and the Lessee that notwithstanding the foregoing the rental payable hereunder shall not in any event be less than the rental payable at the relevant rent adjustment date."
The applicant has made some payments but not all of the amounts of rent and other outgoings provided for in the leases before variation. Computations will need to be made to determine either the amounts owing or which have been overpaid by the applicant as a result of its obligation under the leases after being varied. During final submissions counsel suggested that the Court should publish its reasons and minutes of proposed orders. The parties would then be in a position to make any necessary computations and to make submissions to the Court as to the form of final orders to be made. I propose to follow that course. In addition, the parties may wish to make submissions concerning the costs of the proceedings.
In the result, I publish minutes of the orders proposed to be made and my reasons for the making of those orders. The further hearing of the matter will be adjourned.
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