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Federal Court of Australia |
COURT
IN THE FEDERAL COURT OF AUSTRALIACATCHWORDS
Trade Practices - shopping centre - lease of shops to tenants - whether misleading conduct by a landlord - alleged misrepresentations - whether tenants induced to take leases by misrepresentations.Limitation of Actions - trade practices - misleading conduct by landlord - loss suffered by tenants - when loss sustained - accrual of cause of action - date of accrual - whether claims made within three years after the date on which cause of action accrued.
Administrative Law - local authority - Gold Coast City Council - power to grant certificate of classification of building under Standard Building By-laws - no reference in By-laws to conditional certificates - certificate issued subject to condition - whether certificate issued within power - validity of certificate - implied power of local authority.
Evidence - local authority - issue of certificate of classification of building subject to condition - whether condition fulfilled - subsequent conduct of local authority - whether local authority estopped from asserting condition not fulfilled.
Trade Practices Act, ss.52, 53A, 82, 87
Standard Building By-laws 1975, made under Building Act 1975 (Q)
HEARING
BRISBANE Counsel for -
Keen Mar Corporation Pty Ltd Mr G.L. Davies Q.C.
Trevor McDsougall Coomber with Mr T. Marklan
Gregory Desmond Kelly
Cameron Gregory Godden
Colin James Palleson
Betty Ruth Palleson
instructed by: Hempenstall O'Donoghue & Co.
Counsel for -Labrador Park Shopping Mr I. Callinan Q.C.
ORDER
No. 185 of 1988This order not be entered before 21 days from this day.
No. G70 of 1988
The appeal be allowed.
Order 1 made by Pincus J. on 11 March 1988 in matter G 144 of 1984 be set aside and in lieu thereof it be ordered that judgment be entered in favour of the applicants against the respondents in the sum of One thousand three hundred and seventy dollars ($1370).
This order not be entered before 21 days from this day.
No. G72 of 1988
The appeal be dismissed.
This order not be entered before 21 days from this day.
No. G73 of 1988appellants against Keen Mar Corporation Pty Ltd and against the third respondents.
The appeal be allowed insofar as it relates to the claims made by the
In relation to Keen Mar Corporation Pty. Ltd Orders 2 and 4 made by Pincus J
on 11 March 1988 in matter G 119 of 1984 be set aside
and in lieu thereof it
be ordered that
(a) judgment be entered in favour of the cross-claimant against Keen1988 in matter G 145 of 1984 be set aside and in lieu thereof it be ordered that judgment be entered in favour of the cross-claimant against the cross-respondents in the sum of five hundred and sixty nine dollars ($569).
Mar Corporation Pty. Ltd in the sum of nineteen
thousand eight hundred and twenty six dollars
($19826);
(b) the cross-claim against Alan Keen and
Trudy Keen be dismissed; and
(c) Keen Mar Corporation Pty. Ltd pay to the
cross-claimant one half of its costs of
the cross-claim.In relation to the third respondents Order 2 made by Pincus J on 11 March
Otherwise the appeal be dismissed.
This order not be entered before 21 days from this day.NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
DECISION
Labrador Park Pty. Limited ("the landlord") is the proprietor of the Labrador Park Shopping Centre, within the area of the Gold Coast City Council. The shopping centre was built in 1981. During the course of that year the landlord retained agents, including one Wakeham, to find tenants for the shopping centre. It also issued a brochure for the purpose of conveying information about the shopping centre to prospective tenants. The shopping centre consisted of a large supermarket and some twenty smaller shops, all served by a substantial car park.2. Three of the tenants who took leases of shops in the shopping centre sued the landlord, claiming that they were induced to enter into their leases by misrepresentations made either by Mr Wakeham or in the brochure. They claimed that the misrepresentations were made in breach of ss. 52 and 53A of the Trade Practices Act 1974. They also claimed that their occupation of the demised premises was at all material times illegal because of the absence of a necessary Certificate of Classification required under by-laws made pursuant to the Building Act 1975-1981 (Q) and that, consequently, their leases were unenforceable. The tenants also claimed that the landlord had overcharged them for their shares of outgoings payable by them under their leases and sought to recover the amounts said to have been overcharged. The learned trial judge found that some of the alleged misleading statements were, in fact, made and that they induced the tenants to enter into their leases. However, he held that the claims based upon the statements failed because of the three year time bar in s.82(2) of the Trade Practices Act. He also rejected the claims for return of moneys paid on the ground that the leases were illegal.
3. The landlord brought cross-claims against the tenants for unpaid rent. The cross-claims were also dismissed. His Honour was of the view that there was inadequate proof of the cross-claims and that, in any event, they were not sustainable because of illegality in the performance of the leases brought about by the absence of a Certificate of Classification. He rejected an application made by counsel for the landlord at a late stage of the proceedings for leave to re-open its case.
4. The tenants and the landlord have appealed against most of his Honour's findings. It is convenient to consider first the landlord's appeal against the findings that the tenants were induced to enter into their leases by misrepresentations made by Mr Wakeham and by misleading information contained in the brochure. These findings were made in respect only of two of the tenants, Mr and Mrs Palleson and Mr Coomber and his co-tenants, Messrs Keily and Godden ("the Coomber tenants"). The third tenant, Keen Mar Corporation, did not pursue its claim under the Trade Practices Act.
5. We approach the landlord's attack on his Honour's findings of fact
conscious of the respect that must be paid to the findings
of a trial judge
who has had the advantage of seeing the witnesses: Warren v Coombes [1979] HCA 9; (1979)
142 CLR 531.
Palleson Misrepresentations
6. The Pallesons leased shops 11 and 12 for the purpose of establishing a restaurant and take-away food business. His Honour found that Mr Wakeham told Mr Palleson in May or June 1981 that there would be a "national chicken take-away" operating three shops in the shopping centre. According to Mr Wakeham, what he said was that he believed that a national chicken chain would be taking a lease. His Honour said that he was sufficiently confident of Mr Palleson's recollection of what Mr Wakeham said to make a finding in the Pallesons' favour on this point; primarily, apparently, because Mr Palleson's version was similar to that of one of the Coomber tenants, Mr Keily, who said he was told much the same thing. It was well open to his Honour to prefer Mr Palleson's account of his conversation with Mr Wakeham, but that is not the end of the matter. It was necessary for the Pallesons to show that the representation played a part in inducing them to enter into their lease, which they did not execute until 2 December 1981. His Honour found the statement was an inducement to the Pallesons, but his reasons neither state the basis for that finding nor refer to significant evidence that pointed the other way. Before signing their lease the Pallesons were required by the landlord to specify in a deed any representations that had been made to them concerning the premises which they were intending to lease. The Pallesons signed the deed after consultation with their solicitor. The deed made no mention of reliance being placed on any representation that a national chicken take-away operator would be leasing space in the shopping centre.
7. It is not in doubt that an exemption clause in a lease cannot be relied upon by the lessor in answer to a cause of action based upon s.52 or s.53A of the Trade Practices Act. This must be so, since the conduct upon which such a cause of action is based is antecedent to the making of the lease and commonly will have induced the lessee to have entered the lease: Clark Equipment Australia Ltd. v Covcat Pty Ltd (1987) 71 ALR 367; Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd (1987) 72 ALR 601 at pp 613-614 and, on appeal [1988] FCA 40; 79 ALR 83 at pp 98-99. But, as Wilcox J. pointed out in the latter case, the fact that a claimant states, in an agreement into which he claims to have been induced to enter by misleading conduct, that he was not so induced may bear upon the question whether he should be believed in asserting that the misleading conduct was an inducement.
8. In the present case, the deed signed by the Pallesons, after reciting that
it was frequently alleged by lessees that statements
were made to them having
the effect of inducing or influencing them to enter into their leases and that
it was desired to avoid any
disputes in that respect and that the parties
desired to record "the substance of any Statements which may have been made by
the
Lessor or by any other person acting ... on the Lessor's behalf ... to the
Lessee ... which has had or may have had the effect of
inducing or influencing
the Lessee ... either to enter into the ... Lease or to agree to any or all of
the terms thereof" provided
that the lessor and lessee covenanted and agreed
as follows:
"1. The following Statements have been made to the9. The words "No such statements have been taken into account in any manner whatsoever by me" are in handwriting and are followed by Mr and Mrs Palleson's initials.
Lessee in relation to the Proposed Lease by the
person or persons named below which Statements:
(a) have induced or influenced the Lessee
to decide to enter into the Proposed
Lease or to agree to any or all of its
terms; or
(b) have been relied upon in any way as
being accurate by the Lessee for the
aforesaid purposes; or
(c) have been warranted to the Lessee as
being true; or
(d) have been taken into account by the
Lessee as being of any importance
whatsoever to the Lessee's decision to
enter into the Proposed Lease or to
agree to any or all of its terms.
No such statements have been
taken into account in any
manner whatsoever by me."
10. Mr Palleson's explanation for making the above statement was not convincing. He said variously that "I was not really aware of the full implication, or the meaning of that" and "I wrote the actual statements that our solicitors in Southport said we would have to write. If we did not write those words in we would not get the shop." The Pallesons' solicitor did not give evidence. It is hard to accept the explanation unless it be assumed that the solicitor gave inadequate and poor advice to his clients. There is no reason for making such an assumption.
11. Further, it must have been apparent to the Pallesons when, or soon after, they took possession of their shop in early December 1981 that a national chicken take-away operator had not leased space in the centre. The shopping centre was officially opened on 8 December. Yet, although they made numerous complaints to their landlord after they went into possession, the Pallesons made no complaint about the absence of the chicken operator. They made written complaints to their landlord about a variety of matters on no less than seven occasions between April 1982 and August 1983. Considered in isolation from the absence of a relevant complaint after they took possession, the execution of the deed might not have been a matter of great significance. But the combination of their failure to make any mention in the deed that they relied on Mr Wakeham's statement and their subsequent failure to make any complaint about it (in the context of a long history of complaints about other matters) provides a substantial basis for a finding that, even if the statement was made to them, it did not induce the Pallesons to enter into the lease.
12. It is to be observed that his Honour found that the tenants in both the Coomber and Palleson cases, to a considerable extent, made their own assessments of the prospects of the proposed new shopping centre. His Honour rejected a number of other claims by the Pallesons that other statements made by Mr Wakeham induced them to sign their lease. Plainly, he was not prepared to make findings in their favour merely on the basis of their assertions that every statement made to them induced them to lease premises in the shopping centre.
13. We think this Court is in as good a position as the trial judge to determine whether the Pallesons were induced to enter into their lease by Mr Wakeham's statement that there would be a national chicken operator in the shopping centre. Having regard to the evidence to which his Honour did not refer, we have arrived at a different conclusion on this matter.
14. The second representation found to have been made to the Pallesons related to the degree of interest by other prospective tenants of the premises that the Pallesons were intending to lease. The trial judge accepted Mr Palleson's evidence that Mr Wakeham told him that "there were fifteen prospective tenants that were interested in the take-away food shop. He said if we wanted the shop, we would have to make a very quick decision and decide whether we wanted them or not." The finding that Mr Wakeham used these words was plainly justified. The only question is whether his Honour was correct to find, as he did, that the statement induced the Pallesons to enter into their lease.
15. In answer to a question by his Honour, Mr Palleson said that fifteen seemed a lot to him and he was "a bit suspicious" about the statement. Despite this answer, the learned judge found that the statement had some inducing effect. The only reason given by his Honour for this finding was that the statement contrasted sharply with the tone of correspondence between Mr Wakeham and his principals in which he referred to his lack of success in attracting fast-food operators to the shopping centre. With all respect to his Honour, we are unable to see how this correspondence was relevant to whether the statement was an inducement to the Pallesons. No mention was made of this "suspicious" statement in the deed they executed nor was it mentioned in any of their numerous letters of complaint. Of its nature, it was not the sort of statement that was likely to have an inducing effect on the minds of business people like the Pallesons who, as his Honour found, to a considerable extent made their own assessments of the prospects of the shopping centre. In our opinion a finding that the statement had some inducing effect was not justified by the evidence.
16. The third representation found to have been made to the Pallesons related to the rental of the shop that they leased. Mr Palleson gave evidence that he said to Mr Wakeham that the rental of $300 per week asked seemed very high and that he asked whether rentals were negotiable. He received the answer, "No, they are non-negotiable. All rentals are fixed." Mr Wakeham did not deny that he gave this answer. He said that to give such an answer was normal commercial practice and that it was a "straight out negotiation".
17. His Honour described Mr Wakeham's answer as a lie, since there was clear evidence that he was free to negotiate, his instructions from his principal being to get the highest rental he could obtain. However, upon the evidence, we do not think that the answer given by Mr Wakeham can fairly be characterized as a lie, or even as misleading in any relevant sense. When an agent is empowered by his principal to negotiate the best rental he can obtain for premises, he is clothed with authority to fix the rental which, at any particular stage of the negotiations, is the lowest rental at which the premises can be leased. At an early stage of leasing this figure may be higher than at a later stage. A statement by Mr Wakeham that the rental of the premises was $300 per week, that rentals were not negotiable and were fixed, can only be regarded as a statement as to the position which Mr Wakeham, on behalf of the lessor, was adopting at that time. Such a statement was not inconsistent with the fact that Mr Wakeham had authority from his principal to accept a lower rental at a later stage of leasing, if he needed to do so in order to obtain a tenant. The Pallesons must surely have known that if a tenant willing to pay $300 per week could not be found, the landlord would necessarily have to accept a lower rental.
18. No doubt Mr Wakeham hoped to obtain the rentals which had been fixed for the shops at the time when leasing commenced. The fact that some premises were subsequently let at rentals less than those fixed at an earlier point in time did not establish that, at that earlier point in time, the rentals were not then fixed by him.
19. We do not think a finding should have been made that Mr Wakeham's statements to the Pallesons as to the rental of their premises was misleading or otherwise actionable under the Trade Practices Act. Coomber Representations
20. Two misrepresentations were found to have been made to the Coomber tenants, who took a lease of a shop on 5 October 1981. The first representation was that a person would be able to walk directly from the car park to their shop. His Honour found that this representation was proved, in part, by a statement made by Mr Wakeham to Mr Keily in June 1981, that "one would virtually be able to drive up to ... whichever shop the shopper wanted to shop at and go in quite easily and go out quite easily" and in part by a brochure describing the shopping centre.
21. His Honour's finding that Mr Wakeham made the statement attributed to him
is unassailable. However, the meaning which could
have been reasonably
attributed to the statement by Mr Wakeham must be determined in the context of
the brochure, in which the following
statement appeared:
"External parking for approximately 285 cars is22. The total capacity of the car park referred to in the brochure was approximately 451 car spaces. Any person reading the brochure with a modicum of commonsense must have appreciated that unless spaces were specially reserved for the use of customers of a particular specialty shop such customers would have to park their vehicles wherever a space was available in the car park. There was no suggestion that spaces would be specially reserved. It follows that a reader of the brochure intending to establish a specialty shop in the shopping centre must have appreciated that it would be a matter of chance whether, at any particular time, customers would find available spaces immediately outside his or her shop. To put the matter another way, when Mr Wakeham said to Mr Keily that a person "would virtually be able to drive up to ... whichever shop the shopper wanted to shop at and go in quite easily and go out quite easily" that statement must have been understood by Mr Keily as being subject to the proviso that nearby external car spaces were not already occupied.
provided at Labrador Park Shopping Centre, with
further under-cover parking catering for
approximately 166 cars. All car spaces will be
within easy walking distance of the specialty
stores."
23. It is plain that a shopper cannot, in a literal sense, drive up to whichever of these shops he or she wishes to patronize, since the shopping promenade is at a higher level than the car park. However, one section of the car park is immediately adjacent to the specialty shops and separated from them only by the promenade. Of course, some parts of the car park are more remote from the specialty shops than the part immediately adjacent to those shops. But it could not be contended that none of the car spaces were within easy walking distance of the shops.
24. The basis of his Honour's finding against the landlord on this matter appears to have been his conclusion that the effect of what was conveyed to Mr Keily by Mr Wakeham, and by the brochure, was that the car park and the shop which Mr Keily and his partners were interested in leasing would be on the same level. For ourselves, we do not think that the statement that a person would "virtually be able to drive up to ... whichever shop the shopper wanted to shop at and go in quite easily and go out quite easily" necessarily conveyed that there would be no steps at all between the car park and the shops. Indeed, his Honour did not expressly find that it did. His ultimate finding on this part of the case was that the combination of the brochure and Mr Wakeham's statement "gave Keily the impression ... that one would be able to walk directly from the car park to their shop".
25. We do not think the brochure assists the tenants' case on this point. There is nothing in the brochure that conveys to the reader that the car park and the specialty shops are to be on the same level. On the contrary, the brochure contains a sketch representing the supermarket and specialty shops in the shopping centre in which the car park is shown at the same level as the supermarket, but at a lower level than many of the specialty shops. Included in the sketch are representations of three pedestrians standing on the shopping promenade outside one of the specialty shops, and this part of the promenade appears to lie at the same level as the roofs of cars parked adjacent to it.
26. Accepting, as we do, his Honour's findings as to what passed between Mr Wakeham and Mr Keily in June 1981, we doubt whether it could safely be concluded that Mr Wakeham conveyed the impression to Mr Keily that the car park and the specialty shops would be on the same level. The statement made by Mr Wakeham to Mr Keily did not include any representation, in terms, that the specialty shops and the car park would be at the same level. However, even if such a conclusion could be drawn, the question arises whether a finding should have been made that what Mr Wakeham said to Mr Keily had any inducing effect on the Coomber tenants at the time they signed their lease some four months later.
27. In our opinion any impression that the specialty shops and the car park would be on the same level could not have survived the sighting by Mr Keily of the brochure. Moreover, the difference in the levels of the car park and of the shopping promenade, as constructed, is so great that it must have been apparent to anybody visiting the site once the floor slab upon which the shops were located was in place. The difference in levels is as much as a metre in a section of the car park adjacent to many of the shops. Mr Godden said that he visited the site on several occasions during the course of construction. As the trial judge observed, he presumably then had the opportunity of noticing the difference in levels. Mr Keily said that he visited the site two or three times a week during the course of construction, but he claimed that the difference in levels was only apparent when the car park was sealed. This explanation is unconvincing. His Honour did not state that he accepted it.
28. His Honour found in the Palleson case that the difference in levels was obvious as at December when the Pallesons' lease was signed. That finding was plainly correct, and there is nothing in the evidence to suggest that the levels were any different as at 5 October when the Coomber tenants signed their lease. According to Mr Godden, he visited the shopping centre site in late June 1981 and thereafter once every week or fortnight. He said that, after he first visited the site, construction of the shopping centre "moved on very quickly" and he thought the slab may have been in place at the end of June. According to him, the floor slab was in place some considerable time before the lease was signed. He said that at that stage the level of the car park was three or four feet below the slab upon which the shops were being constructed. He was then of the view that unless something was done to the car park by building it up with earthworks, the shopping level would be above the level of the car park. Any such earthworks would have had to have been of major proportions. It is difficult to believe that Mr Godden could have thought that such earthworks were going to be carried out since there was no evidence of them on any of his numerous visits to the site.
29. There is some uncertainty in the evidence as to Mr Wakeham's belief of the relative levels of the shopping centre and the car park. He said that the sketch in the brochure was "... rather hazy but, if anything, I thought it showed the shopping level above the car park". Elsewhere in his evidence he said that until 22 September 1981 he believed that "the shopping centre itself would be at the same level as the car park". It is difficult to reconcile Mr Wakeham's evidence with the evidence given by Mr Godden. It seems likely that Mr Godden's recollection of the date when the slab was constructed is more reliable than that of Mr Wakeham. The shopping centre opened for business on 8 December 1981 and it seems probable that this could have occurred only if, as Mr Godden said, the slab upon which the shops were subsequently erected was completed before 5 October 1981.
30. The difference in levels is shown most clearly in a photograph tendered in the proceedings. It is not possible to say from the evidence precisely when the photograph was taken but it was said to have been taken "a considerable time" before the signing of the Palleson lease, which occurred on 2 December 1981. Having regard to the advanced stage of construction of the shopping centre at the time the photograph was taken, it is difficult to believe that the difference in levels would have been much less apparent as at 5 October 1981. In our opinion, any person who had been told in June 1981 that the car park and the shops were to be on the same level could not have retained that belief at the beginning of October.
31. We shall refer later in these reasons to the terms of a deed executed by the Coomber tenants at the time they executed their lease. The deed was in broadly similar terms to the deed signed by the Pallesons. It made no reference to reliance having been placed upon any representation that the car park and shops would be at the same level.
32. All the above considerations lead us to conclude that a finding should not have been made that the representation as to the level of the car park had any inducing effect when the Coomber tenants signed their lease.
33. The substance of the second representation found to have been made to the
Coomber tenants was that statements were made by Mr
Wakeham to Mr Keily in
June 1981 that a national take-away chicken food store would be in the
shopping centre, that the store would
comprise three shops, and that the
operator "had been committed". As in the Palleson case, the Coomber tenants
signed a deed itemizing
the representations made to them prior to signing
their lease. They identified the representations made to them before they
executed
their lease as follows:
"A Statement was made to the Lessees by StephenThe deed was signed after consultation with their solicitor. After going into possession they, like the Pallesons, raised several matters of complaint with the landlord. These matters did not include any claim referable to the absence of a take-away chicken store. We can only infer from his Honour's omission to refer to these matters that they were not given weight in arriving at his finding that Mr Wakeham's statement had an inducing effect at the time the lease was signed. When regard is had to them, such a finding should not be made.
Wakeham, Leasing Manager of Jones Lang & Wootten
that the major tenant of the centre would be G.J.
Coles & Co.
"Further representations were made to the Lessees
being in the form of a printed brochure issued by
the Lessors agent and handed to the lessees prior
to the signing of the Lease."
34. In reaching the conclusion that none of the claims under the Trade
Practices Act should have been found to have been established we are acutely
aware that we are differing from the trial judge on some of his findings
of
fact. But the approach that should be taken on an appeal of this kind is
referred to in Warren v Coombes (supra, at p 552) as
follows:
"... the traditional and practical reasons for the35. We do not think the trial judge was in any better position than an appellate court to decide whether the several statements to which we have referred induced any of the tenants to enter into their leases. Our departures from the conclusions of the trial judge are not occasioned by any difference of opinion regarding the credibility or other personal characteristics of any witness. Rather they reflect differences as to the inferences which ought to be drawn from the primary facts. In such a case we must give effect to our own judgment on the matter.
reluctance of an appellate court to interfere with
the verdict of a jury do not exist where the
judgment is that of a judge sitting alone; for one
thing, the judge gives reasons, whereas the verdict
of the jury is, as Lord Denning M.R. has said, 'as
inscrutable as the sphinx' (Ward v James (1966)
1 QB 273, at p 301). Again with the greatest
respect, we can see no justification for holding
that an appellate court, which, after having
carefully considered the judgment of the trial
judge, has decided that he was wrong in drawing
inferences from established facts, would
nevertheless uphold his erroneous decision. To
perpetuate error which has been demonstrated would
seem to us a complete denial of the purpose of the
appellate process. The duty of the appellate court
is to decide the case - the facts as well as the
law - for itself. In so doing it must recognize
the advantages enjoyed by the judge who conducted
the trial. But if the judges of appeal consider
that in the circumstances the trial judge was in no
better position to decide the particular question
than they are themselves, or if, after giving full
weight to his decision, they consider that it was
wrong, they must discharge their duty and give
effect to their own judgment."
36. We add one further comment on the matter of inducement. In considering the effect of the various statements alleged in this case we have looked at the position as at the dates of the respective leases. We have taken this course because the case alleged by each group of tenants was that they were induced by the statements to enter into the relevant lease. It will ordinarily be the position that the critical step for a representee is the entry by him or her into a legal commitment as a direct result of the representation; for example, a lease or a contract to purchase some item of property. But it is possible to envisage cases in which the critical step will occur at an earlier point of time. For example, as a result of the representor's statements a representee may so change his or her position - for example, by disposing of some asset or by incurring some collateral liability - that, even when the truth becomes known, the most prudent commercial course is to go ahead with the transaction the subject of the representations. It may be that, in such a case, a representee could recover damages from the representor notwithstanding that, at the time when the representee first entered into a legal commitment with the representor, the falsity of the representation was already apparent.
37. We make the above observation in order to guard against any impression that we are of the view that the entry into the lease is necessarily the critical step. But, as we have said, in these particular cases the claim is that it was.
38. The learned trial judge found that the applicants' claims under the Trade
Practices Act were barred by s.82(2) of that Act. Having regard to our
conclusion that the claims were not, in any event, made out it is unnecessary
for us to consider
the correctness of that finding.
Cross-claims
39. The landlord cross-claimed against the tenants for their failure to pay the balances of the rents reserved under their leases and for damages. As originally pleaded, the landlord's claim was that it had suffered loss and damage and a claim was made "for rent, interest and other moneys payable pursuant to the Lease together with damages for breach hereof".
40. The way in which the cross-claims were formulated can be seen from the
form of the cross-claim in the Coomber matter. It was
alleged that the tenants
had covenanted to pay the rent reserved by the lease, a share of outgoings as
defined in the lease, electricity
charges, interest on rental arrears, and
rental for a sign erected on the premises. It was then alleged that in
breach of the covenants
to pay these sums the tenants terminated their
occupation of the premises on 31 October 1984 and failed thereafter to meet
their
obligations under the lease. The allegation was made that the landlord
was unable to secure a tenant until 7 December 1984, being
the agreed date of
termination of the lease. The landlord's loss and damage was particularized
as follows:-
"Rental41. All the cross-claims were amended during the course of the trial. In their final form, they were for moneys said to be payable under the leases and also for "loss and damage". The claims for loss and damage seem to have been based upon allegations of the landlord's inability to secure tenants for the several premises after they were vacated by the lessees.
Year 1 1981-1982 $24,960.00
2 1982-1983 27,780.48
3 1983-1984 30,347.28
$83,087.76
Less paid 71,810.73 $11,277.03
Interest @15.5% from 20.10.84
to 31.1.87 3,984.34
$15,261.37
Arrears on sign rental 186.12
Interest on sign rental arrears 65.76
TOTAL AMOUNT OWING $ 15,513.25"
42. The trial judge was of the view that the evidence failed to make out any of the cross-claims and accordingly he dismissed them. His Honour thought that since there was no evidence as to the efforts made by the landlord to re-let the premises after they had been vacated, there was insufficient proof of any damage the landlord may have suffered. Another matter which concerned his Honour was that part of the claim for damages was based upon the alleged failure by the tenants to meet their obligations under their leases to make contributions to the outgoings of the shopping centre. This part of the landlord's claim was bedevilled by its failure to give proper discovery before, or even during, the hearing. The failure came about in circumstances reflecting no credit on the landlord.
43. Evidence in support of the cross-claims was given by Mr Jeffrey. He had no personal knowledge of the facts in issue, since he had entered the service of the landlord only in 1986. However, without objection, he was allowed to give evidence of certain schedules which had been made out by another of the landlord's employees. His Honour said that although normally he would have given little weight to Mr Jeffrey's evidence, he saw no reason not to give "full effect" to it. However, he thought that it did not prove enough to make out the cross-claims.
44. There were two major reasons why his Honour was of this view. First, he thought that Mr Jeffrey's evidence did not support the claims for damages. We agree with his Honour's conclusion in this regard. Each of the tenants, parties to this litigation, went out of possession before the expiration of that tenant's lease. Where a tenant takes that course, a landlord may adopt the position that the lease remains on foot and sue for rent, as it becomes payable, during the remainder of the term. Actual possession by the tenant is not a necessary precondition of the landlord's right to recover the rent reserved by a lease. The essential matter is that the landlord has made possession available to the tenant, whether or not the tenant elects to take advantage of that availability.
45. The circumstances surrounding the vacation of premises by a tenant may constitute a repudiation by the tenant of the lease. The test is whether the tenant has evinced an intention not to perform his or her obligations under the lease. If the landlord elects to accept that repudiation, the lease will thereby be determined, bringing to an end the landlord's entitlement to recover rent but creating a right of action for damages. Ordinarily, the measure of damages will be the difference between the moneys payable to the landlord under the lease and the amount which is available to the landlord upon a reletting of the premises. Where damages are claimed, the onus of proof rests upon the landlord. It follows that damages are only recoverable in a case where the landlord shows the likely return to him or her under a new lease.
46. In each of the present cases the tenants gave up possession and failed to make further payments of rental. We speak with some hesitation as the facts were not fully explored in argument before us; but there was probably conduct amounting to repudiation by each of the tenants of their respective leases. (The landlord appears to have accepted the repudiations, at least in the Keen Mar and Palleson matters because it re-let those premises to other tenants. The landlord appears to have approached the matter, in the litigation, upon the assumption that this was so.) But the difficulty is that there is no evidence of the rentals available to the landlord under new leases. There was evidence before the trial judge, in the form of a written report from Mr Brett, a valuer, to the effect that the last six months of 1981 were the culmination of a boom in real estate activity and values on the Gold Coast and that rents for shops dropped during subsequent years. Mr Brett's evidence was to the effect that if the shops leased to the tenants had been offered for lease in 1983 or 1984 the rentals that would have been achieved would have been lower than the rentals reserved in the subject leases. He gave specific evidence as to the rentals which could have been achieved for the subject premises in 1982 and 1983, had they been then offered for lease; but this was not material as none of the leases was determined before 1984. The evidence suggests the possibility, if not the probability, that the landlord suffered some loss consequent upon the tenants vacating their premises prior to the expiration of their leases. However, that loss is left unquantified by the evidence. Moreover, there was a complete absence of evidence as to what steps the landlord took to re-let the premises and to obtain the best rents available.
47. At one stage, during our consideration of the matter, we thought that it might be possible, from the material in evidence (other than the evidence of Mr Jeffrey to which we shall presently refer) to calculate for ourselves the rents which fell due during the periods in which the tenants were respectively in possession and to deduct from those figures the payments actually made by them by way of rent, the totals of which do emerge from the evidence. If the former figure exceeded the latter, it would be safe to allow the difference, as being the minimum figure recoverable by the landlord. However, this exercise cannot safely be undertaken. Each of the leases reserves a specified rental for the first year but provides for an escalation of this rent in subsequent years to a figure to be agreed between the parties or to be determined by a valuer. There is no evidence of any such agreement or determination. Moreover, it would not be right simply to take the original reserved rent and to calculate the amount payable upon the basis that it remained unvaried. There is correspondence which indicates that, at least in some cases, the landlord responded to the tenants' complaints by reducing their rents below the reserved rents, thereby apparently inducing the tenants to stay in possession longer than they might otherwise have done. To make a calculation based upon the original reserved rents would be to deny the tenants the benefit of these concessions.
48. However, in two of the three cases, there was some evidence of the amounts of the rents owed to the landlord by the tenants when they vacated their respective premises. In the cases of both the Pallesons and Keen Mar Mr Jeffrey gave evidence without objection of the amounts owing by each tenant for rent up to the date of vacation of the premises. Under the Palleson lease the tenants were liable to pay interest at the rate of 14% per annum on rents which became due and remained unpaid. The Keen Mar lease was apparently not tendered so we are not aware whether it provided for interest on overdue rent and, if so, at what rate. Neither of the tenants gave evidence disputing the amounts which Mr Jeffrey said were owing to the landlord at the time they vacated their respective premises.
49. In the Palleson matter, Mr Jeffrey gave conflicting evidence as to the amount owing by the Pallesons when they vacated their premises. He initially said that the Pallesons owed the landlord $1880.65 when they vacated on 30 November 1984, but subsequently increased this figure to $2499.65 (i.e. $77,753.97 less amount paid $75,253.98). Neither of these figures was disputed by the Pallesons. In this unsatisfactory state of the evidence, we think it would have been proper for his Honour to allow only the lower figure of $1880. Interest at 14% on this amount to the date of judgment, 11 March 1988, would be $867. Accordingly, subject to the matter of outgoings, to which we will come, the landlord was entitled to recover the amount of $2747 in its cross-action against the Pallesons.
50. In the Keen Mar matter, Mr Jeffrey said an amount of $12,957 was owing for rent at the time the premises were vacated, on 1 March 1984. Although we are unaware of any agreement as to interest, it is reasonable to allow prejudgment interest at 14% for the period of four years from date of vacation until judgment. This amounts to $7256, a total of $20,213. Once again this is subject to the matter of outgoings. The cross-claim was also made against Alan Keen and Trudy Keen presumably persons having some association with Keen Mar. However, as no evidence was offered in support of that claim the recovery must be against the company alone.
51. In view of the fact that the landlord is entitled to some recovery against Keen Mar it is appropriate to make an order in its favour in respect of some of the costs incurred by it at first instance. However, the amount recovered falls well short of that claimed. As time was spent on the unsuccessful claims we think that justice would be done if Keen Mar was ordered to pay one half of the costs of the landlord's claim against it.
52. Mr Jeffrey said in evidence that the unpaid rentals to which he deposed had been calculated making allowance for rebates of rent which the landlord had agreed to give the tenants.
53. In the Coomber matter, the tenants vacated the premises on 20 October 1984. The lease was not due to expire until 8 December 1984. Mr Jeffrey said that the amount of rent "to the end of the rental period" was $3,279.39. The term "rental period" is ambiguous but Mr Jeffrey said that this period was 38 days and he said that, at the date of vacation, the lease had 38 days to run. In the absence of any evidence to suggest otherwise, we infer that the Coomber tenants paid the whole of the rent which fell due during their period of occupation. Consequently, consistently with what has already been said, nothing should be allowed to the landlord in respect of this claim.
54. The amounts claimed by the landlord against the Pallesons and Keen Mar by way of damages were very substantial, since each of those two leases had several years to run after the tenants vacated the premises. There was no satisfactory evidence either as to the fact of repudiation by the various tenants or as to the extent of any consequential losses suffered by the landlord. Under the circumstances, a question arises as to the course appropriate to be taken. Counsel for the landlord submitted that, if necessary, the matter should be remitted to the trial judge in order that he might receive sufficient new evidence to enable him to assess the amount of damages. This course was opposed by counsel for the tenants who argued that the landlord had enjoyed every opportunity properly to formulate its case at the trial, that it had deliberately withheld from discovery documents relevant to the state of accounts between the parties (i.e. the documents relating to outgoings) and that the landlord should not be given a further opportunity to make a case.
55. The trial judge considered whether, in the light of his conclusion that
the evidence did not establish the cross-claim, he ought
to grant leave to the
landlord to reopen its case. His Honour commented that, in many cases, "it
would no doubt be right to allow
a reopening of the evidence to enable proper
proof of missing elements of a claim". However, his Honour was not persuaded
that this
was such a case, saying:
"Here, however, a number of circumstances combine to56. The trial judge's decision not to permit the reopening by the cross-claimant of its case was a decision made by him in the exercise of a judicial discretion. It is well settled that an appellate court will interfere with such a decision only where it is persuaded that, in the words of Kitto J in Australian Coal and Shale Employees' Federation v Commonwealth [1953] HCA 25; (1953) 94 CLR 621 at p 627, it is "clearly wrong". Such satisfaction may exist where a primary judge has acted upon a wrong principle or under an erroneous view of the law, has failed to consider material factors or has taken into account extraneous circumstances. Occasionally, although the nature of the error is not manifest, the result is so unreasonable or plainly unjust that the appellate court will infer a failure properly to exercise the discretion reposed in the court: see Ahern v Deputy Commissioner of Taxation (1987) 76 ALR 136 at p 147 and the cases there cited.
influence me against allowing reopening, one of
which was the unfortunate way in which the claims
came to be presented; I intend no criticism of
counsel, who were helpful throughout. In
exercising my discretion against reopening, I can
take into account, in particular, the absence of
proper discovery, the late reformulation of the
claim, and the element of deception in the
apportionment of outgoings, to which I have
referred."
57. We do not think that the decision of the trial judge not to permit the
landlord to re-open its case exhibits any of the characteristics
just
mentioned. The trial was a lengthy one. His Honour had the benefit of having
observed the manner in which it was conducted;
including the apparently
deliberate suppression by the landlord of documents properly discoverable and
its failure, despite comment
from his Honour, to present properly the
ingredients of its cross-claim. His Honour would have been acutely aware both
of the delays
which had occurred in the matter coming for trial and of the
length and cost of the trial. The landlord was represented at the trial
by
experienced counsel. His Honour would have been justified in concluding that
the landlord had elected to conduct the cross-claim
in a particular manner and
that it would be unjust to permit it, that course having failed, to again
reformulate the claim -- with
consequential additional expense and delay -- in
the hope of obtaining a better result. We do not think that his Honour's
discretion
miscarried and we reject the submission that the cross-claims ought
to be remitted to the trial judge for further evidence.
Illegality
58. The tenants defended the cross-claims on the basis that no Certificate of Classification in respect of the leased premises had been issued under the provisions of the Standard Building by-laws 1975 made under the Building Act, and that consequently the occupation of the premises was illegal. Accordingly, so it was argued, the landlord could not recover the unpaid rentals. Although it was unnecessary for the trial judge to rule on this submission, he was of the opinion that it was sound.
59. The Standard Building By-laws make provision for the classification of
buildings and portions of buildings into various classes.
The classes
include Class VI, which is applicable, inter alia, to shops. By-law 6.3
reads as follows:-
"6.3 Where approval is given for any building60. The form contained in Appendix 2A begins:
work, the Local Authority shall -
(a) on substantial completion of the
building concerned; or
(b) where it consents in writing to the
occupation of portion of the building
concerned before the completion of the
entire building concerned,
prepare a certificate of classification, in
duplicate, in or to the effect of the form set out
in Appendix 2A."
"This is to certify that the Council has approved ofThe form makes no provision for the issue of a conditional certificate.
the use of the building as a building of the class
or classes detailed ...".
61. By-law 6.3a provides:
"6.3a No person shall occupy any portion of a62. The Gold Coast City Council issued two certificates in respect of the shopping centre. It is unnecessary to refer to the first certificate. It did not refer to any of the premises which are the subject of the landlord's appeal. The second certificate was issued on 14 April 1982 and bore the following endorsement:
building of Class II, III, IV, V, VI, VII, VIII, or
IX, until a certificate of classification has been
issued in accordance with these by-laws."
"Storey or Portion of Building Class or Classes63. The trial judge found that the certificate issued on 14 April 1982 was ineffective to authorize the tenants' occupation of the premises leased to them. In his opinion, the Council had no power to issue a conditional certificate and, accordingly, the certificate was void. He rejected an argument that, if the condition referred to in the certificate was invalid, it was severable and that the certificate was valid when shorn of the condition. All these findings were challenged by the landlord.
SUPERMARKET AND VARIETY SHOPS. VI
FIRST FLOOR AREA ABOVE SHOP. VII
BASEMENT CAR PARK. VII
CERTIFICATE SUBJECT TO:- Retaining of excavation
to eastern adjoining property and completion of
adjacent stormwater drain within TWENTY-EIGHT (28)
DAYS of Council's approval of proposed design."
64. The by-laws do not, in terms, give a local authority power to issue a certificate of classification subject to conditions. Counsel for the landlord submitted that a local authority has implied power, under the by-laws, to issue a conditional certificate. They submitted that it must have been intended that a local authority should have such a power, as otherwise the operation of the by-laws would give rise to much inconvenience. It was put that lack of power to issue a conditional certificate would, for instance, prevent a local authority from issuing a certificate of classification in respect of a very large building on the condition that some trifling work be completed to the authority's satisfaction. The result would be, so it was suggested, that the building could not legally be occupied at all pending completion of the trifling work unless the authority were minded to issue an unconditional certificate.
65. Any power to issue a conditional certificate of classification must be found in the by-laws. A statutory power such as is found in by-law 6.3 includes a power to do whatever may fairly be regarded as incidental to the power: The Queen v Gough; Ex parte Australasian Meat Industry Employees' Union [1965] HCA 52; (1965) 114 CLR 394 at p 422 and Civic Co-operative Permanent Building Society Limited v Registrar of Co-operative Societies and Agents (1974) 24 FLR 430 at pp 436-437. In the latter case Franki J. referred to some of the well known authorities on the existence and extent of the incidental or implied powers of statutory bodies, including Deuchar v Gas Light & Coke Co. (1924) 1 Ch 422 where Astbury J. (at p 435) expressed the view that "the test ... is not one of absolute necessity on the one hand or mere convenience on the other, but whether the thing objected to is reasonably incidental to carrying out a statutory object". The decision of the Court of Appeal in Deuchar was affirmed on appeal: (1925) AC 691.
66. It is to be observed that para. (a) of by-law 6.3 authorizes the preparation of a certificate of classification on substantial completion of a building. We think that it can fairly be regarded as incidental to that power to issue a certificate conditional upon the doing of work that will bring the building to a state of total completion. Paragraph (b) of by-law 6.3 authorizes a local authority to issue a certificate in respect of the occupation of portion of a building before the completion of the entire building. Likewise, it seems to us that it can fairly be regarded as incidental to that power to issue a certificate conditional upon completion of the entire building.
67. It is important to note that "building" is defined in by-law 1.3(1) as meaning "a fixed structure that is wholly or partly enclosed by walls and is roofed and includes any part of a building". Many facilities and works which are commonly ancillary to buildings, for example car parks, fall outside the definition of "building" in by-law 1.3(1). It would be a surprising and stultifying limitation on the power of a local authority if it were obliged to issue a certificate of classification in respect of a building (because it had reached the stage of substantial completion) without having the power to make that certificate subject to a condition that the ancillary facilities and works be completed.
68. In Gough (supra at p 406) Barwick C.J. observed that the courts have not been niggardly in their interpretation of the implied powers of corporations set up to conduct trading operations. A similarly generous approach should be taken to the interpretation of the by-laws made under the Building Act, unless some reason of policy can be discerned for not doing so. We can see no such reason. On the contrary, not to imply a power to issue a conditional certificate could lead, in many instances, to frustrating delays in the occupation of buildings without any advancement of the public interest.
69. The vesting of power in a local authority to grant a permit subject to conditions authorizing the occupation of a building would not be without precedent. Such a power is given to local authorities in New South Wales by s.316 of the Local Government Act 1919 (NSW).
70. The learned trial judge was of the view that a power to issue a conditional certificate of the kind issued by the Council ought not to be implied because, should the condition not be satisfied, the certificate would fail or become void and would thereupon cease, retrospectively, to authorize occupation of the building. But whether this result would follow is open to question. Read in its entirety, the subject certificate exhibits the Council's intention that the certificate would take effect immediately. That is to say, it was intended to authorize the occupation of the building. Unless the Council had intended that the certificate should have effect from 14 April there would have been no point in issuing it. Thus the effect of the certificate was to authorize the occupation of the building and also to impose a condition requiring the doing of the work referred to in the indorsement. It is possible that the enforcement of this condition may have presented the Council with a problem if the necessary work was not subsequently executed to its satisfaction. The extent of this problem was not explored in argument. As will appear from some references which we will make to the evidence, it was a problem that did not, in fact, arise. But even if it had, we do not think that any problem of enforcement would have resulted in the certificate, valid at the time it was issued, retrospectively losing its validity. The certificate would cease to have effect once there was a default in compliance with the condition, but the invalidity would be prospective only. In relation to difficulties of enforcement it may be observed that, in any case in which a council prepares and issues an unconditional certificate upon substantial completion of a building, a somewhat similar problem would arise if further insubstantial work, required to be done to bring the building to a state of total completion, is left undone.
71. In our opinion it was within the power of the Council to issue the certificate of classification of 14 April 1982. That being so, the question arises whether it was effective to authorize the occupation of the premises occupied by the tenants.
72. It was submitted that it was not effective to authorize the tenants' occupation of their premises because the condition relating to the stormwater drain was not complied with. We therefore turn to consider this submission. However, before doing so we observe that the only issue presented to the trial judge by the pleadings on this part of the case was whether a certificate of classification under the by-laws had issued in relation to the premises. In their statements of claim, the tenants alleged that a certificate had not been issued. The landlord answered this allegation by asserting that a certificate had been issued in relation to the demised premises on 14 April 1982. The tenants' reply was a simple joinder of issue. Hence, the only issue at the trial on this part of the case was the validity of the certificate. There was no issue that, if the certificate was valid when it was issued, it subsequently became ineffectual because of non-compliance with the condition. Nevertheless, without any amendment of the pleadings, that matter was litigated and was argued on appeal.
73. The onus lay on the tenants of establishing non-compliance with the condition since it was they who alleged it. To determine this question it is necessary to examine the evidence as to what happened after the issue of the certificate.
74. To support the case that the landlord failed to comply with the condition senior counsel for the tenants tendered the landlord's answers to certain interrogatories administered to it. In those answers the landlord admitted that the stormwater drain referred to in the condition was required to be completed within 28 days of the Gold Coast City Council's approval of the proposed design and further admitted that "the stormwater drain was not completed within 28 days of Council's approval of the proposed design". These admissions do not identify the date upon which the Council approved the design of the drain. For all that appears from the answers to the interrogatories, the Council may have approved a design after the expiration of the tenants' leases. If that occurred, there would not have been any non-compliance with the condition while the leases were current. This is not a fanciful speculation because it is plain that discussion with the Council regarding drainage went on for some years.
75. There was a considerable volume of correspondence, between the landlord and its architects on the one hand and the Gold Coast City Council on the other, dealing with, inter alia, the design and building of the stormwater drain. It is not easy to discern from the correspondence whether this drain is the precise drain referred to in the condition because the design and building of the drain was considered in conjunction with drainage works related to adjoining land.
76. On 23 September 1982 the Council wrote to the architects referring to a meeting which had been held with the Assistant Building Surveyor "to discuss the problem of the discharge of stormwater and retention of the property to the east of the ... site." It was stated that a site meeting had been held with adjoining property owners to discuss a system of stormwater drains to carry off stormwater from those sites, and that subsequently those property owners had been requested to carry out work to discharge stormwater to the approval of the Council. The letter stated that "it would seem a combined project between (the landlord) and (the adjoining owners) is the proper solution." The letter concluded with the statement that a meeting would be arranged between all property owners to discuss the construction of a stormwater drainage system and retaining wall.
77. Thereafter site meetings were held between representatives of the landlord's architects, adjoining landowners and the Gold Coast City Council. On 4 February 1983 the architects wrote to the Council referring to the fact that at a site meeting held three months earlier it was agreed that the Council would "design and cost a solution to the problem". The request was made that the Council's officers should attend to the matter with the utmost urgency. The Council replied on 7 March 1983 making a suggestion as to the necessary drainage work and suggesting that another meeting be held with the adjoining landowners.
78. On 11 July 1983, the landlord wrote to the Council expressing concern that "there is no apparent progress from your end with regard to the problem of flooding within our Centre ...", and requesting the Council to call a meeting of interested parties "so as to reach a solution". The Council replied on 20 July 1983 saying that a meeting had been arranged for 3 August 1983 with the relevant parties "to discuss the final solution ...".
79. On 23 November 1983 the landlord wrote to the Council referring to the minutes of the meeting held on 3 August. This letter made reference to the landlord's decision to construct at its own cost a retaining wall, apparently in conjunction with the drain. However, it also referred to the part to be played by the owners of adjoining properties in dealing with the stormwater drainage problem. It is not possible to discern from the correspondence the exact inter-relation between the "adjacent stormwater drain" referred to in the certificate of 14 April 1982 and the "stormwater drainage work" referred to in the correspondence. On 13 December 1983, not having received a reply to its letter of 23 November, the landlord again wrote to the Council complaining that, in effect, the adjoining landowners were not doing their part in solving the stormwater problem. Further complaints were made on 10 January and 5 March 1984.
80. The last reference to the Council's attitude to the drainage problem appears in a memo of 13 March 1984 to the Town Clerk from the Chief Inspector. The Chief Inspector referred to the "long and tortuous history over the last few years" of the matter. The report makes reference to a design prepared by the Council's Works Department of a combination open drain and retaining wall along the boundary between the properties of the landlord and the adjoining owners. The statement is made that the landlord was not prepared to construct the drain and wall at its expense and that it had taken alternate action to erect the retaining wall on its property. It is stated that the drainage problem could have been overcome if the landlord had constructed the proposed drain and wall as suggested by Council at an approximate cost of $12,000.
81. The impression which is gained from a reading of the correspondence is that the landlord proceeded to retain the excavation to the eastern adjoining property, and that it carried out certain drainage works. These drainage works appear to have satisfied the Council. At no stage did the Council write to the landlord, or to its architects, complaining that the landlord was in breach of the condition referred to in the certificate of 14 April. The answers to the interrogatories must be understood in the light of all this evidence.
82. Having regard to the totality of the evidence, to only some of which we have referred, it appears that the Gold Coast City Council accepted the drainage work carried out by the landlord as a sufficient compliance with its obligations in the certificate of 14 April 1982. The evidence contains no suggestion that the Council regarded the landlord as being under any obligation to carry out more work to satisfy its requirements or that it required it to do so. The "alternate action" taken by the landlord, being the action referred to in the Chief Inspector's report of 13 March 1984, was taken with the knowledge of the Council and only after it gave the necessary permission for the carrying out of the work. In effect, the Council gave its consent to a variation of the condition in the certificate. It was for the Council to determine whether the stormwater drain should be completed in accordance with any particular design. Even if the stormwater drain was not ultimately constructed in accordance with "the proposed design" referred to in the certificate the events subsequent to the issue of the certificate would have estopped the Council from asserting that the landlord had not complied with its obligations under the certificate. The Town Clerk of the Council signed the letters sent to the landlord and its architects. They were entitled to assume that the Town Clerk spoke with the authority of the Council: cf. Page v Drummoyne Council (1973) 28 LGRA 263 at p 270 per Jacobs J.
83. In the circumstances of this case the principle recognized in cases such as Southend-on-Sea Corporation v Hodgson (Wickford) Ltd. (1962) 1 QB 416, that a local authority cannot be estopped from performing its statutory duties, would have no application: cf. Brickworks Limited v Warringah Corporation (1964) 108 CLR p 568 at p 577 per Windeyer J. In Lever (Finance) v Westminster City Corporation (1971) 1 QB 222, at p 230, Lord Denning M.R. observed that statements made in cases such as Southend-on-Sea Corporation v Hodgson (supra) that a public authority cannot be estopped by any representations made by its officers must be taken with considerable reserve and that, if an officer acting within the scope of his ostensible authority makes a representation on which another acts, then the authority may be bound by it as much as a private concern would be. Lever's Case was considered in Western Fish Products Ltd. v Penwith District Council (1981) 2 All ER 204 at pp 220-221 where it was said that Lord Denning stated the law too widely in the above observation. However, for the purposes of the present case, Lord Denning's dictum remains relevant and, in our respectful opinion, correct.
84. Of course, at no stage, did the Council make any assertion that the landlord had not complied with its requirements. It would be a surprising result if the certificate of classification were to be held ineffectual because of non-compliance with the Council's requirements when the Council itself not only never asserted such non-compliance but, on the contrary, gave every indication that its requirements had been met.
85. In the result, we do not think that the evidence established that the certificate of classification was ineffectual and that, in consequence, the tenants' occupation of the premises was illegal.
86. We have considered the question of the legality of the tenants' occupation of their premises on the basis that it was within the power of the Council to issue the certificate of 14 April 1982 subject to the drainage condition. Counsel for the landlord submitted that, if the Council was without power to impose that condition, the certificate was nevertheless valid because the condition was severable.
87. Having regard to the views we have already expressed no question of
severance arises. If it had, the question would have had
to be considered in
the light of such authorities as Potato Marketing Board v Merricks (1958) 2 QB
316, Kingsway Investments v Kent County Council (1971) AC 72, Thames Water
Authority v Elmbridge B.C. (1983) QB 570 and R. v North Hertfordshire District
Council, ex parte Cobbold (1985) 3 All ER 486.
The outgoings
88. It remains to consider the claims of the tenants to recover the amounts for which they were overcharged for out- goings. In our opinion, the overcharges were paid by the tenants pursuant to mistakes of fact rather than of law. In effect, the landlord told the tenants that the total outgoings on the shopping centre were a certain amount, and that the amounts for which they had been charged had been calculated in accordance with their obligations under their leases. In these circumstances, the tenants mistakenly paid more than they were obliged to pay. Their mistake was not caused by their misunderstanding of the law. It was caused by the erroneous information given to them by the landlord.
89. In any event, the circumstances in which the landlord demanded and was paid outgoings by the tenants established, in our opinion, that the landlord was unjustly enriched to the extent of the over-payment made to it. The circumstances in which a claim for unjust enrichment may be made out are discussed in Pavey & Matthews Pty. Ltd. v Paul [1987] HCA 5; (1987) 162 CLR 221 at pp 227 and 246 et seq., Baumgartner v Baumgartner [1987] HCA 59; (1987) 62 ALJR 29 at p 36 per Toohey J. and Australia & New Zealand Banking Group Ltd. v Westpac Banking Corporation [1988] HCA 17; (1988) 62 ALJR 292 at p 295. The over-payments made by the tenants were not made in submission to honest claims made by the landlord. It appears from the evidence that the landlord's agent was well aware at relevant times that the tenants were being overcharged for outgoings. The amount of the outgoings has been calculated. Although the landlord gave instructions which would have had the effect of overcharging each of the tenants by 10% of all outgoings paid by that tenant, there were off-setting errors in the calculation which reduced the actual overcharge to 6%. The relevant figures are as follows: Palleson, $1491; Keen Mar $248; Coomber, $927.
90. Pre-judgment interest should be allowed on each of these amounts at 14% from the date of vacation by the particular tenant until the date of judgment, thus increasing the figures to $2178, $387 and $1370 respectively.
91. In the case of Palleson the sum of $2178 should be deducted from the $2747 due for rent, leading to judgment for the landlord in the cross-action in the sum of $569. In the case of Keen Mar $387 should be deducted from $20,213, giving a net recovery by the landlord of $19,826. As no outstanding rent is proved against the Coomber tenants, those applicants should have judgment in their favour for $1370.
92. The computations made in these reasons have been made by us. It is possible that, in making our calculations we have fallen into some error. Accordingly, we propose to allow counsel an opportunity to check the figures. For this reason we will direct that judgment not be entered for a period of 21 days after the date upon which the orders are pronounced. We are prepared to review the calculation upon the written application of either party, supported by submissions, within this period.
93. As requested by the parties, we do not at this stage dispose of the question of costs of the appeals. We shall consider any application for costs in respect of the proceedings before us, made by any party. Any such application must be made within 21 days, supported by written submissions. However, it may serve to avoid unnecessary expense if we indicate that our present view, which we emphasize is only tentative, is that there ought to be no order for costs of the appeals. Each of the parties has enjoyed some recovery but, in each case, substantial claims have failed. It may be that justice would be done if all parties were left to bear their own costs of the appeals.
I agree with the orders proposed by Morling and Wilcox JJ. I agree also with their reasons for dismissing the cross-claims by the landlord save for the amounts proved to have been unpaid in respect of rent for the periods before the tenants respectively left the leased premises; and with their conclusion that the primary judge's decision refusing to reopen the landlord's case in respect of damages or rental was not vitiated by any error. I agree also with the reasons they give that the tenants are entitled to recover the amounts for the outgoings for which they were deliberately overcharged by the landlord, and with their conclusion and reasons concerning the validity of a conditional Certificate of Classification.
2. On the pleadings the issue between the parties was as to the validity of the Certificate of Classification which issued on 14 April 1982. The question of whether the Certificate of Classification, if valid, was of no effect because of non-compliance, was not raised on the pleadings nor the subject of submission to or ruling by the trial judge. In that context, it seems to me unnecessary and inappropriate to consider whether the condition was severable, or whether the condition had in fact been complied with or, failing compliance, the consequences of non-compliance.
3. In my opinion, however, the findings by the primary judge concerning the claims of the applicants pursuant to s.52 of the Trade Practices Act 1974 and his findings that those representations induced the tenants to enter into the leases, were open to him on the evidence in this case, and ought not be overturned. The claims failed because the trial judge held that the loss or damage suffered by the tenants in relying on those representations occurred more than three years prior to the commencement of the proceedings and were therefore barred by s.82(2) of the Trade Practices Act 1974.
4. Section 82(1) vests in a person who has suffered loss or damage by conduct
in contravention of s.52 of the Trade Practices Act 1974 a right to recover
the amount of the loss or damage. Section 82(2) provides:-
"An action under sub-section (1) may be commencedBoth the Coomber and Palleson applications were commenced on 7 December 1984.
at any time within three years after the date on
which the cause of action accrued."
5. The trial judge concluded that s.87 did not assist the tenants if their claims were barred by s.82(2). On the appeal, the tenants accepted, for the purpose of argument, that they were required to institute their proceedings within three years after the date on which their causes of action accrued.
6. In the Coomber case, the agreement for lease is undated but the lease was executed on 5 October 1981, i.e. more than three years before the institution of the proceedings. In the Palleson case, the lease was executed on 2 December 1981 - again more than three years before the institution of the proceedings. The shopping centre was officially opened on 8 December 1981.
7. It was submitted by the tenants that the representations as to a national chicken takeaway which misled both the Coomber and Palleson interests and the representations as to the ease of access and the carpark level, which misled the Coomber interests, were representations as to qualities or characteristics which the shopping centre would have when the appellants went into possession. It was then submitted that those representations could not have misled the appellants or, alternatively, they could not have suffered damage until they went into possession of a shopping centre without those qualities or characteristics.
8. In my opinion, neither of these claims is correct.
9. The orthodox view, espoused by the landlord, is that a cause of action accrues when damages is suffered and that time under a statute of limitations continues to run although the plaintiff is unaware of the damage. It was argued by the tenants that, before a cause of action accrues, there must be knowledge of damage.
10. The trial judges concluded, relying on Forster v. Outred & Co. (1982) 1 WLR 86, D.W. Moore and Co. Ltd. v. Ferrier (1988) 1 WLR 267 and Gillespie v. Elliott (1987) 2 QdR 509, that "the cause of action accrued by the time the applicant entered into the relevant transaction; where the applicant has taken a lease, that will be not later than the execution of the lease."
11. I agree. In my opinion, the relevant date is the date of execution of the lease, not the date of entering into possession pursuant to the lease.
12. The conduct of a landlord's agent constituted by the making of promissory
representations which induce the execution of a lease
is to be characterised
as misleading or deceptive conduct on a consideration of the circumstances at
the time of that conduct. The
well-known passages of the Full Court in Global
Sportsman Pty. Ltd. v. Mirror Newspapers Pty. Ltd. [1984] FCA 180; (1984) 2 FCR 82 at p 88
summarises the position:-
"A statement which involves the state of mind ofThe fact that the promissory representation ultimately is unfulfilled, is not determinative of the question of whether at the time of that conduct it was misleading or deceptive: Bill Acceptance Corporation Ltd. v. G.W.A. Ltd. [1983] FCA 269; (1983) 78 FLR 171.
the maker ordinarily conveys the meaning
(expressly or by implication) that the maker of
the statement had a particular state of mind when
the statement was made and, commonly at least,
that there was basis for that state of mind. If
the meaning contained in or conveyed by the
statement is false in that or in any other
respect, the making of the statement will have
contravened s.52(1) of the Act. Compare Lyons v.
Kern Konstructions (Townsville) Pty. Ltd. (1983)
47 ALR 114.
The non-fulfilment of a promise when the time for
performance arrives does not of itself establish
that the promisor did not intend to perform it
when it was made or that the promisor's intention
lacked any, or any adequate, foundation.
Similarly, that a prediction proves inaccurate
does not of itself establish that the maker of the
prediction did not believe that it would eventuate
or that the belief lacked any, or any adequate,
foundation. Likewise, the incorrectness of an
opinion (assuming that can be established) does
not of itself establish that the opinion was not
held by the person who expressed it or that it
lacked any, or any adequate, foundation.
The applicants argued that, nevertheless, the
statement of an incorrect opinion is misleading or
deceptive or likely to mislead or deceive merely
because it misinforms or is likely to misinform.
An expression of opinion which is identifiable as
such conveys no more than that the opinion
expressed is held and perhaps that there is basis
for the opinion. At least if those conditions are
met, an expression of opinion, however erroneous,
misrepresents nothing."
13. Where conduct consists in the making of promissory representations which have the effect of inducing a lease, it is necessary, before that conduct can form the basis of a cause of action, that, as at the date of execution of the lease, the promissory representations as to the characteristics of the shopping centre be unfulfilled. This is not because, if the representation is then fulfilled, the character of the conduct, misleading or deceptive at the time of the conduct, has ceased to be misleading or deceptive, but because no damage has been suffered by that relevant conduct, and hence there is no cause of action under s.82(2) of the Act.
14. For the same reason it is necessary that the promissory representations be unfulfilled as at the respective dates of possession, or shortly thereafter.
15. If there was, at the time of the making of the promissory representations, no basis for them, and if the promissory representations at the time of the execution of the leases are in fact unfulfilled, the lessees have at that time suffered quantifiable loss or damage by conduct in contravention of s. 52, because the price paid for their leasehold interest, ex hypothesi reflecting the representations which induced the execution of the lease, is higher than the value of that interest on the true facts.
16. It was submitted in the alternative that all of the misleading
representations found to have been made not only caused the tenants
damage,
but concealed from them the existence of their causes of action until after
they went into possession. Reliance is placed
on the observations in Hawkins
v. Clayton (1988) 62 ALJR 240 by Deane J., who said (at p 261) of the firm's
defence in that case
based on the Limitation Act:-
"There is a more general answer to that defence.And later at p 262 said:-
Its basis is to be found in the circumstance that,
in the present case, the negligent failure of the
firm to inform Mr. Hawkins of the existence and
contents of the testatrix's last will not only
caused the damage which was sustained by him in
the capacity of executor of the testatrix's estate
but also effectively concealed from him, for so
long as he remained unaware of the contents of the
will, the existence of the cause of action in
negligence against the firm."
"It seems to me, however, that the preferable17. Consistent with that approach, the words "date on which the cause of action accrued" in s.82(2) could be construed as excluding any period during which the wrongful act itself effectively precluded the institution of proceedings.
approach is to recognise that it could not have
been the legislative intent that the effect of
provisions such as s.14(1) of the Limitation Act
should be that a cause of action for a wrongful
act should be barred by lapse of time during a
period in which the wrongful act itself
effectively precluded the bringing of proceedings."
18. The cause of action in Hawkins was of a special kind. The wrongful act in Hawkins was the failure to discharge what the majority held was a duty owed by a solicitor who had custody of a will to disclose to an executor the existence of the contents of the testatrix's will. This is to be contrasted with the wrongful acts relied on here. The test espoused by Deane J. in Hawkins is no warrant in this case for extending the period within which the applications could be commenced until such time as the tenants were aware of the absence of the promised features of the shopping centre. The approach of Deane J. in Hawkins on the question of the applicability of the Limitation Act was not shared by the other judges in that case.
19. Mason and Wilson JJ. were of the opinion that the solicitors were not under any duty of care.
20. Brennan J. concluded at p 249:-
"Whether the raising of the Limitation Act in a21. Gaudron J., at p 267, said:-
case like the present is regarded as appropriate
or not, the issue raises questions which depend on
the answer to a technical question; when does a
cause of action in tort for breach of a duty to
disclose first accrue? The majority of the Court
of Appeal held that such a cause of action first
accrues when damage occurs irrespective of the
claimant's knowledge (per Kirby P.) or as soon as
the wrongful act has caused some damage beyond
what can be regarded as negligible (per Glass
J.A.) There is no doubt that most causes of action
for negligence first accrue when the plaintiff
first suffers damage caused by the defendant's
breach of duty....This case, however, is not an
ordinary case in which a plaintiff seeks damages
for negligence. For reasons earlier stated damage
is not temporally the last element of the cause of
action to occur. Unlike the ordinary case, the
last element to occur in a case of the present
kind is the nominated executor's assumption of the
office of executor. Until that occurs, the cause
of action is not complete. For the purposes of s.
14(1)(b) of the Limitation Act, 'time runs from
the accruer of the cause of action, but a cause of
action does not accrue unless there be some one
who can institute the action': Meyappa Chetty v.
Supramanian Chetty (1916) 1 AC 603 at 610; and
see Thomson v. Clanmorris (Lord) (1900) 1 Ch 718
at 728-729. Until the nominated executor assumes
the office of executor, the cause of action does
not accrue and time does not begin to run....Time
commenced to run in this case only from Mr.
Hawkins' assumption of the office in March 1981.
The action was commenced within six years
thereafter. The defence based on the Limitation
Act fails."
"...the loss sustained by Mr. Hawkins was the22. On the facts, this is not a case of fraudulent concealment.
difference between the value of the assets of the
estate when they came under his control as
executor and the value they would then have
enjoyed had he then held them in the same capacity
and had they been properly managed from the time
of the death of the testatrix.
Until the assets came under the actual control of
Mr. Hawkins they had sustained damage by
deterioration and had been subject to waste,
including that the real estate had not been put to
income-producing use. But that was not the loss
sustained by Mr. Hawkins. The property was not
then vested in him, notwithstanding that by s. 44
of the Wills, Probate and Administration Act the
grant of probate effected a vesting with
retrospective effect....What he suffered was a
loss in the value of the assets referable to their
not having been properly managed in the period
prior to coming under his control. That loss was
suffered by the executor only when the assets came
under his actual control. At the earliest, that
occurred when he was informed of the existence of
the will in March 1981. Action was commenced
within six years of that date."
23. I acknowledge that the question of when a cause of action accrues is not
free from difficulty. However, in the circumstances
of the present case, at
best for the tenants their cause of action did not accrue until they went into
possession. Mr. Palleson was
asked:-
"When did you first become aware that the shopsHe replied:-
were not built on the same level as the carpark -
the external carpark?"
"That would only be a few days prior to the24. Mr. Keily said:-
opening."
"It was not evident until about three weeks prior25. Agents for the landlord wrote letters dated 11 November 1981 and 24 November 1981, each of which referred to the opening date of Tuesday, 8 December 1981, and which urged all tenants to be fully operational by that date and requested that the tenants organize their shopfitters to allow them quickly and effectively to complete their shops' fitout.
to opening - that in fact the external carpark
level was going to be different from that of the
shopping level."
26. The evidence is such that, in my opinion, the tenants must have been aware of the falsity of the representations about the national chicken shop and the carpark level prior to 7 December 1984 when the applications were filed.
27. Given the condition of the shopping centre in early December and, in particular, the fact that there was a takeaway chicken business not associated with a national operator in one of the shop areas, none of the tenants could have been in any doubt that, by 8 December 1981, or even within a reasonable time thereafter, there would not be a national chicken takeaway operator occupying three shops in the shopping centre. Their state of mind before 7 December must have accorded with the fact: no national chicken takeaway business would be a lessee in the centre and the shops in the centre were not on the same level as the external carpark.
28. My conclusion is that, even on the basis on which the tenants contend their cause of action accrued, the position is that the tenants' s.52 claims are statute barred.
29. I want shortly to state why I disagree with the conclusion of Morling and Wilcox JJ. that one of the representations found by the primary judge to constitute s.52 conduct did not have that character, and their conclusion that, contrary to the finding of the trial judge, the representations did not induce the execution of the respective leases.
30. On the appeal it was asserted by the landlord that it was not open to the trial judge to find that the representations found by him to have been made were in part responsible for the tenants entering into the respective leases. I do not accept those submissions.
31. In Warren v. Coombes [1979] HCA 9; (1978-9) 142 CLR 531, the majority (Gibbs A.C.J.,
Jacobs and Murphy JJ.) said in their joint judgment at 551:-
"Shortly expressed, the established principles are,And at 552:-
we think, that in general an appellate court is in
as good a position as the trial judge to decide on
the proper inference to be drawn from facts which
are undisputed or which, having been disputed, are
established by the findings of the trial judge.
In deciding what is the proper inference to be
drawn, the appellate court will give respect and
weight to the conclusion of the trial judge, but,
once having reached its own conclusion, will not
shrink from giving effect to it."
"The duty of the appellate court is to decide the32. The principal determinant of the approach to be adopted by an appellate court is whether the trial judge was in no better position than appellate judges to decide the particular question. I do not share the view of Morling and Wilcox JJ. that the judge in this case was in no better position than the appellate court. Their conclusions are not posited on the second basis of appellate intervention, namely that which recognises the advantages of the trial judge and gives full weight to his decision, but nonetheless consider that it was wrong.
case - the facts as well as the law - for itself.
In so doing it must recognize the advantages
enjoyed by the judge who conducted the trial. But
if the judges of appeal consider that in the
circumstances the trial judge was in no better
position to decide the particular question than
they are themselves, or if, after giving full
weight to his decision, they consider that it was
wrong, they must discharge their duty and give
effect to their own judgment."
33. The determination of what factors did induce a party to enter into a lease is, in my respectful view, an area in which the recognized advantage of a trial judge is entitled to special respect by an appellate court. The question of inducement is an entirely subjective one. The test is not whether a reasonable person would have been induced by those representations to enter into the lease in question nor whether, on some objective basis, the tenants ought not to have placed any weight on the representations in their decision to go ahead.
34. In Smith v. Chadwick (1884) 9 AC 187, an action for deceit, Lord
Blackburn, at p 196 said:-
"I think that if it is proved that the defendantsAs the Full Court (Sheppard, Morling and Spender JJ.) noted in Jones v. Acfold Investments Pty. Ltd. (1984-5) 59 ALR 613 at 624, the inference of inducement is one of fact which may be rebutted by other evidence which is inconsistent with that inference.
with a view to induce the plaintiff to enter into
a contract made a statement to the plaintiff of
such a nature as would be likely to induce a
person to enter into a contract, and it is proved
that the plaintiff did enter into the contract, it
is a fair inference of fact that he was induced to
do so by the statement...Its weight as evidence
must greatly depend upon the degree to which the
action of the plaintiff was likely, and on the
absence of all other grounds on which the
plaintiff might act. I quite agree that being a
fair inference of fact it forms evidence proper to
be left to a jury as proof that he was so
induced...I think there are a great many other
things which might make it a fair question for the
jury whether the evidence on which they might draw
the inference was of such weight that they would
draw the inference."
35. It follows that, if a representation made to a prospective lessee is such as would be likely to induce such a person to enter into the lease, that consideration is one which would strengthen a conclusion that it did in fact so induce the execution of the lease. The question ultimately is whether in fact it did induce the conduct from which loss or damage is said to flow.
36. As Lord Sumner said in S.S. Hontestroom v. S.S. Sagaporack (1927) AC 37,
it is wrong for an appellate judge to reverse the conclusion of a trial judge
based simply on his own view of the probabilities
of the case. Lord Sumner
said at p 47:-
"...not to have seen the witnesses puts appellate37. In my respectful view, this is not a case where the primary facts are not in dispute and the appellate court is therefore in as good a position as the trial judge to make consequential inferences or findings. The "fact" in question is that of inducement. That fact involves perception as well as evaluation, adopting the terms of Viscount Simonds in Benmax v. Austin Motor Co. Ld. (1955) AC 370 at 373.
judges in a permanent position of disadvantage as
against the trial judge, and, unless it can be
shown that he has failed to use or has palpably
misused his advantage, the higher Court ought not
to take the responsibility of reversing
conclusions so arrived at, merely on the result of
their own comparisons and criticisms of the
witnesses and of their own view of the
probabilities of the case."
38. This is to be contrasted with a case where there was no evidence on which a finding of inducement could properly have been made, or where the trial judge has in some way misdirected himself in law or has altogether overlooked or mistaken a relevant fact. In such a case, an appellate court is under a duty to give effect to its assessment of the evidence and reverse the finding of the trial judge. This is not such a case.
39. Similarly, in the context of whether a particular representation was an inducement to the execution of a lease, the evidentiary value of the signing by the respective tenants of the "Deeds of Acknowledgement" is a matter for assessment, the determination of what in truth the tenants were acknowledging by the signing of such deeds being relevant to the ultimate question of inducement.
40. It is clear that parties cannot contract out of the provisions of the
Trade Practices Act 1974, including the prohibition contained in s.52. In
Clark Equipment Aust. Ltd. v. Covcat Pty. Ltd. (1987) 71 ALR 367, the Full
Court was concerned with the effect of a clause in a lease agreement to the
effect that the lessee, before signing the
agreement, had examined the goods
and, relying on his own skill and judgment, had satisfied himself that they
were reasonably fit
for the purpose for which he required them. The agent of
the lessee had said that, when he signed the acknowledgment, he did not
consider that it applied to the rate or speed at which the machine would cut
trees. Of the effect of such a clause, Sheppard J.
said at 371:-
"Be that as it may, a vendor of goods may not41. Wilcox J. in Collins Marrickville Pty. Ltd. v. Henjo Investments Pty. Ltd. (1987) 72 ALR 601 at 613, referred to P.J. Berry Estates Pty. Ltd. v. Mangalone Homestead Pty. Ltd. (1984) 6 ATPR 40-489 at 45,638; Petera Pty. Ltd. v. E.A.J. Pty. Ltd. (1985) 7 ATPR 40-605 at 45,887; Galloway v. Mapmakers Pty. Ltd. (Burchett J., unreported, 5 September 1985); Dibble v. Aidan Nominees Pty. Ltd. (1986) ATPR 40-693 at 47,619; Byers v. Dorotea Pty. Ltd. (1986) 69 ALR 715; ATPR 40-760 at 48,230; Bateman v. Slatyer (1987) 71 ALR 553. His Honour then said:-
successfully rely on an exemption clause such as
that in question here in answer to a cause of
action under s. 52 of the Trade Practices Act.
That is because the conduct of a respondent in
making representations is antecedent to the
contract in which the exemption clause is
contained. The effect the representations have in
inducing a purchaser to enter into a contract will
usually be spent before or at the instant the
contract is signed.
Parties may agree that statements and
representations made antecedently to their
entering into a contract are not to form the basis
of any remedy in the event of there being a
subsequent disagreement. Except in cases of
fraud, the common law will give effect to their
contract. But the remedy conferred by s. 52 of
the Trade Practices Act will not be lost, whatever
the parties may provide in their agreement. If a
vendor of goods has engaged in misleading or
deceptive conduct, the law makes him accountable
for loss and damage suffered as a result of his
unlawful conduct. That conduct will usually have
been committed, as in this case, prior to the
signing of any contract. If, as a result of the
conduct, a person is induced to enter into a
contract and suffers loss, an action to recover it
lies. The terms of the contract are irrelevant.
As Wilcox J. said in Petera Pty. Ltd. v. E.A.J.
Pty. Ltd. [1985] FCA 277; (1985) 7 FCR 375 at 378: 'Whatever
may be the effect of cl. 19 (the exemption clause
in that case) in relation to an action brought in
contract, in which reliance is placed upon an
alleged warranty or condition not included in the
contract of sale, that clause should not be
allowed to defeat a claim based upon s.52. To
permit such a clause to defeat such a claim would
be to accept the possibility that a vendor might
exacerbate his deception, as by actively
misleading a purchaser as to the existence or
nature of such an exclusion, and thereby ensure
that he would escape liability.' I refer also to
Byers v. Dorotea Pty. Ltd. (1986) 69 ALR 715;
(1987) ATPR 40-760, per Pincus J. at 48230"
"If in fact the misleading conduct of the42. I respectfully endorse these observations. Equally, if in fact the misleading conduct of the respondent has induced an applicant to enter into an agreement, that inducement is not negated because, in a document separate to the agreement itself, the applicant says to the contrary.
respondent has induced an applicant to enter into
an agreement, that inducement is not negated
because, in the agreement itself, the applicant
says to the contrary. Of course, the fact that
the applicant so says may bear upon the question
whether he or she should be believed in asserting
that the misleading conduct was an inducement;
although in the case of a printed exclusion clause
this may be of little moment. And, once it is
found as a fact that the conduct induced the
transaction, the Act itself gives a remedy. There
may be scope for the introduction into this area
of the law of the concept of disclaimer, as
suggested in the editorial comment and in the
article by Terry: 'Disclaimers and Deceptive
Conduct', 1986 Australian Business Law Review,
p 478-512, to which the second comment refers;
although it would seem that it must always remain
a question of fact whether the disclaimer has
succeeded in negating the misrepresentation; see
Hutchence v. South Sea Bubble Co. Pty. Ltd. (1986)
64 ALR 330 at 338."
43. On the appeal in the Collins Marrickville Case[1988] FCA 40; , (1988) 79 ALR 83,
Lockhart J. said at 99:-
"There are wider objections to allowing effect to44. That a deed of acknowledgment has some value as evidence on the question of whether the representations did in fact induce the leases is accepted. Equally, however, it cannot be conclusive on the question of inducement. So to hold would in many cases be a convenient roundabout route of circumventing the policy of the statute.
such clauses. Otherwise the operation of the Act,
a public policy statute, could be ousted by
private agreement. Parliament passed the Act to
stamp out unfair or improper conduct in trade or
in commerce; it would be contrary to public policy
for special conditions such as those with which
this contract was concerned to deny or prohibit a
statutory remedy for offending conduct under the
Act."
45. For my part, the terms of the deeds of acknowledgment in this case reek
of such an attempt, and clearly call for a careful scrutiny
as to whether the
signing of such deeds had the conclusion for which the landlord contends. The
deeds of acknowledgment in the present
case recite:-
"WHEREAS THE LESSOR AND THE LESSEE HEREBY ACKNOWLEDGE THAT:and continue:-
A. As between lessors and lessees disputes and matters in
difference arise from time to time as to the making or
alleged making by lessors (or their servants or agents
or other persons acting on their behalf) of
statements...in connection or associated with the grant
of leases or the entering into of agreements for
leases...
B. It is frequently alleged by lessees that such Statements
had the effect of inducing or influencing them to enter
into Leases OR that such Statements were warranted as
being true OR that such Statements were made negligently
or fraudulently OR that such Statements otherwise
provide or give them some basis for or right to legal or
equitable or statutory relief of various kinds;
C. One of the fundamental difficulties from both the point
of view of lessors and lessees is that such Statements
are not to be found either set forth in the Leases
between them or in any other formal manner with the
result that there are disputes as to whether any and if
so what Statements were made, when any such Statements
were made and by and to whom any such Statements were
made;
D. They desire to avoid any such disputes or matters in
difference arising in connection with the proposed grant
by the Lessor to the Lessee of a lease...
E. They desire to record in this Deed the substance of any
Statements which may have been made by the Lessor or by
any other person acting or alleged to be acting on the
Lessor's behalf...which has had or may have had the
effect of inducing or influencing the Lessee or any
person acting on the Lessee's behalf either to enter
into the Proposed Lease or to agree to any or all of the
terms thereof."
"NOW THE LESSOR AND THE LESSEE HEREBY COVENANT AND AGREEThere follows a blank space of approximately 7 cms, in the margin of which is written:-
AS FOLLOWS:
1. The following Statements have been made to the Lessee in
relation to the Proposed Lease by the person or persons
named below which Statements:
(a) have induced or influenced the Lessee to decide to
enter into the Proposed Lease or to agree to any or
all of its terms; or
(b) have been relied upon in any way as being accurate
by the Lessee for the aforesaid purposes; or
(c) have been warranted to the Lessee as being true; or
(d) have been taken into account by the Lessee as being
of any importance whatsoever to the Lessee's
decision to enter into the Proposed Lease or to
agree to any or all of its terms."
"NoteIn the Palleson deed is handwritten:-
This Clause is to be completed by either:
(i) the Lessee filling in the blank space, or if
there is insufficient room by attaching a
separate piece of paper, by stating the
substance of any such statements and identifying
the person who made them; or
(ii) the Lessee writing in the blank space 'No
such statements have been taken into account in
any manner whatsoever by me'."
"No such statements have been taken into account inIn the Coomber deed is typed:-
any manner whatsoever by me."
"A Statement was made to the Lessees by Stephen46. Since the weight to be given to such deeds on the question of inducement does not depend on the fact of their execution but on a fair assessment of all of the evidence relevant to the question of whether the representations did in fact induce these particular persons so to act, in my opinion the conclusion of the trial judge that the representations did have that consequence should not be set aside by an appeal court whose materials for assessment are wholly written.
Wakeham, Leasing Manager of Jones Lang & Wootten
that the major tenant of the centre would be G.J.
Coles & Co.
Further representations were made to the Lessees
being in the form of a printed brochure issued by
the Lessors agent and handed to the lessees prior
to the signing of the Lease."
47. There were three representations which the trial judge found had been made to the Palleson interests and which induced the execution of the lease to them for a restaurant and takeaway food business. The first was a representation made by the landlord's agent to Mr. Palleson in May or June 1981 concerning a national chicken takeaway shop in the shopping centre. The landlord's agent, when speaking to the Pallesons of a national chicken operator, Chicken Spot, acknowledged speaking to them of the national chicken takeaway proposal, and said "at that point in time, I believed that they were going to proceed." The Palleson lease was executed on 2 December 1981 and the Pallesons took possession in early December. At that time, there was no national chicken takeaway chain operating in the premises. The premises officially opened on 8 December. The primary judge had rejected the submission that other representations by the landlord's agent had induced them to sign the lease, but he was satisfied that the representations concerning the national chicken takeaway did operate as an inducement to the Pallesons to execute the lease on 2 December 1981. In my view, this discrimination in result acts to reinforce the finding of inducement in this particular representation rather than having the opposite tendency. In my view, the conclusion that the Pallesons were induced to enter into their lease by this representation ought not to be disturbed.
48. The second inducing representation found by the trial judge concerned a representation by the landlord's agent concerning the degree of interest in the shopping centre. The representation by the agent was to the effect that there were 15 prospective tenants interested in the sort of business for which the Pallesons had shown interest. It was clearly open on the evidence, including the correspondence, to find that the statement made by the agent was untrue and, given that lack of basis in fact for the statement, it was also open to conclude that the purpose of the statement was to put pressure on prospective lessees to make the decision to commit themselves to the lease for the takeaway food business. The primary judge found, in effect, that the representation did not fail in its object. I am quite unable to say that it was not open to him to so find.
49. The third inducing representation found by the primary judge was that the landlord's agent represented the rental for the takeaway food business to be $300.00 per week, such rental being fixed and non-negotiable.
50. Morling and Wilcox JJ. are of the view that this statement is not fairly to be characterised as constituting misleading or deceptive conduct in any relevant sense.
51. I agree that the fact that premises were later let for a lesser amount does not establish that the earlier rentals were not fixed at that earlier time when the statement to that effect was made. Economic circumstances or the absence of demand may have dictated a reduction subsequent to the making of the statement. However, the agent of the landlord gave evidence that he told the Pallesons the rentals were fixed, and that that was not true. He said that to say so was "normal commercial practice. It is not lying; it is straight out negotiation". Where the agent, at the time of making the statement that the rentals were non-negotiable, knows that his authority permits him to negotiate at a lower rental, and his commission is a function of the rental negotiated, my opinion is that it was open for the primary judge to conclude that the making of that statement constituted conduct in contravention of s.52.
52. In the case of the Coomber tenant, two inducing misrepresentations were found by the primary judge. The first concerned the ease of access from the carpark to the shopping centre.
53. While conscious for the need to apply a common sense approach to what was to be understood by the representation by the landlord's agent that "One could virtually be able to drive up to whichever shop the shopper wanted to shop at and go in quite easily and go out quite easily" (particularly in the context of a shopping centre which had provision for external parking for 285 cars and under-cover parking for 166 cars), the nub of the complaint, as found by the primary judge, was that the arcade of shops would be on the same level as the external car park, contrary to the ultimate construction. The brochure in evidence, in my respectful opinion, supports this ground. In my opinion, such a finding was open on the evidence.
54. As to the inducing effect of that representation, the significant difference in levels would have been observed by Mr. Godden, and the other Coomber interests, as the construction of the project proceeded. For my part, I have no reason to doubt that it would have been obvious in early December 1981.
55. However, the relevant date is 5 October 1981, when the Coomber tenants executed the lease. The agent of the landlord said in evidence that his belief, until towards the end of September 1981, was that the shops would be on the same level as the carpark. He gave evidence that the slab was poured on 22 September 1981, and he would have seen it "possibly a week or so after that point in time". While the matter is not clear cut, in my opinion, the evidence is not such as to require the conclusion that, by 5 October 1981, the physical state of the shopping centre was such, and was known to the Coomber interests to be such, as to prevent continued reliance by them on the level of the carpark as a factor in the decision to execute the lease.
56. The second inducing representation found in respect of the Coomber tenancy, was the representation that a national takeaway chicken chain had committed itself to three shops in the complex. Once again there was a deed of acknowledgment in which there was no reference to any such representation. As earlier indicated, in my view, this consideration, while relevant, is not determinative on the question of inducement. The lease in the Coomber case was executed some two months before the official opening of the centre. While they would have been aware by the time of the official opening that the representation in fact would not be realised, their legal obligation commenced on the execution of the lease and their attitude might very well have been to make the best of a bad job. In this case also I would not interfere with the finding by the trial judge that this representation had an inducing effect on the Coomber interests at the time of the execution of that lease.
57. Notwithstanding these differences in viewpoint from those of Morling and Wilcox JJ., for the reasons earlier indicated, I agree with the orders proposed.
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