Skiwing Pty Ltd v Trust Company of Australia (025117) (No 2) [2003] NSWADT 199 (28 August 2003)

Last Updated: 24 October 2003

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL RETAIL LEASES DIVISION

CITATION: Skiwing Pty Ltd v Trust Company of Australia (025117) (No 2) [2003] NSWADT 199

PARTIES: APPLICANT

Skiwing Pty Ltd trading as Cafe Tiffany's

RESPONDENT

Trust Company of Australia Ltd (Stockland Property Management Ltd)

FILE NUMBERS: 025117

HEARING DATES: 21/07/2003

SUBMISSIONS CLOSED: 25/07/2003

DECISION DATE: 28/08/2003

BEFORE: Donald BG - Judicial Member

LEGISLATION CITED: Administrative Decisions Tribunal Act 1997

Retail Leases Act 1994

CASES CITED:

APPLICATION: Claim for payment of money

Costs

MATTER FOR DECISION: Damages and Costs

APPLICANT REPRESENTATIVE: APPLICANT

By its principal in person

RESPONDENT REPRESENTATIVE: RESPONDENT

M Allars, barrister

ORDERS: 1. Amended application dismissed.

2. No order as to costs

Reasons for Decision:

REASONS FOR DECISION

1 Following the decision of this Tribunal in this matter [2002] NSW ADT 278 that the Lessor was in breach with its obligations to the Lessee in refusing it permission to display a sign advertising its business, the matter was adjourned for determination of any compensation flowing from the breach. The Tribunal had moved promptly to determine the matter following the original application and had ordered the Lessor to permit the sign to be displayed. This happened early in January 2003 after an interruption of 3 months and continues to be the case.

2 The Lessee by Amended Application filed 15 May 2003 claims both costs as a result of its success in the original application and compensation for the 3 month period for lost customers, business, goodwill and sale of the business plus interest.

3 While it might be considered that the absence of a specific advertising sign in a very busy pedestrian area in the 3 Christmas trading months must be likely to impact on the extent to which the passing trade is deflected into an internal restaurant premises, this Tribunal cannot make determinations on the basis of surmise. It must have evidence on the basis of which it can be properly satisfied that the Applicant has established a loss flowing from the breach which should be compensated in addition to the order for the replacement of the sign.

4 The Lessee relied on the affidavit of its principal, Mr Stojanoski filed 13 June 2003, as its evidence of lost business and loss of the goodwill and sale opportunity.

5 The principal basis for compensation was an alleged down-turn in trading figures for the months October to December 2002 when the sign was not permitted to be displayed, as compared with trading for the same 3 months in the preceding year.

6 The Lessee's evidence was that, as it raised its prices 10% in July each year, the figures actually achieved for the period in the preceding year should be increased by 10% for the purposes of a proper comparison with the actual achieved in October to December 2002 to give a true picture of the relative down-turn. On that basis, the Lessee contended that, after adjustment for food costs being the only variable cost, the lost profit for the 3 months when the sign was not displayed was $15,590.

7 The Lessee supported its figures by providing its receipts book, cash register rolls and bank statements as well as BAS's, all of which were acknowledged not to have been audited. Mr Stojanoski was cross-examined on the accuracy of the cash register rolls and the receipts book as reliable financial records. While the Tribunal is satisfied these records have been honestly kept, a detailed examination of them left the Tribunal unable to accept them as a reliable basis upon which a factual determination could be made as to the complete turnover of the business.

8. During his cross-examination on the records, Mr Stojanoski stated that credit card sales were not included on the cash register records but were separately banked. He also accepted that some of the cash register rolls when specifically analysed could not be readily compared with the figures in the receipts book. He was unable to satisfy the Tribunal that the cash and credit sales from those sources were accurately recorded in the compilation of sales figures on the basis of which the year on year comparison was made.

9. In addition, even on the Lessee's own records, it was noteworthy that for the 3 months January to March 2003 immediately following, when the signs were again on display, there was at least as great a downturn compared with the same period for the previous year as was asserted for the 3 months in question.

10. The Lessor's evidence in reply on the issue of the difference in total profit was an expert's report by its accountant, Mr Warner. The essence of his report was that, examining the Lessee's business for the period from July 2000 through to the end of March 2003, its turnover was trending steadily downwards and that the difference for the last quarter of 2002 over the previous year was entirely consistent with that trend. This report concluded that the trend continued for the next three months, confirming the raw data from the Lessee's records referred to above. Hence this witness stated the opinion that it was not possible to conclude that the difference in the trading results was caused by the absence of the advertising sign.

11. The Lessor's expert report also queried the accuracy of the cash records for the business. Furthermore the expert's report concluded that, even overlooking the problems facing the Lessee in relation to both the trend in the figures and the deficiencies in the records, any loss of profits having regard to all inputs including wages, food and other costs would be unlikely to be able to be in excess of $1,800 for that period.

12. This evidence confirms the difficulties the Tribunal has with the Lessee's evidence and the Tribunal is unable to be satisfied on the basis of the evidence that the absence of the sign has resulted in proven loss to the Lessee in terms of lost customers and business.

13. The Lessee also asserts that it has lost the opportunity to sell its business because of the loss of sign and provides a report of a business broker who offered the business for sale during the period when the sign was not displayed. However, there is no comparable report of the level of interest from potential purchasers during the period when the sign was on display either before or after the relevant period and in any event the factors referred to by the business broker as resulting in diminished interest in the sale of the business include at least four factors other than the absence of the sign.

14. Accordingly the Tribunal is not satisfied according to ordinary standards of proof that the absence of the sign has itself caused the loss of opportunity to sell the business. Nor is there any substantial evidence to establish that the current goodwill value of the business has been reduced by the absence of the sign for the three-month period in question.

15. Accordingly the Amended Application of 15 May 2003 is dismissed.

16. The Tribunal is not satisfied in terms of s.88 of the Administrative Decisions Tribunal Act 1997 that there are any special circumstances entitling the Lessor to an order for costs of the original application or the Amended Application.

ORDERS

1. Amended application dismissed.

2. No order as to costs