Skiwing Pty Ltd v Trust Company of Australia Limited [2004] NSWADT 169 (17 August 2004)

Last Updated: 17 August 2004

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL RETAIL LEASES DIVISION

CITATION: Skiwing Pty Ltd v Trust Company of Australia Limited [2004] NSWADT 169


PARTIES: APPLICANT AND CROSS RESPONDENT
Skiwing Pty Ltd
RESPONDENT AND CROSS APPLICANT
Trust Company of Australia Limited




FILE NUMBERS: 045027, 045068

HEARING DATES: 11/06/2004 & 1/07/2004

SUBMISSIONS CLOSED: 06/08/2004



DECISION DATE: 17/08/2004

BEFORE: Donald BG - Judicial Member





LEGISLATION CITED: Retail Leases Act 1994

CASES CITED: Randi Wixs Pty Limited -v- Pokana Pty Limited (No. 2) [2003] NSWADT 4
Skiwing Pty Ltd t/as Café Tiffanys v Trust Company of Australia Limited [2002] NSWADT 278
Skiwing Pty Ltd v Trust Co of Australia Ltd (No 3) [2004] NSWADT 94

APPLICATION: Claim for declaration of rights, obligations and liabilities under a lease
Claim for payment of money

MATTER FOR DECISION: Principal matter


APPLICANT REPRESENTATIVE: APPLICANT AND CROSS RESPONDENT
Z Stojanoski, agent


RESPONDENT REPRESENTATIVE: RESPONDENT AND CROSS APPLICANT
J K Ratanatray, solicitor

ORDERS: Application 045027:-
1.Dismissed
2.No order as to costs
Application 045068
1.Declare that Applicant is entitled to enforce the obligation in the Lease to contribute to outgoings in accordance with the terms of the Lease and the Retail Leases Act 1994
2.Respondent to pay within 21 days unpaid outgoings of $24,629.40 and unpaid promotional levy of $2,959.19 plus interest from the date of the Application until the date of payment at the District Court rate on a judgment debt namely 9%
3.No order as to costs


Reasons for Decision:

REASONS FOR DECISION

1 In Application 045027, Skiwing Pty Ltd seeks a declaration that contribution to outgoings is not payable under its lease from Trust Company of Australia Limited (trading as Stockland Property Management Ltd) and a refund. In Cross Application 045068 Trust Company of Australia Limited claims unpaid contribution to outgoings.

Factual basis to the claims

The original lease

2 In 1993 Skiwing originally became the Lessee of shop C19 in the Imperial Arcade, which it operates as Café Tiffanys, under a lease expiring on 30 April 2000 (see Skiwing Pty Ltd t/as Café Tiffanys v Trust Company of Australia Limited [2002 NSWADT 278] ("Skiwing Decision 1").

3 Under that lease, Stockland would provide annual estimates of total outgoings for the Imperial Arcade together with a calculation of the monthly contribution payable by Skiwing (e.g. for 1988/1999 Exhibit A, pp.11-12, for 1999-2000 Ex 2, pp. 6-7, being evidence from affidavits filed by each party). Following the end of a financial year an annual outgoings reconciliation would also be provided (see e.g. Ex A, pp. 13-14 and Ex 2, pp.23-24). In both cases there was the usual list of estimated and actual outgoings headed "Imperial Arcade -Retail".

Outgoings under the new lease

4 In mid-1999 the parties began to re-negotiate for a continuation under a new lease and by letter of offer of 17 September 1999 written by Mr Ruben Aaron, the then Centre Manager, (Ex A, p.1), Stockland offered to enter into a seven year lease. The letter of offer attached the Disclosure Statement and stated:-

"This letter of offer should be read in conjunction with the attached Lessor's Disclosure Statement".

Stockland's Disclosure Statement in turn stated:-

"This disclosure statement should be read in conjunction with the attached Lessor's letter of offer which contains commercial terms and other relevant information".

5 The letter of offer stated in clause 8:-

OUTGOINGS

Estimated at $44,881.45 per annum for the financial year ended June 2000 payable monthly in advance from lease commencement with any variation accounted for at the end of the financial year. A detailed breakdown of the Centre's outgoings is provided in the Disclosure Statement. The estimate of the Lessee's contribution is based on the proportion of the Lessee's tenancy bears to the gross lettable area of those tenancies in the shopping centre sharing the relevant costs/services.

6 There is no reference in the Disclosure Statement as such to outgoings. The versions of the Lessor’s Disclosure Statement produced in evidence in this matter and other proceedings between the parties have not included any "detailed breakdown of the Centre's outgoings" referred to in clause 8 either within the document or as an attached document.

7 Stockland’s current Centre Manager, Mr Doherty, gave evidence that based on his own inquiry and on other letters of offer and accompanying disclosure documentation sent to other prospective tenants at about that time (copies of which were produced to the Tribunal), it was standard practice to include an annual estimate of outgoings listing all the items regularly provided to Skiwing under its previous lease and subsequently provided following the commencement of the new lease. On the basis of that, the Centre Manager says it is his honest belief that it is likely that such a list was in fact included with the Skiwing offer package of letter of offer and Disclosure Statement according to its terms.

8 Mr Stojanoski , a director of Skiwing, gave evidence that he never received such a list at the time of negotiating the new lease.

9 On all the evidence it is not possible to be satisfied on the balance of probabilities that an actual list of estimated outgoings was included in the offer package of 17 September 1999. It is equally clear however that Skiwing had received under its then current lease regular outgoings reports, estimates and actuals, and was well aware that that system would continue under the new lease.

10 Mr Stojanoski gave evidence that at the time of negotiating the new lease he had a discussion with the Centre Manager, Mr Aaron concerning outgoings. Mr Stojanoski says he asked Mr Aaron

"Do I understand everyone from top to bottom is paying"

to which he recalls Mr Aaron replied with words to the effect that

"Yes, it is based on your 154 sqm divided with the whole building."

Mr Stojanoski says that on the strength of that representation he was willing to accept a contribution to outgoings.

11 There is no reference in the letter of offer, the Lessor's Disclosure Statement, the Lessee's Disclosure Statement (signed by Mr Stojanoski on behalf of Skiwing on 24 September 1999) or in any letter from Mr Aaron concerning contributions to outgoings by other tenants.

12 There has been a dispute between these parties concerning the status of the provisions in the Lessee's Disclosure Statement regarding the existence of representations that were later relied on when entering into the lease and the Tribunal has ruled on that position in Skiwing Decision 1 as follows:

9 A lessor's Disclosure Statement pursuant to s.11 of the Retail Leases Act was provided on 17th September 1999. This did not list any agreements or representations made by the lessor. A lessee's Disclosure Statement pursuant to s.11A was executed by the Lessee on 24 September 1999 at the office of the Lessee's lawyer. A version of that Disclosure Statement is held on the files of the Lessor with the section relating to "representations relied upon" showing the "No" column ticked in respect of all categories of representations listed including the category "Any other representation upon which you are relying". The version of the Lessee's Disclosure Statement produced by the Lessee and examined by the Tribunal contained no ticks in the "No" column. While there was a dispute as to which was the valid version, the Tribunal ruled that either way, the only possible conclusion on the facts was that no agreements or representations were asserted to be relied on by the Lessee other than in the lease.

13 Accordingly as a finding of fact as between these parties, there has been no reliance by Skiwing on any representation on behalf of Stockland in relation to outgoings other than as set out in par 8 of the Letter of Offer above; in particular there was no reliance on a representation that all or any other tenants would contribute to outgoings.

14 No draft lease was provided at the time the Disclosure Statement was delivered. The lease was subsequently delivered to the solicitor for Skiwing on 10 November 1999.

15 The provisions of the lease ultimately signed by the parties and dated 28 March 2000, to commence on 1 May 2000, define "OUTGOINGS" in clause 1.16 in familiar terms covering a very wide range of expenses relating to the management and maintenance of the Centre. It is notable that the definition of outgoings in the lease is not qualified by any notion of reasonableness and simply includes all expenses actually incurred by the Lessor in the listed categories.

16 Clause 3.04 of the lease provides for "OUTGOINGS RENT", applying the standard formula:-

"OR = TP x G

TA "

defining each factor as:-

"OR = the outgoings rent for the lease year from time to time in question;

G = the outgoings for the lease year from time to time in question.

TP = the lettable area of the demised premises expressed in square metres; and

TA = the Lettable Area of the demised remises expressed in square metres."

"Lettable Area" is specifically defined in clause 1.20:

"LETTABLE AREA OF THE CENTRE- Means the lettable area of the Centre expressed in square metres being the aggregate of those parts of the Centre leased or intended to be leased to lessees at commercial rental but should not include any part of the Centre leased or intended to be leased at a nominal rental or as a temporary or casual letting or lease or not used for retail purposes (emphasis added)."

The Imperial Arcade is a retail and commercial building in the Sydney CBD, comprising three levels and a lower ground floor level of retail space and six levels of commercial space. The total retail space is 6,730 sqm and the commercial lettable area is 9,630 sqm.

17 The evidence from Stockland's current Centre Manager, Mr Doherty and Mr Marshall one of the KPMG partners responsible for auditing the recoverable outgoings in relation to Stockland Imperial Arcade retail Centre, was that both estimated and actual outgoings related specifically to the retail space and did not include charges relating to the commercial space. Any outgoing of a general nature for the building was apportioned between the commercial and retail areas on the basis of lettable area.

18 In order to be quite satisfied on the accounting procedures followed by Stockland and its auditors and also to be satisfied that the contribution figures were correctly calculated, the Tribunal expressly requested Mr Marshall to attend and give oral evidence answering questions from both from the Tribunal and the Applicant Skiwing. This request reflected the assertion by Skiwing of its belief that the outgoing items had related to the total building and not only to the retail space and also to its belief that costs attributable to Stockland's other buildings in the CBD, for example the Piccadilly Arcade, were being included in the costs recovered as outgoings of the Imperial Arcade.

19 Having questioned Mr Marshall, I am satisfied that the figures for outgoings presented by Stockland on an annual basis are properly verified by its auditors and that they relate only to the Imperial Arcade retail Centre.

20 A very substantial item in the list is a management fee ranging between $197,000 and $235,000. The evidence established that that fee is calculated by Stockland as 3% of the turnover of the rental retail space in the shopping centre and is a fee charged by Stockland as an overall operation for providing the services of administration of the Centre, other than those services provided by on-site staff. The auditors consider that this is a commercially usual figure.

21 Skiwing asserts it is excessive. The only relevant evidence on that was an extract table provided by Skiwing from a source it described as "Rawlinson's 2002 cost estimates for developments, p. 782", which tabulates operating costs of buildings of various types listing management fees as between 7% and 13% of total outgoings. The estimated and actual management fees charged in relation to the Imperial Arcade constitute about 14% on average of the total outgoings and so while at the high end of that range are not significantly beyond it.

22 Skiwing also contends that the management fees were increasing in the years when there was substantial vacancy in the Centre (see Skiwing Pty Ltd v Trust Co of Australia Ltd (No 3) [2004] NSWADT 94). It says there must have been lower turnover during those years so that a 3% amount would reduce rather than increase.

23 Both the Centre Manager and the auditor have given sworn evidence that the management fee has been calculated on that formula and there is no basis to question their credibility.

24 Accordingly there is no basis for me to conclude other than that the management fees forming part of recoverable outgoings, even if high, are within the usual charges to be expected for a retail shopping centre of this nature. As noted, there is no qualification in the lease that outgoings must be reasonable.

25 Skiwing also asserts that items for insurance and wages are excessive and cover elements not allowed under the lease. In that regard, I expressly put to the auditor whether the audit was carried out under proper principles and whether KPMG had confirmed that the costs fell within the permitted items under the lease. He confirmed that opinion and I have no basis for refusing to accept his evidence.

26 To agree with the requests of Skiwing to go behind that process and scrutinise in detail all the expenses, review all the insurance policies and other material would in my opinion be out of all proportion given that the Skiwing share is 2.3% such that even a 10% error in the total outgoings, which is not at all likely, would result in only a small increase to Skiwing.

Promotional fund under the new lease

27 Clause 9 of the letter of offer provided that a charge of 5% base rental will be levied under the proposed lease on offer. The Disclosure Statement states that ‘The Lessee is to contribute to the retail shopping centre promotional fund as specified in the lessor’s letter of offer." The lease repeats the 5% figure in Item 14 ‘Maximum contribution to Promotional Fund’ in the reference schedule to the lease with the operative provision obliging the tenant to pay being clause 17.14.

28 Neither the letter of offer, the Disclosure Statement nor the lease contained any provision as to the contribution by any other tenants to the Promotional Fund.

Skiwing’s total payments

29 Notwithstanding the estimate of the order of $44,000 for the 1999-2000 year, the actual contribution by Skiwing for outgoings for 2000-1 was $34,540, for 2001-2 $35,108 and 2002-3 $37,439 with the estimate for 2003-4 at $38,461.

30 Nevertheless the combination of the base rent beginning at $113,630 (escalating by 3% p.a.), the outgoings contribution at about $35,000 and the promotional contribution at over $5,000 p.m., the total rent of Café Tiffany per annum was in excess of $150,000 p.a. for the lease of 154 sq m of space in the Imperial Arcade.

31 In the course of other litigation between these parties, Skiwing became concerned that, not only were its outgoings substantial and high but that some other tenants' leases did not include obligations for outgoings or promotional costs and that in some cases the total rent was substantially less per sq. metre.

32 As a consequence Skiwing came to believe that the representation which Mr Stojanoski says was made to him by Mr Aaron had not been true and that he was not being treated in the same way as other tenants as promised either as to outgoings or as to promotional fund contributions.

33 The three leases Skiwing specifically referred to and their comparison with its own lease terms are as follows:

(a) Double Bay warehouse for an internal space on the Castlereagh level about 400 sq m, more than twice the size of Café Tiffany’s - $150,000 pa rent indexed on a CPI basis, no outgoings rent or turnover rent and no contribution to promotional fund. This lease commenced in 1995 with the first year rent free. This lease on a sq metre basis obviously produces much lower total payments than the Skiwing lease.

(b) Supre/Network Fashion about 1.5 times the size of Café Tiffany’s on the Pitt Street level - $290,000 p.a. base rent escalating on a CPI basis with a different calculation for contribution of sundry outgoings increases and 5% contribution to the promotional fund. Skiwing contends that this lease does not include outgoings contributions but my reading of it is the opposite. There was a six months initial rent free period. Unless there is an aspect of this lease not contained in the document, this does not appear to be on preferable terms to the Skiwing lease but is a more expensive lease.

(c) DVD shop, C20, next door to Café Tiffany also overlooking the Mall and being the same size. Base rent $90,000 p.a. indexed by CPI plus 1.5% with a 2% turnover rental and 5% promotional fund and a contribution to outgoings calculated under a different formula resulting in a contribution of that character if not necessarily of the same amount or proportion as for Skiwing. Subject to the turnover levels, this would appear to be a significantly less expensive lease than Skiwing’s.

34 In its Notice of Grounds of Defence Stockland admits that it has entered into leases which ‘do not contain any independent obligation by those tenants to contribute to outgoings’.

The Proceedings

35 Skiwing’s claim was filed on 15 March 2004. It was unrepresented and claimed recovery of all outgoings. It also sought an urgent interim order.

36 At the first directions hearing on 25 March 2004 the application for urgent interim order was dismissed on the basis of an undertaking by Stockland not to take recovery action in respect of unpaid outgoings pending the determination of the matter. The parties were requested to meet to endeavour to negotiate the dispute (but not to formally mediate the matter before the Retail Tenancy Unit). Skiwing was directed to file Points of Claim which it did by the next directions hearing.

37 At that next directions hearing on 13 April 2004, as Skiwing was again unrepresented, the Tribunal became concerned as to the maintainability of claims and took the unusual step of requiring Skiwing to consult legal advisors acting for him in other matters and for them to file before the Tribunal a Certificate under s.198L of the Legal Profession Act that the application was properly made. If such a certificate was forthcoming then Skiwing was also to file an amended Points of Claim settled by those legal advisers.

38 The solicitor representing Skiwing in those other matters provided the Tribunal with a relevant letter of 23 April 2004 correctly pointing out that it was, strictly speaking, not required under the Legal Profession Act as the solicitor did not have formal instructions in the matter. Nevertheless by that letter the lawyer confirmed that after conference with Counsel and subject to obtaining further documentation under due process, he was of the opinion that there were reasonable grounds for believing on the basis of provable facts and a reasonably arguable view of the law that the claim disclosed in the Points of Claim (as amended) had reasonable prospects of success.

39 Skiwing filed those amended Points of Claim on 23 April and Stockland filed its Notice of Grounds of Defence on 1 May 2004.

40 On 6 June 2004, Stockland filed its cross-application claiming the outgoings unpaid to that date together with interest and costs.

41 The matter having been set down for hearing on 11 June, a dispute arose as to the scope of summonses which was heard on 4 June 2004. In lieu of requiring production of extensive documentation relating to the outgoings for the Imperial Arcade, in order to control costs and limit the matter to essential material, the Tribunal proposed that if Stockland filed certificates from its auditors concerning the verification of outgoings, that would be adequate initially, subject to the right to revisit on reasonable grounds.

42 As a consequence, at the commencement of the hearing on 11 June, Stockland filed Mr Marshall's affidavit (Ex.1), and as a result of the Tribunal's analysis of the evidence, the Tribunal requested that Mr Marshall present himself for questioning on the material in the affidavit. As he was not available that day the matter was adjourned to take that evidence on 1 July 2004, the hearing on 11 June having taken all other evidence.

43 On 1 July 2004 Mr Marshall was examined. Further evidence was led from Mr Doherty, the Centre Manager, as a consequence of which, in the process of determining a further summons, three original "offer packages" to the three named Lessees were directed to be produced in the original.

44 At that point having reviewed the evidence to date and the relevant strength of the Skiwing claim, the Tribunal directed that it would not call upon Stockland for written submissions until it had considered the written submissions for Skiwing based upon the evidence. This was done in order to determine basically whether there was a case for Stockland to answer so that costs would be limited. Skiwing was given until 23 July to file its written submissions.

45 Thereafter there was further correspondence with the Registry from Skiwing seeking yet further documents in relation to the offer packages, in particular the originals of the file of documents said to relate to the Skiwing lease itself.

46 Without a hearing, the Tribunal determined that subject to what may emerge in the written submissions on re-consideration of the Skiwing case, there was no proper basis revealed for re-opening the evidence which had closed. Skiwing subsequently lodged a further request for delay in providing any written submissions pending a further directions hearing together with a request for further hearing as a result of allegedly receiving further notices claiming outgoings.

47 The Tribunal responded that for the proper management of the case, and given the undertaking by Stockland not to take any action pending the determination of the matter, there should first be no further delay in the Tribunal proceeding to arrive at its decision nor any need for further orders concerning the interlocutory management of the matter.

48 I have traversed the interlocutory proceedings in some detail first because I undertook to the Applicant to do so in relation to those interlocutory decisions taken against it without hearing in response to its various letters and also as it will be relevant to dealing with the issue of costs in both the application and the cross-application.

Skiwing’s claims

s.10 pre-lease misrepresentations

49 Skiwing claims in paragraph 11 of its Amended Points of Claim that the following pre-lease representations were false or misleading to the knowledge of Stockland:

(b) a detailed breakdown of the outgoings as provided in the [Disclosure] Statement

(c) the estimate of the Lessee's contribution was based on the proportion of the area of the Premises to the gross lettable area of those tenants in the Arcade sharing the relevant costs or services.

(d) a charge of 5% of the base rental would be levied on all tenants of the Arcade by way of contribution to the promotional fund of the Arcade.

50 Skiwing claims that s.10 of the Retail leases Act entitles it to recover reasonable compensation for damage suffered as a result of entering into the lease on the basis of those false representations.

51 I am not satisfied that there is sufficient evidence of any false or misleading statement or that it was made with the knowledge of Stockland or Mr Aaron that it was false or misleading with respect either to the outgoings or to the promotional fund.

52 In relation to the outgoings, while there is not enough evidence to prove that a detailed list of the outgoings was in fact included with the Disclosure Statement, at best this would appear to have been a mistake given the express reference in the letter of offer to the inclusion and the fact that on Stockland's evidence such a list was included with documentation going to other tenants.

53 Accordingly, any representation as to the inclusion of that information was either not made with knowledge as to its falsity or alternatively, because Skiwing was well aware of the whole process of estimation and calculation of contributions to outgoings including full details of the lists from previous years, it has not made out any case that it entered into this lease on the basis of falsity in the representation.

54 As to representations concerning the calculation of the Lessee's contribution, par 3(c), the wording of the letter of offer itself (Ex.A p.2) is not sufficient to establish any knowing misrepresentation. The letter may be argued to be ambiguous in referring to "the gross lettable area of those tenancies in the shopping centre sharing the relevant costs/services" (emphasis added). That could be open to the meaning that the contribution is based only on those Lessees who are paying part of the costs or alternatively it could mean the estimate relates to all tenancies which share in the services for which the costs are incurred by way of outgoings. Either way it is impossible in my view to see this as the source of a knowing misrepresentation which caused the entering into the lease.

55 My preferred view is that the letter is properly open to the interpretation that all tenancies in the retail shopping centre which are the beneficiaries of the services constitute the relevant floor space for the purpose of the calculation. In any event the position which continued to prevail from the previous lease was what induced the entering into the lease namely that the proportion payable would be based on Skiwing's floor space to the floor space in the retail Centre.

56 On its best interpretation that is all that Mr Aaron said if indeed he did make that statement but it does not clearly support the construction that everybody else would necessarily be contributing to outgoings in any particular way or in the same way.

57 I do not find anything in the lease which commits Stockland, by way of pre-lease representation, necessarily to charge outgoings to all tenants or in a particular way. Its representations are about Skiwing's proportion only.

58 In any event I have confirmed that in previous proceedings I have already determined that no pre-lease representations have been relied on as between these parties.

59 In relation to the alleged promotional fund representation, par 3 (d), the only real evidence in support of it was oral evidence by Mr Stojanoski that he understood Mr Aaron to mean that all parties would be paying the 5% but that he could not specifically recall that Mr Aaron had said all parties would be paying the 5%. There is nothing in any of the documentation to support any basis of representation either way as to who or how people might contribute to the promotional fund.

60 Accordingly I reject the s.10 claim.

s.11 claim

61 In paragraph 4 of the Amended Points of Claim Skiwing asserts:

"Contrary to s.11 of the Retail leases Act and the representation referred to in paragraph 3(b), the disclosure statement did not contain a detailed breakdown of the outgoings of the Arcade".

62 Section 11 and Schedule 2 of the Retail leases Act require details of outgoings to be paid by the Lessee to be included in the Disclosure Statement and the statutory form lists various required headings.

63 However, even given my finding that the evidence does not establish that that list of items was included in the Disclosure Statement, I do not think this establishes any basis for claim in terms of s.11 itself. By s.11(2) the only right given for failure to provide that information is to terminate the lease within the six months and even that right is not available where the Lessor acted honestly and reasonably ought to be excused or where the Lessee is in substantially as good a position as if the failure had not occurred; (see 11(3). In circumstances where this tenant was well aware of the extent of the outgoings upon which its contribution was calculated, despite them not actually being in the disclosure statement, it was in as good a position to make a decision whether or not to enter into this lease. The purpose of disclosure statements is to ensure that tenants have adequate information and there can be no question that this tenant had all of that information available to it.

64 Accordingly I dismiss any claim under s.11.

s.30 claim

65 Paragraph 5 of the Skiwing amended Points of Claim asserts that clause 3 of the lease is contrary to s.30 of the Retail leases Act which provides:-

30 Non-specific outgoings contribution limited by ratio of lettable area

(1) A lessee under a retail shop lease in a retail shopping centre is not liable to contribute towards a non-specific outgoing of the lessor (that is, an outgoing not specifically referable to any particular shop in the retail shopping centre) unless the shop is one of the shops to which the outgoing is referable, and is not liable to contribute an amount in excess of an amount calculated by multiplying the total amount of that outgoing by the ratio of the lettable area of the shop to the total of the lettable areas of all the retail shops to which the outgoing is referable.

(2) An outgoing is "referable" to a retail shop if the shop is one of the shops that enjoys or shares the benefit resulting from the outgoing.

66 I am well satisfied on all of the evidence that, whether or not the very substantial contribution to outgoings of this tenant amounted to over one-fifth of its total payments under the lease, those outgoings were first properly attributed only to the total outgoings of this particular retail Arcade and secondly that the contribution was calculated only by reference to the proportion of the lettable area of the premises to the total retail area of the Imperial Arcade shopping centre.

67 Accordingly I dismiss the s.30 claim.

68 I also dismiss claims in paragraphs 8 and 9 that outgoings referrable to shops which have no specific obligation to contribute to outgoings or to vacant shops should be excluded from the total retail space outgoings before apportionment to the Skiwing lettable area. Nothing in the lease or the Act requires that result.

s.12 and 22 claim

69 Paragraph 6 of the Skiwing's amended Points of Claim asserts that clause 3 of the lease insofar as it purported to require the applicant to contribute to outgoings of the Arcade is void by virtue of ss.12 of the Retail leases Act and therefore there is no provision of the lease under which outgoings can be recovered as required by s.22.

70 Those sections provide:-

12 Lessee not required to pay undisclosed contributions

A provision of a retail shop lease that requires the lessee to pay or contribute towards the cost of any finishes, fixtures, fittings, equipment or services is void unless the liability to make the payment or contribution was disclosed in a disclosure statement given to the lessee in accordance with this Part.

22 Recovery of outgoings from lessee

(1) The lessee under a retail shop lease is not liable to pay any amount to the lessor in respect of any outgoings except in accordance with provisions of the lease that specify:

(a) the outgoings that are to be regarded as recoverable, and

(b) how the amount of those outgoings will be determined and how they will be apportioned to the lessee, and

(c) how those outgoings or any part of them may be recovered by the lessor from the lessee.

(2) In this Part, the expression "outgoings to which the lessee contributes" refers to any outgoings in respect of which the lessee is liable under the lease to make any payment to the lessor.

(3) Costs associated with the advertising or promotion of a retail shop or retail shopping centre, or of any business carried on there, are not outgoings for the purposes of this section.

71 Skiwing argues that s.12 renders clause 3 of the lease void because although the letter of offer which formed part of the Disclosure Statement did disclose the liability to make a contribution to outgoings, those documents did not comply with Schedule 2 because they did not list the outgoings and so were not "in accordance with this Part". Accordingly, it argues, there is no provision of the lease specifying the right to recovery of outgoings and by virtue of s.22 there is no right to recover any.

72 In my opinion s.12 does not deal with ‘outgoings’ which are dealt with in numerous other sections of the Act. On ordinary principles of statutory interpretation, the list of cost items referred to in s.12 uses specific language and does not include a reference to ‘outgoings’. Given that ‘outgoings’ are expressly defined in s.3 and dealt with elsewhere, ss. 22, 27-30, it is in my opinion not possible to contend that ‘services’ in s.12 includes the various activities that relate to the operation of the Centre the cost of which is covered by the lessor's outgoings.

73 I read the scheme of the Act with regard to outgoings to be that they are required to be in the Disclosure Statement by virtue of s.11 and that they cannot be recovered except pursuant to express provisions of the lease, s.22. If they are not in the Disclosure Statement there are rights under s.11 to terminate the lease within 6 months. However if, as I have found here as a matter of fact, they are absent from the Disclosure Statement but included in the lease and the s.11 rights are not exercised, they are recoverable.

74 Skiwing cites the decision in Randi Wixs Pty Limited -v- Pokana Pty Limited (No. 2) [2003] NSWADT 4 where at par 49 there is a specific finding that costs within the heading ‘Fire Protection’, one of the items mandated by Schedule 2 of the Retail leases Act to be covered in the outgoings list in a Disclosure Statement are also services within s.12. The Tribunal then said:-

It seems to me that, absent appropriate disclosure in accordance with the clear requirements of the Act, the nature and content of the fire safety audit falls within the provision of `equipment or services' within section 12 such that, absent disclosure, the cost thereof is to be borne solely by the Respondent as Lessor.

75 I do not think I am bound by those observations, which did not examine the language of the Act as I have done above, to conclude that no outgoings at all can be recovered here.

76 Accordingly I dismiss the claim under ss.12, 22.

77 I am also generally satisfied that this outcome of the matter accords with ordinary commercial fairness having regard to the factors referred to above in relation to s.11 namely that this tenant was in fact fully aware of the list of outgoings from its then current dealings with the lessor.

Skiwing’s sense of discriminatory treatment

78 Skiwing has been driven in these proceedings by a real sense of unfairness and discriminatory treatment. That is partly explained by the intensive and extensive disputation with which it has engaged with Stockland including its discovery in those matters that certain concessions made to other tenants in other contexts were not made to it.

79 However I think that sense is misplaced in relation to the issue of outgoings and the promotional fund. There is no obligation on this lessor under the lease or the Act to treat all tenants the same. As found in Skiwing Pty Ltd v Trust Co of Australia Ltd (No 3) [2004] NSWADT 94, the rents on various levels and for different sized premises differed markedly throughout the Centre.

80 The Double Bay lease although as noted above being much cheaper per sq m for a much larger interior area, may well be commercially perceived as having relevant commercial differences from restaurant space overlooking the Mall occupied by Café Tiffany’s.

81 The Supre lease for a larger space is very much higher in base rent than for Skiwing and does include both outgoings and promotions fund. There may well have been certain concessions to that tenant at various times but the lease as structured does not on its face reveal a less expensive deal than for Skiwing; quite the contrary.

82 The DVD shop lease, while having a substantially lower base rent for very comparable premises to Skiwing's, includes a 2% turnover rent which is not applicable to Skiwing, a potentially higher review index being CPI plus 1.5% and the promotional levy. While different, it incorporates the range of commercial elements.

83 Skiwing was under no compulsion to enter into this renewal of its lease which it did on the basis of its own commercial assessment. It did not negotiate express terms in relation to the manner in which other tenants would contribute to outgoings or the fund. While in other disputes the conduct of Stockland has resulted in successful claims in favour of Skiwing, it cannot be said that the entering into the lease involved unconscionable or manifestly unreasonable conduct.

84 These observations are not formal findings but are made in the context of the Tribunal’s role in endeavouring to conciliate disputes.

Stockland's claims

85 It follows from the terms of this decision that Stockland is entitled to recover unpaid outgoings and promotional levies. In its cross-claim it asserted rent was unpaid but at the hearing of the matter, when Skiwing contended that rent was fully paid up, this was not directly disputed.

86 Accordingly any order of the Tribunal in relation to the Stockland application will be for unpaid outgoings and promotional levies and also a declaration that Stockland is entitled for the duration of the lease to recover its outgoings subject to due compliance with the terms of the lease and the provisions of the Act as to supply of estimates etc see ss.27, 28. For the future the current undertaking to the Tribunal by Stockland to refrain from pursuing recovery of outgoings and promotional levies lapses.

Costs

87 In both the application and the cross-application the respective parties have applied for costs.

88 In Skiwing Pty Ltd v Trust Co of Australia Ltd (No 4) [2004] NSWADT 162 I set out the principles to be applied in determining whether costs should be awarded and I incorporate those principles in this decision.

89 The Tribunal has endeavoured in the management of this matter first to ensure that Skiwing received legal advice that the matter had reasonable prospects of success and secondly the Tribunal has limited the summons procedures and also the hearing and the requirement for submissions so as to contain costs. In particular, having formed an initial view on the basis of Skiwing’s case that it did not appear to have sufficient merit, the Tribunal has considered the matter in more detail before requiring Stockland to incur the costs of preparing submissions. In the result submissions have not been required from it.

90 In those circumstances I do not think that in either case, the launching of the matter or its conduct has been so out of the ordinary as to constitute special circumstances. There is no serious unfairness to either party in making no order as to costs.

Orders

Application 045027:-

1. Dismissed.

2. No order as to costs.

Application 045068

1.Declare that Applicant is entitled to enforce the obligation in the Lease to contribute to outgoings in accordance with the terms of the Lease and the Retail Leases Act 1994

2. Respondent to pay within 21 days unpaid outgoings of $24,629.40 and unpaid promotional levy of $2,959.19 plus interest from the date of the Application until the date of payment at the District Court rate on a judgment debt namely 9%..

3. No order as to costs.