Fagerlund and Atkinson v PPS Nominees Pty Ltd [2011] NSWADT 24 (3 February 2011)

Last Updated: 11 November 2011

This decision has been amended. Please see the end of the decision for a list of the amendments.

Administrative Decisions Tribunal New South Wales

Case Title:	Fagerlund and Atkinson v PPS Nominees Pty Ltd
Medium Neutral Citation:	[2011] NSWADT 24
Hearing Date(s):	10 May 2010 11 May 2010 12 May 2010 4 June 2010
Decision Date:	03 February 2011
Jurisdiction:
Before:	Deputy President Olsson SC, Mr G Griffiths, Mr R Ward
Decision:	1. Application dismissed. 2. Cross Application allowed in part. The Cross Respondents will pay the Cross Applicant the sum of $58,830.90 calculated as follows: - $23,046.85 - $13,784.10 - $22,000.00 3. The Cross Applicant is entitled to interest on the sum of $58,830.95. The Cross Respondents are to pay interest on that sum at the prescribed rate from the date of termination of the lease, 28 July 2008. 4. The Tribunal notes that the parties have requested the opportunity to make submissions as to costs. The Tribunal orders that each party pay its own costs, which order will be stayed for the period of 14 days from the date hereof during which time the parties are invited to make submissions as to costs in writing to the Tribunal.
Catchwords:	Misleading and deceptive conduct; unconscionable conduct
Legislation Cited:	Retail Leases Act 1994
Cases Cited:	Cantarella Bros v Valcorp Fine Foods Pty Ltd [2002] FCA 8 Campbell v Backoffice Investments [2009] HCA 25; (2009) 83 ALJR 903 Global Sportsman Pty Ltd v Mirror Newspapers Ltd [1984] FCA 180; (1984) 55 ALR 25 Attorney General of NSW v World's Best Holdings Ltd [2005] NSWCA 261; (2005) 63 NSWLR 557 Hurley v McDonalds Australia Ltd [1999] FCA 1728; (2000) ATPR 41-741 Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 Parkdale v Puxu [1982] HCA 44; (1981) 149 CLR 191; Samaha v Corbett Court Pty Ltd [2006] NSWSC 1441
Texts Cited:	Nil
Category:	Principal judgment
Parties:	Debbie Marie Fagerlund and Wade Anthony Atkinson - Applicants and Cross Respondents
Representation
- Counsel:	Mr A Fernon, Applicants Mr M R Ellicott, Respondent
- Solicitors:	S and T Lawyers, ACT Minter Ellison, Respondent
File number(s):	085230 and 095010
Publication Restriction:	nil

JUDGMENT

Background

1. This dispute concerns a retail lease between the Applicants and the Respondent in respect of a shop located in the Ballina Fair Shopping Centre, a retail shopping centre situated at Kerr Street, Ballina, in the State of New South Wales ("the Centre").

2. At all material times, the Respondent was the proprietor of the shopping centre.

3. Between 2005 and 2008, the Applicants, Wade Anthony Atkinson and Debbie Maree Fagerlund, operated a pastry shop known as Decadent Pastries in the Centre pursuant to a lease which the parties agree was subject to the provisions of the Retail Leases Act 1994.

4. On 28 June 2005, the Applicants had purchased an existing business from a company known as Charduke Pty Limited for the sum of $45,000.00. The business was located in shop 35 in the Ballina Fair Shopping Centre.

5. Charduke had operated its business pursuant to a Lease granted by the Respondent which had been executed on 28 November 2003 for the period of five years commencing on 1 December 2003 and concluding on 30 November 2008. There was no option to renew that Lease.

6. The Respondent consented to the Assignment of Lease to the Applicants and the formal Assignment was executed on 18 August 2005. Thus at that time, the Lease had approximately three years to run.

7. The Lease contained a clause which required the Tenant to refurbish the premises. This obligation was outstanding at the time of the Assignment of the Lease.

8. The Applicants carried out the refurbishment works at considerable cost to themselves and continued to trade until mid 2006 when the Centre Manager, Katrina Warren, and Development Manager, Dean Perry, began conversations with the Applicants regarding the relocation of their premises.
9. The events which commenced in about July 2006 and continued into 2007 are at the heart of this dispute.

10. In short, the Applicants, as a result of negotiations, executed a new Lease in respect of Shop 62 in the Centre and commenced to trade in October 2007. They continued to trade until 31 May 2008 but the business did not prosper and they vacated the premises on that date. At the time of vacation of the premises, they were in breach of the terms of the Lease which required regular payment of rent and other monies.

11. The Applicant says that either or both Katrina Warren and Dean Perry (representing Centre management) represented that if they agreed to move to shop (No. 62):

it would be located outside the Centre in an area devoted to food and which was referred to as the "Piazza"

their sales would increase by 15-20%

the Respondent would pay $30,000.00 towards the new fit out

12. The Applicants further say that the Disclosure Statement provided to the Applicants in September and December 2007 disclosed that the proposed Shop 62 would be in the Piazza (and not inside the Centre).

13. They say that they relied on these representations and that they were misleading and deceptive or likely to mislead or deceive in that Shop 62 was in fact located inside the Centre, not in the Piazza area, sales did not increase. They argue that they have suffered loss and damage as a result of the misrepresentations.

14. The Applicants further rely on an agreement which was reached on 18 September 2007 in which the Respondent agreed to pay the sum of $1,500.00 per day in the event that the premises of Shop 62 were not available to the Tenant on 24 September 2007. They say that possession was granted on 27 September and that they are entitled to a payment of $4,500.00.

15. The Applicants also say that in the premises, the conduct by the Respondent through its agents Ms Warren and Mr Perry was unconscionable within the meaning of section 62B of the Retail Leases Act 1994. They claim damages in respect of this conduct.

16. The Respondent contends that it made no such representations. It says that it was entitled, under the Lease, to relocate Tenants and it gave the Applicants (and other tenants who were to be affected by the Centre's refurbishment) the option of relocating under the terms of their leases or negotiating a new lease. The Respondent says it made no representations to the Applicants as to the position of the new shop in the 'piazza' area and that it made no representations as to an increase or likely increase in turnover.

17. They further say that the Applicants were in default under the Lease for failure to pay rent, outgoings and promotional levies totalling $23,046.85 during the period of their possession of the shop and that the Respondent has applied $22,000.00 of the $30,000.00 fit out contribution towards offsetting the Applicants' rental arrears. The Respondent also says it has suffered loss and damage as a result of the Applicants' breach of lease.

The evidence

18. The Applicants' case is that Ms Warren approached them in or about early July 2006 to attend a meeting with her and Mr Perry. The fact that this meeting occurred is not controversial.

19. In broad terms, the purpose of the meeting was to discuss the proposed renovation and expansion of the Centre. Ms Warren said that at a meeting on 26 July 2006, Mr Perry said (in her presence) to the Applicants that they would have to move from Shop 35 because it was to be reconfigured and would no longer exist and that therefore they had two options: either allow the Centre to relocate them pursuant to the Retail Leases Act [RLA] and clause 19 of the Lease in which case the Lease would expire in accordance with its present term (ie November 2008) or else they could negotiate a new lease.

20. Thus in mid 2006 the Applicants were faced with the prospect that their Lease, to which they had committed not only the cost of purchase of the business but also the cost of refurbishment of the premises, would expire in just over two years time with no guarantee of a new lease. Alternately, they could negotiate terms for a new lease in a different area of the Centre.

21. According to Ms Fagerlund, who gave evidence for the Applicants, she felt "mortified" by this information. At subsequent meetings, she said, she and her husband Mr Atkinson objected to their forced move but Ms Warren reminded them that under the lease, the landlord had the right to issue them with a relocation notice.

22. Critically, Ms Fagerlund said that the Applicants had designed and purchased 20 metres of refrigerated cabinets at a cost of $63,000.00 each and that they were very concerned that they might not fit in the new proposed shop.

23. Ms Fagerlund also said that she felt "pressured" to agree to the new lease since Ms Warren or Dean Perry said that their choice was to take the existing lease and have Centre Management pay for the relocation (in which case a new lease might not be offered) or agree to the relocation and have the opportunity of negotiating a new lease.

24. Pausing there, the pressure that Ms Fagerlund and Mr Atkinson felt at being told they had to move their shop, particularly in circumstances where they had borrowed to buy the business and carry out the refurbishment, formed part of their claim for unconscionable conduct. The Tribunal notes however that they were legally represented when they bought the business and took the Assignment of Lease, and that at that time; the Lease had approximately three years to run and contained no option to renew. Thus on one view at least, the Applicants took a very considerable risk when they took on the Lease. On the face of the Lease, it would expire in November 2008 and the Applicants must have been alive to the prospect that they might not be offered another lease.

25. Returning to the matter, Ms Fagerlund said that when she received the first plan (attached to the email of 25 August 2006) she was not happy about moving but if it was necessary, then having a shop which had access to the food court area was pleasing to her. She said that Ms Warren showed her, in late 2006, the existing bottle shop and said words to the effect "The former bottle shop is to be your new shop". The bottle shop was located outside the entrance doors to the Centre.

26. Ms Warren, who was the Centre manager, denied that she indicated the bottle shop would be the 'new shop' but agreed that she said the new shop would be "in the vicinity of the bottle shop." The bottle shop was outside the Centre's entrance doors.

27. Ms Fagerlund said that when she and her husband received the plans attached to the Disclosure Statement in late 2006, it showed the shop outside the entrance doors and that it was "important to Wade and I that if we had to relocate, that shop 062 was in the outside food court area" (Affidavit of DMF 23.6.09, paragraph 43).

28. The location of the shop might have been important to Ms Fagerlund and her husband but there is a paucity of evidence that they ever communicated that fact in those terms to Centre Management. In fact, it is remarkable that in the correspondence between the parties in relation to the lease of the new shop and the relocation from the old shop that there is little or no mention of its position.

29. What seems to have been of more importance to all parties were three things: that the Respondent would pay for some of the fit out (which the Applicants succeeded in negotiating from a much lower figure to $30,000.00), that the Applicants' refrigerated cabinets and other equipment would fit in the new premises and that there was external access to the car park to allow early morning workers to buy food and drinks without the need for them to enter the Centre.

30. Ms Warren told Ms Fagerlund that their business, Decadent Pastries, had the highest turnover of any food outlet in the Centre. According to Ms Fagerlund, Ms Warren said that since the new shop would be in the "food court" and bigger than the existing one, its turnover "would increase by 15 to 20%".

31. Ms Warren emphatically denied that she had made that comment. Her demeanour generally in the witness box was impressive and her denial of this statement was robust.

32. There was no suggestion by Ms Fagerlund or Mr Atkinson that they undertook any kind of business analysis or modelling of their own with respect to estimated turnover or profit, nor advice, nor that they took particular attention to this representation if indeed it was made.

33. The Applicants were not business novices - Ms Fagerlund had been a legal secretary and conveyancing clerk with an ACT law firm. She has tertiary qualifications. Mr Atkinson at least had experience in another business which involved the sale and installation of skylights. They were legally represented.

34. On 25 August 2006 Mr Perry sent an email to Mr Atkinson with a plan of the proposed new tenancy (DRP 10). The email read as follows:

"Wade, as discussed please find enclosed a proposed new tenancy for you as part of the development at Ballina Fair.

The shop we would like you to consider is Shop 62 (109 sqm) on the attached plan. As you can see the shop has two entries - one at the new entry point to the Centre and the other directly onto the car park creating excellent external exposure.

Please note that we have marked up the other proposed food around this tenancy and believe your business/usage would compliment [sic] this precinct around the new piazza........"

35. It was accompanied by a plan which showed a new tenancy at Shop 61 and 62. The plan showed the entrance doors to the Centre drawn in quite a distinctive way and show Shop 62's frontage effectively being bisected by the entry doors to the mall.

36. No one seemed to take any notice of the apparently odd situation of a shopfront being bisected by main entrance doors.

37. It is interesting to note that the proposed 'food' outlets (Shops 27, 28, 28A and 29) give directly onto a landscaped seating area but Shop 62 is depicted as some distance from the seating area.

38. In any event, Mr Perry and Mr Atkinson had a further meeting on 18 October 2006 at which Ms Warren was also present. There was a general discussion regarding how the equipment of Shop 35 could be arranged so as to fit into the proposed shop 62. There was a discussion about the provision of a freezer room, which Mr Atkinson did not have at the existing shop.

39. The site manager for the builder carrying out the Centre refurbishment drew a "Mud Map" which was intended to show Mr Atkinson how his equipment could fit into the new shop. The "Mud Map" is found at KMW8. This drawing shows what appear to be the entrance doors to the Centre at the external end of Shop 62; that is, Shop 62 appears to be wholly within the Centre.

40. The Applicants as inconsequential dismissed this apparent discrepancy since, they said, the purpose of the Mud Map was to look at the fit out of the shop, not its position in the Centre.

41. That may be so, but in one sense it represents the constantly evolving floor plan for the re-development of the Centre.

42. There were other meetings but critically, one occurred in late October 2006 in which Ms Warren and Mr Perry both recall Mr Atkinson expressing his pleasure that the new shop would have a frontage inside the Centre but also an outlet to the external car park. They said that he said :" I'm really happy because I am able to have two entries to the shop, and internal one for normal trade through the Centre and external one for selling food to early morning tradies and travellers before the Centre opens."

43. Mr Gray, another Tenant, gave evidence that Mr Atkinson said something similar in a conversation they had in October 2006. Mr Gray deposed that he said to Mr Atkinson: " You'll have the best of both worlds, you'll be able to serve from either entry. "

44. According to Mr Perry he had a subsequent conversation with Mr Atkinson in which Mr Atkinson said that he was pleased "to have the best of both worlds."

45. This conversation is critical, because if Ms Warren, Mr Perry and Mr Gray are believed, then Mr Atkinson knew, at the relevant stage of negotiations, that he was being offered a shop which was located inside the Centre doors.

46. It was put for the Applicants that it was improbable that after the passage of several years, each witness would have remembered that particular conversation. That may be so, but equally of course, a distinctive remark such as "best of both worlds" might stick in one's memory.

47. On 19 September 2006, the first Lease offer was made (KMW 15) It comprised a Letter which summarized the Offer as being for a lease of a six year period with a net rental of $75,000.00 and with outgoings and other incidentals included, a gross rental of $90,395.56.

48. The letter was expressed to include a Disclosure Statement, Lease Offer, Standard form of Agreement to Lease, Standard form of Lease, NSW Design Guidelines and a Retail Tenancies Information Booklet. No mention was made of a plan although one was incorporated as part of the exhibit to Ms Warren's affidavit. That plan plainly discloses the entrance doors to the Centre as being located such that Shop 62 was contained within the Centre.

49. Putting that issue to one side for a moment, the Lease Offer contained a number of Special Conditions. Special Condition 4 reads:

" The Lessee acknowledges that the Lessor is considering a redevelopment of the Centre including the proposals referred to in the redevelopment provisions in Part 2 of Annexure 2 of the standard lease for the Centre (a copy of which has been provided to the Lessee) and/or Disclosure Statement (if applicable). The final form and timing of these proposals is not yet known. The Lessee may inspect the plans of the proposed renovations, redevelopments or extensions at the Centre Management Office......

The Lessee acknowledges that any proposals that the Lessor may have now, or in the future, will be subject to change and will be conditional on a wide range of factors including planning, building and development approval and the Lessor's Board approval. These proposals may readily change or not proceed as a result of such factors. The Lessor reserves the right to alter or cancel such proposals in its absolute discretion; the Lessor does not represent any redevelopment will in fact be carried out to the centre or if works are carried out that the Lessor will adhere to any proposed redevelopment plan or time program previously provided to the Lessee. The Lessor makes no representation as to the continued presence of any of the retailers currently presentin the centre..."

50. On 5 December 2006, a revised Lease Offer was sent to the Applicants (DRP 9) under the cover of a letter of the same date. The letter was in similar terms to the earlier offer but referred to a seven-year lease. As with Ms Warren's affidavit, a copy of a floor plan was annexed to the exhibit to the affidavit but there was no mention of that plan in the letter. The plan shows the entrance doors to the Centre being positioned so that the whole of the tenancy of Shop 62 was within the Centre.

51. On 12 December, the amount of Landlord's fit out contribution was increased to $30,000.00 after representations from the Applicants and/or their solicitor and on 22 December 2006, the revised Lease Offer and Disclosure Statement were signed.

52. In early January 2007, a Retail Information Meeting occurred, the purpose of which was to provide retailers with an overview of the redevelopment and laminated plans were displayed for the following six months. The plans which were displayed are contained both in KMW11 and Exhibit B.

53. The Agreement for Lease was signed by the Respondent on 30 April 2007 and by the Applicants on 1 November 2007, expressed to commence on 22 October 2007.

54. An agreement was reached regarding compensation for late handover of the shop premises on 18 September 2007. According to the Respondent's witnesses, on 24 September 2007, the shop was ready for handover and in fact the Applicants' tradesmen were working there. Nevertheless, Ms Fagerlund did not collect the keys until 27 September 2007. The Applicants say that the shop was not ready for them on 24 September. Ms Warren said that the shop was ready on 24 September and in fact the Applicants' tradesmen were working there.

55. By 24 October 2007 the Applicants were trading from shop 62 and were paying rent. The refurbishment of the Centre was still not finalized and the entrance doors were placed some time in October 2007.

56. On 21 February 2008 the Applicants raised with the representatives of the Respondent the matter of the placement of the Centre doors. It was not raised prior to this time, notwithstanding the doors were in place some weeks before the Applicants signed the lease.

57. Trading at Shop 62 did not go well and on 15 May 2008, the Applicants ceased trading and vacated the shop. At the time, they were in default for failure to pay rent, outgoings and promotional levies amounting to $23,046.85.

58. The Respondent served a Notice of Breach on 1 July 2008 and the Lease was formally terminated on 28 July 2008. The Respondent secured an alternative tenant who executed a lease on 13 August 2008 at a base rent of $55,444.00.00

The various configurations of the floor plan for the Centre

59. Pausing at this point, it is useful to review the changing configuration of the shops over the months July 2006 to November 2007.

60. There is a significant discrepancy in the evidence as to whether the floor plans, which are annexed to the exhibits to the affidavits of both Mr Perry and Ms Warren, were in fact provided to the Applicants with the Lease Offer.

61. Of course, on one view, even if the plans were not provided to the Applicants, they would still have the task of proving to the requisite standard that there was in fact a representation or representations made regarding the position of shop 62 outside the Centre and that they were relied upon by the Applicants in coming to the decision to take the shop.

62. Have they done so? Both Ms Warren and Mr Perry reject the proposition that they made representations about the position of the shop outside the Centre and in the 'food court' or 'piazza'. Indeed, they rejected the proposition that the outside area was ever referred to as a 'food court'.

63. Exhibits A and B provide very useful summaries of the changing floor plans. Exhibit A shows, at Page 1, the floor plan attached to the 'original' (ie 2003) Lease. Shop 35 is plainly in evidence but Shops 26 and 29 define the entrance to the Centre. Shop 26 was a bottle shop with an entrance on the outside of the Centre doors.

64. Page 3 of the exhibit was apparently attached to the email of 25 August 2006 (page 2) to which reference has already been made. It shows entrance doors across the middle of the frontage of the shop.

65. Page 4 of the exhibit is a copy of the existing floor plan prior to any refurbishment and was dated November 2004.

66. Page 5 is a floor plan bearing the date 25 May 2006 which is the Proposed Floor Plan. It is unclear but seems to show entrance doors in the vicinity of the external end of Shop 62. It may have been included in a Disclosure Statement.

67. Page 6 of the exhibit is of significance. Mr Perry said that a copy of this plan accompanied his letter of offer of 19 September 2006. As has already been noted, it was not referred to as an enclosure with that letter and would have been inconsistent with the plan attached to the Disclosure Statement. The Applicants denied receiving yet. However Exhibit 3 was a version of the same plan in A3 format and the evidence indicated that it was recovered from the Applicants' discovered documents.

68. Exhibit B contains copies of the plans with a very useful summary of the evidence of both parties.

69. Ultimately, the Tribunal is persuaded of the following matters:

i) the Applicants were aware when they executed the Assignment to Lease in 2005 that they had an obligation to refurbish the premises, being shop 35, that the Lease had less than three years to run and that there was no option to renew.

ii) The Applicants and in particular Ms Fagerlund had considerable experience as a legal secretary and conveyancing clerk. She was aware of the contractual importance of documents such as leases and had access to legal advice.

iii) The Respondents were entitled under the Lease, to relocate the Applicants to another shop and of course were free to negotiate the terms of a further lease.

iv) The Applicants were unhappy and annoyed on being told that they had to relocate because shop 35 was going to be reconfigured in the Centre refurbishment but they were given the choice of either being relocated for the balance of the term of their lease or to negotiate a new lease.

v) Given the money they had spent on shop 35 the prospect of negotiating a new lease was a good one.

vi)The conduct of the Applicants throughout the negotiation period suggested strongly (and not surprisingly) that they were most concerned that their equipment and in particular new refrigerated cabinets would fit in the new shop. The Respondent appeared keen to assist them with the fit out plans. Presumably it was in the Respondent's interest to ensure that their tenants ran viable businesses, particularly as (according to the evidence of Ms Fagerlund) Ms Warren was of the view that their tenancy had the highest turnover of any food outlet.

vii)The new shop was considerably bigger than the old shop and had access to the car park area which would enable the Applicants to pick up 'out-of-hours' trade

viii) The Applicants demonstrated that they were able to negotiate terms in their favour, notably the Respondent's contribution to the fit out which went from $25,000.00 to $30,000.00 and the period of the lease from six years to seven.

ix) After work began on the refurbishment of the Centre in about September 2007 the Applicants watched the new Centre doors being fitted, yet they did not raise this with Centre Management. According to their evidence, the most important thing to them in the relocation of their shop was that it was to be outside the Centre itself yet when the Centre doors were installed such that Shop 62 was inside the Centre, the Applicants said nothing and did nothing.

The Law

70. In order to obtain relief under section 62D of the Retail Leases Act 1994, the Applicants bear the onus of proving that the Respondent, in connection with the lease of Shop 62, engaged in conduct that was

misleading or deceptive towards them, or

was likely to mislead or deceive them

71. Sections 62C and 62E of the RLA entitle the Applicants to recover loss and damage sustained as a result of such conduct.

72. The sections are cast in similar terms to ss 52 and 82 of the Trade Practices Act 1974 and the law applicable to that Act is applicable to the RLA.

73. The test of whether something is misleading or deceptive or it likely to mislead or deceive is an objective one determined in all the circumstances of the case and by concepts of reasonableness: Cantarella Bros v Valcorp Fine Foods Pty Ltd [2002] FCA 8.

74. Intent is irrelevant for the purposes of considering the conduct.

75. Whether conduct is misleading or deceptive is a question of fact which must be decided by reference to all of the circumstances, which includes (but not exhaustively) contracts and disclosure statements : Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 83 ALJR 903.

76. The presence of terms in a contract that provide that a party did not rely on information provided to it, do not necessarily prevent a finding that misleading or deceptive conduct induced the party to enter the contract.

77. Conduct is likely to mislead or deceive if there is a real or at least not remote chance of possibility regardless of whether it is less or more than 50%: Global Sportsman Pty Ltd v Mirror Newspapers ltd [1984] FCA 180; (1984) 55 ALR 25.

78. Causation is established even if the impugned conduct is not the sole cause of the loss and damage. If the breach materially contributed to the loss or damage suffered, it will be regarded as a cause of the loss or damage despite other factors or conditions having played an even more significant role in producing the loss or damage: Henville v Walker [2001] HCA 52; (2001) 206 CLR 459.

79. For conduct to be unconscionable under section 62B of the RLA, moral obloquy is required. The passage most frequently cited in respect of this requirement is in Attorney General of New South Wales v World's Best Holdings Pty Limited (2005) 63 NSWLR 583 :

"Unconscionability is a well-established but narrow principle in equitable doctrine it has been applied over the centuries with considerable restraint and in a manner which is consistent with the maintenance of the basic principles of freedom of contract. It is not what principles of what "fairness" or "justice" or "good conscience" require in the particular circumstances of the case."

80. In Hurley v McDonalds Australia Ltd [1999] FCA 1728; (2000) ATPR 41-741 the Court referred to synonyms of the word 'unconscionable' and said that it "imports a pejorative moral judgment", something "more than unfair".

Decision

81. In paragraph 9(d) of Annexure A to the Further Amended Application ("FAA"), the Applicants contend that the Respondent represented that "Fagerlund and Atkinson could take a lease of a new shop as part of the Shopping Centre's food court and external to the entrance to the Shopping Centre".

82. In paragraph 11 FAA, the Applicants allege that the Disclosure Statement of September 2007 [sic] represented that the location of the Shop 62 was part of the Shopping Centre's food court and external to the entrance of the Shopping Centre.

83. Paragraph 24 FAA alleges that "Had Fagerlund and Atkinson known that Shop 62 would not or may not be part of the Shopping Centre food court or would be or may be internal to the Shopping Centre, it would not have entered into Shop 62 Lease nor surrendered the Shop 35 Lease.

84. The Applicants have not established that representations were made in the terms alleged in the FAA. At its highest, the evidence of Ms Warren was that the new shop would be "in the vicinity of the bottle shop" or "would be in the piazza area". The Tribunal does not accept that there was any conversation specifically directed towards the location of the premises vis a vis the "food court" area.

85. In so saying, the Tribunal accepts that there were general discussions about the location of the new shop and in particular that it would have access to the external car park but that most of the conversations concerned the fit out of the new shop and whether or not it would be able to accommodate the equipment and cabinets that the Applicants had purchased at considerable cost.

86. The evidence also disclosed that the Respondent either through Ms Warren or Mr Perry advised the Applicants that the redevelopment of the Centre was proposed, that the development plans had not been the subject of formal approval and that changes could occur as to positioning of shops. The Applicants accepted that this advice had been given to them. In any event, it was also made clear in the Disclosure Statement.

87. None of the statements made by either Ms Warren or Mr Perry could amount to a clear and unambiguous representation that the new shop would be external to the Centre and located in the food court area.

88. As to the Disclosure Statement, the Tribunal accepts that two versions were sent to the Applicants, one in September and one in December 2006. On the balance of probabilities the Tribunal accepts that the plans which were said by the Respondent to have been included in the package of documents, which accompanied the Lease Offer and Disclosure Statement, were in fact included.

89. Neither version of the Disclosure Statement unambiguously made the representation which was pleaded and in fact expressly provided for the fact that the development could change.

90. The evidence disclosed that a number of plans were provided at different times and were the subject of discussion, mostly regarding the proposed fit out. These plans variously show the entrance door to the Centre in different locations. More than one plan shows Shop 62 wholly within the Centre.

91. The Tribunal regards it as critical that although various plans shown to the Applicants obviously had the entrance doors in different locations, there was not one document nor unambiguous conversation in which the discrepancy was raised. This was despite the fact that the Applicants were legally represented and despite the fact that they say that the position of the shop outside the Centre was of critical importance to them.

92. It was said for the Applicants that the fact that the Respondent's witnesses made no attempt to bring the change of position of the entrance doors to the attention of the Applicants was evidence of their misleading or unconscionable conduct. Another explanation is more plausible: that neither party considered the position of the doors to be of importance.

93. Further, the Statement of Lessor's works, which Mr Atkinson signed, included wording which referred to "internal shopfront" in relation to the "Perspex Roller Grill." The Tribunal does not accept Mr Atkinson's explanation as to his understanding of these expressions. The use of those words merely reinforces the finding that the shop was in fact always to be contained within the Centre.

94. The Tribunal accepts the evidence of one witness who could be said to be wholly independent - Mr Gray. He said that Mr Atkinson had referred to the fact that the new shop was within the Centre but with external access to the Car Park as "the best of both worlds".

95. Finally, both Mr Atkinson and Ms Fagerlund saw the Centre development works as they were carried out, including the positioning of the entrance doors, in October 2007 yet they said nothing about it until February 2008 - 17 months after the representations were said to have been made and 4 months after the doors were installed.

96. It is inconceivable that had the position of the shop outside the Centre been have critical to their decision to take the Lease as they said it was, that the doors could have been installed and their shop wholly contained within the Centre, without as much as raising it with anyone from Centre Management.

97. The Tribunal does not accept Ms Fagerlund's explanation that she felt it was hopeless to complain. Ms Fagerlund did not appear in the witness box as a timid or essentially pessimistic person. Moreover, she or her solicitor at least, had successfully negotiated a seven-year term and an increased contribution for fit out from the landlord. This reveals two things - that the Applicants were capable of arguing for better terms and that the landlord was amenable to negotiation. Indeed, if, as Ms Fagerlund said, the shop at tenancy 35 had the highest turnover of any food outlet in the Centre, it is not difficult to imagine that the landlord might have been interested in retaining such a tenant.

98. The Tribunal accepts the Respondent's submission that the statements must be read in the context of all the information contained within them and within the context of the legislative framework, which is designed to protect both Lessor and Lessee. It would be wrong to select some words or act, which alone, would be likely to mislead if those words or acts, when viewed in their context, were not capable of misleading: Parkdale v Puxu [1982] HCA 44; (1981) 149 CLR 191 at 199.

99. On the balance of probabilities, the Tribunal finds that no clear or unambiguous representation was made to the Applicants in the terms pleaded.

100. Even if that were not the case, the evidence disclosed that the Applicants did not rely on any representations when they signed the lease offer and disclosure statement. Ms Fagerlund in particular, said clearly that she did not rely on any statements or representations (Fagerlund P1-pp60-61, 63-64 and Atkinson P3-pp33-39).

101. No doubt this was the reason that nothing was included in that part of the disclosure statement which required them to include any important representations in that document. The failure to include the alleged representations in that document raises an estoppel against the Applicants: Samaha v Corbett Court Pty Ltd [2006] NSWSC 1441 at [55].

102. The Applicants were, at all material times, represented by a solicitor, Ms Caroline Hunt. It was agreed that Ms Hunt is presently still practicing in Ballina. Her evidence on the matter would have been both relevant and material. She was not called as a witness.

103. It follows from these findings that the Applicants do not succeed in their claim for damages. The Tribunal observes, however, that the evidence as to loss and damage was insubstantial. The Tribunal accepts that the Applicants spent money on the fit out of the shop and that those funds were borrowed but there was no evidentiary connection provided which demonstrated that the position of the shop within the Centre was the occurrence which caused the business to fail and thus for those funds to be lost. Businesses fail for a variety of reasons. The presence of a competitor in the form of Coffee Club may have had an impact on the sales of Decadent Pastries. Perhaps the business would never have been able to sustain the rent applicable for a shop of its size. It is pointless to compare the takings of Shop 62 with those of Shop 35 without any business or trade analysis.

104. The Tribunal does not know what caused the shop to fail. The evidentiary onus has not been discharged.

105. With respect to the allegation of unconscionability, the Tribunal finds that taken as a whole, there was no level of moral obloquy or highly unethical conduct by the Respondent. The Applicants purchased a business which had a limited life left in the lease with no option to renew. The landlord was not obliged to give them an opportunity to negotiate a new lease but did so.

106. The evidence was that the negotiations were conducted over a lengthy period during which the Applicants either by themselves or through their solicitor, were able to secure a lease on favourable terms. The fact that the re-development of the Centre was proposed and in draft only was always disclosed. The Applicants knew that the Centre refurbishment, including the positioning of shops, could change. The allegation of unconscionable conduct by the Respondent is rejected.

107. So to is the allegation that a representation was made as to an increase in profit of 15-20%. Mr Perry and Ms Warren both denied having made any such representation; it was not included by the Applicants in the Disclosure Statement which required important representations to be disclosed; it was not raised in correspondence until February 2008, despite the fact that in November 2007, the Applicants had requested a rent reduction due to low trading figures; Mr Atkinson was silent on the matter; only Ms Fagerlund referred to it.

108. It is necessary to make a determination in respect of the 18 September 2007 agreement in which the landlord promised to pay the Applicants the sum of $1500.00 per day for each day after 24 September 2007 that the premises at shop 62 were not available for handover. There was a divergence in the evidence regarding this matter. Ms Fagerlund said that she collected the keys on 27 September and that the shop was not available before that date. Ms Warren said that the shop was available for handover on 24 September and that in fact, the Applicants' tradesmen were in the shop and working on the fit out on that date.

109. The Tribunal, having had the opportunity of observing both witnesses, prefers the evidence of Ms Warren and accepts that the shop was available for handover (albeit without a completed fit out) on 24 September and that Ms Fagerlund did not take the keys until later in the week. Thus the claim for $4,500.00 fails.

110. The Respondent filed a Cross Application, which sought damages for the breach of the Lease by the Applicants. The Tribunal finds that the Applicants were in breach of their Lease in May 2008 in that rent and other monies were outstanding and that they vacated the premises without the consent of the landlord.

111. The obligation to pay rent is an essential term of the lease (Clause 22.8 of the Lease).

112. On 1 July 2008 a Notice of Breach was served by the Respondent on the Applicants and on 28 July 2008 a Notice of Termination and Re-Entry was served. Subsequently the Respondent took possession. The Tribunal is satisfied that the Respondent was entitled to take possession.

113. Ground 1 of the Cross Application sought damages for outstanding rent. The net amount of rent, outgoings and other charges which were outstanding at the date the Respondent gave formal notice of the termination of the lease was $23,046.85 and that money should be paid to the Respondent. The Respondent is entitled to interest on this amount. The interest is to be paid at the prescribed rate from the date of termination.

114. Ground 2 of the Cross Application sought damages for the cost incurred by it in making good the premises. Mr Seward gave evidence as to that sum, which was expressed to be $13,784.10. In the absence of any evidence to the contrary, it should be paid to the Respondent.

115. It also claimed consequential loss which was characterized in two ways: an incentive paid to the incoming Lessee together with legal fees (being a total of $63,610.72) and $162,339.94 being the difference between the rent payable by the Applicants for the term of the Lease and the rent payable by the incoming tenant.

116. The Tribunal is not satisfied that the amounts claimed for consequential loss other than the amount for making good the premises have been proved. There was no compelling evidence as to the reason that an incentive needed to be offered to Kaos Hair (the incoming tenant) nor how that sum was calculated or negotiated. Its payment was a commercial decision made by the Respondent.

117. The same may be said about the amount of rent charged to Kaos Hair. There was no evidence which satisfies the Tribunal that a Lease needed to be entered into in those terms and the claim fails.

118. Ground 3 invokes Clause 23.4 of the Lease which provides that if the tenant ceases to be the tenant or ceases to occupy the premises within one year of the Lease, then the tenant must repay the $30,000.00 contribution to fit out.

119. The evidence of Ms Fagerlund was that the fit out contribution was not paid. However, Ms Warren's evidence, which is preferred, was that $22,000.00 was paid not in cash but as a credit for rent which was owing. The rental arrears of $23,046.85, which is referred to above, is the amount owing after the credit of $22,000.00. Accordingly and pursuant to clause 23.4 of the Lease, the sum of $22,000.00 must be repaid to the Respondent.

120. Accordingly, the orders will be:

1. Application dismissed.

2. Cross Application allowed in part. The Cross Respondents will pay the Cross Applicant the sum of $58,830.90 calculated as follows:

$23,046.85

$13,784.10

$22,000.00

3. The Cross Applicant is entitled to interest on the sum of $58,830.95. The Cross Respondents are to pay interest on that sum at the prescribed rate from the date of termination of the lease, 28 July 2008.

4. The Tribunal notes that the parties have requested the opportunity to make submissions as to costs. The Tribunal orders that each party pay its own costs, which order will be stayed for the period of 14 days from the date hereof during which time the parties are invited to make submissions as to costs in writing to the Tribunal.

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Amendments

30 Mar 2011 Incorrect Judgment Amount. Paragraphs: 120

04 Apr 2011 typographical error in judgment amount Paragraphs: 120