Tenant Awarded Damages for Breach of Lease Covenants

The claimant sought damages for breaches of covenants in a lease agreement with the respondent. The court found that the respondent breached several covenants, including those related to obstruction and disturbance from ongoing building work, and awarded damages accordingly.

New South Wales Supreme Court

CITATION : [COMPANY] v [COMPANY] [2009] NSWSC 418

HEARING DATE(S) : 23 – 25 February 2009

JUDGMENT DATE : 1 June 2009

JURISDICTION : Equity

JUDGMENT OF : Bryson AJ at 1

1. I give judgment for the plaintiff for $73,789 with interest $21,103.65 from 29 June 2005 to the date of judgment, a total of $94,892.65 and with costs of the plaintiff's claim.

DECISION :

2. I order that each party bear its own costs of the cross-claim.

3. I order that the defendant deliver up all documents held by it as guarantee or term deposit of $23,375.00 given in accordance with clause 25 and item 11 of the Lease: with liberty to apply as to the enforcement of this order.

CATCHWORDS : LESSOR and LESSEE - Commercial premises - halal butchery shop in [COMPANY] - on the facts, the plaintiff did not establish rights under Trade Practices Act s 52 - damages assessed for breaches of landlord's covenants relating to obstruction and disturbance from continuing building work.

Conveyancing Act 1919 (NSW) LEGISLATION CITED : Retail Leases Act 1994 (NSW) Trade Practices Act 1974 (Cth)

CATEGORY : Principal judgment

PARTIES : [COMPANY] (Plaintiff) [COMPANY] (Defendant)

FILE NUMBER(S) : SC 4543/05

[NAME] SC (Plaintiff) COUNSEL : [redacted] [NAME] SC (Defendant) (On 25/2/09)

SOLICITORS : [redacted] [NAME] (Defendant)

- 24 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BRYSON AJ

MONDAY 1 JUNE 2009

4543/2005 [COMPANY] v [COMPANY]

JUDGMENT 1 HIS HONOUR: The plaintiff [NAME] claims remedies relating to an agreement by the defendant [COMPANY] to lease shop Q17 in the [COMPANY], [ADDRESS] to the plaintiff. [COMPANY] is a large development containing [NAME] and [NAME] stores and many smaller retail stores, and was constructed by [COMPANY] in 2003 and 2004; work continued into 2005. Above the [COMPANY] is a residential development containing over 400 home units. 2 The parties entered into a written agreement for lease when the [COMPANY] was still under construction, providing for a lease to be granted when occupation of the shop could be given. At first occupation in January 2004 was contemplated. There were several delays, but eventually [NAME] was allowed to go into occupation in April 2004 to conduct its fit-out, an Opening Ceremony for the [COMPANY] was conducted on 22 June 2004 and at the conclusion of the Opening Ceremony some retail shops, including the plaintiff's halal butchery business, began to operate. The lease was treated as coming into effect on that day. The lease was for a term of five years, but as the lease was not ever registered, the leasehold interest in fact created arose under s 127 of the Conveyancing Act 1919, a tenancy at will on such of the terms as of the agreement for lease as were applicable in the circumstances, terminable on one month's notice. Provisions of the Retail Leases Act also applied to the parties' relationship. From an early point [NAME] did not comply with its obligation to pay rent; it paid only two months' rent, and did not for a long time pay costs and stamp duty, so as to be entitled to have the lease registered. [NAME], the director of [NAME] who gave evidence, said in evidence that at some time (obviously after a long delay) he did pay the stamp duty, but so far as appears the document was never stamped. 3 It is hard to follow the issues from the pleadings. The Statement of Claim was filed on 17 August 2005 and the Defence was filed on 19 October 2005. An amended Statement of Claim was filed on 25 August 2006 and the Defence to that was filed on 12 October 2006. A Further Amended Statement of Claim (FASC) was filed on 2 July 2007 but the defendant did not file a Defence to that document, so that the new claim introduced by the further amendment was not answered. [COMPANY] filed a Cross-claim for rent on 14 November 2007. The cross defendants were [NAME] and also [NAME] and [NAME], directors of [NAME] and guarantors of obligations in the lease. 4 [NAME] and [NAME] are now the directors of [NAME]. In September 2003 [NAME] was the only director. [NAME] became a director on 12 January 2004. [NAME] is a long-term friend and business associate of [NAME]. He speaks very limited English and understands only a limited amount of English. [NAME]'s evidence shows that [NAME] and [NAME] functioned as co-directors with him before their formal appointments. [NAME] was always the leading figure in relevant events. A third director who was appointed on 26 July 2004 [NAME] had no relevant involvement in the events. There have been other directors but they have no relevant involvement in the events. 5 [NAME]' claims include three main groups:

(1) damages under s 82 of the Trade Practices Act 1974 relating to pre-contractual representations made by [NAME] of [NAME] on behalf of [COMPANY], and also representations made by [NAME] a director of [COMPANY] to [NAME] and [NAME] in September 2003 before the agreement for lease. [NAME] relied on s 52 of the Trade Practices Act assisted by s 51A.

(2) damages for breach of covenants in the lease. These were Clause 29 relating to managing and operating the [COMPANY] in a professional and competent way, Clause 30 relating to obeying laws relating to conduct of the [COMPANY], Clause 31 relating to keeping the [COMPANY] in a clean and tidy condition, Clause 32 relating to occupation without interruption or disturbance; and also the implied term against derogating from the grant.

(3) [COMPANY] claimed release or return of a guarantee or term deposit of $23,375.00 which it gave in accordance with clause 25 and item 11 of the Lease. 6 On 15 August 2008 Macready AsJ gave judgment for [NAME] for damages to be assessed on the claims for damages for breach of covenants, and struck out a passage in the Amended Defence which dealt with them. The reasons appear from his Honour's judgments of 24 July 2008 and 15 August 2008, and he adhered to this decision when asked to reconsider it, for reasons stated on 2 October 2008. The reasons were stated fully and are not open to review by me, and were based on procedural defaults by [COMPANY]. Macready ASJ also directed filing any Defence to the claim for return of the guarantee, and [COMPANY] filed a Defence specifically to that part of the claim on 28 August 2008. 7 So the matters before me are [NAME]' claim for remedies under the Trade Practices Act, assessment of damages to which the plaintiff is entitled, the claim to set aside the guarantee and the cross-claim for rent. 8 In the claim under the Trade Practices Act the FASC alleges that there were express oral representations. In or about September 2003 [NAME] made these representations to [NAME] and [NAME] in the course of an interview (para 6 of FASC): (a) There would be a large passing trade;

(b) There would be plenty of parking;

(c) The bridge into the [COMPANY] would be upgraded and traffic will be redirected

(d) The shopping [COMPANY] will be busy

(e) Shop 17 will have very busy pedestrian passing traffic.

(f) There would be a pedestrian passageway from the shopping [COMPANY] straight to Auburn train station. 9 It is also alleged that in September 2003 [NAME] of [NAME], made these representations: (g) There would be regular clientele from the units above the shopping [COMPANY].

(h) The shopping [COMPANY] would have 24 hour security patrols and security cameras will be placed to view all the shops and [COMPANY] courtyard.

(i) Full occupancy of the first floor shops was expected by the time the [COMPANY] was to be opened.

(j) Full occupancy of the units above the shopping [COMPANY] was expected by the time the [COMPANY] was to be opened.

(k) The units above the shopping [COMPANY], and the shopping [COMPANY] were a one-stage development. 10 [NAME] and [NAME] spoke English, but [NAME] and [NAME] also spoke to each other in Arabic, which [NAME] does not understand. [NAME] did not give evidence before me and his not giving evidence was explained, insofar as it was explained, by reference to his poor command of English. [NAME] was not called by the defendant to give evidence. One effect of extensive procedural directions made by Macready AsJ was that the defendant was unable to call [NAME] because it had not complied with the times directed for filing an affidavit by him. There is a reference in the reasons given by Macready AsJ to an alleged difficulty of locating [NAME], but no evidence about this was given before me, so his absence as a witness is unexplained. [NAME] and [NAME] were both witnesses whom in the ordinary course the respective parties would be expected to call. 11 [NAME] was born in Cyprus in 1955. He first visited Australia in 1983, married and settled here and became an Australian citizen soon after. He attended high school in Cyprus and learnt English in high school, including a study course in England. He obtained a university degree in Istanbul in 1977 after four years of study in Radio and TV Journalism, and later studied Textiles for three years part-time at Heidelberg, Germany. He has a wide range of work experience including restaurants, textiles, glass manufacture and clothing production. By 2003 he had wide experience in business ownership and management. He had purchased his home, and had leased factory premises for business. From around 1991 he had experience in leasing shop premises and operating retail businesses through a company [COMPANY]. He purchased a Turkish restaurant business and he took part in its management. From 1991 he also operated business as a Finance Originator, to do which he had certification from Australian Securities and Investments Commission. 12 By 2003 [NAME] was a businessman with an unusually wide range of experience, and he was successfully established in business, including business as a Finance Originator. He must have entered into many contracts and business arrangements, oral and written, including several leases, and he must have known the importance of informing himself of the written provisions of documents he signed. In entering into the plaintiff's lease with [COMPANY] [NAME] had the advice of a solicitor, whom he consulted at every significant stage of the transaction and from whom he obtained explanations of documents. 13 As a lifelong Islamic believer [NAME] is entirely familiar with halal principles for preparation and handling meats and smallgoods and with beliefs and practices of the general Muslim community. He was also familiar with Auburn, where he had resided for about 20 years. As is well-known, many Muslims live in and near Auburn, and the number of Muslims living there is growing. [NAME] had in view establishing a meat and smallgoods processing plant to produce products in accordance with halal principles in a controlled, monitored environment, and marketing products through the butchery and delicatessen. He also contemplated export of products in the longer term. [NAME] leased factory premises at [ADDRESS] from [NAME] for the purposes of establishing the processing plant. [NAME] as a director of [NAME] signed the lease for those premises, although he was unable to produce the document. 14 [NAME]'s decision to embark on production and sale of meat and smallgoods was based on reasoned consideration of prospective demand and the general prospects of the business, which he explained in evidence. His process of consideration included consulting and taking advice from a person who operated a very large business in meat and smallgoods, and introduced him to representatives of David Jones and Qantas. [NAME] also considered the prospects of export business. By 2003 he had made wide enquiries and had given the prospects of the business full consideration; and he was in a position to make a well-informed judgement with the aid of his own business experience. 15 [COMPANY] occupies a large site including the block between [ADDRESS] and [ADDRESS]. There was also development in the block between [ADDRESS] and [ADDRESS], close to Auburn Railway Station. A passage or arcade leads between [ADDRESS] and [ADDRESS] and opens directly opposite the main corridor of [COMPANY], giving ready access from Auburn Railway Station to the midst of the [COMPANY] and in particular to shop Q17. About mid 2003 [NAME] noticed that work had commenced on the [COMPANY], and saw billboards and advertising, which said that shops were available for lease and units for sale. He says: (Aff 130): "I decided the [COMPANY] was attractive to AAF for the premises of the butchery/delicatessen given its location and proximity to the large Muslim community in the Auburn Area." He discussed with [NAME] and [NAME] locating the butchery and delicatessen there and they approved. [NAME] already knew something of the development from information from [NAME], the supervisor of a construction company, who is a brother of [NAME] the developer. [NAME] made enquiries at the Town Planning section of Auburn Council about the [COMPANY] to obtain information confirming statements by the developers about widening a road, improving a bridge over the railway and building a car park. 16 Following indications in the advertising billboards [NAME] contacted [NAME] of [NAME] by telephone about June 2003. [NAME] told him that home units could be purchased but shops were available for lease and not for sale. After discussions with his co-directors [NAME] obtained a contact telephone number and spoke to [NAME], told him that he and [NAME] were interested in leasing premises in the development and arranged a meeting, which took place about September or October 2003. 17 [NAME] gave in evidence (affidavit [143]) a lengthy passage setting out what he said was the effect of what [NAME] said to him. In this passage he attributes to [NAME] statements which dealt with each of the subjects mentioned in paras 6(a) to 6(f) of FASC. The passage attributed to [NAME] is, in its terms, infused with optimism characteristic of developers, without any shade of qualification or contingency and describing what were, obviously from the terms are used, the best contemplated outcomes. For the most part, what was attributed to [NAME] should be reasonably understood, in my view, as a statement of the favourable outcome which the developer expected and hoped for, and only in a few places are words attributed to [NAME] capable of being understood as specific representations about what would be the future state of affairs, or as dealing with an ascertainable future time which could be fixed any more clearly than as the time when the whole development was complete. By way of example, the opening statement "There will be a large passing and regular trade as there will be plenty of parking for people" is not specific in any way and, as a reasonable hearer would understand, there are wide ranges of numbers of people and availability of parking which could be fulfilled by such a statement. In a similar way the statements attributed to [NAME] on each of the six subjects of alleged representations are not specific, and are capable of being fulfilled by facts and circumstances anywhere within wide ranges. 18 At only two points did the statements attributed to [NAME] descend to anything with particular reference to the prospects of [NAME] and his company if they took a lease of a shop. These are: By the time the [COMPANY] opens all of the Shops will be occupied - it will be very busy. We think we will get some good tenants. And

I think Shop Q17 is suitable for you. It has a large shop front and is on the ground floor which will make it easier to get your meat deliveries. Shop Q17 is also located in that passageway between the [COMPANY] and the Auburn Train Station which I think is an ideal place as you get all of the passing trade to and from the Auburn Train Station, in addition to the other customers within the [COMPANY]. 19 The main burden of [NAME]'s complaints, as presented in his evidence and as I was able to understand them, is that representations made to him meant that when the [COMPANY] opened and his tenancy began all the shops would be occupied and there would be no continuing building works. 20 To my mind there is a wide gulf between broad statements by a developer to a prospective tenant describing the state of affairs which the developer expects to exist when the development is completed, and an interpretation that a future state of facts was being represented which the hearer could rely on as a statement of how the facts would be if he decided to enter into the business under discussion. Even as narrated by [NAME] in his evidence in chief on affidavit, before cross-examination had taken him to any examination of his position, I do not think that the interpretation that [NAME] engaged in misleading or deceptive conduct causing damage by describing how he saw the state of affairs in the future is reasonably available. 21 It was [NAME]'s evidence that at the meeting [NAME] showed [NAME] and [NAME] plans of the [COMPANY], and he produced a copy in evidence. These plans are not highly detailed. 22 In his affidavit evidence [NAME] accepted that there had been a conversation, but gave an account of what he had said which was much shorter than that given by [NAME]. He dealt with some of the same subjects, the availability of parking and the proposed arcade from [ADDRESS] and the Railway Station; he denied saying that there would be a large passing trade, denied dealing with improvements to the bridge over the railway, denied saying that by the time construction of the shops was finished most of the residential units would be sold, and, to deal with the subject which requires most attention, denied saying " By the time the [COMPANY] opens all of the shops will be occupied." He also denied showing [NAME] and [NAME] plans of the [COMPANY]. [NAME] says that he referred [NAME] and [NAME] to [NAME] to deal with leasing. 23 [NAME] gave evidence on affidavit of conversations with [NAME]; a first conversation the day after he spoke to [NAME] when arrangements were made to meet, and at a meeting at the engineers' office (not at lunch) at the [COMPANY] several days later attended by [NAME], when [NAME] made a number of statements relied on as representations in FASC [6] subparas (g) to (j). 24 [NAME] was not called to give evidence, and his absence was not explained by evidence; hence what [NAME] says about his conversations with [NAME] has not been contradicted. Statements attributed to [NAME] include some general statements, but also a number more specifically relating to consideration of [NAME]'s company taking a lease to shop Q17. A significant passage is the following: ([NAME] [153]): "The Shop will also have very busy pedestrian traffic as there is going to be a passageway from the [COMPANY] straight to the Auburn Train Station. That means anyone getting on or off the train at Auburn will have the opportunity to walk through the [COMPANY]. Shop Q17 is located on that passageway so all those people commuting on the train would have to walk past your shop to get to and from the train." 25 The attributed statement about "very busy pedestrian traffic" was not specific in any way. There is an element of assessment in these words, but this passage was in no way in misleading and deceptive and was fulfilled; except that, according to the plaintiff's case, it was misleading or deceptive in that it was not fulfilled when the shop opened and the lease commenced, or for many months afterwards, because work continued in the passageway. As a statement about how affairs would be when all building work was completed it was not misleading or deceptive. In my opinion only a specific reference to that event would give the statement the meaning that it was a representation about the state of affairs at the commencement of a prospective lease. The statement deals with a condition of full development and normalcy, not specifically related to any particular time or any particular event in the plaintiff's affairs. 26 Another significant passage is the following: In addition to the passageway and the passing trade, there is also going to be regular clientele as a result of the number of units above the [COMPANY]. These units are being pre-purchased and will be either leased or owner occupied. We have already sold 20% of the units about the [COMPANY] and we expect those sales to continue. We expect to have full occupancy by the time the [COMPANY] is open. 27 This statement, if made in the terms alleged, related to the time when the [COMPANY] would be open and the lease would commence, and related to a matter of high importance, that is, full occupancy of the residential units. Full occupancy of the units is obviously an important consideration for a prospective tenant of a halal butchery on the ground floor. 28 Statements are also attributed to [NAME] relating to road widening, consequent increase in traffic, access to the car park and a bridge over the railway. These statements were highly general in terms and did not incorporate any statement about the expected time of fulfilment. They did not have specific relationship to the prospects for the plaintiff's butchery. There were also general statements about leasing retail premises including "I expect to have full occupancy of the ground floor by the time the [COMPANY] is open". This too is a matter relevant to what the plaintiff had under consideration. 29 When cross-examined [NAME] accepted that [NAME] did not say to the effect that the work or any particular work would be finished by June 2004, or indeed by June 2005. He adhered to his evidence that [NAME] had said to the effect that all the shops would be occupied by the opening day. [NAME] also agreed when cross-examined that [NAME] did not relate his statements to any particular times, to June 2004 or to June 2005. While he accepted that there were no dates mentioned at the meeting, he maintained when challenged that [NAME] said that the passage could be finished by June 2004 which I understand to mean that it would be finished by the time the lease commenced. [NAME] maintained under cross examination that the representations made by [NAME] were among his reasons for entering into the lease and said to this effect (t89, l17): "If I had been told all the shops were not going to be open together, I would not get the lease". He also said that that was the only reason [he took the lease]. He said (t. 90) that the representations relied on were full occupancy at the date of possession. As to the others he said: Q. You now say, do you, that you didn't rely on any of the other representations in relation to your decision to enter the lease, other than that there would be full occupancy of the retail stores as at the date you took possession. Is that right? A. Yes. Q. So you didn't rely on the fact that you had been told that there would be a large passing in regular trade? A. Not 100 per cent but I took the opportunity for that too. 30 He agreed that he could see, when occupancy was taken for the fit-out, in or about April 2004, that not all the other shops in the [COMPANY] were going to be opened. He agreed that at the time of this conversation with [NAME] he could see that the units were still under construction, and and that at the time it was at the foundation stage: there was a lot more work to do. He adhered (t 97) to his evidence that [NAME] said: "We have already sold 20% of the Units about the [COMPANY] and we expect those sales to continue. We expect to have full occupancy by the time the [COMPANY] is open." [NAME] was expecting full occupation of the retail premises, not of the residential premises. He accepted that [NAME] did not refer to June 2004 or to a particular date. 31 [NAME] understood (t.103/33) that [NAME] was talking about was an overall view about how the development would all end up when it was finished. He adhered to his affidavit evidence (t 103-104) that he asked [NAME] "Will the project be completed by March 2004 as planned" and [NAME] said: "Yes, hopefully it will go well and it will be ok." And the reference to "the project" meant the shops. It was plain (t.104/9) that [NAME] was not going to guarantee that. 32 Of high significance in my appraisal of [NAME]'s evidence, of what was said to him and the influence of what was said to him on the decision to enter into the lease, are references and absence of references in communications between the parties and in their documents to whether any relevant representations had been made, or were relied on. It is to my mind significant that there is no reference to representations in the letter of 11 November 2003 (t.106-7) from the defendant which opened written commendations. At a number of places in documents relating to the agreement to lease and to the lease there are references to whether any representations had been made or relied on or related subjects. It was [NAME]'s evidence that he read the lease document with his solicitor and received the solicitor's explanations. 33 However he maintained, for every reference to representations and disclosure statements in documents which he had signed, that although his solicitor had explained the documents to him, he had not been told about the presence of the references to representations. (see t.116, 117, 118). He said to the effect that the solicitor did not mention the disclosure statement, and that [NAME] did not mention to the solicitor about representations made to him. 34 After a letter from [NAME] to [NAME] opening the subject of lease terms and conditions dated 11 November 2003 (Ex A, p10) the defendant's solicitors sent [NAME] the plaintiff's solicitor a form of Agreement to Lease with Lease and Disclosure Statement on 11 December 2003 (Ex A, pp 15-68). [NAME] took [NAME] through the agreement to lease (t 108 and following). [NAME] gave evidence that he did not know that leases have clauses regarding representations. When shown Pt K cl 24 Representations in the Agreement for Lease (Ex A, p25) [NAME] said (t 110) that he first became aware that this clause was there a couple of days before giving evidence; but nobody mentioned it to him until a few days ago, and he was not aware of causes like that appearing in lease contracts. He said that the lease was explained by his solicitor, and in any event he himself was able to read. His solicitor was explaining all the leases to him over so many years but nobody mentioned this type of clause to him. 35 Clause 24 says:

24. Representations 24.1 You acknowledge that you have been afforded the opportunity to record in the lessee's disclosure statement all of the representations (written and oral) which induced you to enter into this agreement and that if you did not record representations, this is because they were not made or, if made, did not induce you to enter into this agreement . 24.2 If you did record representations in the lessee's disclosure statement, and they are not repeated in Schedule 1, this is because you have now accepted that the representations were not in fact made or, alternatively, if made, the representations no longer operate as an inducement to enter into this agreement . 24.3 You agree that the only representations which induced you to enter into this agreement (apart from the representations contained in the lessor's disclosure statement) have been recorded in Schedule 1. 36 [NAME]'s evidence took a similar course with each of several other documents which he saw and in some cases signed, and contained references to representations. He dealt similarly with clause 58 of the Draft Lease relating to there being no representations (see t.113). A form of Lessor and Lessee Disclosure Statement was among the draft documents (Ex A, pp62-68). [NAME] agreed that he had probably seen that at one time. [NAME] agreed that he had probably seen that at one time. This included (p67) Advice to the Lessor.

5. In entering into the retail shop lease, the lessee has relied on the following statements or representations made by the lessor or the lessor's agents Note Matters such as agreements or representations relating to exclusivity or limitations on competing uses, sales or customer traffic should be detailed. 37 The draft lease contains clause 58 No Representations. This clause includes an acknowledgement that there had been an opportunity to record in the disclosure statement all representations which induced the lessor to enter into the lease. [NAME] signed this document for himself and for the company. He said that he signed this too without having read it on the basis of what his solicitor told him. He said he did not remember seeing the Disclosure Statement but that he had probably seen that at some time. He signed a copy of a Disclosure Statement (Ex A, p127) without inserting anything at the place where he was invited to list other agreements or representations. 38 [NAME] wrote a letter to the defendant's solicitors on 16 January 2004, commenting on aspects of the draft documents including an aspect of the Disclosure Statement, but making no reference to any disclosure relied on. [NAME]'s evidence took a similar course with each of several other documents which he saw and in some cases signed which contained references to representations. In several passages [NAME] said to the effect that his solicitor did not tell him about the Disclosure Statement or the requirement for one; alternatively he said (t 127) that possibly he had been told by the solicitor about a disclosure statement but he could not recall, and he did not say it did not happen. 39 When taken to a further set of lease documents which the defendant's solicitors forwarded about 4 March 2000 and to representations clauses in these documents (Ex A, p80) [NAME] said (t.127-128) to the effect that he could not recall the disclosure document but that his solicitor possibly told [NAME] about it. 40 When dealing with a document of 18 March 2004 Ex A, p.127, [NAME] said (t131-132) that he did not read the whole page when he signed the document and that he signed it without considering the contents. He signed this document on 18 March 2004 (see t.136). I regard his evidence as extremely improbable in a man of [NAME]'s business experience and ability. 41 There were further documents which put [NAME] in similar difficulties. A striking example is Ex A, p129 where [NAME] signed a disclosure statement immediately below the advice to the lessee containing the requirement to set out any representation, and p130 to a similar effect. Difficulties of this kind recur several times in relation to execution of the lease. 42 [NAME] and his company entered into possession of the shop many documents had passed his eyes which contained statements indicating the importance of his declaring whether he was relying on any representations which were not recorded in documents in entering into the contractual obligation. I do not find his evidence credible, and I disbelieve that he did not see any of these statements and that his solicitor did not explain any of them. His evidence shows that his solicitor explained a great deal; it is not in my mind credible that a solicitor who did this should have omitted to deal with the references to representations. On [NAME]'s evidence after cross-examination, his case under s 52 comes down to reliance on representations, attributed both to [NAME] and to [NAME], to the effect that all the shops would be occupied when the lease commenced. This would certainly be a material matter; no one wishes to conduct business in a half empty [COMPANY]. There is no contemporaneous note or record in any form that any such representation was made. If anything which [NAME] regarded as significant or important had been said on the subject, it is extremely improbable that none of the attempts to get him to disclose representations would have brought it out. I disbelieve that anything significant was said to him about all the shops and dwellings being open at the time of commencement of its lease. 43 In my judgment the plaintiff's case under the Trade Practices Act fails. 44 [NAME] gave evidence of the inconveniences and difficulties caused by the breaches of covenants. His evidence was tested in cross examination, but it was not answered by any countervailing evidence. The defendant must have been in a far better position than [NAME] to give evidence of the dates, times and nature of the building operations as they continued towards completion of its development project, and this has assisted my conclusion that I should have confidence in what [NAME] said. 45 [NAME]'s evidence shows that at the time of the Opening Ceremony on 22 June 2004 construction work was still taking place in and around the [COMPANY] including: the ceiling for the [COMPANY] remained open, and timber boards covered unopened shops that were still under construction. 46 There was dust all over the [COMPANY] and in particular all over shops due to construction works, and there were construction works in the access passageway between [ADDRESS] and the Railway. Scaffolding in front of the plaintiff's shop which had been removed prior to the Opening Ceremony was replaced soon afterwards. There was poor lighting throughout the [COMPANY], consistent with its not being open for business. There was scaffolding erected inside the [COMPANY] including associated with shops and the [ADDRESS] area. The main entrance was surrounded by scaffolding and construction equipment including cranes, fork lifts and cherry pickers. Construction work was being carried on in a number of shops on the ground floor of the [COMPANY]. Areas were barricaded off for construction safety. Part of the footpath in the courtyard was not tiled and was not available for passage; there were barricades. In the access passageway there were forklifts, cherry pickers, piles of sand, gravel, tiles and bricks just outside the back entrance. Construction in the access passageway had not been completed and the passageway was not open for access by the public. [NAME]'s interpretation was that this gave the appearance that the shop was not open for business. Shops were progressively opened, and he identified seven which were opened after approximately 2 months; a chemist shop was opened approximately 6 months' after the Ground Floor was opened. Of the approximately 10 or 12 shops on the First Floor, occupation began progressively from January 2005. 47 As trading continued from June 2004 to 2005 more and more of the vacant retail shops became occupied and in June 2005 about 80% of them were occupied. There were large businesses in occupation in June 2004; [NAME] named [NAME] and the [NAME]. 48 Unavailability of access through the passageway towards the Railway limited passing trade past the shop. This was particularly significant because the shop was not located in the central courtyard and use of the passageway influenced access to the shop. [NAME] said that the shop had no passing trade at the opening of the [COMPANY], and appeared as if it was not open for business because of the construction works and dust. There may be overstatement but I accept that passing trade was greatly limited by obstructed access through the passageway. 49 Construction work in the passageway continued through the whole of the plaintiff's occupation until 29 June 2005; there was constant construction work in the passageway. At times it was open for half its width, sometimes for a few days, at other times it was blocked off again. When it was open it was partly obstructed and there was dirt and dust associated with the construction work which discouraged pedestrian passage. The passageway was completed at some time after the plaintiff vacated the shop. 50 The fruit shop adjacent to the plaintiff's shop was boarded up until some time late in August 2004. [NAME] made attempts to have the defendant improve the lighting in passageways. Dust from construction work was a continual problem during the first three months the [COMPANY] was opened, and dust affected the plaintiff's shop and the food. In addition to the work on the passageway, construction work at various places in the [COMPANY] continued throughout the plaintiff's occupation. Free passage through the passageway continued to be obstructed by work and the presence of items connected with building work. [NAME] produced and put in evidence a number of photographs which, taken with his evidence, well illustrate the presence of obstructions associated with building work, of various kinds and at a number of times throughout the plaintiff's occupation. 51 The plaintiff put in evidence (Ex B) a [NAME] up to June 2006. This represented the results of a survey of butchers and the results of their businesses in financial years up to 30 June 2006, based on 33 businesses from most States across Australia. It is very difficult to apply any of the material or conclusions in this survey to the case of the plaintiff. The surveyed businesses were established and going concerns, and the survey information does not really bear on the prospects of success in establishing a new business. The survey does show that when established butcher's businesses can be and usually are successful, sometimes highly successful. Success seems to depend on many factors including location and management skills. The actual experience of the plaintiff was that it did not establish a successful business, attempted to establish itself for 12 months and when the business was brought to an end there had been trading losses; there had not been profits. There is no reliable evidence which can establish what the trading losses relating to the butchery were because the accounts kept related to the whole of the company's business, including the factory for production of smallgoods, which operated only so far as was required to satisfy regulatory bodies and obtain approvals, and did not ever pass into commercial production. Commissioning and maintaining the factory in those circumstances must have made a large contribution to the company's overall loss. 52 [NAME] the company's external accountant gave evidence in which he sought to analyse out the elements in the accounts which related to the factory operation. With respect to him I must say that his analysis did not produce any clear understanding of what losses were incurred by the shop business. 53 In any event the losses incurred by operating the shop business are not a correct statement of an integer in the measure of damages. It would certainly be an error to identify the loss in trading and attribute it all to damages caused by interference with business resulting from the breaches of covenant. The correct integer is the amount by which the profit on trading was less or the loss on trading was greater than it would have been but for the breaches of covenant. As there was no experience of trading, successful or unsuccessful, in an earlier period, or anything which could establish what, for this business, was a normal state of trading uninfluenced by breaches of covenant, a fully reasoned demonstration of the quantum of damages cannot be available. 54 However it is plain and clear, and I find that there must have been a loss of this kind. Even if the business was doomed to fail, it must be the case that its failure was worse because of the injury to custom caused by the breaches of covenant I have referred to. This could not fail to be true. A butchery business conducted on a building site must do worse than a butchery business conducted in an environment where passage and access are not impeded by building work and its inevitable concomitant inconveniences. A building site is no place to display meat for sale. There must have been a loss of that kind. If there had not been the breaches of covenant complained of, it is on the whole likely that the business would have been profitable: the location seems, objectively, to be a very favourable one for a halal butchery and delicatessen shop. 55 It is for consideration for what period of trading the loss should be assessed. Although the lease according to its own terms was for a period of five years the plaintiff did not take necessary steps to obtain secure occupation. It left the lease unregistered because it delayed paying the lessor's costs and stamp duty. Further, the plaintiff did not pay rent apart from a short early period, leaving its right of occupation at the mercy of the lessor, who could bring occupation to an end by a short notice and re-entry after continuing failure to pay rent. It is surprising that it took as long as it did, until 29 June 2005, for the defendant to act, give notice and make it plain that it was about to re-enter. The plaintiff as lessee had no right to remain; to equip itself with that right it would have had to pay rent. 56 There are some inferences from circumstances which bear on damages. The plaintiff kept on trading throughout the whole period until threatened with re-entry. The plaintiff wished to go on trading, and made no move to take away its goods, including perishable goods, until the last hours before re-entry. One implication this has for assessment of damages is that, in July 2005, although there were trading losses, they were not intolerable; the plaintiff wished to continue trading, and was prepared to continue to incur the losses. This is a factor qualifying any view about the gravity of the inconveniences which by that time still existed; in my finding by then the interference with trading caused by the breaches of covenant had greatly diminished, compared with June 2004, but had not come to an end. 57 In my finding the loss of goods and stock which were abandoned, or lost their value when they had to be hurriedly removed on the last day of trading is not a loss which should be found to the caused by any breach of covenant by the defendant. The plaintiff's conduct in not recognizing in due time the force of the eviction notice and removing its perishable goods and securing their value while the eviction notice was running was unreasonable, and the losses occasioned were not caused by any breach of covenant by the defendant. As it did not pay the rent, the plaintiff had no right to be there and the defendant did not invade its rights by requiring vacant possession. The losses to perishable and other goods caused by hurried departure were not caused by the defendant's breaches of covenants. 58 In my view it is clear that there was a significant loss in that trading would have been much better, losses would have been smaller and perhaps there would have been profits from carrying on the business during the period of occupancy if the defendant had not been in breach of covenant and had not in effect exposed the plaintiff to the large commercial disadvantage of attempting to carry on the butchery business in the midst of a building operation. I cannot disregard those damages, very little material for their assessment is available having regard to the nature of the loss, and I must make the best assessment I can. I can make some judgement about the scale of operations from the financial statement for the year in [NAME]'s accounts, and there are also, in the most general way, guides of a kind to the scale of operations in Exhibit B the Business Survey. I must make an estimate; I cannot disregard the proved certainty that breach of covenant caused loss. 59 In my assessment the plaintiff's damages are $155,000.00. That is, in my assessment, if there had not been breaches of covenant the plaintiff would have earnt enough money to pay the rent and make a greater profit, or a smaller loss, in the order of $75,000.00 60 [NAME] filed a Defence to the cross claim for rent, very lengthy in its terms but in substance contending that [NAME]' entitlement to damages in some way extinguished the claim for rent. This Defence is plainly and simply groundless; the obligation of a lessee in occupation to pay rent is not interdependent with obligations of the lessor to pay damages to the lessee. It is plain that [NAME] incurred liability for rent, which amounted to $81,211.00 when [NAME] gave up possession on 29 June 2005. I will award this sum to the cross claimant. As the obligation to pay rent plainly existed, until the time of this judgment, and exceeds the amount of the guarantee, [NAME] has not had any entitlement to return of the guarantee. However the liability for rent is discharged by the set-off in my judgment, and there is no longer any ground for the defendant to hold the guarantee. 61 I will set the damages recoverable on the plaintiff's claim off against the rent recoverable on the defendant's claim, and give the plaintiff judgment for the balance. I will award interest on that balance from 29 June 2005. I ask that counsel assist with a calculation of interest. 62 ORDERS:

(1) I give judgment for the plaintiff for $73,789 with interest $21,103.65 from 29 June 2005 to the date of judgment, a total of $94,892.65 and with costs of the plaintiff's claim. (2) I order that each party bear its own costs of the cross-claim. (3) I order that the defendant deliver up all documents held by it as guarantee or term deposit of $23,375.00 given in accordance with clause 25 and item 11 of the Lease: with liberty to apply as to the enforcement of this order. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.