BETWEEN : ASTERLEIGH PTY LTD AS TRUSTEE FOR THE LAHDO FAMILY TRUST

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) - Application to dismiss proceedings for lack of jurisdiction, and further or alternatively, on the basis that application misconceived or lacking in substance under s 47(1) of the State Administrative Tribunal Act 2004 (WA) - Claim advanced on basis that landlord acted unconscionably, and further or alternatively, in breach of s 14 of Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)

Retail Leases Act 1994 (NSW), s 62B

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 7(2)(b), s 12(1)(c), s 13(1), s 14, s 15C, s 15F

Retail Leases Act 2003 (Vic), s 77

State Administrative Tribunal Act 2004 (WA), s 9, s 47, s 47(1), s 47(1)(a)

Trade Practices Act 1974 (Cth), s 51AC

Ambrus and Churches of Christ Homes & Community Services Incorporated [2006] WASAT 141

Assal v Department of Health Housing and Community Services (1992) EOC

Attorney General of New South Wales v World Best Holdings Ltd [2005] NSWCA 261

Australian Competition and Consumer Commission v Simply No­Knead (Franchising) Pty Ltd [2000] FCA 1365; (2000) 178 ALR 304

Automasters Australia Pty Ltd v Bruness Pty Ltd (2002) WASC 286

Barbcraft Pty Ltd v Geobel Pty Ltd [2003] VCAT 1700 (3 November 2003)

Carlsson v HC & AS EE Pty Ltd (unreported, District Court of Western Australia, Lib No D980359, delivered 22 December 1998)

Fernandes v Lam (unreported, Full Court of Western Australia, Lib No 980745 delivered 21 December 1998)

General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125

Kimberley Downs Pty Ltd v Western Australia WASC Library No 6415, 25 August 1986, unreported

Lamiri v Aidan Nominees Pty Ltd (unreported, Supreme Court of WA, Burt CJ, Lib No 6862 delivered 10 August 1987)

McDonald v Dennys Lascelles Ltd (1933) 38 CLR 457

Murphy and Fremantle Markets Pty Ltd [2009] WASAT 84

Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17

State Electricity Commission v Rabel [1998] 1 VR 102

Tia Belau Pty Ltd v GPT Funds Management Ltd [2008] WASAT 165

Wilde and Smith [2008] WASAT 310

1 The applicant and the respondent entered into lease agreements as tenant and landlord, respectively, in respect of two commercial retail shops in the Phoenix Shopping Centre. The applicant commenced proceedings in the Tribunal seeking compensation for alleged breaches of s 14 and s 15C of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA). The respondent applied for the proceedings to be struck out on the grounds that the Tribunal lacked jurisdiction in respect of the s 14 claim and further, on the basis that both the s 14 and s 15C claims were lacking in substance.

2 At the hearing, the applicant abandoned the claim in respect of one of the shops, and the matter proceeded on that basis. In addition to the application, the parties had filed submissions and affidavits addressing the matters in contention.

3 The Tribunal rejected the applicant's contentions that it had to assume that the allegations made by it in the grounds to the application could be made out. The Tribunal held that, under s 47 of the State Administrative Tribunal Act 2004 (WA), following Wilde and Smith [2008] WASAT 310, the Tribunal was entitled to have regard to whatever material was before it in order to determine whether to strike out a proceeding because it was so obviously untenable that it could not possibly succeed or was manifestly groundless. Further, that s 47 could be used at any stage of a proceeding including, in effect, as a basis for a no case submission.

4 The Tribunal concluded that s 14 did not support a claim that increasing trade competition or reducing promotional activities could substantially alter or inhibit the flow of customers. Further, the Tribunal held that a right to compensation under s 14 only accrued after the landlord had failed to rectify the cause of complaint within such time as was reasonably practicable. As the applicant had abandoned the premises and the respondent had re­entered and taken possession within a matter of days of notice being given, no right to compensation under s 14 had arisen because it was obviously not possible to address the complaints within that timeframe. The Tribunal held that it had jurisdiction to dismiss a claim purporting to be made under s 14 and to dismiss it on the merits or because of a failure to give the requested notice.

5 In relation to the s 15C claim, the Tribunal found that the allegations set out in the grounds of the application were insufficient to support an unconscionable conduct claim. However, it was not clear, on the material provided, whether it might be possible for the applicant to reformulate this claim in an acceptable way. The Tribunal noted that even if the applicant could do so, it might not be appropriate to allow the matter to proceed further unless evidence was available to support the claim.

6 In the circumstances, the Tribunal deferred making any orders consistent with its findings and listed the matter for a directions hearing in order to determine how the matter, including the respondent's application for costs, should be best progressed.

7 Asterleigh Pty Ltd (Asterleigh), as trustee for the Lahdo Family Trust, formerly conducted business from two separate shops within the Phoenix Shopping Centre in Perth. Asterleigh entered into leases in respect of the respective premises with Volley Investments Pty Ltd (Volley), as landlord, both of which were for a term of seven years commencing in respect of the premises known as Shop 5B, from 1 June 2009 and in respect of the premises known as Shop 38, from 21 December 2009. Asterleigh continues to occupy and trade from Shop 38. The leases are in respect of retail shops and are subject to the provisions of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (CT Act). Unless otherwise expressly indicated, all references to sections of legislation in these reasons for decision are to the CT Act.

8 Asterleigh alleges that in or about December 2010, without any prior consultation, notice, or warning, Volley converted a part of the common area of the shopping centre adjacent to Shop 5B into a kiosk partly obscuring Shop 5B, and then leased the kiosk to a coffee and cake takeaway business in competition with the business it conducted at Shop 5B under the style Mocca Coffee Lounge. On 27 February 2012, Asterleigh's solicitors wrote to Volley alleging that this constituted unconscionable conduct in breach of s 15C and giving notice to Volley to rectify under s 14. Further, Volley was advised that Asterleigh would close the Mocca Coffee Lounge and vacate the premises in order to mitigate damages.

9 The affidavit evidence of Ms Barbara Katherine Morel, sworn on 17 May 2012 and filed in support of a strike out application referred to further below, asserts that Asterleigh ceased trading and removed all stock from Shop 5B on 28 February 2012, and that on the following day, 29 February 2012, Volley accepted Asterleigh's decision to abandon the leased premises at Shop 5B, effected re­entry and re­took possession of those premises. This evidence has not been disputed.

10 On 14 March 2012, Asterleigh made application to the Tribunal under s 14 and s 15F claiming compensation for inhibiting access of Asterleigh and taking action that substantially altered or inhibited the flow of customers. The application was brought in respect of both Shop 5B and Shop 38.

11 Volley made an application to strike out or dismiss the proceedings on the grounds that in relation to the s 14 claim, the Tribunal lacks jurisdiction, and further or alternatively, that the application is misconceived or lacking in substance pursuant to s 47 of the State Administrative Tribunal Act 2004 (WA) (SAT Act). Further, that in relation to the s 15C claims, the proceedings be dismissed on the grounds that the application is misconceived or lacking in substance. Orders are also sought for costs and for the proceedings to 'be deconsolidated and to proceed in relation to Shop 5B and Shop 38 as separate actions'. On 17 May 2012, Volley filed detailed written submissions in support of the orders claimed by it together with an affidavit of Ms Morel and an affidavit of Ms Lauree Danielle Coci in support of the application.

12 On 8 June 2012, Asterleigh filed its opposing submissions. It did not file any affidavit in opposition. On 2 May 2012, the Tribunal had issued a consent order programming the making of the strike out application, the filing of affidavits and submissions in support, and in opposition, respectively, and listing the application for hearing on 30 July 2012. It can be inferred from Asterleigh's submissions that it did not consider it necessary to provide any affidavit evidence because it considered that an application to strike out under s 47 of the SAT Act was analogous to an application to strike out pleadings under order 20 rule 19(1) of the Supreme Court and that the Tribunal was bound to assume the correctness of the factual assertions made by Asterleigh in its application. Significantly, in these submissions, Asterleigh abandoned its claim in respect of Shop 38 and sought only to establish that its application and the grounds supporting it, raised at least an arguable claim under s 14 and s 15C/15F with respect to Shop 5B, which should be determined at a hearing after receiving all the relevant evidence.

13 Thereafter, without leave of the Tribunal, both parties filed and served further materials. On 28 June 2012, Volley filed submissions in reply together with a further affidavit of Ms Morel. These submissions further developed Volley's contentions that Asterleigh's assertions made in the application were not to be simply accepted as established and that regard should be had to the evidence provided by Volley. The evidence of Ms Morel in the two affidavits filed by her went to directly contradict allegations made by Asterleigh in the application.

14 In the face of these further submissions and evidence, it appears that Asterleigh thought better of its position not to provide evidence and, on 26 July 2012, also without leave of the Tribunal, Asterleigh filed the affidavit of Mr Abraham Lahdo.

15 Neither party objected to the course which had been followed by the other in filing these additional documents and, had leave been sought from the Tribunal, it would have been granted. The case proceeded on the basis that this additional material was properly before the Tribunal. Consideration of all the material before the Tribunal discloses that the determination of the following issues will dictate the outcome of the application to strike out.

1. What criteria apply to an application under s 47(1)(a) of the SAT Act?
2. Has the basis for the making of a claim for damages under s 14 of the CT Act been established?
3. Has the basis for the making of a claim for breach of s 15C of the CT Act been established?
4. What is the appropriate disposition of the application?

(1) This section applies if the Tribunal believes that a proceeding ­

(a) is frivolous, vexatious, misconceived or lacking in substance; or

(2) If this section applies, the Tribunal may order that the proceeding be dismissed or struck out and make any appropriate orders.

(3) The Tribunal's powers to act under subsection (2) are exercisable only by a legally qualified member.

(4) The Tribunal may act under subsection (2) on the application of a party or on its own initiative.

17 Asterleigh submits that the application to strike out under s 47(1)(a) of the SAT Act is analogous to an application to strike out pleadings under the Western Australian Supreme Court order 20 rule 19(1) on the ground that there is no reasonable course of action. Reliance is placed on the principles discussed by Master Staples in Kimberley Downs Pty Ltd v Western Australia WASC Library No 6415, 25 August 1986, unreported. It is not necessary to set out the principles in full, but they include that:

• the rule is intended to apply only to cases which are really not arguable; and
• on the application, not only must all the facts alleged in the statement of claim be accepted as true, but it must be taken for granted that on all other points the pleading is unassailable.

18 Volley takes a completely different view of the provision. Volley submits:

... in order to demonstrate that a claim is lacking in substance, an applicant does not need to satisfy the stricter test for dismissal based on the need to show that a complainant has 'no reasonable prospects of success'. See, eg, State Electricity Commission v Rabel [1998] 1 VR 102 and the cases cited at 107 (lines 37 ­ 50). A claim which presents no more than a remote possibility of merit in which it does no more than hint at a just claim should ordinarily be found to be lacking in substance. See, eg, Assal v Department of Health Housing and Community Services (1992) EOC para 92­409 78, 897 and State Electricity Commission v Rabel [1998] 1 VR 102 and the cases cited at 107.

19 With respect, counsel for Volley has misconstrued the effect of State Electricity Commission v Rabel [1998] 1 VR 102 (Rabel). In the passage referred to, Ormiston JA was referring to the interpretation of the expression 'lacking in substance' in different statutory contexts and having referred to them, went on immediately after the passage cited, to say, at page 107 line 51:

I confess that I find that the test proposed, coming though it does from a very learned source, is neither precise nor helpful and should not be applied in interlocutory applications before the board or tribunal where it is sought to 'strike out' a claim on grounds expressed in the terms appearing in section 44C. Whether it is any more helpful when a commission is deciding whether to refer a claim to a tribunal or where, as in Assal's case itself, it can fairly be applied during a hearing when effectively the whole of the complainant's evidence has been adduced, must remain to be decided at another time.

20 His Honour went on to point out at page 108 line 17 and following that, in Assal v Department of Health Housing and Community Services (1992) EOC (Assal), Sir Ronald Wilson, President of the Human Rights and Equal Opportunity Commission, was possibly attempting to mould a test appropriate to a hearing which had included some 10 hours of oral testimony and receipt of some 59 exhibits as well as the presentation of full submissions, and dealt with the material upon a basis which was more analogous to that suited to a no case to answer submission. Yet, nevertheless, Ormiston JA noted that the learned President concluded that the evidence held out 'no real possibility of success for the complainant', seemingly applying a test almost identical to that which he had earlier rejected. It is further clear that the remaining members of the Court of Appeal in Rabel respectively, applied the more stringent test that the power was to be exercised in respect of complaints that were obviously hopeless or obviously undeserving of relief: Tadgell JA at page 104 line 50; and indicated that the power was to be exercised in a manner akin to an application for summary dismissal or for summary judgment: Phillips JA at page 121 line 21.

21 In my view, s 47 of the SAT Act, unlike the provision considered in Rabel, is open to be used at any time in the proceedings. While one would expect it to be generally used by way of an interlocutory application, there is no reason why it could also not be used to support, in effect, a no case submission, similar to the circumstance which existed in Assal.

22 In Ambrus and Churches of Christ Homes & Community Services Incorporated [2006] WASAT 141 (Ambrus), Deputy President Judge Chaney, as he then was, stated, at [44], that the decision to dismiss an application as lacking in substance is one that should only be taken after very careful consideration. Further, his Honour held, at [8], following General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, that in order to strike out a proceeding, it should be demonstrated that it is so obviously untenable that it cannot possibly succeed or is manifestly groundless. The decision in Rabel is consistent with the views expressed by his Honour. Ambrus has been followed in numerous decisions of the Tribunal including Wilde and Smith [2008] WASAT 310 (Wilde) at [31], where it is stated:

The Tribunal ... usually has a great deal more information before it than a court might have when considering an application to strike out a claim under s 47 of the SAT Act. Further, the Tribunal is charged to act as speedily and with as little formality and technicality as is practicable, and minimise the costs to the parties (s 9 of the SAT Act). In the circumstances, it is appropriate to have regard to all the material which has been placed before the Tribunal ...

23 It follows that contrary to Asterleigh's submissions, regard must be had to all material before the Tribunal and it may not be sufficient in some cases to simply rely on the allegations stated within the grounds to an application, or in a statement of issues, facts and contentions. The material to which regard should be had will differ from case to case. The statement by Ormiston JA in Rabel at page 102 line 28 is apposite:

In the absence of a proper hearing at which the complainant has an opportunity to call all relevant evidence there can be no satisfactory way of determining that a complaint should be dismissed at a preliminary stage, unless it can be demonstrated, either from the materials by which the complainant has instituted the claim or by reference to facts which would undoubtedly deny the complainant relief, that the complaint is so hopeless that it should be summarily brought to an end.

Has the basis for the making of a claim for damages under s 14 been established?

24 It is not necessary to replicate the grounds set out in the application which have followed very much the format of a pleaded statement of claim. It will suffice to summarise the relevant allegations.

25 Asterleigh has particularised details of each of the leases. For resent purposes, in the light of the concessions made in relation to the claims insofar as they pertain to Shop 38, reference will be made only to the allegations relevant to Shop 5B. It is stated that it is a term of the lease that Asterleigh could only use Shop 5B for the retail sale of takeaway food, soft drinks and coffee, and as a sit down restaurant offering modern cuisine and beverages and not, without Volley's prior written consent, for any other purpose. It is a term of the lease that if gross sales exceeded $1,879,382.70 in any rental year, then Asterleigh would pay to Volley a percentage rent, being 10% of the excess.

26 As already mentioned, in about December 2010 and without any consultation with, or notice or warning to Asterleigh, Volley converted a part of the common area in the food hall adjacent to Shop 5B into a kiosk and then leased the kiosk to a coffee and cake takeaway business. The business trades as 'Muffin Break'.

27 Prior to creating the kiosk and the Muffin Break tenancy, the common area adjacent to Shop 5B was part of the food hall and was used for seating and displays, exhibitions and other activities to attract customers to the food hall and to Shop 5B. The main competition to Shop 5B was from 'Cookies and Donuts', 'Rocky Road Café' and 'Jesters Pies'.

28 Shop 5B was clearly visible to visitors to the Phoenix Shopping Centre and potential customers from the corner of the southern entrance and from the mall leading from Woolworths. The Phoenix Shopping Centre had experienced significant changes in centre management, and lacked management continuity and promotion and marketing.

29 It is then further alleged that following the creation of the kiosk and the Muffin Break tenancy:

1. the common area was no longer used for displays, exhibitions and other activities to attract customers to the food hall or to Shop 5B and had reduced seating and tables;
2. in addition to the competition referred to above, competition was experienced from the Muffin Break tenancy;

1. Shop 5B was no longer visible from the southern entrance or from the mall leading from Woolworths; and

1. customer numbers visiting Shop 5B declined, as did sales.

30 The grounds then set out the basis upon which it is alleged that the conduct of Volley was unconscionable, in breach of s 15C, by reason of particular factors set out. It will be necessary to summarise those allegations when dealing with the unconscionability claim, but they are not relevant for the purposes of the s 14 claim.

31 By reason of the matters summarised above, it is then stated that Volley has:

1. inhibited the access of Asterleigh (by its customers and potential customers) to Shop 5B in a substantial manner, and
2. taken action (by the creation of a kiosk on common property and leasing it to Muffin Break, a competitor of the applicant) that has substantially altered or inhibited the flow of customers to Shop 5B;

in breach of s 14(a), and further and alternatively, s 14(b).

32 It is further alleged that by letter from its solicitors to the solicitors of Volley dated 27 February 2012, Asterleigh gave written notice requiring Volley to rectify the matters which had caused access to be inhibited and the flow of customers to be altered. It is then alleged that by letter dated 2 March 2012, Volley denied it had inhibited trade or access to Shop 5B and terminated the Shop 5B lease. Compensation is then claimed, being the difference between the profit earned from Shop 5B and the profit that would have been earned from Shop 5B for the term of the Shop 5B lease.

33 There are a number of points of contention between the parties concerning whether permitting an increase in competition can constitute a breach of s 14 because the effect is to substantially alter or inhibit the flow of customers; further, whether this consequence also resulted from reducing or altering the seating in the food hall and the obscuring of the visibility of Shop 5B from the southern entrance of the shopping centre as a result of the placement of the Muffin Break kiosk. I will deal with these issues only briefly because, in my view, the s 14 claim cannot possibly succeed because the procedures necessary under the statute for a claim of that nature to accrue have not been followed, as reasoned more fully below.

34 In relation to the question of competition, I do not think that any sensible argument can be advanced to the effect that s 14 could be breached by any action on the part of a landlord simply by allowing an increase in competition. The submissions made on behalf of Asterleigh fall far short of presenting any positive argument to this effect. In its written submissions in opposition, all that it did was to criticise the decisions relied on by Volley on the basis that they could be distinguished in one way or another. The only positive submission made was one relying on the decision of Lamiri v Aidan Nominees Pty Ltd (unreported, Supreme Court of WA, Burt CJ, Lib No 6862 delivered 10 August 1987) which, it was submitted, was analogous to the present case. That, however, was a case dealing with whether or not steps taken which obstructed the view of a coffee stall could constitute a breach of a covenant of quiet enjoyment. This decision is of little assistance because, as was held by Kennedy J in Fernandes v Lam (unreported, Full Court of Western Australia, Lib No 980745 delivered 21 December 1998) (Fernandes):

The terms of section 14 of the Commercial Tenancy (Retail Shops) Agreements Act 1985 are not to be either expanded or restricted having regard to the general law of landlord and tenant. In my view, there is, accordingly, little to be gained from a consideration of the extent of the landlord's covenant for quiet enjoyment.

35 In Carlsson v HC & AS EE Pty Ltd (unreported, District Court of Western Australia, Lib No D980359, delivered 22 December 1998), Commissioner Reynolds, as he then was, examined the operation of s 14 and concluded, albeit in an obiter statement, that it is clear for s 14(b) to be invoked, the landlord must take some direct and physical act of obstruction or interference that alters or inhibits the movement of progress of customers to the retail shop in question and that could not result from merely permitting another retail shop to trade in competition.

36 In Fernandes, Anderson J expressed the view, with which both Kennedy and Murray JJ joined, in relation to whether there had been a breach of s 14(c):

However, merely to commence a business in competition with another business or other businesses in the same centre is not within the concept of 'disruption' spoken of in s14(c). It would mean that the more successful a business was in competing with other businesses within the centre, the greater the 'disruption' to trading within the centre. I do not think that would be a sensible result or that it could have been the result that was intended by the legislature. Implicit in the submission is that there was an intention on the part of parliament to enact legislation having an anti­competitive effect. That is not an intention which should be readily imputed to any legislative body these days. In my opinion, it is impossible to find in the Commercial Tenancy (Retail Shops) Agreements Act 1985 the slightest indication of an intention on the part of parliament to protect lessees from competition.

37 The last two sentences expressed above are of general application and cannot be read as being limited to a consideration of s 14(c).

38 As I have said, Asterleigh has advanced no argument to support a proper construction of s 14 so as to capture within the conduct specified any action which simply increases competition.

39 In my view, the same reasoning applies to the complaint that there were changes in the promotional work carried out in the common area.

40 To the extent that the establishment of the kiosk, the change in seating arrangements and the obscuring of Shop 5B are alleged to have substantially altered or inhibited the flow of customers to the retail shop, I accept that this aspect of the case is arguable. There is some considerable disagreement reflected in the affidavit evidence which has been filed by the parties on these issues. There is no objective material which can be relied on as a basis on which to conclude that Asterleigh's case in these respects is so obviously untenable that it cannot possibly succeed. Consequently, the claim would have been capable of amendment to advance this aspect of the matter but for the view which I have formed concerning the procedures necessary before a claim under s 14 can be said to have accrued. I turn to that topic.

41 Section 14 provides as follows:

Where a retail shop lease provides for the occupation of a retail shop situated in a retail shopping centre, the lease shall be taken to provide that if the landlord ­

(a) inhibits the access of the tenant to the retail shop in any substantial manner;

(b) takes any action that would substantially alter or inhibit the flow of customers to the retail shop;

(c) causes, or fails to make reasonable efforts to prevent or remove, any disruption to trading within the centre which disruption causes loss of profits to the tenant;

(d) fails to have rectified as soon as practicable any breakdown of plant or equipment under his care and maintenance which breakdown causes loss of profits to the tenant; or

(e) fails to adequately clean, maintain, or repaint the building or buildings of which the centre is comprised or any common area connected with the centre,

and after being given by the tenant notice in writing requiring him to rectify the matter does not do so within such time as is reasonably practicable, then notwithstanding any provision contained in the lease, the landlord is liable to pay to the tenant such reasonable compensation in respect thereof as is thereafter agreed in writing between the parties or determined by the Tribunal.

42 Asterleigh accepts that in order to have a right to compensation, a valid notice as contemplated by s 14 must be given to the landlord: Tia Belau Pty Ltd v GPT Funds Management Ltd [2008] WASAT 165 at [8] and [29]. As stated in the latter reference, compensation is only payable upon notice being given to the landlord requiring rectification of the matters the subject of complaint, if the landlord fails to do so within such time as is reasonably practicable.

43 It will be recalled that, as outlined above, Asterleigh gave written notice by a letter from its solicitors dated 27 February 2012. Evidence from Ms Morel to the effect that Asterleigh ceased trading and removed all stock from Shop 5B on 28 February 2012 and that Volley re­entered and re­took possession of the premises on 29 February 2012 has not been disputed in the subsequent affidavit filed by Mr Lahdo for the respondent on 26 July 2012.

44 Contrary to Volley's submissions, it is clear that the letter of 27 February 2012 called on Volley to rectify the complaint made therein that allowing the Muffin Break kiosk to trade in direct competition to it, and the obscuring of Shop 5B by the kiosk, had inhibited access to Shop 5B in a substantial manner and had substantially altered or inhibited the flow of customers to Shop 5B. Significantly, the letter does not call upon Volley to rectify, or in any way refer to, the alleged impact on the flow of customers due to any change in seating arrangements or promotional activities.

45 It is necessary to understand properly the effect of s 14. Consistent with many other sections of that legislation, it adopts the methodology of deeming the lease to contain specific provisions. In this regard, by way of example, see s 7(2)(b), s 12(1)(c) and s 13(1). The effect of this is that, by operation of the statute, the relevant provisions are implied into the lease.

46 There has been no challenge in any way of the validity of Volley's re­entry and taking possession of the leased premises. The effect of so doing is to determine the lease: see the discussion in Commercial and Residential Tenancies, the Laws of Australia, edited by Anthony Moore, Thompson Law Book Co 2008 at paragraph 28.7.2760. It is well established that the ordinary principles of contract law apply to leases: Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17. The effect of determination of the lease is that both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Consequently, any cause of action which has accrued from a breach continues unaffected: see McDonald v Dennys Lascelles Ltd (1933) 38 CLR 457.

47 Accordingly, in order to have an entitlement to compensation under s 14, it must be determined whether Asterleigh has a basis for contending that its right to compensation had accrued.

48 Section 14 contemplates that the landlord's liability to pay compensation arises if, having been given notice calling upon it to rectify the matter, the landlord does not do so within such time as is reasonably practicable. Having regard to the nature of the complaints, in order to be able to rectify them, Volley would have needed sufficient time to be able to negotiate with the tenant of the kiosk for the kiosk to be relocated. Clearly, that is a course which would take some time. As the lease was terminated two days after the giving of notice, it can hardly be contended that a reasonable time had elapsed for the purposes of rectifying the complaint. As I have said, the right to re-enter has in no way been challenged.

49 It might be thought that this operates harshly against a tenant but, taking the facts of this case as an example, it was open to Asterleigh to give notice at any time after December 2010 when it became apparent that the kiosk was affecting its operations. Asterleigh has only itself to blame for such delay. But, in any event, the consequence is that there was no accrued entitlement to compensation as at the date of termination of the lease and the claim is therefore obviously untenable and cannot possibly succeed. It is not therefore necessary to address the parties' opposing submissions as to whether the period for which compensation might be awarded would pre-date the giving of notice to cover the whole period of alleged interference with the flow of customers.

50 In any event, no right to compensation could accrue in respect of interference with the flow of customers due to changes in seating or promotional activities as those matters were not the subject of any notice to Volley.

51 Volley's submission did not develop an argument that the Tribunal lacked jurisdiction to deal with the s 14 claim. In my view, the Tribunal has jurisdiction to deal with a claim which purports to be made under s 14 and to dismiss it either on the merits or because of a failure to give notice as required.

Has the basis for making a claim for breach of s 15C been established?

52 The allegations set out in the grounds to the application relevant to the unconscionable conduct claim may be summarised as follows.

53 It is alleged that the conduct of Volley in creating the kiosk and leasing it to Muffin Break as earlier pleaded was unconscionable, in breach of s 15C by reason of the following:

1. the representation or expectation of significant turnover from the business conducted at Shop 5B by reason of the turnover rental provisions of the lease;
2. the limited permitted use for Shop 5B and the prohibition under the lease preventing Asterleigh from trading other than in accordance with the permitted use;

1. an expectation from Volley's approval of the menu for Shop 38, and the permitted use provisions already referred to, that Volley was mindful of tenancy mix and competition in the Phoenix Shopping Centre and would have regarded those matters when leasing tenancies;

1. Asterleigh was contractually bound to a seven year term under the lease and was required to pay rental to Volley during that term;
2. to the knowledge of Volley, Asterleigh relied upon the income from the business undertaken to pay rental, outgoings and other expenses, earn an income and make a return on its investment;
3. Volley was only concerned with its short­term interest in maximising its rental income;
4. Volley did not have any, or sufficient, regard to the reasonable and proper tenancy mix and competition in the food hall, or in the Phoenix Shopping Centre generally; and
5. Volley did not have any, or sufficient, regard to the visibility of Shop 5B, access of customers to Shop 5B or competition for customers when creating the additional kiosk on common area and leasing the kiosk to Muffin Break, a competitor to Shop 5B.

54 There are then allegations that as a result of the unconscionable conduct, and also the conduct relied on for the s 14 claim, the number of customers visiting Shop 5B declined, with consequential reductions in turnover and profit. Asterleigh then claims loss and damage suffered as a result.

55 The references to the conduct of Volley in creating the kiosk and leasing it to Muffin Break as earlier 'pleaded' picks up, by reference to particular paragraphs, the allegations concerning the creation of the kiosk without any consultation, notice or warning and the alleged affect which that had in relation to the use of the common area, increase in competition and on the visibility of the kiosk. An allegation that the shopping centre had experienced significant change in centre management, and lacked management continuity and promotion and marketing does not flow logically as a consequence of the establishment of the kiosk. As set out, it is a stand alone allegation to the effect that, prior to the kiosk and establishment of the Muffin Break tenancy, there was a change in centre management, promotion and marketing. This therefore creates a false issue which is not relevant to the unconscionable conduct claim.

56 Volley refers in its submissions to cl 13.4 and cl 15.5 (sic ­ 15.6) of the lease as constituting an insurmountable barrier to Asterleigh's claims. Clause 13.4 reflects that Volley reserves the right to erect and relocate, remove and re­erect kiosks and other structures in any part of the common areas and to grant any person the exclusive use thereof for trading purposes. Clause 15.6 reflects, firstly, that Asterleigh acknowledges that no representation, warranty or undertaking has been given by Volley, other than as contained in the lease, and that Asterleigh has an exclusive right to carry on the type of business permitted under the lease. Secondly, the clause records that it is agreed that Volley reserves the right to lease other premises within the centre to lessees carrying on the same type of business as that permitted to be carried on by Asterleigh.

57 Volley submits that Attorney General of New South Wales v World Best Holdings Ltd [2005] NSWCA 261 (World Best Holdings) at [22] stands as authority for the proposition that the prohibition on unconscionable conduct under the similar legislation considered in that case does not completely override the legal rights and obligations created by the lease relationship. Further, that there is simply nothing in Volley's conduct which deviates from, or falls outside of, conduct expected in relations between parties to an arm's length commercial transaction and that therefore the proper course is for the matter to be struck out or dismissed.

58 The Tribunal had cause to examine the type of conduct which might constitute unconscionable conduct within the meaning of s 15C for the first time in Murphy and Fremantle Markets Pty Ltd [2009] WASAT 84(Murphy). Reference was made to World Best Holdings and to the legislation considered in that case, being s 62B of the Retail Leases Act 1994 (NSW), which is almost identical to s 15C. Reference was also made to the wider meaning of unconscionable conduct as referred to in s 51AC of the Trade Practices Act 1974 (Cth) as accepted in Australian Competition and Consumer Commission v Simply No­Knead (Franchising) Pty Ltd [2000] FCA 1365; (2000) 178 ALR 304 (Simply No­Knead) and Barbcraft Pty Ltd v Geobel Pty Ltd [2003] VCAT 1700 (3 November 2003) (Barbcraft). As stated at [81] of Murphy, these judicial interpretations of similar provisions to s 15C are a strong indication that unconscionable conduct is to be given the broader meaning referred to in those decisions; that is, a meaning broader than that recognised under equitable doctrine. Further, at [84] of Murphy, the Tribunal expressed the view that s 15C did not have any wider meaning than that under either s 77 of the Retail Leases Act 2003 (Vic), s 62B of the Retail Leases Act 1994 (NSW), or s 51AC of the Trade Practices Act 1974 (Cth), all of which permit regard to be had to any undue influence or pressure or unfair tactics used in determining whether or not unconscionable conduct has occurred. In that context, the Tribunal went on to state that the determination of whether or not unconscionable conduct has occurred must be assessed having regard to the views expressed in World Best Holdings which required that moral obliquy be established. The Tribunal specifically noted that, with reference to Barbcraft, the concept of unconscionability cannot be simply and exhaustively defined, but will be easily recognised when it presents itself. Examples were then given of the conduct in Simply No­Knead, which was held to be unconscionable because it demonstrated an overwhelming case of unreasonable, unfair, bullying and thuggish behaviour. A further example given was that of Automasters Australia Pty Ltd v Bruness Pty Ltd (2002) WASC 286, where the court found that a franchisor had acted capriciously and unreasonably in circumstances where there was also an element of oppression in the franchisor's conduct, sufficient to constitute unconscionable conduct.

59 Contrary to Volley's submissions, I do not accept that the lease provisions can, of themselves, prevent conduct being unconscionable. The lease may permit the erection of a kiosk in any part of the common area, but, by way of example, it does not permit Volley to place a kiosk of a size, or in a position, in circumstances which might show that Volley has acted capriciously or unreasonably in order to oppress a tenant or force a tenant to abandon its lease. The lease does not authorise unconscionable conduct.

60 In fairness, Volley's submission must be understood, in the context in which it is made, and that is that it submits that there is no allegation made which suggests that Volley's conduct deviates from or falls outside of conduct expected between parties to an arm's length commercial transaction. As the grounds to the application are currently set out, I think this submission must be accepted.

61 All that the grounds reflect is that Asterleigh had some expectation that there would be some control of the tenant mix within the centre to avoid competition through the permitted use of each tenancy, and having regard to the expected level of turnover expected to be achieved by Shop 5B. It is then stated that Volley did not have any, or sufficient, regard to the reasonable and proper tenancy mix and competition in the food hall, or in the Phoenix Shopping Centre generally, nor to the effect that the placement of the kiosk would have on the visibility of Shop 5B.

62 It is alleged that Volley was only concerned with its short­term interest in maximising its rental income (by the erection of the additional kiosk and leasing it to a competitor).

63 Volley was entitled to act in the protection of its own legitimate interests, and I do not consider that bare allegations of not having had any, or sufficient, regard to the effect of competition, visibility of the shop, or access, can constitute conduct which is recognisable as being unconscionable in the sense discussed in Murphy. Accordingly, as the grounds are currently expressed, it can be concluded that the case based on a breach of s 15C cannot possibly succeed.

What is the appropriate dispensation of the application to strike out or dismiss?

64 In relation to the claim based on s 14, it is readily apparent, for the reasons given above, that the claim is incurable and should be dismissed.

65 The position in respect of the s 15C claim is not as clear. As the claim has been stated, it cannot succeed. The question is whether it is capable of being reformulated. If it can be reformulated in a way which is sufficient to at least state a case, which, if the allegations can be sustained, is sufficient to support the grant of relief under s 15F, that will suffice to get Asterleigh over the first hurdle that remains before it. There is, however, a second hurdle. The objects of the Tribunal require the Tribunal to act speedily, with as little formality and technicality as is practicable, and to minimise costs to the parties (s 9 of the SAT Act). Although Asterleigh was initially not inclined to put any evidence before the Tribunal, it ultimately did so through the affidavit of Mr Lahdo so that there is, at this stage, unresolved disputes of fact in relation to the size of the kiosk and its impact on Asterleigh's business conducted in Shop 5B. Understandably, there is no evidence which attempts to go beyond the case as it is currently stated.

66 In Wilde, the Tribunal declined to strike out aspects of the tenant's claim and determined that the appropriate course was to review at a directions hearing whether or not the tenant would be able to provide evidence to support an implied term which was essential to the tenant's case. The Tribunal concluded that if there were to be no oral evidence available to support the implication of the term concerned, there might be merit in ensuring that all relevant documents be placed before the Tribunal and that there be a preliminary determination of whether or not the terms were to be implied.

67 It seems to me that it is appropriate to follow a similar course in this matter. There would be no point in allowing Asterleigh to amend the grounds of the application unless there is a basis for concluding that evidence can be provided sufficient to support an unconscionable conduct claim. If Asterleigh believes that such evidence is available, it may be appropriate to require Asterleigh to file all documents and witness statements on which it wishes to rely in relation to the merits of the claim, that is excluding quantum, so that Volley can then assess whether it wishes to make a further application to dismiss the s 15C claim based on all the evidence available to Asterleigh. First, however, it is necessary to ascertain whether Asterleigh considers that it is able to restate the unconscionable conduct claim on a proper basis.

68 In the circumstances, I will hold over the making of any orders reflecting the conclusions reached in these reasons for decision. It is self­evident that it is no longer necessary to consider the application to 'deconsolidate' (separate) the claims in respect of Shop 5B and Shop 38, in view of the concessions made by Asterleigh to exclude the claims made in respect of Shop 38.

69 Volley seeks an order that Asterleigh pay the costs of the 'action' (proceedings). As it is not yet clear whether the proceedings will be dismissed as a whole, or whether Asterleigh will be able to proceed with the s 15C claim, the question of costs and how it should be addressed will also be held over for discussion at the directions hearing.

70 In the circumstances, the Tribunal will cause an order to issue in the following terms:

1. The matter be listed for a directions hearing on 29 October 2012 at 10 am.

I certify that this and the preceding [70] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

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