Cypressvale P/L & anor v Retail Shop Leases Tribunal [1995] QCA 187

Court of Appeal (Qld)|1995-05-19|Before: Before Fitzgerald P, Davies J, McPherson J, Fitzgerald P

The appellants have appealed from an order made in the Trial Division on 25 July 1994, dismissing an application for review under s. 43 of the Judicial Review Act 1991. That application for review, which was filed on 10 May 1994, sought an order remitting to the Retail Shop Leases Tribunal certain "disputes" to which the appellants were parties for the Tribunal "to make ... further findings, ... and to give reasons, or adequate reasons, for its findings, ... on the basis of the evidence already adduced and submissions already made in the Tribunal". The disputes to which the application for review refers were disputes nos. 30/93 and 31/93 under the Retail Shop Leases Act 1984, which were the subject of decisions by the Tribunal dated 12 April 1994, awarding the appellant, Cypressvale Pty Ltd, $60,000.00 compensation and the appellant, Fernmead Pty Ltd, $50,400.00 compensation against the Australian Mutual Provident Society. Written reasons for its decisions were given by the Tribunal on the same date.

"(a) that the Tribunal had or has no jurisdiction or has exceeded its jurisdiction in the proceedings in question when making the finding or order in question; or

(b) there has occurred a denial of natural justice in the course of the proceedings in question."

Before this Court, the appellants accepted, implicitly if not expressly, that the Tribunal's existing reasons do not indicate any error by the Tribunal which would lead to its decisions being declared void or set aside. The presently asserted breach of natural justice, i.e., the Tribunal's omission to give adequate reasons, is not relied on to vitiate or set aside the Tribunal's decisions, but forms the basis for the present application for an order that the Tribunal give additional reasons. Of course, it was not suggested that reasons are inadequate merely because they fail to disclose a basis for challenging a decision; they might be both comprehensive and correct. The appellants' point is that the content of the Tribunal's reasons is so deficient that it is impossible to ascertain whether or not its decisions are susceptible of challenge.

The Tribunal which determined the dispute between the appellants and the Society was established under sub-s. 28(1) of the Retail Shop Leases Act and consisted of three members: sub-s. 28(2). Its chairperson was a retired Judge of District Courts (sub-s. 28 (2)(a)), and, in accordance with sub-ss. 28(2)(b) and (c), the other members were persons respectively "representative of persons who are landlords under retail shop leases" and "representative of persons who are tenants under retail shop leases". Broadly speaking, a Tribunal's jurisdiction, as defined in s. 36, is to "hear and determine" disputes (other than those excluded) which arise out of or relate to the provisions of Parts 2 or 3 of the Retail Shop Leases Act or concern the liability of any person to pay moneys or the recovery of moneys due and owing or paid by any person. Its functions, as stated in sub-ss. 32(1)(a), (b), (ba) and (c) are:

"(a) to hear any dispute, which is within the jurisdiction of the Tribunal, that is referred to it pursuant to the provisions of this Act; and

(b) to make or cause to be made such investigations as it considers necessary for the purposes of such hearing; and

(ba) to keep a written record of the proceedings of the Tribunal and a record of the documents produced in respect of each dispute referred to it; and

And, by s. 38 its powers are those specified in nominated sections of the Commissions of Inquiry Act, 1950, including ss. 5 and 17; in consequence, it has power to summon witnesses and the production of documents, "but is ... not ... bound by the rules or practice of any court or tribunal as to procedure or evidence but may conduct its proceedings and inform itself on any matter in such manner as it thinks proper; and, without limiting in any way the operation of this section, ... may refer any technical matter to an expert and may accept the expert's report as evidence." (Commission of Inquiry Act, s. 17)

The orders which the Tribunal may make are specified in s. 40, of the Retail Shop Leases Act and provision is made for enforcement of Tribunal orders as court orders or judgments by ss. 41 and 42. Rights of appearance before the Tribunal are limited (s. 45), and the Tribunal may not order costs (s. 46). Sections 33, 49 and 50 of that Act provide:

"33(1) Subject to subsection (2), a question before a Tribunal shall be decided according to the opinion of a majority of the members constituting the Tribunal.

(2) A question of law arising before a Tribunal shall be decided by the chairperson who for that purpose may constitute the Tribunal and sit alone.

49. An order of a Tribunal shall be final and binding upon each party to the reference in which it is made, whether or not the party has appeared or been represented at the hearing of the reference.

Restricted right to question Tribunal's proceedings

50. The proceedings of a Tribunal and the finding or order of a Tribunal shall not be questioned in any proceedings whatever except proceedings based solely on 1 or both of the following grounds -

(a) that the Tribunal had or has no jurisdiction or has exceeded its jurisdiction in the proceedings in question or in making the finding or order in question; or

(b) there has occurred a denial of natural justice in the course of the proceedings in question."

Further, by s. 55, subject to limited exceptions, the Tribunal's jurisdiction is exclusive.

The appellants accepted that the Judicial Review Act does not apply in relation to the Tribunal's decisions except to the extent that, by virtue of Part 5 of that Act, the Supreme Court continues to have jurisdiction to grant, by appropriate order, any relief or remedy which it previously "... had jurisdiction to grant ... by way of a writ of mandamus, prohibition or certiorari ...": see sub-s. 41(2) and ss. 43 and 47. In the circumstances, the appellants' ultimate contention in the present proceeding must be that, prior to the Judicial Review Act, they would have been entitled to a writ of mandamus commanding the Tribunal to give additional reasons for its decisions. No authority was cited for that proposition. However, I am satisfied that a writ would have issued if it was established that a duty to give reasons existed and had not been adequately performed: see de Smith's Judicial Review of Administrative Action, 4th ed., pp. 148-150 and 563, and cases cited; Barton v. Licensing Control Commission (1982) 1 N.Z.L.R. 31

The circumstances giving rise to the appellants' applications for review may be briefly stated. Each of the appellants conducts a restaurant at the Pacific Fair Shopping Centre at Broadbeach as the tenant of the Society, the owner of the centre. (The Society is aware of, but did not participate in, the application for review which has led to this appeal but seems to be opposing the appellants' other application for review.) Between about 1989 and 1992, the Society undertook building extensions and other work at the shopping centre. According to the appellants, the work substantially altered or inhibited the flow of customers to their restaurants and disrupted trading, causing loss of profits (Retail Shop Leases Act, sub-ss. 15(1)(a)(iii) and (iv)), and, after the work was finished, the extensions continued to alter or inhibit the flow of customers to their restaurants; therefore, under sub-s. 15(1)(a), the Society is liable to pay the appellants reasonable compensation. Each of the appellants claimed compensation of about $1.5 million, and the resultant disputes were referred to the Tribunal to hear and determine: Retail Shop Leases Act, sub-ss. 32(1)(a) and (b). As is apparent, the compensation awarded each appellant was very much less than its claim.

The Tribunal's reasons are divided into seven sections, as follows:

The appellants make no complaint concerning sections A-E of the Tribunal's reasons.

In section A, the Chairperson of the Tribunal gave rulings on a number of questions of law (Retail Shop Leases Act, sub-s. 33(2)).

Section B contained only a very brief history of the shopping centre, which opened in 1977 with its main tenants a department store, McDonnell & East, a Coles Supermarket and a K-Mart. The original tenants included the appellants' restaurants, "Lakeside" and "Le Basin", which "were in the centre or core" of the shopping centre. The appellants were not the original tenants of the restaurant premises; the appellant, Cypressvale, acquired the Lakeside lease in March 1982, and the appellant, Fernmead, acquired the Le Basin lease on 1 July 1986.

The contents of sections B, C, D and E of the Tribunal's reasons intersect and overlap; their effect is as follows.

By the late 1980s, it was necessary for the Society to expand, and I think refurbish, its shopping centre to avoid the risk that a rival shopping centre would attract a large department store; if the Society had not acted in that way, its shopping centre would not have retained its position as the leading shopping centre on the Gold Coast.

The redevelopment of the shopping centre took place in a number of stages, which the Tribunal summarised in section E by reference to the periods in which they occurred.

"1. From February 1989 to February 1990, when the bridge over the Tallebudgera Creek was constructed, and minor earthworks and other minor works were performed within The Centre."

This period is not the subject of any claim by the appellants.

"2. From February 1990, when major earthworks were commenced in respect to the new Myer building, and the rear road to the K Mart was closed, until 23 September 1991, when the new expanded Myer store was opened. We accept that during this period there was major construction throughout The Centre, and there was interference which caused compensable loss to the claimants. ..."

Earlier, the Tribunal had noted that this construction work occurred at the north-west section of the shopping centre, but involved "[s]ome demolition work ... in the centre or core" of the shopping centre.

"3. From 23 September 1991, when Myer opened, to 12 October 1992, when the area known as 'The Arcade' opened."

"On 23 September 1991, the new and greatly expanded Myer store opened. In October 1991, the Food Market opened. Specialty shops, in particular food shops, which had been in the vicinity of Basin Street, that is, in the core of The Centre, were moved to the Food Market. From this time onwards, there was a decline in McDonnell & East, which finally closed for business in January 1994. This decline was in line with other branches of McDonnell & East elsewhere throughout the State."

"The Arcade is a modern, air-conditioned, attractive building on two levels. Finishes are of the highest quality. There is direct access from Myer's store on two levels, and access on two levels by way of footpaths or escalators to the north and to the west. On the northern side of the second floor of The Arcade is a Food Court. This consists mainly of takeaway food outlets, that is, shops which serve ready to eat food. Provision is made for shoppers to eat the food which they have purchased by the provision of chairs and tables in the vicinity. The entrance to The Arcade from Tallebudgera Way and Oxley Square is high, wide and handsome. The Arcade, as stated, is of high quality and air-conditioned. A six storey carpark is to the south of Myer. Four floors of this carpark access directly into Myer. The claimants allege that the attractiveness of the new Arcade and the creation of other features to which we refer briefly below has caused a substantial change in customer flow past their businesses.

Among the other factors alleged are the situation and opening of a wide California Avenue leading directly from the north-west car park and causing pedestrians to walk directly from carparks to Oxley Square which has been redeveloped in size, shape and direction, the demolition of shops at the top of Linden Strasse, the development of Oxley Square, and the creation of an opening into Tallebudgera Way leading directly from an extended Coles, the closure by a padlocked gate of the previous walkway from outside the banks to the north-east area into Linden Strasse by the previous corner of Coles, the establishment and upgrading of Rue Montmartre including facades, pathing, lighting and sight lines, in contra-distinction to the destroyed or diminished sight lines to the central section.

4. The period from 12 October 1992 when The Arcade opened and the other changes had been completed, until late 1994 when we contemplate the opening of the Target store and Toys-R-Us."

"The Tribunal finds that it is highly likely that two new businesses will open in the premises previously occupied by McDonnell & East. These businesses are Target Stores and a store called 'Toys-R-Us'. The premises previously occupied by McDonnell & East are being altered substantially both internally and externally. Target anticipates an initial annual turnover of approximately $20m, with average sales of about $50, that is, some 400,000 sales will be made per year, and each sale will involve approximately three people visiting the store.

Toys-R-Us will have a turnover of approximately $14m per annum, and an average sale of $35, that is a further 400,000 sales. Between these two new stores, they will have a custom of approximately 2.4m persons per year, calculated on the rate of three persons per each sale. Even taking a discount figure into account - some of these customers will be common to both stores - this will cause a large pedestrian flow into the north-west section of the shopping centre, extending to the core or central section as customers find their way back to other large stores such as Myer or K Mart. Some or most of these customers will use existing major traffic routes through Oxley Square and Tallebudgera Way or southwards to Rue Montmartre, and then eastwards towards K Mart and Myer, but a substantial number will filter through the core area, increasing the flow of potential customers passing both Lakeside and Le Basin.

"We find as a strong probability that both claimants will take immediate steps to obtain assignees of their existing leases and on obtaining such assignees, will then assign the leases ... the [Society] is obliged to allow assignment of the existing leases on the usual terms and conditions relating to an intended assignee under the terms of their existing leases.

In terms of its defined policy, the new assignees will be in a strong position to expect the granting of new lengthy leases on normal commercial terms, subject to substantial refurbishment of the restaurants, and probably subject to relocation of Le Basin Restaurant to other premises in The Centre. We regard this probability as particularly strong, ...

In calculating the price at which the claimants are prepared to assign their leases, they will take into account, as will the prospective assignees-purchasers, the strong probability of being granted fresh leases after expiry of the existing leases subject to refurbishment."

By this point in its reasoning, the Tribunal had also concluded, in part upon "the expert knowledge and experience of some members of the Tribunal", that, in 1992, for reasons unrelated to the Society's actions, the appellants' restaurants had entered a trading phase of declining turnover and profits which would continue unless they were refurbished or there was a "... change of 'offer' as used in the retail trade, incorporating five Ps. 'Offer' in this sense means a combination of product, price, place, promotion and position (in the marketplace)."

The application for review which is the subject of this appeal substantially relates to sections F, The Assessments, and G, The final Award, of the Tribunals' reasons. The basis of the application for review appears from the following paragraphs, 8 to 11 inclusive, of the appellants' written outline of submissions in this Court:

"8. The hearing before the Tribunal occupied 20 sitting days. The addresses, which were supported by extensive written submissions, took one day. There were about 30 witnesses and over 100 exhibits.

9. The main points of difference between the parties (divided into chronological periods for convenience and to follow the Tribunal's reasons) were -

(a) the extent to which in the period from February 1990 to the opening of a new Myer building in the shopping centre in September 1991 there was substantial interference inhibiting the access of tenants and altering pedestrian flow to the applicants' businesses and if so the financial consequences of such matters (Application para. 10);

(b) whether in the period from the opening of The Arcade on 12th October 1992 to late 1994 there was or would be a decline in pedestrian flow past the applicants' businesses due to the actions of the landlord and if so the extent of that decline and the financial consequence of decline (Application para. 14);

(c) whether the actions of the landlord would continue to cause loss to the applicants by virtue of adversely affecting their trading after the date of hearing (Application para. 13).

10. Evidence on the above matters was given by the persons in control of the applicants and by accountants and other experts called by each side. Their evidence conflicted in many respects both in general points of principle and in detail. The principal witnesses were Mr. Calabro an accountant called by the applicants and Ms Miccalizzi an accountant called by AMP. Each gave a series of very detailed written reports which were tendered. The cross examination of each of them took in excess of two days. Mr. Calabro in his evidence analysed the monthly trading figures of the subject shops and of other shops in the centre in the vicinity of the subject shops in order to reveal trading patterns between November 1990 and October 1993. Pedestrian traffic counts at various points of the Centre were put in evidence. There was much evidence as to the management and operation of the subject businesses.

11. Despite the foregoing the Tribunal made no findings on the following matters (using the same lettering as that used on the list of 'main points of difference') -

(ii) The extent to which trading was disrupted as a result of changes in customer flow;

(iii) The basis on which compensation of $24,000 for Fernmead Pty. Ltd. and $45,000 for Cypressvale Pty. Ltd. was calculated;

(iv) Which parts of the relevant evidence were rejected and which parts of the relevant evidence were accepted and relied on in arriving at 'the final award'.

(b) (i) The extent of diminution in customer flow; (The Tribunal attributed 15% of an unquantified decline in customer flow to actions of the landlord and did not differentiate between the businesses in the reasons)

(ii) The extent to which trading was disputed as a result of changes in customer flow;

(iii) The basis on which the total loss of profit of $176,000 (found at p. 16 of the reasons) was calculated for Fernmead Pty. Ltd. and $100,000 for Cypressvale Pty. Ltd.)

(iv) The basis on which the 15% of this figure was said to be attributable to the relevant actions of the landlord;

(v) Which parts of the relevant evidence were rejected and which parts were accepted and relied on in arriving at 'the final award'.

(ii) The extent (if any) to which trading will be disrupted as a result of any such diminution;

(iii) The extent (if at all) to which the applicants will suffer loss as a result of such diminution."

In dealing, in section F of its reasons, with the first material period, from February 1990 to the opening of Myers in September 1991, during which there was construction work in progress, the Tribunal expressed its views on the evidence of Mr Calabro and Miss Micalizzi. While its remarks could have been more clearly expressed, it is plain that each of the experts' evidence involve hypotheses and assumptions, both of fact and law, as well as opinions concerning valuation theory and methods and their appropriate application to the circumstances on which they respectively proceeded. While again the point could have been made more directly and plainly, Mr Calabro's evidence seems to have been accorded little, if any, weight by the Tribunal. On the other hand, no criticism was made of the figures used by Miss Micalizzi, who, it was said, made no mistake, except that:

"the instructions which she was given were in part wrong and in other parts depend on opinions which are not more than impressions. She was incorrect, on the Chairman's finding, on accepting the law as it was given to her in certain respects."

Hence, the Tribunal did not totally accept her evidence. Its comments on the evidence of Mr Calabro and Miss Micalizzi aside, the Tribunal's entire reasoning in respect of the period from February 1990 to September 1991 is to be found in the following passage:

"We accept that there was substantial physical interference inhibiting the access of tenants and altering pedestrian flow to both claimants' businesses during this period. We do not consider it is necessary to set out the physical features which caused this. No counts of pedestrian flow are available. What we are obliged to do is look at trading figures in the light of all the surrounding circumstances and make our assessment on that basis. We have made adjustments in respect of trading figures, some of which we deal with below. We are in the position where we find that we have to adjust the figures given by expert witnesses either up or down due to a multitude of variables. The variables depend on our assessment of the effect of a substantial number of matters, both internal to the two claimants, external to the claimants and within The Centre and external to The Centre.

We find that these factors do not lead to fixed proportions or figures, but are based on opinion and assessment. We cannot do a calculation by compounding all the figures which would increase our assessment, applying them, then compounding the figures which would reduce the assessment and applying them. The figures are not even elastic in the sense that they have a basic shape from which they can be distorted, but which would return to their original shape. Rather, it is a question of the figures being plastic and being able to be moulded, depending on the view, experience and possible bias of the person dealing with them. For this reason we have had to adjust figures in a manner to which the three Members of the Tribunal, giving such weight as they think fit and proper in all the circumstances, leads to a calculated but possibly flexible result.

With regard to this period, we first look at the claim in respect of Le Basin, that is, Fernmead Pty Limited."

Despite the last sentence quoted, there was no further reference to the claim of either appellant in respect of this period until section G which commenced:

We have set out the reasons and the factors which we have taken into account. We have looked at the figures prepared by both Mr Calabro and Miss Micalizzi. We have made a judgement in the manner which we have indicated. We have come to the conclusion that the compensation to which this claimant is entitled for the period from February 1990 to the 30th September 1991 is $24,000."

The other appellant's claim in respect of that period was dealt with under the same heading even more peremptorily, as follows:

Adopting the above reasoning and figures, we have assessed compensation for the period to 30 September 1991 as $45,000."

In dealing, in section F of its reasons, with the next period, from 23 September 1991 to 12 October 1992, the Tribunal spent much of the (approximately) single page involved rejecting an argument by the Society which need not now be referred to in detail. Apart from that, it found that

"From the time when Myers opened until the Arcade and surrounding buildings, including Tallebudgera Way, opened, both claimants' trading figures increased. They had the best trading figures for all the time they had been at The Centre."

On the basis of that finding, it held in section G in relation to the appellant, Fernmead:

"We have decided that no compensation is payable for the period October 1991 to October 1992."

Even less, indeed nothing, was said there with respect to the other appellant, although the statement last quoted was plainly also applied in relation to Cypressvale.

In the course of dealing in section F with the period to 12 October 1992, the Tribunal said:

"When the Arcade and surrounding buildings opened then the turnover of both claimants decreased substantially and has continued to decline."

This was then taken up in relation to the next period, "12 October 1992 to late 1994". The Tribunal said:

"We accept that when The Arcade and Tallebudgera Way opened there was a substantially falling off of pedestrian flow past both complainants' restaurants. This was due in part to the attractions and convenience of The Arcade and its surroundings and in part due to the competition of new food outlets. We have already dealt with the reasons why customers would limit themselves to the new area and not venture into the core area. Coupled with this was the novelty aspect, referred to as the 'honeymoon period' during which customers were attracted to the new areas to the detriment of the old. The evidence before us is that such honeymoon period may last up to two years. Another factor which contributed to the decline of the pedestrian flow in the core area was the decline in the business being conducted by McDonnell & East.

We also accept that the complainants' businesses were in the decline stage in the absence of refurbishment and would have continued to decline even if The Arcade and surrounding buildings had not been constructed.

We have examined pedestrian flow as best we can. In doing so, we have looked at such figures as recorded on the people counters and we have drawn certain comparisons and ratios. We have gained some assistance from the manual count of pedestrians made by the claimants during these proceedings. We have compared the trading figures of those businesses still operating in the core area and which were operating at the commencement of the development in 1989. We have looked at the occupancy costs of businesses in the core area as a proportion of their turnovers and at what stage these reach a point when some of these businesses have become non-viable, using conventional percentages. We have looked at those businesses including Julio's restaurant in the core area, which have expanded and continue to expand since the opening of The Arcade.

As best we can, and not always following the same reasoning, we have concluded that 15% of the decline in pedestrian flow past both the claimants' businesses was due to the actions of the landlord in the section referred to in the Chairman's decision on Section 15(a)(iii) and 85% due to the actions of the occupants of the new Arcade and its surroundings."

At this point, the entire remainder of what is contained in section G of the Tribunal's reasons can be set out:

"For the period of October 1992 to November 1994 we believe that there has been a total loss of profit to this claimant in the sum of $176,000. The major portion of this is due to the actions of new tenants in the Centre. From our findings, stated above, the claimant is entitled to 15% of $176,000, that is $26,400, making a total compensation of $50,400."

"... for the period October 1992 to November 1994 as 15% of $100,000 ie $15,000, making a total of $60,000."

Section G contained no reference to the final period, i.e., after late 1994. That had been disposed of in section F as follows:

"The Fifth Period (this is the period subsequent to late 1994.)

We believe that it is probable that the claimants will seriously consider obtaining purchasers for their businesses and assigning the leases almost immediately. We feel that the probabilities are that such assignment will take place some time before the leases are due to expire. As the businesses continue to be in the decline stage, their turnover will continue to decline and it is likely that the complainants will take steps to obtain new purchasers as soon as possible. The attraction of increased pedestrian flow due to the opening of Target and Toys-R-Us will increase the pedestrian flow part the businesses thereby increasing their potential and their value. We have decided that the sales price of these businesses will be substantially the same as if the whole redevelopment and the conversion of McDonnell and East had not occurred. If anything, we believe that the goodwill of the two restaurants will be greater than if no redevelopment had taken place. We have therefore come to the conclusion that no compensation should be awarded for loss of income after November 1994 or loss of goodwill after this period. We accept that the sale price to be reached would, in any event, compensate for future profits and to award both goodwill and future profits would be duplication.

Applying the Chairman's ruling on the applicability of 'reliance damages', we have come to the conclusion that none have been proved by either claimant."

Although sub-s. 50(b) of the Retail Shop Leases Act does not expressly state that the Tribunal must observe natural justice "in the course of ... proceedings", that is its plain intent. If that obligation does not include a duty to give adequate reasons for its decision in a proceeding, it would be necessary to consider whether, despite the restricted terms of sub-s. 50(b), a supplementary duty to give such reasons arises under the general law: cf. Ainsworth v. Criminal Justice Commission [1992] HCA 10; (1992) 175 C.L.R. 564, at pp. 575-576.

There is a surprising lack of reported authority on the meaning of the phrase "in the course of proceedings". However, "in the course of" has a general connotation of from commencement to completion: cf. Mundy v. Lambert Investments Pty Ltd (1990) 19 N.S.W.L.R. 577, 579-580. Further, the word "proceedings" has a wider meaning than hearings (Ainsworth, p. 574; see also Jamieson v. R. [1993] HCA 48; (1993) 177 C.L.R. 574). The introductory words to s. 50 of the Retail Shop Leases Act could be interpreted as differentiating between the "proceedings" and the "finding or order" of a Tribunal, implying that the "finding or order" does not form part of the "proceedings". However, it need not be read in that way; the draftsman's separate reference to the "proceedings" and the "finding or order" appears rather to be directed to ensuring, from an abundance of caution, that both are protected from challenge except as permitted by s. 50; in other words, the "proceedings", including the "finding or order", are not to be questioned except in the manner stated. Having regard to the nature of the Tribunal's jurisdiction, functions and powers and the context - i.e., a requirement that the Tribunal exercise natural justice - "proceedings" should be given a broad, rather than a narrow meaning (cf. Ainsworth p. 574), and should be held to include every step in, or aspect of, a proceeding (cf. Ainsworth pp. 574, 591), including the Tribunal's decision at the conclusion of the "proceedings". Indeed, it is difficult to comprehend that the legislature could have intended that the Tribunal not be obliged to act fairly at such a critical point in the exercise of its statutory powers, or that, by not giving adequate reasons, it could render the challenges contemplated by s. 50 nugatory or, at least, substantially ineffective.

Before considering that further, it is desirable to notice Public Service Board of New South Wales v. Osmond (1986) 159 C.L.R. 656, in which the High Court held that there is no general rule of the common law or principle of natural justice which requires reasons to be given for administrative decisions, even those made in the exercise of a statutory discretion and liable adversely to affect the interests, or defeat the legitimate or reasonable expectations of others: see p. 662, per Gibbs C.J., who delivered the leading judgment. At p. 667, his Honour added:

"Moreover, the principle that judges and magistrates ought to give reasons in any case in which an appeal lies from the decision provides a quite inadequate basis for the suggested further principle that a body exercising discretionary administrative powers must give reasons to enable persons affected by the exercise of the power to bring proceedings for judicial review. That suggested principle would undermine the rule, well established at common law (see R. v. Northumberland Compensation Appeal Tribunal; Ex parte Shaw [1951] EWCA Civ 1; [1952] 1 K.B. 338, at p. 352) that reasons do not form part of the record, for the purposes of certiorari, unless the tribunal chooses to incorporate them."

However, the law has moved on in the decade since Osmond, as was foreshadowed by Deane J. in that case at p. 676. Speaking of administrative decisions, his Honour agreed that "where as a matter of ordinary construction, the relevant statutory provisions do not impose an obligation to give reasons, the rules of natural justice will not remedy the omission", but then continued:

"On the other hand, it is trite law that the common law rules of natural justice or procedural fair play are neither standardized nor immutable. The procedural consequences of their application depend upon the particular statutory framework within which they apply and upon the exigencies of the particular case. Their content may vary with changes in contemporary practice and standards. That being so, the statutory developments referred to in the judgments of Kirby P. and Priestley J.A. in the Court of Appeal in the present case are conducive to an environment within which the courts should be less reluctant than they would have been in times past to discern in statutory provisions a legislative intent that the particular decision-maker should be under a duty to give reasons or to accept that special circumstances might arise in which contemporary standards of natural justice or procedural fair play demand that an administrative decision-maker provide reasons for a decision to a person whose property, rights or legitimate expectations are adversely affected by it. Where such circumstances exist, statutory provisions conferring the relevant decision-making power, should, in the absence of a clear intent to the contrary, be construed so as to impose upon the decision-maker an implied statutory duty to provide such reasons."

It is unnecessary for present purposes to consider whether administrative decisions which are not subject to judicial review or other statutory rights of challenge remain in a special category. Subject to that, "[it] is now clear that a duty of procedural fairness arises, if at all, because the power involved is one which may 'destroy, defeat or prejudice a person's rights, interests or legitimate expectations'. Thus what is decisive is the nature of the power, not the character of the proceeding which attends its exercise.": Ainsworth at p. 576, quoting from Annetts v. McCann [1990] HCA 57; (1990) 170 C.L.R. 596 at p. 598. Earlier on the same page in Ainsworth, there is another passage which is directly applicable here:

"The Act does not indicate what conduct constitutes fairness in any particular situation. Thus, whether the matter is approached as one involving a statutory requirement (express or implied) or as one to be governed by the general law, it is necessary to turn to the general law to ascertain what, if any, entitlements to procedural fairness the appellants possessed in the present case."

In recent years, there has been a large number of cases concerning a decision-maker's duty to give reasons for his or her decision. Most of the cases relate to the exercise of judicial power or arise from particular statutory provisions, such as those to be found in legislation dealing with administrative appeals and judicial review. See, for example, the unreported judgments of this Court in Australia & New Zealand Banking Group v. Gate (C.A. No. 82 of 1992, 1 April 1992); Lee v. Diesel & Auto Service (C.A. No. 144 of 1992, 5 February 1993); Fidler v. Green (C.A. No. 235 of 1992, 12 March 1993); and Adamson v. Queensland Law Society Inc. (1990) 1 Qd.R. 498, 508; Soulemezis v. Dudley (Holdings) Pty Ltd (1987) 10 N.S.W.L.R. 247; Mifsud v. Campbell (1990) 21 N.S.W.L.R. 725; Sun Alliance Insurance Ltd v. Massoud [1989] VicRp 2; [1989] V.R. 8; Stojkovski v. Fitzgerald [1989] W.A.R. 328; Mobasa Pty Ltd v. Nikic (1988) 19 F.L.R. 411; Salazar and Arbelaez v. Minister for Immigration and Ethnic Affairs [1911] ArgusLawRp 112; (1978) 18 A.L.R. 36; Ansett Transport Industries (Operations) Ltd v. Wraith [1983] FCA 179; (1983) 48 A.L.R. 500; Arm Constructions Pty Ltd v. Commissioner of Taxation [1986] FCA 108; (1986) 10 F.C.R. 197; Hatfield v. Health Insurance Commission [1987] FCA 286; (1986) 15 F.C.R. 487; Ansett Transport Industries (Operations) Ltd v. Taylor (1987) 18 F.C.R. 498; Ansett Transport Industries (Operations) Ltd v. Secretary, Department of Aviation (1987) 73 A.L.R. 193; Our Town F.M. Pty Ltd v. Australian Broadcasting Tribunal (No. 1) [1987] FCA 301; (1987) 77 A.L.R. 577; Minister for Immigration & Ethnic Affairs v. Taveli [1990] FCA 169; (1990) 23 F.C.R. 162; Dornan v. Riordan [1990] FCA 383; (1990) 24 F.C.R. 564; Lek v. Minister for Immigration, Local Government and Ethnic Affairs [1993] FCA 493; (1993) 117 A.L.R. 455; and Barton v. Licensing Commission at pp. 34 ff.

These cases explain the need for reasons by reference to a number of factors, including the requirement of fairness. Indeed, even Public Services Board v. Osmond does not hold that fairness does not ordinarily require that reasons be given for decisions which affect rights and liabilities; its conclusion was rather than, at that time, those who made administrative decisions were not required to provide reasons because that was established by a long line of authority. It is not really surprising that, in a complex society in which there are a proliferation of tribunals with power to affect citizens' rights and liabilities, the courts have come to insist that it is an incident of a duty to act fairly that decisions be adequately explained.

The nature and extent of the obligation to give reasons varies according to the circumstances; the obligation is, after all, an aspect of the duty to act fairly in the particular circumstances. The broad principle deducible from the cases is that the decision-maker is required to give reasons which disclose what was taken into account and in what manner, and thus whether an error has been made: cf. the reference by McHugh J. in Soulemezis at p. 279 to a statement of reasons which "enables the parties to see the extent to which their arguments have been understood and accepted as well as the basis of the ... decision". See also, ibid, at p. 269 per Mahoney J.A.; Sun Alliance p. 19. There have been many attempts to elaborate; indicating for example, the need for findings of fact, usually related at least in broad terms to the evidence on which each finding is based, and an explanation of the reasoning process; vague general statements, or unexplained conclusions are not sufficient; while a tribunal such as the Retail Shop Leases Tribunal might not be required to "submit the material before [it] to the most meticulous analysis and carry into [the reasons for its decisions] a detailed exposition of every aspect of the evidence and the arguments ..." or "... incorporate an extended intellectual dissertation upon the chain of reasoning ...", at least "a basic explanation of the fundamental reasons which led the [Tribunal] to [its] conclusion ..." is necessary: cf. Xuereb v. Viola (1988) 18 N.S.W.L.R. 453, 469, citing from the judgment of Samuels J.A. in the unreported New South Wales Court of Appeal decision in Strbak v. Newton (18 July 1989).

Two other decisions of the New South Wales Court of Appeal which play an important role in the joint judgment of the other members of the Court.

In Housing Commission of New South Wales v. Tatmar Pastoral Co. Pty Ltd [1983] 3 N.S.W.L.R. 379, the appeal and cross-appeal from the Land and Environment Court to the Court of Appeal were confined to questions of law. The primary judge "did not specifically pronounce on whether he accepted ... evidence" which, if accepted "could have diminished the compensation payable, but would not necessarily had done so ...": p. 381 per Hutley J., with whom Samuels J.A. agreed. Not surprisingly, it was held that this omission did not give rise to any question of law: p. 382; cf. p. 386.

In the course of his judgment, Hutley J.A. said at p. 381: "The choice between conflicting experts may have to be a matter of judgment, not of detailed reasoning". Even assuming that to be so, it is not possible to erect that statement into a general principle that reasons need never be given for preferring one expert witness to another in the event of conflicting opinions.

The judgment of the other members of the Court also relies upon a statement by Mahoney J.A. in Housing Commission at p. 386. His Honour said:

"Nor is it necessary for a judge who is exercising a discretionary judgment to detail each factor which he has found to be relevant or irrelevant, or to itemize, for example, in the assessment of damages for tort, each of the factual matter to which he has had regard: see O'Hara v. Evans (Court of Appeal, 23rd September, 1976, unreported; Colacicco v. Colacicco (Court of Appeal, 15th March, 1977, unreported). ... Nor is a judge required to make an explicit finding on each disputed piece of evidence. It will be sufficient, if the inference as to what is found is appropriately clear: see Selvanayagam v. University of the West Indies [1983] 1 WLR 585, at 587, 588; [1983] 1 All ER 824, at 826.

But, subject to matters such as these, the basis of the decision of a trial judge or of an intermediate court of appeal should be made apparent. This does not mean that the reasons given need to elaborate: an elaborate argument may not require an elaborate answer. Reasons need be given only so far as is necessary to indicate to the parties why the decision was made and to allow them to exercise such rights as may be available to them in respect of it."

The only portion in that passage which arguably supports the dismissal of this appeal is the first sentence which, in my opinion, cannot be reconciled with statements by Stephen J., with whom Gibbs J. agreed, in Gamser v. The Nominal Defendant [1977] HCA 7; (1977) 136 C.L.R. 145. In that case, the adequacy of the trial judge's reasons was not raised as a ground of appeal, but Gibbs J. said (p. 148):

"But the assessment by a judge must be a process of methodical consideration, not one of ungoverned intuition. It will often - indeed usually, be convenient for the judge to reveal the details of his reasoning, if not the amounts forming the main components of the global sum, so that if he has fallen into error, that may be revealed and corrected on appeal. I have read what my brother Stephen has said on this subject in his judgment in the present case, and would respectfully express my agreement with his remarks."

"I do not, of course, advocate any process whereby items of damages are quantified in isolation and are then simply aggregated; that is no way to go about the task. But to condemn that approach should confer no merit upon another, no less objectionable, whereby the total amount to be awarded is stated without any disclosure of the mental processes by which that sum has been arrived at. An award of damages is not, nor should it ever be, arrived at intuitively. Only if it were would particularity as to its component parts be otiose; and if an award is to be the result of a process of reasoning, often quite complex, that process should be exposed, both for the satisfaction of the parties and for the enlightenment of appellate courts should thereby an appeal.

So long as compensation takes the form of a lump sum award, arrived at by an evaluation of evidence and by processes of reasoning, there must necessarily be involved some assessment of each item of detriment and some process of computation in order to arrive at the ultimate sum to be awarded. There will very often be detriments suffered or risks of detriment to which a party has been exposed which are incapable of precise quantification. In such cases estimates must suffice and the notion that some false impression of precise mathematical accuracy may be given can readily be dispelled by a few words of explanation. There is no occasion to abandon altogether the task of explaining the components of the award."

See also in this Court Fidler v. Green (C.A. No. 235 of 1992, unreported judgment delivered 12 March 1993), and the decision of the New South Wales Court of Appeal in Government Insurance Office of New South Wales v. Nguyen (1988) Aust. Torts Reports 80-213 at p. 68,113.

In any event, read in conjunction with the second paragraph, the first sentence in the passage taken from the judgment of Mahoney J.A. in Housing Commission cannot mean that there is no obligation to give reasons which adequately explain how damages were assessed.

However, according to the headnote, Yates Property Corporation Pty Ltd (In Liquidation) v. Darling Harbour Authority [1991] 24 N.S.W.L.R. 156 is authority for the proposition that a judge assessing compensation by reference to the value of land "is not obliged to explain each step in his reasoning, having regard to the larger scope for intuition, evaluation, judicial impression and guesswork in such decisions".

There seem to be two factors at work in this conclusion. One is that the appeal from such determinations of compensation is limited to questions of law; the other is that, in such matters, a "subjective element" legitimately plays a significant role in the reasoning process (cf. Soulemezis at p. 274 per Mahoney J.A.).

The colourful descriptions accorded this "subjective element" tend to exaggerate its valid use and to distract attention from the overriding obligations to give reasons which adequately explain the decision; thus, for example, in Yates, Kirby P. at p. 159 referred to "the judicial leaps to judgment that are required in these cases" and cited a passage from the judgment of Mahoney J.A. in Soulemezis at p. 274 which accepted that a judge's reasons for a finding of fact "may partake as much of intuition based on experience as on formal and deductive reasoning". Again, at p. 161, Kirby P. in Yates spoke of "the large scope for judgment, judicial impression and intuition" in such cases. And, at pp. 182-183, Handley J.A. cited with approval earlier judicial references to "the best guess that can be made" and "more than ordinary room for guesswork": cf. per Mahoney J.A. at p. 171.

Nonetheless, in Yates, the duty to give adequate reasons to explain a judge's decision was again reaffirmed: see, for example, per Handley J.A. at p. 186. In my opinion, that case establishes no more, for present purposes, than that some decisions involve a greater than usual "subjective element", and that it is proper to take that into account in deciding whether reasons given are adequate. Like numerous other cases, Yates reaffirms that this issue is one of degree: see, for example, per Kirby P. at p. 160.

In the present case, consistently with the principles as I understand them, I am satisfied that the Tribunal's reasons were inadequate.

For example, stripped of the verbiage, what the Tribunal said in respect of the period from February 1990 to September 1991 was that it had, in some unspecified way, adjusted unspecified figures "either up or down due to a multiple of [unspecified] variables", which "depend on ... a substantial number of matters" which are also unspecified; the figures "being plastic", have been "moulded" on the basis of opinions, experience and "possible bias", involving an adjustment "giving such weight as [the members of the Tribunal] think fit and proper in all the circumstances".

It is unnecessary to discuss the later periods but, for example, the Tribunal's statement in respect of the period 12 October 1992 to late 1994 that the members had arrived at a figure doing the best they could "and not always following the same reasoning", which again was totally unexplained, is not such as to imbue confidence that the Tribunal has performed its statutory functions.

The appeal should be allowed, and an order made in terms of paragraph 6(b) of the notice of appeal.

REASONS FOR JUDGMENT - McPHERSON & DAVIES JJ.A.

The Australian Mutual Provident Society is the owner and landlord of the Pacific Fair Shopping Centre at Broadbeach on the Gold Coast. The applicants, who are the appellants in this Court, are lessees from the Society of areas of the Centre under leases to each of them which commenced on 1 July 1986 and are due to expire on 30 April 1996. They are tenants of retail shops in a retail shopping centre within the meaning of the Retail Shop Leases Act 1984, which was the legislation in force at the time of the events in issue. In its leased area of the Centre the applicant Cypressvale Pty. Ltd. has been conducting a restaurant business known as Lakeside Restaurant; likewise, in its leased area Fernmead Pty. Ltd. has also been conducting a restaurant, which is called Le Basin.

The Pacific Fair Shopping Centre is the leading shopping centre on the Gold Coast. To maintain its advantage over present and prospective competitors, the Society has adopted a policy of redeveloping and enlarging the facilities at the Centre. In recent times it has carried out the following improvements.

(1) In 1989 it built and in 1990 opened a bridge over Little Tallebudgera Creek providing direct access to the Centre from the Gold Coast Highway.

(2) From February 1990 it constructed and on 23 September 1991 opened a new building to house a 30,000 sq.m. Myer department store.

(3) Between September 1991 and October 1992 it built a new two-storey air conditioned building known as "The Arcade".

(4) When it opened in October 1992, The Arcade included a series of specialty food stores and a "food court", which competed with the applicants' businesses.

(5) During the period from about October 1992 there was a winding down in the business of another tenant McDonnell & East, whose business at the Centre closed in January 1994. Alterations were carried out in the space formerly occupied by it, to enable it to be taken over by about the end of 1994 by a Target Store and another store trading as "Toys-R-Us".

The two applicants claimed that these actions and events interfered with the recourse of customers to their restaurants, and that they had a disruptive and depressing effect on their businesses and profitability during the periods in question. Section 15(a) of the Retail Shop Leases Act 1984 ("the Act") in the form in which the section stood at the relevant date in 1986,

contained a statutory implication in every retail shop lease in a retail shopping centre of liability on the part of a landlord in certain circumstances to pay reasonable compensation to a tenant. The specified circumstances primarily relevant in the present case, are if the landlord:

"(ii) inhibits the access of a tenant in the centre to his business in any substantial manner;

(iii) takes action (other than that lawfully required by any statutory body or department of the Government)that would substantially alter or inhibit the flow of customers to any retail shop or retail shops in the centre;

(iv) causes or fails to make reasonable efforts to prevent or to remove any disruption to trading within the centre which disruption causes loss of profits to a tenant or tenants in the centre".

Section 36(1)(a) of the Act invests in a Retail Shop Lease Tribunal jurisdiction to hear and determine a dispute referred to it concerning the liability to pay moneys arising out of Part 3 of the Act, which includes s.15(a).

The applicants claimed that, in consequence of the activities and events at the Centre since 1989, they suffered loss, for which they claimed compensation from the Society as the landlord under s.15(a). Their claims were disputed, and came to hearing before a Tribunal on dates between January and March 1994. We were told that the hearing extended over some 23 days, in the course of which an inspection was had, and evidence was received from some 30 witnesses. A large number of written exhibits were tendered and received. The parties were represented by counsel, and submissions, both written and oral, were made, and rulings on questions of interpretation of the Act and other relevant matters of law were given by the chairman of the Tribunal.

The decision of the Tribunal, delivered on 12 April 1994 comprised 16 pages of typed reasons. The applicants Cypressvale and Fernmead had respectively claimed $1.5 million and $1.4 million as compensation under s.15(a), but the Tribunal awarded them amounts totalling only $50,000 and $60,000. The Act confers no right of appeal, but, on the contrary, by s.49 provides that an order of a Tribunal is to be final and binding on the parties; and, in s.50, that the proceedings, and the finding or order of a Tribunal, are not to be questioned "in any proceedings whatever" except proceedings based solely on the ground of excess of jurisdiction in making the finding or order, or on the ground of a denial of justice occurring in the course of such proceedings.

Confronted by these provisions of the Act, the applicants turned to the Judicial Review Act 1991. On 10 May 1994 they applied to a Judge of the Supreme Court for a review under s.43 of that Act, or alternatively for a statutory order for review under s.20, in respect of the Tribunal's decision. The application came before the Chamber Judge, who, while reaching some conclusions favourable to the applicants in his written reasons delivered on 20 July 1994, dismissed the application on the ground that there had not been any denial of natural justice in terms of s.50 of the Retail Shop Leases Act in the course of the proceedings before the Tribunal. This appeal is brought from that decision.

In the material filed in support of the application, the applicants made various complaints about findings or rulings of the Tribunal. Essentially, however, they were reduced on appeal to the single argument that the Tribunal failed to give any or adequate reasons for various findings or rulings reached by it. On appeal the primary relief sought by the applicants was an order to review in the nature of a mandamus:

"remitting the disputes to the Tribunal to make ... further findings ... and to give reasons, or adequate reasons, for the findings ... on the basis of the evidence already adduced and submissions already made in the Tribunal".

As the argument on appeal developed before this Court, it became apparent that the applications and appeals raised a number of separate questions of difficulty and importance not only with respect to the particular matter itself but more generally to applications of this kind, as well as to the nature of a Tribunal's function under the Retail Shop Leases Act 1984. Ordinarily, of course, the fact that an appeal involves difficult questions would not deflect this Court from its duty of deciding them. Here, however, we have had the benefit of submissions on only one side of the record. The Tribunal itself appeared by counsel simply in order to obtain leave to withdraw, intimating that it would abide the decision of the Court. The Society, which might be thought of as the natural opponent of the relief sought, was served with the applications and appeal; but elected not to appear either in this Court or before the judge at first instance. The appropriate course to adopt here therefore is, we think, to decide no more than is strictly needed to dispose of the appeal, leaving other matters of general principle to some future occasion when the competing arguments are more fully ventilated. Our impression that this is the correct course is strengthened by learning from counsel that another application is pending to review a further decision of the Tribunal with respect to the Centre, for which our decision on this appeal may be relied on as a precedent. The argument referred to above assumes that the Tribunal had a duty to give reasons for its decision, an assumption which the Tribunal also appears to have made. The present appeal may also be decided on that assumption which, for reasons we have already given, we are prepared to make.

The success or failure of the appeal in this instance then depends on whether the reasons given by the Tribunal for its determination of the applicants' claim for compensation can properly be characterised as adequate. The requirement that reasons be "adequate" has been recognised in a number of decisions both here and in England, and apparently has its source in a passage in the judgment of Megaw J. in Re Poyser & Mills' Arbitration [1964] 2 Q.B. 467, 478, which was approved in Westminster City Council v. Great Portland Estates PLC [1985] 1 A.C. 661, 673. It is, however, essential to bear in mind that, in the context in which we are now considering it, adequacy of reasons refers to their sufficiency in content and form, and not to their validity in point of law, or the correctness of matter of fact. The ultimate purpose of the present proceedings is to obtain further reasons which it is hoped will expose errors of law or perhaps of fact rendering the Tribunal's decision liable to challenge under the Judicial Review Act. Without further reasons of that kind, the applicants are not yet in a position to take the latter step.

Whether or not reasons given for a decision can be characterised as adequate or otherwise involves a variety of different considerations. What is adequate depends on the circumstances of the case. See Sun Alliance Insurance Ltd. v. Massoud [1989] VicRp 2; [1989] V.R. 8, 18. In Housing Commission of N.S.W. v. Tatmar Pastoral Co. Pty. Ltd. [1983] 3 N.S.W.L.R. 379, 381, Hutley J.A. with whom Samuels J.A. agreed, said:

"The extent to which a court must go in giving reasons is incapable of precise definition. A court must not nullify rights of appeal by giving no or nominal reasons, but there is no duty to expound reasons so as to facilitate appeals. This applies particularly to the situation where a judge has to decide between conflicting witnesses, including experts. The choice between conflicting experts may have to be a matter of judgment, not of detailed reasoning."

Formulations of the duty to give reasons show considerable variation. In Soulemezis v. Dudley (Holdings) Pty. Ltd. (1987) 10 N.S.W.L.R. 247, 273, Mahoney J.A. said it would ordinarily be sufficient "if the judge apprises the parties of the broad outline and constituent facts of the reasoning on which he has acted". In Ansett Transport Industries (Operations) Pty. Ltd. v. Wraith [1983] FCA 179; (1983) 48 A.L.R. 500, 507, Woodward J. said the decision-maker:

"should set out his understanding of the relevant law, any findings of fact on which his conclusions depend (especially if those facts have been in dispute) and the reasoning process that led him to those conclusions."

Some of the formulations adopted in judicial decision may owe something to statutory provisions, and vice versa. In Queensland, the Judicial Review Act contains in s.3 a definition which provides, in relation to decisions of an administrative character to which under s.4 it applies, that "reasons" means:

(b) a reference to the evidence or other material on which the findings were based;

In the United States, the Federal Administrative Procedure Act requires that "all decisions ... shall include a statement of ... findings and conclusions, and the reasons or basis therefor, on all material issues of fact, law or discretion presented on the record". In commenting on this provisions Professor Bernard Schwartz has said (Administrative Law, 3rd ed., s7.30, at 460-461) that its function is to "compel administrative agencies adequately to articulate the bases of their action, showing a rational connection between the facts found and the choice made". A particular target of such provisions is the practice of some agencies in that jurisdiction of "merely parroting the language of the statute" in expressing their decisions, so that the decision is "no clearer than the statute itself".

The extent of the duty to give reasons is affected by the function that is served by the giving of reasons. The requirement is considered an incident of the judicial process, the hallmark of which is, as McHugh J.A. stressed in Soulemezis (1987) 10 N.S.W.L.R. 247, 278-279, "the quality of rationality", which is what serves to distinguish a judicial decision from an arbitrary decision. The giving of reasons is thus an aspect of judicial accountability, which was identified by his Honour in Soulemezis as the second of three purposes served by the judicial duty of giving of reasons. The first, his Honour said, is that "it enables the parties to see the extent to which their arguments have been understood and accepted, as well as the basis of the judge's decision". The third is that judicial reasoning provides a precedent for the decision of future cases. See, to similar effect, what was said by Mahoney J.A. in the same case: Soulemezis, at 269, referred to with approval in Sun Alliance Insurance Ltd. v. Massoud [1989] VicRp 2; [1989] V.R. 8, 19, in the Full Court of Victoria.

A test which has been propounded in New Zealand for determining whether reasons for a decision are adequate or not is whether the unsuccessful party is justified in feeling not merely "disappointed" at the decision against him, but "disturbed" : Connell v. Auckland City Council [1977] 1 N.Z.L.R. 630, 634. The test has on occasions been referred to in Australia. See Stojkovski v. Fitzgerald [1989] W.A.R. 328, 335; and Mifsud v. Campbell (1991) 21 N.S.W.L.R. 725, 728; and it was adopted by the primary judge in deciding the applications in the present case. With respect, however, it must be at least doubtful whether it results in much more than a value judgment, rather than a reasoned justification for holding in a particular case that the reasons given for a decision are or are not adequate.

From the many cases in which the question of adequacy has been considered it is possible to extract some indications of what is required or expected. It has already been noticed that the choice between conflicting witnesses, including experts, is recognised as often being a matter not of reasoning but of judgment : Housing Commission v. Tatmar Pastoral Co. Also, "where the resolution of a case depends entirely on credibility, it is probably enough that the judge has said that he believed one witness in preference to another ... The position will usually be different if other evidence and probabilities are involved" : Soulemezis v. Dudley (Holdings) Pty. Ltd. (1987) 10 N.S.W.L.R. 247, 280, per McHugh J.A. It has been said to be "plainly unnecessary" for a judge to refer to all the evidence led in the proceedings, or to indicate which of it is accepted or rejected : Mifsud v. Campbell (1990) 21 N.S.W.L.R. 725, 728, although failure to explain the basis of a crucial finding of fact involves a breach of principle : ibid, citing Soulemezis, at 281. But the obligation of doing so does not exist in respect of every matter, of fact or law, which was or might have been raised in the proceedings : Housing Commission v. Tatmar Pastoral Co., at 385. Nor is it necessary for a judge who is exercising a discretionary judgment to detail each factor which he has found to be relevant or irrelevant, or to itemise, for example, in the assessment of damages for tort, which of the factual matters to which he has had regard : ibid, at 386.

Market value is a matter of fact, and valuations are a prime example of something about which, ordinarily, "there must be room for inferences and inclinations of opinion, which being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others" : Secretary of State for Foreign Affairs v. Charelesworth Pilling & Co. [1901] A.C. 373, 391. In Yates Property Corporation v. Darling Harbour Authority (1991) 24 N.S.W.L.R. 156, 183, where this statement was cited with approval by Handley J.A., Cripps J., after a lengthy hearing in the Land and Environmental Court, assessed compensation for land resumed on the basis that it had a special value to the owner. As regards the market value of the land, his Honour preferred the evidence of a valuer for the resuming authority, giving a value of $965 per sq.m., but said that he made "appropriate adjustments" to arrive at the assessment of market value he adopted in the case. He did not identify with precision what those adjustments were, or the amounts per square metre which he attributed to each. It was held that, in omitting to identify with precision the adjustments which he made, or the reasons which led him to make them, Cripps J. had not failed in his duty of giving adequate reasons for his decision on market value. On the other hand, it was held by Kirby P. and Handley J.A. that the judge was wrong in failing to give reasons for deciding that the land had a "special value" to the owners.

The decision in Yates Property Corporation has a particular relevance to the present case, where questions of opinion and impression were also involved in the Tribunal's assessment of compensation to the applicants under s.15(a) of the Act. However, before turning to the particular matters decided by the Tribunal, it is necessary to add that virtually all of the decisions which have been referred to here involved appeals from courts exercising judicial power in the full sense, and not administrative or quasi-judicial bodies or tribunals. The second and third of the three purposes identified by McHugh J. in Soulemezis, which are to maintain judicial accountability and to furnish precedents for the future, obviously have little or much less force in the case of a tribunal whose members and functions are not strictly judicial. The calibre, legal training and experience of members of the judiciary raise expectations that reasons they give for their decisions will attain a high level of sophistication. The same would not always be true of decisions of persons whose primary qualification for decision-making consists of specialist knowledge or experience rather than ability to produce reasons conforming to accepted judicial tradition. Reasons that would not be considered adequate if given by a judge may nevertheless suffice for some other decision-makers not chosen for their task because of their resemblance to the judiciary. In the end, the question whether reasons are "adequate" falls to be considered in the context afforded by the nature of the question which has to be decided and other factors, including the functions, talents and attributes of the tribunal members or the individual in whom the duty of deciding questions of that kind has been vested. Considerations of the cost to litigants and the general public in requiring reasons to be given is another factor which must be weighed : Soulemezis v. Dudley (Holdings) Pty. Ltd. (1987) 10 N.S.W.L.R. 247, 279, per McHugh J.

In the present case it appears from the terms of the Retail Shop Leases Act that the function of a Tribunal in deciding a question of compensation in a case of this kind is to act as a specialist tribunal providing a relatively informal and expeditious venue for determining disputes between landlords of retail shopping centres and their tenants. By s.28, a Tribunal is to consist of three members, having a chairman who is a judge or retired judge or a barrister or solicitor, and who in this instance was a retired judge of District Courts; a second member who is to be a representative of landlords under retail shop leases; and a third, who is a representative of tenants under such leases. Questions of law are by s.33 to be decided by the chairman, but other questions are to be determined according to majority opinion. Representation by legally qualified persons or professional advocates is permitted only with the consent of the Tribunal: s.45(3). Parties are to bear their own costs: s.46. Although, in contrast to the more recent Retail Shop Leases Act 1994, the Act of 1984 does not specifically say so, a Tribunal is not intended to confine itself to acting only on evidence admissible in a court of law. Section 38 extends to it the provisions of s.17 of the Commissions of Inquiry Act 1950, which are that, in the exercise of its functions or powers, a commission of inquiry operating under that Act is not bound by the rules or practice of any court or tribunal as to procedure or evidence "but may conduct its proceedings and inform itself on any matter in such manner as it thinks proper". The Tribunal obviously has some judicial attributes; but it is plainly not intended simply to mimic a court of law, or to conduct its proceedings in the manner of a court, or even to decide disputed questions in precisely the same way as a court. The "adequacy" or otherwise of its reasons must be viewed in the light of these considerations.

With these matters in mind, we turn now to the decision of the Tribunal in the present case and to the reasons which it gave for it.

First period: 1989 to 1991. In deciding whether and in what amount compensation was to be awarded, the Tribunal divided the applicants' claims into five distinct periods corresponding to those set out earlier in these reasons. In respect of the first period from February 1989 to February 1991, when the bridge across Little Tallebudgera Creek was completed, it awarded no compensation at all. According to the reasons of the Tribunal, the assessment made by Mr Calabro, who it may be inferred gave expert evidence in support of the applicants' claims, originally included some amount of loss for the year 1989; but the reasons record that this claim was abandoned, with the consequence that, as the Tribunal remarked, "no claim relates to this period and no analysis is made". No one could complain about the reasoning on this point.

Final period: from late 1994. It is convenient to deal next with the final period involved, which was identified as extending from late 1994 to the expiration of the leases in 1996 and beyond. Again, the Tribunal made no award of compensation for any loss claimed in respect of this period. Three reasons were given for that decision. One was that the expected opening of the Target Store and Toys-R-Us in late 1994 would have the effect of increasing the pedestrian flow past the applicants' businesses so as to enhance them and their value to an extent greater than if no redevelopment had taken place at all. Another reason given was that the Society itself had made it plain that there was no prospect of the applicants obtaining renewals of their leases from the landlord. It followed, in the Tribunal's opinion, that the applicants would almost certainly be taking steps "almost immediately" to sell their businesses and assign the balance of their leases to other persons to whom the Society would be prepared to grant renewals of the leases when they came to an end in 1996. A third reason given was that, acting on the chairman's interpretation of the decision of the High Court in Amman Aviation Pty. Ltd. v. The Commonwealth (1991) 176 C.L.R. 64, the applicants would not be entitled to "reliance damages" based on any expenditure that might have been undertaken by them in anticipation of a renewal of a lease which neither of the applicants had a legal right to expect.

Whatever criticism might be levelled against the validity of these reasons - and we are not here concerned either to condemn or justify them - it is plain that the Tribunal has in fact given reasons for its decision to award no compensation for the fifth or final period. Even if legally or factually incorrect, the reasons are "adequate" in the context in which they now fall to be considered. The Tribunal's decision in respect of this period is therefore not open to complaint or challenge on the ground that the reasons it has given are not "adequate".

Third period: 23 September 1991 to 12 October 1992. The same conclusion holds good for the third of the specified periods. As mentioned before, it was on 23 September 1991 that the 30,000 sq.m. new Myer department store opened in a new building which had been under construction at the Centre since February 1990. From the time of its opening the trading figures of both applicants increased. According to the Tribunal's findings, they had the best trading figures for all the time during which they had been at the Centre.

It follows that in respect of this period there could not, in terms of s.15(a)(ii),(iii) or (iv) of the Act, be any claim by the applicants or either of them for compensation caused by any action of the Society substantially altering or inhibiting access by customers to, or the flow of potential customers past, the applicants' retail shops, or causing significant disruption of trading. So far as can be gathered from the material before us, no such claim was in fact pursued before the Tribunal. The only relevance to the claims made by the applicants of the trading period in question was that the Society contended that the benefits of favourable trading during these months should be set off against other losses sustained by the applicants during the periods that preceded and followed it. The question was initially submitted to the chairman as one of law. He ruled that it was a combined question of fact and law, "in which the facts are the weightier aspect". Taking his ruling and direction into account, the decision was that there should be no such set off. The Tribunal members considered that "each stage should more properly be regarded as a separate development". The decision was favourable to the applicants, who have no discernible interest in challenging it.

Second period : February 1990 to 23 September 1991. It was with the second and fourth periods that the Tribunal was principally concerned, and in respect of which it made awards of compensation in favour of the applicants as follows:

Under s.15(a)(iii) of the Act the landlord was liable to pay reasonable compensation for taking action that would substantially alter or inhibit the flow of customers to the applicants' retail shops. On referring to the chairman, he gave ruling No. 2 in Section A of the reasons of the Tribunal that, under this provision:

"there must be a reduction of potential customers for there to be an inhibition or alteration. The reduction must be in the number of potential customers passing the shop for a claim to arise ... the section is not concerned with proportion, that is, whether the number of prospective customers is a greater or lesser proportion of those coming to the Centre."

During the second period, as the Tribunal found, major earthworks were commenced, and the rear road to the K Mart was closed until 23 September 1991, when the new Myer store was opened. The Tribunal then, in section headed The Redevelopment in the reasons, accepted that during this period:

"there was a major construction through the Centre, and there was interference which caused compensable loss to the claimants."

Also, in section F of the reasons, headed The Assessment, the Tribunal went on to find that there was:

"substantial physical interference inhibiting the access of tenants and altering pedestrian flow to both claimants' businesses during this period."

The question then was to determine the extent of the reduction in pedestrian flow caused by the alteration in customer access, and the resulting compensable losses sustained by the applicants. The obvious method of assessing that reduction was by comparing the number of passing pedestrians before and during the construction work. However, the Tribunal said, no counts of pedestrian flow were available. In default of information of that kind the Tribunal found it was obliged to "look at trading figures in the light of all the surrounding circumstances, and make our assessment on that basis".

In the result, the Tribunal arrived at the compensation figures awarded in respect of this period of $24,000 to the applicant Fernmead Pty. Ltd. for Le Basin Restaurant; and of $45,000 to Cypressvale Pty. Ltd. for the Lakeside Restaurant. Those figures are set out in a section of the reasons headed G. The Final Award. It is introduced by the words:

"We have set out the reasons and the factors which we have taken into account. We have looked at the figures prepared by both Mr Calabro and Miss Micallizzi. We have made a judgment in the manner we have indicated."

The conclusion is then stated that the compensation to which the applicant Fernmead Pty. Ltd. was entitled for this period was $24,000, and that for Cypressvale Pty. Ltd. was $45,000.

It was submitted on appeal, and apparently accepted by the judge below, that, although the Tribunal claimed to have set out the reasons and factors it had taken into account, it had in fact not done so. The submission to that effect is, however, not sustainable. The "reasons and factors" to which the Tribunal was referring were those set out principally, although not exclusively, in Section F of the reasons headed The Assessment. After finding in Section E : The Redevelopment that the construction work had caused substantial physical interference inhibiting access and altering pedestrian flow, and having observed in Section F that counts of pedestrian flow were not available, the Tribunal examined the trading figures on which the expert witnesses for the parties had based their opinions.

The Tribunal explained that it had had to make "upward or downward adjustments" in the figures given by the experts due to "a multitude of variables", which were said to depend on the Tribunal's assessment of the effect of a number of matters or factors both internal to and outside the Centre. The Tribunal said that the assessment of these factors was a matter of opinion, and also in effect, that the impact of those factors did not lend itself to precise statement or calculation. On this aspect the members of the Tribunal expressed their conclusion in the following terms:

"We find that these factors do not lead to fixed proportions or figures, but are based on opinion and assessment. We cannot do a calculation by compounding all the figures which would increase our assessment, applying them, then compounding the figures which would reduce the assessment, and applying them. The figures are not even elastic in the sense that they have a basic shape from which they can be distorted, but which would return them to their original shape. Rather, it is a question of the figures being plastic and being able to be moulded, depending on the view, experience and possible bias of the person dealing with them. For this reason we have had to adjust figures in a manner to which the three Members of the Tribunal, giving such weight as they think fit and proper in all the circumstances, leads to a calculated but possibly flexible result."

It is convenient to pause here and return to some authorities concerning the adequacy of reasons in a comparable context. It will be recalled that in Yates Property Corporation v. Darling Harbour Authority, Cripps J., in arriving at a market value of the land taken, said he had made "appropriate adjustments" in the valuation figure of $965 per sq.m. which he accepted from the Authority valuer, but he never identified those adjustments or the amounts per square metre which he attributed to each of them. The Court of Appeal nevertheless held that in that respect there was no failure by his Honour to give adequate reasons. A matter of valuation was one where there was room for inclinations of opinion which were difficult to reduce to exact reasoning, or to explain to others.

The same may fairly be said of the question in issue here. The Tribunal did not identify the adjustments "upwards or downwards" that they thought it necessary to make in consequence of the "multitude of variables" on which their assessment depended. It can hardly be doubted that the range of factors involved was extensive, nor that determining their impact was a process of estimation and impression. The matter was thus one requiring the exercise of a discretionary judgment in which it would not, even for a judge, have been necessary to "detail each factor which has been found to be relevant or irrelevant" : Housing Commission v. Tatmar Pastoral Co. [1983] 3 N.S.W.L.R. 379, 385. Much less would it be expected that members of a Tribunal, appointed for their specialist skill or experience, should be bound to state in detail the precise reasons which weighed with them in reaching their conclusion on the matters mentioned. The passage in the reasons which is quoted above cannot be commended for its simplicity or clarity. It is replete with metaphor, or perhaps it is the jargon of the times or the trade: figures are described as "not even elastic", but "plastic" and capable of being "moulded" into a chosen "shape". But, as was said in an American case referred to by Professor Schwartz, it is not the function of the courts to pick over the reasons "in the fashion of an instructor in English composition advising a high school student" (Administrative Law, 3rd ed. at 460). Despite some of the language used, the meaning appears. The Tribunal was saying that, in the light of all the variable factors, the trading figures were not susceptible of precise mathematical analysis or of mechanical extrapolation in order to arrive at the assessment of compensable loss, which was formed of a mixture of opinion, experience, and possibly even personal "bias" or, as we would see it, individual perception or predilection.

The Tribunal had before it apparently widely differing interpretations of the trading figures presented by two experts for the parties. They rejected that of Mr Calabro who gave evidence for the applicants. According to what was said in Housing Commission v. Tatmar Pastoral Co. [1983] 3 N.S.W.L.R. 379, 381, they were not obliged to give reasons for rejecting his opinion, but they nevertheless did so. The accuracy of his assessment was, the Tribunal said, affected by the presence of an error in his estimate of the loss for 1989, which was carried over into his calculations for later years. His method of using the consumer price index as a basis for his calculations for two years, and then switching to other figures when the increase became very small, was, the Tribunal considered, not acceptable. Nor was his use of calculations based on "eating and other establishments" in the Centre, without making allowances for the increase in the number and area of those establishments during the period in question.

On the other hand, the Tribunal was obviously impressed by the evidence of Miss Micallizzi. They said they found no mistakes in the figures she used. The reason why they did not accept Miss Micallizzi's evidence "in total" was that the instructions she was given were partly wrong and partly dependent on impressions. Consistently with the chairman's earlier ruling, she was in certain respects also incorrect in accepting the law as it had been given to her.

It is apparent that the Tribunal rejected the figures on which Mr Calabro's opinion was based. They accepted Miss Micallizzi's figures, but subject to the qualifications they mentioned. It is a fair inference that their assessment of compensation for the subject period was based on her figures, which the Tribunal then proceeded to adjust in the light of their own experience and judgment. That was something, which it may be accepted, the Act intended the Tribunal to do. Having regard to the decisions mentioned, they were not required to identify each factor taken into account, nor to set out the details of their calculations in arriving at the amounts of compensation awarded.

Fourth period : 12 October 1992 to late 1994. This period, which ran from the opening of the Arcade and Tallebudgera Way, was, according to the finding of the Tribunal, also one which involved a falling off in pedestrian flow past both restaurants. The reduction in that flow was, the Tribunal found, due to a variety of factors which included : (1) the attractions and convenience of The Arcade; and (2) the competition resulting from the takeaway food outlets described in Section E: The Redevelopment as being readily accessible on the northern side of the second floor of The Arcade. A third factor (3) was the novelty aspect or "honeymoon" period, lasting up to two years, during which customers might be expected to resort to new areas to the detriment of the old. Another contributing factor was (4) the winding down in the business of McDonnell & East, which contributed to a decline of the pedestrian flow in the "core" area of the Centre. Finally, (5) there was the fact that the applicants' businesses themselves were now in the third or "post-maturity decline" phase of development, which is a phenomenon that was explained in the Tribunal's reasons in Section D: The Trading Experience.

Any reduction in pedestrian flow resulting from the last factors (4) and (5) is plainly not within the scope of s.15(a)(ii), (iii) or (iv) of the Act. It is also clear that the Tribunal treated the first three factors as in part the product not of acts of the Society as landlord under those provisions, but "as due to the actions of the occupants of the new Arcade and its surroundings". The final view of the Tribunal was that having regard to all these factors, the decline in the applicants' business during the subject period was attributable as to only 15% to matters which were compensable in terms of s.15(a)(iii) of the Act.

A central question on the appeal is whether the reasons given by the Tribunal for arriving at this apportionment are adequate. The reasons show that the Tribunal relied on two matters. One was the pedestrian flow, which they said they had examined "as best we can". They looked at such figures as were recorded on "people counters" and drew "certain comparisons and ratios". They also gained some assistance from the manual count of pedestrians made by the applicants during the progress of proceeding between January and March 1994. The other matter relied on was, again, the trading figures. The Tribunal made a comparison with the trading figures of businesses still operating in the "core" area which had been operating there when development began in 1989. They looked at occupancy costs of businesses in that area as a proportion of their turnovers, and the stage at which some of those businesses became "non-viable". They also looked at businesses in that area, including Julio's restaurant, which had expanded and continued to expand since the Arcade was opened. Having carried out this exercise, the Tribunal arrived, "as best we can and not always following the same reasoning", at the apportionment of 15% which was then applied to the losses of profit, assessed for this period, at $176,000 to produce an award of $26,400 in the case of Le Basin (Fernmead Pty. Ltd.); and at $100,000, to produce an award of $15,000 in the case of Lakeside (Cypressvale Pty. Ltd.)

It quite frequently happens that in actions in courts damages or compensable loss are not capable of being accurately calculated. Sometimes this is due simply to intractable difficulties of precise proof. Proving causation and loss arising from breach of a contract in restraint of trade is a prime example, and it is because of this that Professor Heydon says that, in cases of that kind, monetary remedies are "not wholly satisfactory" (The Restraint of Trade Doctrine, at 97). The task confronting the Tribunal in assessing the claims of the applicants here bear some resemblance to those experienced in assessing damages or profits lost through enticing away former customers in derogation of an agreement in restraint of trade. There, and in other types of cases, the court is often obliged simply to do "the best it can" to arrive at an assessment. Doing "the best I can" was the approach adopted by Cripps J. in arriving at the market value in Yates Property Corporation v. Darling Harbour Authority (1991) 24 N.S.W.L.R. 156, yet the three members of the Court of Appeal in that case were unanimous in upholding the market value assessment made by his Honour. Mahoney J.A. said it was not necessary for a judge to attempt "by detailed arithmetic" to indicate how he reached his per square metre estimate of market value, adding (at 171) that there would be, or at least need be:

"no more compelling reason for arriving at a particular sum than that, taking into account all of the evidence, the judge was 'doing the best I can'."

It is difficult to see why the Tribunal in the circumstances of this case should be required to provide in the reasons for its decision any more detailed or adequate explanation for its awards than was expected of a judge of the Land and Compensation Court in the Darling Harbour case. Moreover, in that instance, as in all cases in which an appeal is permitted, even if only on a point of law, the appellate court has the advantage of a record of the proceedings below, including pleadings or their equivalent, transcripts of relevant oral evidence, documentary exhibits including reports of expert witnesses, and other means of identifying the issues and understanding the reasons given. In the present case we have nothing at all of that kind. According to the statement in the Tribunal's reasons A. The Nature of the Claims, the Tribunal does not require pleadings, but does require the exchange of witnesses' statements, "which was done in this case, and these define the claims". Without the assistance that such documents and other relevant evidence might be expected to provide, it is impossible to say with any confidence precisely what were the bases of the applicants' claims for compensation; how far the awards in fact made by the Tribunal followed or departed from the assessment of Miss Micallizzi, whose opinion the Tribunal preferred; or even whether she in fact gave her evidence on behalf of the landlord Society, or of one or both of the applicants. Nor is it possible without having the benefit of an inspection, or at least of some map or layout of the Centre, to know much about the physical features of the area, or the extent to which, if at all, the two restaurants compared in size and location, so as to enable a tribunal possessing special knowledge to quantify the factors it used in arriving at its assessment in the case of Le Basin and treat them as fairly applicable to the determination of the similar claim for compensation made in respect of Lakeside for the same period. It may be, for all we know, that at the hearing the two claims were conducted on the footing that they fell to be assessed in precisely the same way or determined by the same standard.

There is, so far as we know, no decision that goes the length of saying that reasons for a decision must be not only adequate but also self-contained. Nowadays even contracts are interpreted in the light of the fundamental assumptions, or basic stock of knowledge common to both parties, forming the factual matrix in which the agreement is set. Here we do not have even the critical documents to which the Tribunal's reasons refer, but, for the most part, little more than partial and circumstantial indications from which to deduce the competing contentions, opinions and evidence which engaged the attention of the Tribunal, and of the parties and their advisers who appeared before it, over a period of some 23 days in the early part of last year. Whether material of that kind would have been admissible on an application for relief of the nature is not a matter we are now called on to consider. It is enough to say that, without access to it, it is not possible to regard the Tribunal as having failed to give reasons for its decision that were "adequate" for the function it was required to discharge.

The appeal should, in our opinion, be dismissed with costs.

Retail Shop Leases Act 1984

Shop Leases Act 1984

Shop Leases Act 1994

At a glance

Court

Decision date

Before

Source

Judgment (190 paragraphs)

Parties

Legislation Cited (5)