Eventus Group Pty Ltd v Ipoh Pty Ltd - [2011] HCA 21 - HCA 2012 case summary — Zoe

CTHHCA

Eventus Group Pty Ltd v Ipoh Pty Ltd

[2011] HCA 21

High Court of Australia|2012-03-12

View original source

At a glance

AI case summary

Result

respondent. Proceedings dismissed; costs reserved; directions given for any costs application.

Key principles

A party seeking relief on the basis of pre-lease representations must prove on the balance of probabilities that the representations were in fact made; where the lessor's...
The phrase 'savoury finger food' in a permitted use clause is to be construed as meaning small food items that can be eaten in one or two average mouthfuls (such as hors...
A lessor's discretionary power under a permitted-use clause to approve or refuse additions or substitutions to a menu must be exercised reasonably and in good faith; on the...
Expert accounting evidence on loss of profits and goodwill is inadmissible unless the assumptions of fact are proved and the report demonstrates that the opinions are wholly or...

Issues before the court

Whether the respondent made actionable representations prior to and during the lease that it would approve menu expansion to include hot foods and...
Whether the menu items sought fell within the permitted use clause or should have been approved by the lessor in the exercise of its contractual...

Plain English Summary

A small espresso bar operator in the Galeries Victoria claimed the landlord had promised he could add hot foods and install an exhaust duct before he bought the business. The tribunal found the landlord never made those promises, that 'finger food' in the lease did not cover burgers or fried chicken, and that the landlord acted reasonably in refusing changes that would turn the tiny kiosk into a takeaway hot-food outlet. The operator's expert report on lost profits was ruled inadmissible because it did not explain its reasoning or prove its assumptions. All claims were dismissed.

AI-generated legal information, not legal advice. Zoe can make mistakes — check the cited source, and for advice about your situation consult a qualified Australian lawyer.

Deep Dive

2,272 words · generated 24/04/2026

What happened

Mr Tarek Bousalman, through his company Eventus Group Pty Ltd, purchased the business of Mio Espresso, a 16.5-square-metre kiosk on the lower ground food court of the Galeries Victoria at 500 George Street, Sydney. The sub-lease from Ipoh Pty Ltd (the leasehold owner of the centre) permitted the retail sale of coffee, tea, cold drinks, continental cakes, filo pastries, sweet and savoury finger food, biscuits, quiche, patisserie items, muffins and open cheese melts, with additions or substitutions permitted only with the prior written approval of the sub-lessor.

Judgment (10 paragraphs)

[1]

reasons for DECISION 1Retail Leases Division: P.R. Callaghan S.C., Deputy President, B. Harrison, Non-Judicial Member (Advisory) and M. Lonie, Non-Judicial Member (Advisory).

[2]

Background 2The Galeries Victoria, also known as The Galeries ("the Galeries"), is a shopping complex comprising a ground level and two upper levels of shops fronting, and extending back from, George Street (at the north-eastern corner of Park Street) and a lower ground level between the George Street section, Town Hall Station and the Queen Victoria building. The Galeries has the address 500 George Street. There are numerous shops and a food court on the lower ground level in the Galeries and some of the shops are small in size. One of those is the "Mio Espresso Bar" ("Mio Espresso"), in Shop AO3, occupying an area of approximately 16.5 square metres. Mr Tarek Bousalman, through Eventus Group Pty Ltd ("the Applicant"), has been operating Mio Espresso since about December 2009. Ipoh Pty Ltd ("the Respondent" and "Ipoh") is the leasehold owner of the Galeries and the Applicant has a sub-lease from the Respondent of the premises which expires on 12 July 2015. Disputes in relation to that tenancy have arisen between the Applicant and the Respondent out of events between about November 2009 and about September 2010. They concern the Applicant's wish to expand the menu of food items sold from Mio Espresso, particularly in relation to hot food, and a wish, or a perceived need, of the Applicant to have a cooking exhaust facility extended to Mio Espresso. 3Mr Bousalman, on behalf of the Applicant, had relevant dealings with various personnel on behalf of the Respondent, all of whom have given evidence: Mr Grant Isaacs - Group Leasing Manager Ms Melissa LeKluse - Centre Manager Ms Laura Nickson - Senior Leasing Executive Ms Katharine Mackarell - Proprietor of Three Fishes Interior Design and design consultant to the Respondent. Ms LeKluse was principally involved on behalf of the Respondent. 4The following is a shortly expressed chronology of some relevant events: 14 September 2005 Commencement of sub-lease of Mio Espresso. 4 November 2009 Applicant incorporated. Applicant applied to Respondent for the sub-lease to be assigned to it. 12 November 2009 Meeting Mr Bousalman and Ms LeKluse. 20 November 2009 Telephone discussion Mr Bousalman and Ms LeKluse re option to renew and changes to Mio Espresso menu. 16 December 2009 Applicant settled purchase of Mio Espresso. Assignment of sub-lease and variation instrument executed, variation instrument adding option to renew to lease. 8 February 2010 Meeting Mr Bousalman and Ms LeKluse re proposals for new fit out and menu. Ms LeKluse consulted among others Ms Nickson and Mr Isaacs. Respondent's consulting engineers approached. 17 February 2010 Telephone conversation Ms LeKluse and Mr Bousalman re engineers' fees and menu changes. 2 March 2010 Mr Bousalman met Ms LeKluse and submitted proposed menu comprising four pages. 22 March 2010 Letter Respondent (Ms LeKluse) to Applicant (Mr Bousalman) approving on trial basis some items in proposed menu and not approving others. 4 May 2010 Applicant's design consultant, Integrity Design, emailed Ms LeKluse. Ms LeKluse emailed Mr Bousalman re exercise by Applicant of option to renew. 6 May 2010 Ms LeKluse telephoned and emailed Mr Bousalman re exercise of option. 7 May 2010 Respondent received note of exercise of option from Mr Bousalman dated, incorrectly, 7 April 2010. 10 May 2010 Exchange of emails between Ms LeKluse and Mr Bousalman re correct date of note of exercise of option. 1 June 2010 Respondent issued Disclosure Package to Respondent. 8 June 2010 Mr Bousalman executed sub-lessee's disclosure statement noting that the sub-lessee had not sought independent advice in respect of the commercial terms in the sub-lease and not noting any statements or representations made by the sub-lessor or its agents. 29 June 2010-20 July 2010 Email exchanges between Ms LeKluse and Mr Bousalman re consulting engineers' investigation re exhaust fan and also re grease trap connection. 2 July 2010 Letter from LSB Lawyers on behalf of Applicant to Aequitas VTS Lawyers on behalf of Respondent seeking clarification of words "savoury finger foods" in sub-lease. 4 August 2010 Ms LeKluse emailed to Mr Bousalman a report from the Respondent's consulting engineers, advising that "ultimately the report indicates that it is likely to be possible to bring exhaust to the tenancy however this would be a substantial cost (conservative estimate $25,000). Should you wish to consider bringing exhaust to the tenancy, please be advised this would be at your cost". 10 August 2010 Mr Bousalman met with Ms Mackarall, the Respondent's design consultant. Ms Mackarall emailed Mr Bousalman and his design consultant a time line and other details for submission of the Applicant's proposed fitout design. 16 August 2010 Ms LeKluse received a letter from Mr Bousalman advising that he wished to proceed "with running an exhaust to my tenancy" and that "I look forward to receiving the specifications regarding the works and the final quote". 18 August 2010 Applicant's design consultant submitted drawings and other details of proposed fitout designs. 26 August 2010 Letter from Aequitas VTS Lawyers to LSB Lawyers advising "Our client instructs us that it considers 'finger food' to be small food items whereby the entire portion can be eaten in one or two average mouthfuls. Examples of 'finger food' are hors d'oeuvres and canapés" and seeking the return of the executed sub-lease and associated documents. 31 August 2010 Letter LSB Lawyers to Aequitas VTS Lawyers advising "we are in a position to return the executed sub-lease pending your client provides us with approval of our client's proposed menu" and enclosing a menu of two pages. 13 September 2010 Meeting between Mr Bousalman, Ms LeKluse and Ms Nickson where Mr Bousalman was advised that the Respondent did not approve the Applicant's fitout design, that an exhaust facility would not be available to Mio Espresso due to the centre's food court re-development and that the proposed menu was not approved. 14 September 2010 Commencement date in new sub-lease. 16 September 2010 New sub-lease executed by Applicant received by Aequitas VTS Lawyers. Applicant's design consultant advised Respondent's design consultant that she had been instructed not to amend the submitted drawings "until the final menu discussions are completed". 20 September 2010 Meeting Mr Bousalman, Ms LeKluse and Ms Nickson where the Respondent's previously stated positions were confirmed and Mr Bousalman advised that he wanted to sort out the menu before proceeding on the fitout and Ms LeKluse advised "we agree to review any menu additions as long as you understand that Ipoh does not wish to deviate from the intent of the tenancy which is a patisserie/espresso bar". 15 April 2011 Certificate that mediation under Part 8 of the Retail Leases Act 1994 has failed to resolve the dispute between the Lessor and Lessee in respect of the subject premises. 9 May 2011 Application for Original Decision ("the Application") filed in Tribunal.

[3]

Issues 5In the Application three orders were sought. The first order was expressed: "1. An Order that the Applicant be permitted to utilise a menu referred to as Annexure "A" attached hereto." There was no Annexure "A" to the Application but there was an Annexure "A" attached to an affidavit by Mr Bousalman of 27 October 2011. That affidavit refers to Annexure "A" as a temporary menu which he submitted to the Respondent, he says, on 3 March 2010 (the correct date seems to be 2 March 2010). That annexure comprises four pages and appears to be a composite of at least two menus. The Application includes particulars to the effect that the lease permitted the sale of finger foods and operation of the shop as a patisserie and that by a letter from the Respondent's solicitors of 22 November 2010 the Respondent refused to allow the sale of finger food on the premises. 6The second order sought is: "2. An order that an exhaust fan be constructed on the premises according to the Respondent's engineering specifications." Particulars are given to the effect that by the letter from its solicitors of 22 November 2010 the Respondent refused "to allow the Applicant to install an exhaust fan facility approved by the Respondent's engineer, despite prior agreement to allow for the erection of an exhaust facility". The particulars go on to allege that "the Applicant cannot operate his business without an exhaust fan facility for preparation and cooking for pastries and finger food". 7The third of the orders sought is: "3. That the Lessor engaged in conduct that was in all of the circumstances unconscionable pursuant to Section 62B of the Retail Leases Act and Section 71A, 71AA(i)(a)(b)." I gather that the last section reference is intended to be "72AA(1)(a) and (b)". No particulars are given in the Application in respect of Order 3. 8Points of Claim were filed on behalf of the Applicant on 27 June 2011. This document recites in 21 paragraphs events from and including November 2009 to and including 20 September 2010, generally corresponding to the outline in the chronology set out above. The Points of Claim conclude with the following items: "Misleading & Deceptive conduct, Trade Practices Act The Applicant asserts that the representations made by the Respondents from paragraphs 1 to 21 were designed to mislead the applicant into entering the lease with the respondent. Unconscionable Conduct The Applicant claims the Respondent engaged in conduct that was unconscionable in light of paragraphs 1 to 21 and the Respondents conduct resulted in the Applicant being unable to operate a business that the Respondent had approved, then by virtue of its conduct, withdrew. Damages Applicant seeks damages which are being assessed by a forensic accountant resulting from its loss of gross profits arising from this claim." 9During the hearing, at my request, there was prepared and tendered on behalf of the Respondent a separate particularisation of the unconscionable conduct claim: "1.The unconscionable conduct commenced when, on the applicant's evidence, he was given to understand that an exhaust system would be installed into the premises he was considering leasing and, on that advice, did enter into a lease with the respondent for the premises being Shop A03, Ground Floor of the Galeries at 500 George Street, Sydney; 2.The unconscionable conduct extended over a period of time as the respondent continued to give the applicant the impression that what he had bargained for would be delivered and, indeed after some delay, did deliver an engineer's report that indicated that the installation of the exhaust system was possible; 3.The respondent provided the engineer's report to the applicant which further encouraged the applicant that the exhaust system could be made a reality in line with the expectations raised prior to his entering the lease; 4.The applicant, relying on a quotation for the cost of the installation provided by the respondent, agreed to pay the costs associated with the installation of the system being quoted at $25,000.00; 5.That the respondent had obtained the report and the quotation and a positive response from the applicant that he wished to proceed at his cost, indicated at this point - August 2010 - that the respondent was in a position to endorse and approve the commencement of the required work; 6.That the respondent was in such a position was indicated on 10 August 2010 when the applicant met with the Tenancy Co-ordinator who provided the applicant with a timeline leading to Ipoh final design approval of his premises on 15 September 2010; 7.On 16 August 2010 the applicant confirmed with the respondent - in response to a request from the respondent - that he wished to proceed with running an exhaust to his tenancy; 8.On 13 September 2010, contrary to all the indications the respondent had given the applicant, the respondent advised the applicant that an exhaust system was not to be available to the applicant's premises." 10No additional particulars were given of the suggested misleading and deceptive conduct claim which was included in the Points of Claim. During closing addresses, I pointed out to the Applicant's Counsel that it may be that this Tribunal did not have the jurisdiction to deal with a claim under the Commonwealth Trade Practices Act 1974 (now the Competition and Consumer Act 2010). I understood the Applicant's Counsel then to indicate that the Applicant was alleging pre-lease misrepresentation under s.10 of the Retail Leases Act 1994 ("the RLA") and misleading or deceptive conduct under s.62D of the RLA. Apparently, those claims are intended to be prosecuted in respect of the matters particularised in relation to the other claims. 11No Reply was filed on behalf of the Respondent but the Respondent obviously contests all the claims made against it by the Applicant. 12The issues that may be deduced from what was thus ultimately presented to the Tribunal might be summarised as follows: 1.Should the Tribunal order the expansion sought by the Applicant of the menu of food items permitted to be sold by the Applicant from Mio Espresso ("the menu expansion") on the following bases, or any one or more of them: first, that the Respondent had represented to the Applicant that it would permit the Applicant to have the menu expansion; secondly, that the menu expansion covers only items which are within the Permitted Use clause in the subject sub-lease (in particular being "finger food"); and thirdly, that the menu expansion should have been approved by the Respondent by way of additions under the Permitted Use clause? I will refer to this as "the menu expansion issue". 2.Should the Tribunal order that a cooking exhaust facility ("the exhaust facility") be installed in the Mio Espresso premises? I will refer to this as "the exhaust facility issue". 3.In the period from (and including) about November 2009 to (and including) 20 September 2010 did the Respondent represent to the Applicant that the Respondent would permit the Applicant to have either or both of the menu expansion and the exhaust facility, and then not fulfil that representation? I will refer to this as "the representation issue". 4.If "yes" to question 3, did the Respondent's behaviour constitute all or any of pre-lease misrepresentation, misleading or deceptive conduct, and unconscionable conduct under the RLA? 5.If "yes" to question 4, what, if any, monetary order should be made by the Tribunal by way of compensation for loss or damage or otherwise?

[4]

Menu Expansion and Exhaust Facility Issues - Preliminary 13These two issues require to a large extent joint consideration because, first, both were on occasions referred to, or allegedly referred to, together in the communications between the Applicant and the Respondent, and in that regard they need to be considered in conjunction with the representation issue. A second reason why they have to be dealt with together is that the availability of an exhaust facility would be a factor in any menu expansion to include the cooking in Mio Espresso of hot, for example, fried, food. Nevertheless, each of the two issues has some separate features which might be detailed at the outset and I will deal with the menu expansion issue first. 14The Permitted Use specified in the current sub-lease of Mio Espresso is as follows: "Retail sale of coffee, tea and cold drinks (excluding juices), continental cakes, filo pastries, sweet and savoury finger food, biscuits, quiche, patisserie with cookies, tarts, danish pastry, biscotti, scones and brownies, muffins and open cheese melts (as substituted or added to from time to time with the prior written approval of the Sub-Lessor)." That is virtually identical to the corresponding provision in the sub-lease which it replaced. 15The first time Mr Bousalman presented a proposed written menu to the Respondent was, he says, on 3 March 2010. On the evidence before me it was 2 March 2010. He then handed to Ms LeKluse, the Galeries Centre Manager, the document which is annexure "A" to Mr Bousalman's affidavit. By letter dated 22 March 2010 Ms LeKluse conveyed to Mr Bousalman the Repondent's decision in relation to that requested menu and the letter was in the following terms (the attachments are omitted): "In reference to the meeting held 2 March 2010 between Eventus Group and Centre Management, please be advised that the Sub-Lessor has reviewed the request for amendments to the Permitted Use. The current Permitted Use is stated in the Sub-Lease as follows: Retail sale of coffee, tea and cold drinks (excluding juices), continental cakes, filo pastries, sweet and savoury finger food, biscuits, quiche, patisserie with cookies, tarts, Danish pastry, biscotti, quiche, scones and brownies, muffins and open cheese melts (as substituted or added to from time to time with the prior written approval of the Sub-Lessor) The following responses are referencing the document titles as provided by Eventus Group, copies are attached. Breakfast additions approved as follows: Toast - Raisin, Thick white and brown, wood fire, grain Bagels - Plain, Blueberry, Cheese (With choices of vegemite, selected jams, cream cheese and Ricotta & honey) Cinnamon Toast - White thick bread Croissants - Strawberry jam & Swiss cheese Muesli cups - Toasted muesli layered with Berry compote or seasonal poached fruits with low fat honey cinnamon yogurt Bircher cup - Healthy mix of oats & seeds with creamy low fat yogurt, natural nuts & strawberries Please note that the following are not approved: BLT's Mini breakfast rolls Breakfast wraps Fruit salads Open Melts on Turkish Bread All variations are approved as these are covered under the Permitted Use. Individual Cold Items As per the attached email that was provided, all cold items are approved. Individual Hot Items Baby Frittatas, quiches and feta and spinach rolls are approved All other items are not approved Assorted cakes and slices All items are approved Cocktail bites Please provide more information on this proposal. Are these meant to be catering options? Or will these be sold for individual sale? Lunch Menu Additions Up to 6 types of pre-made wraps are approved using the type of ingredients listed Up to 6 types of pre-made rolls are approved using the type of ingredients listed These variations are approved for a trial period of one month. The Sub-Lessor will then consider permanently approving these changes, subject to feedback from retailers, customers and the Sub-Lessor's agents." The approval of that list by the Respondent seems to have continued at all relevant times up to the hearing. 16On 2 July 2010 LSB Lawyers on behalf of the Applicant wrote to Aequitas VTS Lawyers on behalf of the Respondent seeking clarification of the words "savoury finger foods" in the sub-lease. The request was worded as follows: "Our clients seek to clarify the definition and scope of the words 'savoury finger foods' mentioned in Reference Schedule Item 13 of the Sub-Lease contract. The meaning and scope of those words will inevitably determine the nature and scope of the food product which our client can provide at the premises and is therefore necessary to clarify the precise meaning of those terms." Aequitas VTS Lawyers responded to LSB Lawyers by letter dated 26 August 2010 in the following terms: "Our client instructs us that it considers 'finger food' to be small food items whereby the entire portion can be eaten in one or two average mouthfuls. Examples of 'finger food' are hors d'oeuvres and canapés. 17On 31 August 2010 LSB Lawyers wrote to Aequitas VTS Lawyers. They advised: "We are in a position to return of the executed Sub-lease pending your client provides us the written approval for our client's proposed menu. Please note that enclosed menu is what our client intends to sell in addition to the existing menu. We are instructed that most of food to be small food items falls into your clients' definition of 'finger food'." The attachment to that letter comprised the second and fourth pages of the four page menu document which is Annexure "A" to Mr Bousalman's affidavit referred to above. Those pages included items such as "whole chicken and large chips", "chicken burger reg. chips and drink", "fish fillets grilled or deep fried", "beef strogonoff" and "pluto pups". 18While a suggested wide meaning or range of "finger food" did not feature significantly in the closing written submissions or oral address made on behalf of the Applicant, it appears to have been an aspect of the particulars in respect of Order 1 sought in the Application and Mr Bousalman referred to it a number of times during cross-examination and appeared to place considerable reliance on it. Mr Bousalman's comments in cross-examination included the following: "...The permitted use of the term savoury finger foods, I looked it up with my previous law firm and that - it's a very broad, wide range which would allow me to expand my menu. At that stage that's as simple as it was and was all I needed to know, so based on that information is what I've put down here, and it seems to me quite clear and to my knowledge it was understood by Melissa and it was accepted." "...being finger foods as part of the permitted usage to me was enough. The interpretation I receive as what finger foods is from the lawyers is - I'm sorry to say is a mere fabrication and so this is where we're at." "...Q. You say that whole chicken and chips is savoury food? A. Absolutely, once chopped up and eaten with foods, according to what's out there in the general public on the internet served across the board, yes, I do believe so. Q. And it refers to barramundi, roast pork and beef, it has types of burrito. You say a whole burrito is savoury finger food? A. Yes, and I have checked that out with my previous lawyer. If it's served in the right way, portioned up correctly, yes it is. Q. This menu includes burgers. They're not savoury finger food are they, Mr Bousalman? A. Yes they are, they're eaten with your hands and fingers. They are. Q. You regard a burger-- A. Absolutely. Q. -of any size as being savoury finger food? A. According to my investigations, yes. Q. And sausages, rissoles and chiko rolls? A. Absolutely." "...I mean I've got, I've got rice, of course that's not a finger food, but the general consensus and what I have been advised and what my investigation has come to conclude is that it can be anything that is used - eaten with your hands and fingers and that's it. That's as broad as an interpretation as we could possibly get." This consideration was also raised with him during questions from one of the Tribunal members: "Q. ...had you ever considered trying to define a little more, in more detail in brackets, as to what you meant by savoury finger food? A. Sir, I took that to my lawyer at the time, my Counsel, to ascertain what - because I couldn't really put my finger on as to what it actually meant. We did some investigation and came up happy with the answer we found." 19During cross-examination Mr Bousalman made comments to the effect that he was happy to talk and negotiate about his submitted menu. During re-examination he accepted a suggestion which I made, that Annexure "A" comprised an ambit claim. That led to there being prepared overnight after the first hearing day, a list of what the Applicant actually wanted for the purposes of Order 1. It also became apparent during Ms LeKluse's oral evidence on the second hearing day that following completion of the food court refurbishment in about May 2011, there would still be some capacity within the Galeries exhaust system for an exhaust facility for Mio Espresso, were that required. The Tribunal was informed during closing addresses that the Respondent had responded by way of agreement on 29 February 2012 to much of that list but with some deletions and amendments. Given in particular the continuing relationship between the parties the menu as then altered by and agreed to by the Respondent should be set in full: Mio Espresso Menu BREAKFAST/MORNING TEA/LUNCH/AFTERNOON TEA Toast - Raisin, Thick white and brown, wood fire, grain Bagels - Plain, Blueberry, Cheese (with choices of vegemite, selected jams, cream cheese and ricotta & honey). Cinnamon Toast Croissants - assortment of filled croissants (Almond & custard, chocolate & Custard, Cream cheese & smoked salmon, ham, cheese & tomato, Cheese & tomato). Selection of cakes and slices May include - caramel slice, mud cake, carrot & walnut cake, mini cheese cakes & tartlets (lemon meringue caramel & pecan), petite cupcakes, healthy muffins (gluten free and low fat), banana bread, pear & raspberry bread, mango & coconut scones. Open Melts on Turkish bread made to order (variety of options) -Avacado & tomato -Cheese & tomato -Vegemite & cheese -Avocado, mushroom & boccocini -Ham, cheese & Spanish onion -Bacon, boiled egg & tasty cheese -Salami, olive paste & cheese -Mushroom, caramelized onion & cheese -Salmon, cream cheese, capers & Spinach Assorted Pre-made Wraps and Rolls will vary from day to day depending on seasonal availability- with fillings to include such things as (bacon, baby spinach, tomato, avocado, poached/scrambled or curried egg, ham, smoked salmon, tuna, rare roast beef, chicken, salami, eggplant, zucchini, artichokes, basil, tabouli, Turkey, cheese, haloumi cheese & lettuce, cranberry jam, hollandaise, pesto, sundried tomatoes, Dijon mustard, chutney, Sauce and homemade garlic mayo). Hot selection Mini bacon & egg rolls Mini bacon, lettuce, tomato & mayo rolls Dim Sims, spring rolls, chiko rolls, chicken & corn rolls, Pluto pups Chicken nuggets & chips Chicken drumettes & wings & chips Marinated chicken skewers with satay sauce Marinated lamb skewers with minted yogurt Gourmet sausages. chipolata & chips Beef rissoles & chips Crumbed chicken tenderloins Gourmet sausages rolls, meat pies and spinach pastries Potato scallops Hot chips Beverages Cappucino, flat white, long black, latte, chai latte, espresso, mocha, hot chocolate, macchiato, herbal tea, earl grey tea, English breakfast tea. Iced coffee/iced chocolate/frappuccino Milkshakes (vanilla, chocolate, caramel, strawberry) Frappes with seasonal fruits Refrigerated bottled Cold drinks (excluding juices) It is apparent that nothing on that menu (as altered and agreed) requires the installation of an exhaust facility in Mio Espresso. 20The particulars in the Application refer to a letter dated 22 November 2010 from the Respondent's solicitors whereby "the Respondent refuses to allow the sale of finger foods on the premises". So far as I can discern, that letter was not referred to during the hearing and is not in evidence. However, at meetings on 13 and 20 September 2010 between Mr Bousalman, Ms LeKluse and Ms Nickson, the Respondent's non-approval of any menu expansion beyond, apparently, that given by the letter of 22 March 2010 which I have detailed above, was confirmed, at least implicitly. Those discussions will be covered further in the following section of this decision, dealing with the representation issue. 21I will now deal with some of the evidence dealing with the exhaust facility. An important aspect of this issue is when, and in what terms, the exhaust facility was raised between the Applicant and the Respondent. Mr Bousalman says that it was discussed between him and Ms LeKluse in November 2009 but Ms LeKluse denies that and claims that the first time Mr Bousalman raised it with her was on 8 February 2010. 22Mr Bousalman and Ms LeKluse met on 8 February 2010. Mr Bousalman says in his affidavit: "On 8 February 2010 I met with the Respondent's employee, Melissa LeKluse, and asked her whether she had an answer in regards to the exhaust ducting system and she replied 'no not yet, I should have an answer for you very soon'.'" Ms LeKluse says in her affidavit that on 8 February 2010 Mr Bousalman raised the issue of exhaust with her for the first time. She details the discussion thus in the affidavit: Mr Bousalman said to me words to the effect: 'I am just making enough to pay my bills. Lunch trade is non-existent on the Premises but the sale of coffee is good and I hope to retain it. I want to introduce a deep fryer or hot plate to the Premises and start to sell hot food'. I replied to Mr Bousalman words to the effect: 'The introduction of a kitchen will need a service review. We need to send your request to the services department and make sure there is enough capacity to service the kitchen. Also, all menu changes are subject to Ipoh's approval.' Mr Bousalman then said to me words to the effect: 'I also want to remove all seatings and bring the counter to the edge of the lease line. I want to install wheels on the counter so as to enable entry.' I then replied to Mr Bousalman in words to the effect: 'Any fitout on the Premises would require a design review. As the period for you to exercise your option to renew the Sub-lease is between March 2010 and June 2010, you need to exercise your option before I appoint the fitout coordinator. There will be costs associated with your proposed fitout and you will need to bear the costs of the appointment of a fitout coordinator.' Mr Bousalman said to me words to the effect: 'I don't know what is behind the bulkhead, and whether there are services back there.' I then replied to Mr Bousalman words to the effect: 'I don't know what is behind the bulkhead, I will need to look into it.' Mr Bousalman then said to me words to the effect: 'I would like a floor plan.'" 23After the meeting with Mr Bousalman on 8 February 2010, Ms LeKluse emailed to Ms Laura Nickson (Leasing Executive) and Mr Grant Isaacs (Group Leasing Manager) information concerning reconfiguration proposed by Mr Bousalman of the food menu for, and the layout of, Mio Espresso. Communications among those Ipoh personnel and also involving Mr Andrew Gardoni, the Tenancy Co-ordinator, led to the Respondent approaching Kuttner Collins & Partners (NSW) Pty Ltd, Consulting Engineers of North Sydney. Those engineers advised the Respondent that it would charge a fee of $860.00 to carry out an appropriate services review involving retrieval from their archives of existing service layouts, site investigation to ascertain ceiling space restraints and a report of the availability of existing exhaust ventilation services and capacity for additional exhaust. 24Mr LeKluse says in her affidavit that on 17 February 2010 she had a telephone conversation with Mr Bousalman: "I said to Mr Bousalman words to the effect: 'The cost for reviewing the possibility of whether an exhaust can be brought to the Premises is possibly $860.00 plus GST, and you will have to pay for it.' Mr Bousalman replied to me words to the effect: 'I will review my menu options to determine whether I definitely want to pursue a kitchen. I will get back to you and let you know whether to engage a consultant. Can I get another consultant to review the Premises and see if I can get a cheaper quote?' I then replied to Mr Bousalman words to the effect: 'No, you are required to use our consultants.' I then said to Mr Bousalman words to the effect: 'Our Leasing department is happy to consider changes to the Permitted Use but they would need to determine whether it is appropriate given other competitors in the Centre. You need to submit a menu for Ipoh to review. You need to understand that an exhaust may not be a possibility as it is subject to our final approval. As such, you need to consider menu options that don't require a full kitchen.'" Mr Bousalman does not, I discern, deal with such a conversation in his evidence. 25On 29 June 2010 Ms LeKluse emailed Mr Bousalman: "I have been following up with our facilities department and it appears that the request to investigate whether exhaust can be brought to your tenancy has been overlooked. The cost to undertake this review is $860 + GST. Could you please confirm that you still require this investigation to be undertaken?' Mr Bousalman asked for that investigation to go ahead. By way of a report dated 30 July 2010 Knox Advanced Engineering, of North Sydney, advised Mr Gardoni: "A site inspection and document search was undertaken on Friday, 23 July 2010 revealing that kitchen exhaust duct with sufficient spare capacity to serve this tenancy is located on the other side of the pedestrian mall, approximately 16 metres away. While this area is very busy and significant disruption will be unavoidable, it would be possible to extend the kitchen exhaust system to serve this tenancy. ... To extend the kitchen exhaust system to the rear of the A3 tenancy would be in the order of $10,000 not including the exhaust hood. Our feeling is that the associated builders work and electrical cost associated with relocation of signage, if required, would be in the order of $15,000. We need to emphasise that estimation of the cost of builder's work is beyond our area of expertise and, as such, the latter figure should be regarded as indicative, for budget purposes only." The report attached a proposed layout plan for the location of a possible extended exhaust duct to Mio Espresso. Ms LeKluse attached a copy of the report to an email which she sent to Mr Bousalman on 4 August 2010, advising in part: "In regards to kitchen exhaust, the report has been received from our mechanical consultant, please find attached. Ultimately the report indicates that it is likely to be possible to bring exhaust to the tenancy however this would be a substantial cost (conservative estimate $25,000). Should you wish to consider bringing exhaust to the tenancy, please be advised that this would be at your cost." Mr Bousalman responded by a note dated 16 August 2010: "I Tony Bousalman of Eventus Group pty ltd trading as Mio Espresso wish to proceed with running an exhaust to my tenancy. I look forward to receiving the specifications regarding the works & the final quote."

[5]

Representation Issue - Preliminary 26The Applicant's case in relation to the representation issue is put, I understand, on the basis that the alleged representations and the Applicant's reliance on them continued throughout the period from (and including) November 2009 until (and including) September 2010. Accordingly, all relevant events during that period need to be considered and the prominent among them, and there are many of those, should be detailed. 27From November 2009 and until September 2010, most of Mr Bousalman's direct dealings with the Respondent were with Ms LeKluse, the Galeries Centre Manager. There are, in the Galeries, approximately 125 tenants for whom Ms LeKluse is responsible as Centre Manager and she has held the position since June 2006. She is also the Respondent's Centre Manager for the Chifley Plaza and she reports to the Group General Manager. She explained her duties and work practices thus in her affidavit: "As the Centre Manager, my duties include meeting and liaising with prospective tenants of the Centre in relation to their leasing applications as well as financial and physical management of the Centre and providing input to the Leasing and Marketing Departments. It has been and is my practice, as the Centre Manager, to ask prospective tenants questions from a standardised checklist and to keep short notes during meetings with prospective tenants if necessary and to make detailed file notes shortly after the meetings. It has also been and is my practice to keep a voicemail logbook for every voicemail message left for me. In the voicemail logbook, I keep details of the caller, checkboxes indicating my replies, and short notes if necessary. I make this Affidavit after consulting my notes, and any relevant records of the Respondent." 28Mr Bousalman completed an Accounting Advanced Certificate at Bankstown TAFE in 1990. Between 1990 and 1996 he worked in various positions in food retail and spent the last three years of that period managing a family café business at Miranda. Thereafter until 2006 he worked principally in the building industry. He owned and operated a 250 seat restaurant in Bankstown from about 2006 to 2008. In about November 2009 through some business brokers he became aware that the Mio Espresso business was for sale and he established contact with Ms LeKluse. 29In his affidavit Mr Bousalman says: "In November 2009, I was informed by the Respondent's employee, being Melissa LeKluse that 'you can sell hot foods from the premises'. I said to the Respondent's employee, 'I am going to need an exhaust system connected to the premise I intend on purchasing, can you arrange for this for me?' The Respondent's employee said 'yes I can, I will arrange this for you'. I said 'ok then, provided you get the exhaust connected to the premises, I will buy the shop and enter into a lease'. 30Ms LeKluse says in her affidavit that she met with Mr Bousalman on 12 November 2009 and in discussions with him worked through, and completed, a form of Assignee Interview Checklist, which is attached to her affidavit. On that checklist was a question: "Does the proposed Assignee understand the parameters set by the permitted use?" Ms LeKluse indicated in the affirmative in answer to that question and entered the following comment: "Would like to extend the menu but understands that the Lessor has no obligation to approve." In her affidavit Ms LeKluse set out in detail the process she engaged, including the conversation which she and Mr Bousalman had at the time, which is consistent with the notes she made in the form. The affidavit then states: "Mr Bousalman did not express to me his intention to sell any hot food items when he mentioned his intention to change the Permitted Use as referred to above. I also do not have a record of him mentioning it. I believe Mr Bousalman did not mention his intention to sell any hot foot at that stage as it was my practice to note down anything outside the Permitted Use on the Assignee Interview Checklist." Later in her affidavit she refers to the exhaust facility: "...Mr Bousalman and I did not discuss the exhaust system during November 2009. Even if the issue of exhaust was raised at that time, I would not have said 'Yes I can, I will arrange this for you' or words to this effect as I was not authorised to organise the installation of an exhaust system without engaging a consultant's review." 31The differences between Mr Bousalman and Ms LeKluse concerning this initial meeting were emphasised during cross-examination, although neither was directly confronted with the other's affidavit account of that meeting. An example is in Mr Bousalman's cross-examination: "Q. And you knew that once you signed on the dotted line that you probably wouldn't be able to change any of the terms in the lease? A. No, because it clearly states that it's negotiable with the approval of the landlord whenever it suits them, so no. There's a clause there that states there is flexibility. That's what I was relying upon, sorry, because of the initial conversation between Melissa and myself that yes, I can have hot food and yes, I can have the exhaust. Q. So you knew that once you signed the lease you'd have to ask for a change and the landlord was not obliged to agree, could say yes, could say no? A. A slight possibility, but I was relying on her notion that it was going to happen." The following is taken from Ms LeKluse's cross-examination: "Q. Do you disagree or agree that Mr Bousalman was given the impression, if I can just put it at that level, that he was given the impression that it was possible for him to have exhaust system put into his premises? A. No I don't agree that that was the impression when he first met with me. Q. What do you tell the Tribunal? A. I met with Mr Bousalman to discuss his application to take an assignment of lease. As part of my process I review whether the incoming purchaser understands what the permitted use is. We discussed the permitted use and at that time Mr Bousalman did reference that he might want to expand the menu but didn't provide me with any details at that time. I made it clear that the permitted use is what is in the lease which is essentially what he was purchasing the right to sell but that (we still) may consider any variations at a later date as they were submitted." 32In the Checklist, Ms LeKluse noted that "Lease term to be varied to include option for further term of 5 years". There were some ongoing communications between Mr Bousalman and Ms LeKluse concerning the processing of the Respondent's approval of the assignment of the lease. On 19 November 2009, Ms LeKluse and the Group General Manager signed off on an Approval Form for the assignment of the lease and the form included a note that: "The proposed assignee understands that inserting a further option for five (5) years is contingent upon a full fit out of the tenancy being completed which will mean a complete gutting of the existing fit out." 33Mr Bousalman left a message for Ms LeKluse on 19 November 2009 seeking confirmation about that option and Ms LeKluse rang him back on 20 November 2009 to give that. She says she also then discussed with him his wish to add items to the menu of Mio Espresso to the effect of a file note which she made at the time: "spoke to Tony 10.40am

[6]

Representation Issue - Conclusions 59I have related in the preceding section of this decision the conflict between the evidence of Mr Bousalman and Ms LeKluse concerning their meeting on 12 November 2009 (see paragraphs 29 to 32 above). At that meeting, Ms LeKluse was engaged in what was for her an ordered and comprehensive exercise, of a type she was familiar with, working through with Mr Bousalman, the Respondent's Assignee Interview Checklist. She noted matters in the Checklist progressively as they went through the items listed there. The only relevant note she made in the Checklist concerning menu expansion was of a wish by Mr Bousalman "to extend the menu", in relation to which she also noted Mr Bousalman's understanding "that the Lessor has no obligation to approve". She has given a comparatively detailed account of the occasion including production of the form she completed. Mr Bousalman's evidence of the discussion is short, and asserts little more than allegedly explicit assurances by Ms LeKluse concerning development of Mio Espresso from its then presentation to the sale from it of hot food and extension to it of an exhaust facility. I was impressed by the content and presentation of Ms LeKluse's evidence as to this and other occasions, and I found her evidence on this and other occasions to be persuasive. It is, I think, likely that if Mr Bousalman had expressed any wishes concerning the sale of hot food from, and the extension of an exhaust facility to, Mio Espresso, Ms LeKluse would have included some note concerning those matters in the Checklist and also such matters would have been given attention by Mr Bousalman's lawyers in the period leading up to settlement of the Applicant's purchase of Mio Espresso. Mr Bousalman's account is unsupported by any contemporaraneous material. I am not persuaded on the balance of probabilities that in November 2008 there was in November 2009 any discussion between Mr Bousalman and Ms LeKluse concerning the sale of hot food from, or the extension of an exhaust facility to, Mio Espresso as alleged by Mr Bousalman. I am not satisfied that the Respondent then made the representations alleged by the Applicant. 60I accept Ms LeKluse's evidence that on 19 November 2009 Mr Bousalman told her by telephone that he wanted to take his time working out what items he wanted to add to the menu and that she told him this could be discussed at a later date but would be subject to Lessor approval (paragraph 33). This discussion, to my mind, reinforces the conclusions which I have expressed in the immediately preceding and succeeding paragraphs. 61I am satisfied that the first time that Mr Bousalman spoke to Ms LeKluse concerning the sale of hot food from, or the extension of an exhaust facility to, Mio Espresso, was on 8 February 2010 (paragraphs 21 to 23). An aspect of this conclusion is that I am not persuaded to accept Mr Bousalman's assertion, which is denied by Ms LeKluse, that on 20 January 2010 and on 8 February 2010 he met with Ms LeKluse and enquired of her concerning any progress in relation to an exhaust system. Ms LeKluse followed the discussion of 8 February 2010 from Mr Bousalman through within Ipoh, to the extent that a consulting engineers' quote to assess the possibility of an exhaust facility was obtained (paragraph 23). That exercise by the Respondent is, I think, sufficiently explained by the context that there was, in any event, to be a complete refit of Mio Espresso carried out by the Applicant prior to the commencement of the new sub-lease in September 2010. It does not in these circumstances suggest to me any intimation by the Respondent of favourable consideration of, let alone agreement by, the Respondent to an exhaust facility for Mio Espresso. 62On 17 February 2010 Mr Bousalman in a telephone conversation with Ms LeKluse declined (at least for the time being) payment for the Respondent's consulting engineers' fees for an assessment of the possibility of an exhaust facility being extended to Mio Espresso and told her he was reviewing his menu options to determine whether he wanted to pursue a kitchen (paragraph 23). This led to a deferment of any further consideration of any exhaust facility for the shop. 63Mr Bousalman then, on 2 March 2010, submitted a proposed written menu to the Respondent, via Ms LeKluse, for the first time (paragraph 15). The Respondent, on 22 March 2010, again via Ms LeKluse, gave its answer to Mr Bousalman with a comprehensive list of what the Respondent approved. As I have previously said the approval of that list by the Respondent (while it was expressed to be for a trial period of one month) seems to have continued at all relevant times up to the hearing. I accept Ms LeKluse's denial of a conversation on 22 March 2010 with Mr Bousalman, alleged by Mr Bousalman wherein, he says, there was suggestion of a hot food bar and exhaust system as, in effect, forthcoming features of Mio Espresso (paragraph 39); other considerations apart, such a conversation would not be compatible with the tenor of the letter of that date. 64On 16 April 2010, I accept, Mr Bousalman enquired of Ms LeKluse as to the possibility of a bain-marie in Mio Espresso (paragraph 40). It was left to Mr Bousalman to develop that proposal by way of a further submission to the Respondent, which appears not to have been forthcoming. This is another indication that Mr Bousalman's ideas for what he wanted to do about development of Mio Espresso were not concluded. 65In May 2010, with prompting from Ms LeKluse, Mr Bousalman exercised the option to renew on behalf of the Respondent (paragraphs 41 and 42). The Respondent's designer embarked on preparation of a design for the fitout of Mio Espresso and this involved communications among Ms LeKluse, Mr Bousalman, and the Applicant's and Respondent's designers (paragraphs 45 to 48). Those communications included Ms LeKluse reminding Mr Bousalman on 29 June 2010 about the possibility of an engineers' investigation concerning the availability of an exhaust facility for Mio Espresso (paragraph 25). That reminder seems to me to be only an aspect of the consideration then being generally given to the refit design and I do not see in it any implicit suggestion of acceptability to the Respondent of such a facility. 66The failure in June 2010 by or on behalf of the Applicant for any assertion of representations by the Respondent in relation to the menu expansion and exhaust facility issues to be included in the Sub-Lessee's disclosure statement (paragraph 43) is significant. The statutory disclosure notice procedure is "...designed to implant firmly in the minds of the parties the importance of transparency as to all matters of significance to each party" and "...lessees should see the disclosure system regime as providing the place in which to record all material representation that induced them to enter the contract" (Armstrong Jones Management Pty Ltd v Saies-Bond Pty Ltd (RLD) [2007] NSWADTAP 47 at [118] and [119]). 67On 4 August 2010 Ms LeKluse forwarded to Mr Bousalman a copy of the engineers' report as to the result of their investigations (paragraph 25). In doing so she used language such as "it is likely to be possible to bring exhaust to the tenancy" and "should you wish to consider bringing exhaust to the tenancy". Again, this seems to me to be only an aspect of the consideration then being generally given to the Applicant's refit design and I do not see in it any implicit suggestion of acceptability to the Respondent of such a facility. 68The negotiations concerning the fitout including the menu expansion and exhaust facility issues come to a halt with the meetings of 13 September 2010 and 20 September 2010 (paragraphs 49 to 58). The evidence concerning those meetings is such that I am well satisfied on the balance of probabilities that the accounts of Ms LeKluse and Ms Nickson concerning those meetings should be accepted and that Mr Bousalman's evidence should not be accepted to the extent that it is inconsistent with the evidence of Ms LeKluse and Ms Nickson. 69Thus, I find myself well satisfied on the balance of probabilities that the Respondent did not at any stage from (and including) about November 2009 to (and including) 30 September 2010 represent to the Applicant that it would permit the Applicant to have either the menu expansion or the exhaust facility. I therefore find in favour of the Respondent on the representation issue and no question of pre-lease misrepresentation, misleading or deceptive conduct or unconscionable conduct on the part of the Respondent arises.

[7]

Menu Expansion and Exhaust Facility Issues - Conclusions 70It follows from the above conclusions that to the extent that the Applicant's case for the orders sought in respect of the menu expansion and the exhaust facility issues, is based on representations by the Respondent concerning them, the case fails. There are, however, other matters to be considered. 71In the Menu Expansion and Exhaust Facility Issues - Preliminary section of this decision, I have canvassed material relating to suggestions made, and perhaps pressed, on behalf of the Applicant that the description "finger food" in the Permitted Use provision in the subject sub-lease should be given a wide meaning (paragraphs 16 to 18) such that it would cover items of hot food such as, for example, the items deleted in the menu which the Respondent agreed to during closing addresses (paragraph 19). Construing the phrase "finger food" both on its own and in the context of the surrounding descriptions in the Permitted Use provision, I think that what was suggested by the Respondent's lawyers when they wrote on 26 August 2010 responding to the query raised by the Applicant's lawyers, that the Respondent considered "finger food" to be small food items such that "the entire portion can be eaten in one or two average mouthfuls", was appropriate (paragraph 16). The Australian Oxford Dictionary, 2nd edition, gives, in similar vein, meanings for "finger food" as "food served in such a form and style that it can be conveniently eaten with the fingers" and "savouries". I cannot see that any of the hot food items which the Respondent deleted in the Applicant's current list, commencing with "mini bacon and egg rolls" and ending with "hot chips" ("the contentious items") could be said to constitute, on any reasonable construction, "finger food". I do not understand the Respondent to suggest that any of the other descriptions in the Permitted Use clause would encompass the contentious items. I find that none of the contentious items falls within the Permitted Use clause. 72Among the relief that the Applicant seeks in its submissions are orders, pursuant to s72(1)(c)(i) of the RLA, that the Applicant be permitted to use the menu tendered on behalf of the Applicant on 16 February 2012 as Exhibit A7 (paragraph 19). Section 72(1)(c)(i) empowers the Tribunal (in its discretion) to make and order for a party to: "do any specified work or perform any specified service or any obligation under this Act on the terms of a lease." The relief sought may not strictly come within that provision but it would in any event come within the more general words of s72(1)(c)(iv): "do or perform, or refrain from doing or performing, any specified act, matter or thing. 73Absent (as is the case) any entitlement in the Applicant to the menu expansion based on misrepresentation by the Respondent as alleged by the Applicant or based on proper construction of the items specified in the Permitted Use clause, entitlement to any such relief would require proof by the Applicant that the failure, or refusal, by the Respondent to grant the menu expansion by exercising the discretion given to it under the Permitted Use Clause (paragraph 14) by the words in parenthesis "as substituted or added to from time to time with the prior written approval of the Sub-Lessor", was relevantly flawed. In the written submissions on behalf of the Applicant, in the context of the unconscionable misconduct claim it is contended that the Respondent's behaviour was "not just unfair or unjust but worthy of censure and blame". I would accept that the exercise of such a contractual discretionary power must be effected reasonably and in good faith. I think that relevant guidance is to be found, by way of example, in Renard Constructions (ME) Pty Ltd v Minister for Public Works [1992] 26 NSWLR 234 dealing with a different type of contractual provision, namely, a principal's power to determine a building contract, but because of the discretionary nature of the power, a relevantly similar one; Priestley JA at 255B to 263F and Handley JA at 279B to 280G, held that such power had to be exercised reasonably, and Priestley JA at 263G to 268G (also Handley at 279B to 281C) was of the view that it should also be exercised in good faith. Burger King Corporation v Hungry Jack's Pty Ltd (2001) 69 NSWLR 558, particularly at [163] and [164], is later authority that in a commercial contract there will ordinarily be implied, as a matter of law, terms of good faith and reasonableness. 74I have detailed above in this decision the factual details of the parties' consideration of the menu expansion from November 2009 to September 2010 at paragraphs 14 to 18 and 29 to 58. I have expressed conclusions relevant to the menu expansion issue at paragraphs 59, 60, 63 and 71 in particular. I am well satisfied on the balance of probabilities that in the circumstances which I have canvassed there, the Respondent's decisions on the menu expansion issue throughout (and particular occasions were 22 March 2010 - paragraph 15; 13 and 20 September 2010 - paragraphs 49 to 57; and 29 February 2012 - paragraph 19) were made reasonably and in good faith and in no way were unfair or unjust or worthy of censure and blame. There was no flaw that I can find in those decisions, let alone one warranting attention by the Tribunal. 75I would add three further comments. First, the protracted consideration of the menu expansion is to be regretted but it has to be remembered that this was occurring in the context of development of the scheduled refit of Mio Espresso. Secondly, it is also to be regretted that Mr Bousalman and his advisers permitted themselves, as I think was the case, to be distracted by what I might term "the finger food issue" (paragraphs 16 to 18 and 71) and that they apparently did not recognise that there were significant opportunities for the advancement of such position as they may have wished to contend for, on the menu expansion issue (and for that matter, the exhaust facility issue) at the time the Applicant's purchase of Mio Espresso was negotiated and completed in November-December 2009 (paragraphs 29 to 34) and at the time of completion of the Sub-Lessee's aspects of the Disclosure Package in June 2010 (paragraphs 43 and 66). Thirdly, that views as to the menu issue contrary to those of Mr Bousalman, expressed on behalf of the Respondent by Ms LeKluse (for example, concerning "the espresso usage that the Lessor wants from this tenancy" - paragraph 52), Ms Nickson (for example, that Mio Espresso "has only ever been known as a tenancy that sells ... great coffee, pastries, just small, quick grab and go food ... I certainly was surprised to get the menu (Mr Bousalman) put forward" - paragraph 50) and Mr Isaacs (for example, "The 'espresso bar' concept is good coffee, fresh pastries, small cakes, toast, fast, fresh and convenient" - paragraph 53), were appropriate considerations on the part of the (leasehold) owner of the shopping complex and consistent with a proper exercise of the sub-lessor's discretion under the Permitted Use clause in the sub-lease. 76The representation issue was central to the Applicant's case on the exhaust facility issue and as I have pointed out, the latter case must fail on account of the failure of the former case. Further, there is no need for any exhaust facility on account of the prevailing Mio Espresso menu (paragraphs 15 and 19) and, as with the Respondent's decisions on the menu expansion issue, I find no flaw in the Respondent's decision that there not be an exhaust facility for Mio Espresso. There is another reason why the exhaust facility case would fail in any event. Any claim for mandatory relief, such as an order under s72(1)(c)(i) or s72(1)(c)(iv), must be "expressed in as clear and unambiguous language as the circumstances reasonably admit" and "as definite, clear and precise in its terms as possible" (Spry, Equitable Remedies, 7th edition, 2007, at 374; also Meagher Gummow & Lehane's Equity Doctrines & Remedies, 4th edition, 2002, at [21-505]). On the facts here, such an order could not be formulated. The Application in these proceedings seeks an order for the installation of "an exhaust fan on the premises according to the Respondent's engineering specifications" and the Applicant's written submissions use similar language. There were only ever detailed on behalf of the Respondent the availability with the Galeries as at July 2010 of physical conditions which would accommodate the extension of an exhaust facility to Mio Espresso and a tentative cost estimate (paragraph 25). Those details were taken no further. Constructions details and a definite cost figure for an exhaust facility were not prepared and Mr Bousalman recognised that they would be necessary, when he said in his note of 16 August 2010: "I look forward to receiving the specifications regarding the works and the final quote." There were thus no "Respondent's engineering specifications" for an exhaust facility which were capable of being the subject of an order by this Tribunal, had the Applicant otherwise made out a case for such a facility. 77There is a final comment I wish to make on the exhaust facility issue. There is some inconsistency as to the Respondent's stated reason for permission not being granted to the Applicant for the exhaust facility. According to Ms LeKluse "exhaust is not available due to food court works and the incoming sushi train" (paragraph 52) but Mr Isaacs said in his affidavit "I was of the view that the installation of an exhaust should not be approved as it is not necessary for an espresso bar tenancy, considered the appropriate use" (paragraph 53). There is evidence that the food court refurbishment was undertaken in about May 2011 and that there would still be some capacity within the Galeries exhaust system, were it required, for an exhaust facility for Mio Espresso (paragraphs 19 and 51). I have an impression that the Respondent should have given a straightforward account, along the lines of Mr Isaacs' opinion, in September 2010, to Mr Bousalman as the reason for not approving an exhaust facility and had that been done, Mr Bousalman's persistence in his stance and the stagnation which has continued since then, of the new, and now overdue, fitout of Mio Espresso may not have occurred. 78My ultimate conclusion on these issues therefore is that the Applicant has not made out any case for the Tribunal to order that either the menu expansion or exhaust facility sought by the Applicant, be implemented.

[8]

Monetary Order 79In my opinion, therefore, no case for any relief has been made out by the Applicant. Nevertheless, evidence was taken in relation to the Applicant's claim for a monetary order and it would be as well if, for the sake of completeness, I deal with that. 80The Applicant relies on a report by Mr Ralph Merrell, the principal of Merrell Associates Pty Ltd, public and forensic accountants ("the report"). In the report, being the original report of 12 December 2011 supplemented by a further report of 21 November 2011, opinions are expressed that the Applicant has suffered losses as follows: actual loss from 13 October 2010 to 30 September 2011 - $146,450.00; loss of future trade in profits - $421,776.00; and loss in value of goodwill - $394,000.00. 81The reasoning in the report might be summarised, very shortly, as follows: (a)Cash register tapes from Mio Espresso for 2 weeks from 4 July 2011 to 16 July 2011 showed among other things weekly sales of 1,823 coffees and 476 food items. Therefore, 26% of coffee purchasers also bought a food item. (b)Hot food items which Mr Bousalman wished to add to a range of items sold from Mio Espresso, listed in an attachment to the report and ranging in prices from whole chicken and large chips at $15.00 through to items such as chicken burgers, regular chips and drink at $10.95, and down to regular chips at $2.50, would increase the average price of food items sold. (c)Assuming 26% of coffee purchasers would buy food items including such hot food items, the weekly sales from Mio Espresso would increase in amount. (d)On the basis of sales figures given to Mr Merrell in respect of food retailers in the Galeries, the addition to hot food items to the Mio Espresso would increase the weekly number of sales from Mio Espresso, such as to achieve sales of $1,000 per square metre per week. (e)Under such a sales regime there would be an additional weekly net profit for Mio Espresso of $2,929.00, yielding a total for the 50 weeks from 13 October 2010 to 30 September 2011 of $146,450.00. (f)Applying the same figures to the 144 week period from 10 October 2011 to 12 July 2015, a future loss of $421,776 is calculated. (g)Applying the same figures, an additional annual turnover of $152,308.00 is calculated and valuing additional goodwill on a capitalisation of future maintainable earnings basis over 3 years a figure of $456,924 is obtained and discounting that at 5% per annum "for the time value of money", the result is (say) $394,000. 82Mr Merrell's expertise does not extend beyond accountancy. He said in evidence that he currently has no takeaway food outlet as a client. His report involves a series of deductions from facts, which he has assumed on the basis of instructions, such as the levels of sales of food retailers in the Galeries and the relevant comparability of those businesses to Mio Espresso. There is no evidence proffered by the Applicant by way of substantiation of those assumed facts. There is no statement of reasoning proffered in Mr Merrell's report showing how his expertise as an accountant when applied to the assumed facts could produce the essential results which are deduced, principally those summarised in sub-paragraphs (c) and (d) in the preceding paragraph of this decision; in other words, and using the language of s79 of the Evidence Act 1995, it has not been demonstrated in the report that the opinions expressed are "wholly or substantially based on" "specialised knowledge based on the person's training, study or experience". Proof of assumed facts and such an explanation of reasoning are essential requirements for the acceptability of expert opinion evidence (Dasreef Pty Ltd v Hawchar [2011] HCA 21 at [30]-[43], [90] and [93]). The report is deficient in those respects and is not acceptable evidence, leaving aside the failure of the report, on its face, to include an appropriate acknowledgment of the Expert Witness Code of Conduct (Uniform Civil Procedure Rules 2005 31.23 and Schedule 7). 83Had the Applicant, contrary to my decision, succeeded in any relevant aspect of its claim, the report would have constituted no basis for any monetary order to be made in the Applicant's favour.

[9]

Orders 84In the result, the Tribunal ORDERS that: 1.The proceedings are dismissed. 2.The issue of costs is reserved. The Tribunal DIRECTS that: 3.Any application by the Respondent for costs is to be filed and served, with supporting submissions, within 14 days of the publication of this decision and any response by the Applicant is to be filed and served, with supporting submissions, within 14 days thereafter. 4.Any such application for costs, in the absence of any application suggesting the contrary, may be adequately determined by the Tribunal on that material and without holding a hearing.

[10]

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 April 2012

wanted to add items to permitted use.
wants to take his time deciding what to add and was concerned that he had to work it out now. ML advised that this could be discussed at a later date and that any changes would be subject to Lessor approval." Mr Bousalman has not, I apprehend, addressed that occasion in his evidence. 34On 16 December 2009 the Applicant's acquisition of Mio Espresso was settled and the documentation executed including an instrument of Variation of Lease which inserted into the assigned sub-lease an option to renew for 5 years on expiry of the then current term on 13 September 2010. 35Mr Bousalman says in his affidavit that he had a discussion with Ms LeKluse on 20 January 2010: "On 20 January 2010, I met with the Respondent's employee Melissa LeKluse, to see whether she had made any progress in relation to the exhaust ducting system. Melissa had not made any progress and asked me to submit a menu. I said 'ok'." Ms LeKluse says that she has no record or recollection of such a discussion. 36As set out in the preceding section of this decision, Mr Bousalman and Ms LeKluse met on 8 February 2010 and proposals by Mr Bousalman for reconfiguration of the food menu for, and the layout of, Mio Espresso, were discussed. 37As also set out in the preceding section of this decision, the discussion on 8 February 2010 led to the Respondent communicating with their engineers concerning a possible exhaust facility and to a telephone conversation between Ms LeKluse and Mr Bousalman on 17 February 2010, prompted by a fees estimate from the Respondent's engineers. These events seem to have had as a consequence the deferment of consideration of the possibility of an exhaust facility. 38In the preceding section of this decision, I have related events comprising the submission of a menu by Mr Bousalman to Ms LeKluse on 2 March 2010 and the Respondent's response to that by the letter of 22 March 2010. Ms LeKluse says that during the discussion she had with Mr Bousalman on 2 March 2010 he also mentioned to her that he was seeking permission to install a menu board on the external bulkhead of Mio Espresso. In her affidavit Ms LeKluse says that she made a response to him which he acknowledged: "This would be subject to a design review. I am not adverse to it but it will be subject to Ipoh's approval. You need to submit details to us. I remind you that a full fitout is required upon you exercising the option to renew, and the fitout will need to be completed in September or October 2010. All old items are not allowed to remain and the menu board that you are proposing would likely need to be replaced. You need to understand that spending money on fitout now will not remove the need for a full fitout when you exercise the option." Mr Bousalman does not, I discern, refer to any such aspect of that discussion. 39In his affidavit Mr Bousalman says that he had a discussion as follows with Ms LeKluse on 22 March 2010: "On 22 March 2010 I received the permitted use amendments as a response to the temporary menu I submitted. The hot food items were not approved. The Respondent's employee, Melissa LeKluse, said, 'just wait until you have a hot food bar and the exhaust system in place and you will be able to prepare and sell hot food as promised.' I replied 'I am not happy but ok'." Ms LeKluse says in her affidavit that she does not recall speaking to Mr Bousalman on such an occasion, nor does she have a voicemail log or file note for such a conversation. She denies that she said what Mr Bousalman attributes to her in his account of the alleged discussion. 40Ms LeKluse recounts in her affidavit a telephone conversation she says she had on 16 April 2010 with Mr Bousalman, following a telephone message he left for her on 15 April 2010: "During the telephone conversation, Mr Bousalman said to me words to the effect: 'I have been struggling but I have come up with ideas to improve turnover of the business. We are allowed to do finger foods under the lease. Would you accept that we install a bain marie and remove all seatings so as to sell finger foods?' I said to Mr Bousalman words to the effect: 'Ipoh needs to see what this will look like visually as well as whether this would have any impact on the fire path of egress.' Mr Bousalman then said words to the effect: 'The bain marie will take up approximately 2/3rds of the opening so it will not impact the fire escape path. I will shop around and see what I can find on the market.'" Mr Bousalman has not referred to any such discussion in his evidence. 41On 4 May 2010 Ms LeKluse was contacted by Ms Gabriela Gray of Design Integrity whom Mr Bousalman had recently appointed as the designer for the new fitout to the Mio Espresso. Ms Gray sought various details from Ms LeKluse concerning the task, including plans relating to Mio Espresso and the Respondent's Tenancy Guidelines. Ms LeKluse forwarded that email to Mr Bousalman seeking confirmation that he intended to exercise the option for a further lease, so that the fitout process could be started. Ms LeKluse says that Mr Bousalman spoke to her by telephone on 6 May 2010 which she followed up with an email to him the same day: "As requested, the following is a summary of our telephone discussion today. In order to exercise the option, please provide a written statement to that effect. Upon receiving this, a disclosure statement will be issued to you which is required under the Retail Leases Act. You will be required to return a signed copy to us. Once the signed disclosure statement has been received, we will appoint Three Fishes who are external fitout design coordinators. I outlined this process to you in our meeting on the 12th November 2009 whereby I explained that the option would be contingent on a full fitout being undertaken and subject to the lessors design approval. All costs associated with design and service reviews are required to be paid by the lessee. The disclosure statement will outline the fees associated with the design and service reviews that are required as part of the fitout works. In relation to the fitout, this must meet the lessor's design intent which Three Fishes are across. Ultimately, the design must meet with our approval as well as complying with all relevant Australian Standards and Regulations. I hope this adequately explains the process however should you have any further questions, please don't hesitate to give me a call." 42On 7 May 2010 Mr Bousalman lodged with Ms LeKluse a notice of exercise of the option bearing date 7 April 2010. There was a telephone discussion, and an email exchange, between them confirming that the correct date of the notice was 7 May 2010, that the Respondent accepted that the Applicant had duly exercised the option and that the Respondent would produce a Disclosure Statement. 43On 1 June 2010 the Respondent issued a fourteen page Disclosure Package with various attachments including the draft sub-lease, the Sub-Lessor's Fitout Guide and the NSW Retail Tenant's Guide, to the Applicant. The Sub-Lessor's disclosure statement set out, among other things, details of the Permitted Use of the shop (in the same terms as in the ultimate sub-lease), Sub-Lessee's obligations to undertake a complete refit of the tenancy, and of a proposed total refurbishment by Ipoh of the food court in the Galeries and associated works (which were ultimately carried out and completed in May 2011). Mr Bousalman signed the Disclosure Package on behalf of the Applicant on 8 June 2010. In the Sub-Lessee's disclosure statement section of that document, Mr Bousalman noted that the Sub-Lessee had not sought independent advice in respect of the commercial terms claimed in the Sub-Lessor's Disclosure Statement and did not note any statements or representations made by or on behalf of the Sub-Lessor and on which the Sub-Lessee had relied. 44As set out in the previous section of this decision in relation to the exhaust facility issue, on 29 June 2010 Ms LeKluse emailed Mr Bousalman with a reminder about the proposed investigation whether exhaust could be brought to Mio Espresso and the cost thereof of $860.00 plus GST. Mr Bousalman asked for that investigation to go ahead. A report dated 30 July 2010 from the Respondent's consulting engineers was obtained and on 4 August 2010 Ms LeKluse forwarded a copy of that report to Mr Bousalman with an email the relevant text of which I have set out there. Mr Bousalman responded by a note dated 16 August 2010 which I have also quoted there, advising that he wished to proceed with running an exhaust to his tenancy. 45In association with the exhaust facility situation, Ms LeKluse, at the request of Ms Bousalman on 5 July 2010, set in train an enquiry within Ipoh as to the grease trap connection details for Mio Espresso. The email which Ms LeKluse sent to Mr Bousalman on 4 August 2010, part of the text of which is set out in the previous section of this decision dealing with the exhaust facility issue, included as a first paragraph: "We have been unable to ascertain whether or not the tenancy is connected to trade waste. As such, I have appointed a consultant today to review this. I have asked that this be completed as quickly as possible as I am aware that this is likely information, that you need in order to finalise your fitout design." 46In about early August Ms Katharine Mackarall, the proprietor of Three Fishes Interior Design, of Chatswood, was consulted by the Respondent in respect of the Applicant's proposed new fitout of Mio Espresso. Mr Gardoni forwarded to Ms Mackarall on 3 August 2010 a copy of the report of Knox Advance Engineering of 30 July 2010, referred to in the preceding section of this decision in respect of the exhaust facility issue. On 10 August 2010, Ms Mackarall met Mr Bousalman to discuss the scope of the proposed fitout. In her affidavit Ms Mackarall details part of the conversation on that occasion: "During the meeting Mr Bousalman said to me words to the effect: 'I want to install an exhaust in the Premises. Will this form part of my building work's scope or does the centre do it?' I replied to Mr Bousalman words to the effect: 'I will need to follow this up with Ipoh as they will need to advise how the process of installing an exhaust will be managed.' During the meeting, Mr Bousalman and I discussed broadly in relation to the Applicant's proposed additions to the menu. Mr Bousalman said words to the effect: 'My solicitor is waiting on a definition on what 'finger food' is.' I replied to Mr Bousalman words to the effect: 'I do not have authority in relation to the approval of menus. You will need to speak to Ipoh to resolve this.' Mr Bousalman said words to the effect: 'Please follow up for me.'" 47 Following that conference, Ms Mackarall sent Mr Bousalman an email and copied it to Ms Gray of Design Integrity and Mr Gardoni: "It was nice to meet with you today & discuss your upcoming Mio Espresso refurbishment at The Galeries. As promised, attached is a copy of the shopfitters induction handbook which outlines what is required to allow you to be the Principal contractor on site. We have also discussed your request to undertake the mechanical services scope required to run exhaust to your tenancy with Ipoh. We confirm that these works fall under the base building schedule of works & must be undertaken by Ipoh. If you decide to proceed with running an exhaust to your tenancy, can you please advise Ipoh in writing so that they can commence design of the system required & so that they can obtain a price to supply & install. Andrew Gardonis details are attached for your information." The email went on to advise Ms Gray about another attachment: "...this is the form that should be used to calculate the heat loadings within the tenancy. If this can be completed as soon as possible in conjunction with your drawings, I will be able to issue the drawings to our consultants for a service review." At the conclusion of the email a timeline for the fitout approval was set out, commencing with the presentation of the concept design on 18 August 2010 and concluding with the Respondent's final approval on 15 September 2010. Ms Mackarall's account of that meeting was not put in issue in cross-examination and is not dealt with in Mr Bousalman's evidence. 48Ms Gray submitted concept drawings and other material to Ms Mackarall on 18 August 2010. On 20 August 2010 Ms Mackarall emailed to Ms Gray and copied to Mr Bousalman her comments in the form of manuscript notes on Ms Gray's concept drawings. Ms Mackarall said in cross-examination: "(The drawings) were heading in the right direction but they did require, they would have required more work" "I sent them back to the designer and then after a little bit of time I just wanted to follow up on how the next set of drawings were going and then from there the designer came back to me to say she'd been instructed by Mr Bousalman not to develop the drawings further until some things were resolved with Ipoh." 49On 13 September 2010 and 20 September 2010 meetings took place between Mr Bousalman, Ms LeKluse and Ms Nickson, an Ipoh Leasing Executive. Mr Bousalman in his affidavit deals only with the meeting of 20 September 2010. Detailed evidence is given of these meetings by Ms LeKluse in her affidavit of both meetings. In her affidavit, Ms Nickson covers both meetings and substantially corroborates LeKluse's account of the meetings. There was no significant cross-examination of Mr Bousalman or Ms LeKluse in respect of these meetings and that is surprising, and unfortunate, because these meetings mark the end of negotiations between the parties in relation to the menu expansion and the exhaust facility and have led to non-progression of the Mio Espresso fitout over the 18 months or so to date. 50Before seeking to outline the evidence in chief of Mr Bousalman and Ms LeKluse in relation to these meetings, I will relate some of the cross-examination of Ms Nickson as that seems to me to convey a fair representation of the context and content of the meeting on 13 September 2010: "Q. So your role at the meeting, would you put it that your fairly limited role was to advise Mr Bousalman that there would be sort of no deal on the exhaust system? A. No, my role at the meeting was to discuss the menu. The exhaust for me was just a very minor point in the meeting. And the point being that his menu would not be approved. His permitted use which he currently had which was for a small, you know, 15, 16 square metre espresso takeaway tenancy of coffee and pastries didn't require exhaust so that was pretty much the point that I was making to him, you know, it doesn't require exhaust, the food court is coming up anyway and then we got talking about the menu. Really the exhaust was a very, very minor, minor part of the meeting. Q. When you say the exhaust wasn't required, it would only have been not required if Mr Bousalman was not allowed to have the additional food items to cook, is that correct? A. Yes, that's correct. It's - the tenancy that he took the lease on was a small espresso tenancy and, you know, our plans for the centre as a whole was to keep it as a small espresso tenancy. ... Q. Is that correct, am I right in thinking that's sort of shorthand for saying well the permitted use is espresso and cakes and that's it? A. Well it's - the tenancy is Mio Espresso and it has only ever been known as a tenancy that sells, you know, great coffee, pastries, just small, quick, grab and go food. It's always been like that and I certainly was surprised to get the menu that he put forward. Q. Now with the menu that he put forward was there not - he's given evidence that he was counting on some flexibility from The Galeries or from Ipoh. Was it the case that the respondent, the lessor could afford him no flexibility? A. No, we actually gave him some examples of items outside of the permitted use that he could add to his menu, like for example pre-made sandwiches, pre made pizzas that you can heat up in one of those - like a toast roller machines and the reason we recommended that he try these sort of things is because we've got other tenancies in our portfolio that are small tenancies. Their main product is predominantly coffee but they're able to do pre-mades or maybe pizza and they trade very well. So his permitted use didn't have pre-made sandwiches so we were giving him that, and he was opposite a sandwich operator which normally a landlord wouldn't allow someone to do the exact same offer as someone directly opposite (but) we allowed him to do that." 51There was some cross-examination of Ms LeKluse in relation to the meeting of 13 September 2010 concerning the advice then given to Mr Bousalman that an exhaust facility would not in any event be available to Mio Espresso and she said that Mr Bousalman's reaction to that advice from her was that "he wasn't happy with that". I sought some further details as to the apparent change in the situation concerning any exhaust facility for Mio Espresso: "A. ...we were developing the design for the food court refurbishment works and at that stage the feedback from the meetings for the food court was that we were going to struggle to get sufficient exhaust to support all the incoming food tenants. So there was a lot of different calculations and variations being devised of how we would possibly move different operators in the centres into different connections to try and get the exhaust to the food court. So that was where everything had changed. In terms of the way I looked at it there was nothing available because we were going to have (to) relocate everything in it. Q. Right there was nothing then available, has the situation ever been revisited, that is the possibility of an exhaust system for Mio Espresso? A. Yes, I have looked into that since. There is some capacity through the centre but in order to know whether we can provide to Mio I'd need to understand how much exhaust is actually required. So in order to do that I'd need to know what equipment and what menu was going to be cooked so that we could determine what canopy has to go in, how many litres per second needs to be achieved and then we could determine whether the riser that is nearest that does have some capacity would be able to support what's been requested? Q. But that situation hasn't been developed in any way? A. No." 52A comprehensive, but abbreviated, way of recounting Ms LeKluse's evidence in relation to the meeting on 13 September 2010 is to set out a summary of the points covered in the meeting from a file note which she prepared: "TB started the meeting stating that ipoh are happy with fitout design. LN corrected TB and advised that this was not the case. The designs had been submitted to Kate Mackarell but these have not been approved by ipoh. LN noted that the design is generally reminiscent of a 1980's takeaway which isn't ipoh's direction for this tenancy. LN advised that exhaust is not available for the tenancy due to the food court works and the incoming sushi train. LN advised that TB should review espresso outlets within the ipoh portfolio such as Workshop Espresso and Bacio so that TB may gain an understanding of the types of items that we may approve under an espresso permitted use. ML noted that during the discussions for the assignment that it was made very clear that the permitted use of the lease was what TB was purchasing and that any changes to this would be at the discretion of the lessor. TB stated that the tenancy is currently turning over approximately 30% of what it should and that compromises needed to be made by the lessor in order to increase this. LN went through the proposed menu and advised that basically all of it would not be approved as it was not considered within the espresso usage that the lessor wants for this tenancy. TB noted that a lot of the items were not a conflict with other tenants. ML noted that this was irrelevant, it was outside of the permitted use which is what the lessor wants for this tenancy. TB advised that he had a lot of changes since he took over but nothing has really worked. ML asked whether he had introduced pre-mades which were approved by ML on 22.03.10. TB advised that he thought that the approval was for 5 pre-mades only, ML clarified this was for 6 styles. TB noted that even without an exhaust, he is allowed to have up 8 k/w of cooking equipment. A baking oven would take approximately 4 k/w. LN used Luneburger as an example and the pre-made rolls that they sell for $5. ML and LN agreed that introducing a baking oven would be a good addition to the tenancy. Ipoh to brainstorm whether any hot food could be added within the existing usage. ML to arrange to credit TB for exhaust report cost. LN noted that TB should be very clear that the current fitout plans have not been approved. ML raised the issue of changing the name and commented that Mio still had some value. TB agreed but wanted to remove the word 'Espresso' as it limited what customers would perceive the shop to offer. ML/LN to discuss with ipoh team re trading name. ML/LN advised TB that they did not like the proposed trading name - Town Hall Takeaway." 53Mr Grant Isaacs is the Ipoh Group Leasing Manager for the Galeries. In early September he was given a copy of the proposed menu that had been submitted by the Applicant's lawyers and also copies of the Applicant's draft design drawings for Mio Espresso. Mr Isaacs did not meet Mr Bousalman at the time but he was consulted by Ms LeKluse and Ms Nickson on 13 September 2010 after they had met with Mr Bousalman. His evidence is appropriately particularised by quoting the following paragraphs from his affidavit (which were not the subject of significant cross-examination): "3. As the Group Leasing Manager, my duties include the overall management of all leasing and fitout design functions within Ipoh's leasing portfolio including approving significant proposed changes of lease terms such as changes in the permitted use of the Centre's leases. I understand it to be part of my job to enhance the customer appeal of the Centre and ensure as much harmony as possible between tenants within the Centre. This is done by ensuring that the permitted use of each lease in the Centre conforms to the overall intention of the Centre. The Respondent does not attempt to appeal to all possible customers who might pass by that part of the city because it is considered that this would be commercially unwise in the long run. As well as defining appropriate permitted use clauses, it is important to ensure that they are fairly enforced. ...

The Proposed Menu was not approved by Ipoh because it was not in line with Ipoh's direction of the Centre. The retail mix of the centre has always been carefully orchestrated to ensure the Centre and its retailers have maximum appeal to the passing customers. The location of the Applicant's business, Mio Espresso bar, has always had strong appeal to passing customers who use the underground link from the QVB and Town Hall train Station. Customers are looking for good quality cost effective product which is convenient and fast. The 'espresso bar' concept is good coffee, fresh pastries, small cakes, toast, fast, fresh and convenient. An alternative permitted use proposed by the Applicant in the Proposed Menu which includes deep fried products is not in line with current consumer trends for healthy choices in lifestyle and food. ... Kate Mackarell, the Centre's design consultant, emailed me a copy of the Applicant's draft design drawings for Shop A03...on 6 September 2010. I noticed that the Applicant had included new equipment items such as 'hot food display', 'countertop double basket fryer', 'counter cooktop', 'chicken rotisserie' and 'convection/baking oven' ("Equipment") which were not in line with the Applicant's permitted use. I was of the view that the Applicant did not need the Equipment as the Applicant's Proposed Menu had not been approved by Ipoh. I was of the view that the installation of an exhaust should not be approved as it is not necessary for an espresso bar tenancy, considering the approved permitted use. I was also concerned that if an exhaust was approved, the Applicant may mistake it as Ipoh's consent for the Applicant to sell all the food items in the Proposed Menu. ..." 54On 16 September 2010, the Respondent's solicitors received the new sub-lease executed by the Applicant. The sub-lease in clause 32 obliged the sub-lease to complete refitout of the premises prior to 14 September 2010. Also on 16 September 2010, there was an exchange of emails between Ms Mackarell as the Respondent's Design Consultant and Ms Gray as the Applicant's Design Consultant; Ms Mackarell advised Ms Gray: "Laura has met with Tony to discuss his menu and the food offer he will provide. They did confirm at this meeting that Ipoh will not permit the exhaust to run to the tenancy due to the disruption to the adjacent tenancies. It is my understanding that they are meeting again early next week to finalise the food offer. It will be similar to what he is serving now with 1 additional hot item still to be confirmed. Can you please discuss with Tony and amend the drawings to reflect the deletion of the exhaust." and Ms Gray responded as follows: "Thanks for your email. Following my discussions with Tony, I have been advised not to amend the drawings until the final menu discussions are completed. I will keep you informed of the progress." 55Mr Bousalman gives the following account in his affidavit of the meeting on 20 September 2010: "On 20 September 2010 I met with Melissa LeKluse and Laura Nixon. The said exhaust system and the new menu were rejected by Ipoh. Melissa suggested I set up a shop similar to Luneburger which is a German bakery in the QVB. I mentioned that this idea had already been incorporated into my plans as you should have seen in my design. I also stated that in order to run a business like this I will need an exhaust system installed. I said 'Luneburger has an exhaust system, and I need the exhaust system installed in my shop as well'. Melissa shrugged her shoulders and said 'that's not my problem'. I replied 'so I can't have an exhaust system and I can't prepare and sell hot food, what improvements can I make?" Melissa said 'I don't want you to make any of these improvements'. I said 'ok, it seems like your initial promise prior to me purchasing the business is and may have always been false'. I then said 'thank you for your time'. I got up and shook Laura's hand and then shook Melissa's hand. Melissa wiped her hand on the side of her pants and smirked at Laura. This made me feel terrible and disrespected." 56Ms Nickson provides an account of the meeting of 20 September 2010 in her affidavit against which Mr Bousalman's evidence has to be balanced: "I did not hear from Mr Bousalman any further after the 20 September 2010 meeting. Contrary to paragraph 34 of Mr Bousalman's Affidavit dated 27 October 2011 ('Mr Bousalman's Affidavit'), Melissa LeKluse did not smirk and wipe her hands on the side of her pants in the manner as described in paragraph 34 of Mr Bousalman's Affidavit. My recollection of the meeting was similar to our last meeting on 13 September 2010 which I felt like we had had some constructive discussion and that Mr Bousalman could see what Ipoh wanted and that he would come back to us with new ideas that are within the Permitted Use and the issues would be resolved soon. Contrary to what Mr Bousalman has alleged in his Affidavit, the atmosphere of the meeting was amicable and pleasant. After the meeting, I read through Melissa LeKluse's file note dated 20 September 2010 and confirmed that it was accurate." 57Conflict with Mr Bousalman's evidence is also evidenced by what Ms LeKluse says in her affidavit and it would be as well to set that out in full: "On 20 September 2010, I had a meeting with Mr Bousalman and Laura Nickson. During the meeting, Laura Nickson said to Mr Bousalman words to the effect: 'There are some espresso tenancies within the Ipoh's shopping centre portfolio that sell hot food. Ipoh is prepared to give you approval to sell a limited number of styles of pizza slices, like what Modena Pizza and Bacco Pasticceria have.' Mr Bousalman then said words to the effect: 'What about burritos and hot wraps?' Laura Nickson replied to Mr Bousalman words to the effect: 'Burritos and hot wraps would not be approved as they fall way outside of the realm of the intent of the Permitted Use.' Mr Bousalman then said words to the effect: 'I understand that I am bound by the Permitted Use but I want to change it to make the business more profitable.' Laura Nickson and I replied to Mr Bousalman words to the effect: 'The Permitted Use is set out in the lease and outlines the direction that Ipoh wants the tenancy to take. Any changes would be at the discretion of Ipoh. Mr Bousalman, you are not privy to Ipoh's plans for the food court or the overall leasing direction for the Centre.' Mr Bousalman then said words to the effect: 'I request an explanation as to why I cannot be allowed to add items to my menu that may make my business more profitable.' During the 20 September 2010 meeting, Mr Bousalman then said words to the effect: 'What about the exhaust? Why is it no longer available? It had been offered to me and was then taken away.' I replied to Mr Bousalman words to the effect: 'The Report indicated than an exhaust was a possibility for the Premises. I also noted in my email to you dated 4 August 2010 that it was a possibility but it would cost in excess of $25,000.00. The purpose of my email was to get a clear indication from you that you understand the cost ramifications for you before I investigate the matter further. After you indicated that you understood the costs ramifications, we undertook more investigation on the matter. The situation in the Centre is that there is a limited amount of exhaust available to the Centre which is dictated by the size of the risers. The leasing profile for the Centre and the food court requires the maximum exhaust that the Centre can produce. As the food on your menu does not necessitate the installation of an exhaust, it has been decided that due to the demands of the food court and the permitted use for the tenancy, an exhaust is not required for the Premises.' During the 20 September 2010 meeting, Mr Bousalman also words to the effect: 'What about the fitout?' I replied to Mr Bousalman words to the effect: 'The fitout of the Premises is required and it is not negotiable.' Mr Bousalman then said words to the effect: 'I understand. But I want to sort out the menu first so that I can get the fitout correct.' Mr Bousalman also said: 'Ok then, I will go look at other shops that do not have an exhaust.' I deny having said what Mr Bousalman has alleged in paragraph 34 of his Affidavit. At the end of the 20 September 2010 meeting, Mr Bousalman said words to the effect: 'Thank you for allowing pizzas and the limited number of pre-mades that were approved earlier for my menu. I will investigate into introducing pizza to my menu. I will also investigate menus of other similar style operations and will continue to make suggestions for additions to my menu.' Laura Nickson and I said to Mr Bousalman words to the effect: 'We agree to review any menu additions as long as you understand that Ipoh does not wish to deviate from the intent of the tenancy which is a patisserie/espresso bar.' I did not wipe my hand on the side of pants and smirk at Laura Nickson at the conclusion of the meeting as alleged by Mr Bousalman in paragraph 34 of his Affidavit." 58There was virtually no cross-examination of any of these persons in relation to their evidence detailed above. At one point in his cross-examination Mr Bousalman said: "...no this took quite a long time to get an answer as we were waiting on an interpretation from Aequitas Lawyers which took God knows how many months but that held things up considerably and once we received that answer a meeting was scheduled closely after that date to discuss this matter and the exhaust and that's when it was all, come to an abrupt halt, denied."

Eventus Group Pty Ltd v Ipoh Pty Ltd

At a glance

Result

Key principles

Issues before the court

Plain English Summary

Deep Dive

What happened

Cited legislation

Why the court decided this way

Before and after state of the law

Key passages with plain-English translation

What fact patterns trigger this precedent

How later courts have treated it

Still-open questions

Judgment (10 paragraphs)

Parties

Cases Cited (1)

AI Analysis