G & A Lanteri Nominees Pty Ltd v Fishers Stores Consolidated Pty Ltd [2005] VSC 336

20 The proceeding referred to in clause 13 is this proceeding, although at the date of the contract of sale, 30 August 2002, it consisted only of a claim for breach of clause 4.3 of the lease, the covenant to keep the supermarket open for business. The other claims now being litigated were added by amendment to the plaintiffs' statement of claim on 18 July 2003. The added claims relate to what might properly be described as "rent or outgoings" and accordingly, are covered by clause 2 of the contract of sale. That clause ensured that they are properly brought by the plaintiffs for their own benefit, although, again, Sofal needed to be a party to the proceeding to ensure that they were bound by the judgment. Fishers does not contend otherwise.

21 The plaintiffs have submitted that upon its proper construction clause 13 constituted an agreement by Sofal to renounce the benefit of s141 of the Property Law Act 1958 in respect of the covenant in clause 4.3 of the lease in favour of the plaintiffs. Fishers and Alan Fisher have responded by pointing out that the clause does not mention s141, although clause 2, which deals specifically with covenants concerning rent and outgoings does. They submitted that as there is no specific negativing of the affect of s141 in clause 13 the statute operates of its own force to pass the benefit of the relevant covenant to Sofal. All the clause does, say Fisher and Alan Fisher, is to acknowledge, as between the plaintiffs and Sofal, the existence of this proceeding and declare that any damages produced as a result of it belong to the plaintiffs. They argue that all clause 13 is is an agreement by Sofal not to interfere with a future contingent right which the plaintiffs might or might not establish. The unexpressed conclusion to their argument is, of course, that the plaintiffs cannot establish that right because it belongs to Sofal!

22 The key to a proper construction of clause 13 is to be found in the acknowledgment by Sofal in the clause itself that any damages awarded to the plaintiffs in this proceeding for a breach by Fishers of clause 4.3 of the lease will be the "sole, absolute property" of the plaintiffs and that it, Sofal, will make no claim or demand in respect of such damages. For the plaintiffs to be ever entitled to such damages, s141 of the Property Law Act must have no operation with respect to the relevant covenant. Thus, Sofal's acknowledgment, by necessary implication, involves an acknowledgment that s141 does not apply to the breach of clause 4.3 upon which the plaintiffs are suing.

23 If the implication referred to is not read into clause 13 of the contract of sale the clause has no purpose. It would confer neither rights nor obligations on either the plaintiffs or Sofal. It would be completely otiose. To give it any effect it must preserve the plaintiffs' right to continue its suit against Fishers notwithstanding its sale of the freehold of the shopping centre to Sofal.

24 In construing a contract the Court must give legal effect to the intention to the parties by objectively construing the words they used in the context in which they used them. Here the words of clause 13 were used in the context of an existing legal proceeding by the plaintiffs against Fishers for breach of a covenant in a lease relating to part of the property the subject of the contract. The acknowledgement by Sofal in that contract of the plaintiffs' right to retain any damages awarded in that suit must imply a renunciation by it of those rights to those damages in the plaintiffs' favour.

25 Sofal's renunciation effected an equitable assignment of its rights in respect of clause 4.3 of the lease to the plaintiffs upon which they could sue in Sofal's name. However, Sofal, having declined to join as a plaintiff in this proceeding was joined as a defendant for conformity and will be bound by the judgment to be pronounced. Accordingly, there is no obstacle to the plaintiffs pursuing their claim against Fishers and Alan Fisher as guarantor, for damages for failing to keep the supermarket open.

Breach of the Covenant to Remain Open for Business

26 Clause 4.1 of the lease required the lessee to conduct a supermarket or similar business on the demised premises. Subject to a number of situations which are irrelevant for present purposes, clause 4.3 required the lessee to cause the supermarket to remain open for business for at least the usual trading hours of the shopping centre.

27 There is no question that when Fishers vacated the supermarket on 5 April 2002 it breached clause 4.3 of the lease. Fishers does not dispute this proposition but argues that, as the plaintiffs' income stream from the shopping centre was not effected by its closing the supermarket, no losses occurred.

28 This contention must be rejected. The lease required Fishers to keep the supermarket open and pay the rent. Its failure to honour either of these obligations has legal consequences. One such consequence is that the plaintiffs could have taken steps to enable them to determine the lease under clauses 13.4 and 13.6. It is not to the point that the covenant contained in clause 4.3 is not an "essential and fundamental term" as described in clause 14.1.

29 But this is not the plaintiffs' only remedy. As a lease is treated in this respect as having the incidents of a commercial contract the plaintiffs may elect not to exercise their rights to take steps to terminate it but rather to sue for damages for breach of covenant whilst keeping the lease on foot.[4] In this case, that the relationship between the parties should be treated as being governed by the principles of the law of contract is a fortiori. They are all parties to the deed of assignment which incorporates by reference all of Fishers covenants in the lease.

30 Fishers argument that as long as the lessor is receiving the income stream from the rent under the lease it has suffered no compensable loss leads logically to the conclusion that a lessor could never claim damages for breach of a covenant in a lease other than the covenant to pay rent. Breach of a covenant to, say, paint the demised premises regularly would not sound in damages as long as the lessee paid the rent. Such a conclusion must be rejected.

31 It follows that the plaintiffs are entitled to damages to compensate them for any losses they have suffered as a consequence of Fishers' breach of covenant; such loss being assessed in accordance with ordinary contractual principles.[5]

32 Fishers was the "anchor" tenant in Mildura City Plaza. There was ample evidence before the Court, if any was needed, that an anchor tenant by its presence in a shopping centre attracts and assists the profitability of the "speciality" retailers which occupy the centre's smaller shops. It provides passing trade and so is meant to enhance the value of the shopping centre to its owners. It is an inescapable inference from the fact that clause 4.3 was in the lease that its purpose was to protect the value of the shopping centre as a whole. Thus the loss which might fairly be seen as arising naturally from a breach of that covenant is the possible diminution in the value of the freehold of the shopping centre caused by the closing of the anchor tenant's business. Alternatively, it may reasonably have been supposed to have been in the contemplation of all parties to the lease that a breach of that covenant might diminish the value of the freehold of the shopping centre.[6] This is not to say, of course, that a breach of such a covenant will inevitably lead to a diminution in value of the shopping centre on every occasion. Much will depend, as in this case, upon other surrounding circumstances which may have an effect on the shopping centre's value. To succeed in their claim for damages the plaintiffs must prove that Fishers' breach of clause 4.3 has caused a loss and prove its quantum.

33 The plaintiffs claim the diminution of the value of the Mildura City Plaza caused by Fishers' breach as the measure of their loss and they submit that that diminution in value should be assessed as at 30 August 2002, the date they sold the freehold to Sofal. They say that this is the date that their loss "crystallised."

34 Prima facie, the date by reference to which damages should be assessed for a breach of a contract is the date of the breach, in this case 5 April 2002. This rule holds good unless there is sufficient reason for the selection of some other date which would provide a more adequate assessment of appropriate compensation.[7] It must be the same for a covenant in a lease.[8]

35 In contending that 30 August 2002 was the most appropriate date to assess their loss the plaintiffs referred to a number of cases: Buchanan v Byrnes;[9] Costain Developments Limited v Finlay & Co Limited;[10] Johnson v Agnew;[11] Peet & Co Pty Ltd v Rocci;[12] Johnson v Perez;[13] and Brunswick Developments Pty Ltd v Shock Records Pty Ltd[14].

36 Buchanan v Byrnes and Peet & Co Pty Ltd v Rocci were each cases in which a tenant had abandoned or repudiated a lease. In Brunswick Developments a proposed tenant had repudiated an agreement to lease. These cases are of no assistance to the plaintiffs. Fishers never repudiated their lease. They continued to pay rent and to discharge their other obligations under the lease after ceasing to trade. The actions in each of those cases was not for a breach of covenant but for repudiation - the destruction by the act of the defendant of the very substance of the lease.

37 Whilst the facts in Costain Property Developments were not dissimilar to those in this case there appears to have been no argument there as to the appropriate date by reference to which damages should be assessed. They appear to have been assessed, as in a personal injuries claim, at the date of trial The argument was as to whether the plaintiff suffered any damage and it was accepted that the landlords' subsequent sale of the property was a relevant factor. Indeed the Deputy Judge who heard the case was of the view that the loss did not occur until the reversion was sold. I respectfully differ from His Lordship on this point. The loss occurred when the breaching event occurred even if the assessment of its quantum could, in an appropriate case, take into account subsequent events such as a sale. That the loss may be unrealised until such an event occurs does not mean that the loss has not occurred, just that its effect on the owner is postponed.

38 Lord Wilberforce in Johnson v Agnew in the passage relied upon by the plaintiffs, merely restates the principle that damages for breach of contract would normally be assessed as at the date of the breach unless that date gave rise to an injustice, in which case it would be more appropriate for the Court to fix such other date as may afford appropriate compensation. That case gives no support to the plaintiffs' contention that 30 August is the appropriate date.

39 The plaintiffs have failed to demonstrate that any injustice would be caused to them by assessing the diminution in value of the shopping centre by reference to the date upon which Fishers breached the covenant, namely 5 April 2002. To say that their loss "crystallised" on 30 August is to say no more than that the effect of it was not felt until that date, not that it had not occurred until then. The plaintiffs' loss should be assessed as at 5 April 2002 by reference to expert opinion informed by the usual factual investigations carried out by expert valuers, including, if relevant, events which occurred after that date. The question to be addressed is what was the plaintiffs' loss, if any, caused by Fishers closing the supermarket on the day it did.

Measure of damages

40 The plaintiffs submit that the quantum of their damages is equal to the difference between the value of the shopping centre as a going concern with Fishers in occupation of the supermarket and the value of the shopping centre as a going concern without Fishers in occupation from the date the supermarket closed until the expiration of its lease in November 2004. In fact, the plaintiffs' further amended statement of claim which was the pleading upon which this case was tried, particularised the plaintiffs' loss as being specifically referable to the diminution of the value of "the reversion" caused by Fishers having closed the supermarket. The word "reversion" in this context must refer to the reversion expectant upon the term created by the lease containing the covenant which Fishers breached. But that is not how the plaintiffs put their case. They claimed, at trial, the diminution in value of the freehold of the whole shopping centre which they alleged was caused by Fishers breach of covenant. Fishers responded to this claim in the evidence they led so that no injustice was done to any party by the matter proceeding on a different basis from that pleaded.

41 Although Fishers' solicitors in their 15 January letter to the plaintiffs' agents merely stated their client's intention to vacate the premises, by a subsequent letter written on 3 April, they set out their client's position in detail. This letter contained a statement to the effect that although Fishers was going to close the supermarket it would continue to pay rent and other proper outgoings for the rest of its term, that is to say until November 2004. All parties accepted that this represented the true situation and that, even if Fishers had not ceased trading in April 2002 it would certainly not have exercised its options to renew the lease past its expiry date.

42 The plaintiffs called two valuers to support their contention that Fishers' breach of covenant had caused a loss calculated as they contended. They were Mr Robert Barnden and Mr Leslie Brown.

43 Mr Barnden wrote a report in which he provided valuations as at 31 July 2002 showing a difference of $850,000 in the value of the shopping centre depending upon whether Fishers was trading or not. Mr Barnden was subsequently requested to reassess his opinion by reference to 5 April. On 19 October 2003 he provided a further opinion in which he expressed the view that it would be beyond the skill of a competent valuer to identify any change between a valuation performed by reference to 31 July 2002 and one performed by reference to 5 April.

44 In the course of his oral evidence, Mr Barnden was forced to make a number of very significant concessions as to the methodology of his valuations and as to his conclusions. He had to alter his calculations substantially so that counsel for the plaintiffs did not press his valuations in their final submissions. This concession was, in the circumstances, entirely appropriate and undoubtedly saved considerable time and costs in this trial. However, some of Mr Barnden's evidence was of relevance, particularly as to his local knowledge of the lack of profitability of small mall type shopping precincts in Mildura, the somewhat "troubled" life of this particular shopping centre and his description of the shopping centre after the supermarket closed as being a "large, dark and ugly void in the centre of the mall area."

45 Mr Les Brown of m3property Strategists provided an opinion as to valuations of the shopping centre as at 5 April, 30 August and 29 November 2002. He has been a qualified valuer for about 24 years and is experienced in the valuing of retail property.

46 Mr Brown inspected Mildura City Plaza on 2 April 2004 and obtained a large amount of information about it from the plaintiffs' solicitors, from his inspection and from other research and investigations which he conducted to qualify himself to express the opinion he arrived at. None of this information was contentious. For the most part it was common to all those valuers called on the trial.

47 In reaching his conclusions as to value, Mr Brown considered sales transactions in respect of six other shopping centres, five in Victoria and one in Tasmania. They ranged in size (Gross Lettable Area) from almost 6,000 square metres to 1,700 square metres. The GLA of Mildura City Plaza is about 3,700 square metres, of which the supermarket covered about 1,500 square metres. Sales of the properties evaluated by Mr Brown all occurred within about 10 months of April 2002. Mr Brown also considered the sale of the T & G Building in Mildura and two Officeworks properties at Traralgon and Ballarat.

48 Having considered the sales evidence for the shopping centres he examined, which demonstrated a market yield of between 8.50% and 10.81%, he was of the view that an appropriate capitalisation rate for Mildura City Plaza, assuming the supermarket remained open, was 9.5%. If the supermarket was not operating, he would adopt 10% as being more appropriate thereby reflecting an assumption that the closure of the supermarket would have an adverse effect on the value of the shopping centre; a proposition with which valuers called by Fishers did not agree.

49 Mr Brown undertook calculations based both on a capitalisation rate and a discounted cash flow analysis in respect of each of the scenarios presented to him. He gave his opinion that the difference in value of Mildura City Plaza, assessed as at 5 April 2002, caused by the supermarket closing was $215,000 being the difference between its being worth $4.2m if Fishers was still trading and $3.985m if it was not. He produced different figures for 30 August and 29 November which would have yielded damages quantified at $285,000 and -$5,000 respectively had either of those dates been relevant.

50 Mr Brown would not accept the possibility that Fishers closing the supermarket in April 2002 but continuing to pay the rent and meet the outgoings until, if necessary, the end of its lease, would have presented the freehold owner of the shopping centre with a valuable opportunity to obtain a new long term tenant whilst still maintaining its cash flow for the supermarket area. He was of the view that a landlord would prefer what he referred to as the "certainty" which would have obtained had Fishers continued trading until November 2004. This "certainty" was not elaborated upon.

51 Mr Brown's view that Fishers ceasing to trade must have had an adverse effect on the value of the shopping centre is inherent in his choosing a higher capitalisation rate when considering its value with the supermarket closed. By increasing the capitalisation rate by .5% over that he would apply if the supermarket was open he quantified that opinion but he gave no cogent reason for choosing .5% as against .3% or .7% apart from referring to the "uncertainty and greater risk associated with the supermarket being closed." Whilst it is a legitimate exercise of a valuer's judgment to express such an opinion, it must be recognised for what it is and not given more weight than is appropriate in an overall assessment of the evidence. Mr Brown's opinion is essentially unexplained. Particular care must be taken to guard against any assumption that the plaintiffs must necessarily have suffered loss by the closure of the supermarket in breach of a covenant to keep it open. Whilst such a loss might be expected in some circumstances it must still be proved in the actual conditions prevailing to entitle the landlord to an award of other than nominal damages.

52 Mr Robert Milne, another qualified valuer of over 30 years experience, provided an opinion and gave evidence on behalf of Fishers, not by putting forward any valuation himself but by commenting on those proffered by the plaintiffs from Mr Barnden and Mr Brown. In particular, he was critical of the approach of both of these valuers for apparently not even contemplating the possibility of the value of the Mildura Central Plaza being enhanced by Fishers vacating when they did and continuing to pay rent. As Mr Barnden's opinion as to valuation is no longer relevant, it is only necessary to examine Mr Milne's criticism of that of Mr Brown.

53 Mr Milne points out in his report of 18 January 2005, that just as Sofal was able to secure a new tenant and arrange refurbishment of the supermarket after it bought it from the plaintiffs and whilst Fishers continued to pay rent, so could any other purchaser of the property. Such a purchaser could also, as Sofal did, negotiate a substantial fee from Fishers as consideration for relieving it of the burden of continuing to pay rent of more than $230,000 per annum until November 2004. Mr Milne considered that such an approach, which a prudent lessor would be expected to pursue, would have been likely to result in greater financial performance from the property overall than if Fishers had simply continued trading until its lease expired. He was putting, he said, the converse view to that inherent in the valuations he had been asked to comment upon because they, and particularly for present purposes, Mr Brown's, did not even consider the opportunities presented by Fishers having closed the supermarket when it did whilst continuing to pay the rent. He believed that there was a probability that the shopping centre would actually be worth more with Fishers not trading having respect to the other circumstances prevailing.

54 Mr Shane Close is the retail practice group director of Charter Keck Cramer, a firm of valuers. He has had over twenty years experience and specialises in the valuation of retail premises including shopping centres and supermarkets.

55 Mr Close undertook a valuation of Mildura Centre Plaza as at April 2002 on the two bases used by each of the two other valuers. He inspected the centre on 27 May 2004 but used factual data taken from Mr Barden's report. He considered that having regard to the relatively short period of Fishers' lease remaining as at April 2002, what he considered to be the centre's poor trading environment, the prospect of vacancies, its probable minimal rental growth and consequent risk to income, prospective purchasers would not vary their view as to its value whether Fishers was trading or not.

56 He expressed this view because he considered an approach to value in the circumstances of this case would need to be based on longer term rental levels than on a capitalisation of actual rental being received as had been the basis of valuation used by Mr Brown. Fishers were undoubtedly going to close the supermarket when the lease expired in any event.

57 Much of Mr Close's very careful analysis was directed to establishing the actual value of the shopping centre as at the relevant date, applying the scenarios adopted in this case. However the Court is not concerned with absolute values. In the particular circumstances of this case it is concerned only with the quantum of any difference between the two values obtained by examining the two scenarios accepted. In the event Mr Close concluded that there was a $25,000 difference in value as at April 2002 between the value of the shopping centre assessed against the two scenarios, which sum he attributed to a loss of rental brought about by the fact that one of the specialty shops (the Cheesecake Shop) was entitled to a reduction in its rent consequent upon Fishers ceasing trading; such reduction taking effect 3 months after that event. Absent that entitlement his opinion was that there was no difference in value of the shopping centre whether Fishers was trading or not.

58 In his oral evidence, Mr Close expressed similar views to Mr Milne concerning the possible attraction of the property without Fishers trading to a potential investor and the opportunity for improvement of the shopping centre as an investment that that situation presented.

59 In their final submissions, the plaintiffs made many criticisms of Mr Close's evidence but none of them throws into doubt his fundamental proposition as to the lack of difference in value of the shopping centre between the two scenarios considered.

60 Finally, with respect to the evidence of Mr Close, a question arises as to whether, if his evidence is accepted as the basis for the assessment of any loss by the plaintiffs, the loss in value attributed to the concessional provision in the Cheesecake Shop lease should be taken into account. There is no evidence before the Court that Fishers was ever aware of the Cheesecake Shop's special position as a tenant in Mildura City Plaza, that is to say that the plaintiffs' right to collect the full rent reserved under its lease was dependent upon Fishers continuing to trade. In the circumstances there would appear to be no legal basis for visiting the consequences of the concessional provision in the Cheesecake Shop lease upon Fishers.

61 Some knowledge is undoubtedly able to be imputed to a defendant who is in breach of a contract (scil. in this case, breach of a lease) so as to render him liable for losses which were reasonably to be regarded as within the knowledge of both parties. However, where, as here, part of the loss is attributed to a particular circumstance, for the plaintiffs to succeed in recovering that part of their loss they would have to prove that the defendant actually knew of the financial consequences to the plaintiff of his breach of covenant. See Hadley v Baxendale;[15] Victoria Laundry (Windsor) Limited v Newman Industries Limited[16] and Satef-Huttenes Albertus S.p.A v Paloma Tercera Shipping Co S.A.[17] The plaintiffs have not proved that knowledge in this case.

62 The evidence of Mr Milne and Mr Close is to be preferred to that of Mr Brown. In particular the experience of Mr Close with respect to the valuation of shopping centres and supermarkets placed him in a superior position to all the other valuers called with respect to the particular valuation questions relevant to this case. Also, his explanation as to why he considered that there was no significant difference in the value of the shopping centre freehold (except for the Cheesecake Shop deduction) was much more convincing than Mr Brown's evidence which lacked any real explanation as to why he chose the higher capitalisation rate which led to the lower value in his opinion under the scenario in which Fishers closed the supermarket.

63 Mr Milne's opinion that Fishers ceasing to trade whilst still paying rent opened up opportunities for investors which would not have existed if Fishers had continued to trade to the end of its lease, with a consequent positive effect on the value of the property, is compelling. This is particularly so when no realistic answer to it was provided by the plaintiffs and it was corroborated by Mr Close.

64 The plaintiffs have failed to satisfy the Court that Fishers ceasing to operate its supermarket at Mildura City Plaza caused the value of the freehold of that shopping centre assessed as at 5 April 2002 to be diminished in such a way that they are entitled to damages.

65 A plaintiff who seeks damages for breach of contract is entitled to an award of only nominal damages unless actual damage and the extent of it is proved.[18] The situation must be the same where breach of a covenant in a lease is involved. Thus, the plaintiffs will be awarded nominal damages of $5 against Fishers in this proceeding.

66 There being no argument as to Alan Fisher's liability, both on his own behalf and as executor of the estate of his late father, judgment will also go against him for the same nominal damages.

The plaintiffs' other claims

67 The plaintiffs make various other claims against Fishers for alleged breaches of covenant, including the covenant to pay rent. Without clause 2 being in the contract of sale between the plaintiffs and Sofal of 30 August 2002, the exclusive right to make all of these claims would have passed to Sofal. However, clause 2 expressly excludes the operation of s141 of the Property Law Act 1958 with respect to "rent or outgoings" payable by the tenant up to the settlement day, that is 29 November 2002. Clause 2 also requires Sofal to institute any necessary legal proceedings to claim any rent or outgoings on behalf of the plaintiffs from the tenants of the shopping centre. It having declined to do so (in breach of contract) and having been joined as a defendant in this proceeding the plaintiffs are entitled to make the claim themselves. Sofal will be bound by the judgment.

68 Particulars of the plaintiffs' claim expressed in terms of amounts outstanding on a running account are set out under paragraph 20 of their further amended statement of claim.

Rent: 27 October 2002 to 29 November 2002

69 The plaintiffs claim unpaid rent during this period, the quantum of which ($20,950) is not in dispute. Fishers resists this claim. It contends that it is not obliged to pay rent during a period that the Warehouse Group occupied the supermarket premises with the acquiescence of the plaintiffs. It submits that an agreement made by Mr Lanteri with Mr Dimasi of Sofal that in consideration of Sofal agreeing to pay rent and outgoings until settlement the plaintiffs would consent to the Warehouse Group remaining in occupation constituted acquiescence by the plaintiffs in the effective dispossession of Fishers at the end of October 2002 even though it was still paying rent and observing all the other covenants in its lease.

70 Whilst there is evidence that some discussions occurred between Mr Lanteri on behalf of the plaintiffs and Mr Dimasi on behalf of Sofal concerning the Warehouse Group going into possession of the supermarket premises at the end of October 2002, the evidence that there was an agreement or that the Warehouse Group occupied the premises with the plaintiffs' consent or acquiescence is far from conclusive. Indeed, no such agreement was established on the evidence. But, even if the Warehouse Group did occupy the former supermarket premises with the plaintiffs' consent or acquiescence, this would have had no effect on Fishers' legal obligation to pay rent whilst it was the lessee of those premises. Nor would it have had any effect on Fishers' legal right to exclusive possession of those premises.

71 By virtue of the existence of the lease the plaintiffs had no right to "permit" anyone to occupy the supermarket premises. To purport to do so could have no legal effect. Because Fishers was entitled to exclusive possession of the former supermarket premises whilst the lease was on foot it could have asserted its right by action against the Warehouse Group. A plea by the Warehouse Group that it had the licence of the freehold owner to occupy the supermarket would have availed it nothing. It would always have been liable to ejectment and to judgment for mesne profits or damages for trespass at the suit of Fishers. Put another way, even if the plaintiffs did acquiesce in the Warehouse Group committing the tort of trespass, they would not have been liable for that tort unless there was a relationship between them and the trespasser which gave rise to vicarious liability. A landlord will be in breach of his implied covenant to permit his tenant quiet enjoyment of the demised premises if he actively interferes with the tenant's possession of those premises, but he is not liable for the wrongful acts of another. [19]

72 Fishers allege, in the alternative, that the plaintiffs waived their right to rent by their conduct in acquiescing in the tort of trespass by the Warehouse Group. Even if there was acquiescence, this would not constitute either an express or implied release of Fishers from the obligation to pay rent according to the lease.[20] There would have to have been an abandonment of the right to insist on rent from Fishers by the plaintiffs. The evidence here does not support such a conclusion. Mr Lanteri made it abundantly clear that he, on behalf of the plaintiffs, always regarded Fishers as being liable for the rent. He made that position clear on a number of occasions.

73 In the circumstances, there is no need for the Court to consider the allegations made in the plaintiffs' amended reply. Fishers are liable for the rent claimed in the sum of $20,950.

Municipal Rates

74 Fishers does not dispute a claim for Municipal Rates of $2,312.57.

Claim for Outgoings for 2001 - 2002 Financial Year

75 Fishers accepts that it was liable for 40.6% of expenses referrable to the shopping centre properly payable under its lease other than expenses which related to electricity, cleaning or repairs and maintenance. The plaintiffs have claimed a total of $10,367 as owing on Fishers' account in respect of the 2001 - 2002 financial year. Fishers disputes that a number of the components of that account are properly payable under the lease, namely amounts variously entitled Administration, Accounting Fees, Banking Charges and College Lease. They can be dealt with conveniently under these headings.

Administration

76 Fishers submit that there is no obligation imposed by the lease to pay the plaintiffs' agent's administration expenses. However, the plaintiffs rely on a separate agreement between Alan Fisher and Wendy Thomson of Roccisano Estate Agents, the plaintiffs' agent, that Fishers would pay these expenses.

77 Fishers contention that there is no obligation on it imposed by the lease to pay administration expenses is correct. Nowhere in clause 1.20, which deals generally with operating expenses, is there a sub-clause which could include administration expenses which the tenant would have to bear.

78 Ms Thomson, in her evidence, deposed to a conversation by telephone which she said she had with Mr Fisher on a date she could not recall. She said she told him that the work involved with the outgoings meant that Roccisano Estate Agents would be charging an administration fee in the future, but that as savings had been made on the outgoings themselves the total budget would not increase. She said that Mr Fisher was not happy about it but that he agreed.

79 Mr Fisher's evidence was that he never agreed to pay administration costs. He said that he told Ms Thomson that if she had a problem with the remuneration she was getting for managing the centre that that was a matter between her and the landlord.

80 The evidence does not permit a positive finding that there was ever any agreement between Mr Fisher and Ms Thomson as alleged by the plaintiffs. Even if there was, it would be difficult to see how such an agreement could be enforced as Fishers would receive no consideration for paying the administration expenses.

81 Accordingly, 40.6% of the total claimed by the plaintiffs against all tenants, $5,205, namely $2,113, should be deducted from the plaintiffs' claim in respect of operating expenses for the 2001 - 2002 year.

Accounting Fees

82 In a conversation with Ms Thomson at a meeting at Merbein in 1998, Mr Fisher requested that the shopping centre outgoings be audited. He subsequently confirmed that request in a letter dated 24 November 1999. Ms Thomson's evidence was that in a subsequent telephone conversation Mr Fisher agreed that Fishers would pay its proportion of the costs of an audit. Mr Fisher's evidence was that he never agreed to pay any portion of the audit fees.

83 Clause 3.7 of the lease obliges the lessor to provide audited statements of expenditure to tenants within 3 months after the end of each accounting period. As no provision is made for apportioning or otherwise dealing with the costs of having those statements of expenditure audited it follows that they must be provided at the lessor's expense. Mr Fisher's request that the outgoings be audited was, in effect, a request by him that the lessor abide by the terms of the lease.

84 There is no basis for the plaintiffs claiming the proportionate costs of auditing the shopping centre outgoings. Accordingly, 40.6% of $1,550 or $629 must be deducted from the plaintiffs' claim.

Bank Charges

85 Clause 1.20 of the lease would not justify the on charging of bank fees to Fishers. Ms Thomson's evidence was that it was standard practice in the real estate industry to pass on such fees to tenants. This does not justify seeking to make Fishers liable for those fees.

86 Accordingly, 40.6% of $147.24, namely $60.00 must be deducted from the plaintiffs' claim for the balance of operating expenses allegedly owing for the period 1 July 2001 to 30 June 2002.

College Lease

87 When the Chaffey brothers came from California to Mildura in the 1880's they brought with them a Californian concept for the financing of educational institutions, the so-called College Lease. Initially 1/15th of the irrigable land granted to them by the Victorian Government was vested in the Minister for Education who held that land on trust to finance an agricultural college. Subsequently, the Mildura College Lands Act 1916 provided that the income of the trust be distributed to schools in the Mildura area. It was said in the Legislative Assembly in a debate on a bill to amend the 1916 Act on 17 November 2004 that the assets of the trust are now about $16m and that its income benefits some 30 schools in the Mildura area.[21]

88 When a parcel of land in Mildura includes land effected by a College lease the owner of the fee simple in the rest of the land in that parcel must pay rent to the Minister for Education in respect of the College Lease land. The land on which Mildura City Plaza is built contains a strip of College Lease land. The College Lease, which is in evidence, shows that that strip of land was demised to one Gugger on 31 March 1953 by the then Minister for Education for a term of 50 years with options to renew. The lease is in a common simple form and contains the usual covenants, including a covenant by the tenant to pay the reserved rent on the days and in the manner provided by the lease. The landlord has a right of re-entry for non-payment in the usual way. It is the rent under this lease which the plaintiffs now claim as an operating expense payable by Fishers under clause 3.5 of the lease of the supermarket.

89 The plaintiffs contend that rent paid in respect of the College Lease is included within the definition of operating expense in clause 1.20(a) of the lease. They submit that it falls within the words:

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