13 The Tribunal found that the representation in relation to the building of the residential tower was misleading and dishonestly made. The respondents were ordered to file expert evidence to establish damage or loss flowing from the failure to build the residential development.
14 The Appeal Panel is satisfied that the evidence before the Tribunal established that all Lessees received legal advice before entering into the leases.
15 Each of the Leases and Disclosure Statements were in evidence before the Tribunal and were in substance to the same effect.
16 In the section of the Disclosure Statements headed:-"Details as to Agreements or Representations: Give details of any other agreements between the Lessor and the Lessee, or representations made by the Lessor or the Lessee including those relating to exclusivity or limitations on competing uses:" a number of details appear, differing as between the Leases, concerning commencement date, rent concessions, turnover rent, fitout costs, insurance and legal costs, exclusivity, rent reviews. However, significantly, there is no reference at all to the proposal to build a residential tower.
17 In the Lessees' Disclosure Statement, being Part 2 of the Disclosure Statement, at item 5 the following statutory statement appears:
'In entering into the retail shop lease, the Lessee has relied on the following statements or representations made by the Lessor or the Lessor's agents. Note: matters such as agreements or representations relating to exclusivity or limitations on competing uses or customer traffic should be detailed.'
There is no entry in this item of any information at all and it is followed by the statutory wording for Item 6 as follows:
'Apart from the statements or representations set out above, no other promises, representations, warranties or undertakings (other than those contained in the Lease) have been made by the Lessor to the Lessee in respect of the premises or the business to be carried out on the premises.'
The grounds of appeal
18 The appellant's grounds of appeal on the question of law as filed with the notice of appeal and dated 16 July, 2002 were, first, that the Tribunal had erred in law in finding that any representation in relation to the tower was false or misleading in that the representation was as to a future matter and there was no evidence that the representation was not genuine or was made without reasonable grounds and, secondly, by way of a further ground and in the alternative, that there was 'no evidence before the Tribunal of any reliance on the Tower representation by any of the respondents in deciding to enter into the leases'.
19 At the hearing of the appeal, the appellant sought to rely upon two further grounds of appeal, namely, whether the misrepresentation constituted by the disclosure statement under s 11 Retail Leases Act 1994 was made and whether the Tribunal erred in law by failing to afford procedural fairness to the appellant by not requiring the respondents at any time to specify the substance of the representations upon which they relied.
20 At the hearing of the appeal and for the first time, the appellant also sought a review of the decision below on the merits. Written submissions were handed up to the Tribunal. The application was opposed by the respondents. After hearing from Mr Robb QC, for the appellant, the Tribunal resolved that the issue of a review of the decision below on the merits be deferred for a further hearing pending the respondents' consideration of the appellant's submissions on that question and an opportunity for reply. Further written submissions have been received from counsel for both appellant and respondents and have been left with the papers. We shall say no more about a review on the merits in this judgment other than to note that we are by no means persuaded to depart from frequent rulings in this Tribunal to the effect that it will be a condition precedent, in most cases, to the grant of leave for a review upon the merits of a decision pursuant to the provisions of s 113(2)(b) Administrative Decisions Tribunal Act 1997 that the appellant establishes before the Appeal Panel a question of law to be reviewed.
The questions of law
21 Section 113(2)(a) Administrative Decisions Tribunal Act 1997 provides that an appeal may be made on any question of law. The distinction between a question of law and a question of fact is often a very nice one. 'The distinction between questions of fact and questions of law is a vital distinction in many fields of law. Notwithstanding attempts by many distinguished judges and jurists to formulate tests for finding the line between the two questions, no satisfactory test of universal application has yet been formulated.': Collector of Customs v Agfa-Gaevert Limited (1996) 186 CLR 389 per Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ at 394. Submissions have been made by the appellant that questions of law have been properly raised on the appeal. Counsel has referred us to some helpful authorities and, in particular, the decision of this Tribunal in Commissioner of Police, New South Wales Police Service v Krzeminski [2002] NSWADTAP 3 where some of the authorities are referred to. Many of the authorities are concerned to make the distinction between construction of a technical term or word or phrase in a statute, which has been held to be a question of law, and the ordinary meaning of such a term, word or phrase, which has been held to be a question of fact: Collector of Customs v Agfa-Gaevert Limited (1996) 186 CLR 389; Collector of Customs v Pozzolanic (1993) FCR 280 at 289.
22 In Collector of Customs v Pozzolanic (1993) FCR 280 at 289, the Full Court of the Federal Court was of the view that the construction of a term or phrase whose meaning has been established is a question of law. In Collector of Customs v Agfa-Gaevert Limited (1996) 186 CLR 389, the High Court commented that the distinction between the meaning of a term or phrase and the construction and effect of a term or phrase may be illusory. However, no criticism was offered of the view expressed by the Federal Court in Pozzolanic that whether or not the facts as found fall within the compass of a statutory provision properly construed is a question of law. We accept this as a correct statement of the law. Likewise, we are of the view that it is not controversial that whether the evidence as found by a court or tribunal warrants an inference that a provision of a statute or regulation has been breached is a question of law: Hayes v Federal Commissioner of Taxation (1956) 96 CLR 47; Hope v Bathurst City Council (1980) 144 CLR 1; Commissioner of Taxation v Miller (1946) 73 CLR 93; Farmer v Cotton's Trustees [1915] AC 922. The Appeal Panel of this Tribunal has declared that: 'The Appeal Panel's role in this tribunal is broadly comparable to that of the appellate tier of the ordinary court system. In the ordinary system it is usually the case that there is no general right of appeal against the findings of the original trier of fact, the primary judge. Normally it must be shown that the trier of fact has erred in applying the law to the facts.' [italics added.]: Woodside v Director General, Department of Community Services (CSD) [2000] NSWADTAP 8. We are, therefore, of the view that whether there was sufficient evidence before the learned judicial member to warrant a finding that the appellant had made a false or misleading statement or representation with knowledge that it was false or misleading is a question of law.
The scope of section 10 Retail Leases Act
23 The issue of law in this appeal comes down to this. Whether, on the evidence as found by the learned judicial member below, the appellant has breached the terms of section 10 Retail Leases Act 1994 and is liable to pay to the respondents reasonable compensation. The appeal was not argued before the Appeal Panel on the basis that the appellant had committed a fraudulent or negligent misrepresentation actionable at common law. Nor, was there any question of an innocent misrepresentation. We note that the respondents are seeking compensation by way of variation of the rent, not rescission or termination of the leases. Nor was the application or the appeal mounted on the basis that there was a basis for relief in equity whether by way of estoppel or otherwise.
24 The respondents' cause of action is statutory and founded upon the terms of section 10 which reads as follows:
(1) A party to a retail shop lease is liable to pay another party to the lease ("the injured party") reasonable compensation for damage suffered by the injured party that is attributable to the injured party's entering into the lease as a result of a false or misleading statement or representation made by the party, or any person acting under the party's authority, with knowledge that it was false or misleading.
(2) The giving of a lessor's disclosure statement to a prospective lessee under a retail shop lease is considered to be the making of a representation by the lessor to the lessee as to the information in the disclosure statement.
(2A) The making of a representation by a prospective lessee in a lessee's disclosure statement given to a prospective lessor under a retail shop lease that the prospective lessee has sought independent advice, or as to statements or representations relied on by the prospective lessee in entering the lease, is considered to be the making of a representation by a lessee to the lessor.
(3) This section extends to apply to a statement or representation made before the commencement of this section.
25 The section provides a statutory cause of action for compensation in the defined events as specified. This Tribunal considered the scope and reach of section 10 in Gizah Pty Limited v AXA Trustees Limited [2002] NSWADT 116. The Tribunal there pointed out that:
This Section provides for reasonable compensation for damage suffered by an injured party (in this case the Applicant) that is attributable to the Applicant's entering into the lease as a result of a false or misleading statement or representation made by (the Respondent) or any person acting under (the Respondent's) authority with knowledge that it was false or misleading.
In order to come within Section 70 and constitute a retail tenancy claim under Section 70(a)(x) it seems to me that there are four separate matters that need to be proved by a successful Applicant:
i) there must be a false or misleading statement or representation.
ii) the Applicant must show that the statement or representation caused or contributed to the Applicant entering into the lease.
iii) the false or misleading representation must be made by the Respondent or a person acting under the Respondent's authority.
iv) and it must be made with knowledge that the statement or representation was false or misleading. ….
The final matter about which an Applicant has to satisfy this Tribunal is that the party or person making the false or misleading statement or representation has made same "with knowledge that it was false or misleading". This is a fairly serious finding to make and one must tread with care in making that type of finding.
26 We emphasise the significance of the words 'with knowledge that it was false or misleading.' Courts have frequently stated that inferences of fraud are not lightly drawn and likewise, we are of the view that in approaching the liability of a representor under section 10, the Tribunal should be satisfied that clear evidence has been led allowing the Tribunal to conclude that the representor knew that the utterance was false or misleading.
27 In his written submissions, counsel for the appellant has submitted that the law developed in the interpretation and application of section 52 Trade Practices Act 1974 is relevant to a correct understanding of the reach of section 10 Retail Leases Act 1994. Certainly there is some similarity between the wording of the respective provisions and the protection afforded by the two statutory regimes. In particular, the distinction, vital to the common law of misrepresentation, between representations of existing fact and representations of future facts, conduct and intentions, has been swept away, to some extent, by the Trade Practices Act 1974: Cohen v Centrepoint Freeholds Pty Ltd (1982) 66 FLR 57; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 55 ALR 25. There is no reason to suppose that the common law distinction has been preserved in the wording of section 10 which simply enjoins the making of a false or misleading statement or representation.
28 It is instructive to compare the wording of section 10 with that of section 52 Trade Practices Act 1974. Section 10 has been quoted in full above. Section 52 provides:
(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
29 The difference between the wording of the two sections is significant. Whereas there is a general proscription on engaging in conduct that is misleading or deceptive by the terms of section 52, the wording of section 10 is far more confined. The latter section provides that compensation is payable for damages suffered as a result of a false or misleading statement or representation (cf. 'misleading and deceptive' in section 52) and, then, only if the maker of the false or misleading statement or representation knew that it was false or misleading.
30 Another difference of importance between the two enactments is that there is no counterpart to section 51A Trade Practices Act 1974 in the Retail Leases Act 1994. Section 51A(1), introduced in 1986, is in the following terms: '… where a corporation makes a representation with respect to any future matter (including the doing of, the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.' The terms of section 51A(2) place the onus of demonstrating the existence of reasonable grounds upon the corporation.
31 Prior to 1986 and the enactment of section 51A, in order to found a breach of section 52 in relation to a representation as to a future matter or intention, it had to be shown that the representor knew at the time of the making of the representation that the representation was false or acted with reckless indifference as to whether it were false or not: Milchas Investments Pty Ltd v Larkin (1989) 96 FLR 464; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 55 ALR 25. The onus of proof was upon the representee to show that the representor had no present intention of making good the representation.
32 The terms of section 10 Retail Leases Act 1994 are reminiscent of the interpretation and application given to section 52 Trade Practices Act 1974 with respect to statements and representations as to future matters and matters of intention before the introduction of section 51A. The terms of section 10 require demonstration, as a condition of liability, that the representor knew that a statement or representation was false or misleading. Where the statement or representation goes to a future fact or matter or is a statement of intention, we are of the view that the representor will not be liable unless the representor knew that the statement was false or misleading at the time it was made. That is to say, it must be shown that the representor had no intention of making good the representation or was aware of circumstances which would prevent the making good of the representation: Bill Acceptance Corporation Ltd v GWA Ltd (1983) 50 ALR 242; Lyons v Kern Konstructions (Townsville) Pty Ltd (1983) 47 ALR 114; Milchas Investments Pty Ltd v Larkin (1989) 96 FLR 464; T N Lucas Pty Ltd v Centrepoint Freeholds Pty Ltd (1984) 52 ALR 467 at 474.
33 Counsel for the appellant has submitted that the onus is on the respondents to demonstrate that their cause of action for compensation is within the terms of section 10. We agree with this submission. It is the respondents who are bringing the action under section 10 and it is the respondents who must show that the statement or representation relied upon was made by the appellant with knowledge that it was false or misleading. There is no equivalent provision in the Retail Leases Act 1994 to section 51A(2) Trade Practices Act 1974.
The law as applied to the facts
34 The representation, and the subject of the appeal to this Appeal Panel, relied upon by the respondents as giving rise to a compensable claim under section 10 was that a residential tower would be built within the shopping complex. Various witnesses on the respondents' side deposed to a representation of this kind being made by either or all David Whittaker, Joseph Antonios and Aaron Barnes of Retail Estate Pty Ltd. The respondents also rely upon the representation made in the lessor's disclosure statement. During the hearing, there was an acute contest as to whether the oral statements were to the effect that there was a proposal that a residential tower would be built on the one hand or whether the statement or representation was unqualified and amounted to a representation that the tower would be built on the other hand. The witnesses for the appellant deposed to a statement or representation of the former kind while some of the witnesses for the respondents deposed to the making of an unqualified statement or representation. In the light of this conflict of evidence and after hearing and seeing the witnesses at the hearing, the Tribunal's finding in relation to the oral statements or representations is important. The Tribunal found that: 'I am satisfied that in their own way each of the applicants [the respondents] asked about those proposals, and I am also satisfied that the representatives of the Lessor had a standard response which indicated that the residential tower was a proposal to the local council.' The critical words in this finding, in our view, are the words in italics. The oral statements or representations, as found by the learned judicial member, were that there was a proposal by the appellant to build a residential tower which would be put to the local council. There was ample evidence presented at the hearing for the judicial member's finding in this regard. The important point for this appeal is whether such a finding supports a conclusion that the making of the oral statements or representations constituted a breach of section 10 giving rise to a compensable claim. It is not clear from his judgment that the Tribunal made such a finding but, in any case, we think not. Having regard to the content of the oral representation as found, a finding of a breach would need to be predicated upon a conclusion that the representation was false or misleading to the knowledge of the appellant. In our view, the evidence to sustain such a finding would need, for example, to point to the application to council to build the residential tower being withdrawn or defeated with no prosecution of an appeal at the time of or before the representation was made. A failure to disclose that council had rejected the application before the leases were entered into or that council insisted upon significant amendments to the application and proposed development might well amount to misleading conduct: Warner v Elders Rural Finance Ltd (1993) ATPR 41-238; Demagogue Pty Ltd v Ramensky (1992) 110 ALR 608; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83. However, no such evidence was presented to the Tribunal. There was no evidence before the Tribunal as to whether and if so, when, the local council rejected the appellant's proposal to build the tower. The mere fact that the tower had not been built or work started is not enough to warrant the inference that the representation that there was a proposal to build the tower was false or misleading: Bill Acceptance Corporation Ltd v GWA Ltd (1983) 50 ALR 242;
35 The lynch pin of the respondents' case is that the statement in the lessor's disclosure statement concerning the residential tower amounted to an actionable representation within the terms of section 10. The statute clearly provides that the 'giving of a lessor's disclosure statement to a prospective lessee under a retail shop lease is considered to be the making of a representation by the lessor to the lessee as to the information in the disclosure statement.' - section 10(2). It is thus important to examine the wording of the lessor's disclosure statement and to quote it in full to discern what the representation was. It is common ground that the wording in this respect was the same in all four disclosure statements in each of the respective four leases. In the disclosure statement made under section 11 Retail Leases Act 1994, it was provided that:
The Lessor specifically discloses that residential development consisting of a residential tower, additional car parking spaces and multilevel car parking is proposed as set out in the attached plan and drawings. Inconvenience as to the flow of customers particularly off Marsden Road, noise, dust and temporary disruption to services to the Centre are likely to occur and the lessor shall use its reasonable endeavours to control such occurrences so as to keep any disruption to lessee's trading in the Premises to a minimum. No claim for compensation for such disturbance may be made by the lessee.
36 The attached plan and drawings consisted of 11 pages and described what was shown on the plan as a proposed residential development.
37 It should be noted that section 34 Retail Leases Act 1994 exposes lessors to claims of compensation for future disturbance and that s.34(3) provides a mechanism to limit this exposure;
(3) A retail shop lease may include a provision preventing or limiting a claim for compensation under the provisions implied by this section in respect of any particular occurrence if the likelihood of the occurrence was specifically drawn to the attention of the lessee in writing before the lease was entered into.[Note: A disclosure statement is an appropriate means of specifically drawing the attention of the lessee to the likelihood of an occurrence.]
38 A principal purpose of that segment of the disclosure statement was to limit liability for any disturbance from any proposed residential tower if it were to be built in the future. The Tribunal noted that one of the lessee's solicitors drew the risk of trade interruption to its attention; par 15. Indeed, it would be expected that the lawyers for the lessees would give such advice. But while there are other sections of disclosure statements for the purpose of recording representations made, they do not necessarily mean that a disclosure of a proposal for the purposes of s.34(3) could not also in all the circumstances constitute a representation.
39 The Tribunal found that by force of the terms of section 10(2), the lessor, by making the disclosure relating to the residential tower, made a representation that residential development consisting of a residential tower, additional car parking spaces and multilevel car parking is proposed … It is to be noted that the representation was not that the tower would be built but that there was in existence a proposed residential development. To be an actionable representation under section 10, it must be shown that the representation about the proposed residential development was false or misleading to the knowledge of the appellant. In this regard, the finding of the Tribunal was that the representation was false to the knowledge of the appellant after the date of the receipt of the notice of rejection by the local council and, 'if not technically false, was misleading if that representation was maintained after the Local Council had formally rejected the application but the appeal period had not yet expired.' However, as the judicial member pointed out in his judgment, there was no evidence as to when the council rejected the application and he was not able to take the matter further [at para 37].
40 Submissions were heard from both counsel for the appellant and the respondents in this appeal as to whether there was any evidence before the Tribunal allowing it to make a finding that the statement in the disclosure statement was false and misleading up to the time of entry into the leases by the respondents. In particular, in this appeal, counsel for the respondents was pressed to direct the Appeal Panel to any evidence that the application to build a residential tower had been rejected by council and, if so, upon what date and whether that date were before the date of the leases. The respondents conceded that no such evidence had been before the Tribunal. The only advertence to a possible rejection of the development application by council was in the evidence of Aaron Barnes, transcript 28 September, 2001 page 72, but this evidence falls far short of establishing that the appellant made a representation about a proposal to build the residential tower with knowledge that it was false or misleading.
41 We are of the view that there was no evidence before the Tribunal to justify a finding that the appellant had made a representation about the building of the residential tower which was made with knowledge by the appellant that it was false or misleading. Any evidence in this regard would have to be clear and unambiguous in the context of the requirements imposed by section 11 Retail Leases Act 1994 relating to lessor disclosure. Section 11 requires the lessor to disclose those matters set out in Schedule 2 which relevantly includes 'changes or developments planned by the lessor for retail shopping centre.' Failure to comply with section 11 renders the lease liable to termination at the suit of the lessee and exposes the lessor to a potential claim for compensation for interference with the lessee's quiet possession under section 34. The wording of the representation and the motivation of the appellant in making it must be read in the light of this statutory requirement. Care must be taken before an inference is drawn that the representation in the disclosure statement was made by the lessor with knowledge that it was false or misleading. In the light of this lack of evidence, it follows that there was an error of law in the findings below and that the appeal must be allowed.
42 Our conclusion is based on a question of law and while the respondents may consider the result unfair, we note that there was no issue or allegation of unfair practices or unconscionable behaviour on the part of the appellant raised at the hearing. Nor could there have been since the unconscionability provisions of the Retail Leases Act 1994 [Part 7A] did not commence operation until October, 2001. It may be that in circumstances where the lessees were not legally represented and laboured under an understanding or impression that a statement or representation on the part of the lessor would be made good by the lessor, especially in circumstances where the lessees were not proficient in spoken or written English, and where the conduct of the lessors, although falling short of an actionable representation under section 10, contributed to that understanding or impression, the failure to make good that representation may amount to unconscionable behaviour. We say no more about this and make no conclusions on the point. The interpretation and application of part 7A of the Act will develop in due course.
The issue of procedural unfairness
43 Since we have found for the appellant on one ground in the notice of appeal, we do not need to comment on the ground raised of procedural unfairness but we think we should make some brief remarks about this ground. The Administrative Decisions Tribunal is not a court of strict pleading. Ideally, the respondents should have raised the issue of the disclosure statement and the legal effect of the representation raised therein in their notice of reply to the appellant's application. At least the matter should have been raised at the first hearing day. However, as judicial member Donald pointed out during the appeal, the importance of the disclosure statement and the reliance by the respondents of the representation therein and the importance of the matter to the respondents' case became a clear issue during the hearing, which was conducted over many days with gaps of several weeks between the hearing days. It is clear to us that the appellant had ample opportunity to meet this aspect of the respondents' case and no issue of procedural unfairness at the hearing before the Tribunal has been made out.
Reliance
44 Our decision that there was no representation within section 10 of the Act is sufficient to dispose of the respondents' applications and their defence against the appellant's claim and it is not strictly necessary to consider whether there was an error of law relating to the reliance by the lessees on any representation. Nor have we reached a joint conclusion on this issue as there was evidence before the Tribunal on which it relied in making the finding of fact of reliance. Deputy President Rossiter is of the view that, in order to constitute an error of law and thus an appealable point on the finding below that the respondents relied upon the tower representation, it would need to be shown that the Tribunal had no evidence before it to reach the conclusion it did or ignored critical evidence before it. Although the respondents' (the lessees') disclosure statement was admitted into evidence before the Tribunal, no submissions were directed to the Tribunal at the hearing nor on this appeal as to the conclusion to be properly drawn from the failure of the respondents to advert to the representation in their disclosure statement. However as one member of the Appeal Panel has reached a firm and different view on this matter and considers it appropriate to state his reasons in that regard in case the matter is the subject of review on appeal, his reasons on that issue are separately published.
45 This leaves the appellant's primary amended application for orders for rental arrears, costs, interest and forfeiture of the leases. As the essential element in the defence by the lessees has failed, the appellant is entitled to recover the disputed rent under the leases. However, applying well established principles developed in this Tribunal on forfeiture, the lessees are entitled to an opportunity to pay the rent in accordance with the leases and the lessor would not be entitled to forfeiture of those leases if that rent is paid.
46 There have been no submissions on the question of costs but we are mindful of the usual practice in this Tribunal that an order for costs will not be made in the absence of special circumstances. Without foreclosing any argument the parties may wish to put concerning costs, it appears to us that there are no special circumstances either at the hearing or on this appeal warranting a departure from the usual practice.
Mr Donald's separate reasons on the lessee's reliance on the representation
47 Contrary to the prevailing opinion of this Appeal Panel, I consider the Tribunal erred in law in the finding that the respondents relied on the representation by the lessor concerning the residential tower proposal in entering into the leases. Accordingly I separately state my reasons.
48 The relevant test in this Tribunal for determining whether an error of law may have arisen in these circumstances is set out in Woodside & anor -v- Director General, Department of Community Services (CSD) [2000] NSWADTAP 8. The Appeal Panel stated:
44 The fact finding process necessarily involves a process of selection between inconsistent and conflicting assertions as to fact by a process involving the assessment and weighing of evidence. A submission that the trier of fact's findings are against the weight of the evidence does not raise a question of law. For recent examples in the context of the Consumer Claims Tribunal, see Maxwell-Smith v Consumer Claims Tribunal & anor (Supreme Court, Greg James J, 8 December 1998) and Lewis & anor v Registrar Consumer Claims Tribunal & anor [1999] NSWSC 381 (Bell J).
45 There are some qualifications to this rule.
46 Critical Evidence: It is an error of law for the trier of fact to ignore evidence which is critical to an issue in the case: Mifsud v Campbell (1991) 21 NSWLR 725 (Court of Appeal); Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473 at 513 (Court of Appeal); or to make an adverse finding without addressing significant uncontroverted evidence to the contrary: State Rail Authority of New South Wales v Earthline Constructions (1999) 73 ALJR 306.
49 In this case there was evidence before the Tribunal of the contents of the lessor's and lessees' disclosure statements relating to representations made and relied on by the parties in entering into the lease. That evidence is set out in this Appeal Panel's reasons at paras: 15-17.
50 The importance of this evidence arises from the system established by the Retail Leases Act 1994 for prior disclosure of matters relied upon in entering into the lease.
51 Systems for prior disclosure of information and prior provision of legal documents have become an established method of ensuring parties to important legal relationships are not taken by surprise and have an opportunity to address clearly significant issues in the transaction. They are used in consumer situations such as retirement village leases (see Retirement Villages Regulations 2000 (NSW)) and in small business transactions such as franchising (see Franchising Code of Conduct in the Trade Practices (Industry Codes - Franchising) Regulations 1998 (Cth.)). The policy is to prevent subsequent disputation as to the extent of the respective obligations and rights of the parties by providing ample opportunity for scrutiny and advice on the details of the transaction. This always includes recommendations to the parties to seek legal advice.
52 The prior disclosure and advice system in the Retail Leases Act 1994 is set out in my decision in Xin v Zakos [2002] NSWADT 189 which although given after the hearing of this appeal, may usefully be repeated:
35 The Retail Leases Act 1994 establishes a system for disclosure of important information separately from and prior to the parties concluding the lease. It does this first by requiring in s.9 that a copy of the lease is to be provided at the negotiation stage and then sets out in s.10 a right to compensation for intentionally misleading statements or representations by either party prior to entering into the lease. Subsections 2 and 2A of s.10 make it clear that statements in the lessor and lessee disclosure statements are representations for the purposes of this right to compensation. Sections 11 and 11A require the respective parties to provide disclosure statements in terms of Schedule 2 of the Act covering a range of general information about the shopping centre and the lease, and in both of which there is a specific section for the parties to give details of statements or representations made by either party including those relating to exclusivity or limitations on competing uses.
36 Accordingly the detailed pre-contractual information process established by the Act provides an express opportunity for the parties to clarify any pre-contractual representations which are pertinent to entering into the Lease. Lessees are expressly advised to seek legal advice which in this case the Lessee did.
37 Where lessors comply with their obligations under that system, it is only proper that in the ordinary course, they be entitled to rely on what is the outcome of that system in terms of the representations identified or not identified.
53 Accordingly, in my view, evidence concerning what representations are or are not stated to have been relied on in entering into the lease is unquestionably critical in a retail lease case where it is asserted that the lessee has relied on certain representations in entering into that lease.
54 In its decision in this case the Tribunal did not give any consideration to the evidence before it that both the lessee's and lessor's Disclosure Statements expressly stated there were no representations on which the lessees had relied in entering into the leases, this being expressed in circumstances where all the lessees were in receipt of legal advice.
55 In my opinion this falls within the 'Critical Evidence' qualification stated in Woodside and constitutes an error of law in that the trier of fact ignored evidence which is critical to an issue in the case. Whether or not the parties drew the attention of the Tribunal to this evidence does not, in my opinion, determine the obligation of the Tribunal to consider the evidence that is before it. Not to have done so is in my opinion an error of law.
56 The question is then the role of an Appeal Panel in response to an error of that nature within its power under s.114 of the Administrative Decisions Tribunal Act 1997 (NSW). It is not a full merits appeal and it is obvious that the Panel has not had the benefit of hearing and seeing all the evidence as presented. One course under s.114(2)(b) would be to remit the matter to be heard and decided again. However the Panel has had the benefit of the Tribunal setting out the evidence on which it has based its decision and is therefore well placed to consider against that evidence the further evidence which it considers should have been taken into account. Accordingly, pursuant to the power of the Appeal Panel in s.114 to make such orders as it thinks fit and given the interests of the due administration of justice and of the parties in timely resolution of what is now a protracted dispute, the proper course would be for the Panel to determine this issue on that basis.
57 In my opinion, had that further evidence been appropriately examined and considered, the Tribunal should have concluded that the lessees did not as a matter of their legal relations, rely on any representations concerning the proposed residential tower in entering into the leases. By examining all the elements of the disclosure statements the nature of the representation as to the proposed residential tower proposal in the section for 'Changes or developments planned', would have been clear. It was a representation in that section for the purpose of informing the lessees of proposed disruption to trading and entitling the lessor to protection against any claims for compensation for that disruption under s. 34 of the Act. In light of the remainder of the disclosure statements and the express exclusion of reliance on any representations, it was not a representation intended to form the basis for an adjustment to the rent or other compensation if that proposal did not in fact eventuate.
58 On that basis, the subsequent affidavit and oral evidence before the Tribunal can be properly understood. Notwithstanding that the lessees may have been commercially influenced by a proposal for a residential tower being constructed at some unspecified time in the future, there was no evidence that they made due inquiry of the Council as to the status of the development application or that they or their lawyers sought to ensure that this influence was reflected in the lease documentation by way of provisions to apply if the proposal did not eventuate. Accordingly they took the commercial risk and they accepted that for the purposes of the legal relations between lessor and lessee as parties to a lease, no reliance was placed on that commercial possibility.
59 Accordingly I would uphold that ground of the appellant's appeal as a further basis for the orders proposed to be made by the Appeal Panel.
Orders
60 We make the following orders:
1. The respondents pay all rent owing to the applicant in accordance with the terms of the lease between the parties plus interest pursuant to s 72A Retail Leases Act 1994 at the District Court judgment debt rate;
2. If the parties are unable to agree on the quantum of rent payable, liberty to apply to list the matter before a judicial member of the Tribunal;
3. If the rent or any part thereof remains unpaid within fourteen (14) days of the parties' agreement as to the amount owing, or failing such agreement, the Tribunal's determination of the amount owing, the applicant be entitled to serve notice in writing terminating the lease.