Macquarie Publications Pty Ltd v Coles Supermarkets Australia Pty Ltd [2021] NSWSC 405 | Case summary

Macquarie Publications Pty Ltd v Coles Supermarkets Australia Pty Ltd [2021] NSWSC 405 | Case summary | Zoe

[5]

The negotiations between Macquarie Publications and Coles

Thus, when Macquarie Publications became registered proprietor of the Premises and the Car Park in April 2017, parking was free for the first two hours.
The rates for the first two hours of parking were described on the rate board outside the Car Park as: "No cost customer parking. Must display ticket on dashboard"
A meeting took place between Macquarie Publications and Coles in April 2017. Evidently, during that meeting a suggestion was made that Coles might agree to reduce free parking from two hours to an hour and a half.
Thus, on 26 April 2017, Coles wrote to Macquarie Publications: "Coles to consider the minimum length of time they would be willing to agree to for [free] customer parking (90 min v 2 hrs)".
On 15 May 2017, Macquarie Publications wrote to Coles: "As you know, although the existing Lease Memorandum with Coles provides for one hour of free parking throughout the centre, Dosto Pty. Ltd., in an email exchange dated 4 July 2016 agreed to allow two hours free parking … In consideration of the above extended free parking hours, Coles agreed to an additional payment of $31,200 per annum plus GST … To achieve our mutual goals, we propose the present rent be increased by $25,000 p.a. and annual increases in the car park rental of 2.5% pa to cover capital costs, ongoing management costs and equipment replacement. This arrangement would need to be subject to an enforceable Deed once agreement is reached."
It is common ground that Macquarie Publications' reference in the last paragraph to "rent" was a reference to the "additional payment" in the second paragraph. Thus, Macquarie Publications' proposal was to maintain two hours' free parking for customers but to increase the annual sum payable by Coles from the $31,200 negotiated with Dosto to $56,200.
On 6 July 2017, Coles wrote to Macquarie Publications agreeing to the "car park fee as proposed" but saying that Coles did not agree that free parking be reduced from two hours to an hour and a half. Coles stated: "As you know when this store was recently converted to Coles it was negotiated for the free parking period to be extended from 1 hour to 2 hours, we have received a lot of positive feedback from customers on this change and given its recent introduction we do not believe the 30 minute reduction will be well received."
In a letter to Coles dated 30 April 2018, Macquarie Publications described the improvements it proposed to introduce to the Car Park. These included a "Parking Guidance System" and a "Licence Plate Recognition" car parking system. A Parking Guidance System identifies vacant parking spaces with a green light overhead and occupied parking spaces with a red light. A Licence Plate Recognition System takes a photograph of the licence plate of the car on entry to and exit from the car park and records the time the vehicle was in the car park.
Macquarie Publications continued: "The installation of the proposed [Licence Plate Recognition] and [Parking Guidance System] car parking system will cost around $400,000.00. Macquarie will finance the equipment and ongoing maintenance costs and manage the installation process with Secure Parking and Ybern. The current informal parking arrangements, whereby Macquarie is providing one hour of additional free parking above the lease requirement … is unsatisfactory."
Macquarie Publications then proposed two options.
The first option was free parking for up to an hour, $2 for a stay of up to an hour and a half and $4 for a stay of up to two hours.
The second option was free parking for two hours but on the basis that Coles made an annual payment to Macquarie Publications of $148,500 plus GST.
On 18 June 2018, Macquarie Publications wrote to Coles terminating "the current informal arrangements" for two hours' free parking; that is, the Ad Hoc Arrangement originally made between Coles and Dosto, and that had continued after Macquarie Publications became owner of the premises and the Car Park.
Macquarie Publications proposed that it would install a Licence Plate Recognition System and change the signage outside the Car Park to "reflect the lease requirement of one hour of free parking at the site".
On 18 July 2018, Coles wrote to Macquarie Publications rejecting Macquarie Publications' proposal for a car parking fee applying after one hour. Instead, Coles proposed two hours of free parking on the basis of Coles making an annual payment to Macquarie Publications of $40,000.
Coles stated: "As you are aware an agreement was put in place whereby customers would receive two (2) hours free parking at the centre with Coles in return making monthly payments equal to an annual cost of $31,200.00 plus GST. Both Coles and the Lessor agree that the method of payment for this agreement leaves an opportunity for enhancement, that is, an agreement where payments are made as part of regular outgoings. Notwithstanding, Coles has always contended that the two (2) hour free parking period is critical to the customer experience and is a significant contributing factor to the growth of sales since launching in Five Dock in 2016. The two hour free parking period is a benchmark for the majority of Coles' stores, with the closest stores in this catchment (Norton Plaza - Leichhardt and Concord) having a two hour free period. It is generally accepted by our Lessors that a two hour free limit is fair and reasonable, both for the customer experience and store trade. The Lessor's proposal of an annual fee of $148,500.00 plus GST for the second hour of free parking is excessive and is not a commercially viable option for Coles. Coles believes that the reduction in the free parking period will have a detrimental impact on sales, which will offset any improvements the car park management system will have in improving turnover of car parking for the Lessee's customers. We are committed to improving the customer offer at this site and support in principle the Lessor's plans to introduce a parking management system with an amended layout for trolley[s] and pedestrians on account of safety. Coles advocates the use of reasonable parking management measures at sites where customer parking is jeopardised by motorists misusing the carpark, such as Five Dock Plaza … On this basis Coles will consider entering into a new agreement by way of formalised deed for two hours free parking at an annual fee of $40,000.00 + GST. Coles considers this offer to be a [sic] fair and reasonable."
On 27 July 2018, Coles wrote to Macquarie Publications stating that the offer at [40] would be withdrawn unless accepted within seven days. Coles' offer was not accepted and was thus withdrawn, with effect on or about 3 August 2018.
In the meantime, on 9 July 2018, Macquarie Publications entered a "Management Agreement" with Secure Parking Pty Limited, an experienced car park manager.
On 1 August 2018, Macquarie Publications instructed Secure Parking to change the signage of the Car Park to read "1 Hour Free Parking".
A sign was erected over the Car Park entrance: "Please Be Aware. Random Patrols are Undertaken in This Car Park to Ensure Compliance with Car Parking Conditions".
Another sign said: "Any vehicle not complying with the Car Park Terms & Conditions will be issued with a Non-Compliance Breach Notice".
Macquarie Publications contends that these arrangements provide a "proxy" for what would have been the position had it been able to impose a charge or fee for the second hour of Car Park stays. I return to this below. [5]
On 7 August 2018, Macquarie Publications wrote to Coles: "Like Coles, Macquarie Publications is committed to improving the customer offer at Five Dock Square. We have demonstrated our commitment through significant capital investment in the centre since our acquisition in April 2017, including the large investment we are making with the current installation of the [Licence Plate Recognition] parking system and the ongoing cost of having the car park externally managed. The intent of both the [Licence Plate Recognition] parking system and the active management of the car park is to ensure the regular turnover of car parking for Coles' customers by removing congestion caused by the misuse of the car park by residents and other motorists. The offer contained in your letter of 18 July 2018 to retain two hours free parking is not acceptable to Macquarie Publications. It is not a commercially viable option for us, and does not reflect the costs that we are incurring to improve the turnover of car parking for your customers. As such, and as notified to you on 18 June 2018, we have ended the previous informal arrangement of one hour's additional free parking."
Macquarie Publications continued by repeating the 30 April 2018 Proposal so far as it concerned the first two hours of car park stays: that is, free parking for the first hour, $2 for stays between an hour and an hour and a half and $4 for stays between an hour and a half and two hours. The August 2018 Proposal also proposed charges or fees for parking beyond two hours.
Coles replied on 22 August 2018: "Clause 13(b) of the Lease requires the Lessor and the Lessee, acting reasonably, to agree on the amount to be charged for car parking fees. After consideration of the parking charges the Lessor has proposed, please be advised Coles does not agree to the fee structure. … Whilst Coles understands the need for a parking management system at Five Dock Square, we reiterate that Coles is not supportive of the Lessor's decision to remove the two (2) hour free parking limit and does not endorse the implementation of a parking charge for less than two (2) hours."
The following day, Macquarie Publications wrote to Coles, noting that Coles had withdrawn the offer referred to at [40] but contending that that offer was: "… simply inadequate to compensate Macquarie Publications for either the increased costs it has recently incurred, and will continue to incur, in improving and paying for the active external management of the car park, or, the revenue that Macquarie Publications would forego in not charging for the second hour of parking."
Macquarie Publications continued: "In this regard, I note that the recent improvements to the car park have cost Macquarie Publications about $410,000 plus GST (a little over 90% of that being the cost of installing the [Licence Plate Recognition] system itself), the ongoing annual external management cost of the car park is about $40,000 pa, and once the [Licence Plate Recognition] system is past its warranty period in 24 months, its annual maintenance costs are expected to be approximately $20,000 pa. Further, the revenue that Macquarie is projected to earn (at its proposed rates), from the second hour of parking (the hour that Coles proposes to also be free), and which would otherwise cover those costs, is between $80,000 and $100,000 pa. … Both your correspondence of 22 August 2018 and of 18 July 2018 make it clear that Coles will not agree to Macquarie Publications charging any fee, regardless of the amount, for the second hour that people park at the premises. The reasons advanced by Coles are essentially unrelated to the reasonableness of the proposed fees themselves, focusing instead on the duration of the fee free parking periods at other Coles premises. Coles' position, while convenient, ignores that in each of those instances Coles will have negotiated two hour free parking periods with its relevant landlords, something that it did not do when negotiating this Lease. As such, Macquarie Publications considers Coles' blanket refusal to consider or agree to any fee for the second hour of parking to be in breach of its obligation to act reasonably in agreeing the fees to be charged under clause 13(b) of the Lease, and that a dispute has arisen between the parties."
Coles responded on 4 September 2018. That letter included: "Coles rejects any suggestion that compensation is owed by Coles to the Lessor for this system or on account of associated costs. This is not appropriate and it is unreasonable for the Lessor to assert this in the circumstances. Any suggestion of this is irrelevant to this matter on the basis that Coles has not made any undertakings to contribute to the parking management system. Coles construes this as an attempt by the Lessor to recoup the costs of capital works from Coles. … Whilst clause 13 provides that a charge may be implemented for over 60 minutes, any charge is still captured by the reasonableness qualifier within the clause. To this extent, the clause does not restrict the parties' interpretation of the reasonableness of the fees. Rather, the clause is to be read taking into account the reasonableness of any fee for a particular duration of time over 60 minutes. The test of reasonableness is an objective test, to be measured against other comparable retail centres in the market, having regard to the primary purpose for entering into a parking agreement set out in clause 13(c) - that is, for the regular turnover of car parking for the Lessee's customers. Comparable retail centres are regarded as shopping centres containing similar sized supermarkets, including Coles competitors. … The inadequacy of the one hour free period was the primary reason Coles negotiated the ad hoc arrangement with the previous Lessor to bring the carpark in to line with the general parking standard at retail centres in the market. Moreover, Coles has always indicated to the Lessor its preference for a side agreement between the parties to secure a permanent arrangement to this effect."
The debate continued in correspondence, including an email from Macquarie Publications to Coles, on 20 September 2018, which included: "Your attempts to limit the matters which might be considered relevant to the determination of a reasonable fee, despite the absence of any such limitation in the Lease. For the avoidance of doubt, I see no reason why any of the costs of operating the car park, a desire to obtain some reasonable return in respect of the same, comparisons with non-retail car parks, or, comparisons with fees charged in retail car parks after the relevant free parking period (accepting that in this instance that period is 60 minutes not 2 hours) are in any way 'not appropriate' or 'irrelevant' or 'immaterial' …"
On 21 March 2019, a director of Macquarie Publications, Ms Elizabeth Poate, made a note of a meeting she had that day with Mr Gordon Smith, Coles' State Property Manager for NSW/ACT.
Ms Poate's note read: "I asked Gordon if he would like to walk through the car park but he said he had already done that. Gordon agreed that the system we had installed was a good one and that it would work to eliminate overstayers and that our only point of disagreement was the free period. I pointed out to Gordon that the data we had collected confirmed that up to 84% of car parkers were exiting the car park in the 60 minutes signposted in the car park, so in effect a 60 minute period was not affecting Coles sales (or my percentage rent) as indicated by the growth in revenue being generated by the store. Gordon mentioned the offer of $40,000.00 that has been made by Coles and I said that that was less than the $56,000.00 offered the year before - Gordon asked me why we had not taken that and I said we had made that offer on the basis of 90 minutes free parking not 120 minutes of free parking."
On 11 April 2019, Mr Smith sent an email to Ms Poate, stating: "We recognised that parking management is needed at Five Dock, provided that there is a minimum of 2 hours free. Charges above this are accepted. We don't agree to any parking charge for below 2 hours. 2 hours free is standard at all other centres in the Inner West/Canada Bay retail catchment, and the basis of our position."
Mr Smith's statement that "charges above this are accepted" was directed to that part of the August 2018 Proposal that concerned Car Park stays over two hours.
On 31 October 2019, Macquarie Publications commenced these proceedings.
In June 2020, Macquarie Publications served a report by an expert parking and traffic consultant, Ms Cristina Lynn, who opined that a reasonable charge for car park stays in the second hour was $4 (the Lynn Proposal).
Coles' position throughout these negotiations was that no car parking charge was reasonable for stays up to two hours, but that instead it was prepared to pay an annual fee to Macquarie Publications.
Coles' position was summarised by Mr Conde as: "Coles contends that to be reasonable the car park must have a window of 2 hours free parking for customers and Coles is (and has always been) willing to pay a monthly amount to [Macquarie] to secure that window of 2 hours free parking".
I will return to this, but a summary of the negotiations concerning an annual amount payable by Coles to Macquarie Publications in exchange for two hours' free parking is: 1. 15 May 2017 - Macquarie Publications proposed the annual fee be $56,200 in exchange for one and a half hours' free parking; [6] 2. 6 July 2017 - Coles accepted that figure but in exchange for two hours' free parking; [7] 3. 30 April 2018 - Macquarie Publications proposed two options one of which was an annual fee of $148,500 in exchange for two hours' free parking; [8] and 4. 18 July 2018 - Coles proposed an annual fee of $40,000, which was withdrawn with effect on or about 3 August 2018. [9]

[8]

The proper construction of Clause 13(b) of the Lease

Clause 13(b) provides that Macquarie Publications "may' impose "a" reasonable charge or fee for car park stays of more than 60 minutes.
The clause does not speak of "the" reasonable charge, thus reflecting the parties' contemplation that more than one "reasonable" charge or fee may be available.
As Mr Weinberger and Mr Jordon, who appeared for Macquarie Publications [11] submitted: "[A] reasonable fee includes or encompasses a range of fees. There can't only be one precise fee that is reasonable. It might be $4. It might be $3.50." [12]
The clause does not speak of a "market" charge or fee. Mr Weinberger submitted that the concept of a "reasonable" charge or fee was broader than that of "market value". He described Coles' reference in negotiations to "comparable retail centres" [13] as "misconceived" and "misplaced". However, as I set out below, Macquarie Publications expert, Ms Lynn, expressed her opinion as to a "reasonable charge" or fee by reference to "comparable shopping centre car parks". [14]
Clause 13(b) makes specific provision for what must be established in order that Macquarie Publications make a charge for Car Park stays beyond an hour.
First, Macquarie Publications "may impose a reasonable charge or car parking fee" for such stays.
Second, such charge must be "in an amount previously agreed" with Coles, "both parties acting reasonably".
I see both of these requirements as being essential.
That is, in order that Macquarie Publications be able to make a charge for parking beyond one hour, the charge it seeks to impose must be: 1. reasonable; and 2. in an amount previously agreed to by Coles, acting reasonably.
I do not accept Mr Weinberger's submission that the second requirement is subservient to the first, or that clause 13(b) can be read as providing no more than that Macquarie Publications' proposed charge for parking beyond one hour, in fact, be "reasonable".
Mr Weinberger drew attention to the description by Lord Diplock in Sudbrook Trading Estate Ltd v Eggleton [15] of a provision in an option to purchase land that the price be agreed by two experts as being a "convenient and sensible machinery for ascertaining what is a fair and reasonable price". [16]
Mr Weinberger submitted that, by analogy, the parenthetical words "in an amount previously agreed between [Macquarie Publications] and [Coles], both parties acting reasonably" was "merely a convenient and sensible means for ascertaining what a 'reasonable' car parking fee" was.
I do not agree.
The words used by the parties in cl 13(b) show that they intended that the parenthetical words do more than this. Their effect is that Macquarie Publications can only impose a charge for car park stays beyond one hour if Coles has "previously agreed". The qualifier to that requirement is that Coles must act reasonably. That is additional to the qualifier in the first requirement of the clause, namely, that the proposed charge itself be reasonable.
Further, Mr Weinberger's submissions would give the parenthetical words no work to do. If the clause means no more than that the proposed charge or fee be reasonable, the parenthetical words could be excised. Where possible, effect should be given to every part of a document and no part treated as being redundant, inoperative or surplus. [17] I do not see the parenthetical words as having been inserted merely out of an abundance of caution or because of poor drafting [18] and see no reason why clause 13(b) should be read as if those words were not present.
I think Mr Conde was correct to submit that cl 13(b) does not require Coles to agree to any "reasonable charge or car parking fee for car park stays of more than 60 minutes in duration"; it requires Coles to act reasonably in working to agree to such charges or fees.
I also agree with Mr Conde that, on the proper construction of cl 13(b), Coles could only be in breach of the clause if it acted unreasonably and that it is possible, on the text of the clause, and in particular circumstances, for a fee to be reasonable and for Coles to act reasonably in refusing to agree to it.
An example of that circumstance might be if Macquarie proposed "a" reasonable charge or fee but that Coles itself proposed another charge fee that was also reasonable. As Mr Weinberger submitted, there will be a range of fees that will be reasonable. [19] That circumstance would or might create a deadlock. It might result in the necessity of Macquarie Publications proposing a different but reasonable charge or fee and for Coles to act reasonably in relation to that alternative proposal. I received no submissions about that possibility. For example, Mr Weinberger did not submit that the parties are unlikely to have intended such a result.
In any event, this is the result of the words the parties have used. As Coles is the only significant commercial tenant of the development, and for whose customers the Car Park is primarily intended, [20] this result undoubtedly reflects Coles' particular interest in the charge or fee imposed by Macquarie Publications for use of the Car Park.
On the other hand, if, as Coles contends, Macquarie Publications' proposed charge or fee for the second hour of parking is unreasonable, it would be hard to conclude that Coles acted unreasonably in opposing it.

[10]

Can a charge or fee be $0?

Clause 13(b) provides that Macquarie Publications "may impose" a reasonable charge or fee for parking beyond one hour.
Mr Weinberger submitted that the clause thus presupposes that Macquarie Publications may impose a charge or fee "of some substance" and "something greater than $0".
Mr Weinberger submitted: "A reasonable person in the position of Macquarie would not make the significant commercial investment in purchasing the Car Park only to then have to fully fund the continuing operation of the Car Park just for the pleasure of letting people use the Car Park (for free) in order to shop at Coles ..."
In my opinion, this submission begs the question of what the clause means. In any event, on no view of Coles' position is it suggesting that Macquarie Publications "fully fund" the operation of the Car Park.
Implicit in Mr Weinberger's submission is the proposition that "$0" is incapable of being a charge or a fee. But I can see no reason why, as a matter of language, it could not be said that the "charge" or "fee" for something is "zero" or "nothing" or "$0".
Another way of expressing the same idea might be to say that there is "no charge" or "no fee" or that the thing in question is "free".
But it does not follow that "$0" is incapable of being a "charge" or "fee".
Indeed, in its Management Agreement with Secure Parking, Macquarie Publications, in terms, agreed that the "Tariff Charge" for "0-1 Hours" of parking should be "$0". [21]
"0" or "zero" is, after all, a number.
In Federal Commissioner of Taxation v Ryan, [22] the High Court was invited to consider whether there could be a "nil assessment" for income tax purposes. The majority [23] considered that framing the issue for consideration in that case around whether zero was a number distracted from the real issue. [24]
However, whilst agreeing with the majority in the result, Callinan J observed: [25] "[The trial judge] was correct to hold that the 'number zero is the beginning of and hence the first number of, and included in, the domain of natural numbers … in the domain of the integers, the number line unarguably contains zero. That is, zero is a number, sum or amount'."
Further, Kirby J [26] said: [27] "An assessment which … results in an obligation to pay no tax is just as true as an 'assessment' for the purposes of the [Income Tax Assessment] Act…I agree with [the trial judge] that a nil assessment is not a legal impossibility, as has sometimes been claimed. As his Honour correctly put it, 'zero is a number, sum or amount, and an assessment of zero dollars is an assessment of a sum or amount of tax'."
That case was cited with approval in Vodafone Pacific Ltd v Mobile Innovations Ltd, [28] where Giles JA stated: [29] "Although Mobile submitted that nil could not be a target level because nil was nothing, and one could not aim at nothing, as a matter of language, I consider that a target level can be nil. In other contexts, zero has been held to be an 'amount of taxable income', with acceptance that it is a number …"
It must follow that a "charge" or "fee" also can be "zero", "nil" or "$0".
Here, the parties have agreed that any charge or fee be "reasonable". It must follow, in my opinion, that it cannot be said that "$0" is incapable of being a reasonable charge or fee.

[11]

The Lynn Proposal

Ms Lynn's expert report is dated 15 June 2020.
Ms Lynn expressed the opinion, assuming the accuracy of data gathered by Macquarie Publications using the Licence Plate Recognition System to which I have referred, [30] that a "reasonable charge" for a stay of between one and two hours in the Car Park is $4.
Ms Lynn based her opinion on parking rates at 16 "[c]omparable shopping centre car parks" which she said she used "as a benchmark to assess a reasonable parking fee for stays over 60 minutes".
Ms Lynn said that she did not take into account three other shopping centre car parks which provide two hours' free parking and that she agreed were proximate and in which there is a Coles supermarket, [31] because their "[s]ize and diversity of retail component[s] is not comparable". I infer from this that Ms Lynn accepts that the 16 car parks do have comparable "size and diversity of retail component[s]" as exist at Five Dock Square.
Of those 16 shopping centre car parks: 1. three have three hours of free parking; 2. nine have two hours of free parking; and 3. the remaining four have one and a half hours' free parking.
Not one of Ms Lynn's comparable car parks has free parking for only one hour.
Ms Lynn's reasons for her conclusion that $4 was a reasonable charge for Car Park stays of between one and two hours were that: 1. according to the data with which she was supplied, around 85% of parkers stayed less than one hour and around 55% stayed less than 30 minutes in the Car Park; 2. according to that data, the proportion of parkers staying between one and one and a half hours was around 8%; 3. although it was not possible to know what proportion of parkers attended Coles' supermarket, it is to be assumed that most parkers "would spend some or most" of the parking time shopping at Coles; 4. somewhat inconsistently, shoppers spending more than one hour in the car park were "likely" also to shop elsewhere "justifying the imposition of a parking charge to ensure turnover at the car park for the customers of Coles"; 5. Council operated car parking spaces in the vicinity charged $7.40 for two hours' parking; and 6. $4 was the "mid range" of the charges at four of the 16 comparable car parks.
Ms Lynn did not explain in her report how she reconciled the free parking at the 16 other sites with her conclusion that a reasonable fee for a second hour of parking at Five Dock Square was $4; nor with the implicit conclusion that it was reasonable for there to be no free parking at Five Dock during that second hour.
This is especially hard to understand in circumstances where, inconsistently with Mr Weinberger's submissions set out above, [32] Ms Lynn said she used comparable car parks as her "benchmark" to assess a "reasonable" [33] parking fee, and yet did not identify one car park that imposed a fee during the second hour. All Ms Lynn's 16 comparable car parks allowed free parking for at least one and a half hours, nine for two hours and three for three hours.
As to Ms Lynn's reference to imposing a charge to "ensure turnover" in the Car Park, the parties agreed in clause 13(c) of the Lease that it was the entry by Macquarie Publications into a car park management agreement, such as the agreement Macquarie Publications entered with Secure Parking on 9 July 2018, [34] that was to secure this result. [35]
Further, in relation to Ms Lynn's last stated reason, that a $4 charge was the mid-range for stays of between one and two hours at four of the comparable car parks, those four car parks had free parking for one and a half hours. Ms Lynn's reasoning here does not compare like with like as the rates to which Ms Lynn compares $4 for the second hour of parking are for either a parking period between an hour and a half and two hours or, in one case, a parking period between one and a half and two and a half hours. [36]
Mr Weinberger submitted that some car parks in the Inner West area should not be seen as comparable to that of Five Dock Square because they allowed free parking either as a result of terms negotiated in the relevant lease, or because of a condition imposed by the local council on development approval.
However, Ms Lynn stated that five of the shopping centre car parks she regarded as being comparable provided free parking by reason of a "condition of the major tenant's lease".
In these circumstances, and although Ms Lynn's evidence is the only expert evidence on this topic, I am not persuaded that a reasonable charge for the second hour of parking is $4. Indeed, Ms Lynn's evidence as to the amount of free parking at the 16 shopping centres she states as being comparable suggests that it is not.
These matters also suggest that the August 2018 Proposal is not reasonable as, like the Lynn Proposal, it proposes only one hour free parking and a charge or fee of $2 for parking between one and one and a half hours and $4 between one and a half and two hours. This is a little less than the Lynn Proposal but is more than what was charged for 12 out of 16 of Ms Lynn's comparable shopping centre car parks.
Further, there is evidence: 1. of Coles' customers expressing dissatisfaction that only one hour of free parking is provided at Five Dock Square. This appears in a number of articles in the Inner West Courier of 5 July 2016 and 28 August 2018, and in customer comments recorded by Coles; and 2. of a negative reaction from Canada Bay Council whose officers have complained both to: 1. Coles, saying "[t]here are no other shopping centres with a parking charge for under 2 hours in this local government area"; and 2. Macquarie Publications; Mrs Poate agreed that representatives of Canada Bay Council had communicated to her "their concerns about the reduction in free parking from two to one hour". [37]
Those matters also point against the reasonableness of the fees Macquarie Publications proposes.
Mr Weinberger relied on a number of other matters.
First, Mr Weinberger placed emphasis on the Initial Parking Rates and submitted that: "A reasonable person in the position of the parties would have understood, at the date of the execution of the Lease, the Initial Parking Fees to be 'reasonable' car parking fees within the meaning of the Lease."
Mr Weinberger also submitted that "nothing less than those rates can be unreasonable".
Macquarie Publications seeks a declaration that Coles is and remains in breach of cl 13 of the Lease in that it has failed to agree to the rates in the August 2018 Proposal, or alternatively in the Lynn Proposal. Therefore, the question must be determined by reference to the circumstances in existence at the time of those two proposals; that is 7 August 2018 and 15 June 2020 respectively.
Further, the Initial Parking Rates formed no part of the reasoning in forming either the August 2018 Proposal, nor the Lynn Proposal.
Mr Weinberger also pointed to the fact that the only express requirement in the Lease is for the provision of one hour of free parking. That is true, but that begs the question of what a reasonable charge or fee for the second hour of parking might be.
Mr Weinberger's submissions pointed to the capital expenditure that Macquarie Publications has undertaken to install control management facilities within the Car Park. He argued that Macquarie Publications' reasonable expectation to recoup that capital expenditure was a factor relevant to consideration of a reasonable fee for the second hour of parking. This factor was emphasised in Macquarie Publications' letter of 7 August 2018 in which it made the August 2018 Proposal. However, it played no role in Ms Lynn's analysis.
Overall, I am not persuaded that Macquarie Publications has established that its proposed parking rates for the second hour of parking in the Car Park are reasonable.

[12]

Did Coles act unreasonably?

It is for Macquarie Publications to establish that Coles did not act reasonably in failing to agree to its proposed charge.
As I have concluded that Macquarie Publications has not established that the charges or fees it proposes are reasonable, I do not see on what basis I could conclude that Coles did not act reasonably in failing to agree with them.
In any event, even if Macquarie Publications' proposed charges were reasonable, they can only impose "a" reasonable charge and the question arises as to whether the charge for which Coles contends, "$0", was also reasonable.
The car parking fees charged at the 16 comparable car parks Ms Lyn identified suggest that $0 is a reasonable charge, as 12 out of those 16 car parks provide free (ie "$0") parking for the second hour.
Further, I think Mr Conde was correct to submit that the reasonableness of Coles' conduct falls also to be considered in light of the fact that Coles had earlier agreed, and remains willing, to pay a monthly or annual charge to Macquarie Publications, in lieu of customers paying a charge for using the Car Park for between one and two hours.
On 15 May 2017, Macquarie Publications proposed that Coles pay it an annual amount of $56,200 (being a $25,000 increase on the amount that Coles had earlier agreed to pay Dosto), on the basis that Macquarie Publications would install a new car park management system and that there be one and a half hours of free parking in the Car Park with validation. [38]
On 6 July 2017, Coles has said that it agreed to that proposed "car park fee" but on the basis that free parking for the first two hours be maintained. [39]
From 30 April 2018, Macquarie Publications' position was that if there were to be two hours of free parking, Coles should pay it an annual amount of $148,500. This was almost a threefold increase on the amount that Macquarie Publications had proposed, and Coles conditionally accepted, in the previous year. It was also some 50% above the revenue ($80,000 to $100,000) that Macquarie Publications then calculated it would be foregoing by not being able to charge for the second hour of parking. [40]
Macquarie Publications sought this much larger charge because, according to Ms Poate, Macquarie Publications should be able to recoup through that charge amounts on account of matters such as capital and maintenance costs, as well as profit. [41]
However, as Mr Conde submitted, matters such as recoupment of capital costs and seeking a profit are not apposite matters to be taken into account to calculate a charge such as that contemplated. That is because the charge was intended to be compensatory for loss of revenue from the Car Park and nothing more.
Coles' response to Macquarie Publications' offer of $148,500 was to make its 18 July 2018 offer to exchange "two hours' free parking at an annual fee of $40,000". [42]
The question of whether Macquarie Publications has shown that Coles acted unreasonably in relation to the charges and fees proposed by Macquarie Publications must be seen in this wider context. The fact that Coles was prepared to engage in the process, while at the same time contending for a car parking charge that was, at least arguably, reasonable, leads me to conclude that Macquarie Publications has not established that Coles' failure to agree to its proposed charges was unreasonable.

[14]

The Licence Plate Recognition System data

As I have said, [43] Ms Lynn's opinions assume the correctness of information as to car parking patterns said to have been derived from Macquarie Publications' Licence Plate Recognition System.
That evidence was derived from screen shots and Microsoft Excel spreadsheets prepared by Mr Eam Chiew Lim, the National Operations Manager at Ybern Pty Ltd ("Ybern"), a company specialising in the supply and installation of ticketless parking systems for commercial parking stations.
Mr Lim described the Licence Plate Recognition System as follows: "In simple terms, the ticketless parking system installed at the Car Park works by: (a) taking a photograph of the licence plate for each vehicle when it enters the Car Park by way of a camera situated at the entry point to the Car Park; (b) recording the time that the vehicle entered the Car Park; (c) taking a photograph of the licence plate of the vehicle when it exits the Car Park to confirm the time at which the vehicle exited the Car Park. The data gathered is used to calculate the fee payable for each vehicle based on the length of time between the vehicle entering the Car Park and exiting the Car Park, which is charged at the time the vehicle exits the Car Park by way of a payment system installed at the exit point."
In fact, as I understand the evidence, there is currently no "payment system installed at the exit".
One such system could be a boom gate which would only open if the exiting vehicle is identified as entitled to free parking or if any required payment is made. No such boom gate appears in the photographs in Ms Lynn's report. Mr Weinberger informed me that no such boom gate is installed. I will return to this below.
Mr Lim explained that: 1. the Ybern parking system uses a software system known as "Kronos" to capture the registration number of cars entering and exiting the car park and the time of such entry and exit; 2. that data is stored as code on a "back end database management system" known as "MySQL"; 3. Ybern can use a web-based proprietary software (or "web interface") called Ampyx, which is "integrated" with Kronos, to access the data stored on MySQL.
Mr Lim said that he was able to view the data so stored, and to export it into Microsoft Excel spreadsheets.
He produced: 1. a screenshot which purports to show the length of stay of vehicles in the Car Park between 21 April 2020 and 30 April 2020; 2. another screenshot which purports to show percentage occupancy of the Car Park throughout the day on 11 May 2020; and 3. a spreadsheet setting out the usage of the Car Park on a daily basis from 18 September 2018 until 30 April 2020, the number of cars at the Car Park on an hourly basis from April 2019 to April 2020 and the number of cars at the Car Park on an hourly basis for 5 May 2020.
At the outset of the hearing I admitted these documents as evidence only of the fact that the Ampyx web interface produced the screenshots in question and that Mr Lim had performed the task of preparing the Excel spreadsheets.
Mr Conde submitted the evidence should not otherwise be allowed because: " … there appear to be at least three systems in place (Kronos, MySQL and Ampyx) and although there is evidence of one of those systems having been accessed and data retrieved from it (i.e. Ampyx), the [Macquarie Publications] has not adduced evidence to explain how these electronic systems interact with one another, how they compile and treat information, whether any kind of judgment is applied to information, why the data produced by these systems is reliable and so on."
However, I am persuaded that, by reason of s 146 of the Evidence Act 1995, that material should be received as evidence of the fact of the car parking patterns purportedly revealed by the steps taken by Mr Lim.
Section 146 of the Evidence Act provides: 146 Evidence produced by processes, machines and other devices (1) This section applies to a document or thing - (a) that is produced wholly or partly by a device or process, and (b) that is tendered by a party who asserts that, in producing the document or thing, the device or process has produced a particular outcome. (2) If it is reasonably open to find that the device or process is one that, or is of a kind that, if properly used, ordinarily produces that outcome, it is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that, in producing the document or thing on the occasion in question, the device or process produced that outcome.
The question is, is it is "reasonably open" to find that the "process" described by Mr Lim, [44] properly used, ordinarily produces the "outcome" of showing usage of the Car Park as set out in Mr Lim's spreadsheets.
The test of whether it is "reasonably open" to find that a device or process ordinarily produces the outcome in question has been described as "not a demanding one". [45]
In order to conclude that something is "reasonably open" it is not necessary to make a concluded finding about the matter or make a finding on the balance of probabilities. [46]
It has been said that the phrase "reasonable open" is "virtually equivalent to a 'prima facie case'". [47]
In North Sydney Leagues' Club v Synergy Protection Agency, [48] Beazley JA [49] stated: [50] "Section 146 is directed to evidence produced by the application of a mechanical or technological process. Photocopied documents, computer generated material and material generated from data stored in a computer are typical examples. Section 146(2) is not directed to the underlying accuracy of the information contained in a document or record that is produced in this way … Rather, s 146(2) is a means whereby, on this example, a photocopy of a document containing such information may be received into evidence. It follows that, in my opinion, the appellant's s 146(2) submission fails."
The "process", as Mr Lim has described, is one whereby a back end database management system (ie "data stored in a computer" per North Sydney Leagues' Club) is accessed by front end software to produce the "material generated".
Here: 1. the Ybern system was recommended to Macquarie Publications by Secure Parking and another car park consultant, Caldwell and Kent, after a "tender process which called for 'a fully equipped remote-control centre with integration to the parking control system and the ability to perform … Live monitoring of parking system' with 95%+ accuracy"; 2. in the period that Secure Parking was managing the Car Park, Secure Parking was required to carry out regular inspections and assessments of the Ybern equipment, as well as provide monthly reports on any operational and maintenance issues with respect to the Ybern equipment; 3. Mr Lim was first trained in using Ampyx in 2015 by the developer of Ampyx, has used Ampyx as part of his day-to-day activities at Ybern since joining Ybern in November 2017 and now trains clients in how to use Ampyx. 4. for Ybern's internal records, and in order to assess the performance of Ybern's client's car parks, Mr Lim generates "Length of Stay" data reports approximately 5 to 6 times a month and has never experienced issues in Ampyx where the data extracted from Ampyx has differed to the data recorded on Ampyx; and 5. Ms Lynn compared the results of an occupancy count at the Car Park on 5 May 2020 to the Ybern occupancy information and found that "the results [were] within an acceptable margin of error".
I think that it is "reasonably open", in these circumstances, to conclude that the process Mr Lim has described ordinarily produces the outcome summarised by Mr Lim in his Microsoft Excel spreadsheets and that it should therefore be presumed that the process did produce that outcome.
Thus, the material should be received as evidence of the fact of the reported car parking patterns.

[15]

What car parking pattern would have occurred had there been no free parking beyond one hour?

Macquarie Publications claims damages for the loss it has suffered assuming Coles acted in breach of cl 13(b) by failing to act reasonably in rejecting the August 2018 Proposal and/or the Lynn Proposal, those damages being the car parking fees it would have received had it been able to impose a charge for car park stays between one and two hours.
I will return below to Macquarie Publications' position in relation to car parking fees for stays beyond two hours.
Macquarie Publications accepts that it cannot produce precise evidence of its loss because there are no means by which it can establish the exact pattern of car parking use that would have occurred had car park users been obliged to pay car parking fees for the second hour of parking.
Mr Weinberger accepted that assessing how car park users would have responded to the imposition of the August 2018 Proposal and/or the Lynn Proposal at the relevant time, and the continuing car parking demand, "is entirely hypothetical and cannot be estimated with any precision".
Mr Weinberger drew attention to the observations of Hayne J [51] in Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [52] that where a plaintiff cannot adduce evidence of what has been lost "it may be that estimation, if not guesswork, may be necessary is assessing the damages to be allowed". [53]
On the other hand, there must be some basis in the evidence to reach the relevant conclusion. What cannot be done is to take a stab in the dark or pluck a figure out of the air. [54]
In those circumstances, Mr Weinberger submitted that car park data for September 2018 could be used "as a reasonably accurate proxy for the pattern of car parking use that would have occurred had car park users been obliged to pay for stays over 60 minutes in duration".
As I have set out above, [55] from 1 August 2018 there were signs over the Car Park entry saying "1 Hour Free Parking" and warning of "Random Patrols" to "Ensure Compliance with Car Park Conditions" and of the possible issue of a "Non-Compliance Breach Notice" in the case of non-compliance with "Car Park Terms & Conditions".
There is evidence that these steps generated publicity in the Five Dock area. Thus, on 28 August 2018, the InnerWest Courier reported that: "Parking a car is becoming a headache for shoppers and visitors in Five Dock as new parking limits take their toll in the town centre. Business owners say they have already had a drop in customer numbers due to the impacts of … new one-hour restrictions at Five Dock's main carpark on Garfield Street. The car park, under Coles … has traditionally offered two hours of free parking but this was cut to 60 minutes earlier this month."
Coles has recorded "Store Element Comments" immediately after 1 August 2019 such as: "One hour free parking is not enough! 2hrs would be good".
There was also another comment made immediately before 1 August 2019: "It's still free! One hour free parking will not be enough, if that does happen I think it will turn a lot of people away from shopping there."
This evidence is, of course, anecdotal in nature but does suggest that, immediately after 1 August 2019, car park users are likely to have understood that there would be a charge for the second hour of parking.
That suggests that parking patterns at this time will give some indication of what parking patterns would have occurred had Coles agreed that there be a charge for the second hour of parking.
Mr Conde did not cavil with this proposition in his submissions in reply.
The data collected from Macquarie Publications' Licence Plate Recognition System shows that between 10 September 2018 and 9 October 2018, the car park pattern was: Length of stay Number Up to 1 hour 35,637 Up to 2 hours 2,971 Beyond 2 hours 1,865

[20]

Endnotes

Defined to be the "customer car parks in the Centre" as identified on a plan.
So named as it was made in a report by a traffic consultant, Ms Cristina Lynn: see [60] below.
So named because Macquarie Publications proposed these fees in a letter dated 7 August 2018: see [48] below.
The strata plan was registered on 14 July 2004.
See [176ff]
See [30] above.
See [32] above.
See [33ff] above.
See [40] and [42] above.
See [43] above.
And for convenience, and without intending any disrespect to Mr Jordon, I will henceforth refer only to Mr Weinberger.
T7.21 - T7.22
For example, in its 4 September 2018 letter referred to at [53] above.
See [110ff]
[1983] 1 AC 444.
At 478 - 479.
See generally Lewison & Hughes, The Interpretation of Contracts in Australia (2012, Thomson Reuters) at [7.03] and the cases cited therein; and Herzfeld & Prince, Interpretation (2nd Ed, 2020, Thomson Reuters) at [22.50].
See Herzfeld & Prince at [22.50].
See [70] above.
"Car Parks" in cl 13.2 is defined as "the customer car parks in the Centre see f/n 1 above.
See [66] above.
(2000) 201 CLR 109; [2000] HCA 4.
Gleeson CJ, Gummow and Hayne JJ
At [13].
At [87].
Albeit in dissent on the result.
At [73].
[2004] NSWCA 15.
At [164].
At [33] above; I consider the question of what this data proves below at [149ff].
Norton Plaza Leichhardt, Westfield Burwood and Ashfield Mall.
At [71].
Not "market".
See [43] above.
See [9] above.
The relevant schedule to Ms Lynn's report incorrectly states that the rates at these four shopping centres are for the period "1-2 hrs"; a note in the schedule states that the rate at one, Coles Sutherland, is for between "1.5-2.5 hrs".
At T18.8 of day 1.
See [30] above.
See [32] above.
See Macquarie Publications letter of 23 August 2018 set out at [51]-[52] above.
See Ms Poate's email of 20 September 2018 set out at [54] above.
See [40] above.
At [108] above.
And set out at [154] above.
R v Dolding [2018] NSWCCA 127 at [39] (Simpson AJA, Johnson and Harrison JJ agreeing).
Harvard Nominees Pty Ltd v Tiller (No 2) [2020] FCA 604 at [72] (Jackson J).
Jackson v TCN Channel Nine Pty Ltd [2002] NSWSC 1229 at [40] (Adams J).
(2012) 83 NSWLR 710; [2012] NSWCA 168.
Macfarlan and Whealy JJA agreeing.
At [63].
With whom Gleeson CJ and McHugh and Kirby JJ agreed.
[2003] HCA 10.
At [38].
Eg Troulis v Vamvoukakis [1998] NSWCA 237 at 29 (Gleeson CJ).
At [44ff].
See [152] above.
See [57] - [58] above. 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: 20 April 2021

Macquarie Publications Pty Ltd v Coles Supermarkets Australia Pty Ltd

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