Prosha Pty Ltd v AXL Trading Pty Ltd

Procedural history 36As already stated, the Lessee instituted Tribunal proceedings on 4 September 2008, by filing an Application for Original Decision (file 085172). Relevant aspects of the accompanying Application for an Urgent Interim Order and of directions given by the Tribunal for stocktaking and inspection of the goods removed to Shop 67 have already been outlined. 37In its Application for Original Decision, the Lessee claimed that following the expiry of the Lease on 31 July 2008 it remained in occupation of Shop 31 under a monthly tenancy terminable on one month's notice, that the Lessors had locked it out of this Shop and taken possession of its stock and other goods without giving such notice, that this conduct 'fundamentally breached the Lease which the Applicant accepted' and that the Lease was thereby terminated. 38As summarised in the Tribunal's decision at [108], the Lessee also pleaded conversion by the Lessors, asserted that the Respondents were the 'bailee of the Applicant's stock, fittings and fixtures and documents located in the shop" and asserted that the Lessors had 'destroyed and/or damaged the Applicant's stock etc. whereby the Applicant has "suffered loss and damage" and was "entitled to possession of the stock etc"'. 39In a Cross Application (file 085222), filed on 6 November 2008, the Lessors asserted that in or about early July 2008 the parties had agreed verbally to extend the terminating date of the Lease from 31 July 2008 until 31 August 2008, but that in breach of the Lease as so varied the Lessee had failed to vacate Shop 31 on 31 August 2008. They claimed damages for unpaid rent, removal costs, storage costs and the amount of a liability to the incoming lessee of Shop 31 because it had not obtained vacant possession as promised under the lease that it had entered into with the Lessors. 40The hearing of the Application and Cross Application took place over ten days between 23 November 2009 and 19 June 2010. The Tribunal was constituted by Mr G Molloy, Judicial Member. Pursuant to directions, the parties filed written submissions after the hearing. The last of these was filed on 5 October 2010. 41The Tribunal delivered its decision on 17 December 2010 ( AXL Trading Pty Ltd v Prosha Pty Ltd [2010] NSWADT 301). It granted the relief sought by the Lessee and, save to a limited extent, dismissed the Lessors' Cross Application. Its principal order was an award of damages to the Lessee in the sum of $108,707.47. Relevant parts of its lengthy and detailed reasons are reproduced or summarised below. 42The Lessors instituted the present appeal by filing a Notice of Appeal on 10 January 2011. An application by them for an order staying the principal order of the Tribunal was heard and dismissed on 8 February 2011. 43The hearing of the appeal took place before us on 12 and 13 May 2011. Mr Reuben of counsel appeared for the Lessors and Mr Fernon of counsel for the Lessee. 44At the conclusion of the hearing, because time had not permitted oral argument on all the matters raised by the appeal, we directed (a) that the Lessors should file and serve within 21 days supplementary submissions, focusing on the question of assessment of damages and on matters that had not been sufficiently covered in Mr Reuben's address in reply; and (b) that the Lessee should file and serve any submissions in response within a further 21 days. 45The supplementary submissions then filed by the Lessors traversed a number of matters that, according to submissions filed by the Lessee in response, went beyond the range permitted in our directions. In correspondence sent to the parties by the Registrar at our request, it was indicated that this objection by the Lessee was a valid one and that except as to one section of the Lessors' submissions we would not take account of what we will call here the 'offending passages' when reaching our decision. 46The section within the 'offending passages' that we have however taken into account relates to a ruling of the Tribunal, made on grounds outlined below, that an objection by the Lessee to the Lessors' tender of video evidence during the Tribunal hearing should be upheld. Having read the Lessors' arguments about this ruling (which deal principally with questions of law) in their supplementary submissions, we determined that we were bound to take account of them and that we should therefore grant leave to the Lessee to file submissions in response. Further aspects of this part of the appeal proceedings are summarised below. 47The last of the supplementary submissions in the appeal were filed on 26 July 2011.

The section 16 certificate 48At the commencement of the Tribunal hearing, both parties assumed that the term of the Lease was twelve months only, commencing on 1 August 2007. As stated by the Tribunal in its decision at [10], [15] and [17], it was on this footing that both the Lessee and the Lessors pleaded their cases (in their respective Applications) and put forward their evidence and submissions at the hearing. 49During the hearing, however, the Tribunal asked whether section 16 of the RL Act might have been applicable. This would have the consequence that the term of the Lease would be five years unless a certificate under section 16(3) had been given by a solicitor or licensed conveyancer who was not acting for the Lessors. 50So far as relevant, section 16 states:- 16 Minimum 5 year term (1) The term for which a retail shop lease is entered into, together with any further term or terms provided for by any agreement or option for the acquisition by the lessee of a further term as an extension or renewal of the lease, must not be less than 5 years. An agreement or option is not taken into account if it was entered into or conferred after the lease was entered into. (2) If a lease is entered into in contravention of this section, the validity of the lease is not thereby affected but the term of the lease is extended by such period as may be necessary to prevent the lease contravening this section. Note:... (3) This section does not apply to a lease if a lawyer, or a licensed conveyancer, not acting for the lessor certifies (before, or within 6 months after, the lease was entered into) in writing that: (a) the lessee or prospective lessee requested the lawyer or conveyancer to give the certificate, and (b) the lawyer or conveyancer has explained to the lessee or prospective lessee the effect of subsections (1) and (2) and that the giving of the certificate will result in this section not applying to the lease. If the certificate is given within 6 months after the lease was entered into, then, without affecting the validity of the lease, subsection (2) ceases to apply to the lease and the extension of the term of the lease effected by that subsection accordingly ceases to be operative. 51Because the possible application of section 16 to the Lease was not addressed in the evidence or in the written submissions filed after the hearing, the Tribunal directed the parties to deal with it in supplementary submissions. 52In its supplementary submissions to the Tribunal, the Lessee claimed that no certificate under section 16(3) was 'ever signed by a solicitor', that the duration of the Lease was therefore five years and that accordingly the Lessors' conduct in locking the Lessee out of Shop 31 was a breach of the Lease. 53In their supplementary submissions, the Lessors argued that since no evidence had been tendered on the issue of whether a certificate had been given, and since evidence that a certificate had not been given would have been favourable to the Lessee, the Tribunal should infer that a certificate had in fact been given. They relied on a passage in the judgment of Cole JA in Ferrcom Pty Ltd v Inbush (NSW) Pty Ltd and Anor [1996] NSWCA 184, in which his Honour cited and applied principles deriving from the well known decision in Jones v Dunkel (1959) 101 CLR 298. 54The Lessors also conceded that if no certificate had been given, the term of the Lease would in fact have been five years and their termination of it on 31 August 2008 'may have been unlawful'. 55In its decision at [12 - 13], the Tribunal dealt as follows with these submissions of the Lessors:- 12 The Respondent submitted that no evidence had been filed by the parties in relation to the s.16(3) Certificate. I reject this submission. The lease itself was in evidence, and led in chief by the Respondent. No s.16(3) Certificate appears in that document. The Respondent submitted that "as evidence that a s.16 Certificate was not given would not have been favourable to the Applicant, the Tribunal should infer that a s.16(3) Certificate was given from the Applicant's omission to file evidence to establish the contrary". This submission was based on an observation by Cole JA in Ferrcom Pty Limited v. Inbush (NSW) Pty Limited (unreported) [1996] NSWCA 184 at pp 2-3. It was perhaps a Jones v. Dunkel point; but, quite frankly, I do not see it in that light. It was part of the Respondent's own case that the lease was a 12 month lease; the lease itself was put in evidence by the Respondent; that document does not contain a s.16(3) Certificate; and it is plain to me that there is no Jones v. Dunkel point. It is not a question of any inference; rather, it is a question of the evidence that was put before the Tribunal. 13 The Respondent has, in my view, correctly, conceded that "once s.16 is applied the further consequence (is) that the (Respondent's) termination of the Shop 31 Lease on 31 August 2008 may have been unlawful. Other factors may also have been relevant to whether the (Respondent's) termination was in fact unlawful, such as the parties' agreement to (the) lease ending on 31 August 2008". I agree with that concession. Independently, I should say that I have formed the same opinion... 56As Mr Reuben pointed out to us at the hearing of the appeal, the Tribunal indicated in a number of later passages in its decision that it treated the duration of the Lease as a matter of considerable importance and that it regarded the Lessors as primarily responsible for the parties' misapprehension on this matter. In the last sentence of paragraph [13], for instance, it stated that the Lessors' conduct in terminating the Lease amounted to a 'substantial breach' of the Lease. At [21], it criticised them for not being 'au fait with' the relevant provisions of the RL Act and expressed the opinion that it was incumbent on owners and managers of retail shopping centres to 'understand the terms and effect' of this Act. At [29], it described the Lessors' breach of the Lease as 'massive', adding in the next paragraph that they had 'misled and deceived' Sophie into believing that the Lessee had no right to occupy Shop 31 after 31 July 2008. At [205], the Tribunal described the Lessors' conduct as 'clearly unwarranted and, quite clearly, atrocious'. Other paragraphs to which Mr Reuben drew our attention in this context were [3], [8], [9], [18], [31] and [119]. 57At the appeal hearing, it was however established that a certificate under section 16(3) had been given after all. An affidavit sworn on 4 May 2011 by Mr Fraser, solicitor for the Lessors, was tendered on their behalf and admitted without objection. Annexed to it were copies of a letter dated 3 May 2011 from Waynes to Fraser Clancy and of a section 16 certificate. 58The letter included the following passage:- We advise that Counsel in the course of preparing submissions has, in some bundles of papers provided by the client, located a Section 16 Certificate. A copy is now enclosed. It was not attached to any other document and it was simply found loose. Conceivably it may raise issues with the appeal, points of appeal and submissions. 59The accompanying certificate satisfied the requirements of section 16(3). The solicitor or licensed conveyancer providing it stated (a) that he did not act for either of the Lessors, and (b) that at the Lessee's request he had explained the effect of subsections (1) and (2) of section 16 of the RL Act and indicated that the giving of the certificate would result in this section not applying to the Lease. 60A number of submissions made by Mr Reuben at the appeal hearing were based on this evidence that a section 16 certificate had been given relating to the Lease, and on the fact that it was not produced to the Lessors or the Tribunal until a few days before the hearing of the appeal. 61First and most importantly, Mr Reuben argued that because the Tribunal's numerous and trenchant criticisms of the Lessors' conduct in insisting that the Lease expired on 31 August 2008 had now been shown to be unjustified, its ultimate conclusion that the Lessors were liable to pay damages to the Lessee should be held by us to be flawed and unreliable. The Tribunal's strong disapproval of the Lessors' behaviour should, he maintained, be held by us to have affected all of its findings on the matters in dispute, necessitating a review of its decision on the merits. He added that this aspect of the decision, considered in conjunction with our admission into evidence of the newly-discovered certificate, had the outcome that we were bound to grant leave under section 113(2)(b) of the Administrative Decisions Tribunal Act 1997 ('the ADT Act') for the appeal to extend to the merits. 62Mr Fernon did not oppose a grant of leave under section 113(2)(b). He relied, however, on a number of statements by the Tribunal indicating that its ultimate conclusion that the Lessee should succeed did not depend on its belief that the Lease had a term of five years. He maintained that the discovery of a section 16 certificate, with the consequence that the term of the Lease was only one year, as initially pleaded, should therefore not be held to have affected the Tribunal's decision to award damages to the Lessee. The statements by the Tribunal on which he relied were as follows. 63At [21], having referred to the fact that the requirements of section 44 of the RL Act (as to which, see below) took up a considerable amount of time at the hearing, the Tribunal said:- Even on the Respondent's case (ie that the lease was for 12 months) the Respondent did not seem to understand the provisions of the RL Act with regard to the legal requirements that apply to retail shop leases and retail shopping centres. 64At [41], the Tribunal said:- The failure to ensure vacant possession of Shop 67 was a failure, not only of the casual tenant, but also of the Respondent and the centre management. The lock-out of the Applicant from Shop 31 was, in all the circumstances, unwarranted, even on the asserted 12 month lease, let alone on the s.16 extended five year lease. 65Paragraph [74] included the following observations:- Quite frankly, and in all the circumstances, and even if one accepts (and I do not) that the lease was for a term of 12 months only, extended by one month by agreement, the plain fact is that the Applicant had been in occupation of Shop 1 since 1 April 2007 (or perhaps March 2007)... Consequently, I conclude that there was really nothing that would have caused any concern to the Respondent relating to the occupation of Shop 31 that would have encouraged the Respondent to take all the photographs and videos... 66At [94 - 95], the Tribunal said:- 94 It is my clear view that there was no consent to vacate as at 31 July 2008, alternatively 31 August 2008, simply because no party, and, in particular, the Applicant, was aware that the tenancy did not expire until 31 July 2012. Therefore, there was no agreement/contract to vary that term. 95 In any event nothing much hangs upon this argument for the reasons I endeavour to express later in this decision. The real issue that occupied the bulk of the hearing time was that pertaining to the issue of damages and it is to that issue I shall now turn... 67Finally in this connection, paragraph [119] included the following sentence:- The evidence demonstrates, in my view, that the Applicant, even on the understanding that the lease was for 12 months and extended by one month to 31 August 2008, was not able to move her goods into Shop 67 simply because the casual tenant of that shop had not removed its goods. 68As we indicated during the hearing of the appeal, the reception of fresh evidence on a matter given considerable prominence in the Tribunal's decision - namely, whether a section 16 certificate had or had not been provided in relation to the Lease - was enough of itself to warrant granting leave for the appeal to extend to the merits. We stated that such leave was indeed granted, with the consequence that any remitter of these proceedings for further hearing at first instance was precluded and that we were required to dispose of the appeal ourselves in accordance with section 115 of the ADT Act. 69We do not accept Mr Reuben's submissions, however, that because the Tribunal mistakenly believed that there was no certificate its criticism of the Respondents' conduct was wholly unjustified and that for this reason alone we should set aside its decision. Our reasons are twofold. 70First, we agree with Mr Fernon that, in view of the passages in the Tribunal's reasons to which he referred, its decision to award damages to the Lessee was not dependent on its belief that the Lease had a term of five years. 71Secondly, as appears from paragraph [41], cited above, and from other passages to which we will refer below, the supposedly unlawful termination of the Lease was not the only ground on which the Tribunal disapproved of the Lessors' conduct. It also criticised their failure to provide any reasonable opportunity to the Lessee to conduct in an appropriate manner the removal of its stock into the alternative accommodation (Shop 67) that they had promised to make available. 72Having said this, we would add that because the Tribunal's disapproval of the Lessors' conduct is a recurrent theme within its reasons, our examination (as required by section 115 of the ADT Act) of the findings on which its ultimate conclusion was based should be close and careful. 73At this point, it is useful to refer to authorities on the nature of the inquiry that an Appeal Panel should undertake when, having granted leave for an appeal to extend to the merits, it is required by section 115 of the ADT Act to make 'the correct and preferable decision on the material... before it'. 74This question was considered by the Appeal Panel in Commissioner of Corrective Services v Aldridge [2000] NSWADTAP 5. It held as follows, at [94 - 98]: 94 When an Appeal Panel decides to permit an appeal to extend to a review of the merits of the decision under review, what form should that appeal take? While we will afford the parties an opportunity to make submissions in relation to this matter it may assist the progress of this appeal if we advance a tentative opinion. In Turnbull v NSW Medical Board [1976] 2 NSWLR 281 at 297, Glass JA noted that, "Appeal is a term loosely employed to denote a number of different litigious processes which have few unifying characteristics." He then went on to identify and describe six different types of appeal. In our opinion an appeal to an Appeal Panel, which extends to a review of the merits falls within the category described by Glass JA as "appeals from a judge by way of rehearing." In such cases, according to Glass JA the following occurs: If errors of law or wrong findings of fact have occurred below, the appellate court will try the case again on the evidence used in the court below, together with such additional evidence as it thinks fit to receive. Since it will decide the appeal in the light of the circumstances which then exist, changes in the law will be regarded." (at 297) 95 Associate Professor Bernard Cairns in Australian Civil Procedure 4th edition (Law Book Co., Sydney 1996) at 637-638 elaborates on the description given by Glass JA in Turnbull: The court is not confined to a determination of whether the trial judge was wrong on the evidence presented at the trial. A rehearing is a new determination of the rights and liabilities of the parties rather than the correction of errors in the determination of the court below. Moreover, the rehearing is conducted on the basis of the law as at the date of the rehearing. A rehearing does not involve calling oral evidence at the appeal. The appellate court proceeds on the transcript of the evidence given at the trial. And further evidence that is allowed is admitted in documentary form such as an affidavit or deposition. 96 Subject to any submissions which counsel wish to make, this is how we believe an Appeal Panel should conduct an appeal, which extends to a review of the merits of an appealable decision. In our opinion we are not limited, as in a strict appeal, to correcting errors, which the Tribunal may have made. We are required by section 115 of the ADT Act to reach our own decision in the matter taking into consideration any relevant factual material, which was before the Tribunal, plus additional factual material, which we admit into evidence and by applying the law as it stands at the time the appeal, is heard. 97 For the sake of completeness this form of appeal should be contrasted with "a rehearing de novo." Glass JA also described this type of appeal in Turnbull v NSW Medical Board [1976] 2 NSWLR 281 at 297-8: All the issues must be retried. The party succeeding below enjoys no advantage, and must, if he can, win the case a second time. 98 Cairns (at page 636) elaborates on this description by stating that "a rehearing de novo requires a new trial or hearing before the appellate Court . . . and evidence must be called before the appellate court." We do not believe that section 115 of the ADT Act extends this far. While the Appeal Panel is required to exercise the jurisdiction, which the Tribunal initially exercised, the Appeal Panel is not required to exercise this jurisdiction by starting the matter afresh and by conducting a hearing as it would be conducted in the Tribunal. Unless there are exceptional circumstances the appeal should be determined by considering the transcript, the documents admitted as exhibits, any additional factual material in documentary form, which we choose to take into account and the submissions by the parties or their legal representatives. 75In Commissioner of Corrective Services v Aldridge (No 2) [2002] NSWADTAP 6 at [20] and [[26], the Appeal Panel stated that it now adopted what in the earlier decision had been its 'preliminary view', viz, that a 'rehearing', not a 'hearing de novo', should take place following a grant of leave for an appeal to extend to the merits. 76As far as we are aware, no subsequent decision has cast doubt on this statement of principle. It should be noted that the review of evidence required of us does not include redetermining, save in exceptional circumstances, the credibility of the witnesses who gave oral evidence at the hearing at first instance. 77In this discussion relating to the section 16 certificate, the next argument by the Lessors that we shall consider was set out initially in written submissions filed before they were notified of the discovery of the certificate, and was elaborated by Mr Reuben at the hearing. The gist of it was that the procedure adopted by the Tribunal in receiving the parties' submissions on the impact of section 16 unfairly denied them any opportunity to tender all relevant evidence and/or cross-examine any witnesses called by the Lessee on the question whether a certificate had been given. 78Mr Reuben relied particularly on two considerations. The first of these was that because the Lessee had claimed in its Application that the term of the Lease was one year only and had presented its case in the Tribunal on this basis, the Lessors had assumed throughout the hearing that this was the case that it was required to meet. The second was that the Lessors had been given no opportunity to seek to rebut through appropriate evidence the claim in the Lessee's supplementary submissions (described by Mr Reuben in his appeal submissions as 'tenant counsel's evidence' and subsequently admitted to be incorrect) that 'no... certification' under section 16(3) was 'ever signed by a solicitor'. 79Although in its Notice of Reply to Appeal the Lessee claimed that 'there was no "Tenant's counsel's evidence"' within its supplementary written submissions, we incline to the view that the Tribunal did indeed fail to give to the Lessors a sufficient opportunity to seek to rebut this 'evidence'. 80In addition, even though the Tribunal indicated at [10] and [15] that the Lessee, in its Application and its conduct of the case, put forward the Lease as having a term of one year only, the Tribunal treated the opportunity given to the Lessors to file supplementary written submissions as an adequate measure to redress any disadvantage suffered by them through having, at a late stage, to respond to the Tribunal's own proposition that its term might be five years. We do not believe that it was adequate. To illustrate this, we would point out that in its decision at [12], the Tribunal treated as relevant evidence on the matter the absence of any certification in the Lease itself. But the procedure that it adopted gave no scope for the Lessors to explore - for example, through cross-examination of Sophie - the possibility that, as ultimately transpired to be the case, certification under section 16(3) was effected in a separate document. 81These matters would be of considerable importance if the Tribunal's conclusion regarding certification remained open to challenge in the appeal. But this is no longer the case, because the Lessee has conceded through its counsel that the term of the Lease was only one year. 82To a significant extent, Mr Reuben's oral submissions at the hearing of the appeal took appropriate account of this concession. He indicated, for instance, that two grounds stated in the Lessors' Notice of Appeal were no longer pressed. These were grounds challenging a ruling by the Tribunal (at [93]) that since the parties had not realised that by virtue of section 16 the Lease did not expire until 31 July 2012, they could not be held to have varied the Lease by consent through substituting an expiry date of 31 August 2008. 83Mr Reuben argued, however, that we should infer from the circumstances of the late discovery of the certificate that Sophie had known of its existence and significance at all material times and had indeed concealed it from the Lessors and the Tribunal. He did not refer to any evidence tending specifically to support these allegations. 84While it is obvious that Sophie knew of the existence of the certificate at the time when it was given, we agree with a submission by Mr Fernon that there is insufficient evidence to support the inference urged by Mr Reuben. To conclude that at the time of the Tribunal hearing Sophie recalled the provision of the certificate and, most importantly, appreciated its significance for these proceedings, but nonetheless decided not to disclose it, would be to attribute seriously dishonest conduct to her. Allegations of this grave nature must be established by affirmative evidence, not merely by inference. 85If the Lessors, having received from the Lessee's solicitor a copy of the certificate only a few days before the hearing of the appeal, had applied to us for leave to have Sophie recalled for cross-examination on this question, we would have given careful consideration to their application. But they did not do so. 86Finally, Mr Reuben argued that the Tribunal's mistake in assuming that no section 16 certificate had been given amounted to 'jurisdictional error' that was sufficient in itself to invalidate the Tribunal's decision. He relied here on a passage in the joint judgment of the High Court in Craig v South Australia (1995) 184 CLR 163 at 179. Having referred to constitutional limitations in Australia that 'may preclude legislative competence to confer judicial power upon an administrative tribunal', the Court said:- If such an administrative tribunal falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal's exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it. 87Mr Fernon sought to rebut these arguments by submitting, as we have already indicated, that the Tribunal's decision to award damages to the Lessee did not depend on its belief that no section 16 certificate had been given. 88In our opinion, this submission is well founded and is sufficient to dispose of Mr Reuben's claim that the Tribunal's mistaken conclusion with regard to the certificate is sufficient in itself to warrant wholly setting aside its decision on the ground of 'jurisdictional error'. 89It is convenient to summarise at this point a further submission made to us by Mr Fernon regarding the impact of the Tribunal's finding that due to the absence of a section 16 certificate the term of the Lease was five years. 90Mr Fernon drew our attention to a claim by Sophie (described by the Tribunal at [26]) that during a conversation with Mr Ma in the first half of July 2008, he responded to her expression of a desire to stay in Shop 31 under a long lease by saying 'If you're the best offer you can stay'. In his evidence, Mr Ma claimed not to have said this. Mr Fernon submitted to the Tribunal, however, that it should prefer Sophie's testimony on this matter and that it should find that Mr Ma, by making this statement, implicitly withdrew the Notice relating to termination of the Lease that had been served on the Lessee on or about 27 June 2008. The result of so finding, he said, would be that the Lessors would have been bound to observe the requirement in the holding over clause of the Lease that the month-to-month tenancy provided for could only be terminated on one month's notice. 91The point that Mr Fernon made to us was that because the Tribunal held that the term of the Lease was five years it saw no need to rule on his submission that the Notice of 27 June 2008 had been withdrawn. In this respect, he claimed, the Tribunal's mistaken conclusion as to the duration of the Lease had operated to the disadvantage of the Lessee, not the Lessors. 92In our opinion, there is merit in this submission put by Mr Fernon, but we do not believe it to be of importance in determining the outcome of the appeal.

The negotiations regarding the Lessee's departure from Shop 31 93A major issue of contention in the appeal was whether the agreement whereby the Lessee was permitted to remain in occupation of Shop 31 until 31 August 2008 was linked with, or entirely independent of, the Lessors' offer to permit it to remove stock and other goods from Shop 31 to Shop 67. 94As already stated, the Tribunal's principal finding on this question was at [28]:- 28 The Applicant continued to occupy the Shop after 31 July 2008; but the evidence disclosed that there was an "agreement" to enable the Applicant to move out of Shop 31 and into a smaller shop, being Shop 67 ("Shop 67") that is currently selling CDs". Mr Ma's evidence was that the Applicant could move to Shop 64 ("Shop 64") and use part of it "as a storage area", and into Shop 67 "temporarily" and that "the security guard will have the keys for you to gain access this weekend"; and that he had agreed with the casual lessee of Shop 67 to remove it's stock "on or before Sunday" (31 August), the casual lessee stating that it would have its stock out "by Sunday". 95In addition, the Tribunal stated as follows at [90] and [119]:- 90 If it was argued that the failure to give the Applicant vacant possession of Shop 67 was a breach of the arrangement reached between the parties, I think there is some force in that argument simply because it would seem that the parties did in fact "agree" that the Applicant could move into Shop 67 on 31 August 2008 and that could not have taken place as a matter of practicality because the casual tenant had not vacated Shop 67. 119... There is no requirement for the Tribunal to make a determination relating to the type of quality of the occupation by the Applicant of Shop 67, simply because it was the Respondent who offered to the Applicant that Shop for the purposes of enabling the Applicant to remove its stock from Shop 31, thus enabling the Respondent to let Shop 31 to the new tenant. 96Mr Reuben argued, however, that on a proper interpretation of paragraph [28] of the Tribunal's decision the 'agreement' referred to was not a binding agreement. Instead, the outcome, in his submission, of the discussions between Sophie and Mr Ma during July and August 2008 was as follows: (a) the date of expiry of the Lease was fixed at 31 August 2008, in lieu of the original expiry date of 31 July 2008, which had been stated in the Lease and confirmed by the Notice dated 27 June 2008; and (b) the Lessee was obliged to vacate Shop 31 on or before 31 August 2008, irrespective of whether the Lessors had by that date implemented their offer to make Shop 67 available to receive the Lessee's stock and other goods. 97In support of this argument, Mr Reuben relied on the following evidence before the Tribunal: paragraphs 21 to 30 of Sophie's witness statement (Exhibit A); various extracts from the transcript of her answers in cross-examination (23.11.09, page 51, lines 10ff; page 52, line 35ff; and page 71, lines 40ff; also 25.11.09, page 79, lines 10ff) and of Mr Ma's answers in cross-examination (26.11.09, page 36, lines 40ff; page 37, lines 35ff); and a witness statement by Ms Caroline Parker, who was the Lessors' solicitor at the relevant time. 98We have reviewed this evidence, together with other evidence (some of which was identified by Mr Fernon) that appears to us to be relevant also: namely, paragraphs 11 to 18 of Mr Ma's first witness statement and further extracts from the transcript of his answers in cross-examination (26.11.09, page 38, lines 1-10; page 95, line 46 to page 96, line 4). This leaves us in no doubt that, contrary to Mr Reuben's submission, there was indeed an agreement, as found by the Tribunal, that the Lessee would be permitted to move stock and other goods from Shop 31 into Shop 67. 99Mr Ma gave the following evidence, for instance, at paragraphs 11 - 17 of his witness statement: (a) on or about 14 July 2008, he told Sophie that she could stay in Shop 31 until 31 August; (b) on or about 21 July he told her that she could move to Shop 67 'temporarily' and also use part of Shop 64 for storage; (c) on 25 August, after he taken her to view these two shops, he went to Shop 67 and 'in reliance upon this agreement with Sophie', he asked the casual tenant of this shop to move his storage stock by 31 August 'as the Shop 31 tenant is going to remove their remaining stock to store in shops 64 and 67 on or before Sunday (31 August)'; and (d) the tenant said: 'OK, I'll have it out by Sunday.' 100Furthermore, the last of the passages in his cross-examination on which Mr Reuben relied includes the following exchange between him and Mr Fernon, who appeared for the Lessee at the Tribunal hearing (Transcript, 26.11.09, page 95, line 46 to page 96, line 4):- Q. Now, on any view, would you agree with me or not agree with me that you had an agreement with her one way or the other. A. For her to remove her stock. Q. We can argue about the terms of it. A. Yeah. Q. That she could occupy Shop 67, lease it for storage? A. Yes. 101There was disagreement between the parties as to the dates on which the relevant conversations between Sophie and Mr Ma occurred, and on various aspects of what was said. But the evidence, in our view, entirely supports the Tribunal's conclusion that one matter on which they agreed was that the immediate destination of some at least of the Lessee's goods when Shop 31 was vacated was to be Shop 67. 102It was not expressly stipulated by Mr Ma, nor agreed to by Sophie, that if Shop 67 was not ready to receive these goods on or before August 31, the date fixed for vacating Shop 31, the Lessee would have to move them to some other location. Instead, there was in our opinion an implied term, arising on grounds of business efficacy, that if through no fault of the Lessee Shop 67 was not sufficiently emptied of the casual tenant's goods to enable it to move its goods there on or before 31 August, it should be permitted to remain in occupation of Shop 31 for such limited period as proved necessary to permit a direct transfer of the goods from one shop to the other. 103We regard this term as more readily to be implied on account of the practical considerations that underlie section 44 of the RL Act. As the Tribunal noted when discussing this provision at [86 - 93], the Lessee placed significant emphasis on its requirements, but the Tribunal held them to be irrelevant because of its belief that the term of the Lease was five years. For present purposes, the relevant parts of section 44 are subsections (1), (2) and (6), which state:- (1) Not less than 6 months or more than 12 months before the expiry of a lease, the lessor must by written notification to the lessee either: (a) offer the lessee a renewal or extension of the lease on terms specified in the notification (including terms as to rent), or (b) inform the lessee that the lessor does not propose to offer the lessee a renewal or extension of the lease... (3) If the lessor fails to give a notification to the lessee as required by this section, the term of the lease is extended until the end of 6 months after the lessor gives the notification required by this section, but only if the lessee requests that extension by notice in writing to the lessor given before the lease would otherwise have expired.... (6) If a retail shop lease is for a term of 12 months or less the periods of 12 months and 6 months in this section are shortened to 6 months and 3 months respectively." 104On the basis of the parties' shared belief, both before and during part of the Tribunal hearing, that the Lease (as initially agreed) was for a term of one year expiring on 31 July 2008, the Lessors, in order to comply with subsection (1) (as modified by subsection (6)), should have notified the Lessee between 31 January and 30 April 2008 that they did not propose to offer a renewal or extension. They failed to do so, but because the Lessee did not make a written request for extension, the term was not extended by three months pursuant to subsection (2) (again as modified by subsection (6)). The Lessors' failure to give the requisite notice had the consequence, nevertheless, that the time left to the Lessee to seek alternative premises for its business, or to deal in some other way with its impending departure from Shop 31, was distinctly shorter than section 44 seeks to ensure for retail shop lessees. Instead of three months, at least, it was little more than one month. In our opinion, this consideration provides further support for ruling that a term such as we outlined in the penultimate paragraph should be implied into the oral agreement reached between Sophie and Mr Ma during July and August 2008. 105As the submissions on behalf of the Lessors acknowledged, both at first instance and on appeal, the extension to the Lessee's term of occupation until 31 August 2008 was agreed upon orally by Sophie and Mr Ma and operated as a variation of the written terms of the Lease. In our judgment, an implied term such as we have just formulated, constituting a further variation of the Lease, arose similarly from the oral negotiations between these two individuals. 106Accordingly, we reject Mr Reuben's submission that the agreement whereby the Lessee was permitted to remain in occupation of Shop 31 until 31 August 2008 was independent of the Lessors' offer to permit it to remove stock and other goods from Shop 31 to Shop 67.

Whether clause 11 of the Lease was applicable 107Clause 11 of the Lease was in the following terms:- REMOVAL OF TENANT'S GOODS 11.4.1 On or before the expiry or earlier termination of this Lease, the Tenant will remove the Tenant's Goods from the Premises and make good any damage caused to the Premises. 11.4.2 If the Tenant does not remove the Tenant's Goods as required under Clause 11.1, the Landlord can: (a) at the Tenant's risk and cost remove and store the Tenant's Goods; and (b) treat any of the Tenant's Goods as if they were the Landlord's property and deal with them in any way without being liable to account to the Tenant. 11.4.3 The Tenant indemnifies the Landlord in relation to the removal and storage of the Tenant's Goods. The Tenant also indemnifies the Landlord in relation to claims by any Person of an interest in the Tenant's Goods. 108A step taken by the Tribunal in concluding that the Lessors were liable to the Lessee for damage inflicted on the Lessee's stock and other goods was to rule that as from the time when they evicted the Lessee from Shop 31 they were bailees of the stock and other goods which remained in this Shop and which they subsequently caused to be removed to Shop 67. In making this ruling, the Tribunal rejected an argument by the Lessors based on clause 11 of the Lease. 109At [118 -121], the Tribunal outlined this argument and the reasons why it was unsuccessful:- 118 The Respondent submitted that bailment depends upon a voluntary and knowing possession of goods such that there can be no bailment where the possessor does not consent to possession. It was submitted that the goods were simply left behind by the Applicant, thus enabling the Respondent to "treat any of the tenant's goods as if there were the Landlord's property" as per clause 11.4.2 of the Lease. Thus, the Respondent was an involuntary bailee and owed no general duty of reasonable care to safeguard the goods against loss, theft or damage, except perhaps not to damage them wilfully or recklessly. 119 The difficulty with this submission is that it flies in the face of the evidence. The evidence demonstrates, in my view, that the Applicant, even on the understanding that the lease was for 12 months and extended by one month to 31 August 2008, was not able to move her goods into Shop 67 simply because the casual tenant of that shop had not removed its goods... 120 In any event, it was a pre-requisite for the Applicant's removal to Shop 67 that vacant possession would be given of that Shop and, in my view, the evidence demonstrates otherwise such that it is plain that the Respondent took it upon itself to remove the Applicant's goods and chattels. And, to put icing on the cake, the Respondent denied the Applicant access to the stock and goods, and denied it the right to remove its stock and goods and deal therewith. 121 In addition, the Applicant claimed a lien as at both 1 and 2 September 2008, at a time the Applicant was prohibited from accessing its stock and control over that stock was assumed by the Respondent. Thus, it is plain to me that, firstly, the stock so removed remained the property of the Applicant; secondly, the stock removed to the warehouse remained the property of the Applicant, and is the property of the Applicant, and thirdly the Respondent holds those goods, not as an involuntary bailee but as a voluntary and knowing bailee consenting to, and asserting, possession. In the circumstances the Respondent cannot call in aid clause 11.4.2 of the Lease, because the stock was not abandoned or simply left behind but rather the Applicant simply could not remove the stock to Shop 67 for the reasons indicated. Although it is true that the Respondent abandoned its lien it is also true that it does not claim ownership of the stock in the warehouse. There can be no other conclusion, in my view, that the Respondent is a bailee for reward or, alternatively, a voluntary bailee. 110In the appeal, the Lessors asserted once more that the Lease came to an end on 31 August 2008, with the consequence that clause 11.4 became immediately operative. In his oral address, Mr Reuben did not seek to rely on clause 11.4.2(b), as the Lessors had done in their submissions to the Tribunal, but claimed instead that because the Lessee had not removed its goods on or before 31 August 2008, the Lessors' rights were as set out in clause 11.4.2(a) and clause 11.4.3. He acknowledged that clause 11.4.2(a) did not give the Lessors carte blanche in their handling of the goods, and that they would not escape liability for a clear failure in their duty of care (if, for example, they arranged for the goods to be destroyed). He also asserted that the Lessors could rely on the indemnity granted to them by clause 11.4.3 in the event that the goods were damaged due to their negligence. 111A further argument put at the hearing (principally in a summary of submissions handed up by Mr Reuben) was that the Lessee should have used its reasonable endeavours to vacate Shop 31 by the end of 31 August 2008 or as soon as possible thereafter, but that it failed to do so. The matters relied on were these: (a) because the area of Shop 67 (63 square metres) was considerably less than that of Shop 31 (130 square metres), it was reasonable to expect that the Lessee would fill up all available space in Shop 64 and/or would seek additional storage space elsewhere, but it did neither of these things; (b) on 31 August, the Lessee did not attempt to gain access to Shop 67 until about noon; (c) during the rest of that day, it continued to trade in Shop 31 and employed only one person to move goods into Shop 67, even after this Shop become wholly vacant around 5 p.m.; (d) it ceased moving its goods as early as 6 p.m.; (e) because it wanted to leave space for potential customers in Shop 67, it did not use up all the available space in this Shop; and (f) on 1 September, neither Sophie nor any other employee of the Lessee returned to Shop 31 or Shop 67 until about 2 p.m., even though Sophie could have obtained the key to Shop 67 at some earlier time from the security guard (if she had not kept it herself when she left the Shop on the previous evening). 112In our opinion, these arguments must be rejected, for the following five reasons. 113In the first place, a consequence of our ruling in the preceding section of this judgment is that the Lessors cannot claim against the Lessee that the Lease expired on 31 August 2008. Although that date of termination was agreed on in the negotiations during July and August 2008, the implied term that we have found to have arisen extended the term until such later time as was required to effect removal of the Lessee's goods into Shop 67. 114Secondly, even if on a strict view of the agreement between the parties, the date of expiry of the Lease must be taken to be 31 August 2008, the Lessors' failure to ensure, in line with their agreement regarding removal of the goods, that Shop 67 would be vacant in time to permit this removal to take place by the end of that day, precludes it from asserting rights arising from the Lessee's failure to vacate Shop 31 on the due date. It might well be that this failure on the Lessors' part must be attributed to neither deliberate nor negligent conduct on their part, but to the failure by the casual tenant of Shop 67 to abide by his promise to remove his goods in time. Nonetheless, the Lessors did not comply with their promise to make Shop 67 available at the requisite time. 115As Mr Fernon submitted to us, repeating a submission made at first instance, the Lessors cannot found a claim for damages on an alleged breach by the Lessee of the agreement between the parties when the cause of this breach was a breach by the Lessors themselves. Mr Fernon cited a number of authorities on this point, the most recent of which was Sport Developments Pty Ltd v Del Fabbro [2009] QCA 64 at [51]. 116Thirdly, we agree with a further submission by Mr Fernon that the indemnity provided to the Lessors in clause 11.4.3 could not sensibly apply to any liability to the Lessee to which the Lessors themselves were subject on account of failure to comply with their duties of care as bailees of the Lessee's goods. This would be to interpret an indemnity clause as if it were an exemption clause. Since no authority in favour of so doing was cited to us, and having regard to the well-known principle that any term exempting a party to a contract from a liability to another party that would otherwise arise must be worded so as clearly to have this effect, we decline to take this step. A further reason is that if the indemnity clause did apply it would logically cover damage caused intentionally by the Lessors as well as damage through negligence, which would patently be an unjust and absurd outcome. Finally, we believe the interpretation urged on us by the Lessors to be at odds with the following definition of 'indemnify' in the Macquarie Dictionary :-

1. to compensate for damage or loss sustained, expense incurred, etc.
2. to engage to make good or secure against anticipated loss; give security against (future damage or liability). 117Fourthly, even if the evidence indicates that when space became available in Shop 67 the Lessee did not use reasonable endeavours to move its goods into this Shop as quickly as possible, it does not follow that all of the goods remaining in Shop 31 after 31 August could be dealt with by the Lessors under clause 11. The evidence does not establish that if the Lessee had used reasonable endeavours, it could have moved all its goods on 31 August, taking proper care of them, and left Shop 31 completely empty. Since a very large number of shoes (more than 7,000 pairs) had to be moved and Shop 67 only became wholly vacant at about 5 p.m., this seems unlikely. Accordingly, a finding that the Lessee's efforts were inadequate could lead, at most, to the conclusion that some proportion of the goods remaining in Shop 31 on 1 September could be dealt with by the Lessors under clause 11. But there is no way of determining what proportion this might be. 118Fifthly, Mr Reuben effectively conceded that even if clause 11 was applicable to some or all of the goods remaining in Shop 31 on 1 September, this did not mean that the Lessors were under no duty of care with regard to them. As the Tribunal pointed out at [121], the goods remained the property of the Lessee. On 1 September, the Lessors denied her access both to Shop 31 and Shop 67. Until the following day, they claimed a lien over the goods for alleged non-payment of rent. It follows that when the Lessors took it upon themselves to effect removal of the remaining goods from Shop 31 to Shop 67 during the evening of September 1 and on the following day - and indeed for as long thereafter as the Lessee was denied access to them - the status of the Lessors in maintaining possession of them was that of a bailee and by virtue of this status, they were under a duty to take reasonable care of the goods. 119At [123 - 124], the Tribunal outlined the nature of that duty, citing a passage from the judgment of Hodgson CJ in Eq in Bowden v Lo (Unreported, Supreme Court of NSW, 19 May 1998, BC9802121). As Mr Fernon pointed out, his Honour held in that case that a creditor retaining possession of a debtor's goods by way of security for payment of a debt is classified as a bailee for reward and that if the goods are damaged while in the bailee's possession, the onus lies on the bailee to show that it was not due to his or her negligence or the negligence of his or her servants or agents. In the appeal, Mr Reuben did not challenge these statements of principle.

Whether agents of the Lessors negligently caused damage to the Lessee's goods 120At a number of points in its decision - for instance, at [111], [116], [128] and [164] - the Tribunal recorded its findings that the two individuals (Mr Vitale and Mr Smith) whom the Lessors engaged to move the Lessee's goods from Shop 31 to Shop 67 on 1 and 2 September 2008 did not exercise due care and attention and thereby caused substantial damage to them. At [115], the Tribunal quoted a passage from the cross-examination of Mr Smith, in which he stated that he was instructed just to 'stack' the boxes of shoes in Shop 67, that the boxes 'kept falling over' and that he and two contractors working with him 'obviously... didn't take too much care', although they 'weren't being stupid about it'. 121In the appeal, Mr Reuben challenged this finding on two grounds. The first was that the photographic evidence on which the Tribunal based its finding of substantial damage did not depict the stock in Shop 67 on the 'critical date' - i.e., 2 September - but at a later time, after Sophie, in the course of inspecting it on 7, 16, 29 and 30 October for the purpose of stocktaking, had herself inflicted substantial damage on the stock by 'trampling' on it and disturbing the stacks of boxed shoes. The second was that the Tribunal had failed to take into account of other admitted evidence - specifically, photographs of Shop 67 taken by Mr Ma on 2 September, 29 October and 4 November 2008 and video footage taken by him on 18 September - demonstrating that on 9 and 18 September the boxes of shoes were 'relatively neatly stacked', but that on 29 October and 4 November the stacks were disorderly and 'dishevelled' and the stock had been 'trashed'. 122Mr Reuben drew our attention to a statement by the Tribunal (at [107]) that it had been 'unable to find any photographic evidence of the state of Shop 67 as at 2 September 2008 and thereafter'. He handed up copies of the photographs taken by Mr Ma. He also referred to evidence given by Sophie in cross-examination (Transcript, 25.11.09, page 67, line 11 to page 69, line 19) acknowledging that when she completed her inspections on 30 October 2008 a number of the boxes of shoes had fallen down and the Shop was 'clearly a mess'. 123In support of this submission, Mr Reuben relied on two cases ( RL & D Investments Pty Ltd v Bisby [2002] NSWSC 1082 and Leduva Pty Ltd v NM Structural Engineering Pty Ltd [2010] NSWSC 1164) as authority for the proposition that for a court or tribunal to state that on a particular question there is 'no evidence', when in fact evidence on it has been admitted, amounts to an error of law. 124In response to these submissions, Mr Fernon pointed out first that at [68] the Tribunal expressly referred to photographs of Shop 67 taken by Mr Ma on 2 September 2008. While acknowledging that the statement at [107] was incorrect, he maintained that the Tribunal clearly took these photographs into consideration and that therefore it did not proceed on the basis that there were no photographs of Shop 67 taken on 2 September. 125Secondly, Mr Fernon argued that a passage in the transcript (25.11.09, page 63, line 48 to page 64, line 32) indicated that Mr Anderson, counsel for the Lessors at the Tribunal hearing, had 'abandoned' the video footage taken by Mr Ma on 18 September 2008 because it was taken in Shop 64, not Shop 67. This was in fact stated by Mr Ma himself in paragraph 34 of his statement dated 5 August 2008, though in paragraph 63 he stated that the videotape contained 'images of AXL's stock and fittings in Shop 67'. On our reading of the passage in the transcript, however, it does not identify unambiguously which video footage was 'abandoned', since Mr Anderson also mentioned some footage taken in the RestorX warehouse. 126Mr Fernon emphasised that according to unchallenged evidence neither Sophie nor anyone else employed or engaged by the Lessee had access to the stock that was removed on the Lessors' instructions from Shop 31 to Shop 67 between the time when removal commenced (on 1 September 2008) to the time when Sophie, Joy and Mr Nour (the Lessee's expert witness) came to Shop 67 to inspect it on 7 October. As the Tribunal found at [71] and [105], while Sophie and Joy were able to see the stock in Shop 67 over a period of about five minutes on 2 September, a security guard then confronted them and they left the shop. 127It followed, Mr Fernon argued, that the following items of evidence should be regarded as describing reasonably accurately the state of the stock during the period when the Lessors, to the exclusion of the Lessee, had it in their possession and control: (a) Mr Nour's account (given in his first report, dated 16 July 2009) of what he saw in Shop 67 on 7 October 2008 as soon as he, together with Sophie and Joy, arrived there; (b) a number of photographs, annexed to that report, which Mr Nour took at this time (i.e., before any inspection commenced); and (c) observations by him in his second report (dated 28 February 2010), to the effect that for a number of stated reasons more than half of the shoes were 'not in proper store and professional manner'. 128At [161 - 163], the Tribunal summarised as follows Mr Nour's account given in his first report and the impact of the photographs:- 161... [Mr Nour] observed that "most of the stock in (Shop 67) was mixed together. Much of the stock was not grouped together by way of brand, style or colour or price". He exhibited quite a number of photographs of Shop 67 and, to put it politely, the photographs demonstrate that the goods were piled up willy-nilly, all over the place, boxes opened, boxes without lids, any shoes stacked were often leaning or falling over, often boxes placed on their side and clearly, in my view, little care had been taken with respect to the goods. His view was that "a large number of single, dirty and damaged goods (out of their boxes) (were) stacked in piles. There were a lot of empty shoe boxes everywhere. Due to the way the shoes were stored I found it very difficult to identify and distinguish brands, styles, colours and sizes ... some single shoes had not been put back in their original boxes ... some of the shoes were stored in large cartons and others simply placed on the floor. I often encountered great difficulty in locating the partner to a single shoe located in the shop ... many of the shoes which I saw were simply dirty, scratched and squeezed out of shape ... I also observed that many well- designed shoe boxes were flat or broken on the floor. I also saw more flat and broken shoe boxes underneath piles of shoes and many shoes were not in their original boxes." 162 Mr Nour estimated "that only about half of the shoes in (Shop 67) were in their original boxes." He expressed the view that "before these shoes (could) be sold they needed to be separated and stored according to brands, styles, colours and sizes" such that "as a result of the condition of the shoes and the way in which they were stored I was unable to conduct any proper valuation of the shoes on 7 October 2008". 163 In my mind, and having regard to the clear evidence that was placed before the Tribunal in relation to Shop 67, it was a pretty poor approach by the Respondent to its undoubted obligations to the Applicant relating to is removal and storage of the goods in Shop 67. And, 7 October 2008 is more than one month after 1 September 2008, such that the Applicant's goods had been stacked and lying in Shop 67 for well over one month. 129Mr Fernon relied also on a number of other aspects of the evidence on this matter. 130First, he drew our attention to photographs that Sophie had taken in Shop 67 on her arrival there in 7 October 2008 and to a passage near the beginning of a document, annexed to her affidavit of 27 February 2009, that she and Joy prepared on 17 and 31 October 2008. This document ('the Stock Taking Report') contained an account by them of what had occurred during the four visits that they paid to Shop 67 in October 2008. These photographs and this passage in the Stock Taking Report were to the same effect as Mr Nour's photographs and description of the stock. 131Mr Fernon referred us also to the evidence given by Mr Smith about the manner in which he and two contractors removed stock from Shop 31 to Shop 67 on 2 September 2008 (see [120] above). In addition, he relied on three pieces of evidence given by Mr Smith during cross-examination on 26 November 2009. The first (see Transcript, page 41, line 47 to page 42, line 8) was an admission by Mr Smith that he had no experience in handling shoe stock or moving it around. The second (page 43, lines 46 to 50) was a statement that when he commenced his removal work on 2 September it appeared to him that 'pretty much 90 per cent of the boxes and shoes within the shop front [of Shop 31] were moved already'. Thirdly, Mr Smith stated (page 46, line 23 to page 47, line 17) that the depiction of Shop 67 given in Mr Nour's photographs was more or less as he remembered it. 132Referring to Mr Smith's evidence that when he commenced work about 90 per cent of the stock within the shop front must already have been moved, Mr Fernon submitted that it must be inferred that this had been done by Mr Vitale on 1 September. He then indicated that although the Tribunal referred briefly at [112] to written evidence given by Mr Vitale about his mode of operation, that evidence was not in fact read because Mr Vitale did not attend for cross-examination. (We should state here that Mr Vitale's statement remains among the exhibits retained by the Tribunal after the hearing, but that an exhibit note attached to it is marked 'Not read'.) The upshot, according to Mr Fernon, was that although the Lessors, being bailees for reward, bore the onus of proving that they took reasonable care in moving the Lessee's stock to Shop 67, they brought forward no evidence as to the method of removal of a large proportion of this stock. 133Mr Fernon invited us to scrutinise carefully the photographs taken by Mr Ma on 2 September 2008. He pointed out that, in so far as some of them showed boxes of shoes stacked relatively neatly, they could have been the boxes that Sophie moved to Shop 67 on 31 August 2008. 134Finally, Mr Fernon argued that Sophie's statements in cross-examination on which Mr Reuben relied (these were to the effect that after she had carried out her inspections during October a number of the boxes of shoes had fallen down and the Shop was 'clearly a mess') were to be explained by the fact that the unsatisfactory mode of stacking them adopted by the Lessors' agents rendered this virtually inevitable. For this reason, he said, these statements should not be interpreted as an admission by her that it was she who had caused the stacks of shoe boxes to degenerate into a 'mess'. 135We have carefully considered these competing submissions and the evidence to which they referred. We have also considered further video evidence, constituting 'highlights' (as counsel for the Lessors called them) of footage taken in Shop 67 on 16, 29 and 30 October 2008 (though principally on 16 October) and a short but unrevealing segment that according to Fraser Clancy was taken (in Shop 64 or Shop 67) on 18 September 2008. This 'highlights' package, comprising two DVDs lasting 15 minutes in all, was tendered to the Tribunal during the hearing but was held to be inadmissible on grounds outlined in the next section of this decision. As we indicate at the end of this section, our opinion is that this ruling by the Tribunal was incorrect. We therefore thought it appropriate to view the two DVDs (which are referred to hereafter as 'the excluded DVDs'). 136For present purposes, they disclosed two matters of relevance. First and most importantly, they provided no support at all to the Lessors' claim, referred to above at [121], that while carrying out the stock take and classifying the shoes according to whether or not they were damaged, Sophie inflicted substantial damage on them by 'trampling' on them and disturbing the stacks of boxed shoes. Our finding instead is that Sophie and her fellow-employees of the Lessee appeared to take considerable care not to tread on shoes or boxes of shoes that were lying on the floor and that on only a couple of occasions did they accidentally tread on shoes. Secondly, the footage in the excluded DVDs provided support for a claim, made by Mr Anderson in the Tribunal hearing, that in sorting out the shoes Sophie and her fellow-employees did not open all the boxes, but seemed often to make assumptions as to whether or not the shoes inside them were damaged. In the appeal, this claim was not given any prominence by the Lessors' representatives, and we do not think that it is of material significance. 137On the basis of the evidence and the submissions that we have just identified, we have little hesitation in dismissing the Lessors' challenge to the Tribunal's finding that their agents negligently caused significant damage to stock of the Lessee when removing it from Shop 31 to Shop 67. There was, in our opinion, ample evidence to support this finding and virtually no evidence to support the opposing claim by the Lessors that the damage was inflicted by Sophie or by any other employee of the Lessee.

Video recordings taken of inspections in Shop 67 138In addition to the video footage mentioned above at [121] and [125], which seems in fact to have been taken in Shop 64, the Lessors tendered to the Tribunal video recordings of the inspections and stocktaking carried out in Shop 67 by Sophie, Joy and Mr Nour on 7 October 2008 and by Sophie, Joy and other employees of the Lessee on 7, 16, 29 and 30 October. These recordings were taken on the instructions of Mr Ma. Mr Ma stated in his affidavit of 5 August 2009 that his aim was 'to video record AXL's inspections of the goods and record any conversations between AXL staff and staff of the Lessors so as to minimise the possibility of a dispute as to what in fact occurred or was said during the course of the inspection'. 139The video footage taken on 7 October 2008 was admitted unchallenged and viewed at the Tribunal hearing, during the cross-examination of Sophie by Mr Anderson, counsel for the Lessors. 140As just mentioned, however, when Mr Anderson sought at a later stage of the hearing to tender what we have called 'the excluded DVDs', the Tribunal upheld an objection by Mr Fernon. The ground of the objection was that the publication to the Tribunal of the video footage contained in the DVDs would constitute a breach of section 11 of the Surveillance Devices Act 2007 ('the SD Act'). 141The relevant provisions of the SD Act are section 3(2), section 4 (in part), subsections (1), (2) and (3) of section 7, subsection (1) of section 8, and subsections (1) and (2) of section 11. These state:- 3 Relationship to other laws and matters (2) This Act is not intended to limit a discretion a court has: (a) to admit or exclude evidence in any proceeding, or (b) to stay criminal proceedings in the interests of justice. 4 Definitions In this Act: listening device means any device capable of being used to overhear, record, monitor or listen to a conversation or words spoken to or by any person in conversation... optical surveillance device means any device capable of being used to record visually or observe an activity... party : (a) to an activity-means a person who takes part in the activity, and (b) to a private conversation-means a person by or to whom words are spoken in the due course of the conversation or a person who, with the consent, express or implied, of any of the persons by or to whom words are spoken in the course of the conversation, records, monitors or listens to those words. premises includes the following: (a) land, (b) a building, (c) a part of a building, (d) any place, whether built on or not, whether in or outside this jurisdiction. principal party , in relation to a private conversation, means a person by or to whom words are spoken in the course of the conversation. private conversation means any words spoken by one person to another person or to other persons in circumstances that may reasonably be taken to indicate that any of those persons desires the words to be listened to only: (a) by themselves, or (b) by themselves and by some other person who has the consent, express or implied, of all of those persons to do so but does not include a conversation made in any circumstances in which the parties to it ought reasonably to expect that it might be overheard by someone else. 7 Prohibition on installation, use and maintenance of listening devices (1) A person must not knowingly install, use or cause to be used or maintain a listening device: (a) to overhear, record, monitor or listen to a private conversation to which the person is not a party, or (b) to record a private conversation to which the person is a party.... (2) Subsection (1) does not apply to the following:... (c) the unintentional hearing of a private conversation by means of a listening device... (3) Subsection (1) (b) does not apply to the use of a listening device by a party to a private conversation if: (a) all of the principal parties to the conversation consent, expressly or impliedly, to the listening device being so used, or (b) a principal party to the conversation consents to the listening device being so used and the recording of the conversation: (i) is reasonably necessary for the protection of the lawful interests of that principal party, or (ii) is not made for the purpose of communicating or publishing the conversation, or a report of the conversation, to persons who are not parties to the conversation. 8 Installation, use and maintenance of optical surveillance devices without consent (1) A person must not knowingly install, use or maintain an optical surveillance device on or within premises ... to record visually or observe the carrying on of an activity if the installation, use or maintenance of the device involves: (a) entry onto or into the premises ... without the express or implied consent of the owner or occupier of the premises ... 11 Prohibition on communication or publication of private conversations or recordings of activities (1) A person must not publish, or communicate to any person, a private conversation or a record of the carrying on of an activity, or a report of a private conversation or carrying on of an activity, that has come to the person's knowledge as a direct or indirect result of the use of a listening device, an optical surveillance device, an optical surveillance device or a tracking device in contravention of a provision of this Part. .... (2) Subsection (1) does not apply to the following: (a) if the communication or publication is made: (i) to a party to the private conversation or activity, or (ii) with the consent, express or implied, of all the principal parties to the private conversation or activity, or (iii) for the purpose of investigating or prosecuting an offence against this section, or (iv) in the course of proceedings for an offence against this Act or the regulations, (b) if the communication or publication is no more than is reasonably necessary in connection with an imminent threat of: (i) serious violence to persons or of substantial damage to property, or (ii) commission of a serious narcotics offence. 142In its decision, the Tribunal explained at [76] and [81 - 85] its reasons for allowing the objection:- 76 The SD Act is intended to create a regime to protect persons from unwarranted intrusion into their lives. In certain circumstances permission can be granted for various types of warrants to be issued which would permit surveillance but, absent those, the privacy of persons against the use and maintenance of surveillance devices is prohibited, absent consent. 81 The Respondent on 29 April 2010 sought to put into evidence certain videos, or a compilation of various videos said to have been taken on 16 October 2008... 82 On 29 April 2010 the issue was re-agitated. At that time I referred to s.11, a section to which reference had not been made on 25 November 2009. At (T.29/04/10 at 79) I rejected the tender. I expressed the opinion that s.11 applied in that it "prohibits the communication or publication of a record of a carrying out of an activity without the expressed or implied consent of the principal parties to the private conversation or activity. There is no provision in section 11 which seems to permit this Tribunal, or indeed a court, to look at a video of an activity other than as specified in sub section (2) and which, relevantly, deals with offences against the section; offences against the Act or the regulations, serious violence to persons or a substantial damage to property or commission of a serious narcotic offence. In my opinion there's not enough material before this Tribunal to form an opinion that the video, that is sought to be tendered, is one that is not prohibited under the Surveillance Devices Act (2007) ...". I adhere to those views. 83 There was not the slightest evidence that would lead me to conclude that the Applicant or Sophie consented to the use of the video equipment by Mr Ma. It clearly recorded "the carrying out of an activity". The video equipment was clearly a "listening device" and an "optical surveillance device" (there is no need for me to determine whether an "optical surveillance device" includes a simple camera, although (at least at first glance) the definition would seem to so include). Plainly, however, the video equipment used by Mr Ma met the definition. 84 If it is suggested that by siting the video camera outside the relevant shop, such that the "installation", or perhaps more correctly "use", was not "within premises" ("premises" including "land, a building, a part of a building, any place, whether built on or not" - see s.4) then I would reject that proposition, simply because a tenant in a shopping centre is an occupier of, not only the premises demised under the lease but also a person who is entitled to use the common areas to pass and repass, and deliver goods and chattels to the demised premises; but even if I am wrong in that appreciation it seems to me that the prohibition in s.7 must be accorded its full force and effect, having regard to the definition of "listening device" referred to above and the evidence of Mr Ma set out above. There was no suggestion by Mr Ma, not could there be, that the recordings were made with the consent of the Applicant or Sophie. 85 I am unable to read down or otherwise interpret the prohibitions in the SD Act that would have permitted me to have admitted into evidence the video recordings. I rejected their tender. In any event, in all the circumstances, and having regard to the wealth of other material tendered before the Tribunal by both parties, it is unlikely that the video material would have added significantly to the value of evidence. 143In the appeal, Mr Reuben argued that this ruling that the SD Act would be contravened by publication of the excluded DVDs to the Tribunal was erroneous in law. He put forward five reasons, as follows: (a) Sophie gave implied consent to the footage being taken, because she was aware that it was taken and the only concerns that she expressed about it related to the way in which it was done; (b) there was consent under section 8(1)(a) of the SD Act by the Lessors, who were the owners, if not also the occupiers, of Shop 67; (c) much of the footage was taken by a camera situated outside this Shop and for this separate reason did not fall within section 8(1)(a); (d) contrary to a ruling by the High Court in Parker v Comptroller General of Customs (2009) 252 ALR 619; [2009] HCA 7 at [28], the Tribunal incorrectly imposed on the Lessors the burden of showing that the Act had not been infringed; and (e) even if an infringement occurred, the Tribunal, applying principles derived from the High Court's decision in Bunning v Cross (1978) 141 CLR 54, should have considered admitting the excluded DVDs under its common law discretion to admit evidence unlawfully obtained, but failed to take account of the existence of this discretion. 144The evidence on which Mr Reuben relied regarding Sophie's attitude to the video recording was as follows. In a letter dated 3 October 2008 to Waynes regarding the forthcoming inspection of the stock in Shop 67, Fraser Clancy stated that the Lessors 'will arrange for a person to attend and take video footage of what occurs during this inspection to ensure there is evidence of the damage which we expect will be caused to the packaging/cartons containing the merchandise'. Neither Sophie nor anyone else on behalf of the Lessee raised any objection to this measure being adopted. On 16 October, after the inspection on that day, Waynes wrote a letter to Fraser Clancy containing inter alia a complaint about the video recording of the inspection, but the complaint related only to the manner in which it had been effected. The letter stated that the Lessors had had 'up to four people in the premises video recording within one (1) metre of our client's actions', that such action 'interfered with the process' and that 'our client's ( sic ) feel intimidated'. In a letter dated 20 October to Waynes, Fraser Clancy asked them to 'assure' Sophie that 'the entirety of her conduct during the inspection has been video recorded'. In a further letter dated 29 October, Fraser Clancy stated that all of Sophie's conduct during 'the first inspection' had been recorded, 'including her conduct in trampling over allegedly damaged goods', and that the Lessor would 'continue to record her conduct in today's inspection'. These passages in Fraser Clancy's letters drew no response from Waynes. Finally, the video footage itself showed that Sophie knew it was being taken for the purpose of recording evidence for these proceedings. 145In response, Mr Fernon drew our attention to other evidence that showed, in his submission, that Sophie did not consent, either expressly or by implication, to the video footage being taken. This evidence, which was not challenged at the hearing, was as follows. 146With reference to the inspection on 16 October 2008, the Stock Taking Report alleged 'unfair treatment' by the Centre Manager and went on to state:- The Shopping Centre management used video camera and voice recorder to monitor all of our activities from the beginning to the ending. The video camera and voice recorder were directly zooming to our movements at a very close range, sometimes even in a less than one meter distance to our faces. It was severely hampering our stock taking activity. Sophie asked the manager to stop taking videos a few times, but every time the manager answered, "This is my shopping centre. I can do whatever I like here." One of our staff members refused to come to any stock taking under this pressure. We have been seriously stressed and affected by such behaviours. It is not allowed to take videos and voice record without our consent. See the attachment "A". 147'Attachment A' to this Report was a copy of a photograph showing a tripod, bearing a camera, situated very close to a pile of boxes of a size appropriate for pairs of shoes. Behind this pile, the photograph showed a woman apparently examining the contents of one of the boxes. 148With reference to the inspection on 29 October 2008, the Stock Taking Report alleged as follows: (a) at about 10.25 a.m., when the Centre Manager arrived with a video camera, Sophie told him not to point it towards her or any of her staff; (b) he said that he would 'only zoom on stock items'; (c) when she was not present, however, he started to disturb the stock taking activity by 'taking the video camera around'; and (d) at about 2.30 p.m., after police officers arrived following a request made by Sophie for other reasons, they asked the Manager to stop zooming in on her and her staff and told him to delete all the footage that had been taken. 149Mr Fernon relied also on a passage, referred to above at [144], in the letter dated 16 October 2008 from Waynes to Fraser Clancy. 150In our opinion, the Tribunal erred in concluding that publication of the excluded DVDs to it without the consent of Sophie, and indeed of all the persons involved in the 'activity' being filmed, would constitute a breach of section 11 of the SD Act and therefore preclude its being admitted into evidence. Our reasoning on the matter is as follows. 151The prohibition on publication or communication imposed by subsection (1) of section 11 does not apply unless the relevant matter came to the knowledge of the person seeking to publish or communicate it 'as a direct or indirect result of the use of a listening device, an optical surveillance device, an optical surveillance device or a tracking device in contravention of a provision of this Part ' (our emphasis). This requirement that there must have been a contravention, restricting the scope of the subsection, was not in fact mentioned by the Tribunal during its discussion of the legislation. 152The only two provisions that might have been contravened were sections 7 and 8. 153At first sight, it may appear that section 7(1) was contravened by the Lessors and/or by Mr Ma, on the footing that they 'caused' the video camera to be used. The camera was a 'listening device' within the definition in section 4, because it was a 'device capable of being used to overhear, record, monitor or listen to a conversation or words spoken to or by any person in conversation'. As Mr Ma, the relevant agent of the Lessors, stated in his affidavit, one of the aims pursued in causing it to be used was to 'record any conversations between AXL staff and staff of the Lessors'. Although the parties to the conversations being recorded included employees or agents of the Lessors, they did not include Mr Ma or, as far as the evidence discloses, any director, officer or employee who might be regarded as the 'alter ego' of either of the Lessor companies. On this basis, section 7(1)(a) would be contravened. Alternatively, if (as seems unlikely) the parties to the conversations did include a person who might be equated with either of the Lessors, there was a breach of section 7(1)(b), and none of the exclusions in section 7(3) was applicable. Having regard to the evidence summarised above, we agree with the Tribunal's conclusion that Sophie did not consent to the video recording. Furthermore, while the recording might have been reasonably necessary for the protection of the lawful interests of the Lessors, this cannot be said in relation to any of the 'principal parties' to the conversations, since these are confined by section 4 to the persons 'by or to whom words are spoken in the course of' the conversations. 154The difficulty that the Lessee encounters in this context is, however, that the concluding phrase in the definition of 'private conversation' excludes from this term any conversation 'made in any circumstances in which the parties to it ought reasonably to expect that it might be overheard by someone else'. The evidence outlined above, notably the material in the Stock Taking Report described above at [146 - 148], leaves little doubt that the presence of the video camera was obvious to everyone in Shop 67, including Sophie. In the extract from this report quoted at [146], Sophie and Joy stated that they knew that the device being used was both a camera and a sound recorder. Indeed, they complained that it was placed too close to them for comfort. 155We agree with Mr Reuben's submission, based on Parker v Comptroller General of Customs (2009) 252 ALR 619; [2009] HCA 7 at [28], that the onus lay on the Lessee, in objecting to the tender of the excluded DVDs, to establish the factual basis for its claim that sections 7 and 11 of the SD Act had been contravened. On this particular element of such a claim - i.e., that the conversations being recorded were 'private conversations' as defined in section 4 - the Lessee's evidence in fact tended to prove the contrary. 156We turn now to the question whether the installation of the video camera (being an 'optical surveillance device' as well as a 'listening device') contravened section 8(1). Again, our conclusion is that no contravention occurred. This is the case even though for at least some to the time it was installed inside Shop 67 (as the photograph in Attachment A to the Stock Taking Report clearly indicates) and even though the Lessee, in the possible capacity of 'occupier' of Shop 67 or of the shopping centre, did not give express or implied consent within the meaning of paragraph (a) of this subsection. Our reason is that the Lessors, in their capacity as owners, did give their consent to the installation. On our reading of paragraph (a), consent by either the owner or the occupier of the relevant premises is sufficient to exclude liability. 157Finally in this context, we agree with Mr Reuben's final submission on the matter. In our opinion, the Tribunal erred in law through not considering whether in its discretion it should admit the excluded DVDs in spite of having ruled that any publication of the footage contained in them without the consent of Sophie would infringe section 11 of the SD Act. It did not refer in its decision to section 3(2)(a) of the Act or to the common law principles to which Mr Reuben referred. It appears instead to have assumed (see the decision at [85]) that because of its ruling that section 11 had been infringed it was simply not permitted to admit the DVDs. 158We reached this conclusion provisionally after considering the Lessors' supplementary submissions in the appeal. We then ensured, by means of letters written by the Registrar to the parties' solicitors, that the Lessee had an opportunity to advance opposing submissions and that if, after considering its submissions, our conclusion remained unchanged, we would be in a position to view the excluded DVDs. Since, as already indicated, we did not change our opinion on the matter, we viewed them. As stated above at [135 - 136], we have taken into account the evidence that they provided when determining the issue to which they principally relate - namely, whether the damage sustained by shoes within the Lessee's stock that the Lessors removed from Shop 31 was caused, at least in part, by Sophie and her fellow-employees.

Assessment of damages 159The damages awarded by the Tribunal to the Lessee fell under four heads: (a) loss of, damage to or detention of shoes removed from Shop 31; (b) loss of, or damage to, equipment and stock (other than shoes) removed from this Shop; (c) loss of the amount of a daily cash float kept at the Shop; and (d) loss of cash takings kept at the Shop. 160The specific amounts awarded in each of these four categories (see [200 - 201]), before deduction of appropriate amounts for GST, were as follows: (a) $101,702.24; (b) $18,988.80; (c) $105.00; and (d) $2,000.00. From the total of these amounts, $122,796.54, the Tribunal deducted an amount, referable to categories (a) and (b), representing 'the GST component'. This reduced the total to $109,520.47. It is not clear how the amount deducted, $13,276.07, was calculated, but as will become apparent this is not a matter of significance. 161The Tribunal determined, at [204], that the Lessors' cross claim for $3,813.00 for lost rent was established, but noted also that the Lessors had retained a security deposit of $3,000.00 provided by the Lessee. It accordingly held that the Lessors were entitled to a net amount of $813.00, and that this should be set off against the Lessee's entitlement to damages. 162The Tribunal also held, at [205], that because of the Lessors' 'atrocious conduct' in causing the Lessee to vacate Shop 31 well before what the Tribunal believed to be the date of expiry of the Lease, the Lessors' claim for damages on other grounds must be dismissed 163The amount that the Tribunal awarded to the Lessee in Order 1 of its decision was therefore $108,707.47. It made no additional award by way of interest. 164We will now consider in turn each of the four heads under which the Tribunal awarded damages to the Lessee. The first of them, relating to the stock of shoes that agents of the Lessors removed from Shop 31, was by far the most important.

Loss caused by removal of the shoes 165The Tribunal's approach. As stated above, numerous shoes forming the major component of the Lessee's stock in Shop 31 were removed into Shop 64 and Shop 67. At [139], the Tribunal noted that the Lessee made no claim with respect to the shoes taken to Shop 64. Accordingly, the shoes taken to Shop 67 by agents of the Lessors were the sole focus of attention. 166The Tribunal's assessment of the damages to be paid to the Lessee was chiefly based on the opinions of the two expert witnesses, Mr Nour (engaged by the Lessee) and Mr McHugh (engaged by the Lessors). Their methods, findings and opinions were described and evaluated at some length in the Tribunal's decision, at paragraphs [131] to [191]. For reasons explained below, it is not necessary for us to review all the matters outlined in those paragraphs. 167The Tribunal drew attention to the difficulties that the two experts faced in endeavouring to quantify the loss suffered by the Lessee. It found that they were both appropriately qualified. It rejected a submission by the Lessors that because Mr Nour had conducted business dealings with the Lessee on previous occasions he had failed to maintain impartiality. It concluded instead that both witnesses had complied with this important obligation of an expert. The Tribunal also observed (at [158]) that because Mr Nour's primary expertise was in women's shoes - the sale of which was the 'primary business' of the Lessee - Mr McHugh 'often deferred to' his 'expertise... in this discrete field'. 168Each expert viewed his principal task as being to estimate, with regard to the shoes that he inspected, (a) their value as at 31 August 2008 (being the date on which their removal to Shop 67 commenced) and (b) their 'present wholesale market value' at the time of his inspection(s) of them. 169Mr Nour, who inspected the Removed Shoe Stock at the Lessee's warehouse and the Left Shoe Stock at the RestorX warehouse, arrived at the following figures:- Removed Shoe Stock Value at 31 August 2008: $87,369.79 Value at time of inspections (early November 2008): $32,710.00 Left Shoe Stock Value at 31 August 2008: $64,744.35 Value at time of final inspections (January-February 2010): $6,401.30 170The values ascribed by Mr Nour to both the Removed Shoe Stock and the Left Shoe Stock, as at 31 August 2008, were the wholesale prices paid for them by the Lessee. These were shown on the relevant invoices, which Mr Nour did not inspect. They were also recorded in a computerised inventory of the Lessee's stock, which had been updated on 28 August 2008 and was adjusted to account for the sales that occurred between that day and 31 August. 171Attached to Sophie's second affidavit were two schedules setting out the types and numbers of shoes comprising the Removed Shoe Stock and the Left Shoe Stock respectively, together with the prices paid as shown on the relevant invoices. It was on these schedules that Mr Nour relied when calculating the value of the two components of the stock. The total amounts that appeared in his reports - $87,369.79 and $64,744.35 respectively - were those shown in the schedules. Copies of most of the invoices were also included in the Lessee's evidence. 172The figures supplied by Mr McHugh (who did not inspect the Removed Shoe Stock) were:- Left Shoe Stock Value at 31 August 2008: $12,029.30 Value at time of final inspections (January-February 2010): $8,572.50 173In his evidence, Mr McHugh explained that his methodology in estimating the values of the Left Shoe Stock as at 31 August 2008 principally involved increasing the values that he placed on the shoes at the time of his inspections. He did this to make allowance for factors such as the damage that he perceived on some of the shoes and the depreciation that would have occurred between August 2008 and early 2010 in the value of the women's summer fashion stock (which he described as 'the majority of the stock'). 174Mr McHugh stated that he endeavoured to match invoices given to him by Fraser Clancy with the shoes that he inspected. The aggregate of the prices on the invoices that he was able to match was $14,460.00, but the value that he attributed to the relevant shoes as at 31 August 2008 was only $2,615.00. His main reasons for discounting the invoice prices to such an extent were that many of the shoes were 'old stock', which would have depreciated significantly by 31 August 2008, and that other shoes had been sold to the Lessee by 'secondary suppliers', who would have been paid a lower price than that shown on the invoices. 175The Tribunal did not state expressly at any point that it preferred the evidence of Mr Nour over that of Mr McHugh. But it clearly did so. This appears from the following passages in its decision, in which it set out its reasons why the amount to be awarded with respect to the Lessee's stock of shoes, before deduction of an appropriate amount for GST, should (as indicated above at [160]) be $101,702.24:- 178 The significance of the evidence of Mr Nour is this: in his view (Exhibit "O" at [36(ff)]: "the only reasonable way of determining the market value for the shoes is to refer to the invoice price as recorded in the inventory. In (his) experience this is the usual practice of insurance companies when assessing claims for lost shoes". His experience "in making insurance claims for my stores and in dealing with insurers (and their solicitors) (is that claims) were paid based on the invoiced value". His view was "given the importance of boxes, size, ranges, styles, (and) fashion changes, the invoices provide the only clear record of the value". 184 Counsel have submitted that the primary difference between the two experts is that Mr Nour commences his analysis from the original invoice price. I think that must be correct... 185 The invoice price is "the price that (the Applicant) paid for the stock in its shop ... the price (the Applicant) had on the invoice from the supplier (the Applicant) brought from ... the amount (the Applicant) paid ..." (T. 29/04/10 at 8). If the aim of an award of damages is to restore (as best reasonably possible) the injured party to its position prior to the injury, then it seems to me that the price paid for the goods now damaged is an excellent starting point. 187 In my view there should be an appropriate discounting against the claim of the Applicant. Valuation is not exact science - that is always the case and has been demonstrated almost since time began - experts can hardly ever agree - notwithstanding the earnest and mis-placed attempts by judges to encourage agreement - and one has to do one's best with the evidence provided and the legitimate but differing views of experts. 189 The [Lessee's] claim for "lost or damaged shoes" was made up as follows:- "Invoiced value of shoes at 31 August 2008 $152,114.34 Less: value of shoes retained (by Applicant) $ 32,710.00 Less: value of other shoes in storage $ 6,401.30 Total loss on shoes: $113,003.04" 190 In my opinion the basics of that claim are supported by Mr Nour's evidence save that in my view there should be a discount, simply because it is difficult to be "certain" of the ultimate conclusions having regard to various missing and/or unconnected invoices and the understandable generality of the approach taken by both experts. However, in all the circumstances, I do not believe that the discount should be more than 10%, such that on this head of damage the loss should be $113,003.04, less 10% at $11,300.30; total loss therefore $101,702.74. 176In their lengthy submissions on damages in the appeal, the Lessors challenged many aspects of this reasoning by the Tribunal. We will discuss each of them in turn. 177Evidence that the Lessee's business in Shop 31 was not commercially successful. In its initial submissions in the appeal, the Lessors maintained that the Tribunal erred in finding (at [151]) that the Lessee's business in Shop 31 was commercially successful. It should, they argued, have found to the contrary. The evidence on which they relied was the Lessee's financial statements for the financial years 2005-06, 2006-07 and 2007-08. These showed a loss in the second of these years ($38,530.62) that virtually cancelled out the sum of the profits in the first and third years ($12,992.61 and $26,318.62). It also showed that the Lessee's liabilities exceeded its assets in each of these years. 178We agree with a contention of the Lessee, however, that because these financial statements related to two other shoe shops owned by it as well as Shop 31, they did not provide sufficient grounds for challenging the Tribunal's finding. We note that this argument by the Lessors was not repeated in their supplementary submissions in the appeal. 179Stock held on consignment. Each of the two schedules of stock attached to Sophie's second affidavit included, as the last individual entry, an item of 'consignment' shoes. Within this category, the schedule relating to Removed Shoe Stock listed 1,000 pairs of shoes, with a unit price of $20 and a total price of $20,000.00. The schedule relating to Left Shoe Stock listed 800 pairs, with the same unit price of $20 and a total price of $16,000.00. 180In this affidavit, Sophie stated as follows: (a) the only company providing stock to the Lessee on consignment was Solar Sports; (b) there was no written agreement setting out the terms on which the Lessee took possession of it; (c) this stock would be retained for sale for three to four months; (d) at the end of that period, any of the stock that had been sold would be paid for at the price recorded on the delivery docket and any unsold stock would be returned; (e) in accordance with this arrangement, 1,800 pairs of shoes had been delivered to Shop 31 in February 2008, but had not yet been returned; (f) the Removed Shoe Stock included 1,000 of those pairs of shoes; and (g) the remainder of them had either been sold or formed part of the Left Shoe Stock 'because of their damaged state'. 181Annexed this affidavit was a copy of a delivery docket dated 7 February 2008 from Solar Shoes. It referred to '1800 prs mix style shoes', showed a unit price of $20 and a total price of $36,000.00, and included the words 'For consignment'. 182Because Mr Nour drew his figures for the values, as at 31 August 2008, of both the Removed Shoe Stock and the Left Shoe Stock, from the schedules accompanying Sophie's affidavit, these figures of $87,369.79 and $64,744.35 included the amounts of $20,000.00 and $16,000.00 respectively for the consignment stock received from Solar Sports. In his itemised valuation of the Removed Shoe Stock at the time of his inspection, however, he attributed no value to this consignment stock, even though the valuation noted its existence and the value of $20,000.00 stated in the delivery docket. Similarly, neither he nor Mr McHugh indicated that consignment stock formed or may have formed part of the Left Shoe Stock which they inspected. 183In their submissions in the appeal, the Lessors argued that Mr Nour erred in failing to deduct the amount of $20,000.00 for consignment stock from his valuation of the Removed Shoe Stock as at 31 August 2008, while at the same time failing to attribute any value to it as at the time of his inspection. It followed, in their submission, that his assessment of the diminution of the value of the Removed Shoe Stock was overstated by $20,000.00. 184The Lessee sought to rebut this argument in its initial submissions by claiming that the consignment stock should be regarded as an asset of the Lessee's business and that there was no evidence that the consignor would accept the return of damaged stock. 185In our opinion, this argument by the Lessors is well founded. Indeed, the same reasoning applies to Mr Nour's inclusion of $16,000.00 on account of consignment stock in his valuation of the Left Shoe Stock as at 31 August 2008. 186Our grounds for taking this view of the consignment stock are as follows. The essence of the Lessee's claim is that the Lessors breached their duty of care as bailees of the shoes. The resulting economic loss, not the value of the shoes, is therefore the appropriate measure of damage. According to Sophie's evidence, the Lessee did not pay the total sum of $36,000.00, or any part of this sum, to Solar Shoes when it received the 1,800 pairs from that company in February 2008. It must be assumed, in the absence of evidence to the contrary, that the parties did not intend that the title to these shoes should pass from Solar Shoes to the Lessee. The Lessee tendered no evidence to the effect that Solar Shoes had required it to make any payment for the shoes, whether damaged or undamaged, following their removal from Shop 31. As Sophie stated, the Lessee may indeed have sold some of them before the removal of them. 187For these reasons, the Lessee has not established that it suffered any economic loss by virtue of the removal of the consignment stock from Shop 31 to Shop 67. Accordingly, on the footing that Mr Nour's valuations of the Removed Shoe Stock and the Left Shoe Stock as at 31 August 2008 should continue to be regarded as the starting-point for the assessment of the Lessee's damages, they should be reduced by $20,000.00 and $16,000.00 respectively. 188Other stock claimed not to have been owned by the Lessee. In its initial submissions in the appeal, the Lessors claimed that a number of the invoices produced by the Lessee stipulated that the purchaser was an enterprise other than the Lessee. They submitted that we should infer that the stock to which these invoices referred was not in Shop 31 on 31 August 2008 and therefore should not have been included in the valuation carried out by Mr Nour in reliance on the produced invoices. 189The Lessee's response in its initial submissions was that during cross-examination it was never put to Sophie or any other witness called by the Lessee that this stock had not been purchased by the Lessee. Since the Lessee had had no opportunity to explain why names other than that of the Lessee appeared on the invoices in question, it would, the Lessee claimed, be unfair and inappropriate for us to draw the suggested inference. 190We agree with this response. We note that this particular challenge to Mr Nour's evidence regarding damages was briefly referred to, but not restated in full, in the Lessors' supplementary submissions in the appeal. 191Insufficiency of invoices. In their supplementary submissions in the appeal, the Lessors drew attention to the following items of evidence. First, Mr Nour said in cross-examination that he did not see the invoices on which he based his valuation of the Lessee's shoes as at 31 August 2008, but relied on the itemised schedule given to him by Sophie. Secondly, Mr McHugh testified, as mentioned above, that in valuing the Left Shoe Stock he tried to match invoices given to him with the stock that he was inspecting. Thirdly, the aggregate of the prices on the invoices that he was able to match was only $14,460.00, even though the aggregate of the prices paid for the Left Shoe Stock, as reflected in Mr Nour's valuation, was $64,744.35. 192On the basis of this evidence, the Lessors argued that it could not be assumed that the invoices annexed to Sophie's second affidavit bore any significant relationship to the stock that was located in Shop 31 and removed to Shop 67 on and soon after 31 August 2008. 193In our opinion, the response in the Lessee's supplementary submissions is sufficient to dispose of this argument. This was that, as both Joy and Sophie testified and the Tribunal noted (at [131]), the operations of the Lessors' agents in Shop 31 on 1 and 2 September caused the loss of a significant quantity of the Lessee's business records, including a number of its invoices. The outcome of Mr McHugh's attempt to match invoices with stock is therefore insufficient to cast serious doubt on the reliability of the invoices listed and disclosed by Sophie in furnishing evidence of the prices paid for the shoes moved from Shop 31 to Shop 67. 194Diminution in the value of the Lessee's shoes between the various dates when they were purchased and 31 August 2008. The Lessors argued that the Tribunal, through treating the invoice prices for the Lessee's shoes as establishing their value as at 31 August 2008, failed to take account of a number of important factors that would have resulted in substantial depreciation. In this connection, they put forward three propositions, as follows. 195First, they argued, the Lessee's inventory of its stock as at 28 August 2008 revealed that in a number of lines of shoes it held less than a full range of sizes. Referring to a summary of aspects of this inventory attached to their supplementary submissions in the appeal, the Lessors maintained that there was a 'broken size range' for as many as 62.5% of the shoes listed in the inventory. They pointed out that Mr Nour, in assessing the value of the shoes at the times when he inspected them, regarded the breaking up of size ranges within any line of shoes as a factor significantly reducing its value. In his first report, Mr Nour in fact stated that this would cause a reduction between 10% and 40%, depending on how many sizes were missing. It followed, the Lessors argued, that Mr Nour should also have applied discounts within this range to many of the invoice prices for the Lessee's shoes when estimating their value as at 31 August 2008. He did not do so and the Tribunal, while referring to Mr Nour's evidence regarding broken size ranges (e.g. at [167]), did not itself apply any discount. 196In conjunction with this submission, the Lessors drew attention to evidence from Sophie to the effect that while Shop 31 was in operation, she would 'top up' broken size ranges by purchasing new stock or drawing on stock that the Lessee maintained in two other shoe stores that it owned during August 2008. As indicated by the Tribunal at [108], Mr Nour referred to this evidence in the course of explaining why he did not apply any discount on this ground when assessing the value of the Lessee's stock as at 31 August 2008. Based on these considerations, both Mr Nour and the Tribunal erred, according to the Lessors, in ignoring the fact that the value of shoes within broken size ranges that formed part of the Removed Shoe Stock or the Left Shoe Stock could equally well have been enhanced by 'topping up' in this way. 197In response to these submissions, the Lessee relied on evidence given by Sophie to the effect that as at 31 August 2008 about 80% of the Lessee's stock of shoes was in full size ranges and only 20% was in broken size ranges. It pointed out that this evidence was not disputed at the Tribunal hearing and that the Lessors appeared to have accepted it in the written submissions filed after the hearing. On these grounds, the Lessee argued that we should disregard the summary of aspects of the inventory of 28 August 2008 on which the Lessors based this challenge to Sophie's evidence. 198We agree with this specific proposition advanced by the Lessee. We also agree, however, with the Lessors' argument that after the Lessee had obtained access to its shoes, there was no obvious reason why it could not have 'topped up' the broken size ranges identified by Mr Nour, using the same means as he described in his evidence relating to the stock maintained by the Lessee when carrying on business in Shop 31. We will revisit this matter shortly. 199Secondly, the Lessors submitted that the Tribunal had erred in failing to take account of (a) a concession by Mr Nour during cross-examination that the values of the shoes in Shop 31 would have diminished between their invoice dates and 31 August 2008 by factors ranging between 0% and 30% and (b) a acknowledgment made to the Tribunal by Mr Fernon that the starting-point in assessing their diminution in value thereafter should be the invoice value less 15%. The Lessors pointed out that the discount of 10% that the Tribunal actually made in its decision at [190] (see [175] above) was applicable only to the assessed diminution in the value of the shoes, not to their invoice value. 200The Lessee's submissions in response were (i) that Mr Nour also suggested that the discount should be at the lower end of the range between 0% and 30%, because most of the stock in Shop 31 was not fashion stock, and (ii) that the discount rate of 10% employed by the Tribunal was 'consistent with the evidence of Mr Nour' and within the permissible range. 201In our opinion, the Tribunal's ruling on this matter is open to question, because it involved ignoring, without any explanation, an important aspect of the methodology of the expert witness (Mr Nour) whose opinions on valuation the Tribunal was generally prepared to adopt. We agree with the Lessors that the distinction between a discount on the invoice price and a discount on the assessed diminution in value is an important one. As we have just pointed out, Mr Nour testified, and the Tribunal agreed, that the value of the Removed Shoe Stock diminished substantially during the period of two months between 31 August and 31 October 2008. But the Tribunal took no account of his accompanying evidence that a significant diminution could occur over comparable, or in some instances distinctly longer, periods of time prior to 31 August 2008. In this connection, we refer to a schedule, prepared by the Lessors and tendered late in the Tribunal proceedings, showing that while the dates of the invoices for the bulk of the stock were within the first eight months of 2008, a significant proportion were within 2007 or 2006 and a few of them bore dates in 2002. 202The price paid for the shoes might well, as the Tribunal said at [185], have been 'an excellent starting point' in assessing the damages payable to the Lessee. But it was only a starting point. 203We will defer until later in this decision our conclusions regarding the implications of this error by the Tribunal for the assessment of the damages payable to the Lessee. 204The third proposition of the Lessors stemmed from the opinion expressed by Mr Nour that, to quote phrases used by him in his first report and reproduced in the Tribunal's decision at [167], the months of October and November were 'typically a time when wholesalers reduce the price of their shoes' because they "have clearance sales so as to clear their stock prior to Christmas which is typically a very slow period for wholesalers'. Accordingly, Mr Nour wrote, the 'sale price of shoes in October and November would typically result in the reduction in the price of the shoe by 10% to 50%'. The Lessors pointed out also that, according to the Lessee's own record of its sales of pairs of shoes from Shop 31, it sold 887 pairs during the 25 days between 7 and 31 August 2008. On this footing, its monthly sales would approximate to only 1,050 pairs. 205Accordingly, the Lessors maintained, if the Lessee had been able to continue trading from other premises during September 2008, it still would have retained, at the end of that month, a substantial proportion of the stock that it held on 31 August. The value of this stock would have declined significantly during the ensuing months, for the reasons given by Mr Nour. Yet neither Mr Nour nor the Tribunal made any allowance for this factor when determining the value that should be attributed to the stock as at 31 August. 206The Lessors proceeded from this stage in their reasoning to contend that the Lessee could have moved all its stock to its warehouse by 2 October 2008, pursuant to the Tribunal's directions. It followed, they maintained, that this 'time of year' basis for treating Removed Shoe Stock as less valuable because of their conduct should only apply to 525 pairs of shoes (it being assumed that the 1,050 pairs presumptively sold during September would have been drawn in equal proportions from the Removed Shoe Stock and the Left Shoe Stock). 207In seeking to rebut this reasoning, the Lessee argued as follows in paragraphs 24 to 26 of its supplementary submissions in the appeal:- 24 [This] approach to assessment of damages... is wrong. It asserts that damage is only caused by the extent AXL was prevented from selling its stock by reason of Prosha's conduct. It then proceeds to assess what stock AXL may have sold in a 1 month period. Yet damage is assessed at the time the breach by Prosha occurred, namely from 1 September onwards. AXL lost the value of its stock. That stock has a value. The lost value continued after 30 September 2008, being the so called cut off date. 25 Prosha seems to assert that AXL failed to comply with directions on 25 September 2008 by failing to remove all shoes on 2 October 2008. That is wrong. The directions made on 25 September 2008... required AXL to only remove the stock that it agrees is not damaged. It is clear that much of the stock was damaged... That basic error undermines the balance of Prosha's submissions. 26 Prosha's actions deprived AXL of its stock. It consistently refused to give AXL access to Shop 67 without AXL going to the Tribunal to obtain directions... It did so even though it believed AXL had agreed to take a lease of Shop 67. There was no opportunity to sell any stock whilst it remained in the possession of Prosha. The stock was paid for by AXL. On any normal accounting basis, the loss suffered is the damage suffered to the stock. That is the appropriate basis on which the Tribunal assessed stock at the trial. 208In our opinion, the Lessee's contention that it could not have removed all its stock from Shop 67 by 2 October 2008 is correct. The Tribunal's directions required it to leave in that Shop all stock that it claimed to have been damaged. Furthermore, given the task that confronted Sophie and her staff and the circumstances in which they had to fulfil it, we do not think that they took an unduly long time to identify the undamaged stock and move it to the Lessee's warehouse. As indicated above, they completed this task on 30 October 2008. 209We consider, however, that there is merit in the Lessors' submission regarding the diminution in value that would, if the Lessee had been able to continue trading after 31 August 2008, have affected the stock that it held in Shop 31 on that date but would have remained unsold on 30 October. If the rate of sales during August (1,050 pairs) had been maintained during September and October, the Lessee would have sold 2,110. It would still have retained about 5,000 out of the total number of pairs (about 7,500) held in Shop 31 on 31 August. The prospect that the value of these shoes would have declined as claimed by the Lessors should, in our opinion, be taken into account in attributing a value to all the Lessee's stock as at 31 August. 210Our reasons for so concluding stem from our ruling, stated above at [186], that the damages awarded to the Lessee should, so far as possible, reflect the economic loss that it suffered on account of the Lessors' wrongful conduct. It is not correct, as the Lessee maintained, that the relevant loss is 'the value of the stock' as at 'the time the breach by Prosha occurred'. 211We can further explain our conclusion on this matter by focusing on the Removed Shoe Stock. Mr Nour assessed the value of this stock on 31 August 2008 as $87,369.79 and its value at time of his inspection in early November as $32,710.00. One of the reasons that he gave for this pronounced decline in value was, as just stated, that the resale price of shoes typically fell during October and November. But since, as appeared from the Lessee's records of its sales during August, it would not (if it continued trading) have sold all the stock held on 31 August by the end of October, its takings from the remaining unsold stock would have reflected the significant decline in value that Mr Nour identified and for which he gave reasons. 212The Lessors sought to quantify the reduction in damages that should follow, in their submission, from these considerations. We are not prepared to adopt their calculations, particularly because we do not accept their premise that the Lessee could have regained possession of, and started selling, the Removed Shoe Stock as early as the beginning of October 2008. But as already stated, we believe that their underlying argument is sound. 213In summary, therefore, our conclusion on this matter is as follows. The value that would otherwise be attributed to the Lessee's shoes as at 31 August 2008 should be reduced to take account of the following considerations: (a) if the Lessee had been able to trade without interruption from that date onwards, a significant proportion of those shoes would have still been in its possession at the beginning of November; and (b) those shoes would have sold for noticeably less than the prices obtainable during September. 214The Tribunal failed to take these considerations into account. We will again defer until later in this decision our conclusions regarding the implications of this error by the Tribunal for the assessment of the damages payable to the Lessee. 215Diminution of the value of the shoes after 31 August 2008. In this connection, we return first to the Lessors' argument that after the Lessee had obtained access to its shoes, there was no apparent reason why it could not have 'topped up' the broken size ranges identified by Mr Nour through such measures as purchasing new stock or drawing on stock that it held in the two other shoe stores that it owned. 216Beyond observing that Mr McHugh made no attempt to ascertain the extent to which size ranges were broken during the process of separating the Removed Shoe Stock from the Left Shoe Stock, the Lessee did not refer to this matter in its submissions in the appeal. 217In our opinion, this submission by the Lessors has some merit. We will indicate shortly the impact that it should have on the assessment of damages. 218The Lessors also claimed in their supplementary submissions in the appeal that Mr Nour's valuation of the Removed Shoe Stock in early November 2008 should not be accepted because he simply 'applied a blanket formula', paying no regard to the two specific factors - namely, the existence of broken size ranges and the diminution in the value of shoes during the months of October and November - that he had identified as relevant. The evidence on which the Lessors relied was the schedule to Mr Nour's first report in which he listed for each type of shoe inspected the invoice price and his determination of the value in November 2008. What this showed, according to the Lessors, was that 'anything within a price range was given the same residual value (e.g. all stock with an alleged invoice value of between $12.00 and $16.00 was reduced to $8.00)'. 219This pattern amongst the determinations recorded by Mr Nour is indeed apparent in his schedule. The Lessee argued, however, that he was familiar with the condition of the shoes as a result of inspecting them, that his expertise with regard to the relevant types of shoes was greater than that of Mr McHugh, that Mr McHugh did not criticise this approach and that the two valuers, when inspecting the Left Shoe Stock, adopted a similar approach and came up with similar results. 220Although the pattern of determinations shown in Mr Nour's schedule provides support for this submission of the Lessors, we do not think that it provides sufficient grounds for treating his valuation of the Removed Shoe Stock in November 2008 as wholly unreliable. His valuation is, as indicated earlier, the only evidence on the matter that was put before the Tribunal. 221The Lessors raised several further arguments designed to show that Mr Nour's valuation of the Left Shoe Stock at the time when he inspected it should not be accepted. They argued, for instance, that (a) this followed from the fact that he, unlike Mr McHugh, did not inspect all this stock and (b) his failure, in particular, to inspect pairs of shoes that remained in their original boxes should have induced the Tribunal to find, in line with a comment by him that the Tribunal quoted at [174], that these pairs of shoes (which the Lessors calculated as numbering 1,632) were undamaged and should indeed have been included amongst the Removed Shoe Stock. 222We do not consider it necessary to review these arguments. The reason is that, as indeed the Lessors' counsel observed during the hearing, the estimates given by the two experts of the value of the Left Shoe Stock at the time of their inspections did not differ greatly. Initially, these estimates were very close indeed: Mr Nour's figure was $6,401.30 and Mr McHugh's was $7,402.30. The same could be said even after Mr McHugh raised his figure to $8,572.50. In our opinion, the final estimates are not sufficiently far apart to warrant investigation by us of all the questions raised in this part of the Lessors' submissions. 223Our assessment of the damages to be paid on account of diminution in the value of the Lessee's stock of shoes . In the light of the foregoing discussion, the amount of damages ($101,702.74, before deduction of GST) that the Tribunal awarded to the Lessee on account of economic loss caused by the Lessors' removal of its shoes from Shop 31 to Shop 67 is too high. The 'correct and preferable decision' on the material before us is that a distinctly smaller sum should be awarded. 224We agree with the Tribunal that the appropriate 'starting point' is the price that was paid for the shoes that were in Shop 31 on 31 August 2008, as shown on the invoices relating to them. Like the Tribunal, we prefer this aspect of Mr Nour's approach to assessing the damages. 225We also consider, as did the Tribunal, that Mr Nour's valuations of the Left Shoe Stock at the times when it was inspected should be adopted in preference to those of Mr McHugh. We take account here of the Tribunal's opinion that Mr Nour possessed greater expertise in valuing the types of shoe involved in this case. Not much turns on this ruling since, as pointed out above, the two experts' valuations of the Left Shoe Stock differed by little more than $2,000. 226As indicated in the above discussion, however, there are several reasons why we consider the subsequent steps taken by the Tribunal in arriving at its figure of $101,702.74 to have been unsatisfactory. In broad terms, the measures that should be adopted by way of modifying the Tribunal's approach are as follows:-

1. An amount of $20,000.00, relating to consignment stock, should be deducted from the figure of $87,369.79, put forward by Mr Nour and accepted by the Tribunal, as the value of the Removed Shoe Stock as at 31 August 2008.
2. An amount of $16,000.00, also relating to consignment stock, should be deducted from the figure of $64,744.35, put forward by Mr Nour and accepted by the Tribunal, as the value of the Left Shoe Stock as at 31 August 2008.
3. The values attributed to these two categories of the Lessee's shoe stock at 31 August 2008 should be further reduced by a factor of 15%, to take account of the likely diminution in their value in the period preceding that date.
4. A further reduction to these values should be made to take account of the following considerations: (a) if the Lessee had been able to trade without interruption from 31 August 2008 onwards, a significant proportion of its shoes would have still been in its possession at the beginning of November; and (b) those shoes would have been sold for less than the prices obtainable during September.
5. In assessing the value of the two categories of the Lessee's shoes (the Removed Shoe Stock and the Left Shoe Stock) after it had obtained access to each of them, account should be taken of the fact that the Lessee could have 'topped up' any broken size ranges through such measures as purchasing new stock or drawing on stock that it held in the two other shoe stores that it owned. 227The specific adjustments to be made on account of the first three of these five matters are straightforward. Each of them calls for a reduction of the amount assessed by Mr Nour as reflecting the value of the Lessee's stock as at 31 August 2008. 228It is more difficult to determine an adjustment reflecting the fourth matter. Although we have treated it as a factor bearing on the valuation of the stock as at 31 August 2008, the adjustment should instead be made to the amounts assessed for the diminution in value of the two categories of stock after that date. These should be subjected to moderate discounting only, because (a) the grounds for discounting apply to only a proportion of the Lessee's stock and (b) other important factors, such as the creation of broken size ranges and the damage done to the Left Shoe Stock, caused the value of the stock to diminish. With respect to the Removed Shoe Stock, the discount should be 10%. With respect to the Left Shoe Stock, which suffered more heavily from other factors reducing its value, the discount should be 5%. 229The adjustment reflecting the fifth of the factors listed should again take the form of a discount to the amounts assessed for the diminution in value of the two categories of stock. In our judgment, a further discount of 5% is sufficient. 230The Tribunal at [190] applied a 'contingency discount' of 10%, on the ground that it was 'difficult to be "certain" of the ultimate conclusions having regard to various missing and/or unconnected invoices and the understandable generality of the approach taken by both experts'. We think that this discount should be retained. 231The Tribunal also made a deduction to reflect 'the GST component'. Neither side challenged this on appeal. With regard to the damages relating to both the shoes and the other stock and equipment, a further proportion (1/11) should be deducted. 232As a result of making these adjustments, the substantial gap between Mr Nour's valuation of the stock at 31 August 2008 and the valuations of either or both of Mr Nour and Mr McHugh at the times of the subsequent inspections will be narrowed to a significant extent. This seems to us to be an appropriate outcome. 233We would add here, with reference to Mr Nour's valuations of the Removed Shoe Stock, that the gap of $54,659.79 (between $87,369.79 and $32,710.00) seemed particularly difficult to justify at first sight. This stock was not damaged on account of the Lessors' conduct. From a practical point of view, all that happened to it was that none of it could be sold to a customer of the Lessee during the period of two months from 31 August to 30 October 2008. 234When the foregoing approach to quantification of the Lessee's damages is implemented, the outcome is as follows:- Removed Shoe Stock Invoice value 87,369.79 Less consignment stock 20,000.00 Adjusted invoice value 67,369.79 Discount 15% - depreciation 57,264.32 Less value on inspection 32,710.00 Diminution in value 24,554.32 Discount 10% - unsold stock 22,098.89 Discount 5% - size ranges 20,993.95 Discount 10% - uncertainty 18,894.55 Left Shoe Stock Invoice value 64,744.35 Less consignment stock 16,000.00 Adjusted invoice value 48,744.35 Discount 15% - depreciation 41,432.70 Value on inspection 6,401.30 Diminution in value 35,031.40 Discount 5% - unsold stock 33,279.83 Discount 5% - size ranges 31,615.84 Discount 10% - uncertainty 28,454.26 235The total of the last amounts in these tables, $18,894.55 and $28,454.26, is $47,248.81. When GST is deducted, this is reduced to $42,953.46. 236We accordingly assess the damages payable by the Lessors on account of their conduct in removing the Lessee's stock of shoes from Shop 31 at $42,953.46.

Loss caused by the removal of items other than shoes 237The Tribunal's approach. As stated above, the Tribunal made the following additional awards of damages: (i) $18,988.80 (before deduction of a GST component) with respect to lost or damaged equipment and stock (other than shoes) removed from Shop 31; (ii) $105.00 for loss of the amount of a daily cash float kept at the Shop; and (iii) $2,000.00 for loss of cash takings kept at the Shop. After deduction of a GST component, the first of these amounts comes down to $17,089.92. 238In arriving at the amount (before deduction of the GST component) of $18,988.80 for loss of equipment and of stock other than shoes, the Tribunal listed, at [192], the types, numbers and alleged values of goods covered by the Lessee's claim. The total of the values set out in this list was $23,736.00. At [197], it stated that although the claim was 'properly made and should be allowed', it should be subject to a discount of 20% because 'the proof of loss... although clear as to items was not so clear as to quantities, and not so clear as to quantum, such that, although there was evidence it was subject to doubts.' The application of this discount reduced the initial figure to $18,988.80. 239In their supplementary submissions in the appeal, the Lessors challenged the awards of damages for three categories of lost or damaged stock: t-shirts; reading glasses and sunglasses; and socks. We will deal separately with each of these. 240T-shirts. In relation to the t-shirts, the Tribunal initially allowed the Lessee's claim for $2,975.00 (though it applied the 'contingency discount' of 20% to this figure). It gave the following explanation at [195]:- ... the evidence was that the Applicant's inventory record showed it holding 316 t/shirts but, upon relocation the Applicant's officers/employees could only find 37 t/shirts, all being dirty and creased. The original unit price was $10.00, the re-saleable unit price was $5.00, such that the loss claimed is $2,975.00 There was, effectively, no expert evidence regarding the value of the t./shirts, but I am unable to conclude that Sophie does not know her business and was not able to reasonably estimate the re-saleable value and the consequent loss. 241The Lessors maintained that the Tribunal erred in finding that the original unit price for all of the 316 t-shirts was $10.00. They relied on the following aspects of the evidence: (a) while the Lessee's inventory showed supplies of t-shirts with a cost price of $10, the invoices relating to these purchases were never produced to the Tribunal; (b) two other invoices on which the Lessee relied, showing cost prices of $10.50 and $12.50, did not indicate clearly the nature of the goods supplied, and had indeed been brought into account in Mr Nour's determination of the value of the Lessee's shoes on 31 August 2008; (c) another invoice which clearly related to t-shirts showed a unit price of only $1.75; and (d) the Lessee's record of sales between 7 and 31 August 2008 disclosed sales of 25 t-shirts, amongst which seven were sold for $10 each, 16 for $2 and two for $0.50, producing an average price of only $4.12. 242The Lessee' response was that the above-mentioned invoices of $10.50 and $12.50, along with Sophie's testimony on the matter, provided sufficient support for the Tribunal's finding. It also adverted to the Tribunal's discount of 20%. 243The items of evidence on which the Lessors relied, notably the last two, indicate that while the Lessee may well have obtained t-shirts at prices in the vicinity of $10, it also purchased and indeed resold a significant number of them for amounts in the vicinity of $2. The discount of 20% applied by the Tribunal was not, in our opinion, sufficient to reflect the incidence of purchases and resales at these lower prices. 244The initial figure of $2,975.00 on which, in accordance with the Lessee's claim, the Tribunal based its award under this head should for these reasons be reduced by a factor of 40%. The amount to be deducted is $1,190 and the resulting figure is $1,785. 245Reading glasses and sunglasses. In accordance with the Lessee's claim, the Tribunal awarded (subject to a 20% discount) the sum of $960.00 for loss of, or damage to, 192 reading glasses and sunglasses, for which the unit price was claimed to be $5. 246The Lessors maintained that this amount should be reduced for the following reasons: (a) the Lessee had not established that the ten allegedly damaged items were in good condition before their removal from Shop 31; (b) it had also not established that these ten items were of no value; and (c) between 7 and 31 August 2008, the average sale price for reading glasses and sunglasses in the Shop was only $2.76. 247In our opinion, the third of these grounds justifies a reduction in the amount of the initial award. Having regard to the general discount of 20% being applied in this context, we fix the rate of this specific discount at 25%. The Tribunal's figure of $960.00 should therefore be reduced to $720.00. 248Socks. In accordance with the Lessee's claim, the Tribunal awarded (subject to a 20% discount) the sum of $1,240.00 for the loss of 610 pairs of socks and damage to a further ten pairs, for which the unit price was claimed to be $2. 249The Lessors maintained that the allegedly damaged socks were in fact merely dirty, that the Lessee had not shown them to have been clean while in Shop 31, that the Lessee had also not shown that they were of no value on account of the dirt on them and that the average sale price for socks during August 2008 was only $1.55. 250None of these matters justifies reduction of the Tribunal's initial award, other than through applying the general discount. 251Adjustment of the Tribunal's award for lost or damaged equipment and stock (other than shoes) . For the reasons just given, the figure of $23,736.00 that the Tribunal gave for the value of these goods should be reduced by amounts of $1,190.00 (in relation to the t-shirts) and $240.00 (in relation to the reading glasses and sunglasses). The resulting figure is $22,306.00. 252When what we have called here the 'contingency discount' of 20% is applied, this figure comes down to $17,844.80. Deduction of GST reduces it further to $16,222.55. 253Loss of the cash float and the cash takings. The Lessors, in their supplementary submissions, challenged the Tribunal's awards of $105.00 and $2,000.00 respectively under these heads. The grounds that they advanced were that they should not have been held to be bailees for reward of the Lessee's goods and that in any event they were entitled to be indemnified by the Lessee under clause 11.4.3 of the Lease. 254We have already made rulings contrary to both of these grounds. The Tribunal's awards should therefore stand. 255Assessment. For the foregoing reasons, the damages to be awarded for the losses caused to the Lessee by the Lessors' removal of items other than shoes from Shop 31 should be assessed at $18,327.55, representing $16,222.55 for lost or damaged equipment and stock other than shoes, $105.00 for the lost cash float and $2,000.00 for the lost cash takings.

The total amount of damages to be awarded 256We have assessed the damages payable by the Lessors on account of their conduct in removing the Lessee's stock of shoes from Shop 31 at $42,953.46 and the damages payable on account of their removal of other goods at $18,327.55. The total of these two amounts, rounded down, is $61,281.00. 257As indicated above at [161], the Tribunal awarded the net amount of $813.00 to the Lessors on their cross application for unpaid rent. This award was not challenged, so the amount of $813.00 must be set off against our award in favour of the Lessee. 258The amount of damages to be paid by the Lessors to the Lessee, in substitution for the amount stipulated by the Tribunal in Order 1 of its decision, is accordingly $60,405.00.

Other matters 259At the interlocutory hearing in the appeal on 18 February 2011, Orders 2 and 3 of the Tribunal, which related principally to the collection by the Lessee of goods still held at the RestorX warehouse, were stayed by consent pending further order of the Appeal Panel. 260This matter was not mentioned at the appeal hearing or in the supplementary submissions. In these circumstances, it seems appropriate for us to discharge the stay of Order 2, but granting liberty to apply. Because this would render Order 3 redundant, it should be set aside. 261At the hearing on 18 February 2011, Order 4 of the Tribunal, containing directions whereby the parties might apply for a costs order relating to the Tribunal proceedings, was also stayed by consent pending further order of the Appeal Panel. The parties agreed that any such application should be determined in due course by the Appeal Panel. We are satisfied that by virtue of section 88(4) of the ADT Act we have power to do so. 262It is appropriate also that we make provision for determination of any application for costs relating to these appeal proceedings. 263Our orders on the appeal accordingly include (a) an order setting aside Order 4 of the Tribunal and (b) directions as to how any application for the costs of the first instance and/or appellate proceedings is to be made and determined.

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: 17 August 2011