REASONS FOR DECISION
Introduction
1 This appeal is brought by an Applicant Lessee, Skiwing Pty Ltd (hereafter 'Skiwing'), against the decision of the Tribunal, constituted by Mr Donald, Judicial Member, in Skiwing Pty Ltd v Trust Company of Australia Limited [2004] NSWADT 169. The Respondent Lessor is Trust Company of Australia (trading as Stockland Property Management Ltd) (hereafter 'Stockland').
2 In that decision, the Tribunal rejected two claims by Skiwing (file 045027). One was for a declaration that Skiwing was not liable to pay contributions to outgoings under its lease from Stockland ('the Lease'), which is of premises in the Imperial Arcade, Sydney. The other was for a refund of contributions already made.
3 The Tribunal also upheld a cross claim by Stockland (file 045068) for a declaration that Stockland was entitled to enforce the obligation in the Lease to contribute to outgoings. It ordered Skiwing to pay to Stockland unpaid outgoings of $24,629.40 and unpaid promotional levy of $2,959.19, plus interest from the date of the Application until the date if payment at the District Court rate on a judgment debt, namely 9%.
4 The Lease is governed by the Retail Leases Act 1994 ('the RL Act').
5 In its judgment, the Tribunal rejected the following contentions of Skiwing:
(a) that Skiwing had been induced to enter into the Lease by misrepresentations relating to the amount of contributions that it would have to pay;
(b) that the amount charged was excessive, breaching an implied obligation on Stockland's part to charge only a reasonable figure;
(c) that Stockland had failed to produce reliable evidence justifying this amount;
(d) that Skiwing should be permitted to reopen its case on these issues after the evidence had closed; and
(e) that it was not liable in any event to contribute to outgoings because of contraventions by Stockland of various provisions of the RL Act.
6 In the appeal, Skiwing challenged these rulings by the Tribunal. The parties argued the grounds of appeal both orally and in written submissions filed before and after the hearing.
The dealings between the parties
7 The Tribunal's principal findings relating to the dealings between the parties are outlined in the following extracts from its judgment: -
The original lease
2 In 1993 Skiwing originally became the Lessee of shop C19 in the Imperial Arcade, which it operates as Café Tiffanys, under a lease expiring on 30 April 2000….
3 Under that lease, Stockland would provide annual estimates of total outgoings for the Imperial Arcade together with a calculation of the monthly contribution payable by Skiwing…. Following the end of a financial year an annual outgoings reconciliation would also be provided…. In both cases there was the usual list of estimated and actual outgoings headed "Imperial Arcade -Retail".
Outgoings under the new lease
4 In mid-1999 the parties began to re-negotiate for a continuation under a new lease and by letter of offer of 17 September 1999 written by Mr Ruben Aaron, the then Centre Manager,… Stockland offered to enter into a seven year lease. The letter of offer attached the Disclosure Statement and stated: -
"This letter of offer should be read in conjunction with the attached Lessor's Disclosure Statement".
Stockland's Disclosure Statement in turn stated: -
"This disclosure statement should be read in conjunction with the attached Lessor's letter of offer which contains commercial terms and other relevant information".
5 The letter of offer stated in clause 8: -
OUTGOINGS
Estimated at $44,881.45 per annum for the financial year ended June 2000 payable monthly in advance from lease commencement with any variation accounted for at the end of the financial year. A detailed breakdown of the Centre's outgoings is provided in the Disclosure Statement. The estimate of the Lessee's contribution is based on the proportion of the Lessee's tenancy bears to the gross lettable area of those tenancies in the shopping centre sharing the relevant costs/services.
6 There is no reference in the Disclosure Statement as such to outgoings. The versions of the Lessor's Disclosure Statement produced in evidence in this matter and other proceedings between the parties have not included any "detailed breakdown of the Centre's outgoings" referred to in clause 8 either within the document or as an attached document….
9 On all the evidence it is not possible to be satisfied on the balance of probabilities that an actual list of estimated outgoings was included in the offer package of 17 September 1999. It is equally clear however that Skiwing had received under its then current lease regular outgoings reports, estimates and actuals, and was well aware that that system would continue under the new lease….
14 No draft lease was provided at the time the Disclosure Statement was delivered. The lease was subsequently delivered to the solicitor for Skiwing on 10 November 1999.
15 The provisions of the lease ultimately signed by the parties and dated 28 March 2000, to commence on 1 May 2000, define "OUTGOINGS" in clause 1.16 in familiar terms covering a very wide range of expenses relating to the management and maintenance of the Centre. It is notable that the definition of outgoings in the lease is not qualified by any notion of reasonableness and simply includes all expenses actually incurred by the Lessor in the listed categories.
16 Clause 3.04 of the lease provides for "OUTGOINGS RENT", applying the standard formula: -
"OR = TP x G
TA "
defining each factor as:-
"OR = the outgoings rent for the lease year from time to time in question;
G = the outgoings for the lease year from time to time in question.
TP = the lettable area of the demised premises expressed in square metres; and
TA = the Lettable Area of the demised remises expressed in square metres."
"Lettable Area" is specifically defined in clause 1.20:
"LETTABLE AREA OF THE CENTRE- Means the lettable area of the Centre expressed in square metres being the aggregate of those parts of the Centre leased or intended to be leased to lessees at commercial rental but should not include any part of the Centre leased or intended to be leased at a nominal rental or as a temporary or casual letting or lease or not used for retail purposes (emphasis added)."
The Imperial Arcade is a retail and commercial building in the Sydney CBD, comprising three levels and a lower ground floor level of retail space and six levels of commercial space. The total retail space is 6,730 sq m and the commercial lettable area is 9,630 sq m….
Promotional fund under the new lease
27 Clause 9 of the letter of offer provided that a charge of 5% base rental will be levied under the proposed lease on offer. The Disclosure Statement states that 'The Lessee is to contribute to the retail shopping centre promotional fund as specified in the lessor's letter of offer." The lease repeats the 5% figure in Item 14 'Maximum contribution to Promotional Fund' in the reference schedule to the lease with the operative provision obliging the tenant to pay being clause 17.14.
28 Neither the letter of offer, the Disclosure Statement nor the lease contained any provision as to the contribution by any other tenants to the Promotional Fund.
8 It should be added that clause 3.4.02 of this 'new lease' (i.e., 'the Lease', as we have labelled it) provided for the payment by instalments of Skiwing's contributions to outgoings.
Provisions governing this appeal
9 It is well established (see, for example, French v Sydney Turf Club Ltd (No 2) [2003] NSWADTAP 54 at [29]) that if no error of law is shown in an appeal to an Appeal Panel of this Tribunal, the Panel must dismiss an application under s 113(2)(b) of the Administrative Decisions Tribunal Act 1997 for the appeal to extend to the merits.
10 Section 113(2) is in the following terms: -
(2) An appeal under this Part:
(a) may be made on any question of law, and
(b) with the leave of the Appeal Panel, may extend to a review of the merits of the appealable decision.
11 Skiwing did not have legal representation in these proceedings, either before us or at first instance. Its submissions to us were made by its principal director, Mr Zoran Stojanoski. He treated as alleged errors of law some matters which would more properly be labelled errors of fact. But as will be apparent, a number of his submissions clearly did allege errors of law. In these circumstances, we have considered it appropriate to grant leave under s 113(2)(b) for the appeal to extend to a review of the merits, in so far as this is necessary to dispose of it properly.
12 We will now consider the matters raised by Skiwing in the appeal.
The alleged misrepresentations by Stockland
13 One of the claims made by Skiwing at first instance was that whereas Mr Aaron allegedly represented to Mr Stojanoski at the time of negotiating the Lease that all tenants would be contributing to outgoings and to the promotional fund, this turned out not to be the case. Skiwing maintained that this was a factor inducing it to enter into the Lease.
14 In dealing with this matter, the Tribunal referred at [12 - 13] to a finding that it made in prior litigation between the parties (Skiwing Pty Ltd t/as Café Tiffanys v Trust Company of Australia Limited [2002] NSWADT 278) relating to a lessee's Disclosure Statement that was executed by Skiwing on 24 September 1999. There were in fact different versions of the Disclosure Statement in evidence, only one of which contained an acknowledgment that Skiwing did not rely on any representations other than those referred to in the Statement.
15 In this earlier case, the Tribunal made the finding, at [9], that 'the only possible conclusion on the facts was that no agreements or representations were asserted to be relied on by the Lessee other than in the Lease'.
16 In the present proceedings, at [13], the Tribunal referred to this finding and stated: -
Accordingly as a finding of fact as between these parties, there has been no reliance by Skiwing on any representation on behalf of Stockland in relation to outgoings other than as set out in par 8 of the Letter of Offer above; in particular there was no reliance on a representation that all or any other tenants would contribute to outgoings.
17 At [51 - 60], the Tribunal gave further reasons for rejecting claims, made by Skiwing under s 10 of the RL Act, for damages for pre-lease misrepresentations allegedly arising from statements by Mr Aaron or from the letter of offer. The matters raised in this context included the question whether Skiwing's contribution was to be calculated by reference to the gross lettable area of all tenancies in the shopping centre, or only of those tenancies which in fact required the lessee to contribute to the outgoings. A consideration relied on by the Tribunal was that under the previous lease the former basis of calculation was used, as Skiwing well knew.
18 In this appeal, Skiwing challenged these rulings. It cited two authorities, namely, the decision of the Full Court of the Federal Court in IOOF Australia Trustees (NSW) Ltd v Tantipech (1998) 156 ALR 470 and Gizah Pty Ltd v AXA Trustees Ltd [2001] NSWADT 116. These both consider the effect of a disclaimer in a document such as a Disclosure Statement or 'deed of acknowledgment', to the effect that a party does not rely on representations by another party made other than in the document itself or in other specified documents. They both hold that this does not preclude a finding that such a representation was in fact made, if sufficient evidence is adduced to prove this.
19 These propositions do not, however, assist Skiwing. They provide no basis for disturbing the Tribunal's decision in these proceedings, relying as it does on a finding of fact made in prior litigation between the same parties. The Tribunal's conclusion on this issue was not expressed as a necessary consequence of the acknowledgment appearing in one version of the lessee's Disclosure Statement.
20 In this context, Skiwing cited also the decision of Bryson J in Napatarra Pty Ltd v Perpetual Trustee Co Ltd [1999] NSWSC 750. We accept, however, the submission of Mr Biscoe and Ms Allars, counsel for Stockland, that this judgment does not cast any light on the question of pre-lease misrepresentations. It deals instead with the principles determining whether correspondence between a lessor and a lessee regarding renewal of the lease has led to a binding agreement.
21 Skiwing made no other submission regarding these alleged misrepresentations. Its appeal in relation to the Tribunal's treatment of them must accordingly fail.
The issue of 'reasonableness'
22 In its judgment at [15], the Tribunal pointed out that the definition of 'outgoings' in the Lease was 'not qualified by any notion of reasonableness'. At [24], referring specifically to the amount charged for management fees, it referred again to this aspect of the Lease.
23 In the appeal, Mr Stojanoski argued that Stockland was in fact bound by an implied obligation to restrict the amount charged to a 'reasonable amount'. He relied on a passage in the decision of the English Court of Appeal in Finchbourne Ltd v Rodrigues [1976] 3 All ER 581 at 587, to the effect that in the case of a residential lease a landlord could only charge the tenant for contributions that were 'fair and reasonable'. The Court stated that 'the parties cannot have intended that the landlords should have an unfettered discretion to adopt the highest conceivable standard and to charge the tenant with it'.
24 Mr Biscoe submitted in response that this decision depended on its own facts and circumstances and that it could not be applicable to a case such as this, where the parties' obligations were governed by the RL Act.
25 In so far as this submission might imply that, under the RL Act, a lessor does indeed have 'an unfettered discretion to adopt the highest conceivable standard and to charge the tenant with it', we do not accept it. We note that the amounts of a number of the standard outgoings - for example, council rates and land tax - are not in fact within the control of the lessor. But in relation to any outgoings over which the lessor does have some control - for example, those concerned with maintenance and repair - we do not believe that any provision of the RL Act, or any other applicable principle of law, discharges the lessor from an obligation to act fairly towards a tenant who will ultimately bear some or all of the cost.
26 If therefore the Tribunal's statement at [24] that 'there is no qualification in the lease that outgoings must be reasonable' was intended to imply that Stockland was under no obligation whatsoever to restrict the amount of outgoings that it charged to its tenants, we disagree with it.
27 We do not think, however, that the Tribunal intended to say this. The statement appears in a passage ([20 - 24]) in which it dealt with a claim by Skiwing that the amounts included in the total outgoings for management fees were excessive. Having considered the evidence on this issue, the Tribunal in fact concluded that the management fees, 'even if high, are within the usual charges to be expected for a retail shopping centre of this nature'. Implicitly, it applied a standard of reasonableness.
28 For these reasons, this ground of appeal must be rejected.
The evidence received by the Tribunal to substantiate the amounts claimed
29 Before and during the proceedings at first instance, Skiwing maintained that it should be granted access to all the documents in Stockland's possession relating to the outgoings payable with respect to the Imperial Arcade. Skiwing asserted that the total amount of outgoings put forward by Stockland included outgoings on the commercial space, as well as the retail space, in the Arcade, and also on other buildings owned by Stockland in the Central Business District of Sydney.
30 The Tribunal's response to this claim was to request, in the face of opposition from Stockland, that Mr Marshall, one of the KPMG partners responsible for auditing the recoverable outgoings in relation to the Imperial Arcade's retail centre, should prepare an affidavit and make himself available for cross-examination. Mr Marshall complied with this request, and answered questions put both by Mr Stojanoski and by the Tribunal.
31 On the basis of this evidence, the Tribunal's principal conclusions regarding the figures for outgoings were these: -
17 The evidence from Stockland's current Centre Manager, Mr Doherty and Mr Marshall … was that both estimated and actual outgoings related specifically to the retail space and did not include charges relating to the commercial space. Any outgoing of a general nature for the building was apportioned between the commercial and retail areas on the basis of lettable area….
19 Having questioned Mr Marshall, I am satisfied that the figures for outgoings presented by Stockland on an annual basis are properly verified by its auditors and that they relate only to the Imperial Arcade retail Centre.
32 At [20 - 25], the Tribunal rejected, also on the basis of the evidence of Mr Marshall and Mr Doherty, specific claims by Skiwing that the amounts included in the total outgoings for management fees were excessive and that the amounts for insurance and wages both were excessive and went beyond the items permitted in the Lease.
33 In response to Skiwing's insistence that this approach of the Tribunal was inadequate to ensure that Stockland did not charge an excessive figure on account of outgoings, the Tribunal stated as follows: -
26 To agree with the requests of Skiwing to go behind that process and scrutinise in detail all the expenses, review all the insurance policies and other material would in my opinion be out of all proportion given that the Skiwing share is 2.3% such that even a 10% error in the total outgoings, which is not at all likely, would result in only a small increase to Skiwing.
34 In this appeal, Skiwing challenged this ruling. It asserted an entitlement to check all the figures underlying Stockland's calculation of outgoings and maintained that an auditor's certificate was insufficient. It relied on the following passage in the Tribunal's judgment, dealing also with a lessor's claim for contributions to outgoings, in Davies v Lyndhurst Developments Pty Ltd [2001] NSWADT 9 at [31 - 32]: -
31… If an Applicant does not accept the figures proposed by the lessor, even if they be audited, an Applicant must (by implication if nothing else) have the right to explore that issue. That, in turn, raises the (disturbing) prospect of a full testing of each and every docket or claimed expenditure, in an "open court" adversarial hearing with all its attendant detail. (In effect, this is what the Applicant asks me to order).
32 In keeping with the spirit of the Act, to seek to resolve as many issues as possible by alternative dispute resolution means, and in an attempt, generally, at limiting the hearing to matters genuinely in issue, I direct the Respondent to make all dockets and records available to the Applicant at the offices of the relevant accountant (because they are all in or near Nowra) to give the Applicant an opportunity to examine the records and isolate those (if any) which in her view, were not evidence of proper outgoing. This process, on the one hand, will have more clearly defined the issues between the Parties, and, on the other hand, may well drive them both to the conclusion that the amount in issue is so small as not to justify the full expense and risk of a full hearing on this point.
35 In response, Mr Biscoe drew our attention to clause 3.04.03 of the Lease. It requires the Lessor to provide annual audited statements to the Lessee 'giving reasonable details of the outgoings'. It then states:
Except in the case of a manifest error notified by either party to the other within fourteen (14) days of the service of such statement on the Lessee, such statement shall be prima facie evidence as to the matters stated therein.
36 He referred also to the provision in s 73(2) of the ADT Act that the Tribunal, being not bound by the rules of evidence, 'may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice'. He submitted that the Tribunal, in calling for evidence from Mr Marshall and requiring him to attend for cross-examination, had exercised this discretionary power in an appropriate manner. Its decision that in the circumstances it need go no further, particularly because any error discerned was likely to make little difference to the amount charged to Skiwing, likewise constituted an appropriate exercise of its discretion
37 Mr Biscoe also pointed out that an error of law in relation to the exercise of a discretion only exists in the circumstances outlined as follows by Dixon, Evatt and McTiernan JJ in House v King (1936) 55 CLR 499 at 505: -
If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.
38 He submitted that no such error could be discerned in the approach adopted by the Tribunal.
39 We agree with this submission. We recognise that a lessee who considers that the amount charged for contributions is excessive may well wish to scrutinise all the documentary material on which the calculation of this amount is allegedly based. As Davies v Lyndhurst Developments illustrates, it is open to the Tribunal to order that access to this material be granted. But it does not follow that access must be granted in every case.
40 It is noteworthy that in Davies, there was evidence suggesting that the auditor's certificate had not been given in wholly satisfactory circumstances. This appears from the following passage in the judgment ([2001] NSWADT 9 at [31]), which immediately precedes the passage quoted above: -
The Respondent's motion to Dismiss the Applicant's claim generally faces the difficulty that the Applicant is able to suggest with some cogency that an auditor's certificate purporting to have been given on 9th February 1996 was in fact given at a much later date, and if so given might well place her claim inside the 3 year limitation period which applies to all claims. The Respondent sought to cure this difficulty by tendering a very recent (August 2000) certificate from yet another auditor, to establish the probity of the figures, but that, I am satisfied, did not address the preliminary issue which may arise in all claims pursuant to Section 26, 27 and 28 [of the RL Act].
41 A further factor distinguishing Davies from the present case is that in Davies there was no finding by the Tribunal that an error in the calculation of outgoings was likely to make little difference to the Applicant. Unlike Skiwing here, she was the only lessee required to pay the lessor's outgoings.
42 For these reasons, we hold that Skiwing has not demonstrated any error of law, and this ground of its appeal must fail.
The Tribunal's refusal to permit Skiwing to reopen its case
43 Skiwing's application to the Tribunal to reopen its case appears to have been prompted by its having gained access, after the hearing had concluded, to three 'offer packages' given by Stockland to other Arcade tenants and having ascertained from them that these tenants had no separate obligation to contribute to outgoings. The circumstances in which the application was made and rejected are described in the Tribunal's judgment at [43 - 47]: -
43 On 1 July 2004 [the final day of the hearing] Mr Marshall was examined. Further evidence was led from Mr Doherty, the Centre Manager, as a consequence of which, in the process of determining a further summons, three original "offer packages" to the three named Lessees were directed to be produced in the original.
44 At that point having reviewed the evidence to date and the relevant strength of the Skiwing claim, the Tribunal directed that it would not call upon Stockland for written submissions until it had considered the written submissions for Skiwing based upon the evidence. This was done in order to determine basically whether there was a case for Stockland to answer so that costs would be limited. Skiwing was given until 23 July to file its written submissions.
45 Thereafter there was further correspondence with the Registry from Skiwing seeking yet further documents in relation to the offer packages, in particular the originals of the file of documents said to relate to the Skiwing lease itself.
46 Without a hearing, the Tribunal determined that subject to what may emerge in the written submissions on re-consideration of the Skiwing case, there was no proper basis revealed for re-opening the evidence which had closed. Skiwing subsequently lodged a further request for delay in providing any written submissions pending a further directions hearing together with a request for further hearing as a result of allegedly receiving further notices claiming outgoings.
47 The Tribunal responded that for the proper management of the case, and given the undertaking by Stockland not to take any action pending the determination of the matter, there should first be no further delay in the Tribunal proceeding to arrive at its decision nor any need for further orders concerning the interlocutory management of the matter.
44 In challenging this ruling before us, Mr Stojanoski relied on the Tribunal's obligation under s 73(2) of the ADT Act to observe the rules of natural justice, and on authority (for example, Z v University of A, Dr D and B (No 6) [2003] NSWADT 260 at [11]) indicating that the Tribunal has the discretionary power to allow a party to reopen his or her case, even after the hearing has concluded. He also alleged that in a document that he had filed in the Tribunal on 2 August 2004, after the hearing had concluded, he had drawn attention to 'discrepancies with the documents in Mr Doherty's affidavit' and had made serious allegations about the contents of the affidavit. He submitted to us that this constituted a special reason why the Tribunal should have allowed Skiwing to reopen its case.
45 Applying again the principles stated in House v King, we discern no error of law in the Tribunal's decision not to permit Skiwing to reopen its case. This ground of appeal is accordingly rejected.
The alleged contraventions by Stockland of the RL Act
46 The Tribunal rejected the contention by Skiwing that Stockland had contravened four separate provisions of the RL Act and that each of these contraventions independently disentitled it from claiming contributions to outgoings from Skiwing. We will deal separately with each of the four provisions.
47 Section 11. Subsection (1) of this section requires that a lessor's Disclosure Statement must include all the information set out in the form contained in Schedule 2. One of the sections of this form has the heading 'Outgoings to be paid by the lessee', followed by a sub-heading 'Details of outgoings' and a list of categories of outgoing.
48 As indicated above, the Tribunal found that Stockland's Disclosure Statement, which incorporated the letter of offer of 17 September 1999, did not include this information. On this ground, Skiwing contended that Stockland was not entitled to claim any contribution to outgoings.
49 At [63], the Tribunal rejected this contention for the following reasons: -
By s.11(2) the only right given for failure to provide that information is to terminate the lease within the six months and even that right is not available where the Lessor acted honestly and reasonably ought to be excused or where the Lessee is in substantially as good a position as if the failure had not occurred; (see 11(3). In circumstances where this tenant was well aware of the extent of the outgoings upon which its contribution was calculated, despite them not actually being in the disclosure statement, it was in as good a position to make a decision whether or not to enter into this lease. The purpose of disclosure statements is to ensure that tenants have adequate information and there can be no question that this tenant had all of that information available to it.
50 In the appeal, Skiwing maintained that s 11(2) 'does not apply' because Skiwing only 'became aware' in October 2003, and that s 11(3) 'does not apply'.
51 Without necessarily endorsing the Tribunal's ruling that Skiwing was 'in substantially as good a position as if the failure had not occurred', we agree that s 11(2) sets out the only recourse available to a lessor if s 11(1) is not complied with. (We note also that s 11(6) makes non-compliance an offence.) Since Skiwing did not exercise its right under s 11(2) to terminate the lease within six months, the Tribunal's conclusion that it has no remedy is correct.
52 Section 12. This provides as follows: -
Lessee not required to pay undisclosed contributions
A provision of a retail shop lease that requires the lessee to pay or contribute towards the cost of any finishes, fixtures, fittings, equipment or services is void unless the liability to make the payment or contribution was disclosed in a disclosure statement given to the lessee in accordance with this Part.
53 The Tribunal rejected an argument by Skiwing along the following lines. The letter of offer forming part of the Stockland's Disclosure Statement disclosed only a liability to contribute to outgoings. But neither it nor the Disclosure Statement itself listed the outgoings in question. There was accordingly no compliance with Schedule 2 of the RL Act and therefore no disclosure 'in accordance with this Part', as required by s 12.
54 In support of this argument, Skiwing relied on a ruling of the Tribunal in Randi Wixs Pty Limited -v- Pokana Pty Limited (No. 2) [2003] NSWADT 4. Here the Tribunal was considering costs under the heading 'Fire Protection', which is one of the items in the list in Schedule 2 that s 11(1) requires to be disclosed as 'outgoings' in a Disclosure Statement. It held that these were also costs of 'services' within s.12. The Tribunal then said, at [39]: -
It seems to me that, absent appropriate disclosure in accordance with the clear requirements of the Act, the nature and content of the fire safety audit falls within the provision of `equipment or services' within section 12 such that, absent disclosure, the cost thereof is to be borne solely by the Respondent as Lessor.
55 At [72 - 73], the Tribunal rejected this line of argument: -
72 In my opinion s.12 does not deal with 'outgoings' which are dealt with in numerous other sections of the Act. On ordinary principles of statutory interpretation, the list of cost items referred to in s.12 uses specific language and does not include a reference to 'outgoings'. Given that 'outgoings' are expressly defined in s.3 and dealt with elsewhere, ss. 22, 27-30, it is in my opinion not possible to contend that 'services' in s.12 includes the various activities that relate to the operation of the Centre the cost of which is covered by the lessor's outgoings.
73 I read the scheme of the Act with regard to outgoings to be that they are required to be in the Disclosure Statement by virtue of s.11 and that they cannot be recovered except pursuant to express provisions of the lease, s.22….
56 It made the following observation on the ruling in Randi Wixs: -
75 I do not think I am bound by those observations, which did not examine the language of the Act as I have done above, to conclude that no outgoings at all can be recovered here.
57 In the appeal, Skiwing argued that some of the matters covered in the Lease's definition of 'outgoings' in clause 1.16 clearly fell within the notion of 'services'.
58 Stockland submitted that only one phrase in this clause - 'The cost of operating and supplying all services from time to time provided by the Lessor…' in 1.16.07 - referred to 'services', but that these would not be 'services' within s 12 because they were not eiusdem generis with (that is, in the same general category as) 'finishes, fixtures, fittings [or] equipment'. Stockland otherwise relied on the Tribunal's reasoning.
59 In our opinion, the Tribunal's reasoning does not sufficiently take account of the definition of 'outgoings' in s 3 of the RL Act. This is as follows: -
outgoings means a lessor's outgoings on account of any of the following:
(a) the expenses directly attributable to the operation, maintenance or repair of the building in which the retail shop is located or (in the case of a retail shop in a retail shopping centre) of any building in the retail shopping centre or any areas used in association with any such building,
(b) rates, taxes, levies, premiums or charges payable by the lessor because the lessor is the owner or occupier of any such building or the land on which it is erected or is the supplier of a taxable supply (within the meaning of the A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth) in respect of any such building or land.
60 This definition embraces payments of 'expenses' or of 'rates, taxes, levies, premiums or charges' that are made by a lessor and are for that reason 'a lessor's outgoings'. The term 'outgoings' does not merely include such payments. They constitute what the term 'means'.
61 What the Tribunal describes as 'the scheme of the Act with regard to outgoings' can therefore only apply to 'outgoings' in this sense of payments that the lessor has made. It cannot apply to charges that the lessor levies upon a lessee for services that the lessor itself provides.
62 On this view, even if the Act does establish separate regimes for 'outgoings' and 'services', anything in the nature of a 'service' that the lessor itself provides pursuant to the lease cannot fall within the former regime. But it may well be a 'service' within s 12, in which event this section prohibits the charging of any contribution to the lessee unless the liability to make this contribution has been disclosed in the Disclosure Statement.
63 It also follows that an item included in a definition of 'outgoings' in a lease will not be an 'outgoing' under the Act if it is in the nature of a service that the lessor itself provides. Furthermore, it may well be a 'service' within the meaning of s 12.
64 In our view, this is the case with item 1.16.07 in the Lease, which begins with the words 'The cost of operating and supplying all services from time to time provided by the Lessor…'. It would appear also to be the case with item 1.16.15, which begins with the words 'The cost of managing, controlling and administering the Centre..' We say this because at [20] the Tribunal described the 'very substantial management fee' included in Stockland's figures for 'outgoings' as 'a fee charged by Stockland'.
65 In Stockland's Disclosure Statement, under a heading 'Facilities and services provided by the lessor', the entry 'nil' appears. According to our reasoning, Stockland is therefore debarred by s 12 from relying on clause 3.4 (the clause rendering Skiwing liable to make contributions to 'outgoings' as defined in the Lease) in order to claim any amount pursuant to clause 1.16.07, or (it would seem) clause 1.16.15. This ruling may apply also to other items in clause 1.16. The underlying reason is that Skiwing's liability to make any such contribution was not disclosed pursuant to s 12.
66 We recognise that this interpretation of the RL Act may cause inconvenience to lessors. But it is justifiable in policy terms, according to the following reasoning. A lessor that wishes to charge a lessee for all or part of the cost of a service that the lessor itself provides can, we think, be legitimately required to notify the lessee of this in the Disclosure Statement, on pain of being disentitled throughout the term of the lease from claiming payment. The lessor in this situation has a significant measure of control over the scale of the service and the amount charged for it. On the other hand, ss 11, 22 and 27-30 provide sufficient protection to a lessee regarding its liability to contribute to the lessor's outgoings, in the statutory sense of payments made by the lessor to third parties.
67 By virtue of this reasoning, we must set aside the Tribunal's orders. The further steps to be taken to determine the extent of any liability of Skiwing to contribute to outgoings under the Lease will be dealt with in the orders set out below.
68 Section 22. This provides as follows: -
Recovery of outgoings from lessee
(1) The lessee under a retail shop lease is not liable to pay any amount to the lessor in respect of any outgoings except in accordance with provisions of the lease that specify:
(a) the outgoings that are to be regarded as recoverable, and
(b) how the amount of those outgoings will be determined and how they will be apportioned to the lessee, and
(c) how those outgoings or any part of them may be recovered by the lessor from the lessee.
(2) In this Part, the expression "outgoings to which the lessee contributes" refers to any outgoings in respect of which the lessee is liable under the lease to make any payment to the lessor.
(3) Costs associated with the advertising or promotion of a retail shop or retail shopping centre, or of any business carried on there, are not outgoings for the purposes of this section.
69 We agree with the Tribunal (see its judgment at [76]) that the provisions of the Lease itself sufficiently complied with this section. It was not in fact the subject of detailed argument before us.
70 Section 30. At [65 - 66], the Tribunal dismissed Skiwing's claim under this provision in the following terms: -
65 Paragraph 5 of the Skiwing amended Points of Claim asserts that clause 3 of the lease is contrary to s.30 of the Retail leases Act which provides: -
Non-specific outgoings contribution limited by ratio of lettable area
(1) A lessee under a retail shop lease in a retail shopping centre is not liable to contribute towards a non-specific outgoing of the lessor (that is, an outgoing not specifically referable to any particular shop in the retail shopping centre) unless the shop is one of the shops to which the outgoing is referable, and is not liable to contribute an amount in excess of an amount calculated by multiplying the total amount of that outgoing by the ratio of the lettable area of the shop to the total of the lettable areas of all the retail shops to which the outgoing is referable.
(2) An outgoing is "referable" to a retail shop if the shop is one of the shops that enjoys or shares the benefit resulting from the outgoing.
66 I am well satisfied on all of the evidence that, whether or not the very substantial contribution to outgoings of this tenant amounted to over one-fifth of its total payments under the lease, those outgoings were first properly attributed only to the total outgoings of this particular retail Arcade and secondly that the contribution was calculated only by reference to the proportion of the lettable area of the premises to the total retail area of the Imperial Arcade shopping centre.
71 In the appeal, Skiwing's arguments on this issue went no further than to dispute the Tribunal's factual findings. We accordingly reject this ground of appeal.
Concluding observations
72 Our principal order in this appeal is that, for the foregoing reasons, the appeal must be allowed in part.
73 Order 1 of the Tribunal in Application 045027, in so far as it dismissed Skiwing's claim to a refund, must be set aside. We do not, however, set aside this Order in so far as it dismissed Skiwing's claim for a declaration that contribution to outgoings was not payable under the Lease.
74 Order 2 in Application 045068, requiring Skiwing to pay unpaid outgoings and promotional levy together with interest, must be set aside.
75 We order also that (a) the extent of any liability of Skiwing to contribute, as claimed by Stockland, to outgoings under the Lease and (b) the amount of any payment to be made by either party to the other party, must be reconsidered by the Tribunal.
76 We further order that the following questions relating to the Tribunal's reconsideration of these matters should be determined by the Appeal Panel at a hearing to be arranged by the Registry: -
1. How the Tribunal should be constituted.
2. Under what conditions the parties should be permitted to adduce further evidence.
3. Any other procedural issues requiring determination.
77 The costs of this appeal are reserved.
78 In conclusion, we consider it unfortunate that this judgment leaves some issues undetermined and contemplates further hearings. Under s 74 of the RL Act, the Tribunal is obliged to use its best endeavours to bring about a settlement of any retail tenancy dispute before it. At this stage, we can do little more than to suggest that, since the principal legal and factual issues dividing the parties have in fact been determined, they should attempt once again to settle the remaining issues, so as to avoid the expenditure of yet more time and money.