Spuds Surf Chatswood Pty Ltd v PT Ltd

NCAT Appeal Panel|2014-09-18

The Applicant's claim for the loss of the value of its business

At the merits hearing before the Appeal Panel, the Applicant advanced an additional claim for $250,000 representing the value of the business that it carried on in the Shop. This sum was the amount that a firm called City Beach had been prepared to pay for the business during 2006, on condition that the Respondent would agree to a lower rent. In the alternative, the Applicant claimed $100,000, being the amount that another firm, Rip Curl, had offered for the goodwill of the business during 2007.
In the Principal decision at [257], we gave the following reasons for rejecting any such claim by the Applicant:- 257 The Applicant's claim for damages within the second category - the loss of the value of its business - could only be sustained if the evidence showed that a decline in the profitability of the business brought about by the Respondent's unconscionable conduct was of a sufficient scale to cause the business to fail completely. But as we have just said, the evidence was insufficient to support any finding at all as to the amount of lost profit. It follows that there can be no award of damages based on the value of the business.

Total refund of rent

In the appeal proceedings, the Applicant sought to have set aside the RLD's order, made in the Respondent's cross claim, that it should pay arrears of rent and damages for lost rent to the Respondent, assessed at $327,533.85 plus interest. In the Principal decision at [258], we declined to set aside this order, stating that 'we see no warrant for an order totally relieving the Applicant for its liability for rent'.
We also dismissed a lesser claim by the Applicant that we should make an award in its favour representing the value of rent and outgoings for the six-month period between 1 September 2006 and 28 February 2007. The earlier of these two dates is the date on which the Applicant gave a written notice to the Respondent seeking removal of the three kiosks and a refund of 10% of the rent since October 2002. The reason why the claim covered rent over a period of six months (rather than some other period) was not clear to us.
In the remitter proceedings, Mr Fernon argued that since on a review of the evidence we should find the requisite connection between the Respondent's unconscionable conduct and the Applicant's loss of profits, we should also find that the Applicant should not have been held liable to pay rent to the Respondent. Accordingly, we should set aside the RLD's order for the payment of such rent or, in the alternative, should include the amount of this rent in the damages awarded to the Applicant.
In addition to opposing the claim that this 'requisite connection' was established by the evidence, Mr Angyal pointed out that in the CA decision at [188], the Court of Appeal had expressly stated that the orders of the RLD in favour of the Respondent remained on foot.
On both of these grounds advanced by Mr Angyal, we reject the Applicant's claim that it should be relieved wholly from its liability for rent. We also remain unpersuaded that it should have relief for the six-month period between 1 September 2006 and 28 February 2007. As we indicated in the Principal decision at [258], we do not understand the basis for this claim.

Partial relief of liability for rent

Our ruling in the Principal decision. In this decision, having held that the Applicant's claim for damages for lost profits was unsustainable, we went on to rule that it should instead receive a sum by way of partial relief from its liability for rent under the Lease. The following extracts from the relevant part of our decision (at [259 - 278]) sufficiently explain our reasoning:- 260 An important reason for [our ruling] is that a significant component of the conduct of the Respondent that we have held to be unconscionable was its refusal to grant continuing rent relief to the Applicant, despite the Applicant's concerns, conveyed on numerous occasions commencing as early as August 2002, about the adverse consequences of contravention of the 2002 Height Restrictions… 262 Our finding of unconscionable conduct against the Respondent was… dependent on proof of a continuing course of conduct, extending beyond the approval of contraventions of the 2002 Height Restrictions so as to include also the Respondent's refusal to acknowledge that contravention had occurred, its reliance on a greatly liberalised version of the Restrictions that it issued in 2005 and, as we have just pointed out, its refusal of rent relief… 265 The questions remaining are (a) what amount or proportion of the rent payable should be the subject of abatement and (b) over what period should the abatement occur. 266 With regard to the first of these questions, we derive guidance from the fact that as at March 2002, when negotiations for the Lease were in train, the current minimum rent paid by the Applicant for Shops 415 and 416 was $229,200 per annum and the current minimum rent for Shop 417, being then payable by the tenant preceding the Applicant, was $169,900. The evidence for this is contained in an internal document of the Respondent, headed 'Business Case Recommendation' and dated 13 March 2002. The total of these two amounts is $399,100. 267 In the same document, it was noted that the minimum rent being proposed for the Lease being negotiated for all three Shops was $427,500. This was in fact the amount ultimately agreed on, with provision for annual increases calculated by reference to the CPI and for an additional percentage rent based on turnover. 268 In this document, it was also noted that the 'Surplus to Current Rent' that would then be generated would be $28,500. This represents 7% of the rent being obtained by the Respondent under the two earlier leases and 6.7% of the rent due under the Lease… 270 It is legitimate, in our opinion, to treat the 'surplus' amount of $28,500 within the rental figure of $427,500 stipulated in the Lease as reflecting, at least to some degree, the additional value of the site occupied by the Premises by virtue of its 'premium quality'. This value was diminished by the interference to sightlines caused by the erection, over the ensuing period of about 30 months, of the three kiosks about which the Applicant complained… 273 The Respondent chose… to reject the Applicant's requests for rent relief on account of this interference. This rejection constituted, as we have said, one of the grounds for our finding of unconscionable conduct. If the Respondent had been prepared to, in effect, surrender to the Applicant a significant segment of the 'surplus' annual rent of $28,500 that it had secured by entering into the Lease, we would, as we have said, have been reluctant to make this finding. 274 In determining what annual amount of rent foregone would have been sufficient for this purpose, we receive no specific guidance from the evidence or from legal principle. We must simply abide by a well-known pronouncement (to which Mr Fernon referred us) contained in the judgment of Mason CJ and Dawson J in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83. [This was to the effect that when, in assessing damages, 'precise evidence is not available' the court must 'do the best it can'.] 276 Doing 'the best we can', we conclude that an offer by the Respondent to 'surrender' 50% of this annual minimum rent 'surplus' of $28,500 - i.e., $14,250 - during the period after the Boost Juice kiosk was constructed would have been sufficient to ward off any finding of unconscionable conduct and is accordingly appropriate for present purposes… 278 The amount to which the Applicant should be entitled, with respect to the loss occasioned by the Respondent's refusal to grant rent relief, is… $14,250 x 5.3333: i.e., $76,000. The Applicant should also receive interest on this sum.
The Court of Appeal set aside our order implementing this conclusion on the ground that the parties had not had an opportunity to make submissions on the approach that we had adopted to determining an amount to be awarded to the Applicant. It did not indicate whether it considered this approach to be appropriate in the circumstances of the case.
We have given careful consideration to the question whether the making an order granting partial relief from liability for rent would fall within the terms of the Court's order remitting these proceedings to us. This particular question was not addressed in the parties' submissions.
The remitter order was in the following terms: 'Remit the proceedings to the Appeal Panel to assess the damages (if any) to be awarded to Spuds by reason of PT's unconscionable conduct, consistently with this Judgment.'
In the ensuing discussion, we express the opinion that an order for partial relief of the Applicant's liability for rent would be an order by way of restitution and we draw attention to important distinctions between orders designed to effect restitution and awards of compensatory damages. It may therefore be thought that any such order made against the Respondent would fall outside the scope of the remitter.
We note however that in its decision (at [85] and on two occasions in [158]), the Court of Appeal used the term 'damages' to describe our order in the Principal decision granting partial relief from liability to pay rent. The Court said nothing to suggest that the making of an order of this nature would fall outside the terms of the remitter. We accordingly interpret the phrase 'assess the damages (if any)' in the remitter order as one intended to leave scope for this form of relief.
The Applicant's submissions. Mr Fernon agreed that, as an alternative to assessing damages by reference to lost profits, it was appropriate to make an award based on the rent reduction that the Respondent should have granted.
He claimed, however, that the amount of our award was unduly low. His principal arguments were as follows.
First, the annual amount of $14,250 that we determined as an appropriate abatement of rent was only 3.5% of the initial rental ($427,500). It took no account of the 'destruction of the premium nature of the Shop caused by the Kiosks or their detrimental effect to the gross profits of the business'.
Secondly, although the base annual rent of $1,723 per square metre paid by the Applicant for shops 415 and 416 (before the Lease commenced) increased by only 3.3% (to $1,781) when the Premises expanded to include shop 417, the new rent must be taken to have included a larger premium for the prime location of shop 417. The reason for this, according to Mr Fernon, was that normally the rental rate per square metre diminishes when the size of a retail shop is increased. This was acknowledged during cross-examination by Mr Stevens, a leasing manager employed by the Respondent.
Mr Stevens' answers on this topic were given when he was asked about discussions between the parties during 2005 regarding a possible downsizing of the Shop. His answers included assent to the proposition that the rental per square metre that the Respondent was then proposing for a lease of significantly smaller premises to the Applicant was 12.8% higher than the rental that the Applicant was then paying for the Shop.
Relying on this evidence from Mr Stevens and on evidence that the rental paid by the tenant who took over part of the Shop (shops 416 and 417) following the Applicant's departure was set at about the same rate as the Applicant had been paying, Mr Fernon argued that the 'premium' that the Applicant paid to enlarge the Premises during August 2002 should be taken to have been at least 16%. He reached this figure by adding the increase of 12.8% per square metre sought by the Respondent during the negotiations for downsizing the Shop to the increase of 3.3% that the Applicant in fact paid when the Premises were enlarged.
Thirdly, Mr Fernon submitted that we erred in assessing the rental premium for the prime position of shop 417 by reference only to the additional amount ($28,500 per annum) paid by the Applicant in 2002 over and above what the previous tenant had paid. This approach, he maintained, took no account of the premium already paid by this tenant for the prime location.
Fourthly, he said, we erred in failing to take account of the CPI increases in the rent during the period from the commencement of the Lease in July 2002 until 2006-2007. A similar increase in the value of the premium location should have been taken into account.
Fifthly, he submitted that we erred through not considering the effect of the Respondent's refusal to provide rent relief on the overall viability of the Applicant's business and its capacity to continue trading. If an appropriate level of rent relief had been granted, this business might have survived.
Sixth and finally, Mr Fernon referred to evidence from Mr Stevens that when negotiating a renewed lease in 2006 to a tenant in the Centre, the Respondent had agreed to a reduction of nearly 50% of the rent paid under the original lease, which commenced in 1999. Mr Stevens agreed that a major reason for the reduction was that the traffic flow near the tenant's shop had diminished significantly. On this basis, Mr Fernon claimed that an amount reflecting a 50% reduction in the rent paid by the Applicant should be awarded.
Mr Fernon also made submissions based on the rentals obtained by the Respondent when re-letting the three shops that the Applicant had occupied. It is sufficient for us to indicate that in our opinion neither these submissions nor the opposing submissions advanced by Mr Angyal are of any value in this context. The amounts of the rents for these three shops agreed on in leases granted to other parties during 2007 have little or no relevance to the amount that could be regarded as a fair rent chargeable to the Applicant for premises comprising the three shops following the erection of the three kiosks between November 2002 and February 2005.
The Respondent's submissions. Mr Angyal's primary contentions were along the following lines: (a) the only way in which one might quantify any rent relief to be granted must involve assessment of the impact of the erection of the three kiosks on the Applicant's business in the Shop; (b) the evidence regarding the losses allegedly suffered by the Applicant was insufficient to enable this assessment to be conducted; (c) it followed that no rent relief could be granted.
Mr Angyal argued also that there was no evidence to support the proposition that if appropriate rental relief had been granted, the Applicant's business would have survived. Instead, Mr Bell had expressed the opinion that the Applicant's decision to move into the Shop put it into a position where the sales that it generated were insufficient from the outset to enable it to pay the increased rental.
In reply to Mr Fernon's submission based on the Respondent's grant of rent relief to another tenant on the ground of reduced pedestrian traffic, Mr Angyal maintained that this one instance did not establish that there existed a general practice of granting relief in these circumstances.
Finally, Mr Angyal disputed the general proposition that rental rates per square metre higher for small shops than for larger ones. In this context, he made three submissions: (a) in order to establish the proposition, it was not enough merely to point to the evidence of one witness (Mr Stevens) and to a rate proposed during negotiations for one new lease; (b) Mr Stevens described the proposition as a 'rule of thumb' only, adding that 'it depends on the nature of the retailer'; and (c) at the time when the Premises were enlarged, the rent per square metre ($1,723) paid by the Applicant for shops 415 and 416 (whose combined area was 133 square metres) was higher, not lower, than the rent ($1,588) paid by the then tenant of shop 417 (the area of which was only 107 square metres).
Discussion of general principles. We will commence our discussion with some observations about the general principles that support the making of orders by way of rent relief under the RL Act on the ground of a lessor's unconscionable conduct. This is not a topic that the parties addressed to any material extent, even though they had the opportunity to do so.
In our opinion, the proposition that such orders may be made receives strong support from the wording of section 72AA(1) of this Act. This subsection (with emphasis added by us) is in the following terms:- 72AA Powers of Tribunal relating to unconscionable conduct claims (1) In proceedings for an unconscionable conduct claim lodged with the Tribunal under this Part, the Tribunal is empowered to make any one or more of the following orders that it considers appropriate: (a) an order that a party to the proceedings pay money to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person, (b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings.
The italicised phrases convey the clear message that orders for the payment of unliquidated compensatory damages - such as an award of damages calculated by reference to lost profits - are not the only kind of remedy permitted by the subsection. For this reason, dicta describing how damages should be assessed under section 72AA (such as the dictum in Sarker v World Best Holdings Ltd [2008] NSWADT 75 at [262], on which Mr Fernon relied) should not be interpreted as implying that common law damages are the only remedy available to a successful applicant.
The notion of unconscionable conduct is a creature of equity. To a significant extent, equitable remedies are concerned with ensuring that parties whose past conduct has been found to breach equitable principles are not permitted to retain any money or property that they have acquired by virtue of this conduct. To a significant extent also, the law of restitution is concerned with providing remedies against unjust enrichment.
In the light of these considerations, the relief granted under section 72AA may, in our opinion, take the form of an order requiring a lessor to repay to the lessee some or all of any money (including instalments of rent) that the lessor has received from the lessee, when the grounds for the order are or include a finding that the lessor acted unconscionably in requiring this money to be paid.
An order of this nature does not seek to ensure that the lessee receives compensation, in the sense in which that term describes the purpose of common law damages. Its focus is instead on the extent to which the lessor has been enriched, at the expense of the lessee, by conduct that has been held unconscionable. Such an order may be for a sum falling well short of what, according to the lessee, would amount to compensation for losses caused by the lessor's unconscionable conduct.
By virtue of this reasoning, we reject Mr Angyal's contention that the only means whereby we might quantify any rent relief to be granted in the present proceedings must involve assessment of the impact of the erection of the three kiosks on the profitability of the Applicant's business in the Shop.
We also reject Mr Fernon's submission that in determining an amount to be awarded by way of rent relief, we should give consideration to the effect of the Respondent's refusal to provide such relief on the overall viability of the Applicant's business and its capacity to continue trading. To do this, in our opinion, would involve assessing whether, and if so to what extent, this aspect of the Respondent's unconscionable conduct had adversely affected the profitability of the Applicant's business at the Shop. But that is a question relating to which we have held, for reasons explained above at some length, that the evidence is insufficient.
As indicated above at [223], Mr Fernon's submissions on this matter went to the lengths of claiming that if rent relief on a sufficient scale had been granted, this business 'might have survived'. The evidence does not, however, permit a finding about this proposition. Significantly, the testimony of Mr Bell (as Mr Angyal pointed out) included an opinion that the Applicant's decision to move into the Shop put it into a position where the sales that it generated were insufficient from the outset to enable it to pay the increased rental.
It appears to us that an order along the lines that we have described is entirely appropriate when the Tribunal (as in this case) is satisfied that a lessor's unconscionable conduct has caused the lessee to suffer loss, but the evidence does not provide an adequate basis for quantifying this loss.
How the amount to be awarded should be determined. We turn now to the determination of an appropriate amount to be awarded by way of relief from liability for rent.
As shown in the extracts from Principal decision quoted above at [209], our approach in that decision was to award, for each year of the relevant period, an amount that we believed to be a fair proportion (50%) of the 'Surplus to Current Rent' ($28,500) that the Respondent acquired through substituting the Lease of the Shop to the Applicant for the earlier leases of shops 415 and 416 (to the Applicant) and shop 417 (to another tenant).
We do not accept Mr Fernon's submission that the 'premium' paid by the Applicant for the prime location of the Shop should be assessed at a figure as high as 16%. Equally, we are not impressed by his claim, based on the circumstances of a lease granted to another tenant at the Centre, that a rent reduction at the even higher rate of 50% is warranted. In both of these instances, the evidentiary base is distinctly tenuous.
We attach some weight, however, to Mr Stevens' 'rule of thumb' that generally speaking the rental per square metre for larger premises in a shopping centre will be lower than the rental for smaller premises. This suggests that rental relief at only 3.3% - being the rate of increase per square metre charged to the Applicant by virtue of the expansion of the Premises - would be insufficient.
Having given careful consideration to this question, we remain of the opinion that the general approach adopted in the Principal decision is appropriate. A significant factor in its favour is that its starting point is the 'surplus' amount of rent that the Respondent acquired through entering into the Lease. Its adoption implements the principle that the Respondent, by virtue of engaging in unconscionable conduct that impacted adversely on the benefits acquired by the Applicant under the Lease, should not be permitted to retain the whole of this surplus amount.
In maintaining this approach, we reject one submission by Mr Fernon that relates specifically to it. We are not persuaded that we should take account of any 'premium' paid by the prior tenant of shop 417 for its 'prime location'. Our principal reasons is that, as Mr Angyal noted, the rent per square metre paid by this tenant was lower than the rent paid by the Applicant for two shops (415 and 416) that were not in a 'prime location'.
We agree with Mr Fernon, however, that in the Principal decision we erred in failing to take account of the CPI increases in the rent during the period of the Lease. In re-determining the amount of rent relief to be awarded, we will remedy this defect.
Our calculations. Our starting point in determining an amount to be awarded is the 'Surplus to Current Rent' ($28,500) that the Respondent acquired through entering into the Lease of the Shop. The annual rent then payable by the Applicant (i.e., the initial base rent) was $427,500. Accordingly, the 'annual surplus rent' (as we will now call it) represented one-fifteenth (6.666%) of the base rent.
During the period of the Lease, the base rent rose from $427,500 (in 2002-2003) to $526,104 (in 2007-2008). (The latter amount is one of two figures given in Mr Fernon's submissions for the rent during the final year of the Lease. On our reading of the evidence, it is the correct figure.) We do not know what the base rent was in each of the intervening years. We consider, however, that Mr Fernon's submission regarding CPI increases will be taken sufficiently into account if we base our recalculation of an annual surplus rent figure covering the whole six-year term of the Lease on an amount midway between the initial base rent and the final base rent. That amount is $476,802.
Recalculated in this way, the figure for annual surplus rent becomes one-fifteenth (6.666%) of $476,802: i.e., $31,786.
In the Principal decision, we stated (at [276]): 276 Doing 'the best we can' we conclude 'an offer by the Respondent to 'surrender' 50% of this annual minimum rent 'surplus' of $28,500 - i.e., $14,250 - during the period after the Boost Juice kiosk was constructed would have been sufficient to ward off any finding of unconscionable conduct and is accordingly appropriate for present purposes.
As mentioned above, Mr Fernon submitted that the amount of rent relief that we ultimately determined through assessing it as 50% of the annual rent surplus was clearly inadequate, being only 3.333% of the initial rental.
On reconsideration, we agree with this submission. It must be acknowledged that the proportion of the annual rent surplus that should, according to our reasoning, be refunded to the Applicant must inevitably depend on value judgment rather than on precise calculations conducted in accordance with detailed legal principles. We have ourselves expressed the opinion (at [243]) that rent relief at 3.3% would be insufficient.
Our conclusion is that the amount of the relief should be 80%, not 50%, of the adjusted annual rent surplus. In deciding on this higher percentage, we rely in particular on an aspect of the Respondent's unconscionable conduct to which in the Principal decision we attached insufficient weight. This is that during the later years of the Lease the Respondent refused to grant any abatement of rent even though it knew that the Applicant's business in the Shop was in difficulties and realised - or should have realised - that the conduct in relation to the kiosks that we have characterised as unconscionable may well (we put it no higher) have contributed materially to these difficulties. The ongoing nature of the Respondent's unconscionable conduct calls, we believe, for a surrender by it of a higher proportion of the annual rent surplus than we initially determined.
One further amendment should be made to the approach taken in the Principal decision. In that decision at [277 - 278], we held that the period over which rent relief was should be granted was 5 years and 4 months, from 2 July 2002 to 1 November 2007. We pointed out in the same passage that this was the period covered by the Respondent's cross claim for unpaid rent and outgoings (we should have mentioned that the claim also included damages for lost rent).
We recognise now (though the matter was not addressed in the submissions) that the correct period is five years only, from the time in November 2002 when the Boost Juice kiosk was erected until 1 November 2007. The Applicant has no grounds for claiming rent relief for any earlier period.
On the footing, therefore, that the Applicant should receive rent relief calculated as 80% of the annual rent surplus over five years, the principal amount to be awarded is $31,786 x 0.8 x 5. This produces a total of $127,143.47, to which interest should be added.
In calculating interest, we will employ the methodology, and to some degree the phraseology, that we used in the Principal decision at [279 - 282].
As noted near the commencement of these reasons, the orders made in the RLD decision included orders upholding the Respondent's cross application and requiring the Applicant to pay $327,633.55 on account of unpaid rent and outgoings and lost rent, together with interest, to the Respondent.
In the supplementary RLD decision, the RLD held that the amount of interest to be paid by the Applicant to the Respondent, being pre-judgment interest from 23 April 2008 to 3 August 2011, was $92,811.46. Accordingly, the total amount ordered by the RLD was $420,455.01.
The amount of interest payable by the Respondent to the Applicant under the order that we are making should therefore be $127,143.47 x 92,811.46 divided by 327,533.55. The resulting figure for interest is $36,027.98, and the total amount to be paid under our order is $163,171.46.
The orders to be made. We understand that at the time of the remitter hearing the Applicant had not paid any part of the total amount of $420,455.01 that the RLD ordered it to pay, by virtue of upholding the Respondent's cross application. Assuming that this is still the case, our decision, by virtue of upholding the Applicant's application, that the amount of $163,171.46 should be paid by the Respondent to the Applicant permits a set-off of the Respondent's lesser liability against the Applicant's greater liability. The net amount to be paid by the Applicant to the Respondent is $257,283.55.
But for this set off, the RLD's orders requiring $420,455.01 to be paid to the Respondent would transgress the upper limit of $400,000 for orders made by the ADT under the RL Act. This upper limit is imposed in the following terms by section 73(1) of this Act, which states:- 73 Monetary limit on Tribunal's jurisdiction (1) The Tribunal has no jurisdiction to make an order or orders in respect of a particular retail tenancy claim or an unconscionable conduct claim if the total of: (a) the amount or amounts (if any) of money to be paid, and (b) the amount or amounts (if any) of money to be declared not to be due or owing, and (c) the value or values (if any) of the work to be done or the services to be performed, under or by virtue of the order or orders would exceed $400,000 or such other amount as may be prescribed by the regulations, whether on a balance of account or after set-off or otherwise.
As the Court of Appeal observed (CA decision, [188]), if in these remitter proceedings we decided that the Applicant should not be awarded any amount under section 72AA(1), section 73(1) would require that the total amount that the RLD ordered it to pay to the Respondent would be reduced to $400,000. The Court also referred (at [187 - 190]) to the fact that in the supplementary appeal decision we had averted any application of section 73(1) by ruling that the award in the Applicant's favour made by us in the Principal decision could be set off against the RLD's award in favour of the Respondent. The Court did not state or imply that this ruling was incorrect. It did, however, indicate at [190] that in our decision in the remitter proceedings we should 'address any jurisdictional issues that arise'.
In the remitter proceedings, Mr Angyal submitted that a set off such as we have described was not permitted by section 73(1). The reason, he said, was that the use of the term 'particular' in the opening words of this subsection implied that the only liabilities that could be set off against each other were those arising within a single retail tenancy claim or unconscionable conduct claim. Because the judgment debt owed by the Applicant represented the outcome of a retail tenancy claim made by the Respondent, a judgment debt owed by the Respondent by virtue of the Applicant's success in a quite different claim - being in fact an unconscionable conduct claim - could not be set off against it.
We agree with Mr Fernon, however, that the term 'particular', as used in the subsection, does not have this effect. The wording of the subsection contains nothing to indicate that the only liabilities that may be set off against each other are liabilities arising within one 'particular' retail tenancy claim or unconscionable conduct claim. A setting off of opposing liabilities is frequently sought in proceedings (like the present proceedings) in which an application by one party prompts a cross application by the opposing party. More often than not, such proceedings call for the determination of more than one claim. To interpret section 73 in a manner that does not permit any set off of liabilities in these circumstances is to narrow its scope unduly.
The order that we make is for the payment of the amount of $257,283.55 by the Applicant to the Respondent. This order is made on the Respondent's cross claim for unpaid rent and associated matters. It reduces the total amount stipulated in the RLD's orders, against which the Applicant appealed (for confirmation that this was indeed the case, see the supplementary appeal decision at [29 - 38]). The reason for thus varying the RLD's orders is that we have determined that the Respondent is liable to pay a lesser amount to the Applicant on the ground of unconscionable conduct and that the two opposing debts should be set off against each other.
There remains the matter of the costs of the remitted proceedings. Our initial view on this matter is that since neither party has been wholly successful, there is likely to be no basis for a finding that it would be 'fair' under section 88(1A) of the ADT Act for a costs order to be made. But there may be circumstances of which we are unaware.
We accordingly direct as follows. Any application for an order for the costs of these remitter proceedings must be filed, with supporting submissions, within 28 days of the date of this decision. The opposing party is to file its submissions within a further 28 days. The application will then be decided 'on the papers', pursuant to section 76 of the ADT Act, unless the Appeal Panel determines that a hearing should take place.
I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.
Registrar

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar

Amendments 12 February 2015 - Changed MNC status 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: 12 February 2015

Trade Practices Act 1974(Cth)

reasons for decision Introduction

This decision is made in proceedings that were remitted to the Appeal Panel of the Administrative Decisions Tribunal ('the ADT') by an order of the Court of Appeal made on 18 December 2013.
The litigation of which these remitted proceedings form part has a long history. It commenced in the Retail Leases Division of the ADT ('the RLD') as long ago as 31 August 2006. The principal parties throughout have been Spuds Surf Chatswood Pty Ltd ('the Applicant') and PT Ltd ('the Respondent'). At one stage of the proceedings, the Registrar of Retail Tenancy Disputes participated as an Intervener.
The dispute between the principal parties derives from a lease ('the Lease') of premises ('the Shop') comprising shops 415, 416 and 417 on Level 4 of a shopping centre ('the Centre') known as Westfield Chatswood or Westfield Shoppingtown, Chatswood. The Respondent, which belongs to the group of companies known as Westfield, was the lessor. The Applicant was the lessee. The permitted use included the retail sale of surf and snow clothing, surf boards, wet suits and other apparel.
It has been common ground throughout that the Lease was governed by the Retail Leases Act 1994 ('the RL Act') and that the ADT accordingly had jurisdiction to hear and determine the proceedings.
The terms of the Lease were set out in a memorandum, but this memorandum was never executed by both parties. It provided for a commencement date of 10 August 2002, though it was held during the proceedings that because the Applicant took possession on or about 3 July 2002 the Lease actually commenced on that date, pursuant to section 8 of the RL Act. The termination date was stated to be 9 August 2008, though in fact the Applicant vacated the Shop on 26 June 2007.
At the time when this occurred, the rent due under the Lease was substantially in arrears. In the litigation that ensued, the Respondent's principal claims were for payment of these arrears and for damages representing rent that would have been payable up to the termination date.
The principal claims urged by the Applicant were that in contravention of guidelines on height promulgated by the Respondent amongst tenants in the Centre, the Respondent permitted the erection of three kiosks - the Boost Juice kiosk, the Telechoice kiosk and the Love Salad kiosk - close to the Shop and thereby obstructed sightlines to the Shop from a major walkway in the Centre. As a result, according to the Applicant, its sales at the Shop decreased substantially and its losses were so severe that eventually its business in the Shop failed.
An important matter relied on by the Respondent in seeking to rebut these claims was that the time of commencement of the Lease another kiosk - the B-Zone kiosk - was located near the frontage of the Shop. The Respondent maintained that any obstruction to sightlines caused by the three kiosks about which the Applicant complained was no greater, and indeed possibly less, than the obstruction caused by the B-Zone kiosk.
The litigation has given rise to a number of decisions, both final and interlocutory. It is useful at the outset to list the six decisions of primary importance, together with shorthand names for them, as many references will be made to them:- 1. The substantive decision of the RLD: Spuds Surf Chatswood Pty Ltd v PT Ltd (No 2), PT Ltd v Spuds Surf Chatswood Pty Ltd [2011] NSWADT 152 - 'the RLD decision'
A second decision of the RLD: Spuds Surf Chatswood Pty Ltd v PT Ltd (No 3), PT Ltd v Spuds Surf Chatswood Pty Ltd (No 2) [2011] NSWADT 186, determining questions of interest and costs - 'the supplementary RLD decision'
The first decision of the Appeal Panel of the ADT, granting leave for an appeal filed by the Applicant to extend to the merits: Spuds Surf Chatswood Pty Ltd v PT Ltd (RLD) [2012] NSWADTAP 2 - 'the Leave decision'
The Appeal Panel's second decision, determining this appeal on the merits: Spuds Surf Chatswood Pty Ltd v PT Ltd (No 2) (RLD) [2012] NSWADTAP 35 - 'the Principal decision'
The Appeal Panel's third decision, determining questions of interest and costs: Spuds Surf Chatswood Pty Ltd v PT Ltd (No 3) (RLD) [2013] NSWADTAP 11 - 'the supplementary appeal decision'
The Court of Appeal's decision, allowing an appeal by the Respondent and a cross-appeal by the Applicant, both in part, and remitting part of the proceedings to the Appeal Panel: PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 - 'the CA decision'.
Within the CA decision, all references will be to the judgment of Sackville AJA, with whom McColl and Leeming JJA expressed their agreement.

Scope of remitted hearing

The terms of the Court of Appeal's order remitting the proceedings (CA decision, [195]) were as follows:- (5) Remit the proceedings to the Appeal Panel to assess the damages (if any) to be awarded to Spuds by reason of PT's unconscionable conduct, consistently with this Judgment.
Relying in particular on the words 'if any', Mr Angyal argued that these terms were broad enough to require us to re-determine the question of causation. He acknowledged that the Court of Appeal had referred (at [174]) to our conclusion (Principal decision, [221]) that 'the conduct of the Respondent that we have held to be unconscionable did cause the Applicant to sustain some measure of economic loss…' But he maintained that the question of causation fell nonetheless within the scope of the remitted proceedings, on account of the following additional observations by the Court (at [175], [177], [178] and [179]):- 175 But in the section of its reasons dealing with damages, the Appeal Panel found (at [246]) that Spuds' assertion of a substantial overall decline in the profitability of its business on account of the kiosks was "not backed up at all by financial data". On the contrary, there appeared to be "no correlation in time between the erection of a kiosk and a decline in turnover"… 177… the Appeal Panel made no finding that any particular, quantifiable diminution in gross revenue was caused by PT's unconscionable conduct. 178 … there must at least be a finding that the unconscionable conduct is a cause of a quantifiable loss sustained by the lessee. No such finding - or anything close to it - has been made in the present case. 179… further findings of fact are required before any damages award can be made. Those findings must be made by the Appeal Panel itself on remitter.
Mr Angyal placed particular emphasis on the Court's use of the phrases 'caused by' and 'a cause of' in paragraphs [177] and [178] respectively.
In response, Mr Fernon cited a number of authorities to the effect that a court or tribunal to which proceedings have been remitted must not stray outside the boundaries set by the order for remitter. For present purposes, it is sufficient to quote the following statement of principle appearing in one of these cases, R v Carroll; Carroll v the Queen [2010] NSWCCA 55; 77 NSWLR 45 at [28]:- It is undoubted that the scope of the authority of a court to which a matter is remitted… is confined by the terms of the remitted and that such court can make no order nor undertake any task inconsistent with the remitter order…
The primary ground on which Mr Fernon contested Mr Angyal's argument on this question was that the Court of Appeal had dismissed PT's appeal on the issue of causation and had framed a remitter order that made no mention of this issue. He relied on the following statements by Sackville AJA at [157], [191] and [193]:- 157… I therefore do not accept PT's submission that the Appeal Panel erred in law in finding that PT's unconscionable conduct caused Spuds to sustain some loss. 191 PT's appeal succeeds only to the extent that the Appeal Panel's award of damages must be set aside. PT's appeal, insofar as it challenges the Appeal Panel's finding on unconscionability, must be dismissed. 193 For the reasons that have been given, the unfortunate consequence of the Appeal Panel's departure from procedural fairness in the assessment of damages is that the matter must be remitted to the Appeal Panel for damages to be reassessed (see ADT Act, s 120(2)). It will be a matter for the Appeal Panel to determine whether any evidence should be received on this question.

Issue estoppel

The Respondent's submissions. Mr Angyal's argument based on the principles of issue estoppel was framed in the following manner.
In the Principal decision at [226], we made the following ruling with regard to the question whether the Respondent's unconscionable conduct caused any loss to the Applicant:- … the question of causation (as distinct from quantification of damages) may be answered by determining whether, on the balance of probabilities, there was any material difference at all, adverse to the Applicant, between: (a) The pecuniary impact (if any) on its business of the obstruction to sight lines (if any) caused by the blade sign on the Boost Juice kiosk and the components of the Telechoice and Love Salad kiosks that infringed the 2002 Height Restrictions; and (b) The pecuniary impact (if any) on its business of the obstruction to sight lines (if any) that was caused by the sign suspended above the B-Zone kiosk.
Before the Court of Appeal, the Respondent claimed that this formulation, which we will call 'the criterion of loss', was erroneous in law. The Court rejected this claim (CA decision, [155]) for the following reasons: (a) we had found, as a matter of fact, that if the Respondent had not engaged in unconscionable conduct, the B-Zone kiosk, or a structure very similar to it, would have remained in place; and (b) an appeal to the Court of Appeal on this question of fact was not available to the Respondent.
According to Mr Angyal, this 'criterion of loss' was the same criterion as the RLD at first instance had applied when dismissing the Applicant's claim for damages under section 34 of the RL Act. It had held (RLD decision, [221]) that a comparison should be made 'between the extent of any relevant obstruction by the B-Zone kiosk and any relevant obstruction by the Boost Juice kiosk'. It observed that such an assessment was 'pertinent to determine whether… there were involved inhibitions or alterations "to a substantial extent", "significant disruption" and "significant adverse effect" as alleged by the Applicant'. At [225(d)], it stated: 'There was not caused to Surf City by any or all of those facilities any significant inhibition, alteration, disruption or adverse effect, of the order prescribed by s34(1), or at all.'
In the Leave decision at [260], following a lengthy discussion, we dismissed both (a) the Applicant's appeal against the RLD's dismissal of its claim under section 34 and (b) its application for the appeal to extend to the merits of the section 34 claim. With regard to the latter ruling, we stated (at [255 - 256]):- 255… we should not exercise this discretion in favour of the Applicant unless we believe that, following the 'rehearing' required under section 115 of the ADT Act, we would be likely to reach a decision conferring distinctly greater benefit on the Applicant than the Tribunal's decision dismissing its claim under section 34. 256 On this matter, our opinion is that such a decision would be unlikely…

The Court of Appeal's ruling that a 'quantifiable loss' had to be proved

In the foregoing discussion of the scope of the remitted proceedings, we referred to a distinction drawn in the CA decision between our rulings that (a) the Respondent's unconscionable conduct 'did cause the Applicant to sustain some measure of economic loss' and (b) 'the Applicant's assertion of a substantial overall decline in the profitability of its by its business is not backed up at all by financial data showing that the erection of any of them had an immediate, or briefly delayed, negative effect on its turnover' (see the Principal decision at [221] and [246]).
The Court of Appeal dismissed the Respondent's appeal against the former ruling, on the ground that it had not been shown to be erroneous in law. The Court described the effect of the latter ruling as follows (CA decision, [177]): 177… the Appeal Panel made no finding that any particular, quantifiable diminution in gross revenue was caused by PT's unconscionable conduct. In other words, it made no finding that there was a prima facie causal connection between PT's contravention of s 62B(1) of the RL Act and a quantifiable loss sustained by Spuds.
It is evident from these passages that the Court saw no incompatibility between these two rulings. It took the view that a party claiming damages might well establish that the conduct complained of caused it to sustain 'some measure' of economic loss, but might be denied an award of damages because it failed to establish that this conduct was a cause of 'quantifiable' loss.
The reason why the distinction between 'some measure of loss' and 'quantifiable loss' is of prime importance in the present context appears from a section of the Court of Appeal's judgment (paragraphs [160] to [179]) headed 'Spuds' Onus Argument'.
This argument of the Applicant was not advanced at the hearings before the RLD or the Appeal Panel. At [160] to [172], the Court outlined it and discussed the two cases on which it was principally based:- 160 Although Spuds put its damages claim in various ways, the key submission for present purposes was that it had lost gross profits because of the diminution in the volume of its trade caused by PT's unconscionable conduct. Thus, so Spuds argued, it was entitled to damages under s 62B(8) assessed by reference to its lost profits. 161 Mr Fernon submitted that once Spuds proved a causal link between its losses and PT's unconscionable conduct (which he says it did) the onus was on PT to prove the extent to which the losses were attributable to other causes. It was for PT to prove, for example, that any losses sustained by Spuds were in truth attributable to Spuds' own business decision in April 2004 to discontinue stocking two well-known brands of surf wear, rather than to any unconscionable conduct on the part of PT. 162 According to Mr Fernon, the Appeal Panel found that some of Spuds' lost profits were attributable to PT's unconscionable conduct. Since PT had not established what proportion of Spuds' lost profits could be attributed to factors other than PT's own unconscionable conduct, Spuds was entitled to be compensated for the whole of its losses. Mr Fernon further contended that on any view the amount of lost profits assessed in this way must have exceeded the RLD's jurisdictional limit of $400,000. 163 Mr Fernon principally relied on Henville v Walker [2001] HCA 52; 206 CLR 459. In that case developers relied on misleading advice from a real estate agent concerning the demand for "quality" units when deciding to undertake a particular project. However, the developers also prepared a feasibility study which seriously underestimated the costs of the project. If either the demand for units or the costs of the project had been estimated accurately, the project would not have proceeded. The developers sued the agent for misleading or deceptive conduct in contravention of s 52 of the TP Act [the Trade Practices Act 1974 (Cth)] and claimed pursuant to s 82 of the TP Act the entirety of their losses on the project. 164 By majority (McHugh, Gummow and Hayne JJ; Gleeson CJ and Gaudron J dissenting), the High Court upheld the developers' claim. McHugh J (with whom Gummow J agreed) pointed out (at [144]) that one fundamental purpose of the TP Act was to protect consumers from being induced to enter into transactions by false or misleading conduct. Thus an award of damages made under s 82 of the TP Act had to compensate the claimant for the loss suffered in consequence of altering his or her position on the inducement of the false representation. 165 On that basis, his Honour held (at [146]) that the Full Court of the Supreme Court of Western Australia had erred in concluding that, because there were concurrent causes of the developers' losses, their claim had to fail. McHugh J added this observation (at [148]): Arguably, once a plaintiff demonstrates that a breach of duty has occurred that is closely followed by damage, a prima facie causal connection will be established. It is then for the defendant to show that the plaintiff should not recover damages. In the words of Dixon CJ in Watts v Rake [[1960] HCA 58; 108 CLR 158, at 160], it is the defendant who must disentangle, so far as possible, the various contributing factors. 166 Hayne J (with whom Gummow J also agreed) reached the same conclusion: 160 First, it is necessary to identify the loss sustained by the [developers]. The loss which the [developers] suffered is a single sum. It is the amount by which their expenditures exceeded their receipts. ... Further, the whole of that loss was brought about by the decision to proceed with the project, a decision which was ... made in reliance upon the wrong estimates of both costs and likely receipts. ... 161 Both the estimate of likely receipts and the estimate of likely expenditures were wrong. That does not mean, however, that, in this case, attention can be confined to one side of the profit and loss account in determining what loss and damage was caused by the respondents' misleading and deceptive conduct. The question presented by the statute is what loss was suffered by the [developers] that was caused by the relevant contravention? 162 The conclusion that the [developers] suffered loss requires comparison between the position in which the [developers] found themselves after the project was finished, and the position in which they would have been if, instead of relying on what they were told by the respondents, they had not undertaken the project. ... 163 Secondly, seldom, if ever, will contravening conduct be the sole cause of a person suffering loss. ... What the Act directs attention to is whether the contravening conduct was a cause. It does not require, or permit, the attribution of some qualification such as "solely" or "principally" to the word "by". 167 As Mr Fernon acknowledged in argument, the facts of Henville v Walker were different to the present case. The starting point for the majority of the High Court was that the agent's misleading conduct was a cause of the developers' entire loss on the project: that is, but for the misleading conduct the developers would not have undertaken the ill-fated development. The fact that there were other circumstances inducing the developers to undertake the project was not to the point. By contrast, the present is not a "no transaction" case. Spuds does not say (at least not now) that PT's unconscionable conduct induced it to enter into the Lease. It says that PT's conduct was a cause of its loss of gross profits and that it is for PT to "disentangle" any other factors that may have contributed to the loss. 168 Mr Fernon submitted that although the facts in Henville v Walker were different, the principle was nonetheless apposite to this case. He relied on the carefully reasoned judgment of Jagot J in Haviv Holdings Pty Limited v Howards Storage World Pty Ltd [2009] FCA 242; 254 ALR 273. 169 The issue in Haviv was the quantum of damages to be awarded to a franchisee (Haviv) for the franchisor's breach of contract in permitting a second franchisee to operate within Haviv's exclusive territory. Jagot J applied the principle that: while the plaintiff has the onus of showing loss caused by the breach, "if the loss in question is the apparent or likely result of the breach, the onus shifts to the contract-breaker to prove that it was not" [Cheshire and Fifoot's Law of Contract, (9th Aust ed, 2008), at [23.34]] 170 Jagot J assessed damages by comparing the net profits Haviv in fact earned from its store (when it had to compete with the second franchisee's business) with the hypothetical net profits it would have earned had the franchisor not breached the contract (Scenario 1). Her Honour accepted Haviv's submission that its hypothetical net profits for the relevant period could be ascertained by reference to a benchmark derived from the performance during that period of several exclusive franchisees whose outlets were comparable to Haviv's. On this basis, her Honour found (at [45]) that under Scenario 1 there had been an immediate decrease in sales revenue (and thus of the potential for net profits) following the opening of the second franchisee's store (emphasis in the original). The decrease continued thereafter. 171 The franchisor identified several factors which it said had contributed to the decline in sales revenue. One of these, the opening of a modern retail complex at Rhodes (near Haviv's store), probably had the effect of attracting some customers away from Haviv. However, there was no evidence as to the magnitude of the likely impact on Haviv's revenue (at [42]). In her Honour's view, the onus was on the franchisor to disentangle the extent to which the opening of the Rhodes complex contributed to Haviv's loss of revenue (at [46]): These circumstances ... show a breach of contract "closely followed by damage", thus indicative of a "prima facie causal connection" between the breach and damage: see the observations of Kirby J in Chappel [Chappel v Hart [1998] HCA 55; 195 CLR 232] at [93]. A "practical commonsense" approach to the question of damage indicates that the Rhodes store was a material cause of loss of net profits from [Haviv's] store after November 2004. I also accept Haviv's submissions that, as Haviv had proved a prima facie causal connection between the breach and the loss, it was a matter for [the franchisor] as the party in breach to "disentangle" any contribution to Haviv's loss caused by the Rhodes shopping centre: Henville at [148]; see also Amann Aviation at 94. [The franchisor] did not do so. When this is considered with the proper function of the discount rate ... it is apparent that the state of the evidence does not disclose any fundamental gap in or undermine Haviv's case for damages. No allowance need or should be made for any potential contribution of the Rhodes shopping centre because [the franchisor] has not proven any such effect and, in any event, that is part of the function of the application of a discount rate. (Emphasis added in the CA decision) 172 The critical element in Jagot J's reasoning was the finding that the opening of the second franchisee's store had an immediate and continuing impact on Haviv's gross profits (emphasis in the CA decision). Thus there was a prima facie causal connection between the franchisor's breach of contract and the loss sustained by Haviv. (I leave to one side the role played by the discount rate in the case)…

Principles governing the assessment of damages for unconscionable conduct

The parties' submissions. The starting-point of Mr Fernon's argument on this matter was the proposition that in assessing damages for unconscionable conduct under section 72AA of the RL Act, we should apply principles similar to those governing tort claims and should accordingly calculate the loss of gross profits sustained by the Applicant's business at the Shop on account of the Respondent' unconscionable conduct. He referred to paragraph [262] of the ADT's decision in Sarker v World Best Holdings Ltd [2008] NSWADT 75, which is in the following terms:- 262 Mr Ashhurst [counsel for the applicant] submitted that any damages awarded under this provision should be assessed on principles similar to those governing tort claims. The damages should be designed to place the injured party in the position in which he or she would have been but for the offending conduct. He described the approach to be adopted as 'restitutionary'. Mr Angyal [counsel for the respondent] did not dispute these general propositions.
Subsection (1) of section 72AA, being the relevant part of this section for present purposes, states:- 72AA Powers of Tribunal relating to unconscionable conduct claims (1) In proceedings for an unconscionable conduct claim lodged with the Tribunal under this Part, the Tribunal is empowered to make any one or more of the following orders that it considers appropriate: (a) an order that a party to the proceedings pay money to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person, (b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings.
On this footing, Mr Fernon argued, the following statement by the Court of Appeal in Council of the Municipality of Shellharbour v Ezzi [1991] NSWCA 63; BC9102701 at p 12 was applicable:- However the existence of a concurrent cause does not relieve the tortfeasor from responsibility for loss. It is well settled, as Devlin J said in Heskell v Continental Express [1950] 1 All ER 1033 at 1047: "Where the wrong is a tort it is clearly settled that the wrongdoer cannot excuse himself by pointing to another cause. It is enough that the tort should be a cause and it is unnecessary to evaluate competing causes and ascertain which of them is dominant."
Mr Fernon argued that this general rule applied also to claims for damages for breach of contract. He cited the following statement of principle by Glass JA in Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310 at 357:- In my opinion, the above cases do not establish the proposition that a plaintiff in an action for breach of contract must prove that the breach of contract was the real and efficient or dominant cause of the loss which he suffered. In the law of tort it is well-established that it is sufficient that the wrongful act or omission is a material cause of the plaintiff's injury or damage. In principle the same rule must apply in the law of contract unless the terms of the contract require the sole or dominant cause to be determined.

Our conclusions on the question of 'quantifiable loss'

Our preliminary observations regarding the Sales Figures. The parties' competing submissions on this part of the evidence demonstrate the crucial importance, for the Applicant's case on assessment of damages, of Mr Fernon's submission that during the period of about six weeks between the commencement of trading in the Shop (15 August 2002 or thereabouts) and the end of the third quarter of 2002, the turnover of the business must have increased by 32-34% in comparison with its turnover in the equivalent period of 2001. Mr Fernon arrived at this rate of 32-34% by doubling the rate of increase (16-17%) discernible by comparing the Sales Figures for the whole of the relevant quarter (the third) in 2001 and 2002. The assumptions underlying his submission are (i) that during the first half of this quarter in 2002 (i.e., between 1 July and mid-August), there was no increase in the Shop's turnover and (ii) that all of the increase in turnover for the quarter as a whole should therefore be attributed to the trade conducted in the second half of the quarter (mid-August to 30 September).
In our opinion, these assumptions constitute a fragile foundation for two crucial propositions advanced by the Applicant. These were (a) that the rate of increase in sales that should have occurred in the fourth quarter of 2002 and the first two quarters of 2003 (when compared with their equivalents during 2001 and 2002 respectively) was as high as 32-34% and (b) the failure of the business at the Shop to achieve this rate of increase was attributable to the installation of the Boost Juice kiosk.
As Mr Angyal's competing argument illustrates, if one assumes that the enlargement of the Premises would have increased the Sales Figures by only 20% (this being the highest rate suggested by Mr Standley and a rate near the lower end of the range suggested by Mr Terrill), a very different outcome emerges. This is that the installation of the Boost Juice kiosk in place of the B-Zone kiosk brought about an increase in the Applicant's sales, not a decline.
This is not to say that we agree with Mr Angyal's claim that the rate of 20% should be accepted. We refer to this claim here for the purpose of demonstrating that acceptance of Mr Fernon's figure of 32-34%, or at least a figure exceeding 26% by a significant margin, is essential if his argument that the installation of the Boost Juice kiosk had an immediate negative impact on the Shop's turnover is to be accepted.
Our view of the competing submissions regarding the significance of Mr Mimis's memorandum of 12 November 2002 is that Mr Fernon's submission is to be preferred. It may well be, as he argued, that the rate of increase achieved during the period following installation of the Boost Juice kiosk was in fact less than 26%. But there is no way of estimating this lower rate.

At a glance

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