Textralian Enterprises Pty Ltd v Perpetual Trustees Victoria Ltd [2000] NSWCA 176 | Case summary

Textralian Enterprises Pty Ltd v Perpetual Trustees Victoria Ltd [2000] NSWCA 176 | Case summary | Zoe

[8]

TEXTRALIAN ENTERPRISES PTY LTD & ORS v PERPETUAL TRUSTEES (VICTORIA) LTD & ORS JUDGMENT 1 PRIESTLEY JA: In broad terms this case concerns two commercial leases, the first of which was surrendered during its term and replaced by the second. The appellants (lessees) claimed that they were induced by the lessor's misrepresentations to enter into each lease. As the second lease was entered into in order to settle disputes that had arisen concerning the first one, the appellants can only succeed in obtaining any relief concerning the first one if they make good their appeal concerning the second one. I do not think they have done this, so, in my opinion the appeal should be dismissed. 2 The full circumstances of the case are set out in the reasons of Heydon JA. Fitzgerald JA, basing himself on the materials in Heydon JA's reasons, has stated succinctly, and in a way with which I concur, why he agrees with Heydon JA's conclusion. 3 I therefore agree that the appeal should be dismissed with costs. 4 FITZGERALD JA: The detailed description and analysis of the circumstances giving rise to this appeal which have been undertaken by Heydon JA enable me to deal with the matter briefly. Since the parties made no attempt to distinguish between the different appellants on the one hand or the different respondents on the other, the issues can be considered between the appellants as a group and the respondents as a group. 5 I agree with Heydon JA that the appellants are not entitled to relief in relation to the earlier 1993 transaction if they are not entitled to relief in relation to the 1996 transaction, which was entered into to replace the 1993 transaction and to compromise the appellants' then claims in relation to that transaction. Broadly stated, the appellants allege that they were induced to enter the 1996 transaction by one or more of the misrepresentations alleged in sub-paragraphs (a) to (h) of paragraph 16 of the Amended Defence and Cross Claim, which are set out in Heydon JA's reasons for judgment. 6 As his Honour has demonstrated, each element of the appellants' claim confronts major obstacles. Even if it be assumed that they could establish other aspects of their case, they cannot establish reliance upon a material misrepresentation by the respondents without the evidence of Mr and Mrs Slattery, which was not accepted by the trial judge. His Honour was especially critical of Mr Slattery's evidence, which he described as "completely unreliable". His Honour also stated that Mr Slattery's "credibility was completely shattered in cross-examination". 7 For the reasons given by Heydon JA, the trial judge's decision not to accept the evidence of Mr and Mrs Slattery was amply justified without his Honour's conclusion that Mr Slattery had fabricated and artificially aged some handwritten notes, allegedly made some years earlier, which the appellants produced very late in the trial. The evidence at trial, and in particular the expert opinion of a document examiner, Mr Anderson, supported the trial judge's conclusion that Mr Slattery had fabricated and artificially aged the handwritten notes, which was one of the matters which his Honour took into account in rejecting Mr Slattery's evidence. 8 Under the heading "Fresh evidence", Heydon JA has discussed additional evidence which the appellants sought to adduce in this Court but the Court declined to admit. I agree with what his Honour has stated in relation to what is described as the "Juan Uribe material". If admitted, the other additional evidence of Paul Denison Westwood and Mark Nugent would have cast doubt on the trial judge's conclusion that Mr Slattery fabricated and artificially aged the handwritten notes, and, if accepted, would have demonstrated that his Honour's conclusion was wrong. 9 In his reasons for judgment, Heydon JA has described the circumstances at trial in which the appellants produced the handwritten notes, the respondents produced a report from Mr Anderson which they had obtained overnight, and the appellants made a forensic decision not to pursue an application for a two week adjournment to challenge Mr Anderson's opinion, seemingly because of the terms which the trial judge suggested might be imposed if an adjournment for that purpose was granted. I agree with Heydon JA that the attitude adopted by the trial judge was not unfair, and no basis has been shown upon which his Honour's discretion could legitimately be disturbed by this Court. 10 While this Court cannot determine that the trial judge would certainly have rejected Mr Slattery's evidence even if his Honour had not concluded that Mr Slattery had fabricated and artificially aged the handwritten notes, his Honour's statements in his reasons for judgment, conflicts between Mr Slattery's testimony and documentary evidence and other features of Mr Slattery's evidence referred to by Heydon JA make it highly unlikely that Mr Slattery's evidence would have been accepted even in the absence of Mr Anderson's opinion. 11 More importantly, it must have been obvious to the appellants at trial that Mr Slattery's credibility was critical to their success and might be very adversely affected by Mr Anderson's opinion concerning the handwritten notes. Nonetheless, they elected not to contest Mr Andersons's opinion. The evidence of Mr Westwood and Mr Nugent, which they sought to introduce in this Court, had no purpose other than to relitigate an issue which was deliberately abandoned at trial. Further, the difficulties which the appellants faced at trial in contesting Mr Anderson's opinion were wholly attributable to their own late production of the handwritten notes, necessitating an overnight report from Mr Anderson which they could not meet without an adjournment. As earlier noted, they declined to seek an adjournment when it seemed that terms might be imposed. 12 In the circumstances, it is unnecessary to consider other problems which confronted the appellants' case, particularly on the issue of reliance, including their response when they were offered the 1996 lease and requested to specify any representations which had been made to them which they were relying upon. 13 I am satisfied that the Court's decision not to admit the additional evidence which the appellants sought to adduce was in the interests of justice despite the potential significance of the evidence of Mr Westwood and Mr Nugent. 14 Without that additional evidence, the appellants' attack on the trial judge's refusal to accept the evidence of Mr and Mrs Slattery cannot succeed and the appeal must fail. 15 I agree with what Heydon JA has written with respect to the "specific grounds of appeal relating to the 1996 lease", and with the orders proposed by his Honour. 16 HEYDON JA: Background This appeal is brought against orders made by Young J after a hearing of two proceedings together, the evidence in one being evidence in the other. The two proceedings arose out of the grant of a lease of Shop TE12 in the Erina Fair Shopping Centre, east of Gosford. Though the lease was executed on 31 January 1994, its commencing date was 12 October 1993 and its term was five years. The lessee was B & M Activities Pty Ltd. That lease was surrendered and replaced with effect from 1 November 1996 by a fresh lease, the tenant being Textralian Enterprises Pty Ltd. Its term was seven years. 17 The appellants are the two tenants and a Mr and Mrs Slattery, whose interests are coincident with those of the tenants. The respondents are the lessors which granted each lease. In following the reasoning of the trial judge it is necessary to bear in mind that for convenience he referred to the appellants (who were plaintiffs in proceedings No 5027 of 1997 and defendants in proceedings No 4497 of 1997) as "plaintiffs" and the other parties as "defendants". In this judgment they will be called respectively "appellants" and "respondents". 18 The essential complaint which the appellants have against the respondents is that entry into both leases was induced by misrepresentations made by officers of Lend Lease Property Management (Australia) Pty Ltd ("LLPM"), which was agent for the respondents. 19 The background is that disputes between the lessee and the lessors arose in relation to the first lease during 1996. They were resolved on 23 July 1996, and as part of the settlement the new lease was granted. On 1 April 1997 the lessee stopped paying rent. On 3 June 1997 the solicitors for the appellants wrote to LLPM contending that entry into both leases had been induced by misrepresentation. On 9 October 1997 the lessors took possession of TE12. The lessee then re-entered the premises. Proceedings No 4497 of 1997 commenced on 22 October 1997 to restrain the trespass and recover arrears of rent. By cross-claim, the appellants alleged that the second lease was induced by misrepresentations, that it ought to be varied under s 87 of the Trade Practices Act 1974 (Cth), and that they were to be given monetary relief. 20 On or about 5 December 1997 proceedings No 5027 of 1997 commenced. The appellants sought damages for misrepresentations made in relation to the first lease and a s 87 order varying the terms of the first lease. 21 The appellants in written and oral argument placed most stress on proceedings No 5027 of 1997 - i.e. those relating to the first lease. But those proceedings were doomed to fail unless the settlement of disputes effected in 1996 could be set aside on the ground of the misrepresentations alleged to vitiate the second lease. The trial judge held that the respondents' conduct did not justify that outcome. He also held that the first lease was not induced by actionable misrepresentations either. In my judgment, for reasons given below, the trial judge was correct in not setting aside the 1996 settlement and in not granting any relief in relation to the 1996 lease. But assessing the correctness of his conclusion, which rested on credibility-based conclusions of primary fact, necessitates examining the parties' dealings in the period 1993-1996. Significant parts of the trial judge's reasoning in relation to credibility rest on those dealings.

[15]

The nature of the shopping centre 24 In order to understand the background to the debate about the representations, it is necessary to appreciate the physical layout of the shopping centre. 25 The trial judge made the following findings which do not appear to have been attacked by the appellants: "Erina Fair, in which the plaintiffs' shop is situate, is one of the largest regional shopping centres on the Central Coast. It includes, amongst others, a Grace Bros department store, a Target store, a Big W, a Woolworths Supermarket, a Franklins Supermarket, an HMV shop, an ABC store, an OPSM outlet, two newsagencies, as well as many speciality shops. The centre itself covers a considerable area in a main building of a rather unorthodox shape. This main building is surrounded by extensive car parks. The plaintiffs' shop is at the very end of a northern extension to the centre that was built in 1993 and which is called the Boardwalk. Further to the north on the other side of the car parks are some bulk retailing stores such as Harvey Norman and Joyce Mayne. On the western side down the hill from the main building is a cinema complex and a restaurant known as 'Rustlers'. This cinema complex was completed and open for business in 1996. On the south eastern side on the Terrigal Road, is a McDonalds Restaurant. There is also a McDonalds outlet in the main centre close to the south side of the plaintiffs' shop. Prior to the erection of the Boardwalk, there was an area known as an eatery, where persons could purchase food from takeaway food outlets and consume that food at tables situated close by in the wide aisles of the centre. This eatery area was at the other end of the centre to the plaintiffs' shop near the supermarkets. The plaintiffs were attracted to the possibility of having a shop in the Boardwalk in which it would place amusement machines. Negotiations took place and these culminated in an offer of lease being made by the defendants by letter of 18 February 1993. On or about 23 February 1993 that offer was accepted. From then until the formal lease was signed on 31 January 1994, time was spent fitting out the premises and getting ready to commence trade. … The plaintiffs' shop opened for business on 12 October 1993."

[16]

The pleaded case 26 In the Amended Statement of Claim in proceedings No 5027 of 1997, the representations were pleaded as follows: "9. Prior to the entry by B & M and the Defendants into the Lease and more particularly between January 1993 and February 1993, Mr Rhon Levin orally warranted or alternatively, represented ('the Representations') to B & M as follows: 9.1 A cinema complex ('the cinema complex') of between 8 to 10 cinemas would be constructed within eighteen months of commencement of the Lease namely, the 12th October 1993. 9.2 The cinema complex would be constructed directly opposite the entrance to the northern entrance of the premises and no further than immediately on the other side of the bus lane which would be not more than approximately 15 metres from the northern entrance to the premises. 9.3 The 'old food court' at the Woolworths end of Erina Fair ('the Fair') would close and that end of the Fair would only consist of fresh food and that the Fair would only have one food court which would be established in the then to be constructed 'boardwalk eatery section' near to the premises. 9.4 That the useable internal space of the premises would not be less than 228 m2. 9.5 That the useable internal space of the premises would be clear of any obstructions. 9.6 That in addition to the premises that B & M and its customers would have 24 hour access to public toilets to be constructed near to the premises. 9.7 That Mr Levin was so confident that the cinema complex would be constructed more or less adjacent to the northern end of the premises that LLPM was giving consideration to the possible relocation of the Bus Stop that was to be located outside the northern end of the premises. 9.8 That the cinema complex would attract prospective customers of the business to that part of the Fair where the business is conducted and with the business being so close to the cinema complex, it would be more likely than not that these prospective customers would attend the business and spend money and that they would not otherwise have been customers of the business. 9.9 By virtue of the proximity of the premises and the cinema complex the Plaintiffs business would enjoy significant takings and profits from customers of the cinema complex. 9.10 That there would be a significant flow of pedestrian traffic from the cinema complex to the premises or the vicinity of the premises. 9.11 That if B & M make its main entrance to the premises the northern entrance it would obtain the maximum benefit from customers using the cinema complex. 9.12 The rent and charges as set out in the Lease were reasonable and comprehensible in all the circumstances. 9.13 The operating expenses payable by the Plaintiff and claimed from the Plaintiff by the Defendants for the premises would be calculated fairly such calculation being based on the proportion that the true area of the premises bore in relation to an area described as the gross lettable area ('GLA') which area represented the whole of the lettable area of the Fair."

[17]

In the Particulars to paragraph 9 the following appears: "(c) The only representation that was partly implied was that the cinema complex would be constructed not more than 15 metres from the northern entrance to the premises and this implication arises by reason of the fact that there was to be constructed a lane way for buses outside the northern entrance to the premises which is no more that [sic] 15 metres wide." 27 The representations were said to be false on the following grounds: "13. Contrary to the warranties or, alternatively, the Representations: 13.1 The cinema complex was not constructed until about November 1996, almost three years after commencement of the Lease. 13.2 The cinema complex was constructed about 220 metres from the western entrance of the premises and in between the said western entrance and the cinema complex are extensive car parking facilities and landscaping. 13.3 There is a food court in existence at the Woolworths end of the Fair with a seating capacity of approximately 200. 13.4 There was no significant flow of pedestrian traffic from the cinema complex to the premises or the vicinity of the premises. 13.5 The premises do not consist of a useable area of 228 m2. 13.6 The usable [sic] internal space available in the premises has been reduced and obstructed by the construction of public toilets and the fixing of 4 steel 'V' beams inside the northern wall of the premises. 13.7 B & M and its customers do not have 24 hour access to public toilets outside of the premises. 13.8 LLPM requested B & M to construct 'public toilets' within the premises. 13.9 The approximate useable area of the premises is 190 m2. 13.10 The business has not been supported or significantly improved by the construction of the cinema complex. 13.11 Any prospective customers of the business attracted to the Fair by the cinema complex are not within a close proximity to the business and more particularly approximately 220 metres away. 13.12 Customers of the cinema complex as it is presently located are not likely to attend upon the business before, during or after visiting the cinema complex. 13.13 The operating expenses payable by the Plaintiff and claimed from the Plaintiff by the Defendants for the premises were not calculated fairly in the manner described in 9.13 above in that: a) The said expenses were not calculated on the basis of the proportion which the true area of the premises bore to an area representing the whole of the lettable area of the Fair. b) The GLA did not truly reflect or represent the whole lettable area of the Fair. c) The sums claimed by the Defendants from the Plaintiff for operating expenses exceeded any sum calculated fairly on the basis of the proportion that the area of the premises bore in relation to the GLA and/or the whole lettable area of the Fair." 28 Further, the representations were alleged in paragraph 14 to have been "made by Mr Levin and Mr Miller either knowing them to be false or, alternatively, with reckless indifference to whether they were true or false or otherwise constituted misleading and deceptive conduct in trade or commerce in breach of Section 52 of the Trade Practices Act". That allegation is an allegation of fraud. 29 The following particulars of paragraph 14 were given: "14.1 LLPM never intended for the cinema complex to be constructed either in the position or within the time represented by Mr Levin and Mr Miller. 14.2 In the alternative LLPM knew or ought to have known before the 12th October, 1993 that the cinema complex was not going to be constructed either within the time nor in the approximate position represented by Mr Levin and Mr Miller. 14.3 Plans prepared at or about October 1993 were lodged with Gosford City Council on or about the 10th October, 1994 and show the then proposed cinema complex to be constructed in the position it is now in. 14.4 LLPM always intended to have two main food court areas and in particular one at the Woolworths end of the Fair. 14.5 In the alternative LLPM knew or ought to have known before the 12th October, 1993 that it intended to have two main food court areas and in particular, one at the Woolworths end of the Fair. 14.6 LLPM were in possession of plans before the commencement of the fit out to the premises which showed that toilets were to be constructed within the premises but did not communicate same to B & M. 14.7 LLPM were in possession of plans showing public toilets to be constructed within the premises and for 4 steel 'V' beams to be fixed to the northern wall of the premises before 12th October, 1993 but did not communicate same to B & M. 14.8 LLPM made the Representations referred to in paragraph [9] herein to other shop proprietors of the Fair both before and after the 12th October, 1993."

[19]

The parties' dealings in the period 1993-1996 31 In order to understand the conclusions to which the trial judge came, it is useful to consider the uncontroversial facts in some detail so far as they relate to the five representations on which the appellants rely in this appeal, and the competing versions of the controversial facts. 32 In 1992 it was known that the "Boardwalk" was to be opened as a new section of the shopping centre at Erina Fair. 33 In late 1992 and early 1993 there developed strong demand by prospective tenants for shops in the Boardwalk (including TE12): Blue 3/509; Black 1/170L-171J. 34 Among those who developed an interest in TE12 were Mr Slattery and Mr Carter. In due course they formed a company, B & M Activities Pty Ltd, which became the lessee of TE12 under the 1993 lease. Mr Carter ceased to be associated with that company and with Mr and Mrs Slattery when on 21 June 1994 he and his wife sold their shares in the company to Mr and Mrs Slattery: Blue 1/254V. 35 In January 1993 Mr Carter and his wife were conducting an ice cream business in Erina Fair: Blue 1/249G. Mr Carter had no experience in operating amusement centres. Mr Slattery had been trained as a metallurgist, had worked as a metallurgist and engineer, had owned a factory which he sold, had run an amusement centre, had set up a factory which manufactured and serviced amusement equipment and set up a video tape factory, had operated a Go-Kart raceway, had for two years been considering opening an amusement centre business on the central coast, and had studied the operations of such businesses in the United States of America: Blue 1/138C-L, 139E-Z and 184. He was thus extremely experienced in business generally and in businesses related to amusement centres in particular. 36 Mr Carter approached Mr Levin, Project Leasing Manager of LLPM, several times in late 1992 saying he would like a shop in the Boardwalk for an amusement centre, was very keen to obtain TE12, knew others were interested, and wanted Mr Levin to approve his application over others: Black 1/170L-N, 170W-171J. Mr Carter and Mr Slattery had conversations about joining in establishing an amusement centre business at the Boardwalk: Blue 1/138P-139D. 37 In the period late 1992-February 1993 officers of LLPM, and in particular Ms Martin, the Development Manager for Erina Fair, prepared a plan for the building of a cinema complex at Erina Fair to be erected outside the northern entrance to the Boardwalk: Blue 3/532. 38 At about the end of January 1993 a meeting took place between Mr Carter, Mr Slattery and Mr Levin. At this meeting, according to Mr Slattery, Mr Levin said that a cinema complex would be constructed within eighteen months of completion of the Boardwalk opposite the northern entrance of TE12 and that the food court to be opened in the Boardwalk would be the only food court at Erina Fair: Blue 1/140K-M and X-Z. Mr Levin's evidence was rather different: according to him, he said that though the main eatery would be on the Boardwalk and have about twelve takeaway food shops and seating for 650-700, the existing food hall would be closed and renovated and then reopened with fresh food shops, takeaway food shops and tables and chairs to service the food hall: Blue 3/511C-G. He said that at a later discussion (probably on 3 February 1993) he said: "There is a proposal to construct a cinema complex and the proposed location is outside the northern entrance to the Shopping Centre": Blue 3/511J-K. Mr Carter in chief gave evidence to a similar effect as Mr Slattery, and said that Mr Levin also said: "You should spend more money on the northern entrance to your business as it will be your main entrance and that way you will be able to receive maximum exposure": Blue 1/249T-250F. According to Mr Levin he also showed Mr Carter and Mr Slattery a plan exhibited to his affidavit as RL1 - or more strictly the version then current of that plan (Blue 3/508P and 511B and Black 1/51V-53K). Mr Slattery said they looked at the map at length and in some detail: Black 1/95R. See also Blue 1/141P and 181. That plan did not reveal any cinemas just to the north of TE12. It revealed an area near Woolworths described as "Food Hall" with a number of shops marked "Retail". It also revealed numbers of tables and chairs, which Mr Slattery accepted that he saw: Black 1/52Q. It was by reference to that plan that Mr Levin says he made the remark about reopening the existing food hall quoted above. Mr Slattery denied that part of the conversation, but did not deny that the plan was shown to him: Blue 3/631M. In chief Mr Carter's evidence was inconsistent with Mr Levin's, but he too did not deny being shown the plan: Blue 1/250D-F. In cross-examination Mr Carter admitted that Mr Levin said that after the existing eatery was renovated, there would be takeaway food shops and tables and chairs on a smaller scale than at the Boardwalk: Black 1/157B0H. No-one gave evidence that either Mr Carter or Mr Slattery asked why the cinemas were not shown on the plan. 39 On 3 February 1993 Messrs Carter, Slattery and Levin met again. Mr Slattery said he made reference to the cinemas not opening for another eighteen months: Blue 1/143R. Mr Levin's recollection of what he said about the cinemas applies in relation to this meeting. Controversially, Mr Slattery said in chief that he handed over a letter, referred to as "BJS5", which was dated 3 February 1993 and which included, after setting out various calculations, the following words: "In calculating the above we are allowing for … after 18 months a substancial [sic] increase in trade resulting from the new cinema complex being erected adjacent to or directly opposite our main Northern entrance": Blue 1/142Q, 143G and 182V-183A.

[22]

No written advice of that character was given by Mr Carter or Mr Slattery: Blue 3/154J. In particular, there was no letter reminding LLPM of the reference in BJS5, dated 3 February 1993, to the cinema representations, and to the fact that, as Mr Slattery contended, he gave it to Mr Levin on that day. Though the appellants argued that their failure to make any disclosure pursuant to the 17 September 1993 Deed of Agreement for Lease, clause 9.4(b) (discussed below), was explained by their heavy financial commitment by that time, that explanation cannot justify their lack of response in February 1993 41 On 20 February 1993, according to his main affidavit in chief, Mr Slattery at a meeting with Mrs Slattery and Mr and Mrs Carter "observed that [the offer] did not record what Mr Levin had agreed to, namely that the business would have access to public toilets and would be able to trade unrestricted, for 24 hours and also the ability to sell and hire computer games. It was agreed that "I would bring this to the attention of Mr Levin when we next met": Blue 1/144R-U. Mr Slattery did not give evidence that the Carters or the Slatterys observed the non-recording of anything about the cinema complex or the second food court area, even though he gave evidence that those representations were decisive in causing him to enter the lease: Blue 1/153A-K. 42 Pursuant to what the Carters and the Slatterys had agreed on 20 February 1993, on 23 February 1993 at a further meeting between Mr Levin, Mr Carter and Mr Slattery, Mr Slattery said: "The letter of offer doesn't include access to toilets, and having 24 hour unrestricted trading or the ability to sell and hire computer games". Mr Levin said: "We'll soon fix that": Blue 1/145A-D. Mr Levin agreed with the substance of this evidence: Blue 3/513P-V. Appropriate manuscript amendments were made to the 18 February 1993 letter. Mr Slattery also claimed that various other topics were discussed, the only relevant one being that Mr Levin said there would be 228 square metres of useable floor space: Blue 1/145N and 146A. Mr Carter agreed: Blue 1/252P. Mr Levin denied this: Blue 3/514D. Neither Mr Slattery nor Mr Carter gave evidence that at this meeting they drew attention to the failure of the offer to mention either the cinema complex or the second food court area. However, each claimed, and Mr Levin denied, that Mr Levin told them to spend more money on the northern side because it would be their main entrance facing the cinemas: Blue 1/146F and 252R; 3/514B-H. 43 On 24 February 1993 Mr Carter and Mr Slattery signed an "Acceptance and Acknowledgment" which had been sent to them on 18 February 1993 with the offer. It said in part (Blue 3/520H-N): "I/We hereby: 1. accept the offer and agree that the terms and conditions of the standard Agreement for Lease and Lease for Erina Fair as varied only by the terms and conditions set out in the Particulars of Offer enclosed will comprise the terms and conditions of the tenancy; 2. acknowledge receipt of the enclosures listed with the Particulars of Offer; 3. acknowledge and agree that: a. no promise, representation, warranty or undertaking in respect of the tenancy has been made to me/us in relation to the design, operation, suitability, or potential of the premises or the business to be carried on in the premises or alternatively, that any representation, if given, has not been relied on in entering into this agreement and has not in any way induced me/us to enter into the lease ….".

[23]

Clause 3 a. is significant. 44 Soon after these events Mr Miller took over Mr Levin's role. Mr Slattery, Mrs Slattery and Mr Carter agreed that during one of "numerous design and tenancy construction meetings with Mr Miller", he showed the location of the cinema complex in relation to TE12 by pointing to the north: Blue 1/146T-Z, 244L-V and 253D-K. Mr Miller denied saying: "It will be out here", but deposed that he said: "A proposed location for the cinemas is out there": Blue 3/566T. 45 On 17 September 1993 a Deed of Agreement for Lease of TE12 was executed, with B & M Activities Pty Ltd as lessee, and Mr Slattery and Mr Carter as covenantors. Each of them signed each page. Pages 21 and 22, which were so signed, contained clause 9.4(a) and (b) to the following effect (Blue 4/878N-879D): "9.4 No Warranty as to Suitability of Premises (a) The Lessee acknowledges and agrees with the Development Manager that otherwise than as is expressly contained in this Agreement no promise, representation, warranty or undertaking has been given by or on behalf of the Development Manager or the Lessor or the Owner: (i) in respect of the suitability or capacity of the Premises or any other part of the Centre for any use or for any business (including the Lessee's business) to be carried on therein, or as to the structural load capacity of the Centre, or in respect of the fixtures, fittings, furnishings, finish, plant and equipment of or in the Premises or any other part of the Centre or as to other businesses to be carried on in the Centre, or (ii) that others have leased or will continue to lease or will lease or will not be permitted to lease premises within the Centre or that the Lessee has any exclusive right to carry on the type of use or business permitted under or carried on pursuant to the Lease, or (iii) in respect of the potential of the Premises or of any business to be carried on therein or of other businesses to be carried on in the Centre, or alternatively, that any such promise, representation, warranty or undertaking if given, has not been relied on by the Lessee in entering into this Agreement and has not in any material way induced the Lessee to enter into this Agreement. (b) The Lessee must disclose to the Development Manager by notice in writing on or before the Lessee executes this Agreement any promise, representation, warranty or undertaking (other than as is expressly contained in this Agreement) that the Lessee has relied on in entering into this Agreement or which has in any material way induced the Lessee to enter into this Agreement."

[26]

The relevant pages of each document were signed by Mr Carter and Mr Slattery. Hence if the cinema complex is to be regarded as part of the Centre, the lessor had power to change its location. 48 In 1993 the Boardwalk food court opened with thirteen fast food tenancies and seating for over 700 people. There were also in the Fresh Food Hall near Woolworths, at the other end of Erina Fair, a café and four fast food tenancies, with 200 seats in the Fresh Food Hall for fresh food customers: Blue 2/474J-R. The latter circumstance appears to have provoked no protest in 1993 nor indeed any protest until 9 May 1996: Black 1/37U and 38Q. Mr Slattery certainly referred to the opening of "a second food court" (for example in a letter of 17 August 1994: Blue 1/193) but he did not contend that that food court had opened in breach of any promise or representation to him. 49 Mr Slattery gave evidence of reliance on the representations in the following terms (Blue 1/153A-K): "Although I carried out certain enquiries into the amusement centre industry as I have stated in this my Affidavit and I made the decision, before entering into the lease, that the business would be a viable economic concern, I based that decision wholly relying on the truth of the representations made by Mr Levin and Mr Miller as I have previously set out in this my Affidavit and with more particular emphasis and reliance on the representations that the cinema complex would be constructed more or less, in a position to the immediate north of the business premises and that the Boardwalk area of Erina Fair would contain the main food court eatery of Erina Fair and that as a consequence of these two representations there would be significant pedestrian traffic to and throughout the business. Had the said representations not been made or if I had known that they were false or would not come to be the fact, I most certainly would not have entered into the lease and committed B & M, myself and my wife to such a large financial commitment."

[27]

Mrs Slattery gave no evidence in chief of reliance. Mr Carter gave no evidence in chief of reliance. In cross-examination he denied reliance: Black 1/164U and 166Y-Z. 50 In November 1993 Jebb Holland Dimasi provided a report about four different options in relation to the cinema complex: Blue 3/537S. The report itself is not evidence, and it is not clear which sites the options related to and what degree of acceptance by LLPM of the various options there was, if any. 51 In July 1994 LLPM prepared a report which discussed six sites for the cinema complex, one at the north as discussed with the appellants and one, where the cinema complex was eventually erected, to the west: Blue 3/533 and 559-562. 52 In August 1994 the board of LLPM approved as a site for the cinema complex the site opposite the western entrance to the Boardwalk: Blue 3/533. 53 On 17 August 1994 Mr Slattery wrote a letter to Mr Tresidder of LLPM: Blue 5/1078-1079. He said that since opening in October 1993, TE12 had been trading at $2,000 per week below projections. He said that the opening of the second food court caused a loss of trade to the businesses located in the Boardwalk (but he did not complain of any breach of any assurance in this respect). He said: "However our major concern is the location of the proposed cinema complex, and more importantly, whether the cinema would have or require any amusement equipment to be located in the cinema complex itself. When we originally leased the shop for developing as a Family Entertainment Centre, we dealt with Rhon Levin, who indicated to us that we would have a cinema complex possibly within a 2 year period and the proposed location was directly opposite our northern entrance on the bus stop. What he said made good sense to us, as all the centres we have visited, in Brisbane, other parts of Australia and overseas always had the cinema alongside the amusement centre and the food court, as they all complement each other. We therefore spent an additional $25,000 on the bus stop entrance, believing that it would eventually face a cinema...".

[30]

This letter did not provoke any response either saying that any change in the location of the cinema would be a breach of Mr Levin's assurances, or saying that the suggestion that the cinema might not proceed at all would be a breach of Mr Levin's assurances. Indeed Mr Slattery said that the second paragraph gave him "considerable comfort": Blue 1/149Y. In cross-examination he said there was "no point in responding": Black 1/25F. He then appeared to suggest that an unnamed centre manager told him to disregard it: Black 1/26S-V. Mrs Slattery, on the other hand, said in cross-examination that she told her husband to address the matter and ask for clarification: Black 1/116Q. This instance of unexplained or unsatisfactorily explained silence, like many others, is inconsistent with the appellants' case. 55 On 10 October 1994 the respondents lodged a development application for a ten screen cinema with the Gosford City Council: Blue 3/533J. 56 On 6 December 1994 the Gosford City Council rejected the development application: Blue 3/563. 57 Later in December the respondents appealed against the Gosford City Council's rejection of the development application: Blue 3/534. This decision was communicated to tenants of Erina Fair by an Information Sheet in January 1995: Blue 1/195. 58 Mr Slattery gave evidence that in 1994 he had a conversation with Mr Cole of LLPM in which he referred to "complaints" he had "made concerning the position of the cinema complex [and] the second food court": Blue 1/150G. Apart from the 17 August 1994 letter, he pointed to no material answering that description. 59 The same is true of similar evidence Mr Slattery gave of a conversation with Mr Braketselos: Blue 1/150B. 60 On 4 January 1995 Mr Slattery wrote a letter to Mr Harris of LLPM: Blue 1/201-2. He complained about a loss of space in the course of fit out; about the size of the air conditioning bill; and about the fact that since opening, rent and outgoings were 40% of gross takings with the result that the appellants were not obtaining a return on investment. He asked for a review of the rent. He made no complaint concerning non-compliance with any representation about the cinema complex (which should have been well under construction if it was to open at the time allegedly represented) or any representation about the second food court (which had been in operation since 1993). 61 On 23 February 1995 LLPM replied to Mr Slattery's letter of 4 January 1995 refusing a rent reduction: Blue 1/203-204. 62 In about February 1995 a brochure distributed to tenants of Erina Fair by LLPM said that there had been an appeal against Gosford City Council's rejection of the application to build the cinema complex directly opposite the Boardwalk facing west: Blue 1/197J. There is no evidence of any complaint by the appellants about non-compliance with any representation about the cinema complex. 63 On 13 April 1995 a meeting took place between Mr Slattery and representatives of LLPM. The file note, made by Mr Harris, records Mr Slattery as saying: "If cinemas proceed …": Blue 2/408. It does not record any complaint concerning non-compliance with any representation about the cinema complex or the second food court. 64 On 13 April 1995 Mr Slattery wrote a letter to LLPM complaining about a reduction of space during fit out, air conditioning costs and the level of rent outgoings; and again seeking a rent reduction: Blue 1/205-207. The letter said nothing concerning non-compliance with any representation about the cinema complex or the second food court. 65 On 21 April 1995 the Land and Environment Court overturned Gosford City Council's rejection of the development application and granted consent for an eight screen cinema: Blue 3/534B. 66 On 23 May 1995 Mr Harris on behalf of LLPM wrote to the appellants: Blue 2/409-410. The letter referred to "our recent discussions with regards to your issues raised in relation to the above premises …". It discussed steps which LLPM were taking in relation to air conditioning and advertising, and granted permission to sell drinks and snacks in TE12. It also granted some abatement of rent. It did not record any complaint by the appellants concerning non-compliance with any representation about the cinema complex or the second food court. 67 On 8 June 1995 Mr and Mrs Slattery had a meeting with Messrs Harris and Robson of LLPM. Mr Harris' file note (Blue 2/411) records a discussion about air conditioning, garbage bins, cleaners, the unhappiness of the Slatterys about the level of rent abatement, the possibility of leaving the lease, and the possibility of renewal of the lease. It recorded no complaints concerning non-compliance with any representation about the cinema complex or the food court. Indeed, the Slatterys' expression of desire for a renewed lease at a time when they knew that the cinema complex would not be outside the northern entrance and that there was a second food court points against reliance on anything said about those topics as inducements to enter the 1993 lease. 68 On 22 August 1995 Mr Slattery wrote to Mr Robson of LLPM about "points which we need to resolve": Blue 1/210-211. The letter complained about air conditioning costs, loss of space during fit out and as a result of toilet construction, and a loss of rent because the area of the shop was incorrect. It sought a rent reduction. Though it referred to the cinema complex by saying "without the cinemas we have virtually no exposure to the food court and being on the outside corner is a bad position", it did not complain concerning non-compliance with any representation about either the cinema complex or the second food court. 69 On 23 August 1995 Mr Slattery met Mr Harris and Mr Robson of LLPM. Mr Harris' file note (Blue 2/412) records a discussion of air conditioning and the impact of toilets and beams on the leased area in relation to GLA. An asterisk appears against the latter reference. At the bottom of the page is written: "*Get details together for final deal to resolve once and for all." This appears to foreshadow the negotiations leading to the settlement of 23 July 1996. The note does not record discussion about the cinema complex or the second food court. 70 On 26 February 1996 the start of construction of the cinema complex was announced by LLPM. It was described as "Located across from the Boardwalk": Blue 1/212. 71 On 27 February 1996 Mr Slattery met Mr Harris and Mr Robson of LLPM. A file note was made, partly by Mr Harris and partly by Mr Robson: Blue 2/463-464. It records Mr Slattery as saying that his survey of the shop revealed its area to be 198.5 square metres. Mr Slattery's request for a rent reduction was discussed. Mr Slattery said "he would rather reach a commercial compromise than drag in lawyers as he would like to introduce a go-kart/mini golf outdoor leisure centre at Erina Fair". The costs of this were discussed. There is no reference to the cinema complex or the second food court. 72 Mr Robson deposed that on18 April 1996 he had a telephone conversation in which Mr Slattery said (Blue 2/429Q-U): "You have misrepresented the timing of opening and location of the cinema. You've misrepresented the size of our tenancy." Mr Robson said: "The shop isn't leased on a size of a specific area." A little later Mr Robson said (Blue 2/430N-R): "We can't be held responsible for council refusing our DA and delaying the opening of the cinemas. I don't know what was said to you at the time of leasing your shop and this will always be a point of disagreement and my people tell me the representations you claim were not made." It is not clear what the "representations" are which are being discussed. Mr Robson's file note supports the conclusion that these subjects were mentioned: Blue 2/466-468. So does another note he prepared after the meeting: Blue 2/468E-G. 73 From this point on negotiations continued. The location and opening of the cinema complex was occasionally mentioned and the second food area was mentioned once. The negotiations culminated in the 23 July 1996 settlement. The details of them relate more to the issue of whether the second lease was affected by misrepresentations than to whether the first was. 74 The appellants put the following submission: "The evidence of Mr Prestoe, a former centre manager at Erina Fair, is to the effect that he was aware that the Slatterys had continuing complaints in respect of the various alleged representations when he arrived at Erina Fair as centre manager in March 1995 …".

[33]

The trial judge set out parts of a memorandum of 4 April 1996 from Mr Robson to his superiors (Blue 1/217) relating to the impact of the café and the cinema complex on trade in the Boardwalk food outlets which he said had "some vague supporting value for the plaintiffs' case" (Red 222Z). He noted the silence in the negotiations in early 1996 about the cinema, then in the course of being erected. The trial judge then said (Red 225T-226B): "It can be seen that the dispute is not so much as to whether there was mention of a cinema complex immediately to the north of the plaintiffs' shop but whether that mention occurred in such a manner and in such circumstances as could be taken by an objective observer as being a firm representation. There is some corroborating material that some such statement was made by Mr Levin from other evidence. However, in the light of the fact that the question is not whether some such statement was made but whether a definite representation was made, this is of limited value. The real issue depends upon the evidence of Mr Slattery and the counter evidence of Mr Levin." 76 The trial judge then said that "Mr Slattery's credibility was completely shattered" in cross-examination. "His evidence was shown … just to be completely unreliable." The primary reason given for that conclusion concerned Mr Slattery's evidence about BJS5. 77 The conclusions of the trial judge in relation to these representations were as follows (Red 236U-238E): "The whole of the evidence (other than the discredited evidence of Mr Slattery) suggests that Mr Levin did say that there would be a proposed cinema complex and that the proposal was to site the cinema complex at the northern entrance to the Boardwalk. Although a lot of store was placed on the word 'proposal' by the defendants, there is no particular magic about that word. One can be walking through a swamp in the middle of thick bush and see a notice 'Proposed site for multi-storey office block' and consider the whole thing a joke. On the other hand, a response to a proposal of marriage is something which, at least before statute intervened, led to an immediate and binding contract. A proposal must be considered in all the background circumstances as to whether it is something which is more than likely to happen or something that is just a possibility. The context of Mr Levin's remarks appears to me to be more in the 'This is something which may well come about' type of proposal rather than anything more. Mr Slattery denies in para 39 of his affidavit PA24 that Mr Levin used the word 'proposal'. However, in his letter, PX10, of 17 August 1994 to Mr Tressider, the words used were 'Rhon Levin, who indicated to us that we would have a cinema complex possibly within a two year period and the proposed location was directly opposite our northern entrance on the bus stop.' This letter is, I think, fairly close to what was said. Thus, even if I had accepted Mr Slattery's evidence, the material proffered by the plaintiffs would not have made me conclude on the balance of probabilities that there was any such representation. … The alleged representation as to the 18 months can be dealt with briefly. In many respects the representation is linked with that of the site of the cinema complex. However, the time whether it be 18 months or two years was always just a possibility. It was never a matter which seemed to excite Mr Slattery in any way in contemporaneous correspondence. For a man who was entering into a five year lease in any event a cinema complex possibly within two years is hardly the sort of statement that would amount to a representation that any tenant would rely on before entering into the deal. … So far as the eating area is concerned, again this part of the plaintiffs' case fails because of the lack of credibility of the plaintiffs' witnesses. The only additional fact that should be added is that the plan which was studied carefully by Mr Slattery on the evidence, did in fact show a second food hall with tables and chairs, and Mr Carter certainly was aware there would be a second eatery." 78 On the related question, "Did the tenant rely on the representation?", the trial judge said that the question did not arise, but if it did, the answer was "No". "Mr Carter acknowledged that there was no reliance and the only other evidence was the discredited evidence of Mr Slattery." The judge concluded (Red 239N-T): "where the prospective landlord shares some information with the tenant as to what might or is expected to occur in a centre, that does not of itself constitute some material which the tenant is entitled without more to treat as gospel and to abandon any independent business judgment so that he or she can plead reliance. In the instant case, should the matter need to be decided, it is clear that Messrs Slattery and Carter, the then principals of B & M exercised their own judgment." The credibility of Mr Slattery 79 Given that Mrs Slattery had a very limited role in relation to the negotiations for the 1993 lease, given that there is little evidence of any contribution by Mrs Slattery to the decision to enter the lease, and given that Mr Carter finished up substantially supporting the respondents' case, the credibility of the appellants' case rested on Mr Slattery. The reason expressed by the trial judge for rejecting Mr Slattery's credibility related to his evidence on BJS5. Initially the issue was whether a document known as BJS5 was handed to Mr Levin by Mr Slattery on 3 February 1993. In chief, in an affidavit of 23 December 1997 to which BJS5 was annexed, Mr Slattery twice said it was - in paragraphs 6.2 and 7: Blue 1/142Q and 143G. Mr Carter's affidavit did not say anything about this, and in cross-examination Mr Carter said he had never seen it before: Black 1/160P-R. Mr Levin denied ever seeing it before reading Mr Slattery's affidavit: Blue 3/513F. Mr Slattery then filed an affidavit of 30 April 1998 repeating his earlier evidence: Blue 3/631W. The trial began on 13 July 1998 and the affidavits were read. Mr Slattery was vigorously cross-examined on matters other than BJS5. On 14 July 1998 Mr Slattery said in cross-examination that in 1993 he had an Ink Jet printer: Black 1/46W. He said the document was printed on the Ink Jet printer: Black 1/68Q. He said BJS6, handed over on the same occasion, was printed on a McIntosh printer: Black 1/68W. He said he filed a copy of the version of BJS5 which he had given to Mr Levin: Black 1/67Z. Earlier on 14 July 1998 the respondents had called for any records relating to the purchase of the Ink Jet printer used by Mr Slattery. The answer was: "Not produced". See Black 1/47L. On 14 July 1998 in cross-examination it was suggested to Mr Slattery that he did not have an Ink Jet printer as at 3 February 1993. He said he was sure he would have: Black 1/69K. He also denied printing the document after 3 February 1993: Black 1/69H. On the night of 14-15 July 1998, a notice to produce was served on the appellants' solicitors requiring production of the documents proving the purchase of the printer: Blue 6/1338-1340. 80 On 15 July 1998, in re-examination, Mr Slattery contradicted his earlier evidence. He said BJS6, his "antecedents", was typed by him in February 1993. He typed a letter to Mr Levin which had errors in it; he corrected them in the second letter and gave that to Mr Levin. He continued: "I couldn't find the original, not original, my copies of those letters. I only found my handwriting notes. When you were preparing for this case and back last year I retyped that letter off my notes and it is an accurate copy of what I produced to Rhon Levin on the 3rd and I have only typed out the second letter because the first one had errors in it and I didn't see any point in producing the flawed letter. So I have typed both letters" (Black 1/96C-F).

[34]

That is to say, contrary to his affidavit evidence, he did not hand over BJS5 to Mr Levin. He handed over another letter of which BJS5 was "an accurate copy". It is an available inference that this contradiction was stimulated by the respondents' call and notice to produce in relation to the documents evidencing the purchase of the printer. The contradiction terminated that line of inquiry, but created a new problem. Leave was granted for further cross-examination: Black 1/97G. Mr Slattery denied having lied on 14 July in saying he had filed a copy of what he had handed to Mr Levin: Black 1/98U-100F. In answer to the question: "Yesterday you were aware that you had printed the letter in 1997?" he replied: "I wasn't too sure yesterday. I had time to think about it last night. On reflection I have done it some time in 1997": Black 1/98G-H. The handwritten notes were called for, and Mr Slattery said he would produce them "tomorrow", i.e. 16 July 1998: Black 1/100A. They were not produced then. They were not produced until the close of proceedings on 4 August 1998. (In the meantime, significantly, Mr Carter had denied ever seeing BJS5 (Black 1/160P), and Mr Levin had been cross-examined, but without any question having been put to him suggesting that either BJS5 or any document to similar effect had been handed over on 3 February 1993; compare the position as to BJS6: Black 1/245R-V and 247Z-248G.) When the handwritten notes were produced on 4 August 1998, the appellants tendered them: Black 2/389A-D. Counsel for the respondents obtained leave to uplift them for forensic examination: Black 2/389M. On 5 August 1998, Mr Slattery said in an affidavit that he found them on 2 August 1998, brought them to Sydney on 3 August 1998 but forgot about them until handing them to his counsel on 4 August 1998: Blue 3/743-744. Though his affidavit said he did so in the morning, in further cross-examination he said he did so at lunchtime: Black 2/411V. In that cross-examination, Mr Slattery admitted that on both 13 and 14 July he knew he had typed out BJS5 in 1997 (Black 2/408H-K), and admitted that his denial on 14 July 1998 of having created BJS5 after 3 February 1993 was a lie: Black 2/408V-409A. He was asked whether he had dropped the pad on which the notes were written in water and then torn off each sheet and placed it in the oven to dry to make it look old, but denied this: Black 2/411X-412B. Counsel for the respondents then read an affidavit of Mr Anderson, a forensic document examiner (without objection): Black 2/412M. The trial judge summarised his evidence in a manner not indicating dissent from it: Red 234S-235J. The evidence as summarised suggested that the notes had been artificially aged by being placed in a grill, though, as the appellants conceded, the trial judge did not make an express finding to this effect. 81 The agreed transcript then records the following as happening at the end of Mr Anderson's cross-examination: "(Mr Evans indicated he may need to put on evidence in reply and have the document examined by an expert. His Honour said he should first indicate whether he had finished with Mr Anderson and Mr Evans said he had no further questions.) NO RE-EXAMINATION WITNESS RETIRED AND EXCUSED (Mr Evans stated he would seek to re-open his case and have the document examined and call evidence in relation to it. He indicated he may need two weeks to have tests done. His Honour said that if Mr Evans proceeds with his application he will need an adjournment for about two weeks. Then the other side will want to put on material in reply. His Honour said that it was unlikely that he would be able to hear the matter until next year and if the matter goes over then his Honour will need to look at Mr Evans' clients' occupation of the premises and whether the interim orders could continue. His Honour asked Mr Evans whether he wanted to have a short adjournment in order to obtain instructions. Mr Evans asked for a short adjournment.) SHORT ADJOURNMENT (Mr Evans stated that he would not seek to re-open his case and that, subject to the tender of some documents, was the conclusion of the evidence.)"

[35]

The reference to "interim orders" was a reference to the fact that, contrary to the respondents' wishes, the appellants were remaining in occupation at a fee less than the covenanted rent but more than the appellants considered was just: Blue 1/38P-R. This regime had been in place since October 1997, after the lessee had been ejected but had re-entered. It had been put in place in lieu of an interlocutory injunction against trespass which paragraph 3 of the Summons dated 22 October 1997 in proceedings No 4497 of 1997 had sought. 82 Young J said of these events (Red 235K-X): "After Mr Anderson had given his evidence, a short adjournment was granted and Mr Evans considered whether he needed an adjournment to call counter evidence. Doubtless after weighing whether time would give Mr Anderson the opportunity to find something more weighed against the possibility of an expert finding some defence to what Mr Anderson said, Mr Evans, wisely in my view, decided not to call further evidence. The evidence of Mr Anderson together with the continually changing evidence of Mr Slattery and his admissions makes it fairly clear that document BJS5 is a forgery and was created in December 1997 just before Mr Slattery swore his affidavit. This attempt to fabricate evidence must rank as one of the most despicable attempts to deceive the court that has been uncovered. Not only does the attempt completely destroy Mr Slattery's credibility as a witness, the court also has the duty to send the papers to the appropriate authorities." 83 In my judgment, quite apart from Mr Anderson's evidence, which may for present purposes be left out of account in view of the appellants' attempt to challenge it by fresh evidence, these happenings supported the credibility findings of the trial judge. Certainly it cannot be said that anything of the exceptions to the well-known principles restricting appellate interference with credibility findings or credibility-based findings apply. The appellants contended that Mr Slattery's conduct in handing over the handwritten notes, which made the production of an affidavit admitting what had happened very likely, which in turn made further cross-examination in which he had to admit lying on oath very likely, weighed in favour of his credibility, not against it. I disagree. It is necessary first to put aside the somewhat exaggerated and triumphalist language of the respondents' submissions ("compelled to admit that he had knowingly and repeatedly lied on oath"; "guilty of repeated deliberate dishonesty, on oath, in relation to the most significant issue in the case"; "ultimately compelled to admit to having lied, time and time again, on oath"). Mr Slattery obviously saw BJS5 as important to the case. If it had been delivered to Mr Levin on 3 February 1993, it was contemporary evidence of a relevant representation, of reliance on it, and of reliance to the knowledge of the respondents. Assuming that Mr Slattery's ultimate version was correct, relatively little harm would have been done to his case if he had set out his version in the original affidavit. The problem is that having failed to do so, Mr Slattery haplessly moved from crisis to crisis as the case proceeded. In part the injury which the incident did to his credibility flowed not from his deliberate lying, but from the revelation his testimony offered of an absence of clear recollection - an impression conveyed by evidence on other subjects as well. So far as Mr Slattery's answers reveal lying, they reveal lies more uttered in response to a sudden new crisis than springing from a plan to deceive the court which had been designed long in advance. By the time Mr Slattery decided to produce the handwritten notes, he must have perceived that without them he had no real chance of being believed in his evidence that though he did not hand over BJS5, he handed over a document to the same effect. Accordingly, the production of the handwritten notes was not to be characterised solely as a creditable act of confession, but rather as an attempt to save something from the shipwreck of his original evidence on the subject. 84 The appellants also submitted that Mr Slattery's basic credibility could be inferred because if he had really wanted to deceive the court, he would have concocted a letter much more favourable to his interests than BJS5. But the question is not whether, in a potential hierarchy of unsatisfactory witnesses, Mr Slattery was one of the worst possible cases. It may be assumed that he was far from that. The point is that, even assuming that his evidence as ultimately given about BJS5 is correct, its discordance with earlier evidence is so great that ample grounds were afforded for the trial judge to arrive at adverse conclusions as to his credibility. And he shifted position so frequently as not to justify belief that his ultimate evidence was to be accepted. The appellants contended that it should be, by reason of the following argument. Mr Levin wanted to know about Mr Slattery's antecedents; he did not ask about them after 3 February 1993; this made it likely that BJS6 was handed over on 3 February 1993; this falsified Mr Levin's denial in chief of having received BJS6; and this in turn made it likely that something similar to BJS5 was handed over. This conclusion does not follow as a matter of strict logic. It fails to overcome Mr Carter's support for Mr Levin. It does not explain why Mr Carter, who kept the records of B & M Activities Pty Ltd, did not have a copy of BJS5 or a similar document. And it does not explain why Mr Carter did have a letter of 3 February 1993 over the names of both Mr Carter and Mr Slattery which was inconsistent with BJS5 in the sense that while it set out all the advantages of the proposed shop it did not mention the representations: Blue 4/817-818. 85 There were other grounds for the trial judge's conclusions about Mr Slattery's credibility. In many places he did appear argumentative, evasive and prone to volunteer material not responsive to the question. Under cross-examination he sometimes gave potentially important evidence which would appropriately have appeared in his affidavits if it proceeded from genuine recollection. Mr Slattery also appeared to lack genuine recollection in other respects and to be defensive about answering without first having access to whatever document might help. In addition, there was a substantial lack of credibility in his assigning to the cinema centre and food court representations, whatever the detail of what was said, a central role in view of his years of failure to complain about non-compliance with them despite the many occasions on which it would have been appropriate to - not only 23 February 1993 (after Mr Slattery noticed disparities between the letter of offer and Mr Levin's representations), not only occasions when LLPM's pre-contractual and contractual documentation ought to have stimulated some statement about the representations, but also the many post-contractual occasions when Mr Slattery was remonstrating with LLPM about what he saw as its role in the losses which the shop was suffering. Finally, there was considerable disconformity between the representations appearing in the pleadings (which had been verified by an affidavit of Mr Slattery) and the evidence offered in support of them: the representations in paragraphs 9.6-9.10 and 9.12-9.13 were all alleged to be oral, but Mr Slattery's affidavit evidence about them fell well short of proof. (At one point it was suggested that the representation in paragraph 9.13 was proved by Mrs Slattery's evidence that no-one ever told her or her husband that the operating expenses would be calculated differently from the manner expressed in the lease: Blue 3/611F. That is not what was pleaded.) Making allowances for the great strain Mr Slattery must have been under in view of the importance of the litigation in his financial affairs, the trial judge's conclusions were fairly open to him. 86 The appellants also submitted that the trial judge had lost objectivity, largely because of BJS5, though they stopped short of a suggestion of actual bias. This contention was put many times and in support of several different aspects of the appellants' case. The trial might certainly be described as red-blooded. For example, page 1 of the transcript records that the first three matters not dealt with by consent were the grant by the trial judge of leave to issue a notice of motion to punish Mr and Mrs Slattery for contempt, a complaint by the respondents that the appellants' solicitor had committed contempt by looking at confidential documents without signing an undertaking to do so, and the grant by the trial judge of leave to punish the directors of one of the respondents for contempt. The following day, after hearing Mr Slattery cross-examined about his response to a notice to produce, the trial judge said (Black 1/45H): "I don't think there is enough material there to convict of contempt so I suppose we had better let it go on." On 3 August 1998 the trial judge gave consideration to the referring of evidence about an irregularly sworn affidavit to the Prothonotary: Black 2/311P. The appellants were alleging fraud. Both sides fought the case hard. As the trial judge said (Red 212Q-Y), the trial occasionally showed tendencies to go beyond the issues in the suit between the present parties. He had to strive to keep the trial within the time limits contemplated: Black 1/208E-J and 270R-U. Considerable firmness was called for, and supplied. In all the circumstances it cannot be said that the trial judge lost objectivity in a difficult case. He specifically warned himself against overreacting to Mr Slattery's lack of credibility: Red 235Y-236A. He appears to have taken into account the central aspects of the evidence. His conclusions both on Mr Slattery's credibility and on the objectively established factual position appear sound.

[36]

Section 51A 87 In the course of argument on appeal, three matters were raised by the court. Before turning to the specific applications made by the appellants and the specific grounds of appeal, it is convenient to deal with the three matters in question. 88 The first was that the representations complained about appeared, in whole or in part, to relate to future matters. The appellants pleaded that they relied on s 51A of the Trade Practices Act 1974 (Red 162K), and the respondents accepted on appeal that that sufficiently invoked the section. That placed on the respondents a burden of adducing evidence that they had reasonable grounds for making the representations. Yet the written submissions below do not appear to have approached the matter in that way, the oral submissions are not recorded, the reasons for judgment of the trial judge do not approach it in that way, and the conclusion must be that it was not so approached. That is supported by the fact that the trial judge with the aid of the parties (Black 2/418-419) propounded eighteen issues with which he had to deal (Red 213M-215E). These issues are narrower than those raised by the pleadings. None of them raise s 51A questions. That conclusion is also supported by the fact that the Amended Notice of Appeal did not complain about the trial judge having failed to deal with s 51A. That conclusion suggests that all parts of the trial, not merely the closing submissions, were conducted without any s 51A case being run. At the end of their address in reply to this Court, the appellants sought leave to add a ground to the Amended Notice of Appeal. The new ground conceded that the appellants had made no s 51A submissions below. Though the new ground does not say so, the argument foreshadowing it concentrated on the cinema representations, and the ground would appear to be limited to this, if only because the only other representation with which the trial judge saw it as necessary to deal was the food court representation, in relation to which he rejected the view that there was any representation at all. In all the circumstances, and whether the conduct of all parties in the pleadings and at the trial was satisfactory or not, it does not seem right to grant leave to amend to add this ground. It seeks to criticise the trial judge for something he was not asked to do, it seeks to call upon the respondents to meet a new case on appeal in relation to which they might have called further evidence at the trial had they known it was being run, and even if leave to add the new ground were granted, that leave would be futile because the ground would fail. It would fail because whether the representations about the cinema were as the appellants would have them or as the respondents would have them, Mr Levin had reasonable grounds for making them. Those grounds were that from late 1992 Ms Martin had been working on a proposal for a single cinema complex at the northern end of the Boardwalk: Blue 3/531-533. This fact was put beyond doubt by a series of leading questions (including one asked immediately after an adjournment) asked of Ms Martin by counsel for the appellants: Black 2/314C-T. See also Black 2/315X and 319U-320J. There is no demonstrated change in that position until July 1994, long after the lease had been entered. Nothing supports any inference that the post July 1994 position in truth predated entry into the lease. It was not certain before July 1994 that there would be a cinema complex to the north of the Boardwalk, but there were reasonable grounds for believing that there would be.

[39]

Area representation 90 The third matter raised by the court was whether there was not on the evidence an actionable misrepresentation in relation to the area. Though the pleadings contended that the relevant area representation was oral, and though there was evidence of oral representations of that type, the representation was also made in the 18 February 1993 offer. Being so made, it would escape the ban on using it arguably effected by the "warranties and representations" request later in that document, and the non-response to that request would not have a damaging impact on the appellants' claim to have relied on it. It would not appear to be right to permit the appellants to rely on an argument based on the area representation for the reason that it was not listed as one of the specific representations to be analysed as part of issue 1(a)-(e) defined by the trial judge (Red 213M-V) and evidently he was not asked to make a finding about it under issue 1(f), which inquired whether "any other significant representation" had been made: Red 213V. Though issue 8 raises the question what the area of the shop was, and though the trial judge found that the area was less than 228 square metres, he found that the documents did not bear out that there was a misrepresentation as to the area of the shop, since they spoke in terms of "approximately 228 square metres". Admittedly it is not clear what the point of issue 8 was. In any event, it would be futile to permit the appellants to run an argument based on a misrepresentation as to area in view of the 1996 settlement. Fresh evidence 91 At the commencement of the hearing the appellants applied to tender three affidavits which had not been before the trial judge. They were the affidavits of Paul Denison Westwood sworn on 22 June 1999, Mark Nugent sworn on 22 March 2000 and Bennett Joseph Slattery sworn on 27 March 2000. The application was rejected shortly before the luncheon adjournment on the first day. It was renewed in relation to Detective Constable Nugent's affidavit after the luncheon adjournment on the second day, but was again rejected. The reasons for those decisions were as follows. 92 The tender of the further evidence had two aspects.

[41]

After paragraph 20(b) of the Amended Notice of Appeal appears the following: "20.1 On the hearing of the appeal the appellants will seek to tender fresh evidence by Mr Juan Uribe which evidence was not reasonably available in the Court below due to Mr Uribe being posted in employment overseas and which evidence is anticipated will be to the effect that Mr Uribe was an employee of 'Timezone' in a managerial capacity who had responsibility for tendering for the business premises at Erina Fair namely, Shop TE12, at the relevant time, and that Timezone were not prepared to pay the rental that the Respondents were asking the Appellants to pay. 20.2 The said Mr Juan Uribe gave evidence to the Federal Court in respect of proceedings between the Appellants and Maria and Illia Savas in June 1998 and the Appellants would on the hearing of this appeal seek to tender the transcript of the evidence of Mr Uribe given in the Federal Court (approximately eight pages)." 94 Mr Slattery's affidavit annexed a transcript of certain evidence given by Mr Juan Uribe in the Federal Court of Australia on 2 June 1998. He was cross-examined by Mr Conditsis, who was the instructing solicitor for the appellants at the trial of these proceedings which commenced on 13 July 1998. 95 In the course of the trial of these proceedings, Mr Levin gave evidence that on 3 February 1993 he told Mr Slattery and Mr Carter that he would not reduce the rent; that he had another offer for Shop TE12 from Timezone; and that Timezone was prepared to pay the rent. Mr Levin also gave evidence that he did not deal with the manager of Leisure & Allied, the company which operated Timezone, namely Mr Uribe; rather Messrs Terry McGraw and Adam Steinberg did. Mr Uribe gave evidence to the Federal Court that Mr McGraw (mistranscribed as "McGrath") worked for Mr Uribe in early 1993. 96 The point of Mr Uribe's evidence in the Federal Court was said to be to show that Mr Levin was untruthful in what he had said on 3 February 1993. Mr Uribe told the Federal Court that he made two offers for the shop, which were both rejected. He said: "This first one was rejected said that is not high enough and we lost the second offer and some months later they notify us saying our offer hasn't been accepted." 97 Assuming that this evidence would tend to establish that the representation which the appellants wished to allege was false, and assuming that the transcript of Mr Uribe's evidence was otherwise admissible (both of which assumptions are far from being clearly correct), the evidence would have to satisfy the principles that govern the application of s 75A(7), (8) and (9) of the Supreme Court Act 1970. Those sub-sections provide: "(7) The Court may receive further evidence. (8) Notwithstanding subsection (7), where the appeal is from a judgment after a trial or hearing on the merits, the Court shall not receive further evidence except on special grounds. (9) Subsection (8) does not apply to evidence concerning matters occurring after the trial or hearing." This Court held in Akins v National Australia Bank (1994) 34 NSWLR 155 at 160 that in general three conditions must be met before evidence which could have been called at the trial can be admitted on appeal: "(1) It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) The evidence must be such that there must be a high degree of probability that there would be a different verdict; (3) The evidence must be credible." 98 The first condition was not satisfied. It was submitted that the departure of Mr Uribe for the Philippines meant his evidence could not have been used at the trial. There was nothing to show that his evidence could not have been obtained on commission from the Philippines or taken in Australia before he left. 99 The second condition was not satisfied. The findings of the trial judge in relation to reliance alone would make it extremely unlikely that Mr Uribe's evidence would have altered the outcome. Further, the representation pleaded in the proposed paragraph 9.14 did not appear in the appellants' letter of demand dated 3 June 1997 (Blue 1/26-27), which Mr Slattery accepted as being accurate: Black 1/11T and 12S. 100 It is not necessary to say anything as to the credibility of Mr Uribe's evidence save to say that in the form in which it was given, it was very far from being clear. 101 Even if the three conditions set out in Akins v National Australia Bank are not satisfied, the court is at liberty to exercise the statutory discretion to admit evidence in exceptional circumstances where the justice of the case requires it: Commonwealth Bank of Australia v Quade (1991) 178 CLR 134 at 140. There does not appear to be any injustice in not receiving the evidence of Mr Uribe in view of its clear availability at the time of the trial, to the knowledge of the solicitor for the appellants, and in view of the fact that the contemporary documentary evidence was that LLPM was to make offers to both B & M and Timezone at the same level of rent: blue AB 4/827.

[42]

The Westwood material 102 The second aspect of the tender of further evidence related to PX36, namely the handwritten notes which Mr Anderson examined. Two reports of Mr Westwood in answer to Mr Anderson were tendered. Mr Westwood's reports were much longer than Mr Anderson's, reflecting the fact that Mr Anderson's was prepared overnight. Mr Westwood's conclusion was that his examination of the handwritten notes "has not revealed evidence to substantiate the claim that [they have] been subjected to artificial ageing in the manner claimed by Mr Anderson." Neither expert was able to say when the notes were created. 103 The third of the conditions which generally regulate the reception of evidence which could have been called at the trial is satisfied: Mr Westwood's evidence was credible. So indeed was Mr Anderson's, but opinions on the provenance of documents, particularly where one expert has had much more time than the other to examine the documents, may reasonably differ without being described as not credible. 104 As to the first of the conditions, it has not been shown that the evidence could not have been obtained with reasonable diligence for use at the trial. The handwritten notes and the question of their genesis was a problem created by Mr Slattery's unsatisfactory evidence about BJS5. He could have produced the notes and annexed them to one of his earlier affidavits (either the affidavit of 23 December 1997 to which BJS5 was annexed, and in paragraphs 6.2 and 7 of which he said he gave Mr Levin BJS5, or the affidavit of 30 April 1998 in which he repeated paragraph 7 of the 23 December 1997 affidavit in answer to Mr Levin's denial in his affidavit of having seen BJS5 before). He could have produced the notes in the course of giving as his initial evidence what became his ultimate position, namely that what he handed over was a document like BJS5 and that BJS5 had recently been typed out on the basis of the handwritten notes. Had he done this, there would have been ample time for persons in the position of Messrs Anderson and Westwood to conduct unhurried examinations of the handwritten notes had either party thought this to have been a worthwhile activity. The same is true had Mr Slattery produced the handwritten notes on 16 July 1998, as he had said on 15 July 1998 that he would. Indeed, some real possibility of both sides conducting forensic examinations before the conclusion of the evidence would have existed had he produced them to his counsel on the morning of 3 August instead of the morning, or at lunchtime, on 4 August. This would also have been the case had the handwritten notes been produced to the court earlier than the close of proceedings on 4 August 1998. Indeed, when counsel for the respondents obtained access to the documents for the purposes of expert investigation at the close of proceedings on 4 August 1998, and obtained Mr Anderson's overnight report, it would have been possible for the appellants to have ensured that an appropriate expert attended while Mr Anderson gave evidence and possible for the appellants to have obtained a report from such an expert in a period very much shorter than the two weeks discussed as the possible period during the debate about adjournment. Nor has it been shown that so long a period as two weeks was needed even to obtain Mr Westwood's most elaborate reports, assuming that the maker of the report was apprised of the need for urgency. 105 As to the second of the general conditions, it cannot be said that had Mr Westwood's evidence been available there would have been a high probability of a different verdict. It is true that the trial judge's conclusions on Mr Slattery's credibility assign two reasons for concluding that BJS5 was a forgery. The second was "the continually changing evidence of Mr Slattery and his admissions". The first was the "evidence of Mr Anderson". It is also true that strictly speaking Mr Anderson's evidence does not show BJS5 to have been a forgery - so far as it was a "forgery", that had been independently established - but that the handwritten notes had been artificially aged. What Mr Anderson's evidence did was to damage Mr Slattery's credibility in a new respect. However, quite independently of Mr Anderson's report, there were ample grounds for the trial judge's conclusions about Mr Slattery's credibility flowing from the heavy burdens Mr Slattery had inflicted on himself. His credibility was injured by his contention that he relied on representations about which he made few or no complaints before 1996 despite many opportunities to do so, and despite a specific written request that he do so on 18 February 1993, at a time when he was under no pressure whatever from the respondents. Further, many passages in his cross-examination raise a question mark over his credibility, replete as that cross-examination is with non-responsive answers, evasive tactics carried on for some time and improbabilities. The final blow to Mr Slattery's credibility was the sequence of events from December 1997 to 5 August 1998 in relation to BJS5. Had evidence to the effect of Mr Westwood's been available during the trial, or had evidence of a provisional kind assembled in haste equivalent to that of Mr Anderson been put on by Mr Westwood during the trial, it would have caused the trial judge to do no more than put Mr Anderson's evidence on one side. It would not have altered the trial judge's conclusions on Mr Slattery's credibility. 106 The appellants in effect submitted that even if the general conditions for admissibility were not satisfied, in the interests of justice the residual discretion to admit the evidence should be favourably exercised. A particular appeal was made to the pressure which it was said the appellants were put under by reason of the trial judge's warning at the end of Mr Anderson's cross-examination that if an adjournment were granted the matter might not be heard until the following year, and that the issue of whether the current interim orders should continue would need to be examined. They "found themselves 'between a rock and a hard place'." They "felt as if and were entitled to feel as if they 'had a gun held to their heads'." It was submitted that the appellants were taken by surprise by Mr Anderson's evidence and the turn of events on 5 August; that the judge's words were uttered with some force; that the appellants were entitled to assume that the trial judge was not placing significant weight on Mr Anderson's evidence; and that the trial judge should have warned the appellants about the significance he was intending to place on it. 107 To these submissions there are several answers. The transcript records no objection by the appellants to Mr Anderson's affidavit. The revisiting of the interlocutory regime was not a matter precipitated solely by the aftermath of Mr Anderson's evidence; it had been raised earlier, on 16 July 1998, as a real possibility in the event of the trial not finishing by 7 August: Black 1/208E-J. Had the trial judge not pointed out the possible impact of a long adjournment brought about by the appellants' conduct on the interlocutory regime, he might have been exposed to even greater criticism. Had he made some statement about the strength of Mr Anderson's evidence, he might have been exposed to attack for bias. Mr Slattery's testimonial shifts in relation to the origins of BJS5, culminating in the late production of the handwritten notes, had left the court, the respondents and for that matter the appellants in a difficult position. From the appellants' point of view, the last attempt by Mr Slattery to explain and legitimise his conduct had culminated in Mr Anderson's opinions about it. If that evidence were left untouched, Mr Slattery's credibility was very much at risk. However, even if Mr Anderson's evidence could be qualified or contradicted, Mr Slattery's credibility was under a dark cloud. The consequences of a two week adjournment to obtain expert evidence were fairly pointed out. The appellants then took a deliberate forensic decision to solve their problems by not seeking an adjournment. Forensic decisions of this type in trials are, if not common, to be expected as a part of litigation even in modern conditions, where trials on affidavit are not supposed to produce the types of surprise evidence which Mr Slattery was responsible for. There was no contemporary protest at the shortness of time which the trial judge gave for the decision to be made. There was no affidavit from Mr Slattery or any of his legal advisers as to the difficulties of making the decision or as to any facts which showed that having to make it was unjust. Even assuming that Mr Westwood's conclusions were to be preferred to those of Mr Anderson, there is no valid demand that in justice the evidence of Mr Westwood should be admitted when there was an opportunity to call it, or to call something equivalent to Mr Anderson's evidence, at trial. Mr Anderson had been appropriately cautious in what he said, pointing out the shortness of time available, the limited character of the inquiry and its inconclusive outcome (Blue 4/75-751), and conceding at once that the notes could have been written five years earlier: Blue 4/751E and Black 2/412V-Z and 417B-H. 108 While legal disputes are ideally to be determined after arriving at sound factual conclusions, and while there is a public interest in the orderly presentation and testing of evidence, it is not unjust to refuse an application to call further evidence on appeal in answer to hastily assembled evidence at trial if an opportunity to answer that evidence with other evidence - either assembled equally hastily after a short adjournment, or assembled more sedately after a long adjournment, was available but was refused. 109 One other piece of evidence related to that of Mr Westwood was tendered: a statement by Detective Constable Nugent that in a conversation with Mr Anderson, Mr Anderson said to him: "Since the first report which was made after examining the document only overnight I have re-examined the document. I can't say how old the document is. I have also seen a report by Mr Westwood, who I used to work with in the Federal Police. I cannot disagree with his report."

[45]

Ground 1: rejection of tender of coincidence evidence 113 The first ground complains of the rejection of two affidavits of other tenants in the Boardwalk. They were said in the Amended Notice of Appeal to go to whether the cinema complex representations were made, but one of them also contained material about the second food area. 114 The trial judge rejected the affidavits on the first day of the trial, 13 July 1998: Black 1/8L. A fresh application to tender them was made on 16 July 1998: Black 1/175W-177H. The primary point made in argument was that the two affidavits taken with the other evidence showed a "pattern" in the attraction of lessees. 115 In my judgment the tender was rightly rejected. First, one affidavit (Mr Monk's) did not even deal with Mr Levin, but with Ms McLaughlan, a different officer of LLPM. Secondly, there was insufficient similarity between what the deponents said, and too few deponents, to establish the necessary "significant probative value" under s 98 of the Evidence Act 1995 (NSW). That calls for probative value which is "important" or "of consequence": Zaknic Pty Ltd v Svelte Corporation Pty Ltd (1995) 61 FCR 171 at 175-6 per Lehane J. The dissimilarities in what was said render Mr Wickham's affidavit insufficiently probative. Thus Mr Slattery deposed that Mr Levin said that the existing food court area would be closed down completely (Blue 1/140L); Mr Wickham deposed that Mr Levin said: "Other than a few take-away food shops, the Boardwalk will be the main eatery": Blue 1/134B. Mr Slattery deposed that Mr Levin told him the cinema complex would be added "within eighteen months of completion" (Blue 1/140Y; emphasis added); Mr Wickham deposed that Mr Levin said it would be: "In about 18 months" from March 1993: Blue 1/134L. Mr Slattery deposed that Mr Levin said that the cinema complex would have ten cinemas (Blue 1/140Y); Mr Wickham deposed that Mr Levin spoke only of a "multi cinema complex": Blue 1/134L. 116 The appellants relied on Aroutsidis v Illawarra Nominees Pty Ltd (1992) 21 FCR 500, but the evidence under consideration shares the weakness of the evidence given by two tenants which was rejected in that case at 509 as being insufficient to establish a system or pattern of behaviour.

[61]

This complains about the trial judge's answer to question 8. Question 8 was: "What is the area of the plaintiffs' shop?" The trial judge said (Red 242J-R): "The area of the plaintiffs' shop is not currently a matter of issue between the parties because of the subsequent agreement. In so far as it is alleged that there was a misrepresentation as to the area of the shop, my view is the documents do not bear this out. They talk in terms of approximately 228 square metres. That the area is less than 228 square metres is clear. However, it is not at all clear that the rent was fixed as so much per square metre; indeed if one divides the initial rent in the lease by 228 one does not get the sort of number that one would expect if this were so. I do not consider I need say any more about this." 135 As indicated above, it is difficult to see why, of the eighteen issues considered by the trial judge, issue 8 stands separate from the questions raised about representations in issue 1. But that is what the parties agreed to. 136 The written submissions of the appellants in relation to the ground are as follows (pages 58-59): "His Honour acknowledges that the letters of offer referred to 'an approximate area' of 228 m2 and confirm his finding that the area is in fact less than that and goes on to say:- ' However, it is not at all clear that the rent was fixed as so much per square metre; indeed if one divides the initial rent in the Lease by 228 one does not get the sort of number that one would expect if this were so. I do not consider I need say any more about this.' With respect to His Honour, the real issue of the representation contained in the letter of offer as to 228 m2 is not addressed. What is the point of - having any area in a letter of offer if as stated by the Respondent, it is not relevant to their consideration of rent. Obviously, there is (or should be) a relevance of area in relation to the calculation of outgoings and it would seem, that his Honour had not considered that the representation was surely relevant to that issue and that innocently or otherwise, the area, has been clearly misrepresented."

[66]

1996 representations 140 The representations alleged to have been made which induced entry into the 1996 lease were pleaded as follows in paragraph 16 of the Amended Defence and Cross Claim: "Prior to the First Defendant executing the lease referred to in paragraph 5 of the SoC Robson warranted or, in the alternative, made certain representations to the Defendants ('the representations') being: a) That even if B & M and the First Defendant had paid more rent than they ought to have done under the prior lease it was not possible for the Plaintiffs to reimburse any such money because it had already been spent. b) Unless the dispute between the First Defendant and B & M and the Plaintiffs arising from the prior lease was settled amicably the Plaintiffs would sue the Defendants and the Defendants would run out of money before the Plaintiffs and be driven into bankruptcy. c) That the Plaintiffs would drag any such litigation on for years to ensure the financial ruin of the Defendants. d) That no matter what, at the end of the litigation the Defendants would lose and the Plaintiffs would then bankrupt the Defendants. e) That the Hoyts Cinema Complex (the 'cinema complex') would cause an increase in patronage to Erina Fair, the shopping mall in which the premises are situated, of up to 650,000 persons per annum but, say, conservatively 400,000 per annum and that LLPM's research showed that 58% to 62% of those patrons would attend that part of Erina Fair where the Plaintiffs business was situated and spend money. f) LLPM's further research showed that although the cinema complex was now a stand alone complex away from the business of the First Defendant, as opposed to being adjacent to that business, it would only make a difference in patronage of those persons who would attend that part of Erina Fair in which the First Defendant's business was situated by between 1% and 2%. g) That there was a strong possibility that the First Defendant's business would probably be able to relocate its business to a position adjacent to the cinema complex. h) The operating expenses payable by the Defendants/Cross Claimants and claimed from the Defendants/Cross Claimants by the Plaintiffs for the premises would be calculated fairly such calculation being based on the proportion that the true area of the premises bore in relation to an area described as the gross lettable area ('GLA') which area represented the whole of the lettable area of the Fair."

[68]

He dealt with them together as follows: "11 & 12. These two matters can be dealt with together. The only real challenge to the binding effect of the agreement to settle the dispute was that the agreement was invalidated or should be set aside because of the representations that were allegedly made as set out in para 16 of the plaintiffs' cross claim. On 9 July 1996, Mr Robson, who was then the Centre Manager, wrote to Mr and Mrs Slattery to the effect that the shop had been surveyed by John B White Pty Ltd and had been found to measure 215.2 square metres and that there would be an adjustment since the commencement of trade to account for the discrepancy in gross letting area of 9.6 square metres. The letter went on to say, 'In the light of your current trading performance and in the spirit of commercial compromise we agree to the surrender of your current lease and to enter into a new Seven (7) year lease. A letter of offer reflecting the details agreed in our discussions is attached. Please return the attached documentation in this regard indicating your agreement to the surrender and new lease.' The letter concluded, 'Accordingly your acceptance of this proposal will finalise all the outstanding issues in relation to the lettable area of your tenancy, including the toilets and placements of structural beams.' The evidence shows that this letter came about as a result of discussions that had been taking place between Mr Robson and Mr and Mrs Slattery over the preceding three months. On 8 July, Mr and Mrs Slattery had complained about the unfairness of what was being offered to them, and were told by Mr Robson that the deal which subsequently was recorded in the letter of 9 July was 'as good as it gets'. On 23 July 1996, either Mr or Mrs Slattery attended Mr Robson's office and a few amendments were made on the letter of offer including the switch from B & M Activities Pty Ltd to Textralian Enterprises Pty Ltd. Mr and Mrs Slattery then each signed a copy of the letter of 9 July confirming their acceptance of the proposal. The letter of offer contains a term against the heading 'Warranties and Representations' 'You and we must let each other know, below, anything we have promised said or done which has influenced your decision to take a shop in the Centre, and our decision to grant you a Lease.' Written in Mr Slattery's handwriting under 'Things we have said to you' are these words, 'Confirmation of ability to increase shop size if possible - when and to what size and proposed new rental. We would like the opportunity to re-locate to the cinema complex if and when the opportunity became available.' Mr Slattery, in his affidavit PA05, says that at the meeting of 23 July, Mr Robson repeated 'This is as good as it gets' when Mr Slattery complained about the inadequacy of the proposal, but then Mr Robson added, 'Our research shows that it being stand alone complex only makes 1% to 2% difference in relation to the amount of trade you should do and you should receive a substantial increase in trade as a result of the cinemas.' He said that the cinemas at Charlestown were bringing in 600,000 people a year and that Erina Fair expected 650,000 a year but conservatively 400,00 and continued 'Our research shows that 58% to 62% of these patrons will come across to the Centre and spend money.' He is then alleged to have handed Mrs Slattery a copy of page 2 of his survey with a comment that Mr Robson was risking the ire of head office by doing so. Shortly after Mr Slattery claims he said that on the figures Mr Robson had given, 'We should realistically expect to get 10% of those people to spend $10 a year at our shop. That would then give us another $240,000 a year in turnover. At that rate on the basis of the proposal you're putting forward the business would be viable.' He says Mr Robson replied, 'Yes, the business would be very viable and if you have a new 7 year lease you've really got something to sell haven't you?' Mr Slattery said that had Mr Robson not made those representations he and his wife would not have agreed to enter into the new lease. Mr Robson denies those conversations. He does say that he told Mr Slattery that research indicated that the cinemas would have an impact of somewhere between 1% or 2% on centre sales. He says he did receive a preliminary survey. The person who took the survey reckoned that 27% of Central Coast respondents indicated that they would visit the proposed cinemas at Erina Fair at least once a month. Mr Robson has then in his handwriting worked at [sic] that 27% of 2 million is about $648,000 [sic] and has written this on the copy of the survey which is in his internal file. He denies, however, he gave a copy of the survey or even page 2 of it to the Slatterys. I believe this evidence of Mr Robson. It is consistent with other evidence in this case where copies of internal documents of the defendants appear in the plaintiffs' affidavits with no credible explanation as to how the plaintiffs secured them. Mrs Slattery gives corroborative evidence of what her husband has put in his affidavit. I cannot accept Mr Slattery as a witness of truth. I have also very great reservations about Mrs Slattery's credibility. I have not accepted her evidence that she slept in the centre overnight on 8/9 October 1997. Despite her denials it was quite clear that Mrs Slattery had prepared her evidence in conjunction with Mr Slattery, one indication of this is that they both produced identical verbatim conversations where neither of them had taken notes. Mr Robson's denials are reinforced by the fact that the Slatterys already knew the use that was made by the defendants of passages in the agreement specifying that there was no representation or warranty made outside the document. Yet Mr Slattery inserted one matter in the space provided for 'Things we have been told' but wrote not a word about the representation as to the additional patronage. I am not satisfied that the representations in para 16 of the cross claim were made. Accordingly, question 11 should be answered 'Yes' and question 12 'No'." 142 Thus the trial judge dealt specifically with the representation pleaded in paragraph 16(e) and (f), but not the balance. The Slatterys gave specific evidence in relation to paragraph 16(e) and (f) but only to a very limited extent in relation to the other representations (Blue 2/288 and 307-308). 143 The fact that the trial judge did not deal with any representations other than those in paragraph 16(e) and (f) is explained by the following. First, Mr Slattery said that if Mr Robson had not made the representations set out in paragraph 7(m) of his affidavit of 23 December 1997 (Blue 2/286K-290U), he would not have accepted LLPM's offer to enter the 1996 lease. The representations pleaded in paragraph 16(a) - (d) and (g) - (h) do not appear in paragraph 7(m) of Mr Slattery's affidavit. Something much milder than the representations pleaded in paragraph 16(b) - (d) was set out in paragraph 7(k), the occasion being a meeting on 8 July 1996 (Blue 2/285C-F and 304F-J). This was not denied by Mr Robson. Representation 16(g) was set out in paragraph 7(k) (Blue 2/286A and 305D). This was denied by Mr Robson (Blue 2/446G-H). Representation 16(h) was said to have been proved by Blue 2/288, paragraph 7(j). This was denied by Mr Robson (Blue 2/439N). Secondly, on 3 June 1997 the solicitor for the appellants wrote to LLPM stating that the appellants only entered the 1996 lease because of representations corresponding to paragraph 16(e), but no others: Blue 1/29E-N. 144 In all the circumstances, the trial judge's findings are not vulnerable to appellate attack. First, his conclusions as to Mr Slattery's general credibility cannot be overturned. Secondly, his conclusions about Mrs Slattery's general credibility appear sound in view of the almost identical nature of the affidavits of Mr and Mrs Slattery, suggesting either that they collaborated in preparing the evidence or that one of them, probably Mrs Slattery, simply accepted a draft affidavit placed before her without genuinely recollecting the evidence set out in it. Thirdly, there is a disparity between the pleading of the representations in paragraph 16(a)-(h) and the limited evidence offered in support of them. This would be of some significance even if the pleadings had not been verified; it is of considerable significance given that Mr Slattery swore an affidavit verifying them. Fourthly, the Slatterys had no file notes of the relevant meetings, while Mr Robson was to a very large extent supported by the file notes he made after meetings, as he did in most cases. Fifthly, the appellants' letter of demand dated 3 June 1997 referred only to the representations pleaded in paragraph 16(e). In any event, there are differences between what the letter says and what the pleading says. The letter said that the representation was written, not oral: Blue 1/29G. The letter said 58-62% of the patrons would "attend upon the Fair" and "spend money on something": Blue 1/29H. The pleaded representation was that they "would attend that part of Erina Fair where the Plaintiffs business was situated and spend money". And while the letter said the representation was that the cinema would attract "approximately 600,000 patrons", the pleaded representation was "up to 650,000 persons per annum, but, say, conservatively 400,000 per annum". Mr Slattery said in cross-examination that the written representation was BJS12, a copy of "Fair Comment" distributed by LLPM to tenants in January 1995: Blue 1/151T-V and 197; Black 1/87C-88D. It said of the cinema complex: "The development will include a 10 screen multiplex and family-style restaurant, and is expected to attract 400,000 visitors in the first year …".

[73]

This does not suggest that the representation pleaded in paragraph 16(g) was made. Rather it supports Mr Slattery's expression of desire for a clause in the lease concerning relocation or a possible increase in shop size (Blue 2/290A), which was not denied by Mr Robson (Blue 2/450P). The vital point is, however, that none of the eight representations made appear in the appropriate space. This is even more significant than the corresponding omission in 1993. It negates any real possibility of omission by oversight. The omission of each representation points to the conclusion either that it was not made or that it was not relied on. This is particularly so because of the rather acrimonious nature of the negotiations leading to the 1996 lease, and because, according to the Slatterys, numerous handwritten changes were made to the 9 July 1996 letter as it was discussed in the meeting between the Slatterys and Mr Robson on 23 July 1996. 145 The appellants argued that it was not open to the respondents to rely on what did and did not appear in that space because, according to Mr Slattery, on 23 July Mr Slattery said: "We'd like a clause regarding the relocation to the cinema area or the possible increase in the shop size to be included in the letter. Also we'd like the lease to be conditional on the proposed increase in takings that you're telling us about from the cinemas." Mr Slattery gave evidence that Mr Robson then said: "I can't do that, my bosses would have my head. I can agree to put something in about the relocation and the shop size." Mrs Slattery gave identical evidence at Blue 2/309C-K. Mr Robson denied the second sentence of what was attributed to Mr Slattery and the material attributed to him: Blue 2/450P-Q. One reason for doubting the Slatterys' credibility in this matter is that while that version appeared in affidavits sworn by them on 23 December 1997, Mrs Slattery's affidavit of 27 October 1997 did not mention it: Blue 1/59V-61B. But even if the Slatterys' ultimate version in chief were credible, it does not support the conclusion that Mr Robson's supposed threat applied to the "THINGS WE HAVE SAID TO YOU" space. Rather, the statement attributed to Mr Robson applied to the lease itself. In cross-examination Mr Slattery said that Mr Robson said that they could not include the matters that influenced them in that space because his supervisors would have his head: Black 1/64K. So, later, did Mrs Slattery: Black 1/138C-J. The Court was not taken to any cross-examination of Mr Robson about either the original version given by the Slatterys or the version given in cross-examination. These changes in testimony suggest collaboration and cast doubt not only on the new evidence but also on the general credibility of the Slatterys. 146 Even if the trial judge's findings that the representations pleaded in paragraph 16(e) and (f) were not made could be overturned, there is no evidence to suggest that they were misleading or deceptive: no evidence that, so far as they were statements of present fact they were false, no evidence that so far as they were statements as to the future or statements of opinion they lacked a reasonable basis and, indeed, if this be relevant, no evidence that so far as they were promises they were not fulfilled. 147 The only basis on which the 1996 settlement and lease was said by the appellants not to be a settlement of all disputes arising out of the 1993 lease was that the 1996 settlement and lease was induced by misrepresentations. The trial judge having found that no representations were made, the 1996 settlement and lease stand as a bar to success in an action on any representations in relation to the 1993 lease unless his findings can be upset in this appeal. In my judgment they ought not to be. 148 In the Amended Notice of Appeal there was no ground of appeal concerning the 1996 representations. The appellants applied for leave to add such a ground, and I would favour grant of that leave given that some written arguments attacking the trial judge's conclusions have been filed. The ground in effect was that the trial judge erred in rejecting the appellants' case because his reasoning was so coloured by his reaction to Mr Slattery's evidence on the creation of BJS5 and Mr Anderson's evidence expressed in PX36 that he failed to give any or any due weight to other evidence. I disagree for the reasons given above. 149 Three particular matters were pointed to in the new ground of appeal. 150 The first was that BJS11 and BJS12 supported the Slatterys' allegation that the representations in paragraph 16(e) - (f) were made. BJS11 was an information sheet distributed to tenants at Erina Fair by LLPM in January 1995 and BJS12 was a brochure distributed to them in about January 1995. The first contained a statement to the effect that a survey of the Chadstone Centre in Victoria indicated that 58% of cinema visitors did some shopping and a survey of the Warringah Mall indicated that the equivalent figure was 61%. The second contained a statement to a similar effect. The second also said that the cinema complex was expected to attract 400,000 visitors in the first year. The fact that tenants were told these things early in 1995 in brochures does not make it so probable that Mr Robson said them as to permit disturbance of the trial judge's findings that he did not. 151 The second particular matter was the "unsatisfactory evidence of Mr Robson". Nothing was demonstrated about his evidence which would permit the Court of Appeal to overturn the trial judge's credit-based findings in his favour. 152 The third particular matter concerned evidence that the appellants were negotiating from a position of weakness caused by the misleading and deceptive conduct of the respondents in respect of the 1993 lease. It may be accepted that they were in a position of weakness, but that is not a ground for relief in a representation case as distinct from a case based on duress or unconscionable conduct. Further, the trial judge's finding that there was no misleading conduct in 1993 cannot be overturned.

Textralian Enterprises Pty Ltd v Perpetual Trustees Victoria Ltd

At a glance

Court

Decision date

Before

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Source

Catchwords

Judgment (84 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (4)

Cited By (11)