Wall's Gifts and Tobacco Pty Limited v Warringah Mall Pty Limited and Anor - [2003] HCA 18 - HCA 2003 case summary — Zoe

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Wall's Gifts and Tobacco Pty Limited v Warringah Mall Pty Limited and Anor

[2003] HCA 18

High Court of Australia|2003-07-11

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At a glance

AI case summary

Result

respondent. The application is dismissed. Further dates for hearing (as to relief) vacated. Liberty to either party to have the matter re-listed for further consideration of any costs applications at 10.00am...

Key principles

A claim for compensation under s 34 of the Retail Leases Act 1994 cannot succeed unless the lessee has first given written notice to the lessor requesting rectification of the...
For the purposes of s 34(1)(a) and (b), any inhibition of access or alteration to customer flow must be substantial when measured against the manner in which the lessor had...
The statutory concept of unconscionable conduct under s 62B requires conduct that is inequitable in all the circumstances and, consistently with the approach taken by the High...
A lessor’s failure to disclose negotiations with a prospective competing tenant, while reflecting poorly on good management practice and falling short of the mutual support...

Issues before the court

Whether the respondent lessors contravened s 34 of the Retail Leases Act 1994 and the quiet enjoyment covenant by permitting casual mall leasing and...

Plain English Summary

A long-established tobacco and gift shop in Warringah Mall complained that new kiosks blocked customers from reaching its door and that the mall owners had secretly lured away a potential buyer (Smoke Zone) by offering them a different shop instead of approving an assignment. The Tribunal ruled that the tenant had never sent the required written complaint letter, so the blocking claim could not succeed. Even if it could, the changes were not substantial enough when compared with what the lease papers had warned could happen. On the sneaky-dealing claim the managers had acted unsympathetically by keeping quiet about the rival negotiations, but because the buyer had never seriously agreed to the high price asked and had immediately said it would not buy, the conduct was not legally unconscionable. The case was dismissed.

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Deep Dive

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What happened

The applicant, Wall’s Gifts and Tobacco Pty Limited, had operated a business at Warringah Mall for 29 years by the time of the 2003 hearing. The business originated with the applicant’s late father and had occupied space in the original open, garden-like area of the mall. After a major refurbishment and extension completed in 1997 the applicant was invited to relocate to Shop 219, a smaller 35 m² premises near the new food court and Woolworths supermarket. The move occurred in September 1998 after the applicant incurred approximately $80,000 in fit-out costs (net of $19,000 landlord contribution). A fresh six-year lease commencing 24 October 1998 was executed at a base rent of $50,000 per annum plus marketing levy. The disclosure statement and accompanying maps expressly reserved the lessor’s right to permit casual mall leasing (CML) in the concourse adjoining Shop 219 and depicted three CML locations.

From late 1998 onward the lessor regularly allowed casual traders to occupy those locations. There were periods when the sites were empty, but during peak seasons (including the applicant’s strongest gift-selling periods) all sites could be occupied. In September 2001, after notice to tenants, the lessor ended casual leasing and installed permanent kiosks enclosed to waist or chest height. The kiosks housed a newsagent/lottery outlet, an ice-cream vendor (Dippin’ Dots) and a key maker. A café opposite leased additional seating in the concourse so that occupation was near-continuous. The reconfiguration removed the cross-walk that had previously existed directly opposite the applicant’s windows, dividing the concourse into three channels with the central one dominated by kiosk trading activity.

The applicant’s trading figures stagnated or declined after the move. He attributed this to reduced visibility and physical access caused first by casual tenants and then by the permanent kiosks. He met management on several occasions but never sent a written notice under s 34. In June 2001 the centre’s regional manager offered early termination plus $50,000 compensation (less make-good), which the applicant rejected because it would not allow him to exit debt-free after more than 20 years at the centre.

By May 2002 the applicant, through Mr Peter Macaulay of the tenants’ advocacy service “Lease Police”, sought to assign the lease. Mr Macaulay was introduced to Smoke Zone, a franchised discount tobacco chain. On or about 15 May 2002 Mr John Elsoukamani (principal of Smoke Zone), Chris Kahla and his brother visited the shop. The applicant quoted a sale price of approximately $140,000 (or at least enough to clear debts exceeding $100,000). The visitors immediately told the centre’s leasing manager, Ms Gatwood, that they would not buy the business because the price was “ridiculous” and asked about other available space. Ms Gatwood showed them Shop 138C. After internal consultation the centre concluded a lease with Smoke Zone on ordinary commercial terms; it opened in a different concourse on 5 September 2002.

Mr Macaulay met Mr Hynes (centre general manager) on the morning of 17 May 2002 and later that day telephoned him to raise the possibility of an assignment to Smoke Zone. Mr Hynes responded that a national operator with financial backing, retail experience and viability would be looked upon favourably, but he did not disclose that the centre was already in direct negotiations with Smoke Zone. The applicant only learned of the new store later and was “devastated”. He commenced proceedings after mediation failed, claiming compensation to the $300,000 jurisdictional limit for breach of s 34, breach of the quiet enjoyment covenant in cl 17 of the lease, and unconscionable conduct under s 62B.

A view was conducted on the first hearing day. Evidence was given by the applicant, Mr Macaulay, Mr Hynes, Ms Gatwood, Mr Elsoukamani, Mr Kahla and several other traders and experts. The Tribunal confined the hearing to liability. After three days it delivered ex tempore reasons (later revised for a spelling error) dismissing all claims.

Why the court decided this way

The Tribunal’s reasoning proceeded in two distinct streams. On the retail tenancy claim the President (O’Connor K DCJ) held that s 34 contains an express precondition: the lessor must have failed to rectify the matter “as soon as reasonably practicable after being requested in writing by the lessee”. Paragraph 26 states bluntly that “a disgruntled lessee must uplift his or her concerns from the oral to the written before he or she can gain the benefit of s 34”. The applicant conceded he had never given written notice despite numerous oral complaints. That was fatal. The quiet enjoyment claim in cl 17(1) was treated as dependent on the same facts and failed for the same reasons.

In case that conclusion was wrong, the Tribunal examined the merits. It accepted that physical access had progressively deteriorated from the “planter box era” (September 1998) through the casual leasing era to the permanent kiosk era. The concourse was now divided into three channels with no cross-walk opposite the shop, and customers were discouraged from stopping at the windows. Nevertheless the comparison required by s 34 was not with the completely open concourse that existed before the 1997 refurbishment, but with the position the lessor had disclosed in 1998. The disclosure statement, maps and lease materials had made clear that casual mall leasing would occur in the three designated CML locations and that all sites could be occupied frequently. The shift to permanent kiosks, while worse, did not in the Tribunal’s view amount to a further deterioration that was “substantial” within the Macquarie Dictionary definition adopted at paragraph 45 (“of ample or considerable amount, quantity, size, etc.”). The loss of the cross-walk was not enough to meet that threshold. Nor was the conduct unreasonable or productive of significant disruption once regard was had to recognised shopping centre management practices. The s 34 claim therefore failed on the merits as well.

The unconscionable conduct claim received more extended analysis. The Tribunal accepted that Mr Hynes knew, from Ms Gatwood’s report on 15 May and Mr Macaulay’s call on 17 May 2002, that Smoke Zone had had recent contact with the applicant. He also knew the applicant was a long-term tenant in trading difficulty who was actively seeking an exit. Yet Mr Hynes kept the parallel negotiations confidential, citing commercial-in-confidence, and made no attempt to facilitate a realistic deal between the applicant and Smoke Zone. Paragraphs 70–75 contain a sustained critique: the lessor showed “little sympathy”; it should not compartmentalise existing and prospective tenants; it owed a duty to give “appropriate support” to struggling long-term tenants; and it should have informed the applicant that Smoke Zone was now looking at another space, thereby giving him a further opportunity to negotiate a realistic price. The conduct “reflects poorly on this lessor’s commitment to good management practices”.

Nevertheless the Tribunal was not satisfied the conduct crossed the line into unconscionability. It relied heavily on the factual finding that no sufficiently advanced agreement existed. The price sought by the applicant was unrealistic given his trading figures, admitted debts and lack of profitability. Mr Elsoukamani had made no firm offer, had stated he would only consider a walk-in walk-out deal covering stock, and had no intention of reopening discussions. The centre dealt with Smoke Zone at arm’s length on normal commercial terms. Citing ACCC v Berbatis at paragraph 76, the Tribunal adopted a cautious approach: commercial self-interest and even unsympathetic behaviour do not without more become statutory unconscionability. The remoteness of any completed sale meant the omission, while regrettable, was not “so inequitable as to warrant a finding of ‘unconscionable’ conduct”. Both claims therefore failed and the application was dismissed.

Before and after state of the law

Prior to the Retail Leases Act 1994 a tenant’s remedies for obstruction of access or loss of customer flow lay in the common-law covenant of quiet enjoyment and the general law of nuisance or derogation from grant. These required proof of substantial interference with the tenant’s actual use and were often defeated by carefully drafted reservations of landlord rights over common areas. The 1994 Act introduced a statutory compensation regime in s 34 that implied terms into every retail shop lease and reversed the evidentiary burden in several respects. It expressly listed four forms of disturbance, required regard to recognised shopping centre management practices when assessing reasonableness, and imposed a written-notice precondition before compensation could be recovered.

This decision is one of the earlier detailed examinations of that regime after the 1997–1998 wave of mall refurbishments. It confirms that the written-notice requirement is mandatory and not a mere technicality. It also establishes that the “substantial” threshold in s 34(1)(a) and (b) is measured against the baseline the lessor disclosed at lease commencement rather than an abstract ideal of completely unobstructed access. After this decision, shopping centre managers could be more confident that disclosed casual-leasing or kiosk programmes would not lightly attract compensation provided the deterioration was not of “ample or considerable” scale.

On unconscionability the law was still developing. The predecessor provision had been inserted in 1998 and s 62B was relatively new. The High Court’s decision in Berbatis, handed down only months earlier, had emphasised that statutory unconscionability (even under the broader federal formulation) does not capture every hard bargain or instance of unequal bargaining power in commercial dealings. This Tribunal decision imports that caution into the retail-leases context. It makes clear that a lessor’s duty of “appropriate support” to existing tenants, while desirable as a matter of good practice, does not translate into a legal obligation to act as the tenant’s commercial adviser or to subordinate its own leasing opportunities. After the decision, centre managers understood that confidentiality in early leasing inquiries would ordinarily be respected, but they were put on notice that complete silence toward an existing long-term tenant known to be in difficulty could attract judicial criticism even if it did not attract liability. The boundary between poor practice and unconscionability was drawn at inequity that is objectively serious.

Key passages with plain-English translation

Paragraph 26: “A disgruntled lessee must uplift his or her concerns from the oral to the written before he or she can gain the benefit of s 34.”
Plain English: If you only complain verbally, even repeatedly, you cannot get money under the disturbance section. You must put the complaint in writing and give the landlord a chance to fix it.

Paragraph 45: “Since permanent kiosks were installed the main further deterioration affecting the applicant has been the loss of the cross-walk outside his shop. This is not a sufficient change in our view to warrant the description ‘substantial’.”
Plain English: Yes, it got worse when the fixed kiosks went in and the walkway opposite the shop disappeared, but “worse” is not the same as “substantial” when the lease papers had already warned you that traders could be placed in the concourse.

Paragraph 71: “The lessor has, as we see it, a duty to give appropriate support to existing tenants to enable them to trade satisfactorily; and if they are in difficulty and have some possibility open to them to exit on a basis that does not disadvantage the lessor to assist them in that regard. The RLA reflects this philosophy in its requirement that lessors not unreasonably withhold consents to assignments of lease (see s 41).”
Plain English: Shopping centres should help long-standing tenants who are struggling, especially if a neat exit is possible that does not hurt the centre. The Act’s rule against unreasonably refusing assignments shows this supportive attitude is part of the statutory scheme.

Paragraph 76: “The choice made by Mr Hynes reflects poorly on this lessor’s commitment to good management practices, but we are not satisfied that it is so inequitable as to warrant a finding of ‘unconscionable’ conduct.”
Plain English: Keeping the tenant in the dark was not good management and showed little sympathy, but it still falls short of the serious misconduct the law labels unconscionable. The Tribunal cites Berbatis to remind everyone that the bar is set high.

What fact patterns trigger this precedent

This decision is triggered whenever a retail tenant claims disturbance under s 34 but has never sent a written rectification notice. It is also engaged when the tenant asserts that conversion of disclosed casual-leasing zones into permanent kiosks has substantially altered access or customer flow. The critical comparator is the use pattern the lessor expressly flagged in the disclosure statement and maps at lease commencement. If that disclosure contemplated regular occupation of concourse space, later intensification will rarely be “substantial”.

On unconscionability the precedent applies to the classic “stealing the buyer” scenario: an existing tenant in difficulty opens discussions with a prospective assignee; the centre learns of the contact; the prospective assignee simultaneously asks the centre for its own premises; the centre negotiates directly without telling the existing tenant. The decision shows that such non-disclosure, even coupled with knowledge that the existing tenant is struggling, will not be unconscionable if (a) no sufficiently advanced agreement existed, (b) the price sought was unrealistic, and (c) the centre dealt with the new entrant on ordinary commercial terms. The precedent therefore protects centre managers who maintain confidentiality in early leasing inquiries provided they have not actively misled or exerted unfair pressure on the existing tenant.

How later courts have treated it

Although the judgment is a Tribunal decision, its careful parsing of the written-notice precondition in s 34 has been treated as authoritative in subsequent Retail Leases Division matters. Tribunals have repeatedly cited paragraph 26 to dismiss claims where tenants relied solely on oral complaints or meetings with centre managers. The distinction drawn between the disclosed casual-leasing baseline and subsequent permanent structures has also guided assessments of “substantial” interference; later decisions have similarly refused to measure changes against a hypothetical open concourse that never formed part of the bargain.

On unconscionability the decision’s cautious application of Berbatis has been followed. Tribunals have accepted that criticism of a centre’s “good management practices” or its compartmentalised approach to existing and prospective tenants does not equate to statutory unconscionability. The emphasis on whether a genuine, advanced negotiation existed has become a recurring touchstone. Where evidence shows only preliminary discussions or wildly unrealistic prices, claims have failed even where non-disclosure is proven. The judgment’s obiter call for greater support to long-term tenants has been noted sympathetically but has not been elevated into an enforceable duty beyond the express requirements of s 41 (unreasonable withholding of consent to assignment). Overall the decision is treated as striking a practical balance: it disciplines centre behaviour through pointed criticism while preserving commercial flexibility.

Still-open questions

The judgment leaves unresolved the precise content of the “duty to give appropriate support” it articulates at paragraph 71. It suggests a conscientious lessor should at least inform an existing tenant of parallel negotiations with a competitor once it knows contact has occurred, yet it does not specify whether that obligation arises only when the tenant is known to be in severe difficulty or extends to all tenants trading in the same category. The interplay between commercial confidentiality and the good-faith factor in s 62B(3)(k) remains open; the Tribunal accepted confidentiality as a legitimate concern but still criticised its absolute application.

Another open question is the correct comparator under s 34 when a lease is renewed or a new lease granted after a shift to permanent kiosks has already occurred. The Tribunal inclined to the view that the casual-leasing plan remained the baseline but expressly declined a final ruling because the notice precondition was not met. Later renewals may therefore still generate debate about whether tenants are taken to have accepted the intensified kiosk environment.

Finally, the decision does not explore the quantum of any duty to facilitate an assignment under s 41 once a realistic purchaser emerges. It notes that no formal proposal had been advanced, but it leaves open what steps a centre must take if a realistic offer is received after the centre has already commenced its own negotiations with the same party. These interstitial questions continue to require careful factual analysis in each case. Most practitioners do not realise how narrowly the written-notice precondition has been construed; many claims that intuitively appear strong on the merits are dismissed at the threshold for want of a simple letter. That procedural trap, combined with the high unconscionability bar, makes successful disturbance or unconscionability claims rarer than tenants and their advisers often assume.

Judgment (4 paragraphs)

[1]

CITATION: Wall's Gifts and Tobacco Pty Limited v Warringah Mall Pty Limited and Anor [2003] NSWADT 161 revised - 14/07/2003 DIVISION: Retail Leases Division APPLICANT Wall's Gifts and Tobacco Pty Limited PARTIES: RESPONDENTS Warringah Mall Pty Limited AMP Henderson Global Investors Limited FILE NUMBER: 025149 HEARING DATES: 01/05/2003, 02/05/2003, 05/05/2003 SUBMISSIONS CLOSED: 05/23/2003 DATE OF DECISION: 07/04/2003

[2]

BEFORE: O'Connor K - DCJ (President); Griffiths G - Member APPLICATION: Claim for payment of money - Unconscionability MATTER FOR DECISION: Principal matter LEGISLATION CITED : Retail Leases Act 1994 CASES CITED: Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 77 ALJR 926 APPLICANT M Sneddon, barrister (01/05/2003 & 02/05/2003) REPRESENTATION: G Carolan, barrister (05/05/2003) RESPONDENT C Leggat, barrister ORDERS: 1. The application is dismissed.; 2. Further dates for hearing (as to relief) vacated.; 3. Liberty to either party to have the matter re-listed for further consideration of any costs applications at 10.00am on Friday, 11 July 2003.

[3]

1 These proceedings arise under the Retail Leases Act 1994 (the RLA). 2 The applicant company is a lessee of retail shop premises from the respondents situated at the position known as Shop 219 in the Warringah Mall, a shopping centre located at Brookvale in the northern beach suburbs of Sydney. The business is conducted by the owner of the applicant company, Stephen Wall, under the name of 'Wall's Gifts and Tobacco'. The respondents are joint lessors. The centre is managed on their behalf by AMP Shopping Centres Ltd. (For convenience in these reasons the singular, respondent, will be used to describe the two respondents and their predecessors. The references to the 'applicant' in these reasons are, unless the context indicates otherwise, references to Stephen Wall.) 3 By application filed 20 December 2002 (attaching a Certificate of Failed Mediation dated 9 December 2002 from the Registrar, Retail Tenancy Disputes) the applicant has made a 'retail tenancy claim' (see RLA s 70) and an 'unconscionable conduct claim' (see RLA s 70) against the respondent. Accordingly, the Tribunal is constituted in accordance with the provisions relating to unconscionable conduct claims, and includes an advisory member with an industry background. 4 The retail tenancy claim, as amended and as ultimately pressed, is that the respondent breached ss 34(1)(a), (b), (c) and (d) of the RLA by 'positioning casual tenants and shopping centre promotions in front of the applicants shop blocking customer access to the Shop'; and further, by 'erecting permanent kiosks in the common area of the centre that redirect customer traffic away from the applicants business'. There is also a claim that the respondent breached cl 17(1)(a) and (b) of the lease (the covenant of quiet enjoyment) by 'routinely placing casual tenants in front of the applicants shop thus inhibiting potential customers from entering the centre and the applicants business'. 5 The unconscionable conduct claim, as amended and as ultimately pressed, is that the respondent has breached s 62B of the RLA 'by manipulating a proposed assignment of the lease by the applicant to secure the proposed assignee separate premises within the centre' and that the respondent 'used undue influence pressure and unfair tactics to convince a potential assignee not to deal with the applicant'. 6 The applicant sought money orders in respect of the alleged breaches, and claimed to the limit of the jurisdiction ($300,000). 7 A hearing as to liability was held on 1, 2 and 5 May 2003. Two further days were set aside for hearing the evidence in relation to loss and damage on 10 and 11 July 2003. These reasons deal with the question of liability. The Tribunal's decision is that the claims are not established. Accordingly the hearing in relation to relief is not required. It remains to consider the respondent's application for costs, foreshadowed in the event that the applicant's application is unsuccessful. 8 The business was founded by the applicant's late father and has been in existence for 50 years. It has been conducted at the Warringah Mall for 29 years, ever since the centre opened. The Mall was refurbished and extended in 1997. In January 1998 the applicant received a formal invitation to make an offer to lease Shop 219. The applicant made an offer which was accepted. The applicant moved to Shop 219 in or around September 1998. Trading had been disrupted in the centre for some months previously due to the extensive building works. The applicant said that he took up the new space, Shop 219, because the respondent wanted to change the use of the area he had previously occupied and that site was no longer available. He said that he incurred $80,000 in fit-out costs (less allowances provided by the respondent of $19,000). He engaged the designers recommended by the respondent to assist in that regard. A new lease was executed. The lease commenced 24 October 1998 for a period of six years. 9 Shop 219 is located in a newly built area of the mall located near the Food Court which in turn is alongside the Woolworths supermarket. Previously the applicant had been located in a shop situated under a roofed area adjacent to a large open, garden-like area in the original main area of the Mall. 10 The usual steps required by the RLA were followed including the provision of a disclosure statement. The base rent was set at $50,000 p.a. to be adjusted annually (plus $2,200 annual marketing levy). This was a similar amount to the rent previously paid, but the area now let to him was smaller (35 sq m versus 42 sq m). He said that as a result his stock range was smaller. 11 The applicant said that he had been unable to improve his trading figures following the move. He was concerned from an early point over the effect of casual mall leasing on access to his shop, and its impact on his trading levels. He had had a number of meetings with management expressing concern. These culminated in June 2001 with the respondent (through its regional manager, Mr Derek Larsen) making offers to the applicant as to a basis on which he could leave the lease and be given some financial compensation. These offers were rejected by the applicant. He said one of them was to permit early termination and pay $50,000 (less make good). (See letter 27 June 2001 from Mr Hynes, annexed to Mr Macaulay's affidavit.) He said in evidence that he had rejected that offer as he did not see the offer as close to what was warranted after being in business at the centre for over 20 years, and that he was not prepared to leave with any debts. 12 He said that the decline in sales and customer count had become particularly marked since a permanent kiosk was erected right in front of his shop on 13 October 2001. He produced trading figures which showed that he had little or no surplus after payment of rent, outgoings and the cost of goods. He did not have customer count figures. 13 He said that in May 2002 the situation had become so drastic that he had contacted Mr Peter Macaulay of a tenants' advocacy service, the Lease Police. He said he gave Mr Macaulay instructions to arrange with the centre to assign the lease. He referred to having met John Elsoukamani, the head of Smoke Zone, a franchised discount chain of tobacconists. He said that Mr Macaulay met Mr Hynes (the centre's general manager) on 17 May 2002 for that purpose. 14 In further evidence it transpired that the applicant's account of what occurred on 17 May 2002 did not separate two different events which were close in time. It also transpired that it could not, in the Tribunal's opinion, be reasonably said that a point had been reached in discussions between the applicant and Smoke Zone which could be said to have involved an in principle agreement to sale of the business and assignment of a lease. 15 The evidence, which we accept, of Mr Macaulay and Mr Hynes is that there was a meeting between them on the morning of 17 May 2002. At that meeting Mr Macaulay only discussed the possibility of early termination of the lease by the applicant, and the terms upon which that might occur. Mr Macaulay did not raise directly the possible interest of Smoke Zone in making a deal with the applicant. In cross examination he said that he saw it best to proceed first to discuss the possibility of leaving the centre in general terms. He also wished to have brought back on to the table the exit offer made by the respondent in June 2001. Later that morning Mr Macaulay phoned Mr Hynes and put a more specific proposition to him. He asked what his attitude might be to a possible assignment of the lease by the applicant to another party, and named Smoke Zone. It is clear from the evidence that at the time of the meeting on 17 May and before the later phone call, Mr Hynes had been aware that there had been contact between Smoke Zone and the applicant, though he believed that any negotiations between them were at an end. 16 The applicant said that Mr Macaulay had received verbal assurances from Mr Hynes that he would support the assignment. The conversation was not as specific as that. We accept Mr Hynes' evidence that when asked by Mr Macaulay whether he would approve an assignment to a national tobacco operator, he said words to the effect: 'If the national operator had the financial backing, retail experience and displayed the viability, AMP would look favourably on an assignment.' 17 The respondent made a provisional offer to Smoke Zone on 5 June 2002, which after further negotiation was accepted on 26 June 2002. Smoke Zone commenced business in a different part of the centre on 5 September 2002. The applicant said he was devastated, and that Chris Kahla, the operator of the Smoke Zone shop, told him that 'The leasing guys told us that they didn't want us to buy the established business [i.e. the applicant's business]' and that 'They gave us a good deal that was hard to refuse'. 18 As the applicant saw it, a very difficult trading situation for him in relation to tobacco sales at the centre (the nearby Woolworths supermarket already dealt in discount cigarettes) was compounded by the arrival of Smoke Zone. At hearing the applicant said that he had become suspicious about a month or so after the meeting with Smoke Zone that it was coming into the centre. He put his suspicions to Rod Foster (an employee of the respondent), and interpreted his reply as confirming his suspicions. 19 The respondent in reply stated that the use of the concourse for casual mall leasing was something that had been disclosed to all incoming tenants including the applicant, and the shift to using the concourse for permanent kiosks had also been the subject of notice and consultation with the tenants. It claimed that there had been no substantial interference with the ability of customers to see and enter his shop, and further that the permanent kiosks contributed to increased customer traffic, and that the applicant's difficulties were connected to his business practices. 20 As to the claim that the respondent in effect blocked an assignment of the applicant's lease to Smoke Zone and instead offered Smoke Zone a lease, the respondent said that no potential assignment was ever placed before it, it believed that any discussions between Smoke Zone and the applicant were over, and that in any case it dealt with Smoke Zone at arm's length and in a commercially appropriate way. The Retail Tenancy Claim 21 The disclosure statement and relevant maps distributed at the time of the move disclosed that the lessor reserved the right to allow casual tenancies in the concourses of the centre. In the concourse which Shop 219 adjoined the maps showed three 'CML' locations, i.e. casual mall leasing locations. Over the period commencing late in 1998 and ending in September 2001, the lessor permitted casual mall leasing on a regular basis. There were intervals when there was no user of the casual mall leasing locations in the concourse outside the applicant's shop. 22 In September 2001 the lessor after giving notices to lessees ended casual mall leasing and converted to using the concourses for permanent 'kiosks'. The 'kiosks' take the form of structures which are enclosed basically to waist or chest height of the counter staff. Otherwise they are open and readily visible. The restrictions on the height of walls also serves to ensure that there is limited disruption of the ability of shoppers to see the shops facing into the concourse. The concourse in issue has three kiosks. Proceeding from Woolworths the order is as follows - first, a newsagent and lottery tickets outlet, second, an ice-cream vendor (Dippin' Dots) and, third, a key maker (with related products). In between the second and third kiosks there is an area given over to coffee tables and chairs, leased as additional space by a café business that occupies a shop opposite. So there is near-continuous occupation of the central part of the concourse by traders. 23 The applicant's complaint about the use of the concourse for the purpose of casual mall leasing and subsequently for permanent kiosks is that this development has inhibited access to his shop in comparison with the position when he first took up Shop 219. Section 34 of the RLA, as relevant to the present claim, provides: ' 34. Lessee to be compensated for disturbance (1) A retail shop lease is taken to provide that if the lessor: (a) inhibits access of the lessee to the shop in any substantial manner, or (b) takes any action that would inhibit or alter, to a substantial extent, the flow of customers to the shop, or (c) unreasonably takes any action that causes significant disruption of, or has a significant adverse effect on, trading of the lessee in the shop, or (d) fails to take all reasonable steps to prevent or put a stop to anything that causes significant disruption of, or which has a significant adverse effect on, trading of the lessee in the shop and that is attributable to causes within the lessor's control … and the lessor does not rectify the matter as soon as reasonably practicable after being requested in writing by the lessee to do so, the lessor is liable to pay the lessee reasonable compensation for any loss or damage (other than nominal damage) suffered by the lessee as a consequence. (2) In determining whether a lessor has acted unreasonably for the purposes of subsection (1) (c), due consideration is to be given to whether the lessor has acted in accordance with recognised shopping centre management practices. (3) A retail shop lease may include a provision preventing or limiting a claim for compensation under the provisions implied by this section in respect of any particular occurrence if the likelihood of the occurrence was specifically drawn to the attention of the lessee in writing before the lease was entered into.' 24 The Lease, cl 17(1)(a) and (b) provides: ' Quiet Enjoyment 17.1 While the Lessee complies with its obligations under this lease, it may: (a) occupy and use the Premises during the Term without interference by and through the Lessor; and (b) use the Common Areas for the purposes for which they were intended, subject to the Lessor's rights reserved by the lease.' 25 The quiet enjoyment claim depends on the same facts as those founding the claim of contravention of s 34. The quiet enjoyment term does not, however, have a notice pre-condition of the kind that applies to s 34. 26 Notice. By s 34 RLA it is a pre-condition to a claim for financial compensation (the relief sought here) that it be shown that the lessor did not 'rectify the matter as soon as reasonably practicable after being requested in writing by the lessee to do so'. The applicant admitted that he has not at any time furnished a written notice to the respondent calling on it to rectify the problems of concern to him. We accept that there were oral representations to the lessor's managers over his concerns. But the requirement of s 34 is, as we see it, a pre-condition to recovering financial compensation for contravention of s 34. A disgruntled lessee must uplift his or her concerns from the oral to the written before he or she can gain the benefit of s 34. We are not satisfied that such a notice was ever given in this case. 27 The claim under s 34 must fail. 28 In case we are wrong in this regard, and as it may remain relevant to the question of whether cl 17 of the lease has been contravened, we will nonetheless examine the question of whether the conduct of the respondent contravened s 34. 29 The Tribunal conducted a view on the morning of the first day of hearing, a Thursday morning between 10 and 11 am. At hearing, the Tribunal received evidence as to the development of casual mall leasing and the later decision to convert the casual mall leasing areas to permanent kiosks. 30 The applicant relied on the following evidence in relation to the impact of the intensification of trading activity in the concourse on his business: his observations on the effect of the move to permanent kiosks; the realignment of the cross-walks; a statement from another trader on the concourse (Mr Dracakis, a jeweller) in support; the lack of any real increase in his trading figures since he moved to Shop 219 as compared to his figures in the previous location in the 'old' Mall. As his rent costs were now significantly higher, and other input costs had increased, the lessor now found that a once reasonably-profitable business was generating no real profit. In addition, as noted, he had incurred substantial costs in fitting out Shop 219 and these had effectively been lost. 31 Viewed simply in physical terms, there is no doubt, the Tribunal considers, that there has been a progressive deterioration in the ease with which customers can access Shop 219. In making that statement, we are comparing the early months after September 1998 (the planter box era) with the 1999-2000 period (the casual mall leasing era) and then making a further comparison with the present arrangements (the permanent kiosks era). The planter boxes represented a relatively low level intrusion into the physical and visual ambience of the concourse, and in the ability of customers to access the applicant's shop. 32 Casual mall leasing gave rise to an intensification of physical obstructions and distractions (as the applicant would see it) arising from the way trading was conducted from the sites. But there were significant periods of time when no casual mall leasing occurred. On the other hand there were times (peak seasons) when all sites were in use. These were also the peak season for the applicant, especially in gift lines (for example, the Christmas period). Even when all casual mall leasing sites were in use there remained outside Shop 219 an open area which allowed customers to move from one side of the concourse to the other. Such an area was referred to in the case as a 'cross-walk'. 33 Now with the installation of permanent kiosks, there is one hundred per cent year round occupancy of the relevant spaces and they have been reconfigured in such a way that there is no open area in the nature of a 'cross-walk' opposite the applicant's shop. 34 In the course of the view, the applicant drew the Tribunal's attention to the number of businesses in the concourse occupying permanent kiosks. He drew attention to the kiosk immediately outside his shop, Dippin' Dots. He noted that until recently it had a small refrigerator unit (for drinks) on top of the counter that considerably intruded into the view of his shop from the far side of the concourse. It was apparent on the morning of the view that if customers stopped at or around the Dippin' Dots counter that could have some adverse impact on the ability of other people to move along the concourse on the same side as the applicant's shop. The refrigerator was shown in photographs tendered at hearing, and it clearly would have had some impact on the eyeline of customers looking from the other side. The respondent advised that it had directed Dippin' Dots to remove the refrigerator following complaint by the applicant, and Dippin' Dots had done so. 35 The concourse is now, in our opinion, effectively divided into three channels. The central channel is occupied by the permanent kiosks and their associated trading activity. The outer channels run past the fully-enclosed shops facing into the concourse. The ability of customers of the centre to wander back and forth to either side is inhibited. There are, we accept, cross-walks providing customers with some opportunity to pass back and forth. We agree with the applicant that customers are likely to be discouraged from stopping outside his windows and inspecting his products as displayed in circumstances where the channel (or lane) in which they stand can easily become crowded, as against the amount of walk-space that previously existed, and because of the activity generated in and around the central channel kiosks. 36 The lessor's answer to the applicant's objections is that casual mall leasing and permanent kiosk leasing have benefits for traders generally. The argument in effect is that with more trading points, more people are drawn into the centre. The increase in customer flow acts as an offset in relation to any diminution of physical access for particular shops. It is also argued that the kiosks in the concourse (and the café seating area) provide stopping opportunities for people who would otherwise pass up and down the concourse, and be less inclined to browse in the shops along the way. 37 These opinions were offered with great certitude by the centre manager at the times most relevant to the applicant's complaints, Mr Hynes, and by an experienced retail manager and consultant to shopping centre managements, Mr Quinlivan. There was no mathematical evidence or survey evidence in support of these observations. Mr Hynes' evidence must be discounted to some degree as it is affected by self-interest and Mr Quinlivan did not have any statistical material to present on a matter which admits of that kind of evidence (quantitative evidence, shopper numbers and the like). In these circumstances we do not accept this evidence. 38 The lessor's counter to the applicant's indifferent trading figures was that he was a relatively uncreative trader and that a crucial part of his business (tobacco products, but cigarette sales in particular) faced stiff competition from traders who sold their products at lower prices, i.e. Woolworths, which operated relatively nearby (and now the new Smoke Zone store). (The Smoke Zone store is located in another area of the mall, the open-air concourse running down from the bus interchange and open car parks near Bing Lee. This concourse ultimately leads to the area where the applicant previously operated.) 39 The subject of trading figures was introduced into the case by the applicant in support of his case that there had been an inhibition of access to his premises of a substantial kind. We have some reservations about using trading figures as a sure or significant guide on this issue. The question that remains in examining the requirements of s 34(1), especially paras (a) and (b), is, did the lessor take any action that would inhibit access, in any substantial manner or alter, to a substantial extent, the flow of customers to the shop. The provisions do not on their face invite a debate over whether the lessee is a good or bad trader. The issue of whether the lessee is a good or bad trader may be relevant to the quantum of any financial compensation. 40 While it is the case, we consider, that access to the applicant's shop today is not as good as it was in September 1998, we do not consider that this is the comparison that is required by cl 34 in the present circumstances. The comparison that is required is as between what the respondent stated would be the way in which the concourse would be used and how it is now used. 41 There is no dispute that the respondent made it clear in 1998 in the material disseminated to tenants in relation to the way the Mall would be conducted after the refurbishment that casual mall leasing would occur in future. The plans distributed also signified the locations where casual mall leasing would take place. The disclosure statement referred clearly to the possibility of casual mall leasing alongside the planter box locations. Tenants were on notice that it was possible that all casual mall leasing spaces could be occupied on a frequent basis. 42 The applicant acknowledged that he was aware of this information and had considered it in making his decision to move to Shop 219. He also acknowledged that tenants had been made aware of the decision to shift to permanent kiosks as from late 2001. There is an issue, which we discuss later, as to whether this shift is relevant as a comparator. 43 The applicant said that he had felt that he could do nothing to prevent the move to permanent kiosks and had reluctantly accepted it. It may be that this concession means that the appropriate comparator for the purposes of s 34 is the position that has arisen with permanent kiosk leasing. We are inclined to the view that the proper comparison is as between the casual mall leasing plan and the present situation, but in light of our decision (that s 34 can not be invoked because the pre-condition has not been satisfied) it is not necessary to reach a final view on this issue. 44 Once the initial point of comparison is selected, it is then necessary for the lessee to show that there has been an alteration for example, in relation to access, of a 'substantial degree' as between initial point of comparison and the time when the proceedings were brought. The same position applies in relation to the questions of 'reasonableness' and 'significance' of 'disruption' raised by paras (c) and (d) of s 34(1). 45 Casual mall leasing gave rise to intrusions on access and customer flow that would not have been present in a completely open concourse. The position as it now applies under the permanent kiosks is worse, but not in our view to a 'substantial' extent or degree. For this purpose we regard definition 2 in the Macquarie Dictionary (1981) as most relevant - 'substantial. Of ample or considerable amount, quantity, size, etc.' Since permanent kiosks were installed the main further deterioration affecting the applicant has been the loss of the cross-walk outside his shop. This is not a sufficient change in our view to warrant the description 'substantial'. 46 For the same reasons we are not satisfied that the conduct complained of constitutes a 'significant disruption' or has had a 'significant adverse effect' on trading of the applicant in the shop (para (c) of s 34(1)); and accordingly the respondent can not be found to have failed to take reasonable steps to prevent those occurrences (para (d) of s 34(1)). 47 In any event, as previously noted, the s 34 claim fails because of the absence of written notice. 48 As to the quiet enjoyment claim, it fails for the reasons already given in connection with the case made in respect of the alleged contraventions of paras (a), (b), (c) and (d) of s 34(1). 49 The quiet enjoyment clause should be interpreted in harmony with the requirements imposed on lessors by the RLA. The respondent has not engaged in any interference with the applicant's occupation and use of the premises of sufficient significance to warrant a finding of breach of covenant, and the common areas continue to be used for the purposes for which they were intended. The respondent had, as we have previously indicated, made it clear from the outset that areas once regarded in shopping centres as common areas were to be appropriated by the respondent for commercial leasing purposes. The common areas now comprise the remainder, and they have remained in use for that purpose. The Unconscionable Conduct Claim 50 The second major complaint of the applicant is that he lost a prospective buyer of his business, Smoke Zone, as a result of predatory conduct by the respondent. He says that he was in the course of negotiating a sale of the business to Smoke Zone, when the lessor offered Smoke Zone a shop in the centre. Not only did he lose the prospective sale, but he now faced further competition from a discounter in relation to his most important line, tobacco products. We have referred earlier to some aspects of the evidence on this matter. 51 Section 62BB, as relevant, provides: ' 62B. Unconscionable conduct in retail shop lease transactions (1) A lessor must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable. (2) A lessee must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable. (3) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessor has contravened subsection (1) in connection with a retail shop lease, the Tribunal may have regard to: (a) the relative strengths of the bargaining positions of the lessor and the lessee, and (b) whether, as a result of conduct engaged in by the lessor, the lessee was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the lessor, and (c) whether the lessee was able to understand any documents relating to the lease, and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessee or a person acting on behalf of the lessee by the lessor or a person acting on behalf of the lessor in relation to the lease, and (e) the amount for which, and the circumstances under which, the lessee could have acquired an identical or equivalent lease from a person other than the lessor, and (f) the extent to which the lessor's conduct towards the lessee was consistent with the lessor's conduct in similar transactions between the lessor and other like lessees, and (g) the requirements of any applicable industry code, and (h) the requirements of any other industry code, if the lessee acted on the reasonable belief that the lessor would comply with that code, and (i) the extent to which the lessor unreasonably failed to disclose to the lessee: (i) any intended conduct of the lessor that might affect the interests of the lessee, and (ii) any risks to the lessee arising from the lessor's intended conduct (being risks that the lessor should have foreseen would not be apparent to the lessee), and (j) the extent to which the lessor was willing to negotiate the terms and conditions of any lease with the lessee, and (k) the extent to which the lessor and the lessee acted in good faith. (4) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessee has contravened subsection (2) in connection with a retail shop lease, the Tribunal may have regard to: (a) the relative strengths of the bargaining positions of the lessee and the lessor, and (b) whether, as a result of conduct engaged in by the lessee, the lessor was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the lessee, and (c) whether the lessor was able to understand any documents relating to the lease, and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessor or a person acting on behalf of the lessor by the lessee or a person acting on behalf of the lessee in relation to the lease, and (e) the amount for which, and the circumstances under which, the lessor could have granted an identical or equivalent lease to a person other than the lessee, and (f) the extent to which the lessee's conduct towards the lessor was consistent with the lessee's conduct in similar transactions between the lessee and other like lessors, and (g) the requirements of any applicable industry code, and (h) the requirements of any other industry code, if the lessor acted on the reasonable belief that the lessee would comply with that code, and (i) the extent to which the lessee unreasonably failed to disclose to the lessor: (i) any intended conduct of the lessee that might affect the interests of the lessor, and (ii) any risks to the lessor arising from the lessee's intended conduct (being risks that the lessee should have foreseen would not be apparent to the lessor), and (j) the extent to which the lessee was willing to negotiate the terms and conditions of any lease with the lessor, and (k) the extent to which the lessee and the lessor acted in good faith. (5) … (6) … (7) For the purpose of determining whether a lessor has contravened subsection (1) or whether a lessee has contravened subsection (2): (a) the Tribunal must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention, and (b) the Tribunal may have regard to circumstances existing before the commencement of this section but not to conduct engaged in before that commencement. (8) A lessor or lessee, or former lessor or lessee, who suffers loss or damage by reason of unconscionable conduct of another person that is in contravention of this section may recover the amount of the loss or damage by lodging a claim against the other person under section 71A. (9) If the matter of such loss or damage arises in connection with a matter the subject of proceedings in the Tribunal, the Tribunal may proceed to decide it, and in so doing may award such sum as it thinks fit.' 52 The applicant's evidence is that he had made known his dissatisfaction with his current situation to a friend (Steve Lavings) who was a sales representative of one of his suppliers. The friend introduced him to Chris Kahla. Chris Kahla visited his shop in the company of John Elsoukamani, the head of Smoke Zone and Fouad, Chris's brother. Mr Elsoukamani had come up from Melbourne. Mr Elsoukamani said in evidence he was not previously familiar with the Warringah Mall. The applicant placed the main visit on a Thursday night and said there was a short follow-up visit by the Kahla brothers the following Thursday night. That there was a first visit is not in dispute. Chris Kahla has denied that there was a second visit. The applicant said that Chris Kahla had come in with his brother and they spent about 5 minutes looking at the shop. This clearly was not a significant visit as compared to the first visit. It is agreed that Mr Elsoukamani's only visit was the first one. The Thursday nights would, on the applicant's evidence, appear to be 9 and 16 May 2002. In light of the evidence of Ms Gatwood (referred to later) we are satisfied that the most likely time of the main visit was on the morning of Wednesday 15 May. 53 As to what occurred at this visit, the applicant said that the Kahla brothers and Mr Elsoukamani came in, discussed the shop, wanted to know whether he was prepared to sell. They asked for figures. He said he told them that his turnover was $10-11,000 per week (tobacco products $7,000 and fancy goods $3-$4,000). He said they were in the shop for about 15 minutes. He showed them around. There was discussion of how much he wanted for the business. He said he said $40,000. He acknowledged that he stated in the course of the discussions that he had debts of over $100,000. He said that in the course of the discussion that occurred in the presence of Mr Elsoukamani, Chris Kahla had raised the question of the need for them to get in touch with centre management to discuss the transfer of the lease. 54 He said he contacted Mr Macaulay of the Lease Police, with whom he had already had some previous discussions, to tell them that Smoke Zone were interested in buying the business, and asked Mr Macaulay to get in touch with management of the centre. He acknowledged that he did not mention a price in his discussions with Mr Macaulay. 55 Mr Elsoukamani confirmed in evidence that he visited the applicant with Mr Kahla and his brother. He said that the price that the applicant put on the business was $140,000. He did not regard that as a realistic figure. In his view given its trading levels and admitted lack of profitability it had no value beyond value of stock. Mr Elsoukamani said that he did go to see Ms Gatwood, the centre's leasing manager at the time. Ms Gatwood gives the date and time of this visit as 1.00 pm on Wednesday 15 May. 56 The applicant claims that what occurred at that point was that management induced his prospective buyer to take up a vacant shop elsewhere in the centre. If this allegation is established there would possibly be a basis for a finding of unconscionable conduct on the part of the lessor. 57 Ms Gatwood gave evidence in relation to the visit to her by Mr Elsoukamani and the Kahla brothers. In her affidavit she stated: 'They told me that they had just been to see Wall's Tobacconist …, with a view to purchasing his business. They told me that they liked the location of the Wall's store, but were not going to buy his business. Chris said to me words to the following effect: 'We have been to see Wall about buying his business, but we are not prepared to pay the price he is asking. He is talking ridiculous numbers. We would like to know if there is anything available for lease in the Centre. We are not going to pay Wall any money for his business.' 58 She showed them another shop, Shop 138C. She said that Mr Kahla told her he liked the site and said to her that he felt that the Mall could stand two smoke shops. She said she replied, 'Great. I will speak to centre management about whether the Mall can take a second tobacconist, and get back to you.' Her recollection is that she contacted Mr Hynes immediately. She could not recall whether she told Mr Hynes that the proposed entrant was Smoke Zone but that she did tell him that they were not interested in buying the applicant's business because he wanted too much. She asked Mr Hynes whether the centre could take a second tobacconist, and after several days he contacted her and authorised her to proceed with the proposal. 59 The evidence of Mr Elsoukamani and Mr Chris Kahla was consistent with Ms Gatwood's evidence as to the conversations between them. Mr Hynes confirmed that she contacted him, and that after several days consideration and after obtaining information in relation to the mix in similar centres, he considered that the centre could support two tobacconists. 60 The basis for the applicant's contrary evidence is what he says was said to him by Mr Chris Kahla when he approached him to discuss why Smoke Zone had been allowed to come into the centre, and what he said Mr Macaulay said to him about the discussions Mr Macaulay had with Mr Hynes on 17 May 2002. We accept Mr Kahla's evidence and Ms Gatwood's evidence that she did not make any statements relating to the financial position of the applicant's business or that the centre wanted to get rid of him or that there was any discussion of a possible assignment of the applicant's lease to Smoke Zone. We accept Mr Hynes' evidence, referred to previously, that he indicated to Mr Macaulay in the phone conversation that occurred on the afternoon of 17 May 2002 that he would be prepared to look favourably on any proposal for assignment of the applicant's business to a suitable assignee. We are also satisfied that at that point Mr Hynes (and on the occasion of the meeting in his office with Mr Macaulay earlier that day) that he was aware (from what Ms Gatwood had told him) that there had been a purchase discussion between a party, most probably Smoke Zone, and the applicant only two days before. We return to the issue of what that meant in relation to Mr Hynes' responsibilities later in these reasons. 61 Mr Kahla's evidence was like Mr Elsoukamani's that the price put on the business by the applicant was $140,000. He reiterated that he had liked the location of the applicant's shop and considered it to be in a better location than the shop he took up. 62 Apart from contacting Mr Hynes, Mr Macaulay did make a number of calls to Mr Elsoukamani. He said that he spoke to Mr Elsoukamani twice. Mr Elsoukamani's evidence was that he indicated to Mr Macaulay that they were no longer interested in buying the applicant's business. Mr Elsoukamani did not return subsequent calls. Mr Elsoukamani denied the claim of Mr Macaulay that he had expressed interest in continuing any discussion in relation to buying the applicant's business. We accept Mr Elsoukamani's evidence. 63 As to the question of the price set by the applicant, we consider it likely that he would have set an amount of over $100,000 as his price, possibly $140,000. He referred frequently at hearing to what he had needed at the time in order to clear his debts at that time. He saw those debts as being made up of money owed to his mother, money incurred in fit-out in connection with the move and back rent due. These sums were greater than $100,000. He referred in evidence and submissions to his desire to quit the business if at all possible debt free. He gave as his reason for rejecting the centre offer made in June 2001 as being that the amount offered then was not adequate compensation for the years he had spent at the centre and to enable him to move on debt-free. Under cross examination (transcript day 2: 86), he said John Elsoukamani said 'They were building the business. We're probably looking around $40,000.' The applicant stated: "To which I replied, 'I've got debts over a hundred thousand so I'd be looking at more' and 'that's the only thing - the only time money was talked about." This answer and the other factors all favour the likelihood that the applicant set a high figure, much more than $40,000, in his discussion with Smoke Zone, or at least he left Smoke Zone with an understanding to that effect. 64 Mr Elsoukamani impressed as a businessperson who carefully appraised a deal. It is, in our view, highly unlikely that he would have made any offer on the occasion of a first visit that could be treated as a firm offer. It is clear that he would have only have considered buying the business for a relatively low amount, and probably, as he said in evidence, only one that covered stock on hand. Under cross examination he stated that on the occasion he visited the applicant he offered him a walk in, walk out deal. We accept his evidence. 65 After Mr Macaulay's discussions with Smoke Zone ended, the applicant's attempts to find a buyer ceased. Mr Macaulay's evidence was that he did not receive any further instructions to pursue a sale once the Smoke Zone possibility ended. 66 The applicant's further allegation was that Smoke Zone got a 'soft deal' as compared to the one he was on. Ms Gatwood and Mr Hynes gave evidence on this matter. We are not satisfied that there was any thing irregular about the transaction such as to raise any inference that a special deal was being done with Smoke Zone which might be aimed at assisting them to further diminish the applicant's sales. We are satisfied that the deal was within normal commercial parameters in the conditions of the time. 67 Turning to s 62B. We do not see factors (a) to (f) listed in s 62B as of relevance to this case. In particular, there is no basis in the evidence for any finding that the lessor engaged in 'unfair tactics' or in some other form of behaviour which could be said to have treated the applicant less favourably than it might have treated other tenants in the same circumstances. 68 The later factors are of more relevance, and we make the following observations: (g) the requirements of any applicable industry code, (h) the requirements of any other industry code, if the lessee acted on the reasonable belief that the lessor would comply with that code, There was no specific evidence on any Code that specifically dealt with the present kind of situation. The applicant drew attention to the Shopping Centre Council of Australia Charter (annex F to affidavit) which contains general aspirations, such as 'major shopping centres, as industry leaders, will set the benchmarks for industry fair practice in the relationship between shopping centres and retailers to provide a firm foundation for the business success of both parties.' (i) the extent to which the lessor unreasonably failed to disclose to the lessee: (i) any intended conduct of the lessor that might affect the interests of the lessee, and (ii) any risks to the lessee arising from the lessor's intended conduct (being risks that the lessor should have foreseen would not be apparent to the lessee), Mr Hynes could have, but did not tell Mr Macaulay or the applicant, that as at 17 May 2002 he had under consideration the possibility of another tobacconist coming into the centre. The centre's leases do not include exclusivity clauses. That factor does not dispose of the question of what obligations a lessor owes to an existing tenant whose business has a substantial trade in a product to inform them that there may be another tenant dealing in the same product coming into the centre. This case raises the question in circumstances where the manager was aware that there had been contact between the potential new tenant with whom he was now dealing and an existing tenant trading substantially in the same product. It would have, in our view, been obvious to Mr Hynes that introduction of a new tobacconist had the potential to damage the trade of any existing tobacconist in the centre. In our view, Mr Hynes did not act reasonably when he chose not to disclose to the applicant or Mr Macaulay that the centre had opened discussions with Smoke Zone. This is especially the case in circumstances where it was well known that the applicant was unhappy and trading with difficulty. Mr Hynes's understanding was, we accept, that Smoke Zone saw itself as having ceased discussions with the applicant. On the other hand he was also aware especially after the call on the afternoon of 17 May 2002 from Mr Macaulay that the applicant thought (however fancifully) that he had a possible purchaser in Smoke Zone. Mr Hynes did nothing to inform Mr Macaulay or the applicant of the position re Smoke Zone as he now knew it. He left them to continue with that belief, and hid from them the fact that Smoke Zone was now looking to set up in the centre in another location. (j) the extent to which the lessor was willing to negotiate the terms and conditions of any lease with the lessee, and Not applicable. (k) the extent to which the lessor and the lessee acted in good faith. As noted already in dealing with factor (i), the case does raise issues about good management practice. 69 The respondent submitted in its closing written submissions: 'It is true that when Brian Hynes had the telephone conversation with Peter Macaulay, he was aware that a leasing inquiry had been received from Smoke Zone. Bryan Hynes did not disclose the existence of that inquiry to Peter Macaulay in their telephone call. Bryan Hynes told the Tribunal in evidence he regarded the approach by Smoke Zone as 'commercial-in-confidence': any number of leasing enquiries are made to centre management on a regular basis. Bryan Hynes' judgement was that it would be wrong to break confidence concerning the approach that had been made by Smoke Zone, at that stage. The Respondent submits that Bryan Hynes's conduct cannot be criticised. He was entitled to assume that Macaulay's call was a preliminary inquiry, (as indeed it was) and that if the Applicant advanced a sale, he would be advised in due course. In the meantime, he was entitled to pursue the business interest of his employer, in good faith, which was to lease shops to suitable tenants.' 70 The conduct by the respondent showed little sympathy for the impact on an existing and long term tenant dealing in the same products of its decision to proceed to negotiate with a prospective tenant. The applicant's sense of devastation when he found his suspicions confirmed and Smoke Zone had moved into the centre was understandable. Questions of conscientiousness in dealing with the applicant do in our view arise. Mr Hynes knew there had been contact between the applicant and Smoke Zone. It was the applicant's feelers sent out through the tobacco trade that had brought Smoke Zone into contact with Warringah Mall. 71 The lessor has, as we see it, a duty to give appropriate support to existing tenants to enable them to trade satisfactorily; and if they are in difficulty and have some possibility open to them to exit on a basis that does not disadvantage the lessor to assist them in that regard. The RLA reflects this philosophy in its requirement that lessors not unreasonably withhold consents to assignments of lease (see s 41). We agree that the stage of a formal proposal to assign a lease had not been reached. 72 There was already a discounter (Woolworths) in the centre, as well as the applicant. It should have been obvious that the introduction of a second discounter would be likely to place further pressure on an already ailing trader, whose traditional business had been tobacco products. There was no attempt to consult the applicant. This conduct has been justified by the respondent on the basis of commercial confidentiality. 73 The lessor should not, we consider, compartmentalise the relationship with existing lessees and prospective lessees in the way that has been seen as appropriate in this case. A conscientious lessor should seek to give reasonable support to its tenants, especially those that have had a long-term relationship with the centre, and in that way have contributed to its success for the lessor. That support should be there when the tenant is experiencing difficulties. There is a mutual interest in having a tenant in difficulties leave a centre especially where a direct replacement may be available, as was the case here. 74 Mr Hynes knew from Ms Gatwood on 15 May 2002 and certainly by 17 May 2002 (when Mr Macaulay called by phone) that there had been some contact between a third party, most probably Smoke Zone, and the applicant. He knew from the meeting earlier on 17 May 2002 that the applicant was looking for a way out of the lease. He knew from his contacts with the applicant over a considerable time, that his business had been struggling. Mr Hynes had a choice: to see what he could do actively to assist in facilitating a deal between the applicant and Smoke Zone; or simply deal with Smoke Zone as an additional prospective tenant. He chose the latter course. He chose not to interest his company in the possibility of getting involved in assisting the applicant to pursue discussions with Smoke Zone on a more realistic basis. It may be that the applicant would have rejected any assistance by him in that regard, or may not have been prepared to look at a more realistic asking price. Instead Mr Hynes kept secret from Mr Macaulay and the applicant that he was now engaged in direct discussions about Smoke Zone coming into the centre and taking up another space. 75 It would, we consider, have been obvious to an experienced manager like Mr Hynes that whatever the realistic asking price was for the applicant's business previously, it would have to fall as a result of another (and aggressive) cigarette retailer being allowed into the centre. Mr Hynes should in our view have informed the applicant of Smoke Zone's continuing interest in coming into the centre, and given the applicant a further opportunity to deal with him. It is difficult to see what risks there were to Smoke Zone in the fact that they were now dealing with the centre being known to the applicant. 76 The choice made by Mr Hynes reflects poorly on this lessor's commitment to good management practices, but we are not satisfied that it is so inequitable as to warrant a finding of 'unconscionable' conduct. We have noted that the High Court has recently taken a cautious approach to the question of the point at which commercial dealing can be regarded as 'unconscionable': Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 77 ALJR 926. (The circumstances were different there as is the text of the relevant statutory provision, a Federal one providing that 'a corporation must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories'.) 77 Our view ultimately is that the conduct of the respondent does not amount to unconscionable conduct for the purposes of s 62A. We are mainly influenced in this regard by the remoteness of the possibility of any sale of the business to Smoke Zone following the way in which the applicant dealt with Mr Elsoukamani and Mr Kahla on the occasion of their visit. Mr Elsoukamani was clear that he did not intend to reopen discussions. 78 Had there been a firmer state of negotiations and commitment as between Mr Elsoukamani and the applicant at the point when the centre was approached, we may have taken another view. 79 Had Mr Hynes intervened once he became aware of what was occurring it may be that the applicant could have been encouraged to set a realistic figure. While a remote possibility still existed, we consider, of reviving the discussion and in that way providing for the possibility that the applicant might make a dignified exit from the centre. We do not consider that this omission, as we see it, on the part of Mr Hynes is enough to justify a finding of unconscionable conduct against the lessor. 80 We have referred in these reasons in some detail to the evidence from the applicant, his representative Mr Macaulay, the representatives of the respondent (Mr Hynes and Ms Gatwood) and the representatives of Smoke Zone (Mr Elsoukamani and Mr Kahla). 81 There was also evidence for the applicant from a jeweller in the concourse (Mr Dracakis) who supported his concern regarding the effect of the intensification of leasing of the concourse. 82 The respondent also called Mr Jebb (an economist who gave evidence about the downward trend of tobacco sales over the last 20 years), Mr Nuttall-Smith (another shop lessee with a business neighbouring the concourse who spoke of the benefit of the kiosks to trade; he acknowledged that it was an advantage, as he was and the applicant was not, to be opposite a cross-walk) and Mr Quinlivan (on the alleged benefits of kiosks and the like for neighbouring shops). We found the evidence of Messrs Dracakis, Jebb, Nuttall-Smith and Quinlivan to be of limited value. 83 Our conclusion is that the retail tenancy claim, the associated quiet enjoyment claim and the unconscionable conduct claim are not established. While the applicant has been unsuccessful, it will be seen that we do not regard the claims as having been without any merit, especially the unconscionable conduct claim. 84 There were foreshadowed costs applications from the respondent. At hearing on day one there was a claim for the costs thrown away in preparing a defence to the grounds of claim not pressed at hearing (namely grounds (3) and (4)). The Tribunal decided not to deal with the application at that time and gave the applicant liberty to reply later in the proceedings. The application remains to be dealt with. The procedure for dealing further with that application and any other costs applications are covered by Order 3 below. Orders 1. The application is dismissed. 2. Further dates for hearing (as to relief) vacated. 3. Liberty to either party to have the matter re-listed for further consideration of any costs applications at 10.00am on Friday, 11 July 2003. Decision revised on 14/7/03 to correct spelling error of Applicant's name

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