oo ' i } ' ; ' . an ", ) Wma, Boe ya \ hy Te, FO ai ene vt | s,m "at re" "yp \ pe SP MST TT a Re ae 'eee tae yy bod ey rea: ae ee Oe i De d -- Je Ayniae units AWD: Lpapea tee Respond 1h 8 (4G No. 58 of 1999 PUD: arn, Regie aeeucs (is Ha, § 4 ct aa, Coie. G. oti. 7. ot Dade ef Ayano: 2 yer. uy re reo lyon it Ww The ORR ER Court orders. In ¥G Ne. 58 of 1°60 that the vnoplieaut s elaim Le dasmissed, In VG Me. 59 of 1920 that te anplir- ct's claim be dism:ssed,. That both applicatiens if adjcirren .o & date to be fixed to near even cL tne viore claims against the @pplieanrs ium resp-ci of the'r clotms for amcurts. of r2.u atleyed bs be due Ly Firona Pty. Ltd. Bota these aptisecaiiows te WAaTs oe hear argzumentoon tac atest rom cP costo. iW baa ha Pow PPP sat, COUPT OP _AUSTRAL TS VG No. 5B 0% 19°06 VG No. FG of 1980 GHNORAL DIVTS CH Lil THE BR Tl cla! Practices BETIIEN: FTROMA_FTY. LIVUITED, PHivuh TUTOH wT. and BRVEVLEY LCin4 Tal THEOTORE AND: HERSETELD PALDINGS LINTERD. ant Lei LTP? MORRiSSLY Respongents (VG No. 58 of 1989) RETWEEW: FTRONS PTY. LINTTOD, PFTFR TYECNORE and BEVERLEY LORRE INE THROPGRE Applicants AND: MURTAGONG NOUR RS PP, LIALeRn APR ST Coram: Smitners J. 2 February 1951 2. REASONS TOR JUDOMEWT Tn aetiton VG No. 58 of 1980 Firuna Pty. Lamited a t3 Bh yy " oO ~ (Faron), Icro and Beverley Lorraine Tnheodere ctain ay co im i) rellef again -freid- Holdiaugs Pty. Limw'ea (iersfieid) and Philjap Morrissey under the provisions of the Trede ractices 4et 1974 (the Act) in respect of altered contravert ons of ©.52 and s.53A of the Act constituted by misleading or deeeplive statements made in trad= or commeren by the respondert Morrissey actinr for and on behalf of Hersfield. It 1s alleged that by the said contraventions the applicants suffered loss and damage in that on 28 November 1979 the first named applicant entered unto a lease from the first named respondent of premises known as Shop 92 Deer Park Shopping Centre in the State of Vactorma for a term of two years and rrom 28 November 1979 ana on the same day, the second and third named applicants jointly and severally guaranteed the due performance by Firena of all its covenants and obliguitsons under the lease. Tu action VG No. 59 of 1980 Firona, Peter Theodore and Beverley Lorrazrne Theodore claim relief against Murragong Nominees: Pty. Linated (Murrayon,), Hersficld Development Corporetion Pty. Limited (Hersfield Corpuration), anj E.R. WijJls urneerp ine Aot in respect of allcged contravenirzons of 263. GA and &? A of 4he- 'el eonstituted by 3. misleading and deceptive statements made in trade and ecommerce by the respondent Wills aectirg for and on behalf of Murragong and Hersfield Corporation. It is allered that by the said contraventions the applicants suffered loss and damage in that on 4 December 1979 Firona entered into a lease from Murregong of shop premises known as No. 118 Parkmore/Keysborough Shopping Centre, Cheltenham Road, Keysborough in the State of Victoria for a term of two years commencing on 11 December 1979 and on the same day the applicants Peter Theodore and Beverley Lorraine Theodore jointly and severally guaranteed the due performance by Firona of all its covenants and obligations under the lease. Relief claimed in each of these actions includes damages, reseission of the lease or a declaration that the relevant lease has been rescinded, a declaration that the guarantce has ceased to be enforceable and other relief. jn action VG No. 58 of 1980 Hersfield has instituted a cross claim against the applicants in that proceeding soek1 s —& judgment apainst Firori for rent payable under the lease the subject of that action alleged to be unpaid and against Peter and Beverley Lorraine Theodore for the amount of such rent under the guarantee. In action VG No. 59 of 1980 Murragong has institute? a cross claim against the applicants in that proceedings seeking judgment against Firona for rent payable 4, under whe ease the subjeet of that action allered to be unpaid and against Peter Theodore and Reverley Lorraine Thecdore for the amount of such rent under the puarantec The misleading and decentive conduct of the respendent Nersfield was said to be const:tuted by staterents made by the respondent Morrisscy who was the centre manager for Hersfield as follows, namely, that in or bout August 1979 Merrisaey stated or represented to Teter Theodore that: "(a) the Deer Park Shopping Centre was a geod centre; (b) the Peer Park Shopping Centre wan govnp to become one of the most successful shorping centres in tne west2rn suburbs; (c) If the first named applicant did not sirn the said lease the first named respondent had another blind firm who wanted to take 4t immediately and thet 1t was the only shop left in the Centre and af the lteane was not signed and delivered immediately, he, Morrissey, would have ne option but to arrenge for Hersfield to let 1t." The misleading and deceptive conduct of the responderts Murragong and Hersfield Corporation said io be constituted by statements of the respondent WiJ]18 were as follows, namely, that in or about November 14979 WiljJs, an estate agent acting for Nurragong and Hersfield Corpcration, stated to one Dean a servant of Farona that if thio losse for the shop at Parkmore was not signed by Tirona and returned with @ payment within forty-c1ght hours tre promises wonld be let t) someone e:se becatse all the «tan. shops in the ame nen Me ow Leen mesene pee we we ns en artes ace nee en UN A ie Bal Parkmore Shopping Centre had been Leased. In the end ait became clear thet, for reasons referred to below, the applicants are entitica to relief an action VG No. 58 of 1980 if and only :f they satisfy the Court, as on a balance of probability that Murrirscy stated to the applicent Peter Theodore (Theedor?) 1n Soverber (not August) 1979, in effect, that, shop No. 972 was the only shop in the centre not then let to a tenant, that that statement was untrue, that it was believed by Theceore and was an operative infiuence upon his mind in the making of his decision that Firons would enter arto the lease and that he and Mrs. Theodore would enter into the guarantee. So far as action VG No. 59 of 1°86 1s concerned re is clear that to succeed the applicants must sitarfy the Court, as on a balance of probabil-ty, that ain or about Noverber 1979 .the respondent Wills stated to Mr. Dean iu effect that all the shops in the centre bed been It io tenants, that that statement was believed by Theodore and was an operative influence upon his miné@ in the nelking of kis decision that Firona would enter into the lease and thai. he and Mrs. Theodore would enter into the fuerintee. In neither case is 1t necessary for the annlieants to preve that the makine of the erit.ca! statements vas fraudulent, as opposed to misieadsng or doreptive consuct. 6. Hereafter in these reasons references to fraud are made vith recognitior of this faeter. Tt may be mentioned however, that in the case of both Morrissey and Wills the erirtieal statements if made by them would have been made with the knowledge of their untruth. Morrissey and Wills each denv having made the critical statements attributed to them. Mr. Theodore is a director of Firona which carries on business as a manufacturer, retailer and installer of blinds, mostly for residential winaow pretection. It earrics on part of its business under the firm name of Alpha Blinds Company. it has been in business for a considerable number of years. It has many employees and its turnover is approximately some two million dollars. Mr. Theodore hims-1f has other business and private interests of considerable value and admits to being what was called "a vealthy man". He is a successful self made man with business acumen ard expertrence, , In about June 1979 it came to his notice that three shopping ceutres were being constructed in the environs of Melbourne. One was near Lilydale and was callec Chirnside Park, One was near Dandenong and was called Parkmore. This centre was an cxicnston of an existing centre. The third was called Deer Park end was near Sunshine in the State o. Victoria. In June 1979 Firona already occupied six shop premises in Melbourne suburbs. It conducted business fron those shops by securing the services of persons whose function it was, by themselves, their wives or employees, to man the shops. The person engaged in respect of each shop would receive orders from customers for blinds to be supplied and fitted at their premises, attend at the customer's premises, measure the windows, have the blinds made to the proper size and ensure they were supplied and fitted. He woula thereby become entitled to a commission payable to him by Firona. In about June 1979 Mr. Theodore became interested in the idea of acquiring additional shop premises to be operated according to Firona's established methods. He said that he entertained the idea only very tentatively. More interest was prompted however by a conversation between Theodore and one Mickles who was well known to Theodore and was manager of the Parkmore shopping centre. This; was a project of the. respondent Murragong. The original centre called Parkmore had been opened some t'ne before this conversation and this was known to Theodore. His company had a stand there auring a promotion week eurly in 1979 and the "promotion" was quite successful. The project mentioned by Mickles to Theodore was an extension of the original centre and was called "the Market Stage". Mr. Miekles told Mr. Theodore that one Wills was the letting agent for the Parkmore project. ee As a result of his quickening interest in this new centre Mr. Theodore instructed his marketing manager, one John Dean to visit Mr. Wills. Mr. Pean called on Mr. Wills who hed an office at 520 Collins Street, in the same building and on the same floor as the office of the respoadert Hersfield. There was some business association hetween Murragong and Hersfield. Mr. Wills proiuced a plen of the Parkmore centre whereupon Mr. Dean selected a shop site out of approximately one hudred set out on the plan and signed a form of applacattion on behalf of Firena for a lease of that site. The form of application identified the site, stated the area thereof, the term of the proposed lease, and the rent. On this visit to Mr. Wills, Mr. Dean learned that the shopping centres at Deer Park and Chirnside Park vould oper in a few months. In connection with these projcets he vas referred to another office on the same floor as thet of Mr. Walls. He attended this office, obtained and wx Lened applications on behalf of Firona for ieases of specified shops chosen by him, in each of those centres. These forms identified the shops applied for and stated the aress thereof, the term of eacn lscase applied for and the rent of each shop. Ry letter dated 23 July 1979 Farona was advined that ats Parknor? application was approved. On 25 July 1979 the lease of the Deer Park shop was fermvordedt to Firerna nv Hersfield's solicitor with a request that it be executed and returned together with a cheque for $226." costs ant stamp duty. The letter indiecatecd that uniess the eyeented Lease oO and cheque were returned by 13 August 1979 Hersfield would consider itself free to offer the premises to another party. e On 23 July 1979 Firona was informed that the lease for the Parkmore site would be forwarded 1f a rental deposit of $866.67 was paid to Murragong. It does not appear whether this deposit was paid but according to Theodore's evidence the lease was forwarded to Firona on 26 July 1979. The lease of the Deer Park shop and its accompanying guarantee were executed and signed on ?8 November 1979 and the corresponding documents in resnect of Parkmore were executed and signed on 4 December 1979, The corresponding documents in respect of the shop ai Chirnside Park were executed and signed on ?4 September 1°79, As put initially, on pehalf of the applicants, Theodore's attitude to the Deer Park and Perkmore proposition and indeed also to Chirnside Park was simply that he haa never been ana uever was, until the critical conversation with Morrissey and Wills, positively attracted to them, that although with his authority, Mr. Pean had anplied for the shops in those centres Theodore had, from that time, positively lost interest in them and would never have falren leases of the shops had it not been that Mr. Morrissxy in the ease of Deer Park and Mr. Wills in the case of Parknmore Stated that all the other shops in the "*lovant centres were 10. let, that unless Firona took the shop it had applicd for 3t would be let to a competitor and that the centre was going to be a "boomer". Theodore said in evidence that between July and the conversations referred to, which oc¢urred in late November in early December nothing had happened in relation to the proposed leases. But it appears that the situation was not really so simple. It is clear that in the months between the signing of the applications for leases and their execution in November and December 1979 relevant events had happened. Theodore exhibited considerable positive intercst in the three centres. On 24 September Firona duly completed the lease for the Chirnside centre which opened on ?5 September. In the latter part of August Firona negotiated a reduction of the leasehold period for Parkmore from s1x vears to three. In September Firona incurred expenses in naving shop fitting plans prepared for the work to be earricd out at Deer Park and Parkmore. In addition, «although he states that he once told the solicitor for the Deer Park centre that he had decided not to enter into the Jease he at no time put pen to paper to that effect. And in later stages of the evidence of Theodore it appeared that at least during certain periods between August and November he was positively inte,ested in taking the Deer Park and Parkmore shops. And of course when, during these periods, he was so interested, his interest stemmed from his own judgment and was not kindled by any false statement made by Mr. Morrissey or Mr. Wills. Thus, the framework of his case changed. Tt beeame a case that 11. althourh having spontareous positive interest in going ahead during some svbstantisl periods in the relevant marths, he again lost interest. His final position seemed to be that even in November 1979 it was his genuine intention to take tne shops in Deer Park and Parkmore but it was also his intention to postpone a fina} deeision until shortly after the centres were opencd, and that the effect of the statements by Morrissey and Wills was to change his mind so that Firona executed the leases at once instead of waiting. Tt was inevitable that Theodore's credit suffered somewhat in these developments. Analysis of the evidence is not a clcar cut exercisc largely because there are untied ends and contradictions. But the essence of tne applicant's case was that as of November 1979 Theodore did not intend to proceed then, with the Deer Park Jease, and as of December 1979 he did not intend to procesd then, with the "arkmore lease, and that in each case he cnanged his mind because of what he was told by a representative of the landlord. It 1s a pecultar feature that although there is no Suggestion that the two representatives were aciing in concert, and there 1s every reason to think that they were acting quite indepencen*tiy oF each other, each of them sre alleped to have used fhe same arguments, told the same blatant lie, namely that the centre 12. an quesiior was fully let, and used the same terminology to deccribe the prospects of the centre, narely, thit it vas going to be a "boomer", It may be said at once that T certainly do not accept that this terminology was used. And it seems to me that Theodore's use of the term "boomer" as having been said hoth by Morrissey and Wiltis rather andicates Theodore's lack of regard for reality or precision. I have the impression that Theodore had a sense of grievance concerning the Deer Park and Parkmore leases because they did not turn out as wel] as expeeted and, rightly or wrongly, considered himself justly entitled to some remedy. He felt, I think, that because of the circumstances he must have a valid case. But his lawyers could only formulate this in terms of alleged fraud on the part of Morrissey and Wills, and so, fraud it had to be, and had to be sworn to. But there 1s an air of unreality abovt the fraud in various respects. It 1s clear that at least in February 1980 Theodore found that Deer Park in particular and Parkmore to a Jesser extent were not doing well. Certainly at that stage it was well known to Theodore and Mr. Dean, his marketinp manager, with respect to each centre, that it wes not fully let. Theodore developed the idea that the rentals he was paying under the leases were too high and he derided to attempt to negotiate a reductior of those ventals. Fur this purpose he -— 13. neeced valid arguments. He could argue that he had been told that the centres would be very successful, but as to this the answer would probably be that it was believed by all concerned that they would be very successful. He could argue that there were certain shops at Deer Park being advertised at a weekly rental of $50. But as to this the answer was likely to be that those shops were the small food shops in an area very different in every way from that of the shops let to Firona. He could argue that he had been induced to take the shops by fraud. If true, this was a powerful argument. It was Theodore's case that he knew that Mr. Wills had told Mr. Dean an outright lie to the effect that Parkmore was fully let, and he knew that but for that lie he would net have taken the expensive lease at Parkmore. Yet it is te Mr. Wills that Theodore and Dean turn to assist them in their quest for negotiated lower rents, both at Deer Park ard Parkmore. Both Theodore and Dean were and indeed are, full of gratitude for the efforts made by Mr. Wills, to bring them in touch with a director or directors of the landlords so that they could put their case for lower rents and it is clear that Mr. Wills did make genuine efforts in this respect. He had at that time no notice that Theodore and Dean considered him as boving told a serious and critical lie. Neither Theodore nor Dean made any suggestion to him that their troubles at Parkmore, at least, were to be laid at his door. Tt remains @ guestian whether, 30. leases to gain whatever benefit could be obtained from that policy. As to the actual conversations tontaining the untrue statements which Theodore said were made to him and which influenced him to enter into the leases it may be observed that in each case Theodore expressed a decision to enter into the lease before the critical untrue statement namely the statement covering the relevant centre being fully let, was made to him. As to Deer Park, Theodore said that in November the respondent Morrissey telephoned him saying that he was a son-in-law of a friend of Theodore. He entered vpon a discussion of personal affairs. Mr. Theodore said Morrissey then said that he was ringing about the Deer Park shopping centre and wished to know if Theodore was interested and that he, Theodore, said that he was not interested. According to Theodore the conversation proceeded as follows: "... He said, Feter, do not make a mistake, this 18 going to be a boomer. It is a beautiful shopping centre, 1t 1s the best in the western suburbs. It is going to attract 35,000 people in the shopping centre. The advertising 1s tremendous end he carried on for quite some time about this and 1 said, you really mean 3t, Phillip. He said, honestly and truly, that 1s how good it 1s going to be and so I said well, what do we do from now on. He said you are a little bit late in signing your lease, he said if vou are prepared to write a cheque and send it gown to the city, I will reserve tnat shop 14. if Wills has been successful in arranging the interview, Theodore and Dean would have told the director of the alleped fraudulent conduct of Mr. Wills? Father they did not intend to do this, or there was a certain piquancy in the Situation, namely that they were enlisting the services of Mr. Wills to arrange an interview with his principal at which they would aceuse him of fraud. The more likely explanation is that at the time neither had any intention of alleging fraud against Mr. Wills because there had been no fraud on his part. Fven in evidence in this case the solicitude of Mr. Wills in trying to arrange interviews 1s something in respect of which appears to evoke continual gratitude on the faces of both Theodore and Dean. Mr. Dean could hardly bring himself to say that Mr. Wills had lied. The following passage from Mr. Dean's evidence is relevant:- "... Well, I am basically a salesman. T consider Mr. Wills is the same. He - I probably "felt that he did not actually deliberately tel) me a blatant lie, he may have gambled a little, saying that the place is already let - when it is, maybe it 18 - when 1t gets there - I think we - all salesmen gamble a little bit. No, I did not actually - the word lie is not really a word that I think strongly about. T --- Well then, when you went to Parlmore you found it was about - I do not know mysel]f ---?---Io, no the figures are not right, the only thing I was concerned with that - the empty shops scemed to be all where I was. If they had been fvll up I may have said, well, fair enough, but - no, the lie, the word lie - I - honestly I do not ever roo.t] an my whole life ever saying that 10 ee ee eo 15. anybody. I do not know, that is not something I would say." It is obvious that if renegotiation was to be achieved good grounds would have been essential, and the best ground would have been that Firona could walk out on the ground of fraud. If it had been available it was folly not to use it. The friendliness of Theodore and Dean with Mr. Wills at the relevant period, appears to me not to have been feigned. They were grateful to Mr. Wills. But it would have been impossible at that time for Theodore to have had good feelings towards Mr. Wills if he was the fraudulent person who had misled Theodore and induced him to enter into one of these unfortunate transactions. Yet at no time is any hint conveyed to Mr. Wills that he, Mr. Wills, is at fault. And it is curious also that although at one stage Dean told Wills that Mr. Mickles had told Theodore that all the shops at Parkmore were let, he made no suggestion that Wills had sa:d the same thing. The same sort of comment may be made concerning the alleged fraud of Morrissey. Mr. Theodore made a call at Morrissey's office at Deer Park in the muddle of April 1960. Theodore said this call was made in February but T think the proper inference from all the evidence is that it was mid April. At that time Theodore knew auite well that the situation at Deer Park was not good. The shop he had was far too big even if business was reasonable. In the then current Ae meat whee 16. circumstances the high rent for the very unproductive shap was a burden. By that stage Theodore had got to the point of contemplating , or even deciding upon a walk out unless ne negotiated a reduction in rent. Theodore said 1n evidence that when he entered Morrissey's office Morrissey was engaged with a person who was arguing with him aggressively, and that he had little opportunity for discussion with Morrissey. He said that Morrissey took him into another room, asked "21m what his problem was and that he, Theodore, said "What is happening? You said with all the shops there would be fair takings, it would be the greatest shopping centre in the world." and Morrissey said "Give me three or four days. I will discuss it with Mr. Hersfield and be back with you in three or four days.". There obviously must have been more to the conversation than this, but it is clear that nothing was said to Morrissey to convey to him that he was alleged to have committed fraud by saying all the Deer Park shops were let. Although not all of Morrissey's evidence may carry conviction in itself, I do believe that Morrissey knew nothing of any allegations against him personally, until] he received the Application in this action. On 13 June Thecdore wrote to Herafield Corporation stating that after that company's advertisements of premises being offered at $50 per week, he and Dean had called on Morrissey, and that Morrissey had confirmed that these were shops at the Deer Park centre. The letter states furthor 17. that Theodore and Dean had told Morrissey that Firona wes vacating the centre because:- "(41) you had an ad in the paper advertising the centre for rental of the same size shop as ours for $50.00 per week of which Mr. Morrissey never denied, (2) we were misled when signing the lease that your centre was fully let, (3) half of the centre is in actual faet not occuppjed." The letter continued:- "Then your Mr. Morrissey's answer was to us "Don't do anything for the time being and oa don't pay any rent until I get in touch with you. I will get you an answer from head office." Today is the 13th June and we have not heard from anyone." At this stage the only statement made to anybody by Theodore or Dean as to having been misled, as to any centre being fully let, was that Mr. Mickles had said to Theodore that Parkmore was fully let. Theodore said that Mickles said this to him at a Christmas Party. Dean knew of this, and as mentioned above, ne mentioned 1t to Wills at some stage. It is a comment of some significance that when the allegation of misleading conduct is formally made in ithe letter of 13 June, and the conduct and reaction of Morrissey are a central feature of the contents of tne Jetter and when the allegation is béing put forward as a ground for relief, that communication can be seen as one prenliarly apt to 18, contain also a statement that 1t was Morrissey who had commit*tei the misleading conduct, namely told the relevant lise. It is to be noted that item 3 in the letter wes so exaggerated a statement that it could hardly have been expected to be taken seriously. In actual fact the centre had at least 80 per centum of shops let which comprised 90 per centum of floor space. This letter of 12 June was the second time a written allegation of misleading conduct was made by Theodore against the Landlord, the first being a letter of 30 May 1980. That letter was written by Theodore's solicitor, Mr. Trevor Cohen to the then solicitors representing the respondent companies. It was in the following terms: "Dear Sirs, Re: Firona Pty. Ltd. & Ors ats. Murragong Nominees Pty. Ltd. "We wish to advise that our clients instruct that it is a tenant of three premises owned by your client in different shopping centres and that in relation to all three premises they were advised prior to executing Leases, that the centres were fully leased. Subsequently 1t was discoverec that the centres were far from fully leased and in some cases more than half the shops were vacant. fs a result, we are instructed that discussions have taken place between our respective clients regarding a renerotiation of the rental as it appears that snops in each of the centres are now being offered for lease at a rental of approximately one fifth of that which our client 1s currently payin. We advise that should your client not be prepered to discontinue these proeeedines and renegotiate rental in respect of the three prerisxrs we have instructions to apply to 19. the Federal Court under the Trade Practices Act pursuant to Section 532A for misleading conduct an accordance with Section 52 thereof. Please let us have your advice within 7 days." As to the letter it is to be observed, (a) (b) (ec) the reference to "these proceedings" is to County Court actions commenced against the applicants for the amount of rent unpaid in respect of the shop at Chirnside, Deer Park and Parkmore centres which the applicants had failed to pay; the misleading conduct relied on ais that before entering into the leases in respect of Chirnside Park, Deer Parl and Parkmore, Theodore had been falsely unformed that each of those centres was ful ty leased; the exegrmerated allegatiors thot morc than half the shops are vacant 18 repeated. There 1s of course no case thet VPirons, Theodore or Dean were misled in any respect in respect of rne Chirns de Park lease. That transaction went throunh wiikhont sneidunt, save that Firone was slow in actually crecutinen the Lease. peo 20, However, it was executed on 2! September 1979 and the centre opened on 25 September. Iv is a question how Mr. Cohen came to inelude allegations concerning Chirnside Park in his letter of 30 May. Thecdore said that Mr. Coh2n misunderstood his instructions. Mr. Cohen said that was not so and that the letter accurately represented his instructions. I accept Mr. Cohen's evidence. To my mind the incident reflects Theodore's capacity for immoderate and irresponsible action when in pursuit of something to which he considers himself entitled. In relation to the issues in this case such @ capacity goes directly to credibility. It is convenient at this stage to mention other matters going to credit. By his summons dated 14 July 1980 in the County Curt proceedings concerning wnpaid rent for the Parkmore shop Theodore swore that the formal lease 1 connection with the tenancy was executed by Furona in duly 1979 and Firona "decided against taking this lease". Buti in fact Firona instituted negotiations to change the term of the lease from six years to three years, and the cnange was agreed to on or before 24 August 1979. In the early stages of his evidence Theodore claimed that he only approved of Dean signing applications for leases of the shons in the three centres because of "prodding", to to speak, by Mr. Mackles, and that he forgot about them, having no intention ten ee 21. of completing the transactions. I do not accept this. To apply formally for the leases with all terms including substantial rents stated in the application, ,and to receive formal acceptance of the applications, accompanied then or shortly afterwards by delivery to Firona of the actual leases, with requests for solicitors fees and a deposit, is not something that a practical and successful business man would be likely to forget. It is possible that Theodore would delay signing until the last moment as a matter of business practice. He did this with respect to Chirnside Park which he certainly did not forget but completed on the very last day before the opening. It is of course a question, why go on with Chirnside Park which was of unknown quality and forget about Parkmore which was known and was regarded as the best of the three propositions? But of course Parkmore was not forgotten. Thought was given to it in relation to renegotiation of the term of the lease. Deer Park does not seem to have been forgotten because shop fitters J.D. Provan & Co. visited Deer Park between 19 and 28 September 1979 and submitted a quote, approved by Mr. Dean, for measuring the premises and drawing plans for various fittings at the Deer Park shop. There was much cross examination on the initial insistence by Theodore that he was not interested in the projects. The following passages are relevant to the assessment to Theodore's reliabiJity as a witness, thus:- And thus, 22. "Is it your practice to sign applications for shops at shopping centres when you are not interested in taking the shops? --- Very much so. . So you sign applications for shops for anything as a hobby? --- You said that. I am asking you? --- How can 1 answer a question when you put the answer before? You said before that in July 1979 you had no interest in expanding the number of retail outlets you had? --- That is right. You agree in July 1979 you applied for three shops at Deer Park, Chirnside and Parkmore? ~--- We were asked to apply. Do you always apply for shops when somchody asks you to apply? --- Usually, why not? You apply for shops because you have an interest in expanding your retail outlets? --- Not in that case, because I was solicited. Did you do it for a favour to Mr. Mickles? --- No, I was solicited by Mr. Mickles the same as I was re-solicited by Mr. Pnillip Morrissey." "You say you did not know you had made an offer, bit you did know that you had made an application? --- That is right. And an application could be very much like an offer, could it not? --- st looks that way today to me. When you got the lease you knew then that the people to whom you had made the application thought that you really meant ut and were ROing on with the proposition? --- Yes. I understand you got that Jcase a few weeks after you made the application? ~-- Yos. And the lease came from Madden Bucier Dlder & and again, 23. Graham, 18S that so? --~ Yes. I understand you to say that having got the lease you rang up somebody? --- They rang me up. When you got the lease you did nothing? --- No. Then sometime after that the solicitors rang you and said: 'What about signing that lease'? --- That is right. But how long was that after you received the document? --~- Three or four weeks. Do I understand you to say that at the stage you said to them quite plainly that you were not going on with the proposition? --- No, 1 said to them we were told that we were going to be called in and discuss' the matter of the premises and so on. So you told them that you were not foing to sign So at "And , the lease then because you thought some further discussions had to take place? --- Exactly. that stage you had not decided not to fo on with the proposition? --- That 1s right." that note, that little ecard from Alpha Blinds, asks for the lease to be reduced to three years or confirms it is three years and asks for a re-adjustment stamp duty bi11? --- That is right. Subsequently a re-adjusted stamp duty bill was sent? --- That is right. What I am putting to you is that far from saying I was we are not interested and we were signing documents just because Mr. Mickles asked us, you were re-negotiating the term of the lease at Parkmore at the end of August? --- You were ringing me every day, annoying me; you would not get off the phone. not ringing you? --- You were not the man but Hersfield Developments were ringing me every second day. I said: Look, do not you uncgerstand I do not want co go on with 1t? flso, 24. They just rang every day. They wanted the lease signed, all right? Does that give you an answer? No, it does not. My question was much simpler. If you were saying no, wny aid you, in the latter part of August negotiate the term of the lease for Parkmore from s1x years to three years? ---~ I said I_did not want to take the lease; it is too long. Somebody on your behalf said to somebody look, we do not want six years, we want three? --- That 1s right, we said that. Then why did you say that you wanted three if you wanted none at all? --- Because we said no to them a hundred times and they just kept coming back on the phone. They would not take no for an answer. IT do not really see how that makes you say that you would three instead of six? --- The solicitor that rang me every cay said, if you do not sign the lease I will jump out of the window, and he was going on like that ... Why did you not get your secretary and say, please write to these people and say please 'o not ring up any more; we do not propose , to go on with the lease? -~~ J should have done that, your Honour. Why did you not do that? --- It was neglect on mv behalf." Was there an application form put in by Mr. Dean or anybody about the same time as the Deer Park and Parkmore applicat.ons were put 1n? --- I do not remember, your Honour. We only went into head office. John Dean wine an to make an inquiry about the shopping centre in the first place and he finished up filling out a form. Not only filling ont a form but doing a lot more than that, but he d.id it in relation to elie Bed 25. Chirnside about the same time as he did 1t about Deer Park and Parkmore? --- I cannot remember but I think he couid have done the three in the same day, yes. T cannot remember, He did the whole three, as far as you can remember now, more or less at the same time? --- Yes, one day. You have told us quite clearly that although he did that you certainly were not interested in Parkmore and Deer Park and never were? --- No. But you were anterested with respect to Chirnside? --- Yes. Why were you interested in Chirnside and not in the other two? --- What was particular about Chirnside which attracted you to that? «--- We just felt we would take one and try at the time. Take one? --- Which is Chirnside. What made you pick on Chirnside? --~- We picked on Chirnside because one of the three - and we probably thought that Chirnside was a newer area than --- You probably thought that, but having made a firm Jistinetion in your own mind between . Chirnside and Deer Park and Parkmore, have you no recollection of what i1t was that made you distinguish betwecn them? --- No, we just thought we vould take Chirnside. It was the furthest from where our manufacturing plant is and 1t was a good outlet there. When you saw your solicitor in May 1980, as a result of which he wrote this letter complaining about all three premises, you at that stage had no complairt at all about Chirnside? --- No, I did not. Yet you somehow seemed to have conveyed to your solicitor very clearly that vou did have a complaint about Chirnside? --- Mo. And that they were advertining ?50 a week places at Chirnside end at each of the other places? --- f£ ard not now whicnr places And again, ee ee ee woe oe 26. they were advertising. If you did not know, how did your solicitor get 1t anto his head that they were doing it with respect to all three unless you told him? --- I said to him I was in trouble with Hersfield. . I know, but he writes a letter and says that 1t appears that shops in each of the centres are being offered for lease at a rent of approximately one-fifth. If you are only talking about the two, have you any explanation as to how it was he thought they were advertising shops at $50 or something out at Chirnside? --- T do not know. We were asking all the guestions." "You only signed the lease because Mr. Dean told you that Mr. Wills said, "The whole show has gone and if you do not sign up you will lose it', is that right? --- Yes. That was an outrageous lie, was 1t not? --- Yes. In April, not only did it turn out to have been an outrageous lie put you looked like losing a lot of money? --- Yes. How was it that you did not say to Mr. Wills: -You are a nice sort of chap to do business with, Why did you tell us that fairy tale? Why did you not say something like that to him? --- I did not say anything like that to him. I know, you did not, but why did you not if you knew he had cheated and lied? --- I do not know why, but I was waiting to get an appointment and that was all on the phone, I wanted to sit and talk on the desk. I do not know? --- 7T did rot say that to him, I did not tell him that. The question is, why @¢id you not? it will be put to me later in this case, no doubt, that any ordinary mon who had been told a straight out, blatant lie like that, which you had believed and found out it was a eens se 27. lie, and it looked like being scrious, that any ordinary businessman would have been blazing with anger and would have said sowething about it to the man who did it. Why did you not? --- I did not because he did not tell it to me. Are you really saying that is the reason you did not say it to him? --- Truly, your Honour... But you see, it will be put to me that you did not say 1t because he had never said 1t at all? --- Not to me he did not. It does not matter who to, when you get anto situations like this I am sure it will be urged on me that a man of your experience would be horrified at being such a lie and would have been saying things about it the first time you met the man who did it? --- We were waiting for the appointment to go un and talk about it and tell them then what they told us in front of all the directors. But you are not only not saying to Mr. Wills: you are a person of no decency or honesty - you are more or less friendly with him and he is trying to get an appointment for you? --- That is right. How could you be friendly with him when he has been such a liar? -~-~ I was trying to get someone to get us an appointment, we could not talk to anybody. You did not need an appointment, you needed a so.icitor? --- That is right, I did need a solicitor, I was too late." And finally:- "You were telling us, you were being asked some questions about July cof 1979 when the application forms were filled in for the two shops. Between that period of time and the time of the two telephone conversations in November, what was your attitude about going into business in those two shopping centres? --- As I showed you in the plan my attitude was very much so to go ahead with, you know, going into the shopping centres. As you have seen I have spent with Fr. 28. Proven $1700, $1800. His bill was there somewhere. ... You to]d us that between July and November it was your definite purpose to go on with these propositions? --- I am talking now, you mean, was your question --- 1979 - no, this is going back a bit. You were asked by your counsel, what your attitude was between July and November when you had those telephone conversations - or rather you had one with Morrissey and Mr. Dean had one with Mr. Willis. You said your intention was quite definitely to go on with the propositions with the leases? -~-- Yes. Well, does that mean that you would have gone on with the leases and signed them even if you had not had those telephone conversations? --- No, if we had not had those telephone ~ conversations, we would not have gone on with the leases. Why not, if you -? --- We, in the meantime, we went cold on them, and we did not want to go on with them, but we kept our options open... When did you change your - you see 1t is a little confusing - you were asked fairly and squarely what your attitude was between July and up to those telephone conversations? --- Yes. And I urderstood you to say that your attitude was very definitely to go on, and with that in mind you had spent money with architects? --- Jt was. Well, when did you change your mind and decide that you would not go on? --- Well, we sot very busy towards October and November and we sort of forgot all about it, and then Mr. What's his name came on the phone - Mr. Phillip Morrissey came on the phone. You just forgot about it. It is hard to understand that you were so keen to fo on that you would spend money, and quite a lot of money, did you not with the architects, wel] a lot to me? --- Yes, with Mr. Proven. I was not told how much, but it was a substantial 29. bili? --- $1700 and... Well, it was a fair lot of money for anybody 1 suppose. Well, you spent all that money and then you went cold on the proposition? --- Yes, we did at one stage there in October and November. Is it just that you forgot abont it or that some fact arose which caused you to change your mind? --- No, nothing really arose and we had not heard from Hersfield, and we left it at that. You had leases? --- We had leases, but we had not Signed --- And you knew they were waiting for you to sign? --- Yes, we did not sign them, we left them there. It is a little difficult to understand why you were enthusiastic in September and forgetting about it in October or early November? --- Well, October and Novembur and December is our busiest moth, and really it is hectic to try and get orders out, your Honour, and I did not attend to it, and this is true. But you knew quite well when you got those architects ---? --- yes, but that did not mean that we were not going to go in January." As to this last expression of intention it is difficult to contemplate that Theodore could expect to hold on to the shops until after opening day and keep the landlord guessing, until he decided to go on or not, according to whether the centre was a success, Not even Mr. Theodore could have hoped to do that. The inference thet I draw from the whole of the evidence is that at all times Theodore intended to enter into the leases of both centres. He also did intend to delay as long as possible an exeénuting the wesa eee Meee tn it ee em re ee et ee ee 31. for you and he said, if you do noc take it, there is one of ycur opposition that have the right. That is what I missed before." Mr. Theodore's evidence continued:- "When he said that to me, when he said if you do not take it I will give it to your Opposition, I thought if it is so good, why not. He said get your cheque ready and send it in to the solicitor immediately and I will get that shop for you, it 1s yours and I said thank you very much." Mr. Theodore was then asked "was anything else said to you whether other people were interested in shops?". Counsel for Hersfield objected and I said "Do not lead him at this stage.". Mr. Moshinsky for the applicant said"Yes I understand" and the witness said "He said that was the last shop in the centre and that was it, if I did not take 1t, he was going to let it to somebody else." Thereupon according to Mr. Theodore he arranged the execution of the lease and the signing of the guarantee and duly sent his cheque as requested in respect of the grant of the lease and for duty and costs. Similarly in relation to the critical conversation concerning the Parkmore lease. The background to that conversation was that at some stage between July and November 1979 Mr. Dean received a request from a representative of Parkmore asking that the lease be signed and that he, Mr. Dean, replied that Mr. Theodore was overseas but was returning shoruily and that he would see that the matter was then dealt with. Thereafter in tee were ree ewe mee = ame -- ae wn eee we . ate eee o- - + - - 32. November at a time when, according to Dean, he was having second thoughts about whether it was wise for Firona to take any of the leases he received a telephone call from Mr. Wills. Wills was the agent of Hersfield with respect to the Parkmore Centre. According to Dean Wills asked him why Firona had not signed "the leases" and sent them back and that he Dean, said that they were thinking about the matter. According to Dean, Wills then said "well really your time is up, you cannot think about it any longer, I have got to have the lease back, otherwise you lose your right or application to this shop". Dean said that he said "Well we are thinking of setting back and thinking about it and waiting until it is opened and sort of making a decision then". To this, according to Dean, Wills said "Well I doubt it very much whether you would get in after it opens because a]l the shops are leased and if this lease isn't sent back in a period of time you lose all your rights to this shop and you probably will not get in after it opens because they are all leased, all the centre is full up.". For immediate purposes the critical conversation was not between Theodore and Dean. According to Theodore, Dean said to him, "Those shopping centres are going to be good ... I was just talking to Mr. Wills and he told me that Parkmore traffie is ... fantastic, its going to be a boomer." Mr. Theodore said, "Well John you know seeing we are going into one we will go into the other one." Dean then said "It SU em eee en 33. is the last shop, if you do not take it you are going to miss out on it." Theodore replied, "Alright lets take it" and accordingly he did. I cannot accept that the statement to the appellant that all the shops were let influenced Theodore to decide to take the leases. In each case he made the decision before that statement was made. It may be argued that assuming that the critical statements were ever made by Morrissey or Wills, and looking at Theodore's evidence as a whole it ought to be inferred that his decision to proceed was made only under the influence of those statements. I do not think so. It seems to me no accident that as to the first of the two critical conversations Theodore completed his spontaneous recital of that conversation without mentioning that he was told the shops were all let, and as to the second, he expressed his determination to proceed at a stage when he had not been told that Wills said the shops were all let. It was as though Mr. Theodore had difficulty in remembering what his real case had to be. It is contended by the respondents that this but reflects the real situation which is that Theodore while suffering under a sense of grievance has always sought to renegotiate the rent because the deal he made was a bad one but has at no time really been clear about having been told the alleged falsehoods. It is said that this explains why he never put the supposed falsehoods to Morrissey or Wills. There were no such falsehoods and even in the witness box ae Swit ee 34. Theodore failed to make his case with clarity and conviction. It is a further general comment that when his attempt to renegotiate the rent had failed and he resorted to his solicitor. His solicitor's instructions were improper in every sense, too wide and_even then in his solicitor's letter of 13 June he cannot bring himself to accuse Morrissey or Wills of fraud. So far as Deer Park centre 1s concerned Morrissey denies that he said to Theodore that all the shops were let. He agrees that he introduced himself as the son-in-law of a friend of Theodore's and that the purpose of his call was to induce Theodore to sign the lease. He agrees that he said that it was his opinion that the centre would be a success. He gave evidence that he did so believe and was enthusiastic about 1t. At thit stage he knew that only about 80 per cent of the shops were leased, and he knew quite well that on opening day it would be apparent that there were a noticeable number of shops unoccupied. Morrissey's credit was attacked. It was attacked on the ground that he had spoken over-optimistically to a meeting of Deer Park tenants which was held in October 1979. It is said, and Morrissey agrees, that he told the tenants that it was his opinion that by opening day 90 per cent of the shops would be let. It was said that Morrissey knew that LS Snr 35. the letting was then considerably under 90 per cent and that it was dishonest of him to state that the 90 per cent would be let by opening day. However Morrissey said that he was genuinely enthusiastic about the proposition. He said that he believed that 90 per cent of the shops would be let by opening day. I cannot conclude that this was not his true view. His credit was attacked also on the ground that he had permitted pamphlets to be distributed which indicated that the Deer Park centre would have a public library although the proposal for the library was indefinitely postponed. It was also pointed out that the other proposed facilities included in the pamphlet had not materialised. In the contest between Theodore and Morrissey on the critical matter the onus is on Theodore. Apart altogether from Morrissey's denials Theodore's credit on the critical matter is low. Also Theodore's demeanour did not induce confidence, there were many contradictions and evidentiary contortions. My conclusion is that when suffering from a sense of grievance Theodore speaks extravagantly aand irresponsibly. In coming to the conclusion that Mr. Theodore has been unable to discharge the onus of proof in relation to the case involving Morrissey 1t has not been a process of the acm 36. acceptance of Morrissey's evidence to the exclusion of Theodore's. It is possible that Morrissey's evidence 1s fraught with certain difficulties which if the onus of proof were upon him would cause hesitation in making positive findings based upon it. Nevertheless although Mr. Morrissey's denial does carry weight this case may be approached on a basis equivalent to the situation that would obtain if for some satisfactory reason he had not given evidence. In such a case as is now, Mr. Theodore's evidence must be given very close scrutiny which scrutiny it is unable to survive. . The applicant's case was based in form on statements other than those relating to the centres being fully let. Other alleged representations concerned the probable profitability of the respective centres. I do not accept that these representations made by people not known to Theodore and whose interest it was to promote the centres had any influence on Theodore, a successful and experienced businessman, in the exercize of his own independent business judgment concerning the assessment of the potential of the particular premises. Indeed at the conclusion of the case it was hardly suggested that I should. Also, I do not accept that anything was said by Morrissey or Wills to the appellant that if the applicants did not promptly execute the lease and sign the guarantee =~ eee 37. another tenant whose business was that of supplying blinds to the public would or was likely to take the shop proposed to be let to the applicant. Again, little was made of this e matter at the hearing. So far as Parkmore is concerned the contest in the first instance is between Wills and Dean. I have no hesitation in accepting the evidence of Wills. It is not that I consider that Dean deliberately told untruths. But I do not for one moment think Wills told Dean that all the shops in Parkmore were leased. Wills is a man of quite impressive personality. His demeanour was most reassuring. I believe he told the truth. Nothing to his discredit emerged. It is my opinion that Dean got caught up in the enthusiasm of Theodore concerning the alleged wickedness of Morrissey and his general disappointment about the progress in Deer Park, and having learned from Theodore that Morrissey told him that all the shops were let, and persuaded himself that Wills had saia the same thing. As indicated above there was an element of unreality in Dean's testimony and attitude. For the foregoing reasons I find that the applicants have failed to discharge the onus of proof in relation to VG No. 58 and VG No. 59 of 1980 and accordingly those proceedings must be dismissed. The first named respondent in each of these proceedings cross claimed under the Court's associated jurisdiction claiming that 1n the wee caret em ee te ene a tiewnn en ce sare cee 8 ~— We etn tote ae ot phe Pe To 38. event of Firona's claim being unsuccessful in respect of either of these proceedings the Court has jurisdiction to order the payment of rent which each of the first named respondent contends Firona has failed to 'pay. As both actions have been dismissed each of the first named respondents claim the rent for which Fircna is in default in respect of the Parkmore and Deer Park centres. As it may have been unnecessary to deal with these cross-claims, no argument has been heard pending the determination of the applicant's claims. However, it is now necessary to consider this matter and accordingly I adjourn these proceedings to a date to be fixed to hear argument on this question together with the question of costs. . bd "eo _- ere er eT eee : wedi: oo Msn. Pe thinbey seen Po eae Le are. tre rer aN Me eens a we te spas th v5 { | i } | fosxnin ~ | eee te mee - -- - - -