Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Cai & ors v Sydney Markets Ltd (No 2) [2011] NSWADT 199 Hearing dates: On the papers Decision date: 19 August 2011 Jurisdiction: Retail Leases Division Before: M Chesterman, Deputy President Decision: 1. Declare that an iPhone does not fall within the category 'Music Players' as defined under the Occupancy Agreement between the Applicants and the Respondent in each proceeding. 2. Declare that the Applicants in each proceeding are not entitled to sell or market for sale any cover which is labelled 'iPhone' or bears an 'iPhone' logo. 3. Declare that the term 'used for' in the category 'Music Players' as defined under the Occupancy Agreement between the Applicants and the Respondent in each proceeding means 'commonly or often used for'. 4. The parties are to pay their own costs of these proceedings. Catchwords: Retail shop lease - interpretation of occupancy agreement - variation of agreement - estoppel Legislation Cited: Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994 Cases Cited: Cai & ors v Sydney Markets Ltd [2011] NSWADT 107 Category: Principal judgment Parties: Hengfeng Cai (First Applicant - file 105191) Jing Gao (Second Applicant - file 105191) Hui Xu (First Applicant - file 105196) Xini Li (Second Applicant - file 105196) Sydney Markets Ltd (Respondent - files 105191 and 105196) Representation: Counsel S Docker (Respondent) Kemp Strang (Respondent) File Number(s): 105191, 105196 decision Relevant features of the proceedings so far 1RETAIL LEASES DIVISION (M CHESTERMAN (DEPUTY PRESIDENT)): In these rather unusual proceedings, the question of principal importance is whether, in the context of contractual provisions defining what two couples carrying on businesses at 'stands' in a Sydney market are permitted to sell, an Apple iPhone should be held to be a 'music player' because its multiple capacities include those of an Apple iPod and of other devices whose functions include that of playing music. 2This question was answered in the negative in Order 7 of my decision delivered on 17 May 2011 ( Cai & ors v Sydney Markets Ltd [2011] NSWADT 107), following a hearing on 28 and 31 March 2011 relating to two separate Applications (files 105191 and 105196) that were heard together. 3The facts on which my determination of this question was based are set out in that decision, which I will refer to from now on as 'the principal decision'. Except so far as is necessary to explain the issues now to be resolved, I will not repeat them here. 4In each of these matters, the Applicants are a married couple carrying on retail businesses in a number of stands in Paddy's Market (hereafter 'the Market'), pursuant to a pro forma form of agreement issued by the owner and headed 'Occupancy Agreement' ('the Occupancy Agreement'). The Market is situated in Haymarket, Sydney. 5The Respondent to both Applications is Sydney Markets Ltd ('Sydney Markets'), the owner of the Market. 6Under the Occupancy Agreement and an accompanying contractual document called Sydney Markets Rules, the Applicants are entitled to sell 'Authorised goods only'. In schedules to the Occupancy Agreements that they signed, the categories of 'Authorised goods' identified include 'Music Players', but not 'Telephones'. 7The definitions of these two categories of goods, as set out in a further document headed 'Sydney's Paddy's Markets. Classification and Description of Goods Authorised for Sale - Regular Stands' (hereafter 'the Classification Schedule'), are as follows:- Music Players iPods, MP3 players, MP4 players, all types of music players, head phones, ear plugs and other accessories used for such players. Telephones Mobile telephones and accessories, mobile phone covers, telephone handsets. 8The dispute between the parties chiefly concerns the interpretation of the phrases 'all types of music players' and 'other accessories used for such players' in the definition of 'Music Players'. 9This dispute has arisen because, according to the holders of neighbouring stands who are authorised to sell 'Telephones', the Applicants, in breach of their agreements with Sydney Markets, have been selling and marketing for sale accessories - in particular, covers - that have been manufactured, and are appropriate, for iPhones, thereby diverting trade away from standholders who do have permission to sell such goods. 10Different categories of these covers were admitted into evidence before me. Some, but not all, of them were labelled 'iPhone' or bore an 'iPhone' logo. One or other of two models of iPod, being a form of Music Player that the Applicants were expressly permitted to sell, would in most instances fit into the admitted covers, but for reasons outlined in the principal decision it could not always be said that the cover was wholly suitable for an iPod. 11The order that I made in the principal decision, giving a negative answer to the question posed in the first paragraph of the present decision, was an order (Order 7) dismissing what I will call the primary claim made by the Applicants. As stated in the principal decision at [97], this claim was for declaratory relief in the following terms:- 1. A declaration that covers and other accessories for any Apple iPhone having music player functionality are "Authorised Goods" for the purposes of the Occupancy Agreement(s) between the Applicants and the Respondent... pursuant to which the Applicants occupy shops at Paddy's Market at Haymarket, NSW... even if such covers and accessories bear the word "iPhone". 12Earlier in the principal decision, however, I pointed out that the questions raised in these proceedings went beyond the specific question raised by the Applicants' primary claim. These paragraphs are as follows ([33 - 36]):- 33 The focus of the disputes between each pair of Applicants and Sydney Markets has been almost exclusively on claims by the Applicants that the 'accessories' that are 'used for' the range of goods delineated by the phrase 'all types of music players' in the Classification Schedule include covers that are used for iPhones. 34 In its broadest version, the Applicants' claim is based on the proposition that an iPhone falls within the scope of the phrase 'all types of music players' because its functions include, and are promoted as including, the playing of music. It follows from this proposition, they maintain, that Sydney Markets is obliged to permit them to sell covers that have been manufactured and are used for iPhones, including covers that are labelled 'iPhone' or bear the iPhone logo. 35 In both of the Applications filed in the Tribunal during November 2010, the first of the orders sought is based on this line of argument. The terms of this order are set out below at [97]. 36 Two narrower claims have been advanced by the Applicants. One is that Sydney Markets is obliged to permit them to sell any cover into which an iPod will fit, even though (a) an iPhone will also fit into it and (b) it is labelled 'iPhone' or bears the iPhone logo. The other is that Sydney Markets is obliged to permit them to sell any cover into which an iPod will fit - except covers labelled 'iPhone' or bearing the iPhone logo - even if (a) an iPhone will also fit into it and (b) it appears for other reasons to have been manufactured with iPhones in mind. These claims are based on the proposition that any cover answering either of these descriptions must be regarded as 'used for' iPods. They do not depend on a ruling that the phrase 'all types of music players' in the Classification Schedule includes iPhones. 13I gave my reasons at [119 - 123] for rejecting the Applicants' argument that iPhones fall within the scope of the phrase 'all types of music players' because their functions include, and are promoted as including, the playing of music. 14At [141 - 147], I dealt with and ultimately rejected a further argument by the Applicants, based on principles of conventional estoppel. My conclusion was based in part on (a) various provisions of the Occupancy Agreement (notably the definition of 'Authorised Goods' in clause 1.1) and of Sydney Markets Rules conferring powers on Sydney Markets to vary the terms of its agreements with standholders and (b) letters dated 18 January 2010 from its Retail Markets Manager, Mr Jules Steffe, to the Applicants, which appeared to me to bring about a variation of the definition of 'Authorised Goods' as far as the Applicants were concerned. At [146], I stated: 146 In my judgment, the scope of 'Authorised Goods', so far as the Applicants were concerned, was fixed in Mr Steffe's letters to them, dated 18 January 2010. Before they received that letter, they were authorised to sell 'dual purpose' covers, even if they showed the logo 'iPhone'... But Mr Steffe's letters dated 18 January 2010 made it quite clear that 'covers depicting the logo iPhone' fell outside the scope of Authorised Goods and gave the Applicants two months' notice in which to sell or remove stock of this nature. 15The effect of this ruling was to dismiss the first of the two 'narrower claims' made by the Applicants, which was that their contract with Sydney Markets permitted them to sell 'any cover into which an iPod will fit, even though (a) an iPhone will also fit into it and (b) it is labelled 'iPhone' or bears the iPhone logo'. The ruling left unresolved the second of the 'narrower claims', namely, that they were permitted to sell 'any cover into which an iPod will fit - except covers labelled 'iPhone' or bearing the iPhone logo - even if (a) an iPhone will also fit into it and (b) it appears for other reasons to have been manufactured with iPhones in mind'. 16In the principal decision at [150 - 154], I then made the following observations, which are of particular relevance to the present decision:- 150 It remains for me to consider here the meaning of the words 'used for' in the definition of Music Players. I have found this question, on which the submissions were relatively brief, to be difficult to resolve. 151 It seems to me that the test urged by Mr Docker [counsel for Sydney Markets] - namely, whether the item in question 'can objectively be said to be made for use as an accessory for "iPods, MP3 players, MP4 players, all types of music players"' - may be too narrow. I am instead inclined to the view that 'used for' means something like 'commonly used for' or 'often used for'. 152 In determining whether a particular cover, such as the unlabelled covers which the Applicants have sold, is 'commonly used for' an appliance such as an iPod, evidence that the appliance does not fit reasonably tightly into it, or that buttons or other controls on the appliance cannot be used efficiently or at all while it is in the cover, will suggest that the cover is not 'commonly used for' the appliance. On this reasoning, the covers sold to Mr Benic [an investigator engaged by Sydney Markets] during February 2011 which accommodated an iPhone 4 very tightly but were found by me to be distinctly unsuitable for an iTouch 4, for the reasons just given (see [94]), could not be said to be 'used for' iTouch 4s. 153 It may also be relevant to inquire as to the circumstances in which the relevant item is marketed. The broad definition of 'Sell or Sale' in the Occupancy Agreement and the Rules includes the phrase 'offer or expose for sale, barter or exchange'. When, as Mr Welmeela [also an investigator engaged by Sydney Markets] and Mr Benic testified (see [92 - 93]), the Applicants sold unlabelled covers to them in response to their requests for 'an iPhone cover', it is at least arguable that they had 'offered for sale', and indeed sold, a cover that was not 'used for' an iPod, but for an iPhone. 154 In this decision, I will not make a final determination of these questions, nor of the broader question (with which these are closely linked) of what are now 'Authorised Goods' that may be sold by the Applicants at their stands in the Market. These are difficult questions, some of which were addressed only briefly by the parties. I will therefore provide a further opportunity for submissions about them to be put before me. Having considered any such submissions, I will endeavour (if it can usefully be done) to formulate a declaration clarifying the rights of the parties. This is in line with a suggestion contained in the penultimate paragraph of Mr Docker's outline of submissions. 17In line with what I said in this last paragraph, Orders 3 to 6 in the principal decision were in the following terms:- 3. Within 21 days, the Respondent is to file and serve such submissions as it may wish to make on either or both of the following matters:- (a) Whether any declaration may usefully and properly be made, and if so in what terms, defining the types of 'accessories' for 'music players' that constitute 'Authorised Goods' which the Applicants are entitled, under their agreement with the Respondent, to sell pursuant to the Occupancy Agreement. (b) The costs of these proceedings. 4. Within a further 21 days, the Applicants are to file and serve such submissions as they may wish to make on either or both of the matters outlined in Order 3. 5. The parties have liberty to apply for variation or clarification of the directions given in Orders 3 and 4. 6. The Tribunal's decision on any submissions filed pursuant to these directions will be made 'on the papers', under section 76 of the Administrative Decisions Tribunal Act 1997, unless it considers that a further hearing is required. 18On 7 June 2011, Sydney Markets filed supplementary submissions as directed in Order 3. These submissions addressed at some length the matters defined in paragraph (a) of the Order. As to paragraph (b), they stated only that Sydney Markets did not seek costs from the Applicants, though it reserved the right to respond to any claim for costs against it. 19Shortly afterwards, the Applicants filed a Notice of Appeal challenging my order (Order 7) in the principal decision dismissing their primary claim. The Registrar has informed me that the Applicants have also instituted new proceedings at first instance against Sydney Markets. The details of both these sets of proceedings are not known to me. 20A letter dated 11 July 2011 from the Registrar to the solicitors for both parties, responding to various questions that had been raised by them, contained the following passages:- The Tribunal has determined that the matters raised in the Respondent's supplementary submissions should be resolved, and final orders should be made in the proceedings in files 105191 and 105196, before the appeal is heard... In relation to files 105191 and 105196, the Tribunal accordingly directs:- 1. Within 21 days of the date of this letter, the Applicants are to file and serve submissions in reply to the supplementary submissions filed by the Respondent on 7 June 2011. 2. The questions remaining in these proceedings will then be determined 'on the papers', pursuant to section 76 of the Administrative Decisions Tribunal Act 1997. 21As at the date of these reasons, the Applicants have not filed any submissions in accordance with the first of these directions. I am advised that at a preliminary hearing within the new proceedings that they have instituted, the question whether they intend to file any such submissions was raised with them. 22In these circumstances, I consider it appropriate for me to proceed to determine the matters defined in Order 3(a) of the principal decision and canvassed by Sydney Markets in its supplementary submissions. I am aware of course that the correctness of my determination, as well as of my decision dismissing the Applicants' primary claim, will arise for redetermination when their appeal is heard. Whether, and if so in what terms, further declarations should be made 23In its supplementary submissions, Sydney Markets draw attention to section 72(1)(f)(iii) of the Retail Leases Act 1994, which confers power on the Tribunal, in proceedings under this Act, to declare 'the rights and liabilities of the parties under law, whether any consequential relief or not is claimed'. It argues that the Tribunal should endeavour as far as possible to determine through declaratory relief the issues litigated by the parties in these proceedings. It maintains that a reason why this would be useful was that the disputes between the parties had been the subject of complaint by other standholders in the Market. 24The next argument put by Sydney Markets is that it is preferable for declarations made by the Tribunal to 'identify what items the Applicants are not permitted to sell or market for sale under the Occupancy Agreement', rather than 'attempting to define what are "Authorised Goods"'. The reason given is that this approach 'reflects the way the case was run and the find[ing]s made in the Reasons'. 25Sydney Markets did not file any Application in these proceedings. It did not formally seek declaratory relief or any other form of relief. For this reason, I have felt some reluctance about granting what are in effect negative declarations so far as the Applicants are concerned. 26I acknowledge, however, that the orders made in the principal decision did not bear upon several contested issues that are of substantial importance for the parties. Furthermore, when the appeal by the Applicants is heard, my attempt to formulate declarations relating to these issues may provide a useful focus for the arguments put before the Appeal Panel. On balance, I consider therefore that there is benefit in granting declarations embodying some at least of the conclusions that I reached, at least provisionally, in the principal decision. 27Sydney Markets contend that three declarations should be made. Its submissions include formulations of each of them. I will discuss them in turn. 28The first proposed declaration would, according to Sydney Markets, give positive force to my ruling, at paragraph [123] of the principal decision, that 'the phrase "all types of music players" in the definition of Music Players in the [Classifications] Schedule does not, in my judgment, include iPhones'. 29Sydney Markets proposes the following formulation:- The Tribunal declares that an iPhone does not fall within the category of 'Music Players' under the Occupancy Agreement between the Applicants and the Respondent in each proceeding. 30This formulation differs from what I said at [123]. It purports to define the rights and liabilities of the parties to these proceedings, whereas my ruling at [123] related to the meaning of a phrase in the Classifications Schedule considered apart from any specific dealings between the parties. But the suggested declaration does 'crystallise', for want of a better word, the most important conclusion reached in the principal decision. 31For these reasons, I will grant in slightly altered form the first of the three declarations proposed by Sydney Markets. 32The second proposed declaration is as follows:- The Tribunal declares that the Applicants in each proceeding are not entitled to sell or market for sale any cover which is labelled 'iPhone' or bears the 'iPhone' logo as such covers do not fall within the category of 'Music Players' under the Occupancy Agreement between the Applicants and the Respondent in each proceeding. 33According to Sydney Markets, this declaration reflects my ruling in the principal decision at [146] (quoted above at [12]). My ruling stemmed in part, however, from my conclusion as to the effect of Mr Steffe's letters of 18 January 2010 on the range of the goods that the Applicants were authorised to sell. The final clause of the proposed declaration, beginning with the words 'as such covers', implies instead that this ruling represented no more than the interpretation to be placed on the term 'Music Players' in the Classifications Schedule. 34For these reasons, the appropriate course is to grant a declaration along the lines proposed by Sydney Markets, but omitting the final clause of its formulation. 35The third and final declaration proposed by Sydney Markets endeavours to define, within the context of the Classifications Schedule, what types of covers can be said to be 'used for' iPods and other kinds of 'Music Player'. It is as follows:- The Tribunal declares that the term 'used for' in the category 'Music Players' which applies to the Occupancy Agreements between the Applicants and the Respondent in each proceeding means 'commonly used for'. In its application to covers, this means that if an iPod: (a) does not fit tightly into the cover; and/or (b) moves around inside the cover; and/or (c) has one or more of its buttons or other controls or apertures partly or wholly obscured when it is inside the cover, then the cover is not 'used for' an iPod. Covers of the kind referred to in [44], [46], [78] and [94] of the Tribunal's reasons in Cai & ors v Sydney Markets Ltd [2011] NSWADT 107 are not 'used for' an iPod within the meaning of the category 'Music Players' which applies to the Occupancy Agreement between the Applicants and the Respondent in each proceeding. 36As this formulation indicates, Sydney Markets maintains that the declaratory relief granted in this case should identify some of the types of cover that were admitted into evidence as outside the range of 'Authorised Goods' because, for reasons explained in the principal decision, iPods did not fit well into them. 37A further argument put in Sydney Markets' submissions differs from a suggestion of mine in the principal decision at [153]. It is that when determining whether a particular cover displayed by one of the Applicants is 'used for' an iPod, regard should not be had to whether or not a customer who purchases it (or gives consideration to doing so) has requested a cover for an iPhone. Sydney Markets' arguments on this matter included the following passages:- Sydney Markets, the Applicants and all stand holders need to know by reference to some objectively verifiable and predictable standard what items they may or may not sell or market for sale from the stands... If whether goods are Authorised Goods depends on what the customers ask for, then this rule could operate unfairly to stand holders because they would not necessarily know that an item was not Authorised Goods when they brought it into the Markets and displayed it for sale. Moreover, policing a system based on what customers ask for... will have the undesirable commercial consequence of involving customers in disputes between Sydney Markets and stand holders. 38In my opinion, a declaration relating to these questions is appropriate, but it should comprise no more than a slightly amended version of the first sentence of the declaration proposed by Sydney Markets. The amendment of substance that I will make incorporates an aspect of what I said about the meaning of 'used for' in paragraph [151] of the principal decision. The declaration will be as follows:- Declare that the term 'used for' in the category 'Music Players' as defined under the Occupancy Agreement between the Applicants and the Respondent in each proceeding means 'commonly or often used for'. 39After careful consideration, I have decided that the content of the second sentence of Sydney Markets' formulation is not suitable for a declaration. As I said at [152], the matters to which this sentence refers would constitute evidence that a particular cover is not 'commonly or often used for' an appliance such as an iPod. But if these matters are incorporated into a declaration purporting to set out the rights and liabilities of the parties to these proceedings, they acquire the status of a legally binding 'gloss' or commentary on the terms of the agreement between these parties. This involves going well beyond the operation of ascertaining and declaring what those terms are. 40The third sentence of Sydney Markets' formulation is not suitable for much the same reason. An additional reason is that it relates only to certain specific covers that were admitted into evidence as 'samples', together with other covers of the same 'kind'. The range of operation of a declaration of this nature would be distinctly limited. It would also be uncertain, due to difficulties in deciding what covers were of the same 'kind' as the 'samples' that were admitted. 41I agree with Sydney Markets, for the reasons that it advances, that in determining within the present context whether a cover is 'used for' an iPod or other similar appliance, regard should not be had to the question whether or not a customer who purchases it (or gives consideration to doing so) has requested a cover for an iPhone. 42For the foregoing reasons, three declarations along the lines indicated above should be made. 43Since no application for costs has been made in the manner specified in Order 3 of the principal decision, the parties are to pay their own costs of these proceedings. This follows from section 77A of the Retail Leases Act 1994 and section 88(1) of the Administrative Decisions Tribunal Act 1997. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 August 2011