Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Evriparas Pty Ltd v ING Management Limited [2011] NSWADT 273 Hearing dates: 10 November 2011 Decision date: 18 November 2011 Jurisdiction: Retail Leases Division Before: P H Molony, Judicial Member Decision: 1. Application for urgent interim orders dismissed. 2. Application for original decision listed for direction on 8 December 2011 at 11.am. 3. Applicant to pay the Respondents costs of the day of the interim hearing only. Those costs, in default of agreement, are to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004. Legislation Cited: Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994 Cases Cited: Attorney General of New South Wales v World Best Holdings Limited & Ors [2005] NSWCA 261 Beecham Group Pty Ltd v Bristol Laboratories Pty Ltd [1968] 118 CLR 618; [1968] HCA 1 Gizah Pty Ltd v AXA Trustees Limited [2001] NSW ADT 116 Golden Harvest (Aust) Pty Ltd v Paing Pty Ltd [2002] NSWADTAP 40 Spuds Surf Chatswood Pty Ltd v P T Limited [2007] NSWADT 130 Townsend v Chief Executive, State Rail Authority [1999] NSWADT 56 Nam v Commonwealth Funds Management Limited [2002] NSWADT 80. Category: Interlocutory applications Parties: Evriparas Pty Ltd (Applicant) ING Management Limited (Respondent) The Trust Company Limited (Respondent) Representation: Counsel A Vincent (Respondent) AJL Legal (Applicant) Norton Rose Australia (Respondent) File Number(s): 115143 REASONS FOR DECISION Introduction 1[RETAIL LEASES DIVISION, P H Molony, Judicial Member.] The Applicant is the tenant of shop premises at 10-20 Bond Street, Sydney under Registered Lease AF633673M and the licensee under an associated licence concerning adjoining seating space at which it operates a business, Caf e Chicane . The Respondents are the landlords. 2On 20 October 2011 the Applicant lodged an application for an original order in the Tribunal making a combined retail tenancy claim and an unconscionable conduct claim. At the same time the Applicant made an application seeking urgent interim orders pending the resolution of its application for an original order. 3The application for an original order sought orders - * Under section 72(1)(b) of the Retail Leases Act 1994 reducing the rent paid by the Applicant for a period of 12 months to $16,632.92 (per month) inclusive of GST. * Under s 72(c)(iv) that the Respondents repair all damage caused by the renovations, continued renovations and tradesman and all reasonable costs incurred by the Applicant which were caused by the renovations, continued renovations and tradesman to the premises. * Under s 72AA(a) that the Respondent pay the Applicant by way of compensation $200,000.00. * Costs. * Further and consequential orders. 4The Applicant's grounds for those claims relevantly said - " Ground 1 Particulars 1.1 At all times the Applicant was a Tenant of a Retail Lease with the First and Second Defendant for the Premises Shops 1 and 2 and Storage Area 2, 10-20 Bond Street, Sydney. (the Premises) Particulars 1.2 The Applicant entered into a Retail Lease for the Premises on 4 December 2009. Particulars 1.3 The First and Second Respondent provided notice to the Applicant that refurbishment works at 10-20 Bond Street, Sydney which was to commence on 29 January 2010 with completion of such works to be completed in September 2010. Particulars 1.4 The Renovations were not completed by the First and Second Respondent on September 2010 and where completed in June 2011 (the "Continued Renovations"). Ground 2 Particulars 2.1 During the refurbishment works, the representatives of the First and Second Defendant made representations to the Applicant through its representatives in respect of the effect of the Renovations and Continued Renovations on the Applicant including:- (a) The First and Second Respondent will discuss any effect the Renovations had on the Business and reach an agreement with the Applicant as to assisting the Applicant to re-establish the business operating from the Premises. (b) The First and Second Defendant would compensate the Applicant for loss and damage to the business. Particulars of the Representations Oral Representations expressly made by Mirvac Real Estate Pty. Limited and/or its representatives to the Applicant during the Renovation Period and Continued Renovation Period Particulars 2.2 The Applicant relied on the representations made by the Representatives of the First and Second Respondent and placing reliance on such representations has suffered loss and damages to the business Particulars 2.3 The First and Second Respondent acted unconscionably pursuant to the Act in making the representations through its authorised representatives to the Applicant who relied on such representations. Ground 3 Particulars 3.1 The First and Second Respondent during the Continued Renovations caused loss and damage to the business operating at the Premises by causing:- (a) Inhibit access to the Premises to the Applicant and its customers (b)inhibit the flow of customers to the Premises; (c) Significant disruption to the trading business of the Applicant; (d) Significant noise and interruptions to the Premises; (e) Failure of the First and Second Respondent to prevent or put a stop to the disruptions which has had a significant adverse effect on the business operated by the Applicant and of which was within the control of the First and Second Respondents and/or its managing agents; (f) Failure to clean, maintain or repair common areas or the Premises caused by the First and Second Respondent's tradesmen during the Renovations and Continued Renovations; Particulars 3.2 The Applicant's business has suffered loss and damage due to the Renovations and Continued Renovations" 5The application for urgent interim orders sought orders that - * Under section 72(1)(b) of the Retail Leases Act 1994 that "the Applicant is required to pay as rental of [sic] $16,632.92 inclusive of GST pending final resolution of the retail tenancy claim in these proceedings." * Under s 72(c)(iv) that the Respondents "pending final determination of the retail tenancy claim in these proceedings, or further order of the Tribunal, ... refrain from performing any act, or doing anything, to terminate or otherwise interfere with the Applicant's occupation and current use" of the premises. * Costs. 6The Applicant's grounds for the interim orders sought said - "1. The Applicant in these proceedings claims interim orders of the Tribunal that the First and Second Respondent be refrain from taking any action to affect the use of the Premises by the Applicant or take any steps to terminate the Lease or re-enter the Premises. 2 The Applicant entered into a lease with the First and Second Respondent on 8 th December 2009 (The Lease"). . The First and Second Respondent commenced significant renovations of 10-20 Bond Street, Sydney on 29 th January 2010 ("the Works") 4. The Works were scheduled to be completed by the First and Second Respondent's on or before September 2010, with the works actually finalising in June 2011 (the Continued Works"). 5. The business operated by the Applicant being a cafe/restaurant from the Premises has had a downturn of sales amounting to approximately 50% of sales due to the effect of the Works and Continued Works undertaken by the First and Second Respondent; 005844 6. The Applicant business has been affected by the Works and continued Works as follows:- a. Inhibit access to the Premises to the Applicant and its customers; b. Inhibit the flow of customers to the Premises; c. Significant noise and interruptions to the Premises; d. Significant disruption to the trading business of the Applicant; e. Failure of the First and Second Respondent to prevent or put a stop to the disruptions which has had a significant adverse effect on the business operated by the Applicant and of which was within the control of the First and Second Respondent's and or its managing agents; f. Failure to clean, maintain or repair common areas or the Building or damage caused by the First and Second Respondent's tradesmen to the Premises. 7. The Applicant's business has been adversely affected by the Works and has to date paid 50% of the rental, to the First and Second Respondents representatives ("partial rental"). 8. The Applicant is not and cannot pay the full amount of the Rental claimed by the First and Second Respondent being the monthly sum of $33,265.84 ("the Base Rent") due to the effect of the works on the Business. 9. The Applicant is only in a position to pay 50% of the Base Rent pending determination of the retail tenancy claim 10. The First and Second Respondents have served on the Applicant a "Notice of Breach" dated 17 th October 2011 indicating that First and Second Respondent demand the payment of the additional rental in the sum of $16,598.34 by no later than 4.00pm on 20 October 2011 at which time the First and Second Respondents reserve the right to re-enter the Premises and Terminate the Lease." 7The application for urgent interim orders first came before the Tribunal on 27 October 2011. Deputy President Higgins fixed that application for hearing on 10 November 2011 and urged the parties to mediate. They were unable to resolve the issues in dispute, resulting in the application for interim orders being heard by me on 10 November 2011. 8At the conclusion of that hearing I reserved my decision. Provided the Applicant paid half the current months rent, the Respondents undertook not to take any action to enforce the lease, or to regain possession of the premises, until my decision is published. Material before the Tribunal 9The following material was considered during that hearing - * The original application * The application for interim orders. * The affidavit of Evripides Evripidou sworn 28 October 2011. Mr Evripidou is the sole director of the Applicant. * The affidavit of Evripides Evripidou sworn 28 October 2011. * The affidavit of Matthew Lutman sworn 9 November 2011. Mr Lutman is a senior property manager at Mirvac Real Estate (Mirvac) which managed the tenancy. * The affidavit of Mark Crudden sworn 9 November 2011. Mr Crudden was also an employee of Mirvac, and is now an employee of MPT (which has a beneficial interest in the property). * The affidavit of Christopher Mackinlay sworn 2 November 2011. Mr Mackinlay is a senior property manager with Mirvac. 10There was no oral evidence. 11A reading of the affidavit material filed by the parties reveals that there are significant and important factual disputes between them going to issues central to the Applicant's claims. It was agreed by the parties, and I accept, that for the purposes of determining the application for urgent interim orders I should consider the applicant's evidence, at its highest, in determining whether it has established a reasonably arguable case for the relief claimed: Spuds Surf Chatswood Pty Ltd v P T Limited [2007] NSWADT 130 and Nam v Commonwealth Funds Management Limited [2002] NSWADT 80. It is not necessary for the Tribunal in hearing the present application to "forecast the ultimate result of the case": Beecham Group Pty Ltd v Bristol Laboratories Pty Ltd [1968] 118 CLR 618; [1968] HCA 1. The Salient Facts 12The salient facts are that: * The Applicant purchased the business known as Caf e Chicane from Goza Pty Ltd (Receivers and Managers Appointed) for the price of $480,000 with settlement being effected on 8 December 2009. * The lease was executed on the same day. * When considering the purchase, in September 2009, Mr Evripidou (EE) together with his solicitor Mr Leface (SL) had a meeting with two representatives of Mirvac, one of whom was Mr Mackinlay (CM). At that meeting the Applicant asserts that a conversation took place to the following effect (paragraph 4 of Mr Evripidou's affidavit sworn 26 October 2011): SL "Thank you for seeing us today, as you will be aware, my client is looking at purchasing the business, we have been provided a copy of the Lease for the premises" EE "The rental paid by the previous tenants is to high, given that Macquarie Bank will be leaving Bond Street and, I can't see the business being able to pay the rental claimed by the Landlord." SL "I understand that the receivers have spoken to you about it, however, we are not sure what is actually happening with the rent" CM "The landlord have issued a head of agreement to the Receiver with a rent reduction of 50% for a period of one (1) year in order to allow the building to be re-leased" EE "I also understand that there will be some works at Bond Street" CM "Yes, there will be renovations to the buildings." EE "This will affect the business trade and ability to build up the business given the way it has been operated by the Receivers. How long will the works be going for?" CM The works should be finished in about September 2010, but the works will not seriously affect your business as the shop area is not really subject to much work, and we will work around you; such as weekends and after hours." EE "What happens if the works go on for longer than expected?" CM "We will sit down with you and resolve it with you." EE "So, if the works go longer than expected, you will sit down with me and resolve any affect such works had on the business?" Mr Mackinlay "Yes". * The Respondents deny much of this conversation. * On 24 November 2009 the Applicant signed two disclosure statements whereby the works that were to be conducted near the premises, affecting the premises and licensed, space were disclosed. They indicated, inter alia, that the works were scheduled to be completed by September 2010; that hoardings were be erected with access affected; and parts of the premises would not be able to be used. * The lease and licence executed by the parties were for a term of 7 years and 233 days. The Base Rent was initially $29,098.52 plus GST per month. Clause 20.4 provided for an incentive under which: ... the Tenant is entitled to a discount of the Base rent in which the tenant is only required to pay 50% of the Base rent from time to time ('the Base Rent Discount Period") for the period commencing on the Commencing Date and expiring on 31 December 2010. * The Applicant asserts this incentive was allowed because major tenants were vacating the building and to allow for the building to be re-leased. The Respondents say it was because of the works that were to take place on the property. * On 29 January 2010 Mr Mackinlay wrote to the Applicant advising that safety hoarding was to be erected - Whilst the hoarding may be a slight inconvenience, we do not believe it will have an adverse effect on your business. * The Applicant asserts that renovations commenced on 29 January 2010 and were not completed until June 2011. They resulted in a hoarding being installed around the premises in or about June 2010 and access being restricted, with loss of the outdoor licensed area. * The Applicant asserts that during the renovations access to its premises was inhibited, as was the flow of customers. This disrupted trade and resulted in a significant reduction in weekly takings. * On 21 December 2010 Mr Leface wrote to Mirvac outlining, by way of example, a number of issues which had adversely impacted on the Applicant's business, and had not been addressed. Interestingly this letter noted that, "the lease accounts for a concession during the renovation period". The letter advised that during the renovation period the Applicant's business had suffered a significant reduction in turnover. It continued - Whilst our client has sought to work with the Lessor in respect of these matters, we are instructed to request that the Lessor consider an extension to allow our client to promote its business and build it up to what it was prior to the renovations, As the sale figures indicate, it was unforseen that such an impact would have been made and if our client is required to pay the full rental as from January 2011, it is likely that this would have a dramatic effect on our client's ability to maintain and promote the business. We are instructed to request that the Lessor consider the extension of the rent reduction period for an additional 12 months in order to allow our client the opportunity to re-establish the business, as you will note it is clearly a matter of allowing our client to build the business up to the standard it was just prior to the renovations by building management. In light of the above, our client will pay the reduced portion of the rent in January 2011 pending the conference between the parties. If there is issue with this position, kindly notify this office immediately and our client will make arrangements to pay the full rent. In addition to the above, we are instructed to request that a round table conference take place in order to discuss this matter, and additional matters which require to be addressed such as the use of our client's toilets tradesmen during the renovations which have resulted in the toilets now requiring repairs. Please note that our client is not seeking to be difficult, but wishes to address these issues directly with management. * On 12 or 13 January 2001 Mr Evripidou and Mr Leface attended a meeting at Mirvac's offices. Mr Evripidou asserts that during that meeting a conversation to the following effect took place between himself and Mr Mackinlay - EE "The renovations have not stopped even though they were to be completed in September 2010. The business has suffered significantly. My sales are down 40%. I wont be in a position to pay the full rental for the premises, as I don't have the money'. CM "We understand that the works have gone on for longer than expected. We will speak to the Landlord and come back to you." * Mr Mackinlay denies that conversation. * On 10 February 2011 Mr Mackinlay wrote to the Applicant advising that the 50% rental rebate would continue for the period 1 January 2011 to 31 April 2011. The letter advised - ... This period of time will extend beyond the time frame to complete the remaining works but the Lessor is will to agree to this as a good will gesture. The Lessor requires that you provide audited monthly trading figures (following the completion of the month), so that we can monitor the progress of the business during this lime. * This continuing rebate was not referred to in the Applicant's evidence although its existence, and the fact that the Applicant took advantage of it, was accepted during the hearing. * There were a series of emails sent by Mr Leface to Mr Mackinlay following the meeting in early January 2011seeking a response from the Respondents. It appears that Mr Leface was not sent Mr Mackinlay's letter of 10 February 2011 until 1 March 2011. * On 3 March 2011 Mr Leface emailed Mr Mackinlay stating that matters raised by the Applicant had not been considered and noting that additional works were to be undertaken at the front of the premises. He noted that figures had been provided to the Respondent and that his client could not trade "to the position it was prior to the premises being renovated". Mr Leface requested a further meeting. * On 9 March 2011 Mr Mackinlay wrote to the Applicant. Relevantly, that letter advised - We note that the Lessee took over the premises in December-2009 and was provided with a detailed Disclosure Statement that rehearsed the nature of the works to be undertaken on the ground floor, effects to entry of the premises, potential effects to trade, services interruptions and confirmation that the office towers adjoining the premises were to be vacated and refurbished. In recognition of the potential disruption the Lessor provided a 50% rental rebate for the duration of these works. The rental rebate was commenced in December(2009, prior to the start of any works. The Lessee was also advised in the Disclosure Statement that the outdoor licenced seating area could be dosed for up to 12 months (1 January 2010 to 31 December 2010) but the Lessor in an effort to assist the Lessee managed works in the area, which allowed the outdoor seating area to be kept open till early June 2011 and was able to "fast track" the works to have the area reopened by early December 2011. During the period of closure of the Licenced area the Lessee placed tables and seating outside the designated sealing area and the Lessor did not enforce its rights to have these removed in a further effort to assist the Lessee. The Lessor will continue the rental rebate of 50% of the passing rental for the period of 1 January 2011 to 31 April 2011, while further works are completed on the ground floor and in particular in the Sydney City Council foot path area fronting Bond Street. This further rental rebate is for a period of time, which extends beyond the proposed time frame to complete the remaining works. The Lessor has agreed to this extension of the rental rebate as a good will gesture and to further demonstrate it assistance offered (lithe Lessee. The Lessor requires that you provide audited monthly trading figures (following the completion of the month), so that we can monitor the progress of the business during this time. * Once again, this continuing rebate was not referred to in the Applicant's evidence although its existence, and the fact that the Applicant took advantage of it, was accepted during the hearing. * The works were completed in June 2011. * The Applicant provided unaudited evidence of takings. which Mr Evripidou claimed showed the takings to be as follows: Period Average Weekly Takings December 2009 to June 2010 $42,588.47 June to December 2010 $26,527.12 January 2011 to 30 June 2011 $21,702.62 1 July 2011 to 20 October 2011 $21,891.83 * The Applicant asserts that the extended renovations have had a significant effect on its business. * Since completion of the works the Applicant has continued to pay half the base rent. * To 1 November 2011 the Applicant is said by the Respondent to be in arrears of $106,759.51. The Applicant disputes this figure. * On 17 October 2011 was served with a notice of breach in relation to the October rent. He has now paid the full amount of that Base Rent with borrowed funds. * Mr Evripidou asserts that the business cannot pay the full Base rent due to the effect of the renovations. It seeks the interim orders accordingly. Consideration 13The Tribunal's power to make interim orders is found in s 72(4) of the Retail leases Act 1994 - (4) The Tribunal may make an interim order under this section pending final determination of a claim, if it appears to the Tribunal desirable to do so. 14The authorities that have considered the nature of this power establish that the making of an interim order is discretionary. That discretion is to be exercised having regard to the following factors: * That the Applicant has shown an arguable case for relief * Causation of the Applicant's position * Whether there is a suitable form of other remedy available * Prejudice to the Applicant * Prejudice to the Respondent * The financial circumstances of the Applicant * The economic impact of the orders sought. See Spuds Surf Chatswood Pty Ltd v P T Limited [2007] NSWADT 130, Nam v Commonwealth Funds Management Limited [2002] NSWADT 80 and Townsend v Chief Executive, State Rail Authority [1999] NSWADT 56 . Has the Applicant shown an arguable case for relief? 15The application for an original order and the application for an urgent interim relief both seek orders reducing the rent payable to $16,632.92 (per month) under s 72(1)(b) of the Retail Leases Act 1994 . That sub-section provides - (1) In proceedings for a retail tenancy claim lodged with the Tribunal under this Part, the Tribunal is empowered to make any one or more of the following orders that it considers appropriate: ... (b)an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings, 16The other provision which may authorise the Tribunal to make such an order is s 72AA(1)(b). This provides - (1) In proceedings for an unconscionable conduct claim lodged with the Tribunal under this Part, the Tribunal is empowered to make any one or more of the following orders that it considers appropriate: ... (b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings. 17While the Applicant has not formally sought an order relying on that power the Tribunal is not a Court of pleadings. The Applicant's case as framed and presented clearly alleges unconscionable conduct on the part of the Respondents and seeks the Tribunal's use of that power by way of interim relief. 18In the course of the hearing the Applicant relied on the oral representations said to have been made by Mr Mackinlay in their September 2009 meeting, claiming that they induced it into entering the lease. This allegation gives rise to a consideration of the provisions of s 10 which relevantly provides - (1) A party to a retail shop lease is liable to pay another party to the lease (the injured party) reasonable compensation for damage suffered by the injured party that is attributable to the injured party's entering into the lease as a result of a false or misleading statement or representation made by the party, or any person acting under the party's authority, with knowledge that it was false or misleading. (2) The giving of a lessor's disclosure statement to a prospective lessee under a retail shop lease is considered to be the making of a representation by the lessor to the lessee as to the information in the disclosure statement. ... 19For the Tribunal to make an order based on this section there must be clear evidence that: * a false or misleading statement was made; * it caused or contributed to the Applicant entering into the lease; * it was made by the Respondent or a person authorised by the Respondent; and * it was made in the knowledge that it was misleading. See Gizah Pty Ltd v AXA Trustees Limited [2001] NSW ADT 116. 20In Golden Harvest (Aust) Pty Ltd v Paing Pty Ltd [2002] NSWADTAP 40 the Appeal Panel said, at [26] - We emphasise the significance of the words `with knowledge that it was false or misleading.' Courts have frequently stated that inferences of fraud are not lightly drawn and likewise, we are of the view that in approaching the liability of a representor under section 10, the Tribunal should be satisfied that clear evidence has been led allowing the Tribunal to conclude that the representor knew that the utterance was false or misleading. 21In the present case the Applicant has not advanced any evidence that at the time of the September 2009 Mr Mackinlay was aware that what he said was false or misleading (assuming that to be the case, and that the Applicant relied on it). In the absence of such evidence that Applicant does not have an arguable case for relief under s10. 22The Applicant's also asserts that the Respondents' representatives orally made representations to the Applicant during the course of the renovations that: * They would discuss any effect of the renovations had on the business and reach agreement with the Applicant as to assisting the Applicant to re-establish the business operating at the premises. * The Respondents would compensate the Applicant for loss and damage to the business. The Applicant asserts that it relied on those representations and as a result it has suffered loss and damage, as evidenced by the continued low takings of the business since the renovations were completed. 23These allegations give rise to a consideration of whether the Applicant has demonstrated an arguable case for relief in reliance on s62D: A party to a retail shop lease must not, in connection with the lease, engage in conduct that it is misleading or deceptive to another party to the lease or that it is likely to mislead or deceive another party to the lease. Section 64E provides a party who has suffered loss or damage as a consequence of misleading or deceptive conduct to recover their loss or damage under s 71, as a retail tenancy claim. 24I have a number of difficulties with this aspect of the Applicant's case. First there is no evidence led by the Applicant, or elsewhere, to the effect that any of the Respondent's representatives said that they would compensate the Applicant for loss and damage to the business. At its highest, Mr Mackinaly's statement was that Mirvac would discuss the Applicant's position with the Respondents "and come back to you." While this can be seen as implying that the Respondents would consider what to do about the ongoing decline in the Applicant's business it cannot, in my view, be construed as a representation or statement to the effect that the Respondents would compensate for loss and damage. Indeed, the evidence is that the Respondents considered the Applicant's position and agreed to accept a reduced rent throughout the entire renovation period. As a result half rental was paid and accepted for an additional six months. 25Secondly, there is no evidence of the Applicant altering its position as a consequence of, or otherwise relying, on these representations. 26In the absence of any evidence in relation to these matters the Applicant does not have an arguable case that the Respondents engaged in misleading and deceptive conduct based on the representations Mr Mackinlay is alleged to have made in the January 2011 meeting. 27Similarly, the pre-contract representations allegedly made by Mr Mackinlay in September 2009 do not give rise to an arguable case that the Respondents engaged in misleading and deceptive conduct. At it highest, Mr Evripidou's evidence discloses that Mr Mackinlay said that if the renovations took longer than expected at that time, then "We will sit down with you and resolve it with you." This cannot be reasonably viewed as a representation that, if the works took longer than expected, that the Respondents would pay the Applicant whatever compensation it demanded. At is highest, this was a representation that the Respondents would discuss and resolve. Given that the Respondents have discussed the issues with the Applicant and have compensated it by extended the rent reduction for 6 months, being the course of the renovation works, there is no evidence that this representation was either misleading or deceptive. 28The Applicant also relies on an allegation of unconscionable conduct. In written submissions it argued - "10. The Applicant submits that the conduct of the Respondent's prior to and during the term of the Lease in respect of the renovations constitutes unconscionable conduct. The Respondent's in its evidence have sought to establish that the renovations works would adversely affect the business. The documentation which includes the exhibits provide that the Respondents believed that there would not be any effect on the Business of the Applicant, however, the Second Affidavit of Evripidou clearly demonstrates the effect. 11. The representations made by the Respondent's where accepted in good faith by the Applicant. It is submitted that it was the belief by the Applicant that the representations that the Respondents would resolve the effect of the renovations on the business that untimely led to the Applicant entering into the said lease and more particularly accepting the representations whilst during the works that the Respondents will resolve the effect of the renovations on the business. 12. It is submitted in evidence by the Respondent, that the Respondent's did not wish to negotiate with the Applicant and that all dealings where to be made to the Receivers Legal Representatives. In the circumstances, the bargaining power of the Applicant was diminished, as in essence it could not have had control of the negotiation transaction, but rather, the Applicant was provided documents from the Respondents which were not negotiable and to be executed. 13. In essence, the conduct of the Respondents in not dealing directly with the Tenant despite being advised of an exchanged contract of sale for the Premises had in effect the bargaining power of the Applicant to negotiate a lease and lease terms with the Respondent and in light of this, the Applicant relied on the oral representation made during the term of the Lease and prior to the execution of the Lease. 14. In light of the above, section 62(3)(d) of the Act is to be considered and s62(3)(a) of the Act. 15. The evidence of the Applicant in this application provides the Tribunal that at the Substantive Proceedings, there is a genuine question to be determined by the Tribunal, namely the existence of a lease between the Applicant and Respondent. 29The references in those submissions should be to s 62B of the Retail Leases Act 1994 . It relevantly provides: (1) A lessor 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) ... (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 ... (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. 30In Attorney General of New South Wales v World Best Holdings Limited & Ors [2005] NSWCA 261 Spigelman CJ said (Tobias JA agreeing): 120 Unconscionability is a well-established but narrow principle in equitable doctrine. It has been applied over the centuries with considerable restraint and in a manner which is consistent with the maintenance of the basic principles of freedom of contract. It is not a principle of what "fairness" or "justice" or "good conscience" requires in the particular circumstances of the case. As Deane J put it in Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 at 616: "... [P]roprietary rights fall to be governed by principles of law and not by some mix of judicial discretion ..., subjective views about which party 'ought to win' ... and 'the formless void of individual moral opinion' ... Long before Lord Seldon's anachronism identifying the Chancellor's foot as the measure of Chancery relief, undefined notions of 'justice' and what was 'fair' had given way in the law of equity to the rule of ordered principle which is of the essence of any coherent system of rational law. The mere fact that it would be unjust or unfair in a situation of discord for an owner of a legal estate to assert his ownership against another provides, of itself, no mandate for a judicial declaration that the ownership in whole or in part lies, in equity, in that other ..." To similar effect are the observations of Dean J, with whom Gibbs CJ, Mason, Wilson and Dawson JJ concurred, when rejecting the proposition that the common law recognised a tort of unfair competition. His Honour described the concept as "a cause of action whose main characteristic is the scope it allows, under high sounding generalisations, for judicial indulgence of idiosyncratic notions of what is fair in the market place." ( Moorgate Tobacco Co Ltd v Phillip Morris Ltd (No 2) [1984] HCA 73; (1984) 156 CLR 414 at 445-446.) 121 The Ministerial Second Reading speech, quoted above, indicates a similar concern to distinguish what is unconscionable from what is merely unfair or unjust. Even if the concept of unconscionability in s62B of the Retail Leases Act is not confined by equitable doctrine, as the decisions under s51AC of the Trade Practices Act suggest, restraint in decision-making remains appropriate. Unconscionability is a concept which requires a high level of moral obloquy. If it were to be applied as if it were equivalent to what was "fair" or "just", it could transform commercial relationships in a manner which the Minister expressly stated was not the intention of the legislation. The principle of "unconscionability" would not be a doctrine of occasional application, when the circumstances are highly unethical, it would be transformed into the first and easiest port of call when any dispute about a retail lease arises. 31Accepting the facts asserted by the applicant, I do not consider that they disclose an arguable case that the Respondents have engaged in unconscionable conduct with respect to the retail lease. The conduct alleged by the Applicant does not have the character of moral obloquy, or disclose highly unethical circumstances, sufficient to make an arguable case that the Respondents engaged in unconscionable conduct. 32The proposed works were clearly disclosed to the Applicant at the meeting in September 2009, and in the disclosure statement, before the Applicant executed the lease. The Respondents have sought to deal with the difficulties encountered by the Applicant as a result of the renovation works by reducing the rent to the end of the renovation period. While the Applicant says this is insufficient to compensate for its loss and damage, the Respondents' alleged conduct is not such that there is an arguable case that it has been highly unethical or engaged in unconscionable conduct. 33The Applicant's evidence does point to Mr Mackinlay's letter of 29 January 2009 being incorrect when it said that the hoarding would not adversely impact of the Applicant's business. When considered with the evidence of the subsequent discussions and rent reductions however, it is not arguable that this carries with it the level of moral obloquy necessary to constitute unconscionable conduct. 34The interim relief claimed by the Applicant (a reduction in rent on an ongoing basis until hearing) would result in an ongoing loss of rent to the Respondents. While the Applicant asserted that this would not result in any prejudice to the Respondents, because the Applicant would be ordered to repay the rent if it was ultimately unsuccessful, Mr Evripidou's evidence as to the state of the Applicant's financial circumstances points to that being a hollow possibility. 35The Applicant says that without the benefit of an ongoing rent reduction it will be "left in a position where it will in essence be in breach of the Lease enabling the Respondent to lockout and terminate the Lease resulting in the Applicant being precluded from operating the business from the Premises." I accept that this would prejudice the Applicant's position. There is however, no evidence that the trading position of the Applicant will improve, just expressions of hope. It has not improved since the renovation works ceased. 36On the other hand the Applicant entered into the lease knowing that there were renovation works to take place after it took possession which would adversely impact on the business. It faced the challenge of, and took on the financial risks associated with, rebuilding the business upon completion of those works, albeit that the works were to be completed in a shorter period of time than that which ultimately occurred. 37I agree with the Respondents that the interim remedy which the Applicant seeks has the potential of resulting in the Applicant receiving the benefit of a substantial portion of its claim (the 12 months rent reduction) before the hearing of its substantive claim. 38On balance the factors outlined and discussed above point to this not being a proper case in which to exercise the Tribunal's power to grant the interim orders sought. 39The application for urgent interim orders is therefore dismissed. 40I direct that the original application be listed for directions at 11am on 8 December 2011. Costs 41I note that both parties have sought costs. Section 88 of the Administrative Decisions Tribunal Act 1997 provides: (1) Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section. (1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as: (i) failing to comply with an order or direction of the Tribunal without reasonable excuse, or (ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or (iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or (iv) causing an adjournment, or (v) attempting to deceive another party or the Tribunal, or (vi) vexatiously conducting the proceedings, (b)whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) any other matter that the Tribunal considers relevant. (2) The Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis. (3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs. (4) In this section, costs includes: (a) costs of or incidental to proceedings in the Tribunal, and (b) the costs of or incidental to the proceedings giving rise to the application, as well as the costs of or incidental to the application. 42I have previously considered the principles applicable the to Tribunal's exercise of the discretion to award costs in the retail leases division in Garces v TMG Argyle Pty Ltd and another [2011] NSWADT 101, at [20-26]. I do not intend to repeat that discussion here. 43In this case the applicant has been unsuccessful in its application for urgent interim orders and as a consequence, in the absence of unusual circumstances, none of which apply here, it is not entitled to an order for costs. 44The Respondents have however been successful in resisting the application for interim orders. A principal reasons for their success on that issue was that I was not satisfied that the Applicant had demonstrated an arguable case. This is a relevant factor when considering whether it is fair to award costs: see s 88(1A)(c). In addition, the compensatory nature of an order for costs is a relevant factor under s 88(1A)(e), especially in the Retail Leases Division where proceedings have a more commercial flavour to them. 45Having regard to those factors I am satisfied that is this case it fair to order the Applicant to pay the Respondents costs of the day of the interim hearing only. Those costs, in default of agreement, are to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 . ********** 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: 21 November 2011