Supreme Court New South Wales Medium Neutral Citation: In the matter of Creditors' Trust Deed established in the administration of Bevillesta Pty Ltd [2013] NSWSC 1258 Hearing dates: 5 - 9 August 2013 Decision date: 05 September 2013 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: Directions made that the trustees of the creditors' trust deed would be justified in rejecting the plaintiff's proof of debt against the creditors' trust. Orders made for parties to bring in short minutes of order to give effect to the judgment. Catchwords: CORPORATIONS - management and administration - application for review of decision of trustees of creditors' trust deed to reject a claim for payment under the terms of a creditors' trust - whether the Court has jurisdiction to determine an appeal from the decision of trustees of a creditors' trust - Court's power to give a direction to a trustee under s 63 of the Trustee Act 1925 (NSW). LANDLORD AND TENANT - agreements for lease - creation - when lease took effect at general law - where lease is a deed which would not be binding until delivered - whether intention by the lessor to be immediately bound by the lease - whether lease took effect in accordance with s 8(2) Retail Leases Act 1994 (NSW) - whether lease was sufficiently complete to have effect. DAMAGES - whether damages for breach of contract established where damages sought are loss of profit making opportunity represented by an opportunity to occupy a shop under a lease - where conflicting expert evidence - whether basis for damages calculation established. Legislation Cited: - Corporations Act 2001 (Cth) s 1321 - Corporations Regulations 2001 (Cth) reg 5.6.54(2) - Retail Leases Act 1994 (NSW) ss 3, 8, 8(1), 8(2), 11, 11(2) - Trustee Act 1925 (NSW) ss 63, 63(8)-(10) Cases Cited: - Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99 - Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 - Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 - Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 - Current Images Pty Ltd v Dupack Pty Ltd [2012] NSWCA 99 - David v Lord Provost, Magistrates and Councillors of the City of Edinburgh (1953) SC 34 - Foote v Acceler8 Technologies Pty Ltd [2012] NSWSC 635 - Harvey v Pratt [1956] 2 All ER 786 - Industrial Equity Ltd v Darling Point Securities Pty Ltd (1991) NSW ConvR 55-670 - Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361; (2011) 276 ALR 375 - Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66 - Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 - Malec v JC Hutton [1990] HCA 20; (1990) 169 CLR 638 - Marley v Mutual Security Merchant Bank & Trust Co Ltd [1991] 3 All ER 198 - NZI Insurance Ltd v Baryzcka [2003] SASC 190; (2003) 85 SASR 497 - Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 - Picwoods Pty Ltd v Panagopoulos [2004] NSWSC 978 - Re Application by Perpetual Trust Services Ltd (as responsible entity of the Momentum AllWeather (A$) Absolute Return Fund) [2012] NSWSC 758 - Re Australian Pipeline Ltd [2006] NSWSC 1316; (2006) 60 ACSR 625 - Re Jay-O-Bees; Rosseau v Jay-O-Bees [2004] NSWSC 818; (2004) 50 ACSR 565 - Re Purchas (as liquidator of Astarra Asset Management Pty Ltd (in liq)) [2011] NSWSC 91 - Re MF Global Australia Ltd (in liq) [2012] NSWSC 994 - Segboer v AJ Richardson Properties Ltd [2012] NSWCA 253 - Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 - Tanning Research Laboratories Inc v O'Brien [1990] HCA 8; (1990) 169 CLR 332; (1990) 1 ACSR 510 - Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 - Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 282 ALR 604 Texts Cited: - T. Heaver-Wren, "The Sharp End of Creditors' Trust Deeds - Adjudication of Claims" (2005) 23 C&SLJ 201 Category: Principal judgment Parties: Ronnat Pty Limited (Plaintiff) Peter Krejci and Martin Green as Trustees of the (Creditors Trust established by Deed in the Administration of Bevillesta) (First Defendant) Top Ryde Funding Pty Ltd (Second Defendant) Representation: Counsel: P. Bolster SC/S. Haddad (Plaintiff) T.M. Faulkner (Second Defendant) Solicitors: Spinks Eagle Lawyers (Plaintiff) K & L Gates (Second Defendant) File Number(s): 2011/310040 Judgment 1By Amended Originating Process, the Plaintiff, Ronnat Pty Limited ("Ronnat") applies under s 1321 of the Corporations Act 2001 (Cth) or alternatively under s 63 of the Trustee Act 1925 (NSW) for review of a decision which, it contends, was made by Mr Krejci and Mr Martin Green as deed administrators ("Deed Administrators") of Bevillesta Pty Limited (subject to deed of company arrangement, receivers and managers appointed) ("Bevillesta") and as trustees of a creditors' trust established under a Creditors' Trust Deed dated 8 July 2011 ("Creditors' Trust Deed") entered into by the Deed Administrators and Top Ryde Funding Pty Limited, the Second Defendant in the proceedings. By that decision, Messrs Krejci and Green rejected a claim made by Ronnat as a creditor of Bevillesta for payment under the terms of the creditors' trust. 2Section 1321 of the Corporations Act permits a person aggrieved by an act, omission or decision of, inter alia, an administrator of a deed of company arrangement executed by a company to appeal to the Court in respect of that decision and allows the Court to confirm, reverse or modify that act or decision and make such orders and give such directions as it thinks fit. Such an appeal involves a hearing de novo, in which the deed administrator may rely on any ground on which the relevant company might have defended the claim brought by the creditor: Tanning Research Laboratories Inc v O'Brien [1990] HCA 8; (1990) 169 CLR 332; (1990) 1 ACSR 510; Re Jay-O-Bees; Rosseau v Jay-O-Bees [2004] NSWSC 818; (2004) 50 ACSR 565 at [34], [47]. 3Ronnat's application for review also refers to clause 9.1(d) of the Creditors' Trust Deed, which provides for the trustees to call for formal proofs of debt in support of any trust claims from trust beneficiaries pursuant to those parts of the Corporations Act and Corporations Regulations 2001 (Cth) incorporated into the Creditors' Trust Deed by clause 9.2 of the Deed; and purportedly allows a trust beneficiary 21 days from being notified of the Trustees' decision under clause 9.1(b) of the Creditors' Trust Deed to file with the Court any appeal or other application in relation to the Trustees' decision. The Second Defendant contends (and Ronnat adopts this submission) that, having regard to the circumstances in which the Creditors' Trust Deed was made (including the incorporation of certain provisions of the Corporations Act and Corporations Regulations and the anterior deed of company arrangement), the Creditors' Trust Deed evidences an intention by the Defendants that the trustees' promise in clause 9.1(b) be held on trust for the benefit of each trust beneficiary, and the term "trust beneficiary" is defined in clause 1.2 of the creditors' trust Deed to include anyone who appears to have a trust claim. However, even if that submission were accepted, it does not answer the question whether the Court has jurisdiction to determine the application, under s 1321 or the Corporations Act or reg 5.6.54(2) of the Corporations Regulations or otherwise. 4It does not seem to me that the Court has jurisdiction, under s 1321 of the Corporations Act or reg 5.6.54(2) of the Corporations Regulations, to determine an appeal from a decision of Messrs Krejci and Green made by them in their capacity as trustees of the Creditors' Trust, not as deed administrators, since that section and that regulation do not extend to review of decisions of trustees of creditors trusts. The reference to s 1321 of the Corporations Act or reg 5.6.54(2) of the Corporations Regulations in the Creditors' Trust Deed does not confer jurisdiction or power on the Court in circumstances not within the scope of those provisions: see T. Heaver-Wren, "The Sharp End of Creditors' Trust Deeds - Adjudication of Claims" (2005) 23 C&SLJ 201. The proceedings were neither commenced nor conducted on the basis that, for example, declaratory relief was sought as between the trustees and Ronnat. 5Alternatively, Ronnat relies on s 63 of the Trustee Act 1925 (NSW), which permits the Court to give a direction to a trustee in an appropriate case. That section authorises the Court to give an "opinion advice or direction on any question respecting the management or administration of the trust property" and permits relief aimed at resolving legitimate doubts held by a trustee as to the proper course of action and protecting the trust and those entitled to it. In Re Australian Pipeline Ltd [2006] NSWSC 1316; (2006) 60 ACSR 625 at [17], Barrett J emphasised the role of such advice in providing guidance for the future and referred to Marley v Mutual Security Merchant Bank & Trust Co Ltd [1991] 3 All ER 198 at 201 where Lord Oliver of Aylmerton observed that: "A trustee who is in genuine doubt about the propriety of any contemplated course of action in the exercise of his fiduciary duties and discretions is always entitled to seek proper professional advice and, if so advised, to protect his position by seeking the guidance of the court." 6In Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66, the High Court observed (at [56-59]) that there were no implied limitations on the power to give advice or on the discretionary factors relevant to the giving of advice and the power is confined only by the subject matter, scope and purpose of the legislation and may be exercised whenever a question arises as to "the management or administration of the trust property" or "the interpretation of the trust instrument". The Court also noted (at [64]) that the procedure operates as "an exception to the Court's ordinary function of deciding disputes between competing litigants" and affords a facility for providing "private advice" to trustees although the Court is not bound to give such advice. The application of the section was also considered in this Court in Re Purchas (as liquidator of Astarra Asset Management Pty Ltd (in liq)) [2011] NSWSC 91 at [39], Re Application by Perpetual Trust Services Ltd (as responsible entity of the Momentum AllWeather (A$) Absolute Return Fund) [2012] NSWSC 758 at [35]-[38] and Re MF Global Australia Ltd (in liq) [2012] NSWSC 994 at [9]. 7Subsections 63(8)-(10) of the Trustee Act in turn deal with questions as to who are the beneficiaries of a trust or what are their rights as between themselves, in respect of a distribution of property in accordance with the direction given by the Court under that section. Subsection 63(10) provides that: "Any person who claims that the person's rights as beneficiary will be prejudiced by the conveyance or distribution may within such time as may be prescribed by rules of Court, or as may be fixed by the Court, apply to the Court for such order or directions as the circumstances may require, and during such time and while the application is pending, the trustee shall abstain from making the conveyance or distribution." 8There is a technical, but nonetheless real, difficulty with the application of s 63 of the Trustee Act in this application since the trustees have not, in terms, sought such a direction from the Court and Ronnat does not itself have standing to do so. The Second Defendant contends (and Ronnat also adopts this submission) that the Court should treat the proceedings as in substance an application by the trustees under s 63 of the Trustee Act and that the Court's opinion, advice or directions is warranted as to whether Ronnat's claim should be treated as an "Admitted Claim" as defined in clause 1.2 of the Creditors' Trust Deed. The Second Defendant notes that, although no cross-claim has been filed by which the trustees make the application, a requirement for such a cross-claim should be dispensed with in the light of the conduct of the proceedings to date. Where both parties have assumed that the Court had jurisdiction to determine the relevant question, and where it is consistent with the just, quick and cheap resolution of the matters in dispute for the Court to do so, the preferable course seems to me to treat the application as an application by the trustees of the Creditors' Trust for directions under s 63 of the Trustee Act as to whether they are justified in allowing Ronnat's claim on the asserted basis, and to provide such directions where there exists a dispute between Ronnat and the trustees as to that matter which has been fully ventilated in the hearing before me. Chronology of events 9The scope of the issues in dispute were narrowed in the hearing and, in particular, Ronnat did not press a claim that it had originally made in respect of a shop carried on at Gosford Town Centre in Gosford. The issues that were pressed in the hearing related to an agreement for lease, or lease, of a shop at Top Ryde Shopping Centre. The chronology of events was largely undisputed. 10Ronnat operated or operates retail outlets that sell discount variety goods trading as "Roni's Variety Discount". The evidence as to that extent of that business, or the extent to which it is still operating, was limited, although there was evidence that an entity associated with Ronnat had previously operated a store at another shopping centre, Centro Bankstown, to which I will refer below. 11On 12 August 2005, Ronnat entered into a lease ("First Lease") with Bevillesta for shop 100 in the then Top Ryde Shopping Centre for a term of 2 years, commencing 1 September 2005 and terminating on 31 August 2007 and when into occupation of that shop. Clause 13 of the First Lease provided that, if Bevillesta substantially redeveloped that shopping centre within 5 years of 1 September 2005, it would not, prior to 1 September 2010, grant any lease within the redeveloped Top Ryde shopping centre for the purpose of a discount store similar to that operated by Ronnat under the First Lease, subject to certain conditions. I will address the scope of that clause below. 12By letter dated 13 April 2007, Bevillesta made an offer to Ronnat of a lease of shop LG2-MMD in the redeveloped Top Ryde shopping centre (CB 4/1291) and stated that: "If this offer is not accepted in writing within 14 business days of receipt of this letter, the accompanying offer will be immediately withdrawn and we will be entitled to lease the premises to another party. In that event, your rights under clause 13 of the lease will be at an end." Bevillesta did not proceed in that manner and instead undertook further negotiations with and made further offers to Ronnat over an extended period. 13By letter dated 20 April 2007, Bevillesta advanced a proposal for a lease of that shop to another operator of discount stores, Hot Dollar (CB 2/1284). It seems that the terms of that offer were not conveyed to Ronnat until July 2007, but nothing turns on that delay where Ronnat has not suggested that it suffered any loss by reason of the delay. The evidence of one of the directors of Ronnat, Mrs Scarano, is that she was shown the proposal for Hot Dollar to lease that shop at a meeting on July 2007 and was advised that Ronnat would need to match that offer or Bevillesta would lease the store to Hot Dollar (Mrs Scarano 19.4.2012 [22]). Mr Scarano also gave evidence of a discussion in July 2007 that contemplated that Ronnat would pay a premium to occupy that store and thereby exclude Hot Dollar from the shopping centre (Mr Scarano 19.4.2012 [41]). 14Ronnat ceased trading at Shop 100 in the then Top Ryde shopping centre, which it had occupied under the First Lease, on 14 July 2007 and the redevelopment of that centre thereafter proceeded. 15On 9 August 2007, in purported compliance with clause 13 of the First Lease, Bevillesta's solicitors wrote to Ronnat (CB 2/379) enclosing an agreement for lease ("Agreement for Lease") for shop LG2-MMD in the redeveloped Top Ryde shopping centre (CB 2/411), a lease for that shop for a 5 year term and a 5 year option ("Second Lease") (CB 2/519), a disclosure statement in respect of that lease (CB 2/380), a calculation of stamp duty and instructions as to signing of those documents. Clause 5.1 of the Agreement for Lease permitted Bevillesta to terminate the Agreement for Lease in a range of circumstances including, relevantly, if "after reconsidering the desirability of the business proposed to be operated from the premises ... [Bevillesta] decides that it would prefer to have a different business being operated" (cl 5.1(c), CB 2/425). 16The directors of Ronnat signed the Agreement for Lease and the Second Lease in August 2007 (Mr Scarano 19.4.2012 [12], CB 1/350) and returned them to Bevillesta in late August 2007 together with a cheque payable to the Office of State Revenue in the amount of the stamp duty. The lessee's disclosure statement in respect of the lease recorded that "premium rent was paid to match Hot Dollar to lock-out competition" (CB 2/394). In September 2007, the directors of Bevillesta, Malcolm Beville and John Beville, also signed the Agreement for Lease and the Second Lease and those documents were stamped in early December 2007. 17Mrs Scarano's evidence is that, in early October 2007, she asked the leasing consultant which represented Ronnat in its negotiations with Bevillesta why the cheque for stamp duty had not been presented; he suggested she call Bevillesta's lawyers and ask for the signed pages of the Agreement for Lease and Second Lease to be faxed to her, and that she received these on or about 2 October 2007 (Mrs Scarano 19.4.2012 [24]) 18On or about 2 July 2008, Bevillesta sent a letter to Ronnat welcoming it to the redeveloped Top Ryde shopping centre. Shortly afterwards, on 8 July 2008, Bevillesta determined to relocate Ronnat's business to another shop in the redeveloped Top Ryde shopping centre, so as to locate an Asian grocery store that would pay a higher rent in store LG2-MMD, or otherwise to terminate the Agreement for Lease. On 10 July 2008, Bevillesta wrote to Ronnat advising: "Under clause 5.1 of the Agreement for Lease, we hereby give you notice that after reconsidering the desirability of the business proposed to be operated from the Premises (as recorded in Item 16 of the Lease attached to the Agreement for Lease) we, as landlord, have decided that we would prefer to have a different business being conducted from the premises [Shop LG2-MMD] than that proposed by you, and we accordingly now terminate the Agreement for Lease with immediate effect." That letter noted that Bevillesta would arrange for its solicitors to refund the payment of stamp duty previously made by Ronnat. Ronnat contends that that letter amounted to a breach of the Second Lease by Bevillesta. 19Ronnat initially commenced proceedings in respect of its claim in 2009 and those proceedings were dismissed, without a hearing on the merits, after Bevillesta was placed in administration. The administration ended with the creation of the creditors' trust and Messrs Krejci and Green were appointed as trustees of that trust (CB 1/215). Ronnat subsequently submitted a proof of debt on 2 August 2011 (CB 1/239) claiming that Bevillesta was indebted to it in the amount of $4,692,170.66. The deed administrators rejected that proof of debt on 7 September 2011 (CB 1/240) and these proceedings were commenced on 27 September 2011. The Second Defendant, Top Ryde Funding Pty Limited, which is the funder of the creditors trust, was subsequently joined as party to the proceedings and has been the substantive opponent to Ronnat's application. Whether the Second Lease took effect 20Ronnat contends that the Second Lease took effect when it was signed by the directors of Bevillesta, or alternatively when a copy of the page signed by those directors was sent by Bevillesta's solicitors to Ronnat at Mrs Scarano's request, or alternatively by no later than December 2007 when that document was stamped. Ronnat contends that, when the Second Lease took effect, the Agreement for Lease merged with the provisions of the Second Lease and clause 5.1(c) of the Agreement for Lease ceased to have effect by reason of clause 23.6 of the Second Lease (CB 2/506). On that basis, Ronnat contends that Ronnat was not entitled to rely on clause 5.1(c) of the Agreement for Lease to terminate the relevant arrangements in July 2008 and that Bevillesta repudiated the Second Lease in taking that course. 21The first question raised by this contention is whether the signature of the Second Lease by Bevillesta's directors or the sending of a copy of the signature page by Bevillesta's solicitors to Ronnat at Mrs Scarano's request or the stamping of the Second Lease gave rise to a binding lease at general law. As I noted above, the directors of Ronnat signed the proposed lease in August 2007. At that time, redevelopment work at the Top Ryde Shopping Centre was ongoing and the shop that was proposed to be the subject matter of the lease did not yet exist (Andrews [42], CB 4/1221). The counterparts of the lease signed by Bevillesta and Ronnat were not exchanged; instead, the last page of the lease was sent by facsimile by Bevillesta's solicitors to Ronnat on 2 October 2007, after Ms Scarano had telephoned and requested a copy (Mrs Scarano [24], CB 1/248, Ex D1, Tab 7). Ms Rose, who is a Senior Associate with the solicitors who acted for Bevillesta in respect of the development gave evidence that a signed and stamped Agreement for Lease was also sent to Mr Scarano on 13 June 2008 and annexes an office copy of her letter of that date to Mr Scarano. I accept Ms Rose's evidence in that regard. Ms Rose's evidence, led without objection, was that neither of the originals of the incomplete Second Lease was provided to Ronnat and both remain "held in escrow" on Bevillesta's solicitors' file. 22Ms Rose also gave evidence as to the process that was adopted for the leasing of stores in the redeveloped Top Ryde shopping centre generally. That process was standardised in respect of each store in the shopping centre and, on Ms Rose's evidence, typical of the procedure generally followed for the leasing of large "off the plan" shopping centre developments. Ms Rose noted that a lease for each store was initially prepared that was not complete and did not contain a reference to title, commencement date, expiry date or area for the premises as those details were not known until the shopping centre was constructed and complete. The agreement for lease, disclosure statement and incomplete lease for the relevant shop were issued to the prospective tenant under a covering letter requesting that they be signed by the tenant and returned to Bevillesta's solicitors, and the prospective tenant would then sign each of the documents and return them, with a cheque for the applicable amount of stamp duty. Bevillesta would also sign the agreement for lease, disclosure statement and incomplete lease and return the documents to the solicitors. If stamp duty was applicable, the agreement for lease and incomplete lease would be forwarded to the Office of State Revenue for stamping. 23Ms Rose's evidence is that one original agreement for lease would then be sent to the prospective tenant; the other original agreement for lease would be kept by Bevillesta; and the incomplete leases would then be held "in escrow" by Bevillesta's solicitors until the shopping centre was built, although Ms Rose did not seek to identify the terms of such an escrow. The agreement for lease would in turn (and did in this case) authorise the prospective landlord to complete the lease details (commencement date, expiry date, title reference and area of premises) once they were known. Ms Rose also noted that, in her experience, it was not unusual for tenants or their solicitors to request a copy of the execution page of an agreement for lease in order to confirm that it had been executed by the prospective landlord and there would usually be no good reason for the solicitor acting for the prospective landlord not to comply with that request. 24In the present case, the Second Lease is in the form of a deed, which would not be binding on either Ronnat or Bevillesta until it was delivered, and whether it was delivered is to be determined as a question of fact: Segboer v AJ Richardson Properties Ltd [2012] NSWCA 253 at [51]-[59]. In order to establish that Bevillesta had delivered the deed, in the absence of physical delivery, it would at least need to be shown that it had indicated an intention immediately to be bound by the Second Lease, either when its directors signed the Second Lease, or when its solicitors sent a copy of the signature page of the Second Lease to Ronnat at Mrs Scarano's request, or when the Second Lease was stamped. It does not seem to me that that intention is established. 25First, such an intention would be inconsistent with the terms of the Agreement for Lease, which provided for the lease to be granted and accepted on the Commencement Date (as defined) (cl 2.1) and for the lease not to be binding until the Commencement Date and for Bevillesta not to execute that lease until the Commencement Date (cl 14, Ex D1, Tab 4). The term "Commencement Date" is defined in the Agreement for Lease to mean the earlier of the day (1) the tenant begins trading from the premises and (2) the day after the date the Fitout Period ends, but not before the day after the day on which Practical Completion occurs. On any view, that date was much later than the dates on which Bevillesta's directors signed the Second Lease, or when its solicitors sent a copy of the signature page of the Second Lease to Ronnat at Mrs Scarano's request, or when the Second Lease was stamped 26Second, clause 5.1 of the Agreement for Lease (to which I will refer in greater detail below) permitted Bevillesta to terminate its obligations under that agreement up to 1 July 2009, referred to as the "Economic Feasibility Date" (Agreement for Lease, item 8) and it would be highly unlikely that Bevillesta's objective intention was to bind itself to long term leases of particular shops in the not yet redeveloped shopping centre before that date. 27Third, the evidence to which I have referred above indicates that Bevillesta had provided the signed lease to its solicitors in accordance with its standard practice, and there is no basis to infer from that matter that it intended to be bound by no more than its sending the signed lease to its own solicitor for the purpose of its later being delivered to Ronnat: Segboer v AJ Richardson Properties Ltd above at [72]-[73]. 28Fourth, the fact that Bevillesta's solicitor later provided a copy of the page of the Second Lease signed by Bevillesta's directors to Ronnat at Mrs Scarano's request does not take the matter further, where there is no evidence that Bevillesta instructed it to do so for the purposes of delivery. The fact that only the signature page was provided by facsimile, without any statement that it was provided by way of delivery, does not support an inference that that page was provided by way of delivery. It is also unlikely that the parties would have objectively intended that the point at which the Second Lease was delivered and took effect would be determined by the accident of when Mrs Scarano requested a copy of the signing page of it, which has no logical connection with the progress of the redevelopment of the shopping centre. I do not consider that the submission of the Agreement for Lease and Lease for stamping has any greater significance in this regard, it too having no logical connection with the progress of the redevelopment of the shopping centre. 29Alternatively, Ronnat contends that the Second Lease took effect in accordance with s 8(2) of the Retail Leases Act 1994 (NSW). Section 8 of the Retail Leases Act provides: "8(1) For the purposes of this Act, a retail shop lease is considered to have been entered into when a person enters into possession of the retail shop as lessee under the lease or begins to pay rent as lessee under the lease (whichever happens first). (2) However, if both parties execute the lease before the lessee enters into possession under the lease or begins to pay rent under the lease, the lease is considered to have been entered into as soon as both parties have executed the lease." 30Subsection 8(1) of the Retail Leases Act does not apply in this case, because Ronnat had neither entered into possession of the shop (which, at the relevant time, had not been completed) nor begun to pay rent. The Second Defendant also points out that s 8(2) of the Retail Leases Act only applies if a "lease" has been "execute[d]" by both parties. The term "retail shop lease" or "lease" is defined in s 3 of the Retail Leases Act as an: "agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop." That section therefore requires that there exist an agreement under which such a right has been granted. In my view, the reference to "execute" in s 8(2) of the Act is to execution in a manner that would give rise to a binding agreement constituting a "lease" for the purposes of the Act. I have held above that the Second Lease had not, at the relevant time, been executed at general law so as to grant such rights. 31The Second Defendant also contends, and I accept, that s 8 of the Retail Leases Act operates to determine when a retail lease is entered into, for the purposes of the Retail Leases Act, not whether it is entered into as a matter of its binding legal character. As the Second Defendant points out, several provisions of the Act, and particularly Part 2 which applies "before the lease is entered into" require a determination of that question. The section assumes that a lease has been executed, in a manner which would cause it to have effect at general law, rather than providing for that lease to take effect if it is not executed in a manner that would give it effect at general law. The contrary view would have unexpected results which are not supported by the language of the section or its role in the Act. In particular, it does not seem to me that the language of s 8 of the Retail Leases Act requires or that the legislature could have intended that the section would, for example, cause a lease to be effective if it were executed, for example, by a person who did not have capacity to execute it. It would also be a surprising result if, where a lease was executed in escrow and subject to a specific condition which was to be satisfied before it took effect, would be effective for all purposes by reason of s 8 of the Retail Leases Act, defeating the escrow arrangement. It would be a similarly surprising result if two parties who had each signed counterparts of a lease which provided that it should be effective on its exchange were, contrary to their expressed intent, to be bound on the date which the second of them, unknown to the first, signed his or her counterpart in anticipation that those counterparts would be exchanged so as to become effective at some future date. The result that both parties would be treated as having entered into a lease, on a date which was not necessarily known to both of them, would be all the more surprising where, for example, the lessor is guilty of an offence if he or she does not give a disclosure statement to the lessee at least 7 days before a retail shop lease is entered into, under s 11 of the Retail Leases Act, and where the tenant's right to terminate the lease applies only within 6 months after the lease was entered into under s 11(2) of the Act. 32Third, the Second Defendant contends that s 8(2) of the Retail Leases Act is directed to a subset of the position contemplated by s 8(1), applying to bring forward the date of entry into the lease for the purposes of the Act, but only where a person has either entered into possession of the retail shop or begun to pay rent as contemplated by s 8(1) of the Act, and not where a tenant neither goes into possession or begins to pay rent. I see considerable force in that submission, but it is not necessary for me to determine it given the conclusion that I have reached above. 33For these reasons, I do not find that the Second Lease took effect on any of the events for which Ronnat contends, either at general law or under s 8 of the Retail Leases Act, and Ronnat's first claim must fail on that basis. Whether the Second Lease was sufficiently complete to have effect 34The Second Defendant also contends that the Second Lease lacked essential terms at the relevant time, including the commencement date and the identification of the premises. In the case of a lease or agreement to lease, the essential terms would usually be the parties, the premises, the term and the rent: Harvey v Pratt [1965] 2 All ER 786 at 788; Industrial Equity Ltd v Darling Point Securities Pty Ltd (1991) NSW ConvR 55-570 at 59,202-203; NZI Insurance Ltd v Baryzcka [2003] SASC 190; (2003) 85 SASR 497 at 506; Foote v Acceler8 Technologies Pty Ltd [2012] NSWSC 635 at [21]. In Picwoods Pty Ltd v Panagopoulos [2004] NSWSC 978 at [60]-[61], White J noted that the identification of the commencement date is an essential term for a contract for a lease for a fixed term; it is sufficient if the commencement date can be inferred from the instrument; and that date must become certain before the lease takes effect in interest or possession. 35The form of the Second Lease signed by Ronnat, and subsequently signed by the directors of Bevillesta, did not include the commencement date or particulars of title (Ex D1, tab 5). Clause 14.3 of the Agreement for Lease authorised Bevillesta to complete that information at a later date. At the time the Second Lease was signed, there were open questions as to whether a guarantor would be required for the lease, the amount of a bank guarantee and as to the treatment of the fit-out contribution (Rose [22], Ex D1, Tab 6) although those questions were resolved by the time the Second Lease was stamped in December 2007 (Ex D1, pp 439-440). Ronnat in turn relies on clause 23.6 of the Second Lease which, in the context of seeking to exclude any representations made by Bevillesta outside the scope of the Second Lease and disclosure document, provides that "[t]his lease and the disclosure statement is the full agreement between the landlord, the tenant and the guarantor". Ronnat seeks to use that clause in a somewhat different way, so as to incorporate the disclosure document and, possibly, the Agreement for Lease to complete the terms of the Lease. 36The steps in Ronnat's argument, and other relevant provisions to which Ronnat does not refer, are as follows: * The disclosure statement, as incorporated in the Second Lease by clause 23.6, indicates that the shop would be available for occupation by Ronnat on the "Estimated Handover Date in the Agreement for Lease" (CB 2/381). I interpolate that the Agreement for Lease does not, in terms, indicate an "Estimate Handover Date". However, the term "Handover Date" is in turn defined in clause 12 of the Agreement for Lease (CB 2/419) as the earlier of (1) the date the tenant accesses the premises to carry out the fit-out and (2) the date Bevillesta serves Ronnat with the Practical Completion Certificate. That Agreement also specifies three dates as the "Estimated Date for Practical Completion" for the three stages of the redevelopment, but provides that each of those dates may be delayed as a result of delays in the relevant works "for a period that [Bevillesta] considers reasonable" and that may occur on more than one occasion. * Ronnat in turn relies on the definition of "Commencement Date" in the Agreement for Lease, although its relevance to the completeness of the Second Lease is not clear since clause 23.6 of the Second Lease does not incorporate that agreement and the reference to the "Estimated Handover Date" in the disclosure document does not refer to that definition. That term is defined in the Agreement for Lease to mean the earlier of the day (1) the tenant begins trading from the premises and (2) the day after the date the Fitout Period ends, but not before the day after the day on which Practical Completion occurs. The "Fitout Period" is in turn defined as 8 weeks. * Ronnat contends that the Commencement Date of the Second Lease can be determined by reference to the day after the day on which the Certificate of Practical Completion was issued, and there is therefore no uncertainty as to that date. 37I do not accept that this complex argument leads to the result that the Commencement Date was certain as at either September 2007 or July 2008 so as to allow the Second Lease to have effect as at those dates. Even assuming the terms of the disclosure document were incorporated in the Second Lease for all proposes, and assuming the "Estimated Handover Date" in the disclosure document is to be read as the "Handover Date" referred to in the Agreement for Lease, that date is not certain since neither the date on which Ronnat will access the premises to carry out the fit out nor the date on which Bevillesta will serve the Practical Completion Certificate was not capable of determination as at September 2007 or July 2008, at least for the reason that practical completion could be delayed as the Agreement for Lease recognised. If reference could be made to the "Commencement Date" as defined in the Agreement for Lease, then the date that would be the earlier of the two alternatives specified in the definition of "Commencement Date", and the date on which Practical Completion would occur would also not be capable of determination as at September 2007 or July 2008. The Second Lease therefore lacked a certain commencement date and no binding lease could have taken effect as at those dates. In that situation, the Agreement for Lease including clause 5.1(c) remained in effect, whatever the position would have been after the Second Lease took effect. 38I should add that Ronnat also contended that clause 5.1(c) of the Agreement for Lease only permitted termination of that agreement and not of a lease that had taken effect. It is not necessary for me to address that contention since I have not found the Second Lease had taken effect at either September 2007 or July 2008. Whether the offer of the Second Lease failed to comply with Part 13 of the First Lease 39Ronnat alternatively contends that Bevillesta's conduct in making an offer to it in the terms made on 9 August 2007 (to which I have referred above) did not comply with Part 13 of the First Lease in that clause 5.1(c) of the Agreement for Lease allowed Bevillesta a right to terminate the lease in a manner that was not provided for and was inconsistent with the rights contained in clause 13 of the First Lease. I will deal here with the issue whether the right of termination was inconsistent with Part 13 of the First Lease and will deal with other issues as to the operation of that Part below. Ronnat also claims to have suffered loss and damage by reason of that breach of the First Lease, being the same amount as claimed under its first claim. I will deal with the quantification of that loss below. 40Part 13 of the First Lease applied if Bevillesta substantially redeveloped the Top Ryde shopping centre within 5 years after the Lease Commencement Date for the First Lease. The Lease Commencement Date was 1 September 2005 so that five year period expired on 30 August 2010 ("First Right of Refusal Date"). Clause 13.2 in turn provided that Bevillesta must not, prior to the First Right of Refusal Date, grant any lease of the redeveloped building for the purpose of a discount store similar to the discount store operated by Ronnat under the First Lease without first complying with the clause. Clause 13.3 then provided that: "If [Bevillesta] proposes to grant a lease of the kind referred to in clause 13.2, [Bevillesta] must first give to [Ronnat]: (a) Written notice offering to lease the relevant premises to [Ronnat]; and (b) The proposed lease document, in duplicate." 41Clause 13.4 set out the manner in which Ronnat could accept such an offer. Clause 13.5 provided that: "If [Ronnat] does not accept [Bevillesta's] offer, Bevillesta must not grant any lease of the kind referred to in clause 13.2 to another tenant on terms which are materially more favourable to the other tenant and [sic] the terms offered to [Ronnat] unless [Ronnat] again complies with clause 13.3." The reference to "and the terms offered" in this clause was presumably a reference to "than the terms offered". 42The Second Defendant contends that the right of refusal in Part 13 of the First Lease should be construed having regard to the background knowledge available to the parties at the time they entered into the First Lease; the context in which Part 13 appeared in the Lease and its provisions read as a whole; and the evident purpose and object of Part 13: Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99 at 109; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at 463; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at 179. There is in my view, sufficient uncertainty or ambiguity in clause 13 - particularly in respect of whether clause 13.5 continued to apply after an offer had been made to and accepted by Ronnat - to warrant reference to the surrounding circumstances: Codelfa Constructions Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 352; Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 282 ALR 604; Current Images Pty Ltd v Dupack Pty Ltd [2012] NSWCA 99 at [116]. The surrounding circumstances when the right of first refusal was granted included that the First Lease had a relatively short term, in anticipation of the refurbishment of the shopping centre, and the First Lease gave Bevillesta a right of early termination of the First Lease under clause 12.1 and Part 13 in turn gave Ronnat a right of first refusal for a shop in the redeveloped centre. These matters support a reading of that Part as intended to provide Ronnat an opportunity to have a shop in the refurbished centre, as part of the commercial arrangement in which it had occupied a shop in the predecessor centre, potentially for a relatively short period. 43The offer in early 2007 was made to Ronnat following receipt of a letter of offer from Hot Dollar for a shop then known as LG2-MM4, which was subsequently known as shop LG2-MMD (CB 4/1284). The offer of lease made by Bevillesta to Hot Dollar provided that the lease documents would be in the lessor's standard form, amended only as necessary to reflect the offer of lease (CB 1/1288) and the offer to Hot Dollar would therefore also have been subject to the terms of clause 5.1(c) included in the Agreement for Lease. Negotiations as to the proposed lease to Ronnat of Shop LG2-MMD continued from April 2007 to August 2007, involving meetings, proposals by Bevillesta, counter-proposals by Ronnat and further offers by Bevillesta. In the course of that period, Ronnat was, as I noted above, shown the offers received from Hot Dollar in July 2007 (Andrews [18]-[19], Mr Scarano [41], Mrs Scarano [22]). Bevillesta's solicitors sent the relevant documents to Ronnat for execution and Ronnat returned the signed Agreement for Lease and Second Lease to Bevillesta on 29 August 2007 (CB 4/1344). 44In these circumstances, it seems to me that Bevillesta complied with part 13 of the Lease. In circumstances that it proposed to grant a lease to Hot Dollar, it took the steps required by clause 13.4, by giving written notice offering to lease the relevant premises to Ronnat and providing the proposed lease document in duplicate. In my view, Part 13 of the First Lease did not require that any such offer or agreement for lease or lease to Ronnat be unconditional, or of a lease that only contained some conditions but not other conditions, or that did not contain a condition in the form of clause 5.1(c) of the Agreement for Lease. There is evidence that clause 5.1(c) was included in all agreements for lease in respect of the redeveloped shopping centre, other than those for anchor tenants (Andrews [23]). (Although I admitted that evidence subject to relevance and after expressing reservations as to its weight, on reflection, it seems to me that Mr Andrews' position was such that he would have had knowledge of the relevant matter and can give evidence of that matter.) The right of termination under clause 5.1(c) was in fact one of several rights of termination contained in clause 5.1 of the Agreement for Lease, relating to matters such as a decision not to proceed with the redevelopment works after considering the economic feasibility of the works, Bevillesta's inability to secure appropriate funding for the works, an inability to obtain a satisfactory level of pre-construction tenancy commitments, or an inability to obtain a tenancy commitment from an anchor tenant for each retail level of the centre. The commercial need for such termination events in leasing arrangements in respect of a major shopping centre redevelopment, which may ultimately not be viable or able to proceed, is obvious. That clause contained provision for reimbursement of certain costs and expenses incurred by the tenant in that situation. 45There is, it seems to me, no reason why an offer of lease proposed to be made to a third party to which Ronnat initially proposed to grant a lease - so as to trigger the application of Part 13 of the First Lease - and then made to Ronnat in accordance with that Part could not properly include a condition that might, in some circumstances, deprive that third party or Ronnat of the opportunity to occupy the premises, including conditions of the kind contained in clause 5.1 of the Agreement for Lease. Other obvious examples of such conditions would be one that provided a right to Bevillesta to terminate an agreement for lease or lease if the operation of the tenant's proposed business was subsequently prohibited by law or if the tenant was placed in insolvency administration prior to the grant of the lease or failed to provide security required by the lessor in respect of its obligations under the lease. I accept that the particular terms of clause 5.1(c) of the Agreement for Lease involved, of course, some risk for a potential tenant, because they meant that the proposed lease could be withdrawn if Bevillesta took the specified view, subject to any obligation to act in good faith or reasonably in that regard. However, the other conditions to which I have referred above could have had the same result had the situation to which they were directed arisen. The inclusion of such a condition would not, in my view, have deprived the relevant offer of its character as an offer of a lease in accordance with Part 13 of the First Lease. 46The effect of Part 13 of the First Lease was therefore that, at the completion of negotiations, Ronnat was entitled to accept the offer made by Bevillesta, in which case Part 13 would arguably have no continued operation. (I address that further question below). That is what occurred. If Ronnat considered the uncertainties involved in that offer, including the risk of termination, were unacceptable, then it could have declined that offer and the right of first refusal would have remained on foot for the 5 year period specified in the First Lease, and Bevillesta would have been unable to grant any lease to any other party for a discount store on more favourable terms without them making a further offer to Ronnat, which might or might not also have provided for termination in specified circumstances. 47This construction of Part 13 of the Initial lease seems to me to be consistent with the circumstances in which the parties were then dealing. The objective purpose of the clause was to allow Ronnat an opportunity to match the terms on which a third party might be prepared to lease the premises, which might have included a variety of conditions in which the third party's right to occupy the premises would cease, and there was nothing in the clause to indicate that Ronnat should be provided more favourable arrangements than that third party or arrangements that were wholly unconditional. No doubt, if a proposed offer to a third party was not genuine or the conditions contained in it were an artifice to defeat the operation of Part 13, then that clause might not be complied with; but it has not been suggested, or established, that the proposal to offer a lease to Hot Dollar was not genuine. If Bevillesta's exercise of any rights of termination in the Second Lease was capricious, unreasonable or in breach of an obligation of good faith, that may give rise to other claims; but that was also not pleaded or established in this case. 48Ronnat also contends that clause 13.4 of the First Lease did not contemplate an Agreement for Lease but a lease. I accept that clause 13.4 contemplated an offer of a lease, but Bevillesta in fact made an offer of a lease, including the relevant lease in the material to be provided by Ronnat. It does not seem to me that offer was any less an offer of a lease in circumstances that it contemplated that an Agreement for Lease would be executed anterior to the execution of the lease. The contrary construction would be obviously inconsistent with the parties' objective intention in the relevant circumstances, binding both of them to a lease of a shop that did not then exist in a shopping centre which may or may not be redeveloped depending, as clause 5 of the Agreement for Lease made clear, on whether it was economically feasible to do so. Whether Ronnat has established its loss in respect of these claims 49Ronnat contends that its damages, on this basis, are the loss of the profit-making opportunity represented by the opportunity to occupy shop LG2-MM2 in the Top Ryde shopping centre under the Second Lease. Ronnat contends that a loss of opportunity case can be maintained even if its damages could not be easily measured or calculated and had a less than 50% chance of occurring, referring to Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 at 355-356. Ronnat accepts that, in a loss of opportunity case, it must first prove on the balance of probabilities that it has sustained some loss or damage. Ronnat submits that once it has established that matter, the Court will value the possibility or prospect of that chance or opportunity: Malec v JC Hutton Ltd [1990] HCA 20; (1990) 169 CLR 638; Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64; Sellars v Adelaide Petroleum NL above. In Sellars, the majority set out the relevant principles at 355, observing that: "... we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. The principle recognised in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind. On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable." Brennan J similarly observed 358 that: "Where a loss is alleged to be a lost opportunity to acquire a benefit, a plaintiff who bears the onus of proving that a loss was caused by the conduct of the defendant discharges that onus by establishing a chain of causation that continues up to the point when there is a substantial prospect of acquiring the benefit sought by the plaintiff. Up to that point, the plaintiff must establish both the historical facts and any necessary hypothesis on the balance of probability. A constant standard of proof applies to a finding that a loss has been suffered and to the finding that that loss was caused by the defendant's conduct, whether those findings depend on evidence of historical facts or on evidence giving rise to competing hypotheses. In any event, the standard is proof on the balance of probabilities." 50Ronnat relied on a calculation of damages undertaken by an accounting expert, Mr Robert Elliott, who calculated damages, first, on the basis that Ronnat would have occupied shop LG2-MMD under the Second Lease and would have generated sales revenue of $3,827 per m2, which was derived from retail data contained in a report published by a third party, "Urbis Retail Averages 2009 - Regional Centres". Mr Elliott calculated the pre-tax value of that loss as $1,132,591 at a 15% discount rate or $854,687 at a 20% discount rate, calculated across the full 10 year term of the Second Lease and options. 51There were several difficulties in that approach, which clearly emerged from Mr Elliott's cross-examination. The first is that Mr Elliott had little knowledge of the qualifications or experience of the persons who had prepared the Urbis report, which had been drawn to his attention by a retail consultant to whom he had been referred by Ronnat's solicitors. Indeed, it appears likely, based on Mr Elliott's cross-examination, that he had not actually seen the Urbis report but only been provided with the figure contained in one of the tables in that report. Second, it is not clear what "regional centres" are the subject of that report and whether, for example, the shopping centre in Top Ryde is properly characterised as a "regional centre". Third, it emerged in Mr Elliott's cross-examination that the figure which he had adopted was the sales revenue for stores of a smaller size than that which was to be occupied by Ronnat at the Top Ryde shopping centre and that stores of the size proposed to be occupied by Ronnat were dealt with in a separate table in that report to which he had not had access. It does not seem to me that it is possible to draw any rational inference about the average sales per square metre which would have been derived by Ronnat from a store of 620m2 from the table in the Urbis report on which Mr Elliott relied, dealing with "average" sales per square metre for shops of less than 400m2 in regional centres of an unidentified character. In these circumstances, it seems to me that I can give no weight to Mr Elliott's first report so far as it relies on the turnover figure drawn from the Urbis report. 52Alternatively, Ronnat seeks to establish its loss by contending that it would have achieved a significantly higher turnover per square metre in shop LG2-MMD at Top Ryde shopping centre than an associated entity was able to achieve at the Roni's store situated at Centro Bankstown, because a competitor, The Reject Shop Limited ("Reject Shop") achieved a significantly higher turnover in a nearby store, shop LG2-MMB at Top Ryde shopping centre, than in the Reject Shop's store at Centro Bankstown. Ronnat contends, on that basis, that the turnover per square metre achieved by the Reject Shop in shop LG2-MM2B at Top Ryde shopping centre provides a reasonable basis for the Court to assess Ronnat's likely performance in Shop LG2-MMD. 53There is evidence that in the 2010 and 2011 financial years, a Roni's store at Centro Bankstown operated by an associated entity and a Reject Shop store at Centro Bankstown had broadly comparable sales and were, possibly, of comparable size. The latter statement requires the significant qualification, properly made by Ms Exner, an accounting expert called by the Second Defendant, in cross-examination that there is no evidence of their respective shop floor areas, excluding storage space. Ronnat contends, in effect, that because the Roni's store and the Reject Shop had similar (lower) turnovers at the Centro Bankstown shopping centre the stores to be operated by Ronnat (LG2-MMD) and later operated by the Reject Shop (LG2-MMB) would have had similar (higher) turnovers at the Top Ryde shopping centre. 54There seem to me to be several difficulties with that proposition. The first, as noted above, is that it was not established that the two shops at Centro Bankstown had similar shop floor areas at Centro Bankstown, so as to establish that their broadly comparable total sales reflected broadly comparable turnover per square metre. The premise of the comparison would not be established if the Roni's store at Centro Bankstown had a larger store floor area and smaller storage area and the Reject Shop at Centro Bankstown had a smaller shop floor area and larger storage space, so the Reject Shop at Centro Bankstown was in fact achieving a higher turnover per square metre of the store than the Roni's shop at Centro Bankstown. Second, other matters which were not addressed in respect of the attempt to draw inferences from the relative performance of the Roni's and Reject Shop stores at Centro Bankstown included their relative locations in that shopping centre, respective manners of operation (for example, store layout, staff numbers and advertising levels) and any differences in their operation deriving from the fact that Ronnat and its associated entities were a relatively smaller family-owned enterprise and the Reject Shop is a publicly listed company with over 200 stores (Ex J1 [19(f)]). 55There is no evidence as to whether the Reject shop operated its Top Ryde store similarly, or differently, to its Bankstown store; whether Ronnat would have operated its Top Ryde store similarly, or differently, to the Bankstown store operated by an associated entity; or whether Ronnat would have operated its Top Ryde store similarly to the way in which the Reject Shop operated its Top Ryde store so as to achieve a similar turnover per square metre. The principals of Ronnat, who gave evidence in respect of other aspects of its case, would have knowledge of the extent to which the manner of operation of Ronnat and the Reject Shop were similar or not; however, it was striking that they gave no evidence that addressed that issue. In these circumstances, I consider that I should properly infer that their evidence as to those matters would not have assisted Ronnat's case and should be less ready to draw the inference which they seek to have drawn from the comparison between the two stores: Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-419; Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361; (2011) 276 ALR 375 at 393-394. 56Ronnat contends that the turnover figure is the key variable in quantifying its claimed loss, and points to the agreement of the accounting experts that the operating expenses that would be incurred in generating lost revenue could be estimated as a percentage of sales revenue, although there is a difference between them as to the figure to be adopted (Joint Expert Report, Ex J1 [55]-[56]). Ronnat contends that the experts would each allow an annual sale growth of between 2.1% and 3% (Ex J1 [50]-[54]). The experts differ as to the extent of the discount to be applied in respect of a loss of profit calculation, to take into account both that monies would be received earlier in respect of an award of damages, and the risk involved in achieving the anticipated profit (Ex J1 [68]-[82]). 57Ms Exner, the accounting expert retained by the Second Defendant, relied primarily upon the historical results achieved by Ronnat in a store operated at the Centro Shopping Centre in Bankstown, and prepared her calculation on the basis that Ronnat would have achieved a turnover of $2,600 per m2 for the first year of the lease, by comparison with the figure of $3,827 per m2 on which Mr Elliott had relied. Ronnat points out that that figure is only marginally higher than the figure which it had been able to achieve in its last year of operation at the previous Top Ryde Shopping Centre, in 2007 (Ex J1 [19(c)], CB 5/1869). Adopting that turnover figure, Ms Exner concludes that the operation of a Roni's store at the Top Ryde shopping centre would not have been profitable for Ronnat. Mr Elliott contended that result was surprising, on the basis that it was unlikely that experienced businesspersons would have chosen to enter a lease on a basis that would not be profitable. I cannot accept that reasoning, because experience teaches that from time to time experienced businesspersons make investments that are ultimately unprofitable. It also does not seem to me to have been unreasonable for Ms Exner to proceed on the basis that the best guide, absent any evidence to the contrary, to the likely performance of Ronnat at the Top Ryde store would have been the best performing shop Roni's shop elsewhere, at Centro Bankstown (Ex D4 [4.18-4.24]). Ms Exner calculates that Ronnat would have suffered a loss of $561,812 from operating the store on that basis. That does not seem to me to be an implausible outcome in circumstances that, as I noted above, Ronnat had agreed to pay a premium rent to "lock out" Hot Dollar from the store; however, even if it were an implausible outcome, the evidence does not support any alternative calculation of Ronnat's loss. 58Ronnat criticises Ms Exner's approach on the basis that it does not allow for or have regard to differences between the Centro Bankstown and Top Ryde shopping centres, their respective ages and their customer demographic. There was evidence that the Top Ryde shopping centre and the Centro Bankstown shopping centre served a different target demographic (Andrews T8). Ronnat also criticises Ms Exner's observation that Centro Bankstown shopping centre may be a better performing shopping centre than the Top Ryde shopping centre because it has a higher total turnover per square metre across the shopping centre as a whole. I accept that it is possible that allowance for differences in the age and customer demographics of the Top Ryde shopping centre and the Bankstown shopping centre could lead to different results, and that it is likely (or inevitable, given the nature of an average) that a particular store will perform better or worse than the average turnover per square metre of a shopping centre. However, it does not follow that the approach adopted by Mr Elliott is preferable to the approach adopted by Ms Exner, for either of those reasons, given the difficulty with his reliance on the Urbis report to which I have referred above; nor does not seem to me that reliance on the turnover derived by the Reject Shop at Top Ryde provides an adequate alternative to Ms Exner's approach, absent any evidence as to the extent of any similarity or differences in the manner of operation of that business and Roni's stores generally or the proposed operation of Ronnat at Top Ryde. 59Ronnat also criticises Ms Exner for not having visited the Bankstown or Top Ryde shopping centres in preparing her report. That criticism seems to me to be misplaced. It was not a matter for Ms Exner, who was an expert accounting witness not a witness of fact, to form an assessment of the operating or structures of the relevant businesses which, as I have noted above, could readily have been addressed by evidence given by the principals of Ronnat. 60Ronnat also relied on the proposition, which Ms Exner accepted in cross-examination, that a tenant who is paying twice as much per square metre in one shopping centre as in another is likely to secure a better return (T133). It might seem somewhat counter-intuitive to suggest that the fact that a tenant is paying a higher rental creates a proper basis for an inference that a higher turnover will be achieved, where it is also possible that the tenant is overpaying for the particular premises and will achieve a similar turnover and less profit. Putting aside that difficulty, an inference that Ronnat's payment of a higher rent was indicative of the fact that it would secure a higher turnover is in any event displaced by evidence that, in the present case, it had agreed to pay a premium rent for shop LG2-MMD in the Top Ryde shopping centre in seeking to exclude Hot Dollar from the centre. 61Ronnat emphasises that the evidence of the experts is not binding upon the Court in determining the amount of loss, and that the experts cannot usurp the Court's function in applying its own independent judgment to the facts proved in evidence: Davie v Lord Provost, Magistrates and Councillors of the City of Edinburgh (1953) SC 34 at [39]-[40], [42], approved in Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 at [59]. However, the principles to which Ronnat draws attention do not permit the Court to form a view as to those matters without a proper evidentiary basis on which to exercise its judgment. Ronnat ultimately submitted that the evidence of broadly comparable, or possibly superior, performance of the Roni's store at Centro Bankstown would suggest "a chance" that Ronnat would have achieved sales higher than the $2,600 per m2 figure in LG2-MM2B, and up to the figure achieved by the Reject Shop in LG2-MMD, and submitted that a turnover figure of $4,000 per m2 is entirely reasonable in the circumstances. I do not accept that Ronnat has established that loss, even to the level necessary to support a loss of opportunity case. Alternative claim in respect of the right of first refusal 62Alternatively, Ronnat contends that Bevillesta breached Part 13 of the First Lease in failing to allow it the opportunity to take a lease in the same terms as given to the Reject Shop, commencing on 4 August 2010. Ronnat contends that its damages, on this basis, are the loss of the profit-making opportunity represented by the exercise of that right of first refusal. I should address the legal and factual issues arising from that claim although I declined to admit Mr Elliott's evidence quantifying Ronnat's loss claimed on this basis by reason that his reasoning process for it was not adequately exposed. 63It is first necessary to expand on the factual background to this claim. I have dealt above with the offer made by Bevillesta to Ronnat in respect of the proposed lease of shop LG2-MMD to Hot Dollar. Bevillesta subsequently granted a lease of shop BP2 to another discount store operator, Discount Market, on 15 September 2009. Mr Scarano's evidence is that, although Bevillesta raised the possibility of a lease of the premises now occupied by Discount Market with Ronnat, an offer of lease capable of acceptance was not made to Ronnat and that Ronnat would have accepted a lease in the terms offered to Discount Market (CB 2/594; Mr Scarano 19.4.2012 [61]-[66]). Bevillesta subsequently entered into a lease with Reject Shop over shop L1-MM15 on level 1 of the Top Ryde shopping centre, commencing in August 2010 (CB 5/1889). In November 2011, the Reject Shop relocated from shop L1-MM15 to shop LG2-MMB on the lower ground level of the Top Ryde shopping centre, near the shop that Ronnat had hoped to occupy. Mr Scarano's evidence is, and it was common ground that, the Reject Shop business is the same type of business as that operated by Ronnat, namely a discount variety store (CB 1/363). 64Ronnat's claim in this regard depends on Ronnat being entitled, under Part 13 of the First Lease, to three successive rights of first refusal, initially in respect of Hot Dollar, then in respect of Discount Market, then in respect of the Reject Shop. Ronnat contends that the right of first refusal under Part 13 of the First Lease was not limited to a requirement for a single offer but was an ongoing obligation that applied in relation to any lease within the relevant 5 year period expiring 31 August 2010 that Bevillesta proposed to grant to a third party in the redeveloped shopping centre for a discount store similar to the discount store operated by Ronnat. 65I accept that the words "any lease" in clause 13.2 of the First Lease provide some support for a construction requiring more than one offer in respect of the right of first refusal; however, it seems to me that that subclause needs to be read in the context of the mechanism for the exercise of that right set out in Part 13 as a whole, and particularly clauses 13.4 and 13.5. It does not seem to me that Part 13 of the First Lease was in fact capable of a second or multiple applications, since it only prohibited the grant of a further lease unless Bevillesta again complied with clause 13.3, if Ronnat had not in fact accepted Bevillesta's offer made in respect of the proposed lease to a first competitor of Ronnat (in this case, Hot Dollar). Once Ronnat accepted an offer made to it, clause 13.4 applied, and I accept the Second Defendant's submission that clause 13.5 of the First Lease then had no further operation, having provided Ronnat with a right to occupy a shop in the refurbished shopping centre, on such terms as the Agreement for Lease and Lease provided. The successive operation of Part 13 for which Ronnat contends is, in my view, inconsistent with the mechanism for the operation of that Part specified in clauses 13.4 and 13.5. 66I have held above that Bevillesta complied with clause 13.3 of the First Lease by giving written notice offering to lease the premises which it proposed to lease to Hot Dollar to Ronnat. Ronnat accepted Bevillesta's offer, by entering into the Agreement for Lease and the Second Lease. Having regard to the construction of Part 13 that I have set out above, that discharged Bevillesta's obligations under Part 13 of the First Lease. 67If, contrary to my view, the offer made by Bevillesta to Ronnat in respect of the proposed lease to Hot Dollar was not in compliance with Part 13 of the Initial Lease, and that Part operated only once, then compliance with it would have required Bevillesta to make such an offer in respect of the proposed lease to Discount Market of shop BP2. As I noted above, Mr Scarano's evidence in cross-examination was that, if Ronnat had been offered a right of first refusal in respect of the store occupied by the Discount Market, it would have taken up that store. On that basis, if the right of refusal operated only once at that point, Ronnat's loss was the loss suffered by not opening in the premises now occupied by Discount Market. Ronnat did not seek to establish its loss on that basis. 68If, contrary to my view, Part 13 of the First Lease had multiple successive operations so as to apply to an proposed offer of a lease to the Reject Shop, it would then be necessary for Ronnat to establish a further step in its claim, that the relevant offer was made within the right of first refusal period that continued until 31 August 2010. There is evidence that the Reject Shop occupied premises in the Top Ryde Shopping Centre from August 2010 and ultimately executed a lease of those premises on 30 November 2010, which provided for a Commencement Date of 4 August 2010. The Reject Shop's occupancy of the shop (on some basis) and the Commencement Date specified in its lease were within the right of first refusal period to 31 August 2010, but that lease was executed outside the period. So far as Part 13 of the First Lease is directed to a proposal to offer a lease to a third party, there is no direct evidence as to when Bevillesta reached the point that it proposed to offer the lease to the Reject Shop, which was not ultimately executed until November 2010. Nonetheless, it seems to me that the Court should infer that Bevillesta did propose to grant a lease to the Reject Shop within the relevant period, where the Reject Shop was in occupancy in that period, the lease later executed commenced within that period and Bevillesta did not seek to lead evidence to the contrary. 69There also seem to me to be a further difficulty with Ronnat's calculation of its claimed loss on this basis, putting aside the fact that Mr Elliott's evidence as to that quantification was not admitted. If, contrary to my view, the right of refusal operated more than once, then Ronnat's loss was the loss suffered by not opening both the store occupied by the Discount Market and the store initially occupied by the Reject Shop (and, it contends, possibly also the store subsequently occupied by the Reject Shop). That loss would have had to be calculated on the basis that Ronnat was then operating two stores in the one shopping centre at the same time, and not only one store in that shopping centre in which the Reject Shop initially traded or now trades. Ronnat also did not seek to establish its loss on that basis. 70Ronnat also did not establish the loss which it would have suffered had Bevillesta complied with clause 13 of the First Lease by offering it a lease over the shop initially occupied by the Reject Shop, shop LG1-MM15 on Level 1 of the Top Ryde Shopping Centre, commencing in August 2010; Ronnat had, in accordance with Mr Scarano's evidence, taken up that lease; and thereafter occupied that shop for the term of the lease. Ronnat instead calculated its loss by reference to the position that it had initially occupied shop LG1-MM15 but only for the 11 month period for which the Reject Shop did so, and had then relocated its premises to a store at LG2-MM2B as the Reject shop then did. This calculation depended on a critical assumption that Ronnat did not seek to establish, namely that Bevillesta would have chosen to offer an opportunity to Ronnat to move from the first shop occupied by the Reject Shop to the second, rather than simply permitting Ronnat to occupy the first shop occupied by the Reject Shop for the term of the lease. Ronnat submits that: "It is conceded that there is no direct evidence that had [Ronnat] taken the first Reject Shop lease at Top Ryde it would have been able to secure the second 2011 lease, however, it can readily be inferred from the similarities between the two businesses and their comparable performances when they operated in tandem at Bankstown ... that there was more than a reasonable chance that had [Ronnat] been granted the first Reject Shop lease, it would have been provided with the same opportunity to move as The Reject Shop or at least lost the chance of being able to achieve that opportunity." 71However, the right of first refusal did not require Bevillesta to do anything other than, at its highest, offer Ronnat the right to occupy the shop which it initially offered to the Reject Shop. By the time the Reject Shop moved to the other store at LG2-MM2B, the right of refusal had expired. There is little or no evidence as to the circumstances in which the Reject Shop relocated its premises and there is no basis to assume that, as a matter of fact, Bevillesta would have chosen to offer relocation in the same terms as occurred in respect of the Reject Shop. 72For all these reasons, even if I had held that there was a breach of Part 13 of the First Lease in respect of the offer of the lease to the Reject Shop, it does not seem to me that Ronnat has established its claim for damages in that regard, even to the level required for a loss of opportunity case. Outcome 73Messrs Krejci and Green should therefore be directed, in their capacity as trustees of the Creditors' Trust Deed established in the administration of Bevillesta, that they would be justified in rejecting Ronnat's proof of debt as against the Creditors' Trust. My preliminary view is that Ronnat has been unsuccessful in its claim and should pay the Second Defendant's costs of the proceedings as agreed or as assessed. The parties should bring in agreed short minutes of order to give effect to this judgment (including as to costs) within 7 days and, if there is no agreement between them, their respective draft orders and short submissions as to the differences between them. ********** 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: 11 September 2013