DISTRICT COURT OF QUEENSLAND

1. [1]
   The plaintiff is the owner of a large shopping complex at Robina called “Robina Town Shopping Centre” (‘the Centre’). It alleges the defendants were in breach of lease agreements over a shop in that Centre and claims arrears of rent and damages for the breaches amounting in total to $92,723.26. The defendants deny the plaintiff is entitled to the relief sought and counterclaim for an order under s 87 of the Trade Practices Act 1974 (TPA) setting aside all the relevant lease documents; alternatively, a declaration that they are void; alternatively an order under s 87 preventing the plaintiff from enforcing the terms of the leases; and, damages in the sum of $136,500 for breach of ss 51AC and/or 52 of the TPA.

2. [2]
   The Centre is erected on land described as Lot 140 on RP 8865238 County of Ward Parish of Gilston, CT reference 50079435. The particular shop premises to which this action and the agreements relate is Shop AD.4.26. The leases are contained in two agreements both dated 11 March 2000. The first is for a period of one year commencing on 26 May 2000, and the second for four years commencing 26 May 2001 and expiring 25 May 2005. The defendants admit execution of the leases and that they contained terms and conditions requiring them to pay rent, electricity charges, a proportion of the Centre operating expenses, a contribution towards promotional levies, and GST, and having the effect that any breach of either agreement might be treated by the plaintiff as a repudiation entitling it to determine the leases. The defendants also admit the plaintiff retook possession of the premises from them on 21 March 2001.

3. [3]
   The defendants, a married couple, represented themselves. Mr Michaels had the effective carriage of their case in court in the sense that he conducted cross-examinations of the plaintiff’s witnesses and lead the evidence-in-chief of his wife, and another witness they called. He is not a lawyer and laboured under all the disadvantages which beset an untrained person attempting to conduct fairly complex litigation. Nevertheless he is an obviously intelligent man who quickly grasped court procedures and, in particular, the need to put his case to the plaintiff’s witnesses. At the conclusion of the trial I was satisfied the defendants had said and done everything necessary to sufficiently present their case, and the issues.

4. [4]
   The defendants complained they laboured under one disadvantage: the unavailability of some of their documents which, they said, were retained by their former solicitor under a lien he claimed for unpaid fees. This was a matter which had arisen at the time of an application by the defendants for an adjournment of the trial when it was previously listed for hearing, on 4 February 2003, and considered by his Honour Judge Robin QC then. The transcript of those proceedings shows the steps his Honour took to alert the defendants to action on their part which might be necessary to circumvent the problem. It was clear from the outset of this trial that the defendants had not taken any of the steps he suggested and had done nothing more than serve a subpoena upon their former solicitor only a short time before the trial commenced. Subsequent statements in the course of the trial from Mr Michaels indicated some unresolved issue concerning conduct money associated with that subpoena.

5. [5]
   There were only two instances where the defendants’ lack of access to their documents appeared to cause them some disadvantage: they did not have copies of the pleadings, including their own, and they did not have all the business documents necessary to prove their counterclaim. The first deficiency was remedied by the provision of a photocopy of their last pleading and the second would only have been relevant if the counterclaim succeeded and, for reasons which follow, it does not. The defendants did not otherwise have any occasion to complain they had documents relevant to any aspect of the evidence and were disadvantaged by an inability to produce them.

The Plaintiff’s Case

6. [6]
   Oral and written evidence adduced for the plaintiff proved the lease agreements, their terms, and execution of them by the defendants; default on the part of the defendants in payment of rent and other outgoings required under the lease; service of a notice in form 7 under the Property Law Act 1974 upon the defendants on or about 19 January 2001 (notice to remedy breach of covenant); and, termination of the leases on or about 21 March 2001.The plaintiff also proved that, absent the issues raised in the defendants’ counterclaim, the defendants were indebted to the plaintiff for:

7. [7]
   Interest was originally claimed at commercial rates but amended at trial to the applicable rate under the Supreme Court Act 1995, s 47, from the date of commencement of these proceedings 3 April 2001 to the date of judgment.I was satisfied that the claim for damages in the form of unpaid rent under the second lease up to but not beyond 16 August 2002 was proven through Exhibits 22 and 23 and the evidence of the plaintiff’s manager, Mr Miller.

The Defendants’ Case

8. [8]
   The defendants allege that before the leases were entered into certain representations were made to them by the plaintiff’s leasing officer Mr Luke Young upon which they relied and which induced them to enter into the leases, and the fit-out deed. As pleaded the alleged representations were in these terms:

1. (a)
   By reference to crowd figures and turnover figure, the premises were located in a prime retail position within the Robina Town Shopping Centre;

2. (b)
   The Robina Town Shopping Centre was experiencing growth;

3. (c)
   The number of people visiting the Robina Town Shopping Centre had increased significantly over the past 2 years;

4. (d)
   The prime location of the premises within the Robina Town Shopping Centre was enhanced by reason of the tourist bus set down which was to be located at the end of Arbour Lane;

5. (e)
   The amount of the rent to be charged for the premises was justified by the high volume of sales which would be made by the defendants in the business proposed for the premises;

6. (f)
   In or about early 2001, shop fronts for other small business in Arbour Lane were to be renovated to conform with a higher standard of presentation for the shops in that area.

9. [9]
   It is then alleged that these representations were false, misleading and deceptive or likely to mislead and deceive, in breach of TPA s 52 and that in truth:

1. (a)
   the premises were not located within a prime retail area of the Robina Town Shopping Centre;

2. (b)
   the amount of the rent which the Defendants agreed to pay to the Plaintiff was excessive having regard to the volume of trade which could reasonably be expected for a small business being conducted from the premises;

3. (c)
   other smaller retail stores located in and around the premises in Arbour Lane at Robina Town Shopping Centre were experiencing poor trading in the shopping centre which generally created an unprosperous and unattractive area in the vicinity of the premises to potential customers;

4. (d)
   the area of the Robina Town Shopping Centre in which the premises were located was unable to produce sufficient custom for the Defendants’ business to enable it to trade profitably;

5. (e)
   the area of the Robina Town Shopping Centre where the premises was located was one with diminishing commercial appeal and clearly was not able to support a small business which was obliged to pay the excessive commercial rents being demanded by the Plaintiff;

6. (f)
   the frequency of tourists arriving by buses at the proposed tourist by set down at the end of Arbour Lane was minimal or non-existent.

It is then alleged that by reason of these breaches TPA s 52 is enlivened and the defendants are entitled to damages for business losses (pleaded, in para 31 of the defence and counterclaim, as amounting to $136,500.00).

10. [10]
    The defendants allege in the alternative that the plaintiff contravened TPA s 51AC (unconscionable conduct in business transactions), in the following particulars:

1. (a)
   making the representations referred to in paragraph 24 herein;

2. (b)
   requiring the Defendants to execute an Offer to Lease dated 17 February 1999, and a Lessee Disclosure Statement dated 31 January 2000 (“the documents”) both prepared by the Plaintiff, in circumstances where the Plaintiff did not ensure the Defendants had received independent legal advice with respect to the contents therein generally and in particular with respect to the fact:

(i) that the Defendants were required to acknowledge that no promise representation, warranty or undertaking as to suitability or profitability of the business to be conducted on the premises had been made by the landlord or its agent;

ii) that the Defendants were required to acknowledge that there was no exclusivity of product or service; and

(iii) that the Defendants were required to acknowledge that there was no control over the tenancy mix,

and the effects that such acknowledgements would have on the trading ability and profitability of the defendants’ business.

3. (c)
   failing to disclose trading difficulties experienced by shops situated at the West end of Abour Lane as a result of lack of pedestrian traffic;

4. (d)
   imposing an excessive percentage rental in the amount of 10% of gross turnover in excess of the gross base rental, in circumstances where other tenants in Abour Lane were not required to pay as excessive percentage rental

Particulars

(i) The Plaintiff’s bargaining position was stronger than the Defendants’ bargaining position, and/or it’s bargaining position appeared to be stronger than that of the Defendants;

ii) As a result of the conduct pleaded herein, the Defendants were requited to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the Plaintiff, namely the provisions of Clause 12.1.10 of the leases, the rate of percentage rent provided for in each lease, and the matters pleaded in paragraph 30(b) above in light of the representations having been made;

(iii) As a result of the representations and the effect of the representations, the Defendants were unable to understand the full effects of the documents referred to herein;

(iv) The Plaintiff used unfair tactics against the Defendants in that it:

1. made the representations;
2. did not correct the representations when it became apparent the Defendants were relying on the representations and being induced by them to enter into the first lease, the second lease and the fit out deed;
3. told the Defendants that they would have to decide whether or not they would lease the premises very quickly or it would be leased to a third person, and thereby depriving the Defendants of an opportunity to obtain independent legal advice;
4. failing to draw to the Defendants’ attention the existence and effect of clause 12.1.10 of the first lease and the second lease, so that they might seek independent legal advice with respect to the same;

(v) The Plaintiff’s conduct towards the Defendants was inconsistent with the conduct towards other tenants in Arbour Lane in that the other tenants were not required:

1. to pay as great a percentage rent;
2. to expend the same amount of money on fit out as the Defendants;

(vi) The Plaintiff unreasonably failed to disclose to the Defendants that it did not intend to require other tenants to upgrade or re-fit their premises in Arbour lane (contrary to the representations regarding the same) in circumstances where:

1. the interests of the Defendants would be effected, in that the appearance of the premises surrounding the Defendants’ premises affected the Defendants’ turnover as it would effect the volume of passing trade;
2. the failure to so require the upgrading or re-fitting would increase the risk to the Defendants of not trading profitably on taking possession of the premises and commencing the business pleaded above;

(vii) The Plaintiff was unwilling to negotiate the terms and conditions of the first lease and the second lease, and the same were provided to the Defendant as pro forma documents, which could not be changed or negotiated;

(viii) The Plaintiff failed to act in good faith:

1. in making the representations; and
2. otherwise, for the reasons pleaded herein.

11. [11]
    It follows that for the defendants to succeed in the counterclaim they must prove that the plaintiff made the alleged representations or some of them; those representations were false and misleading; that the defendants entered into the leases and the fit-out deed because of them, and suffered loss by reason thereof; and, those losses were caused by entering into those agreements.

Credit Issues

12. [12]
    Mr Young denies making the representations set out in paragraph [8] save that he admitted making statements to the effect that the Centre was experiencing growth and the number of people visiting it had increased significantly over the past two years. Although the defendants’ own evidence did not conform absolutely with the representations alleged in their pleading, allegations of a similar ilk were put to Mr Young during Mr Michaels’ cross-examination of him and, as the defendants’ case was conducted, a determination of what, if any, representations were made is central to the counterclaim.

13. [13]
    It is appropriate to place the evidence of the defendants, and Mr Young, into the context^[2] of their personal circumstances and dealings over a considerable period.

14. [14]
    Mr Young commenced employment as a leasing executive with the plaintiff’s predecessor Byvan in approximately 1996. Mr and Mrs Michaels had in the past conducted a business designing, producing and retailing children’s wear under the label “Coco Kidz” which began in 1988. Initially they set up a retail outlet at Darling Harbour in Sydney and then further outlets in Newcastle, Manly, Chatswood and North Ryde under franchise agreements. They traded successfully for two years and then helped set up another franchise store at Pacific Fair on the Gold Coast in 1990. Later, further stores were opened and Mr Michaels told me, and I accept, that between 1988 and 1993 he and his wife were actively involved in the establishment of 14 retail outlets. After 1993 some of the shops were sold and they moved to Coffs Harbour for four years, and then to the Gold Coast.

15. [15]
    In late 1998 they decided to investigate opening a similar kind of shop on the Gold Coast but because “Coco Kidz” was still trading at Pacific Fair they looked at other venues and, ultimately, determined to make enquiries at the plaintiff’s Centre at Robina. They first contacted and spoke to Mr Young in March 1999 and by arrangement inspected several vacant shops in the Centre. Further personal and telephone contact followed and in May 1999 the plaintiff offered the defendants a lease of another shop^[3].Further meetings and various communications took place before the leases and fit-out agreement^[4] were executed on 11 March 2000 (the leases) and 2 July 2000 (the date shown on the fit-out agreement, Exhibit 4).

16. [16]
    The defendants and Mr Young agreed that one meeting occurred at a coffee shop at the Centre in August 1999. The defendants’ counterclaim alleged the representations they pleaded were made by Young during several meetings “held predominantly at a coffee shop” from or about August or September 1999 to March 2000^[5] but, as the oral evidence of Mr Young and Mr Michaels fell out, it became clear that, if made at all, they must have occurred in the course of a conversation between Mr Young and both defendants at a meeting in early August 1999.

17. [17]
    Mr Young said, and I accept, that he made contemporaneous file notes of his meetings and telephone conversations with the defendants and he referred to them in the course of his evidence. Mr Michaels did not challenge their accuracy during his cross-examination of Mr Young. Mr Young’s recollection, which I accept, was that on a day in early August 1999 he showed the defendants two tenancies, one of which was the shop they ultimately leased. The following day he sent them a letter offering them a tenancy of that shop^[6].Neither defendant kept any notes or had any precise recollection of what was said by whom at which meeting but Mr Michaels agreed there was a meeting in early August.The evidence of Mr Young which I found clear, precise and consistent satisfied me that the critical meeting, in the sense that there were conversations about the growth of the Centre, and Mr Michaels raised the question of the turnover the defendants’ business would need to achieve to manage the proposed rent, occurred in early August and, probably, on or about 5 or 6 August 1999 at a coffee shop at the Centre.

18. [18]
    The defendants evidence was not as clear or consistent as Mr Young’s. Mrs Michaels frankly admitted she had little recollection of the detail of the relevant conversations and acknowledged that she predominantly left the financial and commercial aspects of the setting up of the business to her husband. She also agreed that she and her husband had conferred on a number of occasions about their recollection of the relevant meeting over the past two years. Significantly, there were inconsistencies between Mr Michaels’ evidence-in-chief and the matters he put to Mr Young in cross-examination, and between the defendants themselves about the nature of the alleged representations, and their pleadings. All these factors point to Mr Young having the stronger claim to credit.

19. [19]
    Some other aspects of the evidence reinforced that conclusion. The defendants had no notes in respect of any of these meetings or conversations. It was not suggested any notes existed but were still in the possession of their former solicitors. Significantly, the absence of any representations (save the admitted one to the effect the Centre was experiencing growth) was confirmed in writing in a document called a “Lessee Disclosure Statement”^[7] in which the defendants were invited to list all the representations which had been made to them to induce them to sign a letter of offer.Mr Michaels completed a list referring to a rent-free period, the plaintiff’s contribution to fit-out, and the absence of a requirement for any personal guarantees and he and his wife signed a certificate to that effect.While a document of that kind will not negate a claim that a representee was induced to act in reliance upon representations, it clearly has “… some value as evidence on the question whether the tenant was in fact induced by the representations”^[8].

20. [20]
    Other evidence raises doubt whether the representations could, logically, have been made. The proposed tourist bus set-down and the representation about it are surprising in the face of evidence that the defendants’ marketing strategy was not aimed at the tourist market^[9] and, as the defendants acknowledged Mr Young told them, he was not responsible for marketing.As to the renovation of shop fronts in Arbour Lane, the representation pleaded^[10] differs from the representation alleged by Mr Michaels during his cross-examination of Mr Young where it was put in terms that “…the Arbour Lane area was to change aesthetically, in as much as when the existing leases of the existing tenants were to be reviewed they would be required to do a new fit-out in their shops”^[11].This is quite a different allegation.It also seems inherently improbable that a landlord would commit to a course whereby all tenants would be refused a renewal of a lease if they did not renew the fit-out of their shops.

21. [21]
    A degree of improbability also attaches to the defendants’ assertion that Mr Young represented the amount of rent to be charged was justified by the high volume of sales the defendants would attain in their new business. The representation was alleged to arise from Mr Young’s acknowledgement that a turnover figure of $350,000-$400,000 or $450,000, suggested by the defendants, was likely to be achieved and a similar level of turnover was being achieved by another clothing store in the Centre. Mr Michaels admitted, in cross-examination, that he put a figure of $350,000-$400,000 per annum for turnover to Mr Young who, in reply, merely gave an “…indication... that the figure I put to him was somewhere in the ballpark in layman’s terms”^[12].Both Mr and Mrs Michaels also accepted that Mr Young told them that he was not allowed to reveal turnover figures for any other tenant.This conversation, if it occurred, must also be put in the context of previous statements Mr Michaels admitted making to Mr Young in which he told him of the defendants’ considerable experience with this kind of children’s wear business.

22. [22]
    On the defendants’ version of this conversation the only reasonable inference to be drawn, at the highest for the defendants, is that Mr Young accepted that the suggested level of turnover put by Mr Michaels was appropriate for the rent proposed. It cannot be said however that he made any direct representation as to turnover their business might achieve, and I am satisfied he did not do so.

23. [23]
    When all of these matters are taken into account the compelling conclusion is that Mr Young’s evidence should be preferred to that of Mr and Mrs Michaels and I am, therefore, satisfied that he did not make any of the alleged representations to the defendants save that the Centre was experiencing growth.

24. [24]
    It is appropriate, nevertheless, to consider the additional issues upon which the onus lies upon the defendants, summarised by Gummow J in Elders Trustee & Executor Co Ltd v E G Reeves Pty Ltd & Ors (supra) at 242:

1) Where statements have been made either before or in the course of complex negotiations for a significant transaction for sale and purchase of property those statements are not to be assessed in isolation but in the overall context of the negotiations (Pappas v Soulac Pty Ltd, supra, at 234).

2) It is for the applicant to show reliance upon the conduct complained of as supplying a sufficient causal connection between the conduct and the loss or damage for which recovery is sought under s 82 (Pappas v Soulac Pty Ltd, supra, at 238-9; Jones v Acfold Investments Pty Ltd, supra at 623-4); conduct in contravention of Pt V of the TP Act need not be the only cause of the “loss or damage” that may be recovered under s 82.Milner v Delita Pty Ltd, supra, at 572.

3) If a representation is of such a nature as to be likely to induce a representee to act upon it, the inference may be drawn, if the representee does act, that the representee has acted in reliance on the representations, but the inference is one of fact and may be rebutted by other, inconsistent, evidence (Jones v Acfold Investments, supra; Nobile v National Australia Bank, supra at 48,586).

4) Where what is relied on for contravention of s 52 of the TP Act is a statement of opinion it will not be misleading or deceptive or be likely to mislead or deceive merely because it misinforms or is likely to do so; the situation may differ if the evidence shows that the opinion was not held or that it lacked any, or any adequate, foundation (Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd, supra, (FCR at 88; ALR at 30-1); Turner v Jenolan Investments Pty Ltd, supra, at 46,635), particularly if the opinion was expressed as an expert (Bateman v Slatyer, supra, at 559).See also Industrial Equity Ltd v North Broken Hill Holdings Ltd (1986) 64 ALR 292 at 300-1.

5) A forecast or prediction as to the future does not, in general, offend s 52 unless the maker did not believe it could be fulfilled or was recklessly indifferent to the accuracy thereof (Bill Acceptance Corp Ltd v GWA Ltd, supra, at 246-7; Johnson v Eastern Micro Electronics Pty Ltd, supra, at 350).In the present case, the time scale was such that reliance was not placed upon s 51A of the TP Act; if it had been, the result would not, in my view, have differed.

This summary remains relevant save that paragraph (2) should be read in light of   the decision of the High Court in Henville & Anor v Walker & Anor (2001) 206 CLR 459.

False or Misleading?

25. [25]
    The evidence established that at least two of the alleged representations were in fact true. Mr Miller, the manager of the Centre, gave evidence that the subject shop was located in a precinct carrying the second highest volume of traffic in the Centre and by inference could be categorised as being in “a prime retail position”. The defendants led no evidence to the contrary nor, in particular, evidence relative to any other areas in the Centre. As to the Centre’s growth Mr Miller’s evidence also established that its turnover had been constantly growing^[13] and Mr Michaels accepted that was an appropriate measure.Again, the defendants led no evidence to the contrary.

26. [26]
    The plaintiff also led evidence that between March 1999 and June 2001 traffic volumes in the Centre grew by approximately four per cent per year and, again, the defendants led no evidence to the contrary. As to the representation about renovation of shop fronts Mr Young said that as tenancies expired existing or new tenants would be encouraged to refit their stores and that would potentially incorporate an upgrade of the shop front^[14].Accepting Mr Young’s evidence in that respect, there was a reasonable basis for this statement in light of his position with the plaintiff.

27. [27]
    As to the alleged representation concerning rent the defendants accept that Mr Young’s statements upon which they base the alleged representation constituted his opinion^[15].In light of the fact that the sales figures upon which this opinion, if given, were based had been provided by the defendants and they had informed  Mr Young of their considerable previous experience, there is no evidence from which it might be inferred he did not have a reasonable belief about the accuracy of his response.

28. [28]
    I am not persuaded that, even if the defendants had been able to establish the alleged representations were made, that they have then discharged the onus of proving those representations were false or misleading.

Reliance

29. [29]
    Henville v Walker (supra) establishes that the defendants must prove they suffered loss or damage “by” the plaintiff’s wrongful conduct which must, therefore, have materially contributed to their loss: TPA, s 82(1)^[16].If a contravention of TPA      s 52(1) is proven that will be sufficient to enable damages to be recovered under s 82 even if there may have been other concurrent causes.The important question will be whether or not the plaintiff’s actions induced the defendants to undertake a course of action that resulted in a reasonably foreseeable loss.

30. [30]
    Here a number of factors compel the conclusion that the defendants did not rely upon the alleged representations and were not, then, induced by them to enter into the leases or the fit-out agreement. First, the defendants had extensive business experience including, in particular, extensive experience in negotiation of leases of this kind. As their witness Mr Lambert said, it was clear to him Mr Michaels had considerable expertise in negotiating leases and setting up businesses of this kind and analysing what would be necessary in terms of turnover to achieve profits. Mr Michaels’ own evidence was to similar effect^[17].The defendants conducted their own enquiries, investigations and research and that, independently, led to their interest in this Centre^[18].

31. [31]
    Considerable time elapsed between the date of the alleged representations (which, the weight of evidence establishes, must if made have been delivered in August 1999) and the ultimate execution of the lease in March 2000. They were not referred to in the disclosure statement, in which the defendants were invited to list all representations.

32. [32]
    Other matters also detract from an inference of reliance. The defendants did not record or claim to have recorded any of the representations. They were allegedly made in informal circumstances in a coffee shop. There was no attempt to confirm them in writing – by correspondence, for example. It also appears the defendants took advice about the lease documents from a solicitor^[19].As the Federal Court (Lee, Nicholson and Sundberg JJ) said in IOOF Australia Trustees (NSW) Ltd v Tantipech (supra), at 480:

Although an exculpatory clause cannot be relied on to answer a claim based on s 52, the fact that an applicant states that he was not induced to enter into an agreement in reliance on representations made bears upon the question whether he should be believed when he asserts that the representations were an inducement: Keen Mar Corp at 53,146 and 53,161.

33. [33]
    These factors all militate against a finding that, even if the alleged representations were made, the defendants relied upon or were induced by them.

Unconscionability: s 51AC

34. [34]
    There is no evidence of conduct on the part of the plaintiff over and above that traversed earlier in connection with the alleged misrepresentations that would constitute a breach of s 51AC. It is, nevertheless, appropriate to touch upon the numerous matters raised in paragraph 30 of the defendants’ further amended defence and counterclaim alleging a contravention of that section. In particular:

1. save as admitted, I am not persuaded the plaintiff’s representatives made the alleged representations;
2. the alleged failure to ensure the defendants received independent legal advice is not only unproven, the defendants’ own evidence is to the contrary;
3. there is no evidence of any trading difficulties being experienced by shops situated at the west end of Arbour Lane as a result of a lack of pedestrian traffic;
4. nor is there any evidence that the imposition of a rent based upon 10% of gross turnover (over and above the base rent) was excessive, unfair or unconscionable; nor that other tenants were not required to pay that excess.

35. [35]
    Paragraph 30(d) is accompanied by a large number of particulars, and sub-particulars which do not all logically relate to the allegation about the “percentage rental” but ought, for finality’s sake, be traversed.I am not persuaded the plaintiff’s bargaining position was stronger than the defendants’, or appeared to be.A number of factors mentioned earlier tell against that conclusion: the defendants’ own business experience including experience leasing premises in large retail shopping centres; their own research, investigations and enquiries before they first approached the plaintiff; the period of a year which elapsed between that first approach and the ultimate lease, involving a number of instances of contact and the opportunity to consider a number of offers to lease and the terms of them; and, the defendants’ own legal advice.Those matters also militate against a finding that the terms of the lease were oppressive or that the defendants were unable to understand them.

36. [36]
    It is also alleged the plaintiff used unfair tactics for which the primary basis is the representations. Further, it is said the defendants were obliged to make a decision about the lease very quickly but that was not the subject of persuasive evidence from them and is entirely inconsistent with the length of time – a year – in which negotiations occurred. There was no evidence of inconsistent conduct towards them, and other tenants and even so, that would not by itself establish unconscionability. Finally, the claim the plaintiff was unwilling to negotiate the terms of the lease is entirely negated by the changes to the defendants’ benefit secured during the prolonged negotiations.

Other Matters

37. [37]
    It became clear during Mr Michaels’ evidence that the counterclaim for $136,500 could not reflect the true measure of the defendants’ losses, if any. He admitted the calculation failed to take into account any of the sales of the business, which he acknowledged they were in the order of $128,000. Nor did it give credit for the plaintiff’s contribution to fit-out costs of $22,600. Mr Michaels also conceded that he recovered some stock and fittings from the premises after the business ceased to trade. It was apparent that the defendants’ attempts to adduce evidence about their losses were hampered by the unavailability of documents in the possession of their former solicitor and the documents they did present were incomplete and unclear.

38. [38]
    There was of course an onus upon them to prove their damages with precision^[20].The figure of $136,500 appears in a detailed calculation of damages in the defendants’ last pleading, settled by counsel and filed by their former solicitors on 22 August 2002.Mr Michaels gave evidence that when he prepared the calculation of loss included in that pleading he had all his documents available to him and in those circumstances the plaintiff’s submission that the defendants cannot then complain that inadequacies in their methodology were contributed to by a lack of representation, or access to their documents, is irrefutable.

39. [39]
    Accepting however that the defendants were hampered by the absence of legal or accounting advice, assistance or evidence, the apparent defects in the quantum of the counterclaim would not have been fatal. Favourable findings on the major issues in the counterclaim would have warranted an adjournment, permitting them further time to obtain access and if necessary present further evidence. For the reasons set out above, the defendants’ failure to prove the counterclaim means that course is unnecessary.

Conclusion:

40. [40]
    The plaintiff is entitled to judgment for its claim of $92,723.26, and interest on that sum (as claimed) under s 47 at the applicable rate from 3 April 2001 to the date of this judgment. The defendants’ counterclaim is dismissed. I will hear further submissions as to costs.