Exit Distraction Free Reading Mode
- Unreported Judgment
DISTRICT COURT OF QUEENSLAND
Goldsmith & another v AMP Life Ltd  QDC 140
ANDREW DAVID GOLDSMITH
JANNE ELIZABETH TIPPET
AMP LIFE LTD ACN 079 300 379
District Court at Brisbane
25 June 2020
5 – 7 May; 11 May; 13 May 2020
Porter QC DCJ
LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – OBLIGATIONS, PROHIBITED TERMS AND PROTECTION FOR LESSEES – where the plaintiffs’ company Gold Tip operated a news agency business in the defendant’s shopping centre as a lessee – where there were two leases – where the leases included terms implied under s 43(1)(b) and (c) of the Retail Shop Leases Act 1994 (Qld) (RSLA) – where the defendant commenced substantial renovations to the shopping centre while the defendant was occupying under the first lease – where the plaintiffs allege that certain actions taken by the defendant in the course of the renovations met the requirements of s 43(1)(b) and (c) in relation to both leases – whether certain actions taken by the defendant in the course of the renovations give rise to a right to compensation for loss flowing from those actions – whether the actions taken by the defendant in the course of the renovations caused loss to Gold Tip – whether the loss and damage allegedly caused to the Gold Tip under the first lease may include loss accruing in the period of operation under the second lease
LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – LIMITATIONS OF ACTIONS – whether the cause of action arising under s 43(1) was a simple contract, thereby attracting a 6 year limitation period – where the defendant contends that any claim by the plaintiffs is statute barred – where the plaintiffs contend that the cause of action under s. 43(1) was an action upon a specialty covenant in a deed – where although the first lease was not in the form of a deed it was registered on the real property register, thereby attracting s. 176 of the Land Title Act 1994 (Qld) – where s. 176 of the Land Title Act 1994 (Qld) provides that a registered instrument operates as a deed – whether s 43(1) is incorporated into the first lease by law – whether the claim under s. 43(1) is an action upon a specialty and the plaintiffs therefore have 12 years to commence proceedings
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – CROSS-CLAIMS: SET-OFF AND COUNTERCLAIM – SET-OFF – where Gold Tip ceased paying the monthly rent under its second lease – where that sum is the subject of a counterclaim in these proceedings against the plaintiffs as assignees of the rights of Gold Tip under s. 43(1) RSLA – whether that claim can be raised against the plaintiffs as assignees as a set off or counterclaim
Corporations Act 2001 (Cth) s. 477(2)(c)
Land Title Act 1994 (Qld) s. 176
Limitations of Actions Act 1974 (Qld) s. 10; 25; 42
Retail Shop Leases Act 1994 (Qld) ss. 18; 42; 43(1)(b); 43(1)(c)
Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588
Forsyth v Gibbs  1 Qd R 403
Franks v Equitiloan Securities Pty Limited  NSWSC 812
Gallagher Bassett Services NSW Pty Ltd v Murdock (2013) 86 NSWLR 13
Hamilton v Porta  VR 247
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
March v Stramare (1991) 171 CLR 506
Travel Compensation Fund v Tambree (T/As R Tambree and Associates) (2005) 222 ALR 263
R v Karl Ernst Kleimeyer  QCA 56
Nicholas Seddon, Seddon on Deeds, (The Federation Press, 1st ed, 2015)
Robert Frederick Norton, A treatise on deeds, (Sweet and Maxwell, 2nd ed, 1928)
John Dyson Heydon, Mark James Leeming and Peter Turner, Meagher Gummow & Lehane’s Equity: Doctrines and Remedies (LexisNexis, 5th ed, 2015)
Peter Young, Clyde Croft and Megan Smith, On Equity (Thomson Reuters, 1st ed, 2009)
Rory Derham, Derham on the Law of Set-off (Oxford University Press, 4th ed, 2010)
N H Ferrett QC; C Upton for the plaintiff
C Schneider for the defendant
Woods Prince Lawyers for the plaintiff
Norton Rose Fulbright for the defendant
Table of Contents
The lay witnesses7
The expert witnesses7
The works and the parties’ dealings8
The Centre before redevelopment8
The old shop and the business before redevelopment9
The first stage of the works: 18 June 2008 to 1 July 200911
Works on the northern side of the Centre11
Works on the southern side of the Centre13
The April 2009 settlement13
The second lease15
The second stage of the work: 1 July 2009 to 4 February 201015
Overview of the works15
Events directly affecting the old shop16
The third stage of the work: 4 February 2010 to 10 June 201017
The Centre as at 4 February 201017
Works carried out between February 2010 and 10 June 201018
The impact of work on the general amenity of the Centre19
Works after the Grand Opening20
Events leading to these proceedings20
The customer numbers and turnover23
The financial performance of the business26
Some issues not pressed29
Analysis of the cause of action under s. 4229
The works caused relevant effects on the old shop32
September 2008 to July 200933
August 2009 to February 201034
The works caused no relevant effects on the new shop36
Loss and damage arising from acts affecting the old shop38
Ms Meulman’s evidence40
Expected growth in sales42
Other arguments on loss after February 201045
The causal inference argument45
No loss proved from relevant works after February 201046
Loss for the period July 2009 to February 201046
Claim on the first lease not statute barred47
The set-off point55
The extinguishment issue56
Limitations defence to the counterclaim57
- The plaintiffs were the directors of Gold Tip (News) Pty Ltd (Gold Tip). From October 2004, Gold Tip carried on a news agency business (the business) at Mt Ommaney Shopping Centre (the Centre) as assignee of an existing lease (the first lease) of an existing news agency shop located in the Centre (the old shop).
- In June 2008, the defendant (AMP) commenced substantial renovations of the Centre (the works) which continued until at least mid-2010. Prior to the commencement of the works, Gold Tip and AMP commenced negotiations for a new lease (the second lease) of a new shop (the new shop) to accommodate the business in the expanded Centre in a new location. The second lease commenced on 4 February 2010, when the business commenced operating from the new shop. The business did not succeed and Gold Tip was wound up on 30 March 2012.
- It is accepted that both leases included terms implied under s.43(1)(b) and (c) Retail Shop Leases Act 1994 (Qld) (RSLA) which obliged AMP to pay compensation for loss caused by actions by AMP which restricted access to, or the flow of customers past, a leased shop or disrupted trading in a leased shop.
- The plaintiffs allege that certain actions by AMP in the course of the works met the requirements of s. 43(1)(b) and/or (c) in relation to both shops, giving rise to a right to compensation to Gold Tip for loss caused by those actions. The plaintiffs sue on the leases by reason of an assignment to the plaintiffs by the liquidator of Gold Tip of Gold Tip’s causes of action against AMP.
- AMP denies any entitlement to compensation under either lease. It also contends that any claim under the first lease is statute barred. It also raises a set-off and counterclaim against the plaintiffs for unpaid rent sums due by Gold Tip under the second lease.
- The plaintiffs did not actively dispute the debt alleged by AMP under the second lease. Rather, they contend that they are not liable on the counterclaim as assignees and further, that the counterclaim is statute barred. They also submit that AMP’s counterclaim cannot be set-off against claims for compensation under the first lease. They accept it could be set off against claims for compensation under the second lease.
- For the reasons below, I have reached the following conclusions:
- (a)The plaintiffs have established an entitlement to compensation in respect of the effect of works on the old shop in the amount of $65,000;
- (b)I dismiss the claim for compensation in relation to the new shop because I am not satisfied that AMP took any actions affecting the new shop which engaged the provisions of s. 43(1)(b) and/or (c);
- (c)AMP has made out its claimed debt for $77,006.47, but is not entitled to judgment on its counterclaim against the plaintiffs because they are not liable on that claim as assignees. However, AMP is entitled to rely on its debt as a defence by way of equitable set-off against the compensation due under the first lease, which defence cannot be answered by a limitations defence; and
- (d)Accordingly, AMP has a defence to the whole of the plaintiffs’ entitlement to compensation under the first lease.
- The ultimate outcome therefore is that the plaintiffs’ claims are dismissed and AMP’ counterclaim is dismissed.
- At the heart of this trial is section 43(1) RSLA, which relevantly provides:
43 When compensation is payable by lessor
- (1)The lessor is liable to pay to the lessee reasonably compensation for loss or damage suffered by the lessee because the lessor, or a person acting under the lessor’s authority–
- (b)takes action (other than action under a lawful requirement) that substantially restricts, or alters:
(i) access by customers to the leased shop; or
(ii) the flow of potential customers past the shop; or
- (c)causes significant disruption to the lessee’s trading in the lease shop…
- There are a number of preliminary observations to make.
- First, in addition to s. 43(1), the plaintiffs pleading also relied on alleged breaches of the express covenants for quiet enjoyment in each lease and on the contention that by the effect of the works on the each shop was such as to derogate from the grant under the leases. One might think that the scope and efficacy of s. 43 RLSA would at the least equate with, and probably significantly exceed, the scope and efficacy of claims under these other heads. This was ultimately accepted by the plaintiffs’ counsel, Mr Ferret QC and Mr Upton. These reasons therefore deal only with the claims under s. 43(1).
- Second, by its pleading AMP:
- (a)Alleged that this Court did not have jurisdiction to hear and determine a claim under s. 43 RSLA; and
- (b)Disputed that the tenure of Gold Tip after the expiration of the first lease was regulated by the RSLA.
- However, in opening, Ms Schneider, who appeared for AMP, conceded that this Court had jurisdiction to hear and determine such a claim, rightly in my respectful view. Further, in closing, she accepted that whatever the true nature of the tenure of Gold Tip after expiry of the first lease, it was a lease regulated by the RSLA.
- Third, a claim for compensation under s. 43(1)(b) and (c) requires the plaintiffs to establish:
- (a)That AMP took certain actions;
- (b)That those actions caused one or both of the consequences for the leased shop identified in those subsections; and
- (c)That those consequences in turn caused loss to Gold Tip.
- For the first lease, the plaintiffs plead the carrying out of the whole of the works. The plaintiffs then plead that the works caused the relevant consequences by reference to various particularised actions: the closing of entrances, the blocking off of malls and the restriction of vehicle access. The plaintiffs also particularised the loss of amenity (toilets closed, dust and noise), the closure of other shops generally and near the old shop in particular and the reduction in size of the old shop and reduced trade compared to trading before the works.
- For the second lease, the plaintiffs relied on all the matters pleaded in relation to the first lease plus the allegation that after the grand reopening in June 2010, there were on-going works which caused the relevant effect on the new shop, including on-going fit outs, roadworks, defective lifts, loading dock construction and reduced trade compared to trading before the works.
- The plaintiffs then plead in a conclusory way that those actions and effects caused loss and damage compensable under s. 43(1). There is no pleading of any facts linking any particular actions of AMP to any particular consequence under the s. 43(1)(b) or (c), nor that any particular consequence led to any particular identified loss. The plaintiffs’ case is that the Court should infer that there were impacts of the kind contemplated by s. 43(1) from the evidence as whole. Particular emphasis is placed on the allegation that the business did not succeed in the financial years of the works (FY2009 and thereafter) and that the more probable inference is that the works caused that outcome.
- It is therefore a necessary first step that I make findings about the progress of the works from time to time. It is convenient at the same time, to trace through the dealings between the parties in that chronology. Before doing so, it is convenient to make some comments about the witnesses called by the parties.
The lay witnesses
- Mr Goldsmith was the only lay witness for the plaintiffs. Mr Goldsmith was a director of Gold Tip and, along with Ms Tippet, managed the business and worked in the business over the whole of the relevant period. He dealt with AMP’s officers. He gave evidence about events at the Centre and in the business. Messrs Carroll and Ihm were the lay witnesses for AMP. They were, successively, the manager of the Centre; Mr Carroll from the before the commencement of the renovations until about June 2010, Mr Ihm for the remainder of the relevant period. Mr Carroll gave evidence about events at the Centre before and during the works and Mr Ihm about after the works. Both referred to dealings with Mr Goldsmith. Taken with the contemporaneous documents, the evidence of these three witnesses provides the foundation for my findings as the relevant events against which the issue of the impact, if any, on the business from time to time of the works must be assessed.
- All three lay witnesses were cross examined. Although Mr Goldsmith was an honest witness, making reasonable concessions against his interests in cross examination, his sense of grievance over the fate of Gold Tip sometimes seemed to impede the reliability of his recollection, particularly in his affidavit filed in chief. Mr Ihm was initially tense and defensive in cross examination, though ultimately I had little basis to doubt his evidence. I found Mr Carroll to be a careful and reliable historian. Ultimately, after cross examination, very little of the narrative of events was in dispute (in contrast to the questions of the effect of the works on the trading of the business, which was hotly contested).
The expert witnesses
- Both parties called evidence from expert accountants on the question of the calculation of potential losses of the business. The plaintiffs relied on reports from Mr Peter Haley and the defendants relied on reports from Mr Bradley Hellen. Mr Haley’s evidence focused on calculation of loss on certain instructed assumptions. Mr Helen critiqued Mr Haley’s calculations in certain respects and carried out calculations on other assumptions.
- Both parties also called expert evidence directed at informing the question of whether and to what extent, the works impacted on the business.
- The plaintiffs called two experts on that issue.
- (a)Ms Kerrianne Muelman is an economist with experience in the retail and property market. She gave evidence about the effect renovation works can have on shopping centres generally, on some aspects of the economic environment at the time and on the impact of the works on foot traffic and on the performance of the Centre overall.
- (b)Ms Teri Dee Roberts is a valuer. She had provided a predicted valuation of the business prior to completion of the works assuming completion of the redevelopment and the move to the new shop on instructions from Gold Tip’s financier, the NAB. In reaching her predicted valuation of the business, she adopted an assumed increase in turnover of 20% on moving to the new shop. She provided that valuation to NAB in October 2009. Mr Haley was instructed to assume that increase in his calculations. Ms Roberts was called so that her valuation could be tendered to support Mr Haley’s calculation.
- AMP also led expert evidence on the causation issue:
- (a)In addition to his accounting evidence, Mr Hellen gave evidence critiquing Ms Robert’s predicted increase in turnover; and
- (b)AMP also called Mr Rumbens, a macro economist. He gave evidence as to macroeconomic trends in the economy generally and for news agency businesses in particular. The gravamen of his evidence was that relevant macro-economic trends were against the business over the relevant period.
- I analyse the competing expert opinions below, after making findings about the dealings between the parties.
The works and the parties’ dealings
The Centre before redevelopment
- As at 2004, AMP owned the Centre. Exhibit 15 contains two A3 sized plans of the Centre, one before (the before plan) and one after (the after plan) the works.
- Prior to the redevelopment, the Centre was some 36,000m2. Its major tenants were Woolworths, Coles, Big W and Kmart, located as shown on the before plan.
- There were two main doors to the Centre. These are marked on the before plan as the North door and the South door. There were also other entry doors. One was located immediately to the west of Kmart. There was also an entry door in the western mall leading to the Big W shop, although these other doors did not figure much in the evidence, perhaps because the North and South doors were adjacent to the main parking areas.
- There were three main areas of parking available at the Centre before the works:
- (a)The North car park which comprised the area to the north of the North Door shown on the before plan;
- (b)The South car park, located in the area to the South of the South door shown on the before plan; and
- (c)The undercroft car park located under the Big W tenancy shown on the before plan to the west of the Centre. It did not figure materially in either parties’ case.
- It was a significant element of the plaintiffs’ case that parts of the North and South car parks were closed during the renovations. It was not in dispute that this did occur, as explained below. However, the impact of the closure of those car parks seems logically to depend, at least in part, on the relative importance of those car parks to the total available parking and the extent to which they were closed during the works. The evidence on this question was incomplete. Even the number of parks in each car park was not definitively proved. It was common ground, it seems, that:
- (a)The total number of car parks before the renovation works was 2100;
- (b)The total number of car parks after the renovation works was increased to 2400;
- (c)When the North car park was closed, some 870 parks of that total were lost until the new multistory car park was opened in December 2008, which increased the car parks in the North car park considerably;
- (d)When the South car park was closed, some 250 parks were lost until a new multistory car park was built, which opened in December 2009; and
- (e)The undercroft car park was smaller than the North and South car parks.
- It was confirmed in evidence that the North and South car parks included the whole of the open areas shown to the north and south of the respective doors on the before plan. On that evidence, it is unclear if the whole of the North car park was ever closed, but it seems unlikely. It seems certain that only a part of the South car park was ever closed. It should be kept in mind, however, that the effect of closing the door providing access to those car parks probably made use of the remaining open areas much less utile.
The old shop and the business before redevelopment
- As at 2004, there was a news agency business being operated in the Centre by another tenant pursuant to the first lease, which was a registered and due to expire on 10 July 2006. It is common ground the first lease was regulated by the RSLA. The location of the old shop is marked on the before plan.
- The relevant characteristics of the location of the old shop include the following:
- (a)The old shop was located on a corner site of a right angled mall in the middle of the Centre;
- (b)That mall had Coles as the main tenant with the Coles entry opposite the first shop;
- (c)A Terry White branded pharmacy was located to the south of the first shop in the tenancy marked 39 to 41 on the before plan;
- (d)Evidence was given (which I accept) that the location of the three shops was mutually supportive of foot traffic being attracted to the Coles Mall, with each shop being both a destination in its own right (as explained in the next paragraph) as well as obtaining the benefit of discretionary spending from tenants attracted to the other two shops; and
- (e)The South door and car park were closest to the first shop.
- The old shop was the only news agency in the Centre. As noted already, it had a monopoly on the sale of Golden Casket and related lotto type business. It also had a monopoly on the supply of newspapers in the Centre, though it provided papers to the supermarkets and some other locations for sale. The lottery business and, to an extent the newspaper business, made the first shop a destination in its own right for some customers.
- Gold Tip took an assignment of the first lease from the existing lessee on about 11 October 2004. At the time Gold Tip took over the old shop and the business, the business comprised the sale of newspapers, magazine, lottery products, greeting cards, stationery, confectionery and gifts. The full range of traditional news agency products. It also had a print centre that provided photocopying, laminating, binding and design and production of personalized wedding and event stationery. The business also incorporated a bookshop which had interconnected premises and its own entrance.
- On acquisition of the business, Mr Goldsmith and Ms Tippett caused Gold Tip to modernise the sale and stock control systems by installing computerised point of sale systems. Mr Goldsmith swore that this permitted the plaintiffs continually to analyse the performance of the business. Similarly, Mr Goldsmith gave evidence that the plaintiffs introduced mapping of the shop designed to assist in analysing the productivity of each meter of floor space allocated to each product category and thereby improve the productivity of the floor space. For reasons never explored in evidence, the data generated by these systems was not relied upon to prove the plaintiffs’ claims.
- Mr Goldsmith swore that these systems, along with maintaining electronic accounts on MYOB, allowed the plaintiffs to monitor the performance of the Business “which ran successfully and profitably for the next four years”. I do not accept that characterisation of its performance: see from paragraphs  to  below.
- On 10 July 2006, the first lease expired. Some months later, it was formally extended until 10 December 2007 (the first extension). The extension was documented as a Form 13 Amendment and provided that the “document sets out the amendments to the Lease, which apply from 11 July 2006”. It extended the expiry date to 10 December 2007 and otherwise confirmed “all other clauses of the Lease”. There is no evidence that it was registered.
- Mr Goldsmith’s said that in mid-2007 he was told a redevelopment would start within two years and that the business would be moving to a new location. He says he was told that the budget was about $145m and the Centre was to increase by some 45% or 20,000m2. All four statements proved to be correct.
- On 10 December 2007, the first extension expired. The first lease was further extended to 30 June 2008 (the second extension). It was extended in the same formal manner which attended the first extension, and again does not appear to have been registered. Strangely, the second extension was not executed until February 2009 (Gold Tip) and April 2009 (AMP). It was therefore executed many months after the second extension had expired. The reason for this was never explored.
- The second extension conveniently states the payment obligations under the first lease as at December 2007, being:
- (a)Base rent (Item 3) was set at $278,250.00, (some $23,000 per month) to be thereafter adjusted in accordance with the rent review provisions of the first lease;
- (b)Marketing levy (Item 10) was set at $13,912.50 to be thereafter adjusted in annually accordance with the first lease;
- (c)Outgoings were calculated as a percentage of floor area; and
- (d)Turnover rent applied calculated as 7% on Gold Tip’s annual Gross Sales to the extent those gross sales exceeded the base rent.
- The second extension expired on 30 June 2008. Despite the fact that the second extension was signed in February and April 2009, there was no further formal extension of the first lease. Accordingly, from 30 June 2008 until Gold Tip vacated the old shop and the lease of that shop was terminated on 3 February 2010, Gold Tip was holding over on the terms for holding over specified in the first lease (see paragraph  below). Notwithstanding that this was the case, these reasons for convenience continue to refer to the tenure of the old shop as arising under the first lease. The precise nature of that tenure is only contentious in relation to AMP’s limitations defence.
The first stage of the works: 18 June 2008 to 1 July 2009
Works on the northern side of the Centre
- The work commenced on or about 18 June 2008, when workers were onsite in the North car park setting up their camp. In September 2008, the North door and North car park were closed. The closure of the North car park saw a loss of about 870 car parks, a 40% reduction in the total number of available car parks. The October 2008 monthly report records:
The redevelopment project is on target with the overall programme but the centre is being impacted by the loss of approx. 870 car parks (out of a total 2100) and the economic downturn.
- Around the time the North car park was closed, a small number of car parks were closed in the southern car park (approximately 25) to make way for the construction of a new hydrant for the Centre’s sprinkler system. However, the balance of the South car park and the under croft car park remained open. From September 2008, construction of the new North multi-storey car park commenced, with that car park being completed and open to customers by 23 December 2008. The opening of that multi-storey car park made approximately 1,600 available parks on the north side of the Centre. In an email that Mr Goldsmith sent to Mr Carroll on 23 December 2008, Mr Goldsmith described the new multi-storey car park as “terrific”.
- However, in his affidavit evidence Mr Goldsmith said that when the new multi-storey car park opened in December 2008, the lifts for that car park had not yet been installed. He said there was a delay between the opening of the new multi-storey northern car park, and the installation and commissioning of the lifts, and that the lifts remained out of operation during the first part of 2009. Mr Goldsmith also gave evidence that there was a period during the first half of 2009 when customer escalators (or “travelators”) on the northern side of the Centre near Kmart were malfunctioning. Mr Goldsmith said that during this period, AMP had extra staff on hand to assist customers in accessing the levels of the new multi-storey car park by pushing their trolleys up and down access ramps.
- In cross-examination, Mr Goldsmith confirmed that the events in relation to the customer lifts and travelators on the northern side of the Centre that he described during his cross-examination are the same events as those to which he referred in paragraph 75 of his affidavit. Mr Goldsmith’s evidence was that these issues with the customer lifts and travelators on the north side of the Centre were addressed at some stage during the first half of 2009, and by mid-2009, these issues in relation to the operation of the customer lifts and travelators on the northern side of the Centre had been fixed.
- Mr Goldsmith’s concession is important. Paragraph 75 of his affidavit attributes these dislocations in the use of the new North multi-story car park to the period after the grand reopening of the Centre in June 2010. AMP alleges that all the work in the Centre and for the car parks was well and truly completed by June 2010. As far as the North multi-story car park is concerned, Mr Goldsmith’s evidence in cross examination supports AMP’s position.
- When the North door was shut in about September 2008, the other three entrances remained open.
- After the closure of the North door and car park, works commenced on an extension to the northern mall. This included the construction of a number of new shops as well as a new space ultimately occupied by Target. The extensions to the North mall were opened on about 18 May 2009, and in May 2009 the new Target store at the Centre also opened for trade, with access available directly from the new multi-storey car park. The new North mall and North door are marked on the after plan.
- Mr Goldsmith’s evidence was that the construction of the new multi-storey North car in the second half of 2008, the North mall extension in late 2008 and early 2009 were each sizeable undertakings involving a considerable amount of construction work. That is hardly to be doubted. During the period in which this work was completed (about September 2008 to about May 2009), there was a large construction workforce on site at the Centre working on the northern car park and northern mall extension. In cross-examination, Mr Goldsmith confirmed that it was during this period (about September 2008 to about May 2009) that he observed the events set out in paragraph 32 of his affidavit. That is, during the period from about September 2008 to about May 2009, Mr Goldsmith observed that the coming and going of construction personnel and vehicles caused some traffic congestion at the Centre.
- Further, in cross-examination Mr Goldsmith also clarified that it was during the period after the North car park closed and before the new multi-storey car park opened (i.e., about September 2008 to about late December 2008) that he received the customer complaints and feedback described in paragraphs 32 and 36 of his affidavit, and observed the reduced visits from regular customers to the business that he described in those paragraphs.
Works on the southern side of the Centre
- In January 2009 (i.e., after the new North multi-storey car park had opened), the South door was closed and the South car park closed. Mr Goldsmith’s evidence was that the South car park was smaller than the old North car park, and the closure of the South car park in January 2009 resulted in approximately 260 car parks being lost from the Centre site. Work then commenced on the construction of the new South mall showing on the after plan and continue thereafter until late 2009.
The April 2009 settlement
- It was accepted by AMP that the works between June 2008 and June 2009 were extensive and negatively affected the trading of the business from the old shop. In April 2009, Gold Tip and AMP reached agreement that some compensation would be provided to the business by AMP for that impact (the April 2009 agreement). The April 2009 agreement was contained in the following emails exchanged between Mr Carroll (on behalf of AMP) and Mr Goldsmith on 6 and 7 April 2009:
- (a)On 6 April 2009, Mr Carroll wrote:
I have spoken to my Divisional Manager and have secured approval to a concession of $30K which can be applied against the recent rent account immediately. This is slightly short of the amount you are requesting but reflects that the main impact from the development would not have occurred till the north door closed in mid September 2008, thus the reason for backdating the concession till 1 September.
This is offered on the basis that it is a full and final settlement of all claims made by you in respect of the redevelopment project.
On your written acceptance of the above we will immediately prepare a credit to your account and advise our lease administrator to proceed with instructing our solicitors to prepare the lease documents for the new premises. I look forward to your response to finalise this matter.
- (b)On 7 April 2009, Mr Goldsmith replied (emphasis added):
The $30k, and your reason for reducing our claim to that amount, seems fair. On that basis we’re happy to accept the offer. We’re prepared to waive all further claims for loss of business related to the redevelopment from its inception through to June 30th this year.
… Because we don’t know what the future holds, it would be irresponsible to waive away all future claims related to the redevelopment. But as I’ve said above, for the period that ends June 30 this year, we will make no further claims.
I hope this is satisfactory.
- The underlined sections of the exchange demonstrate that Mr Goldsmith rejected the basis upon which AMP offered the compensation and made a counter offer in terms of his email. It is uncontentious that AMP accepted this counteroffer by applying the rental credit of $30,000 after receipt of the email. The dispute is as to the scope of the claims settled by that payment.
- AMP contends that on the proper construction of the April 2009 agreement, it settled all claims for compensation for loss or damage caused by conduct occurring before 30 June 2009 and that as a result, any aspect of the claims now made by the Plaintiff for loss said to have been caused by the actions of AMP carried out prior to 30 June 2009 are barred by the agreement. The plaintiffs contend that the April 2009 agreement only compromised Gold Tip’s entitlement to compensation for loss suffered up to 30 June 2009 by reason of conduct before that date, but preserved the right to compensation for conduct before that date which manifested in further loss or damage after that date.
- In my view, the latter construction is correct. It is consistent with the language of the 7 April email which is concerned to preserve the position in respect of the future. There is no reason, in the context in which this email was sent, to read that down as if it was concerned only with future loss from future actions by AMP as opposed to future loss from past as well as future actions. Looked at objectively, it is unlikely that a reasonable commercial person in the position of the parties would think that Mr Goldsmith was seeking to imply such a technical distinction, especially where his concern was plainly for the impacts on the business, not their cause.
- However, in my view, the April 2009 settlement is more important for what it reveals about the impact of the works up to that point. It is worth noting that at the time Mr Goldsmith wrote his email in April 2009, the works on the northern part of the Centre had been underway since September 2008, at least 7 months. It seems to me that Mr Goldsmith was well placed therefore to consider the impact of that work on the business when he reached the agreement with AMP. His agreement reflects, in my view, his contemporaneous view as to the magnitude of the impact of the works up to that time. That view is that the impact he had observed was compensable by the sum of $30,000. This is inconsistent with contemporaneous impressions of customer connections being seriously impacted, regular customers being lost or a major impact on trading, at least at that time. That does not mean, of course, that he might not have underestimated those impacts and he was plainly cautious about that possibility in the future. But it is some indicator of his contemporaneous perception of the seriousness of the situation at that time.
The second lease
- In about October 2008, negotiations for Gold Tip to take a lease of the new shop in the proposed South mall began. Between March and April 2009, AMP and Gold Tip finalised what was, in effect, an agreement to lease the new shop. At that stage it was contemplated that Gold Tip would move into the new shop in about November 2009. On 11 June 2009, the second lease was signed by Gold Tip. It was not signed by AMP until March 2010, but nothing turns on that. The parties were effectively bound by the terms of the second lease from June 2009.
- The second lease relevantly provided:
- (a)Base rent of $265,000 pa;
- (b)Turnover rent at 8%;
- (c)Marketing levy of $13,250;
- (d)For provision of a bank guarantee of $113,900; and
- (e)For personal guarantees from the plaintiffs.
- The area of the new shop is specified as 274m2. The plan identifying the location of the new shop in the second lease is clear as to its position in relation to Coles and Aldi in the new South mall. Coles is the largest tenancy to the south and Aldi the tenancy directly east. The Commencement Date appears not to have been completed at the time the second lease was signed by Gold Tip. It appears to have been written in by hand when the date was identified following the new shop becoming ready for occupation.
The second stage of the work: 1 July 2009 to 4 February 2010
Overview of the works
- Mr Goldsmith’s evidence was that the South carpark and customer access to the South mall remained shut for almost all of 2009. While broadly correct, that assertion lacks precision. That precision was provided in Mr Carroll’s evidence on this point, which I accept. He gave evidence that throughout the second half of the 2009, the works continued to be completed in stages. In particular:
- (a)In July 2009, the new food court opened at the Centre;
- (b)In September 2009, the Big W refurbishment was completed, Suncorp opened, and trade in the new South mall recommenced;
- (c)In October 2009, the new Coles tenancy handed over and parts of the South carpark re-opened for staff and construction parking; and
- (d)On about 10 December 2009, the South carpark was completed and the new South mall commenced trade.
- If regard is had to the after plan, one can see the shaded area comprising the South Mall, which included the new shop, as well as the location of the old shop. It can be seen then that work was being undertaken in a manner likely to sterilise access to the old shop from the South door for the whole of 2009.
Events directly affecting the old shop
Resumption of part of the old shop and compensation agreed
- In August 2009, as part of the works, approximately one-third of the old shop was resumed by AMP and a temporary ‘safety wall’ was constructed inside the Gold Tip shop between the vacated area and the rest of the news agency. This involved the surrender of that part of the old shop which comprised the bookshop. It also involved the surrender of part of the new agency where the print centre had been located. The print centre was demolished and aspects of the store fixtures altered. Mr Goldsmith gave evidence that, as a result, the shop presentation was “significantly degraded”. I accept that evidence. However, the legal and factual context of the surrender is important.
- The only documentary evidence touching on this issue was Mr Nagel’s email of 7 August 2009. It stated:
Further to our discussion this morning, I have spoken with John Carroll and Stephen Beer (Development Manager) and we would be in a position to take back the area discussed with you on site today. I will await your further instruction in relation to timing that best suits you however, we could place a hoarding on the column line discussed as early as Monday/Tuesday next week.
I understand that there is a massive amount of work to be undertaken on your part in order to clear the area of stock etc, so please let me know once you have spoken with the shopfitter as to when you anticipate being able to hand the area back.
Furthermore, we will allow you to trade externally of the lease line in the Coles Mall, outlined by the expansion joints in the existing floor that we marked out today. This will be at no cost to you though you will require insurance etc to cover this floor area.
We are required to give you 30 days notice of our intent to partially surrender the floor area, so I will get you that notice however, if you return email with a date that you give me, we can accept it instead of waiting the full 30 days.
The sooner we do this the sooner we can pro-rata your rental back for the smaller shop, which is obviously the driving factor from your perspective.
Give me a call if you wish to discuss anything.
- It is unclear to me the source of the legal requirement referred to by Mr Nagel (who was the development manager for the works). It does not appear in terms in the first lease (though see clause 17.5 and clause 18, the application of which is ambiguous) nor could I identify a provision of the RSLA in those terms. However, what was clear from the ensuing correspondence and Mr Goldsmith’s evidence on the issue is that the surrender of part of the shop was undertaken with Gold Tip’s consent and in the understanding, if not formal agreement, that rental would abate proportionately. As it turned out, it abated somewhat more than that.
- Gold Tip and AMP reached an agreement on reduction of obligations under the first lease terms following these changes (the surrender agreement). AMP does not appear to contend that it bargained for a release of compensation claims which might have arisen as consideration for this agreement. No evidence of express agreement is in evidence, and neither Mr Carroll nor Mr Goldsmith gave much evidence about it. Such evidence as there is, comprises the following.
- There is a detailed proposal from Mr Carroll sent 14 September 2009 which is a little hard fully to comprehend without explanation, but appears to offer a significant rent reduction, to a gross rent of $15,833 per month plus GST and electricity. Importantly, that offer was made inter alia on the basis that it settled any claim for compensation or concessions.
- I infer that this proposal was not accepted by Mr Goldsmith. The only further evidence was that contained in the email exchange in November 2009, which appears to record confirmation of an earlier agreement that rent on the old shop would be charged at 14.5% of monthly sales and commissions. This is a gross rent of about $16,782 in September 2009 based on the sale and commissions of $115,739. That is of the order of half the rent due under the terms of the first lease: see paragraph  above. And of course as turnover fell, so would the rent payable.
The old shop becomes isolated
- On 10 December 2009, Coles and Terry White moved into the new South mall. Mr Goldsmith gave evidence that after this time all of the other shops surrounding the Gold Tip business were closed. In early January 2010, one end of that mall in which the old shop was then located was closed off and hoarded up. The location of this hoarding is shown on the before map, marked with “Barrier installed”. Mr Goldsmith accepted that it was installed in early January 2010 not December 2009. The result was that the Gold Tip business was left to trade in a “dead-end” mall with no passing customer traffic. It remained in this situation until it moved to the new shop on 4 February 2010.
Possession of the new shop delayed
- It appears that it was originally contemplated that Gold Tip would move to the new shop in September 2009. This was delayed on a couple of occasions with the ultimate day for commencement being 4 February 2010. It appears that the holding over period under the first lease ended on that day.
The third stage of the work: 4 February 2010 to 10 June 2010
The Centre as at 4 February 2010
- By early February 2010, all entrances to the Centre were open and there were approximately 2,200 carparks open to customers at the Centre. Thereafter, there were no further works carried out at the Centre that had the effect of reducing the number of car parks available to customers. Further, aside from the Aldi store, all of the shops in the new North and South malls were open for trade. In particular as at early February 2010, the major retailers Big W, Woolworths, Target and Coles were all open and trading. The new Aldi opened for trade on about 25 February 2010.
- The remaining area of the substantial works was in the so called JB Hi-Fi mall (the JB Mall). It is marked as such on the after plan to the west of the new shop.
Works carried out between February 2010 and 10 June 2010
- The JB Mall extended west at a perpendicular angle from the main North-South mall. This area was hoarded up at both its western and eastern ends. Mr Goldsmith’s evidence was that the hoarding at the eastern end of the new JB Mall was flush with the end of the JB Mall and did not protrude into the North-South. Similarly, the hoarding-up of the JB Mall area did not restrict customer access to other parts of the Centre that were open and trading (including the South mall precinct in which the new shop was located). None of this was controversial.
- It was also uncontroversial that, between February 2010 and early June 2010, works on the new JB Mall were completed and the Centre was open for trade from June 2010. Mr Carroll’s evidence (on which he was not challenged) was that these ongoing works carried on the JB Mall between February 2010 and early June 2010 were done predominantly at night outside of business hours.
- Mr Goldsmith said that these works were completed behind hoarding, were not visible to customers, and that between February 2010 and early June 2010, there was no significant construction noise experienced at the Centre during business hours from those works. Mr Carroll said apart from the JB Mall works, only minor works were carried out at the Centre. These further works were also undertaken at night outside of business hours.
- On 10 June 2010, the Centre held a “Grand Reopening” event. Subject to the minor fit out work identified by Mr Carroll, all the work was completed inside the Centre by then. Nothing suggests that remaining work had any effect on trading or customer movement, generally or for the new shop in particular.
- In his affidavit, Mr Goldsmith gave evidence that, after Gold Tip moved into this new shop on 4 February 2010, works continued outside the main Centre building. In cross-examination, when asked to explain the nature of these works, Mr Goldsmith gave evidence that during this period there were trucks and construction personnel “going backwards and forwards” on the Centre access road, and that this had the effect of causing intermittent delays to customers in access Centre carparks. Mr Goldsmith’s evidence, however, was that during this period, customers remained able to access the carparks at the Centre.
- Mr Goldsmith also gave evidence that during this period there were occasions on which the traffic lights at the Dandenong Road intersection with the Centre access road “would get stuck on red” or “wouldn’t be working”. Mr Goldsmith’s evidence was that any delays caused by this traffic light issue were occasional in nature.
- Mr Ihm gave evidence that when he started work, the works were complete. He said that after mid-2010, there were only minor external works completed on loading docks such as line marking and the installation of hand-rails and bollards which did not affect the flow of customer traffic. Mr Ihm said that he was not aware of there being any issue with the traffic intersection at Dandenong road after he commenced as the Centre Manager of the Centre in mid-2010, despite being present on site.
- I see no basis to infer from this modest evidence of activity related to the works that the remaining external works materially impacted on customer access or trading in the Centre. The customer traffic figures show a significant improvement in traffic, on any measure, from at least early 2010 (see the analysis from paragraph  –  below).
- I find that by June 2010 at the latest, the works were effectively complete, inside and out.
The impact of work on the general amenity of the Centre
- The above findings identify the key events in the carrying out of the works. The central question in this trial is whether, and to what extent, those works included actions by AMP that fell within the scope of s. 43(1)(b) or (c) RSLA and caused loss or damage to the lessee.
- As noted above, in articulating how the works fell within the scope of those subsections, the plaintiffs relied on some general allegations about the loss of amenity arising from closure of toilets, and “noise, dust and general disturbance in and around the Centre.” Mr Goldsmith’s affidavit contained some general remarks about these matters, but in a form which lacked any precision as to detail or timing. His cross examination on this issue was another example of his willingness of make reasonable concessions.
- (b)As to construction noise, Mr Goldsmith accepted that in the period after the Gold Tip business moved into the new shop in February 2010, there was not significant construction noise experienced at the Centre during business hours. Mr Goldsmith also accepted that construction dust which appeared to have been generated by overnight works was quickly cleaned up (although, as is inevitable) some residual dust remained.
- Mr Goldsmith’s observations were consistent with Mr Carroll’s evidence that the vast majority (i.e. 90-95%) of construction works carried out the Centre were undertaking outside of hours to avoid intrusion on day-to-day trade, that works carried out during trading hours were of a “very minor scale” only and that construction activities carried out on the mall extensions, although more intensive during business hours, were similarly restricted in terms of noise during the trading day. Mr Carroll’s evidence was that there were a few occasions when noisy works were started during the business day; and that when this occurred Mr Carroll or one of his team members acted very quickly to put a stop to the performance of those works until after the trading day had ended. As to construction dust, Mr Carroll’s evidence was that plastic sheeting was used during the overnight works to manage construction dust, and there was a thorough clean conducted of the Centre each day before it opened for trade.
- I accept Mr Carroll’s evidence on these matters. Although it might be reasonable to assume that some impact occurred on customer enthusiasm for the Centre because of the works being carried out, Mr Goldsmith could point to no specific impact from dust, noise or toilet availability which materially affected customer access or flow or disrupted Gold Tip’s trade. I am unpersuaded that there was. The evidence supports the conclusion that Centre management were acutely concerned to minimise amenity impacts of the kind referred to in this section of this judgment and they appear to have been largely successful in doing so.
Works after the Grand Opening
- For the reasons given in paragraphs  to  above, I have found that the works were, for purposes relevant to the plaintiffs’ claims, complete by the time of the Grand Opening. I do not accept that there were actions by AMP after that date which caused any of the consequences identified in s. 43(1)(b) or (c).
Events leading to these proceedings
- The scope of the factual matters to be traversed in the period after the grand re-opening has been considerably narrowed by concessions made by the parties at trial (collected for convenience in paragraph  below). However, there remain a number of matters to consider.
- From 4 February 2010, the business traded from the new shop. Gold Tip did not trade with the success that Mr Goldsmith had expected. He remained concerned about the impact of the works on the business while operating from the old shop. From at least September 2010, Gold Tip and AMP were in dispute as to Gold Tip’s entitlements, if any, arising out of the impact of the works on the business at the old shop and the new.
- From December 2010 until October 2011, Gold Tip ceased paying the monthly amounts due under the second lease, with amounts due ultimately totalling $179,036.56. On 2 September 2011, AMP called on the bank guarantee given by Gold Tip to secure performance under the second lease in the amount of $113,900. After receipt of this sum, AMP contends some $77,006.47 was owing under the second lease. That sum is counterclaimed in these proceedings by AMP against the plaintiffs. There is no genuine dispute in these proceedings that that sum is due under the second lease. I find that it is. The question in this trial is whether that claim can be raised against the plaintiffs, whether as a set off or counterclaim.
- Gold Tip brought proceedings in QCAT in February 2011 seeking, inter alia, compensation under the RSLA in respect of both leases. On 14 December 2011, and before those proceedings were resolved, Gold Tip went into voluntary administration. On 23 February 2012, the voluntary administration came to an end with the execution of a Deed of Company Arrangement. It is not suggested that that deed compromised AMP’s claims under the second lease.
- On 13 March 2012, AMP issued a notice to remedy breach of covenant calling on Gold Tip to pay the outstanding amounts due under the second lease and to renew the bank guarantee. Gold Tip did not remedy those breaches and AMP terminated the second lease on 28 March 2012. Gold Tip thereafter ceased to trade, in breach of the deed of company arrangement. The deed therefore terminated according to its terms and Gold Tip was wound up on 30 March 2012, with the deed administrators being appointed liquidators. AMP received no dividend under the deed or in the winding up.
- The winding up of Gold Tip had financial consequences for the plaintiffs. They had given guarantees to creditors of Gold Tip. Further, the business was the source of income of the plaintiffs. Both plaintiffs were unable to pay their debts. They investigated a personal insolvency agreement and on 25 May 2012, Messrs van der Velde and Cronan were appointed as controlling trustees under s. 188 Bankruptcy Act 1966 (Cth) (the Bankruptcy Act).
- On 25 May 2012, the plaintiffs as debtors and the controlling trustees executed a Personal Insolvency Agreement under Part X of the Bankruptcy Act (the Part X). It provided, in effect, for payments of some $60,000 to be distributed amongst the creditors of the plaintiffs in accordance with the agreement. It provided a release from provable debts in the event the terms of the agreement were complied with by the plaintiffs. In particular, clause 7 of the agreement provided:
7. Release from Provable Debts and Bar to Creditors’ Claims
- (a)Provided the Debtors comply with their obligations under the Terms of the Personal Insolvency Agreement and the assignment and payments required by clause 3 of the Personal Insolvency Agreement are made, then upon the distribution of monies received by the Trustees, the Trustees shall issue a certificate stating that the terms of the Personal Insolvency Agreement have been complied with, and upon the issuance of that certificate, the Debtors shall be released from all provable debts as at the date of acceptance of the personal insolvency Agreement.
- (b)This Personal insolvency Agreement may be pleaded by the Debtors against any creditor owed a provable debt, in bar of the creditor’s debt, whether or not the debt is or not admitted or established under the Personal Insolvency Agreement, except if this Personal Insolvency Agreement has been terminated.
- It is not in dispute that the plaintiffs performed their obligations under the Part X and took the benefit of the releases in clause 7. Mr van der Velde filed a notice confirming completion of the Part X obligations on 12 June 2013.
- Soon after securing their releases under the Part X, the plaintiffs contacted the liquidator of Gold Tip seeking to acquire the company’s rights to take legal action against AMP and some other parties. The liquidators agreed to assign such rights by Deed of Assignment made 22 November 2013. The Deed of Assignment relevantly provides:
- (a)By clause 1:
Upon payment in full of the amount referred to in clause 3, the Assignor agrees to assign, transfer, convey and makeover to the Assignees all of the Assignor’s rights, title and interest in the Property with the full benefit and advantage of the Property to hold the same under the use of the Assignees absolutely, subject to the terms of the Deed.
- (b)By the Schedule:
Item 4 4.1 Definition of Property
The right to take action for the recovery of losses incurred or suffered by the Assignor (including the bare right to litigate) against the following companies and individuals:
- (a)AMP Capital Limited;
- (b)AMP Life Limited;
- (c)associated AMP companies;
- (d)employees and former employees of AMP companies;
- (e)Woods Prince Lawyers and its partners, officers, employees and former employees;
- (f)Wayne and Florence Jones and the companies they control; and
- (g)Nextra Australia and associated companies.
The Property also includes the right to act against, by way of report or complaint to appropriate professional or statutory authorities, the individuals included in Item 4.1 of this Schedule.
Consideration The Assignees will pay $5,000, inclusive of GST if applicable, in full and final settlement for the Assignment.
- One might wonder about aspects of this assignment. The sum is a modest one which would have had little impact on the outcome of the administration of Gold Tip. The assignment purported to include rights to make complaints about the conduct of the entities list in paragraph 4.1 and at first blush, it is hard to see how standing to make such complaints is property capable of assignment. Oddly, clause 4.1 included claims against the plaintiffs’ solicitors at this trial. None of these oddities are relevant to this proceeding.
- The assignment was pursued once the Part X had been completed. AMP by its prior pleadings had challenged the validity of this assignment. It did so, however, on the basis that it involved an improper exercise by the liquidator of his discretion to assign causes of action conferred by s. 477(2)(c) Corporations Act and was not enforceable at law. AMP abandoned that case at trial.
- Following the assignment, the plaintiffs took steps to reinvigorate proceedings in QCAT. Prior to the assignment, the liquidators had discontinued those proceedings. The plaintiffs sought to “re-open” the proceedings. Those steps were unsuccessful. Pending the final determination of their application to re-open the proceedings, the plaintiffs commenced these proceedings on 2 February 2016.
The customer numbers and turnover
- It will be recalled that the plaintiffs rely on three subsections of s. 42 RSLA. For each of those subsections, the plaintiffs must identify acts by AMP which have one or more of the following consequences:
- (a)Substantially restricting or altering access by customers to the leased shop;
- (b)Substantially restricting or altering the flow of potential customers past the shop; or
- (c)Significantly disrupting the trading in the leased shop.
- The plaintiffs led no evidence was of customer count figures for either the old shop or the new shop which demonstrated that less customers visited or walked past the old shop after the works commenced as compared to before. Nor was there any figures kept showing an increase in customers visiting or walking past the new shop after the work was completed as compared to before (though given the works were nearly complete in February and effectively completed by June 2010, it might be doubted that much could have been discerned from any such figures for the new shop). The only figures which were provided in relation to customer behaviour were for total customer visits to the Centre.
- This was a blunt instrument for determining whether the preconditions relating to customer access or flow were met in relation to either the new or the old shop. A reduction in total customer visits to the Centre does not necessarily mean that there had been an impact on access or flow, or disruption of trade for a particular business in the Centre. Similarly, an increase in total customer visits does not necessarily mean that there has not been such impacts. It will depend on where the customers enter the Centre, what they come for, and where in the Centre they go. It would also depend on the location of a particular business, the nature of the goods or services it supplied and so on. AMP did not have available evidence of which door was used by the customers who visited the Centre, nor did it have evidence about where customers who entered the Centre usually went, or where they in fact went in the Centre during the relevant period.
- One might more easily infer that if there is a large decrease in customer visits resulting from closing of entry doors or resulting from other aspects of the works, then that makes it more probable that there was a substantial restriction or alteration in access or customer flow, or disruption of trade, for a particular business (and vice versa). However even that inference does not necessarily follow. It depends on the circumstances of a particular business.
- A fortiori when one considers the next causal step called up by s. 42 RSLA: i.e. that a significant interference with access or flow or disruption to trading causes loss or damage to a lessee. Again, it does not automatically follow that interference with access or flow or disruption to trading will necessarily have that consequence. For example, one might think that an established general practitioner’s practice might not be much affected by interferences to customer access or flow because most established patients will still attend the practice. Similarly, if key customers who spent relatively large sums, continued to patronise a particular business (such as a specialty fashion business), the consequence of interference with access or flow might be minor.
- It is in that context that the total Centre customer visitation figures must be considered.
- The customer visitation figures were not disputed. They were recorded in the monthly and quarterly management reports prepared by management of the Centre. AMP’s closing submissions tabulated the figures extracted from those reports in Annexures A and B to those submissions. Those tables also tabulated the figures for total Centre turnover and turnover for the supermarkets in the Centre and for Gold Tip on a monthly basis. They were not challenged by the plaintiffs.
- Annexure A tabulated:
- (a)The monthly totals for customer visits and the month on month variation between a particular month and the equivalent month in the previous year;
- (b)The variation in monthly totals compared to the pre-works period of December 2007 to June 2008 (for the equivalent month);
- (c)The monthly total Centre sales and the month on month variation between a particular month and the equivalent month in the previous year; and
- (d)The monthly change in total Centre sales as compared to the pre-works period of December 2007 to June 2008 for the equivalent months.
- Annexure B tabulated:
- (a)The same information as in Annexure A described in (a) and (b);
- (b)For Gold Tip’s sales:
- The monthly total sales and monthly variation as a percentage; and
- The monthly change in total sales as compared to the pre-works period of December 2007 to June 2008 for the equivalent months; and
- (c)For Supermarket sales:
- The monthly total sales and monthly variation as a percentage; and
- The monthly change in total sales as compared to the pre-works period of December 2007 to June 2008 for the equivalent months.
- In relation to the Gold Tip figures, it must be kept in mind that the Gold Tip claim is articulated by reference to loss in the form of gross profit rather than turnover, though the former tends to track turnover.
- AMP’s written submissions makes the following correct observations based on those figures, which I adopt with some minor changes:
- (a)By December 2008 (i.e. 5 months after the works had commenced) customer numbers remained steady but total Centre sales began to fall behind those at which had been achieved prior to the works;
- (b)During the first half of 2009, the monthly sales and customer visits both fell below that which had been achieved in equivalent months before the works. During this same period, the Gold Tip sales and total supermarket sales achieved each month fell behind that which had been achieved during the equivalent month in the previous year;
- (c)In July 2009, the number of customer visits to the Centre hit a low of 272,000. During this same month, the Centre recorded the lowest level of total sales that it experienced in any July month during the studied period. July 2009 also saw the lowest level of Gold Tip sales and total supermarket sales at the Centre that were experienced in any July month during the studied period;
- (d)By December 2009, the total monthly Centre sales and customer visits started out-performing that which had been achieved during the pre-development period: the December 2009 Centre sales were 12.13% higher than the December 2007 sales; and the number of customers who visited the Centre in December 2009 represented an increase by about 41% on the customer visits in December 2007. That is, on those metrics, by December 2009, the Centre was outperforming its pre-works performance;
- (e)From February 2010 to June 2010, the monthly customer visits and the total monthly Centre sales consistently outperformed by a considerable margin that which had been achieved during both the 2009 year and the pre-redevelopment period of 2007-2008;
- (f)During this same period, aside from a slight decline in February 2010, the total supermarket sales achieved at the Centre outperformed that which had been achieved during the pre-redevelopment period;
- (g)Throughout the latter part of 2010 and into 2011, the total sales, customer visits and supermarket sales at the Centre continued to grow when compared to the pre-redevelopment period by quite large numbers. The positive performance at the Centre continued throughout 2011, with the total sales, supermarket sales and customer visits to the Centre each month consistently outperforming both the pre-redevelopment period, and the results achieved during the 2010 calendar year; and
- (h)Between, December 2011 and March 2012, the monthly customer visits, total sales, and supermarket sales began to even out when compared to the previous 12 month period. Customer visits, total sales and supermarket sales at the Centre during this period continued, however, to consistently outperform the results achieved during the pre-redevelopment period by between 15% and 60%.
- So, in short, the performance of the Centre as to sales and visits went down from the end of 2008 to July 2009. It then consistently improved until December 2009, when it was outperforming the pre-works performance of the Centre as to sales and visits in December 2007. Thereafter it continued significantly to maintain much higher levels than pre-works levels. Of course, one would expect the Centre to be out-performing its pre-works figures given the large increase in the size of the Centre, but the magnitude of the increased performance roughly on a par with the increase in floor area.
- The same general trend is seen with the Supermarket figures. The turnover declined modestly, except for May/June 2009 which were large declines, until December 2009, then recovered quickly from January 2010, and continued to improve thereafter. The supermarket figures were included, I assume, because Ms Meuleman’s evidence might be thought to have suggested that supermarket trading would be correlated to news agency performance. Be that as it may, it is plain from Annexure B that the turnover of the news agency business performed more poorly than for the Centre as a whole, and for the supermarket section specifically, at all stages.
- This analysis can only take matters so far: the financial performance of the business itself must therefore be considered in the context of the progress of the works and the customer visitation numbers and the performance of the Centre.
The financial performance of the business
- Each of the plaintiffs and AMP called expert accountants to give evidence about the performance of the business over the relevant period, both with and without the effect of the works.
- Mr Haley calculated the effect of the works on the business, assuming that there was an effect from the works and that that effect was reflected not just in reduced performance, but in the failure of the business to achieve an expected increase in performance on the move to the new shop. That “but for” scenario is contentious and dealt with below.
- For present purposes, I am concerned with identifying the actual performance of the business. Mr Haley analysed the actual performance of the business by reference to its financial accounts and sales records. Mr Hellen criticized some aspects of the financial records relied upon by Mr Haley, without pointing to any material inaccuracy which would cause me to doubt the substantive accuracy of the financial records used by Mr Haley.
- Mr Haley adopted gross profit as the measure of the impact of any loss and damage resulting from the works. Mr Hellen did not dispute that approach and I agree it is correct. To identify the actual gross profit of the business, Mr Haley had to identify the total sales and total cost of sales. Because of a change in the accounting treatment of sales of transport tickets during the 2009 year, comparing the figures in the financial accounts for the whole period did not involve comparing like with like. Mr Haley therefore revised the figures for the 2007 and 2008 years so that they accounted for transport tickets consistently with the period 2009 and following. The resulting figures for the performance of the business were as follows:
GOLD TIP NEWS PTY LTD
T/A NEWSPLUS MT OMMANEY
SUMMARY OF PROFIT AND LOSS STATEMENTS ADJUSTED FOR CONSISTENT TREATMENT OF COMMISSION INCOME
Cost of Sales
Gross Profit from Trading
Gross Profit %
Lotto & Scratch It commission
Bus and phone commissions
Type of income
Bus and phone commissions
Golden Casket commissions
Variation on previous year
- It can be seen from Mr Haley’s Table that the business declined in its total sales and commissions before the works began. The 2008 year was not affected by the works but showed a 5.02% fall in total sales and commissions. There is a similar fall in category sales only (6%) and very large fall in gross profit from trading (18.3%) between FY2007 and FY2008.
- A similar analysis can be undertaken for the change between the 2006 and 2007 years, even though the 2006 year was not adjusted in Table 4 of Mr Haley’s first report. This can be done by comparing the unadjusted figures for FY 2006 and FY2007, which were both prepared on the same basis as to commissions. This permits comparing like with like in a manner which allows identification of the year on year performance of the business for those two years. The figures in that regard are tabulated in Table 2 of Mr Haley’s report. It shows:
- (a)Total sales declined by 3.3%; and
- (b)Gross profit from trading declined by 16%.
- The overall financial performance of the business was also poor before the works commenced:
- (a)There was a profit of only $2311 in FY2006. And that profit was made with the plaintiffs being paid management fees of a modest $87,450;
- (b)There was a similar profit of $2,205 in FY2007. That modest profit was secured largely by a reduction in management fees to $65,000 and a reduction in interest expenses of some $60,000 (presumably because rates fell significantly, or capital was repaid);
- (c)In FY2008, the business sustained a loss of $112,699.
- Ironically, it does not appear that the business’ operating profit during the period when the works was being carried out changed materially from the position in the 2008 year. This can be seen by analyzing the expenses items in the profit and loss. It can be seen that for FY2009 and FY2010, the loss was of the order of $30,000 and that smaller loss compared to FY2008 seems to be largely explained by the management fee item being set at nil. If a management fee of $65,000 had been added back in those years, the loss would have been $100,371 and $96,300 in 2009 and 2010 respectively. Of course there was a significant reduction in total income in both years, but this seems to have been offset by large reductions in rent: in 2009 rent reduced on the 2008 figure by some $60,000 and in 2010 the rent reduced on the 2008 figure by some $83,000.
- It can be seen therefore that:
- (a)From its first full year of trading, the business was barely profitable;
- (b)The business made a significant overall loss in the financial year prior to commencement of the works; and
- (c)There were large falls in gross profit from trading (the figure adopted by Mr Haley as best identifying the loss suffered by Gold Tip from any impact of the works) in the 2007 and the 2008 years of over 15% in each year.
- In his affidavit, Mr Goldsmith said that the business operated successfully and profitably for four years prior to the commencement of the works. That opinion is not objectively justified on the basis of the above figures, particularly when one realises that Mr Goldsmith and Ms Tippett were taking a modest income reflected in the management expenses.
- The evidence that the business did not generate a significant profit from its first full year of trading and that the business sustained significant falls in sales and gross profit in the two years prior to the works is important because of the nature of the plaintiffs’ case. The plaintiffs effectively invite the Court to infer that reductions in sales and gross profit in 2009 to 2011, and the failure to secure significant increases in both figures from February 2010, were caused by the effects of the works. However, the plaintiffs’ case is largely inferential and the probability that some or all of the poor performance of the business after July 2008 was caused by the works is reduced by evidence that the business was declining prior to the works starting.
- In their written submissions, the plaintiffs contended that it was not open to the defendant to rely on the evidence of decline prior to the works as a factor to be considered in determining whether the plaintiffs had made out that the aspects of works identified by them in their pleading caused the loss and damage they alleged. I reject that submission. It was for the plaintiffs to demonstrate that any aspect of the works which met one of the preconditions in the RLSA caused an identified loss. That causal link was always in dispute on the pleadings. Further, the financial evidence referred to above was tendered in the plaintiffs’ case and was largely contained in Mr Haley’s first report. It was plain that that evidence raised the question of the pre-works performance of the business. Finally, and perhaps most tellingly, Mr Goldsmith put the issue of the pre-works performance into issue by his evidence referred to in paragraph  above. Further, Mr Goldsmith also sought to buttress the plaintiffs’ case with the positive submissions that he was a skillful and successful operator. Finally, Ms Roberts’ opinion was in part premised on what appears to have been a mistaken assumption as to natural growth in the business which was inconsistent with the story told by the accounts (see paragraph ).
Some issues not pressed
- Counsel for both parties made a number of concessions which simplified the proceedings. I note them here for convenience:
- (a)First, as I noted in paragraph  above, AMP did not press the contention that the District Court did not have jurisdiction to award compensation under s. 42 RSLA;
- (b)Second, as I noted in paragraph  above, the plaintiffs accepted that their claims based on breach of quiet enjoyment covenants and derogation from the grant in respect of each lease did not add to anything to the circumstances in which a remedy arose under s. 42 nor did those causes of action add anything to the remedy available;
- (c)Third, the plaintiffs did not dispute that the amounts counterclaimed by AMP arose under the second lease; and
- (d)Fourth, as noted in paragraph  above, AMP did not maintain its pleaded position that the assignment of the causes of action by the liquidators were invalid.
Analysis of the cause of action under s. 43
- The relevant parts of s. 43 are set out in paragraph  above. It is important to identify with precision what is required to be demonstrated for the plaintiffs to be entitled to compensation under that section. As already noted, there are three terms which the plaintiffs rely upon.
- The first is section 43(1)(b)(i) which gives rise to a right to compensation where the plaintiffs establish:
- (a)That AMP took certain actions; and
- (b)Those actions substantially restricted or altered access by customers to the leased premises; and
- (c)Loss or damage was suffered by Gold Tip because of those actions.
- The second is section 43(1)(b)(ii) which applies where the plaintiffs establish:
- (a)That AMP took certain actions; and
- (b)Those actions substantially restricted or altered the flow of potential customers past the leased shop; and
- (c)Loss and damage was suffered by the lessee because of those actions.
- The third is section 43(1)(c), which applies where the plaintiffs establish:
- (a)AMP took actions which caused significant disruption to Gold Tip’s trading in the leased shop; and
- (b)Loss and damage was suffered by Gold Tip because of those actions.
- If the preconditions of any one of those terms are met, Gold Tip is entitled to reasonable compensation for the loss suffered. I make the following observations.
- First, the focus of each term is the impact of AMP’s actions on the particular leased shop. This is important in this case because Gold Tip moved from the old shop to the new shop on 4 February 2010. Accordingly, there are separate and distinct causes of action arising in respect of the old shop and the new shop. To make good a claim for reasonable compensation in relation to the new shop, for example, the plaintiffs must fulfill the conditions in one or more of the identified terms in respect of the new shop. As will be seen below, I do not consider that the plaintiffs have done so in respect of the new shop.
- Second, it was argued by Mr Ferret that it is possible that loss or damage suffered by the business as a result of acts done by AMP which affected the old shop, and which loss continued to accrue after the move to the new shop, could be the subject of compensation, despite the fact that the business had moved to the new shop and there was no breach of s. 43(1) in respect of the operation of the business in that shop. Despite some apparent misgivings in Mr Goldsmith as to the prospects of the argument, Mr Ferret demonstrated the virtue of persistence by persuading me that that proposition was correct.
- There is nothing in the language of s. 43(1) which seems to confine, as a matter of law, the compensation available to a lessee for loss to loss which occurs while the lessee is occupying the particular premises affected by relevant acts of the lessor. Difficulties might exist in establishing as a matter of fact that loss suffered after moving from the premises were caused by relevant acts in a manner contemplated by the statute, but that is a question of fact, not of law. Although the statutory provisions focus on the impact of AMP’s actions on the particular shop, there is no temporal limitation on the scope of the compensation.
- In my view, that means that if there is acts by AMP which affected the old shop and caused loss or damage which continued to be suffered by Gold Tip after it moved to the new shop, compensation was payable for that loss and damage. There might be a question about whether in practice acts by AMP impacting the old shop continued to cause loss to Gold Tip after the move to the new shop and the inevitable changes to Gold Tip’s business conditions resulting from such a move, but as I have said, that is a question of fact.
- This point is important to the resolution of these proceedings because the plaintiffs contend that even if there was no relevant acts by AMP affecting the new shop, AMP’s actions affecting the old shop had a significant continuing impact on Gold Tip, primarily because they impacted on the customer connection between Gold Tip and its existing customer base, which continued to affect Gold Tip in the new shop.
- Third, each term has a very specific double causal analysis which is required.
- For the customer traffic terms, it is necessary for the plaintiffs to show:
- (a)That AMP’s actions caused the consequences in those subsections: ie. AMP either substantially restricted or altered access to, or flow past, the leased shop; and
- (b)Those actions caused loss or damage.
- For the trading term, it is necessary for the plaintiffs to show:
- (a)That AMP’ caused significant disruption to trading from the leased shop; and
- (b)Those actions caused loss or damage.
- The plaintiffs’ pleading did not specifically address each element of each provision. Rather, the pleading identified the works, then particularised specific aspects of the works which are said to have caused the consequences called for for each lease.
- That allegation was particularised for the first lease as follows:
7. The Works were actions taken by the Defendant, that:
(a) substantially restricted or altered:
(i) access by customers to the First Leased Premise; or
(ii) the flow of potential customers past the First Leased Premise; or
(b) caused significant disruption to the trade of the Business; and
(c) interfered with the occupation and use of the First Leased Premises.
During the Works:
(a) at any time one or two of the four entrances to the shopping centre were closed;
(b) malls or parts of the malls were hoarded up and blocked off;
(c) access to the Centre by car was restricted;
(d) up to 50% or more of the Centre’s previously available car parking spaces were closed;
(e) some customer toilet facilities were closed;
(f) there was noise, dust and general disturbance in and around the Centre;
(g) shops in the Centre were permanently closed;
(h) shops in the Centre were temporarily closed and/or relocated;
(i) in August 2009:
- the Defendant required Gold Tip to surrender the part of the Shop that had previously been occupied by its bookshop;
- one of the three entrances to the First Leased Premises was closed;
- a temporary ‘safety wall’ was constructed between the vacated book shop area and the rest of the First Leased Premises;
- a number of fixtures, such as magazine and stationery display stands, had to be cut down to accommodate the changes;
- the print centre was demolished
- the ceiling, lights and electrical and data cables were all affected;
- the presentation of the First Leased Premises was diminished;
(j) between September and December 2009:
- the Coles supermarket, Terry White Pharmacy and all of the other shops in the side-mall where the Business was located were closed;
- one end of the side-mall where the Business was located was closed and hoarded up preventing access;
- the Business was surrounded by empty and hoarded-up shops;
- there was no customer traffic past the shop;
- the Business remained surrounded by empty and hoarded-up shops to 3 February 2010; and
- the trade and profitability of the Business was significantly reduced as compared to the trade and profitability of the Business prior to the Works being commenced.
- Neither the pleading, nor the evidence, descended into specific analysis of how the pleaded aspects of the work caused particular impacts on customer traffic or access or disrupted trading, nor how those impacts caused loss or damage. There was no evidence, for example, that less customers came into the old shop because of the works, as compared to before the works. Rather, the Court was invited to draw those inferences, at least as I understood the case, from three kinds of evidence:
- (a)First, the evidence of the nature of the disruption caused by the works from time to time;
- (b)Second, (perhaps) the evidence of foot traffic in the Centre as a whole from time to time; and
- (c)Third, and most importantly, the evidence of the decline in gross profit of the business during and after the period of the works, especially compared to what was predicted for the new shop.
The works caused relevant effects on the old shop
- My findings as to the progress of the works and their impact on the Centre, along with the foot traffic findings, are sufficient to sustain the conclusion that aspects of the works significantly affected on customer traffic past or access to, or disrupted trading in, the old shop.
- In my view, the impacts can be sensibly analysed from the perspective of:
- (a)General impacts affecting the whole Centre in the period September 2008 to around July 2009; and
- (b)Specific impacts affecting the old shop in particular from August 2009 to February 2010.
September 2008 to July 2009
- The first period covers closure of the North car park and the North door and construction of the North mall. All of that work was completed and the new North mall, the North car park and the North door were all open and fully operational by July 2009.
- The period from January 2009 to July 2009 also was affected by the closure of the south door and car park and the performance of work on the new South mall.
- While I accept that these works had effects on Gold Tip’s business, it is to be kept in mind that:
- (a)At no stage were both the North and South doors closed;
- (b)That the North car park was opened in December 2008. While it had some access problems initially, this is leavened by the fact that it significantly increased the number of car parks. Further, there was no evidence that the access problems were such as to rob it of its effectiveness as a car park to any great extent or for any extended period;
- (c)As at April 2009, Mr Goldsmith was willing to accept a payment of $30,000 in discharge of any claim to compensation for loss up to July 2009. While I accept he might have thought he was entitled to more, there is no evident deep dissatisfaction with the deal done with AMP (and Mr Goldsmith was not backward in expressing dissatisfaction). No-one was better placed as at April 2009 to assess the extent of the impact of the works on the business of Gold Tip at that time. This is not decisive, but it is some contemporaneous evidence of Mr Goldsmith’s perceptions of the impacts to that time.
- (d)For FY2009, while total sales for the business went down by about 10%, gross profit only fell by some $32,000 or 5.2% (coincidentally almost the same amount as the rental credit given by AMP).
- It is also worth looking at the Centre customer figures for this period. As noted in paragraph  -  above, Centre visits by customers fell until July 2009, but then staged a fairly dramatic recovery from August 2009. July 2009 also marked the end of the decline in Centre Sales. This evidence tends to suggest that July 2009 was the nadir of the performance of the Centre from a customer visits and total sales perspective.
- Of course, AMP accepted by its settlement agreement that there had been an impact in this period. And Gold Tip’s claims for loss and damage suffered in this period (until 1 July anyway) have been settled by the April 2009 agreement. A key question which remains to be resolved, however, is whether the any relevant impacts on customer access and flow past the old shop and any disruption to trading which occurred in this period led to loss and damage after 30 June 2009.
August 2009 to February 2010
- From its low point in July, Centre visits increased at a rapid rate compared to the equivalent month of the previous year and as compared to the pre-works figures, so that by December 2009 and January 2010, visits were 41% and 22% higher than before the works. From December 2009, there were also large increases on pre-works sales. By December 2009, the supermarket sales figures had all but recovered to pre-works levels and rapidly increased from that level. The period between August 2009 and December 2009, however, shows mixed results as to the overall performance of the Centre, with visits increasing but sales lagging the increase in customer visits.
- This data might be thought not to present a compelling case for inferring that the works significantly affected customer traffic past or access to, or disrupted trading in the old shop. However, there are other matters to consider.
- First, the old shop was made smaller to facilitate the works in August 2009 as explained at  above. These events did not affect customer flow past the old shop. However, they significantly restricted access to the old shop, in the sense of preventing access to that part of old shop which was surrendered. I am willing to assume that those facts meet the statutory description in s. 43(1)(b)(i). They were also acts which caused significant disruption to Gold Tip’s trading from the old shop, by removing the book selling and the print services and disrupting the shop layout.
- It might be argued, however, that these facts do not attract compensation under any of the subsections relied upon. Section 43(1)(b)(i) is expressly premised on an action taken by AMP which caused the consequences in s. 43(1)(b)(i). Section 43(1)(c) is premised on AMP taking an action causing significant disruption to trade.
- Ms Schneider submitted, in effect, that any consequences of the surrender did not attract compensation because they were not caused by AMP, they were caused by the agreement to surrender part of the old shop in exchange for the rent renewal. Though that argument was not fully developed in writing or orally, as I understand the position the analysis was that the surrender of part of the old shop was caused relevantly by the consent of Mr Goldsmith on behalf of Gold Tip to that surrender on terms as to rent reduction. This of course depends on the finding that the surrender was with Gold Tip’s consent. However, as found in paragraph  above, the process of surrender was done consensually and there was no other evidence that it would or could have been compelled if not agreed to by Gold Tip.
- Causation always involves more than a simple “but for” analysis. It also requires consideration to be given to the common sense identification of what causes an event, with that matter informed by the context in which the causal question arises so as to identify the legally relevant cause in any particular statutory or common law context out of a range of necessary (but not always sufficient) conditions. Here, where the relevant sections are concerned with compensation for actions by a lessor which cause harm to the business of a lessee, the focus of the causal analysis should be on actions by the lessor which impose consequences of the kind identified in s. 43(1) rather than those actions of the lessor which are undertaken with the lessee’s agreement and consent. In the latter case, (assuming no economic duress) there is no impact unilaterally imposed on the lessee’s business. In my view, the legally relevant cause of the surrender was the consent of Gold Tip to that event. Accordingly, the surrender and its consequences do not fall within the scope of the section and cannot give rise to any entitlement to compensation. This point was not dealt with in oral argument. However, it is open on the pleadings and no objection was raised to the argument after delivery of the written submissions.
- Second, as explained in paragraphs , Coles and Terry White moved out of their location opposite the old shop in early December 2009 and access from the north was boarded up in January 2010. The closure of Coles and Terry White would have had a substantial impact on customer flow past the old shop (though as I have observed, there is no direct evidence of that by way of customer counts before and after their move). Further, as explained in paragraph (d) above, the three tenancies supported the other, with each being a destination in its own right, drawing discretionary spending to the other two. And it is reasonable to infer that Coles and Terry White were more important to Gold Tip than the other way around in that respect. The movement of those tenants, with empty shops being the result, would have substantially altered the flow of customers past the shop (though it in no way restricted access to the old shop).
- It might be questioned, however, that the movement of those tenancies was shown on the evidence to have been caused by AMP taking action, as contemplated by s. 43(1)(b). The decision to move, and the act of moving, were decisions and actions which could only have been taken by Coles and Terry White. It was not action taken by AMP. At some broader level, however, the movement of Coles and Terry White was the result of the action of AMP negotiating a new lease with them or at an even broader level of generality, the result of AMP deciding to undertake the works. Bearing in mind my observations as to the policy which ought underpin a causation analysis in s. 43(1), it is necessary for the plaintiffs to establish to the relevant standard that I should infer AMP was the key actor, as it were, in the moving of those tenancies.
- Ms Schneider’s written submissions did not directly raise this issue. Her argument, put in somewhat tentative terms, was that the “mere relocation of surrounding tenants” cannot give rise to a remedy under s. 43(1). I do agree that s. 43(1) cannot be read as effectively imposing a warranty that no tenancy will change in a shopping centre which affects any other tenant without compensation. However, I do not agree that as a matter of law, the mere relocation of surrounding tenants cannot give rise to a remedy under s. 43(1). In my view, there is no such thing as a mere relocation.
- What is required is the identification of the circumstances of the relocation with a view to determining whether the lessor played such a part in the relocation so as to permit its conduct to be characterised as taking action which had the relevant consequences. For example, if Coles had come to AMP and insisted on moving to another location, it would be arguable that AMP had not taken any relevant action. If AMP, on the other hand, conceived of the relocation as proposed it to Coles as part of the renovation of the whole Centre, another consequence might flow.
- Ultimately, in this case, I am persuaded on the evidence that the inference that AMP initiated the move of Coles and Terry White is more probable than other inferences. The inference arises because the moves were incidental to the carrying out of the works as a whole. The renovation was a very large, long term project. Although there was undoubtedly discussions with both tenants, it seems to me that the overall initiative for the works must have been AMP, and that it was the decision to undertake the renovation which was the ultimate and legally relevant cause of the move by Coles and Terry White.
- Third, as noted in paragraph  above, a hoarding cut off the old shop at one end of the old mall on 10 January 2010. This action was one by AMP and undoubtedly met the requirements of s. 43(1)(b). It was of particular significance to the old shop because it cut off flow from the now open and functioning North door and North mall.
- Thus, I find that the movement of Coles and Terry White and the closing of the north entrance to the mall where Gold Tip’s business sat alone and forlorn did engage s. 43(1)(b) at least, if not also 43(1)(c).
- There are a couple of points to note, however, about this period in the trading life of the business, particularly given its importance to the case advanced by the plaintiffs:
- (a)On the one hand, the period of isolation was relatively short. Even allowing for the prospect that trading for Coles and Terry White might have been affected in the lead up to their moves to new premises, the old shop was isolated for only about two months. It is not immediately obvious that this short period would have been particularly damaging to customer connection with the business. Further, the South mall, door and car park opened in December 2009, providing access to the old shop from the South;
- (b)On the other hand, the period included the Christmas shopping period, which is a period of high demand, as was demonstrated by the sales and foot traffic figures tendered. This is likely to have increased the effect on sales and gross profit from this relatively short period of isolation. It can be seen that December turnover was $46,000 less in December 2009 compared to December 2008 and the turnover in January 2010 was $45,000 less than January 2009.
- Accordingly, I am satisfied that the move by Coles and Terry White substantially altered the flow of potential customers past the old shop and that hoarding installed by AMP substantially restricted customer access and flow. I have also found that the works between September 2008 and June 2009 had the effect of substantially restricting or altering access or flow.
- The question is whether any loss or damage was caused and if so, what amount comprises reasonable compensation for those events, bearing in mind the settlement in April 2009 agreement and the surrender agreement. I will address that after considering whether any right to compensation arises in respect of the second lease.
The works caused no relevant effects on the new shop
- I refer to paragraphs  to  above. The particulars of the acts which caused the consequences articulated in s. 43(1)(b) and (c) pleaded for the second lease were as follows:
The plaintiff repeats and relies upon the particulars to paragraph 7 herein and further says that during the Ongoing Works:
- (a)shops continued to be fitted out;
- (b)roadworks around the Centre continued;
- (c)lifts did not work;
- (d)loading docks continued to be built;
- (e)access to the multi-storey car parks continued to be built;
- (f)the trade and profitability of the Business was significantly reduced as compared to the trade and profitability of the Business prior to the Works and the Ongoing Works being commenced.
- The incorporation by reference of the particulars of acts in relation to the first shop is irrelevant. It fails to grapple with the requirement in s. 43(1) that the relevant pre-conditions for acts of AMP to give rise to compensable loss must be met in relation to the leased premises. Acts which effect the customer flow past the old shop, customer access to the old shop or which disrupted trading at the old shop cannot as a matter of law sustain claims for compensation in relation to the new shop. This is no mere pleading issue. The plaintiffs’ case never grappled with this matter until oral argument in final submissions.
- Further, like the particulars given for the old shop, these particulars did not articulate how the so called “Ongoing Works” caused any of the three pre-conditions pleaded. Unlike the position with some of the particulars given for the old shop, it was unclear quite how the generalized allegations met those pre-conditions.
- Bearing those matters in mind, I do not accept that either the particularised case, or the evidence led in respect of trading in the new shop, met any of the three pre-conditions necessary for an entitlement to compensation to arise under the second lease. I reach that conclusion for the following reasons:
- (a)First, for the reasons given in paragraphs  to  above, I consider that the works were effectively completed by the grand opening in early June 2010;
- (b)Second, I do not consider that any of the works done between 4 February 2010 and June 2010 met any of the three pre-conditions relied on by the plaintiffs. The main works done in that period were constructing the JB Hi Fi Mall. The evidence demonstrated that this work was not done in a way which would have interfered with trading at the new shop. Further, the plaintiffs never demonstrated by evidence how that work, in a discrete area of the Centre, which did not affect any of the main entrances, could have substantially interfered with the new shop in a relevant way;
- (c)Third, as to particular (a), I cannot see why fit out of shops per se, would meet any of the pre-conditions. There was no evidence to support a finding that any particular fit out work done had any such effect;
- (d)Fourth, as to particular (b), I cannot see why roadworks around the Centre per se, would meet any of the pre-conditions. There was no evidence to support a finding that any particular road work did have any such effect. The evidence of that work was vague as to when it occurred and its duration and failed to persuade me of any such effect;
- (e)Fifth, as to particular (c) and (e), this appeared to relate to the new North car park. I have found that these issues were resolved long before February 2010;
- (f)Sixth, as to particular (d), I accept Mr Ihm’s evidence that such work would not have impacted on customer access to the car park. A fortiori for impact of the kind identified in s. 43(1)(b) or (c); and
- (g)Finally particular (f) identifies how the Business was trading, but begs the question as to why that difference existed. This particular highlights a central premise of the plaintiffs’ case: Gold Tip’s business was not flourishing as compared to the pre-works period, ergo the works must have caused that reduction. As Ms Schneider submitted, this is analogous to a global claim, at least in circumstances where the plaintiffs are unable to establish on the evidence that any of the three pre-conditions to a remedy relied upon were established on the evidence, as is the case with the new shop.
- As the plaintiffs have not established that the pre-conditions in s. 43(1)(b) or (c) were met in relation to the new shop, the claim advanced for loss and damage in relation to the new shop must be dismissed.
- However, as I have found in paragraphs  to  above, it does not automatically follow that no compensation can be payable for loss and damage suffered by the business after the move to the new shop, which arose from actions affecting the old shop.
Loss and damage arising from acts affecting the old shop
- To recap, I have found that:
- (a)The closing of the North then the South doors, car parks and malls over September 2008 to December 2009 substantially restricted access to and altered flow past the old shop from time to time;
- (b)The movements of Coles and Terry White substantially altered flow past the old shop from December 2009;
- (c)The boarding up of access to the old Coles mall from the North in January 2010 substantially affected the flow of potential customers past the old shop;
- (d)The other effects of the works alleged (as to dust, toilets and general effects on amenity) did not have any substantial effect;
- (e)As to the surrender of part of the old shop, even though the benefit August 2009 agreement was not a quid pro quo for release of claims under s. 43(1), the circumstances of that surrender take it outside the scope of the section (and therefore the consequences of the surrender must be excluded from loss or damage suffered by the business from the other events).
- The next stage in the analysis is to determine the loss or damage suffered by [Gold Tip] because AMP took the actions identified in (a), (b) and (c) above.
- Gold Tip alleged that reasonable compensation should be measured by reference to the difference between:
- (a)The gross profit it would have earned but for the acts by AMP which caused the results in s. 43(1)(b) and (c) between July 2009 and March 2012; and
- (b)The gross profit it actually earned in that period.
- AMP did not cavil with that method of calculating reasonable compensation. Rather AMP contended that Gold Tip had not established that it was entitled to the compensation it claimed.
- Gold Tip’s primary claim for compensation is articulated in Mr Haley’s Table 7 as follows:
GOLD TIP NEWS PTY LTD
T/A NEWSPLUS MT OMMANEY
SUMMARY OF LOSS CALCULATION SCHEDULES
Actual Revenue (Gross profit + commissions)
Notional Revenue (Gross profit + commissions)
Loss of Gross Profit and Commissions
Less Cost Savings
Rent savings whilst paying turnover rent
Net Loss under lease for Old Shop
Net Loss under lease for New Shop
- Mr Haley explains the basis of the calculations in his report:
- (a)He assumes that but for the works, notional sales would have been as in FY2008 for the ensuing years, adjusted for a number of specific matters.
- (b)Mr Haley assumed an annual reduction would have occurred .8% to account for the industry wide reduction in turnover of news agents identified in a well-known industry publication;
- (c)He adjusted the gross profit calculation to take account of the surrender agreement;
- (d)He adjusted for the reduction in the size of the shop by removing bookshop sales after September 2009;
- (e)He adopted an average gross profit figure of 41.7% based on actual gross profit; and
- (f)Most contentiously, he adopted the assumption on instructions that on movement to the new shop, there would have been a one off 20% increase in total sales.
- Mr Haley’s report does not contain expert opinion about causation of the reduction in sales and gross profit. The plaintiffs called Ms Meulman and Ms Roberts to deal with the question of causation.
Ms Meulman’s evidence
- Mr Meulman’s report comprised observations about foot traffic and sales in the Centre before, during and after the works, and observations about shopping centre performance and other broader considerations.
- Much of her evidence was not of assistance. The structure of her report was to identify various statistics and make various statements about performance of shopping centres generally, and the Centre in particular, and then to state conclusions, without explaining how, by application of her expertise, the conclusions she expressed were supported by the statistics and propositions she had reviewed. This lack of explanation of her reasoning would have been less problematic if she had articulated her conclusions with more precision. However, many of her conclusions did not stand up to scrutiny when compared to the statistics in her own report, as Ms Schneider established effectively in cross examination. Further, many of her conclusions were so broad as to be of no real relevance to the circumstances of the news agency business. Her report is a salutary reminder of the importance of the explanation of the reasoning of an expert to the admissibly and persuasiveness of an expert opinion. This is not intended to be a criticism of Ms Meulman. It is a proper part of the role of lawyers in preparation of a matter for trial to ensure it complies with the rules of admissibility and is persuasive and clear in its expression.
- Ms Schneider’s written submissions identify the defects in Ms Meulman’s evidence exposed in cross examination and the concessions made by her. I agree with those submissions. It is unnecessary to set out those submission in full here. It sufficient to note that, not surprisingly, the ultimate effect of Ms Meulman’s evidence after cross examination was to agree with the indisputable figures for foot traffic and turnover, which demonstrate a strong recovery in foot traffic from August 2009 and a strong recovery in sales after September 2009. All suggestions in her report to the contrary were not maintained and to the extent they were, I reject them as inconsistent with the objective evidence.
- The plaintiffs in final submissions relied more strongly, however, on Ms Meulman’s evidence about stabilisation periods after works were completed. The gravamen of the plaintiffs’ case was that stabilisation was a well recognised event and referred to the time it took fully to recover from major renovation works. Ms Meulman recognised that such could occur and that the Centre might have been so affected. However, she drew no reasoned conclusion about the actual stabilisation period for the Centre following the works, she identified no criteria by which stabilisation could be assessed, and she did not link any particular stabilisation period to any particular likely impact on the business. The vagueness of her conclusions can be seen in paragraphs 3.6.1 c. to e. and 5.1 e. and f of her report. In my opinion, these observations do not materially support the plaintiffs claim that Gold Tip’s poor performance after February 2010 was explicable by the enduring impact of the completed works.
- That conclusion is reinforced by the concessions made in cross examination, accurately summarised by Ms Schneider as follows:
66 In preparing her report, Ms Meulman was asked to consider and opine upon the Shopping Centre Council of Australia’s statement that a shopping centre “will be regarded as stable following redevelopment after 24 months”. Ms Meulman concluded that although it is typical for centres to experience a period of stabilisation or recovery following development or expansion works, the level and length of this recovery or stabilisation period is depending on a range of factors. Ms Meulman opined that, during this period of recovery or stabilisation, a centre would expect to see a return to customer visitation patters and an increase in customer counts at the Centre. Ms Meulman accepted that the expected period of recovery from interruptions to customer visitation patterns which is ordinarily brought about a refurbishment of expansion of a shopping centre can commence prior to the completion of all refurbishment or expansion activities. Ms Meulman also accepted that the period of recovery experienced by centres varies, and in some cases centres can recover much quicker than 24 months.
67 As to the Centre at Mt Ommaney, Ms Meulman accepted that from July 2009, there began a recovery in the number of customers who visited the Centre each month as new facilities started to open at the Centre. Ms Meulman further explained that, from July 2009, there were signs that the opening of new facilities at the Centre had also commenced attracting new shoppers to the Centre. Ms Meulman’s evidence in cross-examination was that, from December 2009, the number of customers who visited the Centre each month exceeded that which had visited the Centre during corresponding months in the pre-redevelopment period; and thereafter the number of monthly customer visits to the Centre consistently outperformed that which had been achieved during corresponding months in the pre-redevelopment period. Ms Roberts accepted the evidence suggested that in the first quarter of 2010, customers had already returned to the Centre and additional customers or new customers were also visiting the Centre. Ms Meulman also accepted that from June 2010 onwards, excluding the peaks experienced during the Christmas periods, customer visits to the Centre remained relatively stable at around 500,000 visits per month. Ms Meulman accepted that this period can be compared with the July 2007 to June 2008 pre-redevelopment period during which (excluding Christmas trading peaks) the number of customers who visited the Centre sat at around just under 400,000 per month. Ms Meulman accepted that this suggests that by July 2010, customer visits to the Centre had stabilised.
- The high point of the evidence on stabilization is in paragraphs 3.5.8-3.5.9 of Ms Meulman’s report. There she writes:
3.5.8 It is my opinion that there is a period of adjustment after an interrupting event such as the Works, for which customers are likely to be reluctant to change their behaviours or to revert back to earlier shopping habits and patterns.
3.5.9 Therefore, it would be reasonable in my experience for a centre to experience a period of stabilisation in performance, including in customer visit patterns, following an interrupting event such as the Works. A return to customer visitation patterns and an increase in customer counts at the Centre is expected to be experienced over time as former customers refamiliarise themselves with the Centre, its offer and layout, including parking accessibility, and as new customers investigate the Centre offer.
- One can accept these observations about what commonly happens. They do not assist in identifying any specific stabilisation pattern for the Centre. Indeed, once again, Ms Meulman’s conclusion is hard to square with the objective evidence. That demonstrates a strong and continuous recovery in customers and turnover in the second half of 2009. Further, none of the matters identified in the above passage are meaningfully probative of any actual stabilisation effect on the new shop in particular.
- I am not persuaded that the concept of stabilisation assists the plaintiffs in their claims for loss and damage after Gold Tip moved the business to the new shop.
Expected growth in sales
- Another central issue in the plaintiffs’ claim for loss and damage was the assumption that, but for the impact of the works on customers and trading, the business in the new shop would have increased its base turnover by 20%.
- Mr Haley was instructed to assume that figure in his calculations. The basis of the figure was a valuation report by Ms Roberts prepared for mortgage security purposes and provided to Gold Tip’s bankers. Ms Roberts was undoubtedly surprised to be called, in 2020, to give evidence about a report she provided to a bank in 2009 in a trial in which that bank was not a party. Not surprisingly, her report was not prepared in a form consistent with the expert evidence provisions in Part 5, Chapter 11 of the UCPR. However, AMP did not object to the tender of the report on that basis.
- Ms Roberts’ evidence in chief comprised an affidavit exhibiting the 2009 Report. She did not revise or reconsider her opinions in her Report for the purposes of addressing the issues in this case, despite the fact that her Report was written before the works were finished. The plaintiffs’ case is that I should assume that her predictions would have come through but for the works. However, Ms Roberts did not address in her evidence the reasons why her predictions in her 2009 Report did not come to fruition. That inevitably limits the probative weight of her opinion.
- The key part of Ms Roberts report for present purposes was as follows:
In summary, when determining an estimated maintainable gross shop sales level we have considered the following:-
- Gross Shop Sales have fallen in each year since the commencement of the redevelopment of the Mt Ommaney Centre;
- Redevelopment will impact on trading for a limited time period only;
- The location of the new store premises with the Fresh Food Precinct of the shopping centre can be considered a prime location, with respect to passing pedestrian traffic, and its proximity to Coles supermarket;
- As noted previously in the report, the trading area of the subject business is experiencing further residential and commercial development, which will have a favourable impact on the customer base of the business;
- We would expect Mt Ommaney Centre will continue to be a strong sub-regional shopping centre and therefore consider it likely there will be an increase in the level of customers shopping in the centre;
- Back to School Sales are a strong element with the subject business currently servicing seven schools in the area;
- A new product line is to be introduced, Darrell Lea confectionary, which has previously been a separate store in the shopping centre;
- The effects of competition in the area have already been felt, with no recent new competitors in the surrounding area. We further consider the redevelopment of the shopping centre and its ample car parking spaces with increased numbers of service providers provides potential for the shopping centre to increase its share of the customer market;
- Forecast Gross Shop Sales for the year ended November 2010 include an element of increased trading levels that solely relates to the opening of the centre, and ongoing maintainable sales are therefore likely to experience some normalization in the short to medium term;
- The base year being used for future projections, ie. year end 30th June 2007, also included factors that had a negative effect on sales levels, and that are not likely to occur in every subsequent year of trading.
Given the above considerations, we have applied a 20% increase to the Gross Shop Sales in the year ended 30th June 2007, ie. (20% increase of $1,690,984 equals $2,029,181) or an overall estimate of $2,029,000 per annum.
We consider this growth allows for natural growth from 2007 to 2009, and further allows for an increase in sales levels due to the positive effects of trading in a redeveloped shopping centre which will offer a wider range of services, in a superior location, with a growing customer base.
We therefore adopt an Estimated Maintainable Gross Shop Sales of $2,029,000 per annum.
- The evidence gives one cause to question this analysis.
- First, Ms Roberts assumes that there would be natural growth in sales and gross profit through 2007 to 2009. However, the evidence of Gold Tip’s financial performance in 2007 and 2008 is strongly contrary to any such inference. There was significant contraction in both. Further, the evidence of industry conditions suggested contraction in the overall turnover of news agency businesses Australia wide.
- Second, in cross examination, Ms Roberts conceded she was well aware of the detail of the works and its impact on the business while in the old shop, and of the location and prospects of the new shop. She accepted her opinion was that once the business moved to the new shop, it would trade strongly. She made no allowance for any material impact of a protracted stabilisation period (or of enduring impacts from broken customer connections for that matter.) It must be recognised that Ms Roberts was assuming normal trading with completed renovations from the new shop by December 2009, and that did not occur until February 2010 (or 25 February 2010 if Aldi being open is a key consideration, or perhaps June 2010 if the opening of the JB Hi Fi Mall was a key consideration). However even allowing for that, Ms Roberts’ opinion as at October 2009 did not admit of the prospect of extended stabilisation or under performance. And as I have said, no evidence was led from her about why her predictions did not come true. Thus the state of the plaintiffs’ evidence is that the assumptions of Ms Roberts about the timing and content of the works had materially been met by at least early June, but no increase of the kind Ms Roberts had predicted had occurred. That not consistent with the inference that the works were the cause of the failure of the prediction to come true.
- The plaintiffs’ counsel pressed the proposition that a significant difference from the scenario assumed by Ms Roberts was the “full catastrophe of late 2009”. I have explained the events from August 2009 to 4 February 2010 above. The impact of those events was material, but a close analysis of the facts demonstrates that the position was not catastrophic. In any event, any such short lived catastrophe was over by February 2010. The plaintiffs’ contend, however, that events in the period August 2009 to February 2010 had a magnified effect on the future of the business because of breaking of customer connections. As I explain in paragraphs  to  below, I reject that submission.
- Third, Ms Roberts took (presumably financial year) 2007 as her base year for calculating her predicted improvement in sales. However, she appears to have assumed 2007 was affected by one off factors including the opening of new competitors. She did not appear to be aware of the general trend down in news agent turnover recognised by Mr Haley and explained by AMP’s economist, Mr Rumbens. She also appears, with respect, not to have appreciated the downward trend demonstrated by the accounts in 2007 and 2008. She also recognised that the impact of new competitors might be sustained over time, but did not seem to take into account the long term effect of that.
- Fourth, Ms Roberts made a number of assumptions about product mix, which was important to her calculations of gross profit. It was never properly established that those assumptions held true for the trading of Gold Tip in the new shop, much less that the gross profit assumptions on those lines was made good. I note in that regard that the Darrell Lea business was entirely new and any estimate as to the performance of that new part of the business was necessarily speculative.
- Finally, Ms Roberts’ report was a prediction as to how a business would operate in a very different physical and competitive environment. Such predictions are just that, predictions. Any number of factors could falsify such predictions. For example, the business was intending to significantly increase its card offering. Ms Roberts seems to have assumed this would succeed and generate the same gross profit as the smaller offering in the old shop. However, experience might show that demand did not exist to sustain a larger card offering, or that new competitors had emerged selling cards. And there could be any number of other reasons why the business did not thrive even though it was predicted that it would do so. Such events are very common in commercial life.
- For these reasons, I do not accept that Ms Roberts’ report provides a basis to conclude that but for the works, the business would have achieved an enduring 20% increase in turnover, nor indeed any other particular increase in turnover.
- There are other factors which also tend to call into question any assumption of a material increase in turnover.
- The one which was dealt with most extensively in the evidence was the proposition that there was a general downwards trend in the sales of news agents. Mr Rumbens gave evidence to that effect. He was a macro economist of considerable experience. His evidence tended to be supported by trade publications, including the IBIS World publication relied upon by Mr Haley.
- Compelling though the evidence of general decline in news agents turnover was, I did not think it particularly determinative of the issues in this case, except to this extent. It provided a basis to doubt, in the absence of evidence to the contrary, that the Gold Tip business could expect a future in which there were significant improvements in turnover and gross profit.
- The evidence does not persuade me that, but for the works, the business operated from the new shop would have recorded a material increase in its turnover and gross profit.
Other arguments on loss after February 2010
- There were two other contentions advanced to sustain the conclusion that the effect of the works was to cause on-going loss after February 2010.
- The first was raised for the first time orally in closing submissions. Mr Ferrett submitted that the effect of the all the events leading up to the move in February 2010 was to create enduring loss because they broke the customer connection between the Gold Tip business and its established customers and that new customers never replaced them. Subject to my comments about the period immediately after the move to the new shop set out in paragraph  below (which are not really concerned with customer connection of the kind spoken of by Mr Ferret), I reject this submission.
- There is no direct evidence from any witness that that this in fact occurred, or was likely to occur. Nothing was said by Mr Goldsmith to provide a factual foundation for it. He referred to complaints from his customers about difficulty of access, but ironically that only tends to show that those customers were still coming to the old shop. Nothing was said about it by Ms Roberts, who might be thought to have had expertise to comment on that. There was no evidence of the importance of customer connection to news agent businesses generally nor to this one in particular. In that regard, as Ms Roberts correctly assumed, Gold Tip remained the only seller of Lotto and Scratch it type gambling products. Anyone who visited the Centre who wanted such products had to come to the new shop. It is not obvious that customer connection has much to do with that decision. Otherwise, the business depended on discretionary spending driven to a substantial degree by the large nearby destination tenancies. Those tenancies were up and running at the latest by late February 2010.
- The second was that Mr Goldsmith and Ms Tippett were considered good operators by AMP. That is really not to the point. The evidence did not support the conclusion that the business was going well before the work, despite their efforts.
The causal inference argument
- It was not sufficient to demonstrate that the works happened, that some aspects were likely to have caused consequences contemplated by the relevant provisions, and the profit fell, ergo an evidential onus swung to AMP to demonstrate that the profit drop was caused by causes other than the actions of AMP identified. It was up to the plaintiffs to demonstrate by evidence on the balance of probabilities that the losses they allege were caused by actions by AMP which caused one or more of the consequences identified in s. 43(1)(b) and (c) and that thereby Gold Tip suffered the particular loss alleged. For the reasons set out above, the plaintiffs never succeeded in doing so in relation to the period after February 2010. The approach in the first sentence was most strongly contended for in relation to the performance in the new shop. However, the move to the new shop in a newly renovated and restructured Centre with different layout and competitors meant the business was operating in a different context. There is no guarantee that any business will succeed. The fact that the business did not thrive in that location does not of itself give rise to any inference as to the cause.
No loss proved from relevant works after February 2010
- I have found that the plaintiffs have not established that any part of the works occurring after 4 February 2010 met any of the pre-conditions set out in the relevant subsections of s. 43(1) RLSA. I have also found that the plaintiffs have not established that relevant acts which occurred before February 2010 caused any enduring loss or damage after February 2010 arising from intractable loss of customer connection or patronage caused by the works. With one minor exception dealt with in paragraph  below, the plaintiff’s claims in respect of the period post 4 February 2010, in relation to both the first and second leases, must be dismissed.
- That leaves the question of whether loss or damage can be established for the period between July 2009 and February 2010 and if so, whether the plaintiffs are entitled to any compensation for that loss or whether, on the other hand, AMP has already provided benefits to Gold Tip which comprise reasonable compensation for such loss.
Loss for the period July 2009 to February 2010
- I refer to paragraph  above. Assessing reasonable compensation for the three matters identified in that paragraph as enlivening a right to compensation is made difficult by a number of factors.
- The first is the exclusion of the impacts of the surrender agreement. This creates some difficulties of assessment. None of the calculations by Mr Haley and Mr Helen dealt with this scenario. So far as I could understand it, Mr Haley approached the calculation of loss by taking into account the effect of surrender of the bookshop on sales and the benefit of the rental concessions on gross profit. He valued the surrender agreement concessions at $44,691, which accords with my own estimate derived from the evidence. I have no reason to doubt his calculation. The value allocated to the loss of the benefit of the bookshop sales is harder to isolate.
- There are at least two difficulties with this analysis given my conclusion that the benefits and burdens of the surrender agreement fall outside the claim of the plaintiffs. The first is that the impact of the surrender agreement would have gone beyond the bookshop sales. It would have impacted on the print centre sales and generally on the presentation and amenity of the shop. Second, and on the other hand, it might be argued that the reduction in the rental obligations should be taken out of the calculation of gross profit as it was paid on account of impacts of the surrender agreement only (and if that overcompensated Gold Tip, that would be its good fortune).
- I could have sought even more expert evidence and submissions on this point, but it seemed to me that the broad position is likely to be that the losses from the surrender agreement roughly balance out the benefit of the rental concession. Adopting a pragmatic approach to the matter, I therefore intend to accept Mr Haley’s calculation of loss for the period to February 2010, notwithstanding my different view as to the inclusion of the surrender agreement loss and gains to gross profit.
- Mr Haley calculated the decrease in gross profit in the period July 2009 to February 2010 at $70,500. This figure not is affected by the 20% increase assumption (which only relates to the period after the business moved to the new shop). While there might well be some underlying trend down in the performance of the business conducted over this time, I consider that does not explain the majority of this reduction in gross profit. The most serious impact in this period was in the peak months of December and January (as to which compare sales for December 07/ January 08 to December 09 /January 10). In all the circumstances, I consider $50,000 to be reasonable compensation for the loss in gross profit suffered from July 2009 to 4 February 2010.
- Further, notwithstanding my findings in  above, I consider it likely there would have been some overhang from the poor trading, especially in the Christmas/New Year period, in the initial trading in the new shop. It is difficult to put a precise figure on this. Given my findings as to the predicted increase, the approach to this calculation should be assuming no uplift factor. Mr Haley produced some figures on this assumption of a nil uplift which calculated the loss of gross profit by Gold Tip from February to June 2010 at $44,080. I am not satisfied that the whole of this loss is reasonably attributable to the hang over from the impact of the poor Christmas and New Year period. Further, some of the reduced trading in February at least would be the result of the impact of moving the business. Doing the best I can, I think a reasonable allowance for any such impact is $15,000.
- Accordingly, reasonable compensation for the loss to the business from the impacts of actions by AMP related to the works occurring in July 2009 to 4 February 2010 is $65,000.
Claim on the first lease not statute barred
- Section 10 Limitations of Actions Act 1974 (Qld) (LAA) relevantly provides:
Actions of contract and tort and certain other actions
- (1)The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose—
- (a)subject to section 10AA, an action founded on simple contract or quasi-contract or on tort where the damages claimed by the plaintiff do not consist of or include damages in respect of personal injury to any person;
- (d)an action to recover a sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of a penalty or forfeiture.
- (3)An action upon a specialty shall not be brought after the expiration of 12 years from the date on which the cause of action accrued.
- (3A)Subsection (3) does not affect an action in respect of which a shorter period of limitation is prescribed by any other provision of this Act.
- AMP contends that even if it is liable to compensate Gold Tip for loss or damage under s. 43(1) RSLA, any such claim is statute barred under this section. AMP contends that:
- (a)The cause of action under s. 43(1) was in simple contract, attracting a 6 year limitation period; and
- (b)The proceedings were commenced on 2 February 2016 and that the cause of action under s. 43(1) had accrued by 2 February 2010, more than 6 years prior to commencement of the proceedings.
- The plaintiffs do not dispute the factual propositions in the second limb of AMP’s contention. However, they contend that the cause of action under s. 43(1) is an action upon a specialty, and therefore the plaintiffs had 12 years to bring the proceedings. The plaintiffs accept that if their specialty argument fails, AMP is otherwise entitled to succeed on its limitation defence.
- The plaintiffs’ argument is beguilingly simple. They contend:
- (a)A specialty includes an action upon a covenant in a deed;
- (b)Although the first lease was not in the form of a deed, it was a registered on the real property register thus attracting s. 176 Land Title Act 1994 (Qld) which provides that a “registered instrument operates as a deed”;
- (c)Section 43(1) is incorporated into the first lease by law;
- (d)Thus a claim under s. 43(1) is an action upon a specialty.
- The defendant responds to this argument by contending that:
- (a)No extension of the first lease was ever registered;
- (b)Accordingly, after the expiry of the first lease term, Gold Tip’s tenure was unregistered;
- (c)From the expiry of the second extension until the move to the new shop under the new lease, Gold Tip’s tenure was unregistered and comprised holding over under the terms of the old lease but under a new and separate tenancy from that created by the registered first lease. AMP relied on Hamilton v Porta  VR 247 at 250; and
- (d)Thus the term was not implied into a registered lease and did not obtain the benefit of s. 176.
- The starting point for analysis of this argument is properly to articulate the manner in which the rights under s. 43(1) are conferred on the lessee.
- The RSLA relevantly provides:
- (a)By section 18:
18 Acts provisions implied in leases
If, under this Act, a duty is imposed or an entitlement is conferred on a lessor or lessee under a retail shop lease, the duty or entitlement is taken to be included in the lease.
- (b)By s. 42:
42 Compensation provisions implied in particular leases
- (1)A retail shop lease is taken to include sections 43, 43A and 44.
- (2)However, subsection (1) does not apply to a lease for –
- (a)a periodic tenancy; or
- (b)a tenancy at will, other than a tenancy at will created by the lessee holding over under the lease or with the lessor’s consent.
- The parties agree that from 1 July 2008 (on AMP’s case) or from 1 August 2008 (on AMP’s case), Gold Tip was holding over and therefore s. 43 applied. The question is over the effect of incorporating s. 43(1) into that tenancy at will.
- The plaintiffs argument, developed orally in closing, focused on clauses 2.2 and 2.3 of the first lease which provided:
2.2 If the Lessee continue to occupy the Premises after the Expiry Date with the Lessor’s approval, it does so under a tenancy for a fixed term of one month and then from month to month which either party may terminate on one month’s notice ending on any day.
Holding over terms
2.3 Subject to clause 2.2, the monthly tenancy is on the same terms as this lease including in relation to payment of Base Rent, Lessee’s Contribution, Percentage Rent and Marketing levy (if any) except for those changes which:
- (a)are necessary to make this lease appropriate for a monthly tenancy (except the Bank Guarantee may not be reduced);
- (b)the Lessor requires as a condition of giving its approval to the holding over.
- Mr Ferret submitted that the effect of clause 2.3 was that the terms of the tenancy at will were specified by and contained in the registered first lease: it “is on the same terms as” that lease. Thus s. 43(1) is deemed to be included in that those terms as well. Accordingly, the term implied by s. 43(1) also obtains the benefit of the deeming provision in s. 176 LTA.
- The first step in the argument seems correct: the terms of the tenancy at will are set out in the first lease. And it seems to me that the effect of s. 42 is that those terms are “taken to include s. 43”. Section 42 operates in an analogous manner to incorporation by reference. The provision does not appear in terms of the tenancy at will set out in the registered first lease, but is deemed to be included. No authority was cited to me dealing with whether, and to what extent, promises or terms conferring rights may be incorporated by reference into a deed so as to give them the status of covenants enforceable under the deed. However, the same principles of construction apply to deeds as to contracts, and incorporation by reference is well known in the field of contract law.
- I suspect that there is more to this argument than meets the eye, but on the submissions put before me, it seems correct that the terms of the tenancy at will are (literally) contained in the registered lease, that those terms take effect as a deed between the parties, given the deeming effect of s. 176, and further, that terms incorporated into that lease also thereby take effect as covenants.
- I did not think that Ms Schneider’s arguments led to a different conclusion. She focused on establishing that on the proper construction of the first lease, the tenancy at will was a separate tenancy from the indefeasible tenancy created by the registration of the first lease. That proposition seemed correct. However, that argument does not answer Mr Ferret’s argument. His argument is unconcerned with whether the tenancy at will arose as a new lease or a continuation of the first lease. It relies on the fact that the terms of the tenancy at will are contained in a registered instrument.
- With some trepidation, I conclude that the plaintiffs’ argument is right and that the terms of s. 43(1) took effect as covenants. The action on s. 43(1) is therefore an action on a specialty and subject to a 12 year limitation period. AMP’s limitations defence therefore fails.
- AMP counterclaims for $77,006.47 due under the second lease. I refer to paragraph  above. AMP is entitled to that sum. The questions which arise are:
- (a)Whether AMP is entitled to judgment for that sum against the plaintiffs as assignees of the rights of Gold Tip; and
- (b)Whether AMP can set-off that sum against the sum the plaintiffs are entitlement to in relation to the first lease.
The plaintiffs took the causes of action subject to defences but not counterclaims
- The parties were in agreement that the plaintiffs took the assignments of the causes of action under the first and second leases subject to any defences available to AMP, including defences by way of set-off. However, Ms Schneider submitted that the plaintiffs also took the causes of action subject to a liability to meet any counterclaims of AMP against Gold Tip.
- Uninstructed by authority, this proposition seems wrong. The premise of the proposition that an assignee takes subject to defences is that it is plainly inequitable that the assignee should be in a better position than the assignor in respect of the cause of action assigned. Another way of looking at it is that the cause of action cannot exist separate from the defences which are available to it. It is therefore logical that set-off, which is a defence, should be able to be raised in the same way as any other defence in a proceeding brought by the assignee of a cause of action. The facts which sustain a set-off may, and usually will, also give rise to a counterclaim.
- However, it will only be a subset of all possible counterclaims which give rise to a set-off. Counterclaims which are not related in a legally relevant manner to the assigned cause of action cannot be raised as defences. By what principal can such counterclaims be available to be pursued against an assignee of a cause of action?
- Take an example. A is owed a debt by B. Later, A injures B in a car accident giving rise to a claim for damages for personal injury by B against A. If A assigns the debt to C, what characteristic of the assignment makes C also liable to B on the personal injury claim? It does not seem to be inequitable for that claim to be ignored, because it has nothing whatsoever to do with the debt claim. If A sued B on the debt, A could get judgment without regard to the damages claim of B. The damages claim therefore does not affect the value of the debt claim. The best B could hope for is to stay that judgment pending the hearing of the damages claim, though the basis for such a stay would be doubtful.
- Ms Schneider’s position was not quite as stark as that example. Here, as I find below, the facts that comprise the counterclaim can be set up as an equitable set-off. However, in my view, that seems a distinction without a difference. It does not give rise to any reason why the cause of action against the assignor should be one which can be made good against the assignee beyond its value as a defence which affects the value of the assigned cause of action.
- Ms Schneider referred to Clyne v DCT (1981) 150 CLR 1 at 20-21, where Mason J (with whom Aickin and Wilson JJ agreed) observed:
This effect may be seen as the end result of the principle that an assignee of a chose in action takes it subject to all the equities that the debtor or fund-holder has against the assignor, as at the time of the notice of the assignment, and subject also to all the infirmities and defects in title of the assignor. …
The rule that an assignment is subject to equities has been described as a paramount rule: Redman v Permanent Trustee Co of New South Wales Ltd (1916) 22 CLR 84 at 92. The effect of the rule is that an assignee of a non-negotiable chose in action acquires no greater right than was possessed by his assignor and simply stands in the shoes of the latter. The assignee cannot expect to be in a better position than his assignor was prior to notice of the assignment.
The word “equities” is not used in its technical sense as meaning an equitable interest or something in the nature of an equitable interest. It is a general expression calculated to comprehend defences which would have been available to the debtor in an action brought against him by the assignor as well as set-off and counter-claims. The assignee takes subject to any defence or set-off available to the debtor at the time when notice of assignment is given, unless the right of set-off is excluded by the contract between the assignor and the debtor ….
- Ms Schneider relies on the underlined passages referring to counterclaims. The following points should be noted however:
- (a)First, the sentence following the underlined reference to counterclaims does not contemplate that the counterclaim could be pursued other than by way of set-off;
- (b)Second, the facts of that case did not involve an assignee being sued on a counterclaim. Indeed, it did not even concern the raising of a set-off by way of defence. The issue arose in the context of analyzing whether a creditor who received a notice under s. 218 Income Tax Assessment Act 1936 could assign the debt before it became due and thereby avoid the effect of the notice;
- (c)Third, the cases subsequently referred to by Mason J as exemplifying the principles he had articulated were set-off cases; and
- (d)Fourth, it is of some interest that both Gibbs CJ and Brennan J decided the question without reference to the principles applicable to assignment of causes of action.
- None of this is to suggest that the decision is not authoritative, but rather to direct attention to the reasons for doubting it is authoritative as to whether a defendant may recover a counterclaim against an assignee of a cause of action (beyond the effect of any set-off).
- Ms Schneider also relied on a similar reference in Meagher Gummow & Lehane’s Equity: Doctrines and Remedies (5th Edn) where the learned authors comment:
[6-500] Meaning of Equities
A chose in action is the benefit of an obligation. ‘Equity’ means in this context a defence, set-off or counterclaim which the person subject to the obligation is entitled to oppose to the claim of the person entitled to the benefit. The effect of the rule is that the defence, set-off or counterclaim is equally available against the assignee. …
[T]his rule applies whether the ‘equity’ of the person subject to the obligation assigned is liquidated or unliquidated. Equities on which the person bound can rely as against the assignee are: (a) those on which he or she could have relied as against the assignor at the time he or she received notice of the assignment; and (b) those arising as against the assignor, after the person bound receives notice of the assignment, and which are ‘flowing out of and inseparably connected with’ [Tooth v Brisbane City Council (1928) 41 CLR 212 at 223-224] the obligation the benefit of which is assigned.
- In my respectful view, these passages also fail clearly to make good the proposition advanced by Ms Schneider. The underlined passage suggests the learned authors are concerned with, inter alia, counterclaims which the other obligor is “entitled to oppose to the claim” of the assignee. In my view, suing an assignee to recover on a counterclaim beyond the scope of any set-off which arises, is not properly described as opposing the claim of the assignee. And once again the authorities referred to involve claims which can be advanced by way of defence or which answer the claim of the assignee in some manner. A similar passage appears in On Equity where the learned authors also refer to counterclaims and refer to the statement by Mason J above.
- In my respectful view, those authorities and texts do not provide support for the specific proposition advanced by Ms Schneider. In my view, the reason for the inclusion of the counterclaim in those passages is to recognise that it might not be only claims which give rise to a set-off which can meet the description of an equity which might arise by way of defence to an assigned claims. Those passages appear to reflect the theoretical possibility of other circumstances where a counterclaim, though strictly not a defence by way of set-off could engage the broad equity which arises. However, I do not think it goes further than that. No case has been identified where such circumstances have arisen. Further, such a reason (if indeed it is the reason) gives no support to the idea that a party can recover on a counterclaim against an assignee more than the value of the assigned claim.
- I am fortified in my conclusion by the decision of Brereton J in Franks v Equitiloan Securities Pty Limited  NSWSC 812, where his Honour grappled directly with this issue. His Honour said:
23 So far as the first ground is concerned, the essence of the argument is that an obligor cannot, on a cross-claim against an assignee of the obligation, recover more than the assignee recovers on the claim against the obligor. In other words, it is said that Equititrust would not be entitled to a judgment against Mr Franks on its cross-claim in excess of the amount which Mr Franks recovers on his claim against Equititrust, and as the only circumstance in which the cross-claim against Mr Franks could succeed is that his claim against Equititrust fails – because each is the converse of the other – there could be no situation in which the cross-claim could result in a judgment in favour of Equititrust.
24 This argument depends on the effect of (NSW) Conveyancing Act 1919, s 12, in respect of the assignment of a chose in action (upon which the two deeds, to which I have referred, rely). It provides as follows:
Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal chose of action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would be entitled to receive or claim such debts or chose in action, shall be, and be deemed to have been effectual in law (subject to all equities which would have been entitled to priority over the right of the assignee if this Act had not passed) to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor…
25 I accept that the reference to “equities” in this context is not to be narrowly interpreted, and not only includes defences which may be raised by way of set-off, but also extending to cross-claims and counter-claims that the person subject to the assigned obligation is entitled to set up in opposition to the claim of the person entitled to its benefit [Meagher, Gummow and Lehane’s Equity Doctrines & Remedies, 4th ed, [6-500]; Roxburghe v Cox (1881) 17 Ch D 520; Mitchell v Purnell Motors (1960) 78 WN (NSW) 26; Young v Kitchin (1878) 3 Ex D 127; McDonnell & McGregor v East Limited (1936) 56 CLR 50, 60]. But, in my view, both authority and principle establish that it does not extend to make an assignee liable in damages to the obligor in excess of the amount to which the assignee is entitled on the assigned claim.
26 So far as authority goes, the starting point is Young v Kitchin, in which Cleasby J held that the defendant/obligor was not entitled to recover any damages against the plaintiff but was entitled, by way of set off or deduction from the plaintiff’s claim, to the damages which he had sustained by the assignor/obligee’s non-performance of the contract. With reference to a statutory provision corresponding to s 12, his Lordship said (at 130) (emphasis added):
In substance, I think the defendant is entitled to the benefit of this defence in reduction of the plaintiff’s claim.
27 His Lordship considered that the reference to “equities” in the section was a reference to “all equities which would be enforced in a Court of Equity. I think this is a case where, in equity, the whole matter might be dealt with and the plaintiff’s claim settled, after deducting all that ought to be deducted in respect of the failure to complete and deliver the buildings.” On the form of the defence and counter-claim, and having observed that the form followed was that of a counter-claim in an ordinary case where the plaintiff sued not as assignee of a chose of action, and the defendant was entitled to judgment for the balance of the counter-claim if it overtopped that of the plaintiff, his Lordship said “But this is not the case here; the defendant has no claim to recover anything against the plaintiff; he only meets the plaintiff’s claim by a counter-claim of damages arising out of the same contract, and this ought to appear upon his defence and counter claim”. The defendant was therefore required to amend the counter-claim by showing on the face of it that he did not claim to recover damages against the plaintiff, but only to set them off against the plaintiff’s claim.
28 Young v Kitchin was referred to, with approval, by the Privy Council in Government of Newfoundland v Newfoundland Railway Co (1888) 13 App Cass 199, 213, but the present point did not arise in that appeal. However, exactly the same result was reached by Jacobs J, when a judge of this Court, in Mitchell v Purnell Motors Pty Limited (1961) 78 WN (NSW) 26. The facts were very similar to those in Young v Kitchin. His Honour said (at 28-29):
The answers to all these questions are resolved by a consideration of the rights and liabilities of the trustee to whom the contractual right has been assigned. The trustee thereby became the assignee of the chose in action. The consequence in law can be expressed in two propositions: (1) the assignee can only recover the amount, if any, which remains after deducting all that ought to be deducted in respect of the failure to complete and deliver the buildings; (2) the building owner has no right to recover anything against the assignee; it can only meet the assignee’s claim by its right to set off the deductions last referred to.
In my view, the assignment of the chose in action is effected under the general law enacted in the Conveyancing Act, s 12, with the consequence with which I shall now deal. By the terms of that section the assignee takes ‘subject to all equities which would have been entitled to priority over the right of the assignee if this Act had not been passed’.
Within a very few years of the first enactment in England of a provision in terms similar to s 12 the precise points which have been submitted in this case stated were determined in Young v Kitchin. In that case the statement of claim alleged the plaintiffs sued as assignees by deed of a debt due from the defendant to the assignor of the building contract. The defendant pleaded by way of set-off and counter-claimed that he was entitled to damages for breaches of account by the assignor to build and deliver the buildings at the specified time whereby the defendant lost the use of them. The plaintiff demurred to so much of the defence as alleged breaches of contract by the assignor. And it was argued on the plaintiff’s behalf that the plaintiff demurred and could not be allowed other than as a set off or as a counter claim. It was held that the defendant was not entitled to recover any damages against the plaintiff. It was entitled by way of set off or deduction from the plaintiff’s claim to the damages which he had sustained by the non-performance of the contract by the assignor.
29 Applying that to the case before him, Jacobs J concluded (at 29) that while the whole of the assigned debt may be absorbed in the set off of damages, nonetheless if the damages were proved to exceed the debt, no award of damages in respect of the excess could be made against the assignee.
- Faced with those problems counsel for Equititrust submitted that, given the matter was being dealt with on an interlocutory basis, it was at least arguable that his client could counterclaim against the assignee for the whole of the counterclaim. Brereton J was having none of it. His Honour dealt with that argument as follows:
30 Mr Cox, for Equititrust, frankly conceded that he had been unable to find any case to the contrary of Young v Kitchin or Mitchell v Purnell Motors, but argued that the rationale of those cases was not apparent, and that if the true basis of s 12 was that an assignee could not take the benefit of any assignment without the accompanying burden, then it was at least sufficiently arguable that they were wrong to justify permitting the matter to go to final hearing – and, thus, allowing the amendment for that purpose.
31 First, it has to be said that while the two cases to which I have referred are only decisions at first instance, they have stood, so far as I can tell unquestioned and uncriticised, for many years. Secondly, I think they do have a fairly clear rationale. The reason why s 12 makes an assignment subject to the equities is in order that the obligor is no worse off, and the assignee no better off than was the assignor prior to the assignment. This was explained, also by Jacobs J, in Re Harry Simpson and Co Pty Ltd v the Companies Act (1964) 81 WN (NSW) 207, in which his Honour said (at 209):
However, I think that that assignment is, in accordance with s 12, subject to the equities attaching to the original debt. In the context of s 12 I think the word “equities” has to be given a wide meaning and it has been said that the assignee can be in no better position than the assignor was prior to the assignment.
32 The reference to “it has been said” is probably a reference to the dictum of Lord Jessell MR in Mersey Steel & Iron Co v Naylor Benson & Co (1892) 9 QBD 648 (at 664) in which, in the context of an assignment to a trustee in bankruptcy, his Lordship said:
Judges have said that the assignee in bankruptcy, as he was then called, was not to be in a better position by bringing an action than if the claim had been made in the bankruptcy court.
33 The preserving of the “equities”, by s 12, means that the obligor can raise against an assignee all matters that he could have raised against the assignor in extinguishment or reduction of the liability. This ensures that the obligor does not become liable to pay the assignee a sum which, because of an available set-off or counter-claim, it would never have had to pay to the assignor. But that is not to say that the obligor should be better off. The obligor retains its rights against the assignor, who remains primarily liable on any counter-obligation. This leaves the obligor in no worse position than would have been the case in the absence of an assignment. As against the assignee, the obligor retains the benefit of the defences it would have had against the assignor. That extends to defences by a way of cross-claim, which can be set off in extinguishing or reduction of the obligor’s liability, but it does not extend to improving the obligor’s position by creating new rights to sue the assignee, in circumstances where those rights lie against the assignor. Liabilities, unlike assets, are not capable of assignment. It is consistent with this that the idea of an equity, in this context at least, is that while it impeaches the right of the assignee, it does not create a right in the obligor. Although it is not directly on point, some observations of Lush J in Provident Finance Corporation Pty Ltd v Hammond  VR 312 also illuminate the position. His Honour said (at 319):
The essential concept of an equity in this context is that it is a transaction or event or circumstance which entitles the debtor to say that it is unjust that the debt should be enforced against him without bringing into account his cross-claim arising from the transaction, event or circumstance. In some cases, e.g. Athenaeum Life Assurance Society v Pooley (1858) 3 De G and J 294, the equity would have been enforced by restraining the creditor or his assignee from suing at law. The result seems to have been that the whole dispute was then dealt with in the Chancery courts, even if the chose sued upon was a legal chose.
34 This tends to show that the equities spoken of are defensive, being matters which justice requires be brought to account in permitting a claim to be enforced. It does not support the view that the equities are “offensive” ones creating new rights or improving the position of the obligor.
35 The only basis upon which the contrary has been advanced is that. with the benefit of the assignment, comes the burden. But, once again, liabilities are not capable of assignment, and the fact that a right is assigned does not mean that a corresponding liability is assigned with it, even if closely connected to it.
- I respectfully agree with his Honour. Franks has not been considered or referred to in Queensland since it was delivered. However, in my respectful view, it is plainly correct. AMP’s counterclaim is dismissed.
The set-off point
- In my view, AMP can raise the debt under the second lease as a defence to Gold Tip’s claim under s. 43(1) in respect of the first least by way of equitable set off. In Forsyth v Gibbs  1 Qd R 403, Keane JA, with whom Fraser JA and McMurdo P agreed, observed:
 Consistently with the technique of equity, which does not seek to define what an elephant is but knows one when it sees one, the principles governing the availability of equitable set-off of cross-claims are couched in open textured terms, such as "sufficient connection" and "unfairness". In some cases, it will be necessary to engage in an evaluation of a range of facts which might establish "sufficient connection" or "unfairness" of the relevant kind. But the principles to be applied are not so vague or subjective that it is never possible to determine, for the purposes of an application for summary judgment, that the facts alleged by a defendant simply fall short of what is required.
 It is important to emphasise that the availability of an equitable set-off between cross-claims does not depend upon an unfettered discretionary assessment of whether it would be "unfair" in a general sense for a plaintiff to insist on payment of the debt owed to it while the cross-claim remains unpaid. It is essential that there be such a connection between the claim and cross-claim that the cross-claim can be said to impeach the claim so as to make it unfair for the claim to be allowed without taking account of the cross-claim.
 Thus in Piggott v Williams, the claim of a solicitor who sued his former client to recover fees for services rendered was successfully met by a plea of equitable set-off on the basis that the fees were only incurred by reason of the solicitor's lack of due skill and diligence. The solicitor's breach of his obligations of skill and diligence was itself the source of the claim for his fees. This case affords an example of what is meant when it is said that the claim to set-off must "impeach" or go to "the root of" the plaintiff's claim.
 An example of a failed attempt to assert an equitable set-off, which is particularly pertinent to a summary judgment situation, is afforded by the decision of the Full Court of the Supreme Court of Victoria in Indrisie v General Credits Ltd. There, an order for summary judgment was upheld against a guarantor who sought to rely upon a cross-claim for damages available to the principal debtor against its creditor by way of set-off against the guarantor's liability on the guarantee. The Full Court said:
"… reference to cases such as Edward Ward and Co v McDougall  VR 433; British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd  QB 137;  2 All ER 1063 and Eagle Star Nominees Ltd v Merril  VR 557 shows that, in order to rely upon a cross-claim as an equitable set-off, there must be such a nexus between the claim and cross-claim that the cross-claim can be said to impeach the plaintiff's claim. In the present case the claim for unliquidated damages is founded, not upon the transaction in respect of which the principal debtor is said to be liable, but upon a collateral contract entirely independent of that for which the respondent has the benefit of a security for due performance. The appellants' claim clearly does not meet the test to be applied, namely can the cross-claim be said to impeach the title to the respondent's legal demand?"
- The plaintiff’s contention was that AMP could not set off the debt due under the second lease against a right to compensation under the first lease, because the liabilities arose under different instruments and therefore AMP’s claim did not impeach the claim under the first lease. In my respectful view, this is too narrow a view to take of the nature of the two claims.
- The plaintiff’s claim under the first lease is for compensation for loss and damage caused by AMP to the business of Gold Tip. AMP’s claim is for a debt due to it from Gold Tip in relation to the conducting of that same business. The continuity of the business from the old shop to the new shop was central to the plaintiffs’ arguments advanced as to loss suffered after the move to the new shop for conduct affecting the old shop. The claim advanced in this way by the plaintiffs included the period when Gold Tip was not paying the rental on the new shop. The plaintiffs have in fact been successful, albeit very modestly, in respect of that argument.
- The relevant connection between the two claims is that they involve claims for damage to, and costs incurred by, the same business as between the same parties. This makes it unfair, in my view, for the claim for compensation to be allowed against AMP without taking account of AMP’s claim.
The extinguishment issue
- In written submissions, the plaintiffs argued that after the dissolution of Gold Tip following completion of the winding up, AMP’s debt was extinguished, such that it could no longer be raised as a defence to the claims by the plaintiffs as assignees of the causes of action. While the first proposition has some authority to support it, it would take compelling authority to persuade me of the second proposition, given the potential for it to operate oppressively and the apparent inequity in permitting an assignee to avoid a good defence on that basis, particularly where the potential set-off existed at the date of the assignment.
- The point was not raised in the pleadings and was only raised in final written submissions. Ms Schneider submitted it had to be pleaded and that if it had been raised in the pleadings, AMP could have applied to have Gold Tip re-registered if necessary. For this reason, it was my understanding that Mr Ferret ultimately did not press the argument. If I have misunderstood, I find that Ms Schneider’s argument is correct and the matter cannot now be raised.
Limitations defence to the counterclaim
- The plaintiffs raised a limitations defence to the counterclaim by AMP alleging that the counterclaim was barred by s. 25 LAA. Section 25 provides:
25 Actions to recover rent
An action shall not be brought nor a distress made to recover arrears of rent or damages in respect thereof after the expiration of 6 years from the date on which the arrears became due.
- The matter was not raised in the defendant’s written closing and I remain unsure if it was pressed by Mr Ferret. Ultimately, I think it would be unfair to assume the argument had been abandoned, so I will deal with it.
- The first matter to note is that the plaintiffs’ limitation defence is irrelevant to AMP’s right to raise the counterclaim as an equitable set-off. As Mr Derham explains:
(7) Statute of Limitation
The substantive nature of the defence of equitable set-off may assume importance in the case of a statute of limitation. The usual form of statute of limitation preserves the existence of the right but takes away the remedy of enforcing the right by action at law. Since the Statutes of Set-off merely perform a procedural function, a defence of set-off under the Statutes may only be based upon a debt that is enforceable by action. Therefore, a debt owing by the claimant which is unenforceable as a result of the expiration of a limitation period would not give rise to a defence under the Statutes. Equitable set-off, on the other hand, is a substantive defence which does not require an order of the court for its enforcement. As a consequence, it is not sufficient to deny an equitable set-off that the cross demand upon which it is based is no longer enforceable by action because of the expiration of a limitation period. Indeed, that approach has been adopted in circumstances where an action brought on the cross-demand previously had been struck out for want of prosecution.
- It is strictly unnecessary for me to decide whether the counterclaim is statute barred because of my conclusion that AMP cannot recover on that counterclaim against the plaintiffs. However, in the event I am wrong on that matter, I will briefly consider the issue.
- There appears to be no dispute by AMP that the counterclaim in caught by s. 25 LAA, nor that the counterclaim was first brought after the expiry of 6 years since the date on which the arrears became due. Rather, AMP relied on s. 42 LAA, which provides:
42 Provisions as to set-off or counterclaim
For the purposes of this Act, a claim by way of set-off or counterclaim shall be deemed to be a separate action and to have been commenced on the same date as the action in which the set-off or counterclaim is pleaded.
- The plaintiffs articulated no reason why this provision would not apply to the counterclaim pleaded in this case. If that is so, then the counterclaim is deemed to have been commenced on 4 February 2016. Each of the monthly rental amounts claimed in the counterclaim accrued after 4 February 2010: see paragraph  above.
- Accordingly, AMP’s counterclaim, if available against the plaintiffs, would not have been answered by a limitation defence.
 TS5-9.44 to 5-10.8
 TS1-3.40 to 4.26; and see the amendment to the Fourth Amended Defence (FAD) paragraph 24(c)(ii)(C)
 TS 5-9.35 to .38
 Per Mr Carroll at T3/25:39-47 and T3/26:1-6.
 Goldsmith affidavit paragraphs 19 to 21
 Goldsmith affidavit paragraph 24
 TB B2.08
 Goldsmith at paragraph 26
 TB B.2.10
 I acknowledge that the findings of fact which follow up to the end of the works are drawn substantially the summary of the evidence prepared by AMP Mr Ferrett, QC, recognised the impartial character of the summary. Ultimately, however, the findings are mine and reflect with my own view of the evidence.
 Carroll Affidavit, [38(b)]; Mr Goldsmith accepted this timing in cross examination: T1/37:8-10, 29-45
 T1/37:24-27; T1-37:42-43.
 T3/24:46 and T3/25:1-6; TB E4.10 at page TB2552. (on page 3, under the headings “General Update” and “Key issues”)
 Carroll Affidavit, [38(c)] T1/41:26-27.
 T1/42:43-45. Carroll Affidavit, [38(c)] (TB E3.1, page TB2170)
 TB.B.15; T1/41:9-27.
 T1/43:43-46 and T1/44:1.
 T1/43:34-38, T1/44:31-35, T1/52:42-47 and T1/53:1.
 Carroll Affidavit, [38(e)] and [38(f)] (TB.E3.1, pages TB2170-2171) and see Mr Goldsmith at T1/45:4-9
 T1/39:43-46 and T1/40:1-2.
 Goldsmith Affidavit,  (TB.B.1); Carroll Affidavit, [38(d)] (TB.E3.1, page TB2170).
 Goldsmith Affidavit, ,  and .
 FAD paragraph 24(b)
 Further Amended Reply and Answer (FARA) paragraph 21(iii)
 TB B2.21 at TB Pages 95-96
 TB B2.21 TB Page 217.
 T1/47:46-47 and T1/48:1-21.
 Carroll Affidavit, [38(g)-(m)] (TB.E3.1, page TB2171).
 Goldsmith Affidavit, - (TB.B.1, page TB0070).
 TS1-53.29 – TS1-65.19 and exhibit 2
 See exhibit 10
 Goldsmith Affidavit, - (TB.B.1, page TB0072).
 Carroll Affidavit, [38(n)(i)-(ii)] and [54(a)] (TB.E3.1 pages TB2171 and 2175).
 Carroll Affidavit,  (TB.E3.1 page TB2174).
 Carroll Affidavit, [54(b)] (TB.E3.1 page 2175).
 Carroll Affidavit, [54(c)] (TB.E3.1 page 2175); T1/76:38-45.
 Carroll Affidavit, [54(e)] (TB.E3.1 page 2175), T1/77:4-31).
 Exhibit 9; T1/81:36-43
 Exhibit 9; T1/77:36-37.
 Carroll Affidavit, [54(e)] (TB.E3.1 page 2175).
 Carroll Affidavit,  (TB.E3.1 page 2176).
 Carroll Affidavit,  and  (TB.E3.1 page 2176).
 Goldsmith Affidavit,  (TB.B.1).
 Goldsmith Affidavit,  (TB.B.1).
 T1/84:39-46 and T/85:14-17.
 Affidavit of Steven Bernard Ihm (TB.E.1) (Ihm Affidavit), .
 Goldsmith affidavit at 
 See the Third Further Amended Defence and Counterclaim at paragraph 4.
 Exhibit 28, Annexures A and B to defendant’s closing submissions.
 See paragraphs 3.5.4 to 3.5.6
 Some of the key documents appear conveniently in Exhibits 10 and 11
 See Table 4 in Mr Haley’s report TB B6.1 page 603.
 See Table 2 in Mr Haley’s report TB B6.1 page 602
 See instruction to Mr Haley in his first report at 3.2.2 (v)
 Plaintiff’s written submissions at paragraphs 94 to 95
 TS 5-67.14 to 5-69.6
 Given AMP’s concession that the April settlement did not settle all claims for impacts to 30 June 2009, just loss and damage to that date.
 Defendant’s trial submissions at 
 March v Stramare (1991) 171 CLR 506 at 515; Travel Compensation Fund v Tambree (T/As R Tambree and Associates) (2005) 222 ALR 263 especially Gleeson CJ and  to 
 See Sixth Further Amended Statement of Claim (SFASC) at paragraph 7; FAD at paragraphs 9(c) and 12, FARA at paragraph 6A(iv)
 Defendant’s written submissions at paragraph 121
 Nor was construction of that JB Hi Fi mall identified in the particulars but it was referred to in the FARA at paragraph 15.
 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at ; Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 at ; R v Karl Ernst Kleimeyer  QCA 56 at -
 At paragraphs 56 to 65 of the defendant’s written submissions
 None of this is a criticism of Ms Roberts, who was suddenly called into the trial on short notice, the issue of admissibility of her opinions tendered through Mr Goldsmith only coming up in the week before trial.
 Pages 20 – 21 of Ms Roberts’ report.
 TS4-14 to 16
 Exhibit 10
 After some reflection by Mr Ferret QC in oral argument: see TS5-46.36 to 5-49.10
 TS 5-8.26 to 5-9.38
 I could locate nothing in Nicholas Seddon, Seddon on Deeds, (The Federation Press, 1st ed, 2015) or Robert Frederick Norton, A treatise on deeds, (Sweet and Maxwell, 2nd ed, 1928)
 See Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 at 20-21
 Young Smith & Smith (Law Book Co. 2009) at [10.160]
 See Mr Ferret’s argument at TS5-74.23
 See Gallagher Bassett Services NSW Pty Ltd v Murdock (2013) 86 NSWLR 13 at 17
 TS 5-87.1 to .13
 See the Answer at paragraph 3 and note that at least one essential fact (the dissolution of Gold Tip) was not, so far as I could discern, ever pleaded in any of the extensive pleadings.
 Section 10(2) LAA was also pleaded but it relates to actions for account.
 Rory Derham, Derham on the Law of Set-off (Oxford University Press, 4th ed, 2010) at page 111.
- Published Case Name:
Andrew David Goldsmith and Janne Elizabeth Tippet v AMP Life Ltd
- Shortened Case Name:
Goldsmith v AMP Life Ltd
 QDC 140
25 Jun 2020