Australia: Retail Lease Disputes: Full Time Looming in Sarker and Skiwing

Retail Leasing Update
Last Updated: 7 July 2010
Article by Rob Riddell

The recent decisions in World Best Holdings Ltd v Sarker [2010] NSWCA 24 and Skiwing Pty Ltd v Trust Company of Australia Limited [2010] NSWADT should bring to an end two of the longest running retail lease disputes of recent times. Borrowing some of the language of the World Cup, the stacked defences run by the tenant Sarker on the one hand and by the landlord Trust Company on the other have proved impossible to break down.

Both decisions contain points of law that will be of interest to retail landlords and provide an important reminder of the time and money that can be saved by resolving a dispute before legal costs have accrued past the point where they drive the parties to round after round of bitterly contested litigation.

Facts and issues of Sarker

The facts of the Sarker claim are covered in our July 2008 update, which can be viewed here. Essentially this dispute, having run for 6 years, concerned whether the landlord World Best Holdings had validly terminated Sarker's lease. The Tribunal found that the termination was invalid and held that the landlord was liable to pay the tenant damages assessed on a 'reliance' basis, rather than on a 'loss of profits' basis.

The landlord appealed to the Tribunal's Appeal Panel on a number of questions of law, but was unsuccessful. The Appeal Panel's decision was then appealed to the Court of Appeal. The main questions for consideration were:

  • Was the tenant's trade in Indian groceries contrary to the permitted use of an 'Asian Supermarket'?
  • Were the landlord's notices of termination invalid?
  • Had the landlord repudiated the lease?
  • Was the tenant entitled to 'reliance based' damages, i.e. compensation for the 'set-up' costs of establishing his business, rather than damages based on loss of profits, (as the limited trading information available was not a reliable basis for assessing the profit, if any, the tenant would have made)?

Decision of Sarker

The Court of Appeal found that the Appeal Panel had made some interesting 'black letter law' errors in relation to its interpretation of the permitted use clause, but found that these errors were not material. The following points are noteworthy:

  • When asked to interpret a particular clause in a lease, courts and tribunals should be very reluctant to look at anything but the language used in the clause. The conduct of the parties after the lease is granted is irrelevant and should not be taken into account. Similarly, evidence of surrounding circumstances prior to the grant of the lease should generally be excluded, the only exception being for evidence that relates to facts known to both parties in circumstances where the language of the clause being considered is prima facie ambiguous.
  • The landlord's argument that the normal use of the term 'Asian' produce in Australia referred to south-east Asian produce (and not to Indian produce) was slide-tackled by the Appeal Panel, which considered that 'Asia' includes the Indian sub-continent, given the plain meaning of the term and by applying the contra proferentum principle. The landlord had had an opportunity to narrow the meaning of 'Asian' when it drafted the permitted use clause in the lease but had failed to take it.
  • A notice under section 129 of the Conveyancing Act is not a necessary pre-requisite to a landlord terminating the lease based on a tenant's repudiation, as opposed to a breach, of the lease.
  • An acceptance of a repudiation of a lease does not require any particular form of communication and will be sufficient if it clearly conveys that the aggrieved party is treating the lease as at an end.
  • The landlord will bear at least an evidentiary onus of proving that damages for the tenant's full reliance loss should not be awarded.

Facts and issues of Skiwing

The Skiwing matter has also run for over six years. It centres on a dispute as to whether an amount of outgoings is payable by the tenant. Indeed the litigation outlives the premises, with the Imperial Arcade having been demolished a year ago. The latest instalment is the Tribunal's decision following on from the Court of Appeal's notable decision in Trust Company of Australia Ltd v Skiwing Pty Ltd [2006] NSWCA 387 (our update for which can be viewed here).

The primary issue remitted back to the Tribunal for resolution was whether items of expenditure in the relevant annual outgoings statement were expenses 'properly and reasonably incurred' by the landlord in payment of the outgoings for the relevant year.

Decision of Skiwing

The Tribunal concluded that the expenditure in the relevant outgoings statement was properly and reasonably incurred on the following grounds:

  • The question whether an item of outgoing fails to meet the requirement of 'properly and reasonably' incurred is a question of fact that must be objectively assessed.
  • An audited outgoings statement prepared by an independent auditor in accordance with paragraphs 28(1)(e) and (f) of the Retail Leases Act 1994 should be presumed to be a correct statement of all outgoings expenses 'properly and reasonably incurred'.
  • This presumption can be rebutted, but the onus is on the tenant to establish, on objective material, a reasonable basis for the Tribunal to go behind an audited statement.
  • It was not appropriate for the Tribunal to order production of all documents underlying the outgoings statement as the tenant Skiwing did not put on any material that put the audited outgoings statement in question.

What it means for retail landlords

The Sarker saga is now well into injury time, with the full time whistle imminent and little chance of qualifying for a berth in the final. The landlord's only avenue of appeal is to the High Court (which is unlikely to grant leave to do so).

By contrast, the Skiwing saga will progress to the finals, as it has now been appealed. The basis of the appeal is not known, but given the various red cards awarded, the prospects of this last attacking raid by the tenant must questionable.

So, while the players in both will no doubt cling on to hope until the moment the final whistles are blown, the scorelines suggest one victory for a tenant, and one likely victory for a landlord.

As the crowds walk away from the grounds there is little doubt the main point of discussion will be the 'own goals' of unrecoverable legal costs. Indeed, such costs are likely to be many times the value of the underlying disputes. Such long running cases underscore the benefits for both retail landlords and tenants of early mediation and compromise in what are essentially commercial disputes. Other key lessons that retail landlords can take away are:

  • When defining a tenant's permitted use (or with any other clause of the lease) landlords' should be extremely careful to use terms that have a plain, clear meaning and to expressly set out any uses that they want excluded.
  • The amount of damages payable to a tenant arising from early termination of a lease is not always based on loss of profits – the possibility of an award for 'reliance' damages should be considered before arguing that the tenant would not have made a profit if the lease had continued and so is not entitled to any amount for damages.
  • An audited outgoings statement will be good proof of the amount of outgoings properly claimable in the absence of any evidence led by a tenant to put it in question.

For more information, please contact:


Robert Riddell

t (02) 9931 4940


Daniel Fitzpatrick

t (02) 9931 4830


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions