Australia: Misleading and Deceptive Conduct within the Tuggeranong Town Centre case

Last Updated: 13 December 2017
Article by Alex Collie and Paul Carroll

Tuggeranong Town Centre Pty Limited v Brenda Hungerford Pty Limited (No 2) [2017] ACTSC 88

Earlier this year the Supreme Court of the Australian Capital Territory ruled in favour of a retail landlord (and the previous owner of that shopping centre) against a tenant who had abandoned premises which were the subject of a sublease. The shopping centre in question what the Hyperdome in the Tuggeranong Town Centre and the store was a retail gift and homewares store called "Giving and Living". The store was sold to the defendant in this matter, Benda Hungerford Pty Limited ("BHPL"). BHPL abandoned the premises on 31 January 2008 and the sublessor commenced proceedings for money owed under the sublease. BHPL raised a number of counterclaims, including issues of misrepresentation. While the issues of misrepresentation were only a part of a 1259 paragraph judgment, they provide some insight in to how this area of law is interpreted by the Courts.

BHPL claimed that the landlord made representations that amounted to misleading and deceptive conduct within the meaning of the then Trade Practices Act 1974 (Cth) (now covered by the Australian Consumer Law within the Competition and Consumer Act 2010).

The nature of these representations alleged included:

  1. That the landlord wanted to keep BHPL's shop as it was a good shop;
  2. That the landlord was looking to relocate the shop to a better location;
  3. That nearby travelators would be fixed soon;
  4. That the Hyperdome was a good location for a shop such as BHPL's;
  5. That BHPL's store was in a good location with the second highest foot traffic in the centre;
  6. There was nothing that BHPL should know about the Hyperdome that could affect their business;
  7. The rent for the lease was market rent;
  8. That a new store being leased nearby would increase traffic flow for BHPL's store;
  9. That the landlord would negotiate in good faith with prospective buyers of BHPL's business regarding reduction of shop space and continuing rent relief.
  10. That the landlord would provide rent relief to BHPL to the order of 50 to 30 per cent.

Claims of misrepresentation in all these matters were dismissed by the Refshauge ACJ for varying reasons. The Court was satisfied that at the time the disclosure regarding relocating the shop was made, the landlord was actively seeking to re-locate the shop even if it did not eventuate. It also found that while the landlord was aware that BHPL's turnover had fallen significantly, this did not render any statement as being false, misleading or deceptive. It was found that there were no ongoing mechanical issues with the travelators, but rather issues with its operation during wet weather. In some cases it was simply held that the evidence did not establish that the representations were made.

In regards to rent relief, evidence indicated that this representation involved an employee of the landlord responding to a request for assistance by asking "Would 50 to 30 per cent rent relief assist you?" When asked if rent relief would be passed to a prospective buyer, the employee said he would look at the circumstances at the time they had a buyer.

The Court held that the question regarding 50 to 30 per cent rent relief did not indicate any representation that relief of that amount would be offered. Similarly, the suggestion that they would "look in to it" could not be construed as a representation that the rent relief would be passed on to a buyer of the business.

BHPL's counterclaim also included allegations of unconscionable conduct. While the claims involving the conduct as discussed above were dismissed as being misleading in any event, Refshauge ACJ went further to note that they did not meet the definition of unconscionable conduct under the Trade Practices Act. Unconscionable conduct, it was said, must be more than merely misleading or deceptive but must usually involve some moral fault or responsibility. Mere unreasonableness or unfairness was said not to be sufficient.

This aspect of the case highlights the issues that landlords should be aware of when it comes to potential claims for misleading and deceptive conduct by lessees. Including the ever important rule of keeping organised notes for evidentiary purposes later, the case notes that a difference between intention and outcome is not necessarily misleading. The usual rule when making representations in business is that anything you say (or could potentially imply) should be something you have a reasonable belief is accurate.

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.

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Alex Collie
Paul Carroll
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