Australia: Misleading and deceptive conduct – a tenant request for exclusivity

A recent NSW case dealt with a tenant's claim that the landlord made representations which were misleading and deceptive when dealing with a tenant's request for exclusivity. The landlord represented that the tenant would be the only independent fresh fruit and vegetable shop in the Fresh Food Precinct and as such should pay higher rent. Later in the negotiations, the landlord knew that Franklins (in the Fresh Food Precinct) were going to expand its offering to include fresh fruit and vegetables.

The tenant's claim failed. The Court found that Franklins was not "independent" and in any event the landlord's representation was not about the future. However, it is another reminder about how difficult it is to win misleading and deceptive conduct cases.

Misleading and deceptive conduct

Commencing in 2004, a 5 year lease was entered into between NB2 Pty Ltd (Tenant) and the owners (Landlord) of a premises in Westfield Miranda (the Centre). The Tenant had an independent fresh fruit and vegetable (FFV) shop along with one other tenant whose shop was in the Fresh Food Precinct (the Precinct) in the Centre (Woolworths who was selling FFV was in the Centre but in a different precinct).

As the only other FFV shop in the Precinct failed in 2009, the Tenant wished to acquire a lease of over that premises and continue trading from that new premises as well as their current premise. In 2009/2010, negotiations commenced between the Tenant and the Landlord for a lease over Shop 2082 to be entered into for a period of 10 years. In the Landlord's Disclosure Statement to the Tenant in 2009, it was the stated "Permitted Use of shop" was as follows:

"Fruit and vegetable shop with exclusive pre-packed delicatessen lines as per the agreed menu, including retail sale of flowers.

Note: The lessee does not have any exclusive right to sell particular goods or services. There are or may be other lessees in the centre selling the same or similar goods or providing the same or similar services to those to be sold or provided by the lessee."

The main negotiation point was with respect to "exclusivity". The Tenant wanted to capture all of the market share for FFV in the Precinct. The Landlord's representative discussed with the Tenant about a need to pay a higher rent for their current premises because their shop would then be capturing all the FFV trade in the Precinct from the one site. The Tenant was happy to pay a little more if it meant they would have no competition. Accordingly, the Tenant requested an exclusivity clause be inserted due to the high rent amount to be payable. The Landlord's representative advised the Tenant that the Landlord could not offer exclusivity as Woolworths were already selling FFV in the Centre. The Landlord's representative did however, suggest an exclusivity clause for the Tenant to be the only "independent" operator in the Centre.

The Tenant put forward two proposals for the rent payable either:

  1. $788,500 + gst; or
  2. $888,500 + gst with the following term included in the lease:

"Exclusivity: Exclusive right to be the sole independent Fresh Produce operator in the Centre. This will require an agreement to terminate the lease on Shop 2089/2090 with effect 30/9/09."

The Landlord's representative advised the Tenant "that the lease proposal we put forward is fair and reasonable, given you will capture all the business for the fresh food produce." Further discussions took place where the Landlord's representative suggested to the Tenant that once they surrender the lease for Shop 2089/2090 they would pick up the total FFV trade in the Precinct. When pushed by the Tenant for the exclusivity clause again, the Tenant was advised the other end of the Centre may be redeveloping and the Landlords want flexibility to have a FFV operation at that end. It was then agreed by the parties the exclusivity would be limited to "the sole independent fruit and vegetable [operator] in the Precinct".

In 2010, the Landlords received notice from Franklins requesting their consent on an application for development consent to "refurbishment" of its existing supermarket in the Precinct. The refurbishment included a FFV area and in March 2011 they commenced trade. The Tenant started to default in rent in 2012.

In 2014, the Landlords terminated the lease due to the Tenant's default in paying rent. The Landlord brought proceedings against the Tenant (and the guarantors) for recovery of rent and damages. The Tenant's defence and cross claim was that during negotiations of the lease, the Tenant relied on Landlord representations which were misleading and deceptive. The Tenant's defence and cross claim failed in first instance and the Landlord was awarded approximately $3.5m. The Tenant has now appealed this decision.

Misleading and deceptive conduct

The Tenant claimed that during negotiations, the Landlord engaged in misleading and deceptive conduct or alternatively, acted unconscionably, in contravention of s51AC (which dealt with unconscionable conduct in business transactions) and s52 (dealing with misleading or deceptive conduct) of the Trade Practices Act 1974 (Cth) (the Trade Practices Act 1974 has since been repealed and replaced with the Australian Consumer Law).

During the appeal, the communications between the parties were examined in depth. In short, the discussions were, from the Landlords perspective, that the Tenant should pay increased rent because of its contemplated acquisition of the competing failed "In Season" business leaving the Tenant as the sole FFV operator in the Precinct. There was no mention regarding any future competition. Although the Tenant requested exclusivity, the Landlords response was only that the Tenants exclusivity was "as the only independent fruit and vegetable operator in the Centre" [emphasis added]. The primary Judge found that the use of the word "independent" confined the possibility of exclusivity for the Tenant to it being the only non-supermarket chain FFV retailer in the Precinct. His Honour (in first instance) reflected the ordinary meaning of the word "independent" as "is one that is independent of other stores". It was found that Franklins was not of that description and was therefore not inconsistent with the exclusivity contemplated by the Landlord.

It was also held that when the Landlords representative sought to support this statement, that upon the Tenant's acquisition of the "In Season" store, it would be the only FFV retailer in the Precinct, he did not expressly nor impliedly, represent nor promise that that monopoly position would continue for the term of the lease.

His Honour stated that in his view it was not incumbent on the Landlord's representative to draw the Tenant's attention to the possibility of Franklins commencing the sale of FFV in the Precinct and having not said anything misleading to the Tenant. His Honour quoted Gleeson J in Lam v Ausintel Investments Australia Pty Ltd (1990) 97 FLR 458 at 475:

"Where parties are dealing at arm's length in a commercial situation in which they have conflicting interests it will often be the case that one party will be aware of information which, if known to the other, would or might cause that other party to take a different negotiating stance. This does not in itself impose any obligation on the first party to bring the information to the attention of the other party, and failure to do so would not, without more, ordinarily be regarded as dishonesty or even sharp practice."


The Tenants alleged that the Landlord made the following representations:

  • under the Lease, the lessee would be in a position to capture the whole market for fruit and vegetable retailing in the Fresh Food Precinct of the Centre;
  • under the Lease, the Lessee would be the only retailer of fresh fruit and vegetable produce in the Centre aside from Woolworths [and] aside from any fresh fruit and vegetable operation at the other end of the Centre in respect of which the Lessee had a first right of refusal; and
  • further, or in the alternative, the Lessee would have "the right to be the sole independent specialty fruit and vegetable retailer in the Fresh Food Precinct.

The Tenant's primary case was that the Landlord made the above representations and that those representations became misleading and deceptive when the Landlord became aware of Franklins intention to retail FFV and did not disclose that knowledge to the Tenant. His Honour found the case failed due to the first and second alleged representations not being made and the third representation, although made, did not bear the meaning that the Tenant contends it had. His Honour also held that if the Landlord did not represent to, or promise, the Tenant that it would be the only FFV retailer in the Precinct, there was nothing misleading, deceptive or unconscionable in the Landlord not disclosing to the Tenant their assumed knowledge of Franklins intention.


The Landlord's damages included arrears for rent up to termination of the lease, lost rent from that date until a new lease commenced and cost of removing the Tenants fixtures and fittings.

On a side note, in the appeal, the Tenants challenged the primary judge's assessment of the Landlords damages in that His Honour had erred in not finding that the Landlord had failed to mitigate their loss. His Honour in the appeal concluded it would have been unfair to permit the Tenants to contend in their closing submissions that that finding should be made as they had not pleaded that the Landlord failed to mitigate their loss and had not earlier made a submission to that effect.

The Tenant's other challenge regarding damages, was that the claim for loss of rent should have ceased on the date the Landlord entered into an Agreement to Lease with a new tenant. However, His Honour held that the date adopted by the Landlords was correct i.e. the date the new lessee commenced paying rent.

The Tenant's challenges to the quantum of the damages were rejected.

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.

Paul Carroll
Similar Articles
Relevancy Powered by MondaqAI
Carroll & O'Dea
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”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Carroll & O'Dea
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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